Introduction

2018 saw a number of interesting decisions of the Federal Court, Ontario Superior Court of Justice, and British Columbia Supreme Court, including cases dealing with confusion between trademarks, s. 45 of the Trademarks Act, the meaning of use, official marks, depreciation of goodwill under s. 22 of the Trademarks Act and the constitutional principal of paramountcy.  Below is a discussion of these cases based on subject matter.

1.     Geographic Location

The significance of a geographic location as part of a trademark was reviewed in the Federal Court decision in Advance Magazine Publishers, Inc. v. Banff Lake Louise Tourism Bureau, 2018 FC 108.

In this case the Banff Lake Louise Tourism Bureau (the “Bureau”) applied to register the trademark BON APPÉTIT BANFF for use in association with the Bureau’s ten-day event during which restaurants serve a series of special fixed-price meals. Advance Magazine Publishers, Inc. (“Advance”) opposed the Bureau’s application on the basis of confusion with a number of its registered trademarks for BON APPÉTIT in association with, among other things, on-line magazines and publications and a website allowing customers to subscribe to magazines.

The Registrar in the opposition proceedings found that while the two word marks in issue resembled each other, there was nothing striking or unique in the phrase “bon appétit”. In this regard, the Registrar noted that there can be no monopoly in the idea of enjoying a meal.

The Federal Court took a different view of the matter and conducted the appeal de novo as the new evidence provided by Advance on the appeal was sufficient to materially affect the decision of the Registrar.

A key finding of the Federal Court was that in analyzing the resemblance of the marks in issue the Bureau adopted the entirety of Advance’s trademark and simply added the word “Banff” at the end. In this regard, the Federal Court noted that the first part of a word mark is often the most important aspect for comparison, particularly if it is what is most distinctive about the mark. Further, the Federal Court took the opposite view of the Registrar and found that the words “bon appétit” were striking with respect to the resemblance of both of the marks in issue.

With respect to the word “Banff”, the Federal Court stated that it was generally accepted that geographic locations are generally weak marks and that the word did little to distinguish the Bureau’s mark from that of Advance’s mark.  Further, the Federal Court noted that the font and manner in which the marks were displayed by the parties,
including the fact that the word “Banff” was not given the same prominence in the Bureau’s mark.

With respect to the distinctiveness of the marks, the Federal Court reviewed the evidence and found that while the words BON APPÉTIT are ordinary words, commonly used with food or dining, there was no evidence before the Federal Court that the term is commonly used in the market. Further, the Federal Court determined that while print sales of Advance’s magazine had declined there was steady and continuous online presence for Advance. For example, there were since 1997 over 60 million unique visits to Advance’s website displaying the BON APPÉTIT mark. Accordingly, the Federal Court found that Advance’s mark had acquired distinctiveness through its various activities in print and on-line in the Canadian market.

Accordingly, the Federal Court reversed the decision of the Registrar and found there was a likelihood of confusion between the Bureau’s mark and Advance’s mark. As a result, the application for registration of the Bureau’s mark was refused.

2.     Distinctiveness

Credit cards and the colour black were the subject of a battle between American Express Marketing & Development Corp. (“Amex”) and Black Card LLC (“BCL”).

In American Express Marketing & Development Corp. v. Black Card, LLC, 2018 FC 362, the Federal Court heard an appeal of the Registrar’s decision to refuse the opposition to registration by Amex. Amex challenged applications by BCL for registration of the trademarks of BLACK Design, MY BLACKCARD and MY BLACKCARD REWARDS based on proposed use in association with credit card services and related benefits.

At the heart of the dispute was the claim by Amex that despite the fact that it did not have a trademark registration for the word BLACK or colour black, BCL’s applied for marks were confusingly similar with Amex’s unregistered BLACK CARD trademark and to Amex’s Centurion Card, which is black in colour. Further, Amex alleged that BCL’s credit cards were black in colour and that both Amex and third parties had issued credit cards in Canada that are black in colour. As well, Amex alleged that the BCL marks were descriptive as “black card” connotes a high end credit card.

Amex submitted new evidence on the appeal and the Federal Court determined that the standard of review should be whether the Registrar was correct in its decision.

