One of the Defendant companies had been a 30%  owner  of one of the Plaintiff companies and a Letter of Intent had been executed setting out the basic relationship whereby the Plaintiff s were to distribute valves manufactured by the Defendants in China.  The parties had also executed a Consignment Agreement which the Court found to be a critical document since clause 12 specified that the intellectual property arising by virtue of the Agreement was deemed to be equally owned by the parties. 

For marketing purposes, the Plainitffs adopted the trademark FUSION and proceeded to market wares manufactured by the Defendants, as well as wares sourced from a different manufacturer, using the trademark.  However, following the breakdown of the relationship, one of the Defendants registered the trademark.  The disputes arising between the parties were eventually settled under an Alberta Queen’s Bench action, which left only the intellectual property issues unresolved. The Plaintiffs had also applied to register the trademark, but the Defendants successfully opposed the application on the basis of alleged prior use. 

In light of the Consignment Agreement, the Federal Court concluded that neither the Plaintiffs nor the Defendants had a right to register the trademark.  Since neither party was prepared to acknowledge joint ownership, FUSION was essentially “poisoned” as a viable trademark. 

The Court also concluded that the Defendants could not claim first use on the basis that the Plaintiffs were distributors of a product the Defendants manufactured off-shore (similar to the conclusion reached in the 1989 case, Lin Trading Co. v. CBM Kabushiki Kaisha). Under the Consignment Agreement the Defendants retained ownership of the goods until ownership was transferred to a third party and therefore there could be no use of the trade-mark by the Defendants in Canada.

The Plaintiffs’ request that they be substituted as the registered owner of the trademark was also denied, in light of the equal ownership referenced in the Consignment Agreement, but also because the Court had no such jurisdiction.  The Court also found that the Defendants had mislead the Trademarks Office when they sought to register FUSION, having specificially omitted any reference to section 12 of the Consignment Agreement in the Affidavit filed with the Office.  Following General Motors of Canada v. Décarie Motors Inc.  the Court found there was a material misrepresentation which meant the registration could be invalidated, even in the absence of a fraudulent intent.

Finally, with regard to section 7(a) of the Trade-marks Act, which provides that no person shall “make a false or misleading statement tending to discredit the business wares or services of a competititor”, the Court found that the Defendants had mislead a client of the Plaintiffs by suggesting that the Plaintiffs’ manufacturing facility in China had been closed down.  However, the issue of damages was to be determined in a further hearing and the Court left open the possibility of further evidence from the Plaintiffs’ client.

Thus, neither party was entitled to the registration of the trademark and the issue of damages pursuant to section 7(a) was left open for a further hearing.

(“the Standard Lager Mark”) a beer continuously sold in Canada since 1926, but almost exclusively in the province of Manitoba. Anheuser-Busch, the Applicant before the Opposition Board, had two labels that were registered as trade-marks:

(“the Registered Anheuser-Busch Marks”). The opposition arose when Anheuser-Busch sought to register an “updated” version of its two previously registered marks (“the Proposed Anheuser-Busch Marks”).

The Federal Court reviewed the litigation history arising in respect of the earlier registered marks, including a 1986 Federal Court of Appeal decision, Carling O’Keefe Breweries of Canada Ltd. v. Anheuser-Busch Inc., which concluded that the Standard Lager Mark and the Registered Anheuser-Busch Marks were confusing, that there was some sort of impropriety when the Standard Lager Mark was originally registered in 1929 since it was inspired by and designed with knowledge of the BUDWEISER label, but Carling (Molson’s predecessor in title) could rely on the equitable defence of laches and thus there was no basis for expunging either the Standard Lager Mark or the Registered Anheuser-Busch Marks.

The Opposition Board allowed the registration of the Proposed Anheuser-Busch Mark as it applied to clothing since Molson had not established that the ambit of protection accorded to the Standard Lager Mark included wares other than beer. With regards to use in association with beer the Opposition Board determined that it could limit the scope of protection afforded the Standard Lager Mark since the Court of Appeal had determined it was wrongfully obtained. Thus, Molson’s opposition with regards to use in association with beer was rejected.

The Federal Court disagreed and allowed the opposition with regards to use in association with beer. The Court was particularly concerned that the Opposition Board had exceeded its jurisdiction, since it is limited in an opposition proceeding to determining if a trademark is or is not registrable. Thus, for example, if there is a confusing mark on the register, the new mark cannot be registered. However, if the existing registration of an invalid trademark is interfering with the registration of a new trademark, it is up to the applicant for the new mark to take the necessary steps, usually an expungement application to the Federal Court, to get the register corrected. In an opposition proceeding, the validity of an opponent’s registered mark is not in issue.

The Federal Court was concerned that the Opposition Board could not limit the ambit of protection afforded the Standard Lager Mark on the basis that the Court of Appeal had questioned the lawfulness of the registration. Indeed, the Court of Appeal had not found the registration of the Standard Lager Mark was unlawful, but had instead found that the registration was not a nullity. Thus, Molson was relying on a valid registration and the question to be answered was whether the Proposed Anheuser-Busch Mark was confusing with the Standard Lager Mark. The Federal Court concluded they were confusing, applying the test in section 6(5) of the Trade-marks Act and giving particular weight to