However, this evidence was insufficient to overturn the decision of the Registrar. The Federal Court held that there was no evidence that Amex had made known in Canada the BLACK CARD trademark prior to the material date of the filing date for the BCL marks as there was no evidence Amex had used this trademark in advertising. The evidence of Internet search results provided by Amex was given no weight as it amounted to inadmissible hearsay. Any reference to “black card” in articles published by third parties did not constitute trademark advertising or use by Amex. Accordingly, the Federal Court found no basis for confusion with BCL’s applied for marks. With respect to allegations of non-distinctiveness and descriptiveness of the BCL’s applied for marks, the Federal Court again agreed with the Registrar. While there was some evidence of the possibility of an association by the public between black credit cards and premium or prestigious services, Amex failed to provide evidence of the prevalence of black card use in Canada, or whether such evidence was sufficient to negate the distinctiveness of the disputed trademarks as of the material dates. Further, the allegations of descriptiveness failed as the Federal Court noted that to succeed on this ground it was necessary to show under the relevant provisions of the Trademarks Act, that BCL’s marks were “clearly” descriptive which implied “self-evident or plain”. Again, on the evidence provided by Amex, it was not established that a credit card that is black in colour clearly describes the character or quality of the services provided.

Accordingly, BCL’s marks were allowed to proceed to registration.

3.     Confusion

In Assurant, Inc. v. Assurancia, Inc., 2018 FC 121, the Registrar rejected the opposition by Assurant, Inc. (“Assurant”) to the application by Assurancia, Inc. (“Assurancia”) of its mark ASSURANCIA in association with insurance broker and financial services.  Assurant opposed the application based on its registered trademarks incorporating the mark ASSURANT in association with insurance and financial services.

The Registrar was not convinced that there was any likelihood of confusion between ASSURANCIA and ASSURANT despite both marks sharing the first part or prefix ASSURAN and both being used in the same channel of trade.

On the appeal by Assurant, the Federal Court held that the resemblance of the marks in issue, in both the appearance and ideas suggested, was due to the presence of the highly suggestive non-distinctive and evocative common component ASSURAN. The slight differences between the marks in the latter part or suffixes of the marks was held to be enough to distinguish them and reduce the risk of confusion. The Federal Court cited the principle that when a party uses words or terms commonly used in their trade, some degree of confusion is to be expected, but that the average consumer in such a context will tend to distinguish between the non-common features of the respective marks. In this regard, the Federal Court was of the view that the marks in issue clearly suggest insurance by the common element used, so that while they share some resemblance they were ultimately distinguishable to the average consumer.

Accordingly, the Federal Court refused the appeal and allowed Assurancia to proceed to registration of its trademark ASSURANCIA.

In Clorox Company of Canada, Ltd. v. Chloretec S.E.C., 2018 FC 408, Chloretec S.E.C. (“Chloretec”) sought to register the mark JAVELO for made-to-order bleach which was opposed by Clorox Company of Canada, Ltd. (“Clorox”) on the basis that JAVELO was confusing the Clorox’s registered trademark JAVEX also used in association with bleach.

The Registrar found that the degree of resemblance was low and that Clorox did not prove that the JAVEX marks had inherent or acquired distinctiveness that would lead a consumer to confuse the marks in issue. The Registrar did so despite the prefix for “jav” or “jave” being the same for both marks in issue. On appeal the Federal Court observed that the prefix “jav” or “jave” correspond to the common noun “eau de javel” in French which designates the product. As a result, the Federal Court found both marks possessed limited inherent distinctiveness such that the small differences in the respective marks was sufficient to avoid confusion.

In this regard, the Federal Court cited Assurant, Inc. v. Assurancia and remarked (at para. 32) that to allow the opposition would be to allow “the monopolization of words of the French language and prohibiting the creation of new marks that are based on such words”.

Accordingly, no confusion between the marks in issue was found and Clorox’s opposition was rejected.

While the foregoing cases would appear to downplay findings of resemblance in confusion analysis where the first part or prefix between the marks in issue are the same, other cases in 2018 suggest otherwise.

In Tokai of Canada Ltd. v. Kingsford Products Company, LLC, 2018 FC 951, Tokai of Canada Ltd. (“Tokai”) sought to register the trademark KING for use in association with “butane”, which was opposed by Kingsford Products Company, LLC (“Kingsford”) on the basis of its prior registered trademarks KINGSFORD used in association with a range of barbecue related goods.

The Registrar refused to register Tokai’s KING mark and Tokai appealed the decision to the Federal Court. The Federal Court found that the respective marks possessed a level of inherent distinctiveness and that there was a fair degree of resemblance between the marks as the KING mark was fully incorporated into the KINGSFORD trademarks. On the facts, the Federal Court rejected the argument that because the mark KING is common, comparatively small differences in the marks in issue were sufficient to distinguish weak marks that have a relatively low inherent distinctiveness.

Accordingly, the Federal Court upheld the decision of the Registrar to refuse the application for registration of Tokai’s KING mark on the basis of confusion with the KINGSFORD mark.

In Swatch AG (Swatch SA) (Swatch Ltd.) v. Hudson Watch, Inc., 2018 FC 853, the Federal Court heard an appeal from the decision of the Registrar in the opposition proceeding refusing the application of Swatch AG (“Swatch”) to register the following design mark in association with, among other things, watches:

The opponent, Hudson Watch, Inc. (“Hudson”), alleged the likelihood of confusion with one of its prior registered trademarks iWATCH, used in association with men’s and women’s wrist watches.

The Registrar found on the evidence that a determination of the reasonable likelihood of confusion was evenly balanced. Given that the applicant, Swatch, had the onus to prove on a balance of probabilities that no such confusion was likely, it failed to do so and as such the trademark application was refused.

In this regard, the Registrar provided details as to what the gust of wind might look like to shift the balance in favour of the applicant Swatch. The Registrar identified as being key to potentially tipping the balance of probabilities in favour of Swatch more evidence as to acquired distinctiveness of Swatch’s mark and Swatch’s ownership of a family of SWATCH trademarks.

On appeal, the Federal Court held that “it would not have taken a violent gust of wind to tip the balance one way or the other since we are right on the fence” (at para. 11). To address this, Swatch provided extensive evidence of sales of its SWATCH trademarked products, stores selling these products, and large-scale advertising to show the notoriety of these products since 1984.

This evidence was found by Federal Court to be significant in addressing the gaps in the evidence of Swatch and tipping the balance of probabilities in its favour.

Further, the Federal Court focused on the factor of whether the respective marks in issue were inherently distinctive in the determination of the likelihood of confusion. In this regard, the Federal Court found Hudson’s iWATCH mark to be weak and that it did not have inherent distinctiveness since it is essentially the name of the product with the addition of the letter “i”. Conversely, the Federal Court found that Swatch’s iSWATCH mark to have inherent distinctiveness because it is an invented mark or, at least, because it refers to a word whose meaning is not the product itself.

Following well known case law, the Federal Court held that in circumstances of a weak mark such as iWATCH, small differences with marks in the same channel of trade are sufficient to distinguish them so as to avoid the likelihood of confusion.

Accordingly, Swatch got its gust of wind, the decision of the Registrar was overturned, and Swatch registered its iSWATCH mark.

4.     Use

In 2018 the issue of use of a trademark in association with services was extensively reviewed by the Federal Court and the ambiguity in this area of trademark law was more clearly resolved.

In Dollar General Corp. v. 2900319 Canada Inc., 2018 FC 778 (the “Dollar General Case”), the Federal Court heard an appeal from a decision of the Registrar under s. 45 of the Trademarks Act as to whether the trademark DOLLAR GENERAL was used in association with “retail variety store services” as set out in the trademark registration of Dollar General Corporation (“Dollar General”).

The Registrar struck Dollar General’s trademark registration from the Register on the basis that Dollar General was not offering “retail variety store services” because a Canadian could only obtain goods of Dollar General by travelling to the United States where its bricks-and-mortar stores were located or through additional services of a third-party shipper.

On appeal to the Federal Court, Dollar General argued that their website, which displayed the DOLLAR GENERAL trademark, was accessed, directed at, and used by Canadians to purchase their products. Further, Dollar General argued that it provided secondary and ancillary retail store services through its website and Internet app, which were downloaded by Canadians.

The Federal Court agreed with Dollar General and found that the Registrar erred by defining “services” too restrictively. At para. 14, the court cited Saks & Co. v. Canada (Registrar of Trademarks), [1989] F.C.J. No. 28 (QL), as holding that “retail store services could be performed in Canada without the presence of bricks-and-mortar stores in Canada”. The Federal Court was able to infer that retail store services were performed in Canada from the use of Dollar General’s website, by using it as a substitute to visiting a bricks-and-mortar store located in Canada for purchase of products for delivery to a U.S. address for pick-up or use a third-party shipper to deliver the products to Canada.

Accordingly, the decision of the Registrar to strike Dollar General’s trademark from the Register was set aside.

Later in 2018, the Federal Court heard a similar case under s. 45 of the Trademarks Act, but with respect to “hotel services”. Prior case law caused many to believe that where performance of a service could only be completed by travel abroad, there is no use in Canada. However, other cases indicated that performance of related or ancillary services in Canada could constitute use with the main or primary services such as the ability to book train services in Canada, even though the train was physically located outside Canada. This case law became difficult to reconcile and did not seem to fit well with the case law finding that retail store services were performed in Canada even though there was
no physical presence in Canada by the retailer, such as in the Dollar General decision discussed above.

In Hilton Worldwide Holding LLP v. Miller Thomson, 2018 FC 895, the Federal Court brought greater consistency and clarity to this issue. The Registrar found the evidence lacking with respect to use of the registered trademark WALDORF-ASTORIA in association with “hotel services” as there was no hotel located in Canada using the trademark in association with those services. The Registrar did so despite the evidence before the Registrar that the trademark owner, Hilton Worldwide Holding LLP (“Hilton”), operated an interactive website, had a worldwide registration service, offered discounts for customers who prepaid for rooms, and offered reward points for members of its loyalty program to customers in Canada while displaying the WALDORF-ASTORIA trademark.

On appeal to the Federal Court, Hilton filed additional evidence, including evidence of Canadian customers confirming their hotel bookings and that 41,000 different Canadian customers stayed at Waldorf-Astoria hotels.

The Federal Court found that the Registrar committed a number of errors in its decision and overturned the decision to strike the WALDORF-ASTORIA trademark from the Register pursuant to s. 45 of the Trademarks Act. Of particular importance, the Federal Court found that the term “hotel services” also includes the ancillary or incidental services such as reservation or booking services which all go beyond the physical bricks-and-mortar hotel. Canadians who pre-paid for their rooms entered into binding contracts with Hilton and they received loyalty points for a future hotel stay, all of which was found to be a tangible and meaningful benefit to Canadians.

This decision brings the case law with respect to what constitutes use in relation to services into better order and better reflects the realities of global e-commerce beyond the bricks-and-mortar world.

5.     Section 45

In another case involving what constitutes use pursuant to a proceeding under s. 45 of the Trademarks Act, the Federal Court was called upon to review the decision of the Registrar concerning whether t-shirts worn by employees of the trademark owner were merely promotional and therefore not in the normal cause of trade so as to constitute use of the goods in association with the registered trademark.

In Riches, McKenzie & Herbert LLP v. Cosmetic Warriors Limited, 2018 FC 63, the trademark owner Cosmetic Warriors Limited (“CWL”) successfully responded to the notice to show use of its registered trademark LUSH in association with t-shirts in the three years prior to the notice of the proceeding pursuant to s. 45 of the Trademarks Act. This decision of the Registrar was appealed to the Federal Court.

The Federal Court reviewed the evidence before the Registrar and found that the employees of CWL purchased the t-shirts bearing the trademark but that there was no evidence of a profit made by CWL on these sales. It was the view of the Federal Court that in order to show that this sale was in the normal course of trade so as to meet the test of what constitutes use of a trademark under s. 45 of the Trademarks Act, it was necessary to show a profit. Without evidence of a profit, the sale of the goods was merely promotional and did not constitute use of the trademark.

6.     Official Marks

Official marks continue to create controversy as an unusual feature of Canadian trademark law and the courts seem determined to limit their scope and ambit in the face of a long-standing failure at reform by the legislature, which is only now being addressed as discussed above.

In Quality Program Services Inc. v. Canada, 2018 FC 971, the Federal Court dealt with the issue of a claim for trademark infringement and whether an official mark obtained under s. 9(1)(n)(iii) of the Trademarks Act is a defence to such a claim.

The plaintiff, Quality Program Services Inc. (“QPS”), a British Columbia company, operated a program to increase energy efficiency awareness for communities for new Canadians and it encouraged participation in energy efficiency programs established by governments and public utilities. The program operated since 2012 but only in British Columbia. As part of its program, QPS obtained in 2014 a trademark registration for the mark EMPOWER ME in association with energy awareness, conservation, and efficiency services. The EMPOWER ME mark was used by QPS on its website, social media, and other types of promotional materials and on booths at cultural events and in advertising in various publications.

In 2013, the Ontario government announced it was launching a website with the name “emPOWERme”, which it intended to help energy consumers in Ontario take charge of the power they use by a better understanding of Ontario’s electricity system.

When QPS became aware of Ontario’s website in 2015, it sent a letter to Ontario to cease and desist using the EMPOWER ME mark. Ontario took the position that its website was used only in Ontario and for non-commercial purposes. QPS later followed-up on its letter and without a satisfactory response, QPS commenced an action for infringement of its registered trademark.

Subsequently, Ontario requested that the Registrar give public notice of its adoption and use by the Ministry of Energy of “emPOWERme” as on official mark pursuant to s. 9(1)(n)(iii) of the Trademarks Act.

While it is clear that the owner of an official mark can prevent others from using its official mark but not prior users of an official mark before its adoption, it was not clear whether adoption of an official mark is a defence to an infringement claim by prior users of an official mark.

In dealing with the issue of whether Ontario’s adoption of an official mark for “emPOWERme” was a defence to an infringement claim by QPS for its registered trademark EMPOWER ME, the Federal Court took a restrictive reading rather than an expansive reading of s. 9(1)(n)(iii) of the Trademarks Act and stated (at para. 18):

Section 9(1)(n)(iii) reads as a prohibition against any person adopting a mark consisting of, or so nearly resembling as to be likely to be mistaken for, an official mark. It does not read as conferring upon the public authority any particular protection against claims for trade-mark infringement or other claims under the Trademarks Act.

Further, the Federal Court stated that “the Court should not adopt an interpretation that confers a statutory immunity upon public authorities without clear legislative language supporting this interpretation” (at para. 29).

After disposing of Ontario’s claim to a defence to the infringement claim of QPS, the Federal Court determined QPS had made out its claim, as it found that there was a likelihood of confusion between the marks in dispute based on the factors set-out in s. 6(5) of the Trademarks Act.

With respect to claims of passing-off and depreciation of goodwill under the Trademarks Act, the Federal Court dismissed these claims as QPS failed to establish that it had the requisite goodwill or reputation beyond British Columbia to support such claims.

In its finding of trademark infringement, the Federal Court awarded damages of $10,000 in the absence of evidence to support a quantification of damages.

7.     Consent Agreements

The Federal Court decision in Holding Benjamin and Edmond de Rothschild v. Canada, 2018 FC 258, is a reminder of the very limited value in Canada in pursuing a trademark application on the basis of a consent agreement from the owner of a cited trademark blocking registration.

In this case, the trademark applicant, Holding Benjamin and Edmond de Rothschild, was a Swiss company that sought to register the mark EDMOND DE ROTHSCHILD for use in financial services. The Registrar refused the application on the basis of confusion with the registered trademark ROTHSCHILD in the similar channel of trade.

In an appeal of the Registrar’s decision, the applicant filed new evidence which included a consent letter between the applicant and the registered trademark owner for ROTHSCHILD who agreed to allow the applicant to register its similar trademark and to co-exist in the Canadian market. Further, the applicant argued that the trademarks in issue allegedly co-existed in Europe and that many companies use the name ROTHSCHILD in the wine sector without any confusion.

The Federal Court dismissed the applicant’s appeal, taking the position that the consent agreement had limited value as it was only based on the parties’ belief that there would be no confusion to the public in Canada. The obligation on the Registrar is broader in that it must protect the broader public in Canada from confusion. Further, the Federal Court was dismissive of the significance of a lack of confusion in other jurisdictions as it found the evidence to be incomplete, vague, and unspecific. As well, the Federal Court stated that channels of trade, types of services offered, and the legal test applicable to establish the likelihood of confusion can vary from country to country so as to render this argument of little applicability.

8.     Damages

The issue of the quantification of damages in trademark cases was reviewed again in 2018 in Clearview Plumbing & Heating Ltd. v. Clockwork IP, LLC, 2018 FC 169.

In this case, Clearview Plumbing & Heating Ltd. (“Clearview”) was the licensee and Giraffe Corp. (“Giraffe”) was the owner of the
Canadian trademark registration for THE PUNCTUAL PLUMBER used in association with plumbing and other home care services.

Clockwork IP, LLC (“Clockwork”) operated a franchise business in the United States and Canada and owned a United States trademark registration for PUNCTUAL PLUMBER. Clockwork’s application for registration for the mark PUNCTUAL PLUMBER in Canada was denied, but despite this, Clockwork expanded its franchise network in Canada using the PUNCTUAL PLUMBER mark.

Clockwork was the owner in Canada and the United States for the registered trademark TECHNICIAN SEAL OF SAFETY YOUR SYMBOL OF TRUST DRUG TESTED BACKGROUND CHECKED PROFESSIONALLY TRAINED. Clearview used a similar mark to this in association with its business.

Clearview and Giraffe sued Clockwork for trademark infringement and Clockwork counterclaimed alleging trademark infringement as well.  Before trial, the parties agreed to a statement of facts in which they agreed that they had infringed each other’s trademarks and that there had been no confusion or any loss as a result of the infringement.

However, both parties sought an award of damages for the infringement of the other party at trial. Clearview claimed $40,000 for “damages at large”, citing a number of cases to support its claim.

The Federal Court rejected the damage claims and observed that there is no concept in law such as “damages at large” and that evidence is required as to damages in order to succeed in such an award. As to the cases cited for an award, the Federal Court noted that these cases were default judgment cases or where the defendants did not otherwise participate in the court action so as to allow the plaintiff to present evidence of damages. In such circumstances, a lump sum award in the range of $10,000 to $15,000 was appropriate. However, in this case both parties did participate in the court action and present evidence at trial but did not produce evidence of damages suffered. To the contrary, the agreed statement of facts stated that the parties suffered no losses.

With respect to Clearview’s claim for punitive damages, the Federal Court did not find Clockwork’s conduct to be out of ordinary business practices and the evidence did not show the necessary elements for punitive damages of “high-handed, malicious, arbitrary or highly reprehensible conduct that departs to a marked degree from the ordinary standards of decent behaviour”.

9.     Infringement and Passing-Off

In Royal Pacific Real Estate Group Ltd. v. Dong, 2018 BCSC 1272, the court heard a case involving trademark infringement and passing-off.

This case involved the real estate brokerage business of Royal Pacific Real Estate Group Inc. (“PRE”), which had entered into a Sales Representative Agreement in 2012 with Vinh Phat Steven Dong whereby Mr. Dong was given a limited licence to use PRE’s registered trademark ROYAL PACIFIC and logo while carrying on business as a sales representative for PRE.

However, in 2012 Mr. Dong purchased the domain name royalpacific.co and in 2013 Mr. Dong launched a social media referral system for real estate professionals called Bliip Box using the domain name and PRE’s registered trademark ROYAL PACIFIC. None of these activities were consented to or authorized by PRE. PRE alleged that all the activities were outside Mr. Dong’s duties as their sales representative.

After Mr. Dong failed to transfer the domain name and cease the infringing activities, PRE terminated the Sales Representative Agreement and commenced litigation claiming trademark infringement and passing-off.

Mr. Dong defended the action on the basis that he did not infringe PRE’s trademark and that he had the consent of PRE to use it in his business.

The court found (at para. 104) that “no reasonable person in Mr. Dong’s position could have formed the opinion that [PRE] was consenting or acquiescing in the use of the Royal Pacific name or logo in connection with the promotion of his Bliip Box business or any other business of his apart from his duties under the [Sale Representative Agreement]”.

Accordingly, the court found against Mr. Dong for trademark infringement and passing-off and awarded $6,000 in damages. In this regard, it is noteworthy that despite the use of corporate entities in his business, the court found Mr. Dong personally liable for the conduct of infringement and passing-off on the basis that he engaged in “deliberate, wilful and knowing pursuit of wrongful conduct”, which was reinforced by evidence that showed Mr. Dong at no time differentiated his personal interests and those of his business entities.

10.   Depreciation of Goodwill

2018 saw a battle between battery giants comprising over 80% of the Canadian market as to the wording on the packaging of their products and whether this wording caused a depreciation of goodwill.

In Energizer Brands, LLC v. The Gillette Company, 2018 FC 1003, the Federal Court heard a motion for summary judgment by the defendants, The Gillette Company; Duracell Canada, Inc.; Duracell US Operations Inc.; and Procter & Gamble Inc. (collectively, “Duracell”) to strike allegations made by the plaintiffs, Energizer Brands, LLC and Energizer Canada Inc. (collectively, “Energizer”) in the Statement of Claim.

Energizer opposed the motion and submitted that the Federal Court should leave the issues for determination of the trial judge.

The case revolved around the specific allegations concerning the use on Duracell’s battery packaging of the words “the bunny brand” and “the next leading competitive brand”, and whether such usage was a depreciation of goodwill of Energizer and therefore a breach of s. 22 of the Trademarks Act as well as passing-off of Energizer’s battery products and therefore a breach of s. 7(a) and (d) of the Trademarks Act.

Importantly, Energizer did not have any registered trademark for the specific words ENERGIZER BUNNY, but Energizer had used these words in a trademark registration for a design mark and had filed a trademark application for these words as a word mark. Evidence was provided as to the extensive use of the iconic Energizer Bunny mascot since at least 1992 and Energizer had a number of registered trademarks for the Energizer Bunny mascot as design marks. The Federal Court found that the registered trademarks for Energizer Bunny design marks were famous marks. The Federal Court was satisfied that Energizer never used the words “the next leading competitive brand” on its packaging labels or displays.

Duracell admitted that the intention of the words “the bunny brand” and the “next leading competitive brand” was to refer to Energizer.

Duracell took issue with Energizer’s characterization of the scope of the claim of depreciation of goodwill under s. 22 of the Trademarks Act extending to the use of terms that are not registered trademarks on the basis that consumers understand that the use of these terms refers to registered trademarks. Duracell took the position that even if this was the test under s. 22 of the Trademarks Act, Energizer failed to produce any evidence of any such understanding by consumers.

Further, Duracell took the position that Energizer’s claims were disingenuous as the terms “the next leading competitive brand” and “the bunny brand” are comparative advertising terms common in the marketplace. Indeed, Energizer itself uses the term “the other leading brand” to refer to Duracell’s products on its own advertising.

In response, Energizer cited the Supreme Court of Canada decision Veuve Clicquot Ponsardin v. Boutiques Cliquot Ltée., 2006 SCC 23, for the authority that s. 22 of the Trademarks Act applies even though the use of the mark in issue may differ from the trademark as registered if it causes a connection or mental association in the mind of a consumer.

The Federal Court agreed with Energizer and stated that Duracell took too narrow a view of s. 22 of the Trademarks Act. The Federal Court held that the section also encompasses use of a mark that, while not identical to the plaintiff’s registered trademark, is so closely akin to the registered trademark that it would be understood in a relevant universe of consumers to be the registered mark. The scope of s. 22 of the Trademarks Act is to protect more than minor misspellings of a registered trademark.

Accordingly, the Federal Court dismissed Duracell’s motion to strike the pleadings of Energizer with respect to s. 22 of the Trademarks Act concerning the words “the bunny brand” used by Duracell on its packaging, as it found the somewhat hurried consumer would make a mental association between those words and the Energizer registered trademarks.

However, with respect to the term “the next leading competitive brand”, the Federal Court did not find that this would cause the somewhat hurried consumer to make a mental association with the Energizer registered trademarks. As a result, the Federal Court dismissed this allegation with respect to s. 22 of the Trademarks Act.

With respect to allegations of passing-off under s. 7(a) and (d) in Energizer’s pleading, the Federal Court for similar reasons made the same findings as with respect to s. 22 of the Trademarks Act.

It will be interesting to follow this battle of the battery giants as the litigation progresses and the scope of s. 22 of the Trademarks Act is further determined.

11.   Paramountcy

2018 was interesting in that the constitutional principle of paramountcy was raised as an issue in a trademark case.

In Royal Demaria Wines Co. Ltd. v Lieutenant Governor in Council, 2018 ONSC 7525, the court dealt with the problem of the legislative authority to regulate the term “icewine”.

Royal Demaria Wines Co. Ltd. (“Royal Demaria”) produced icewine in Ontario and was a member of the Vinters Quality Alliance of Ontario (“VQAO”), which regulates the icewine industry in Ontario pursuant to the Ontario legislation, Vinter’s Quality Alliance Act, 1999, S.O. 1999, c. 3 (the “VQA Act”). Under the VQA Act, the VQAO has the power to make rules, including prohibiting the use of certain established terms, descriptions, and designations, without VQAO approval. If a party wishes to use the term “icewine”, they must be a member of the VQAO and receive approval from VQAO.

Royal Demaria was a member of VQAO and received approval to sell their wines using the term “icewine”. However, Royal Demaria’s membership lapsed but the VQAO permitted Royal Demaria to sell its remaining inventory with the regulated terms for a certain period of time.

Subsequently, Royal Demaria obtained a registered trademark for “Canada’s Icewine Specialists”.

The Ontario Lieutenant Governor in Council passed a new regulation to the VQA Act allowing the VQAO to suspend or revoke approval for a wine if the manufacturer ceases to be a member of the VQAO. The VQAO undertook this action with respect to Royal Demaria.

In response, Royal Demaria brought an application before the Ontario Supreme Court of Justice that, in part, alleged that the VQAO’s authority pursuant to the VQA Act conflicts with the Trademarks Act and that pursuant to the constitutional doctrine of paramountcy, Royal Demaria was still able to use its registered trademark which includes the term “icewine”. To the extent that the VQA Act and associated regulations provided otherwise, Royal Demaria argued such provisions were inoperable.

Further, Royal Demaria argued that the VQA Act conflicted with the federal legislation, Canada Agricultural Product Act, R.S.C. 1985, c. 20 (the “CAP Act”), which also regulates the use of the term “icewine”. Royal Demaria took the position that since it was entitled to use the term “icewine” under the CAP Act, to the extent that the VQA Act prohibited Royal Demaria from using the term “icewine”, such provisions were inoperable.

In short, the contest between Royal Demaria and the VQAO was whether the provincial legislation of the VQA Act was inoperable in
the face of federal legislation of the Trademarks Act and CAP Act, pursuant to the constitutional doctrine of paramountcy in favour of federal legislation over provincial legislation.

In reviewing the law, the court cited the Human Rights Tribunal in Cardinal v. Rogers Communications Inc., 2017 HRTO 570, for the authority that “the Trade-marks Act does not provide a positive right to use a trademark. The fact that a trade-mark user is required to use a trade-mark to maintain its registration does not mean that the holder has a positive right to use the trade-mark in the face of other legislation that would prohibit that use” (at para. 76).

Accordingly, the court found no operational conflict between the Trademarks Act and the VQA Act in this matter. In this regard, Royal Demaria conceded there was no operational conflict between the CAP Act and the VQA Act.

The court stated that the federal and provincial legislation are compatible with one another in that the provincial act “furthers the consumer protection purpose of the Trademarks Act by ensuring that when wine manufacturers use certain terms that are also subject to provincial regulation, they are meeting quality standards” and that this “complements, rather than frustrates, the purpose of the federal legislation” (at para. 80).

As a result, the court found there was no conflict which would require application of the doctrine of paramountcy.

The author would like to acknowledge the assistance of Alexandra Madden, Clark Wilson LLP, in preparation of this paper.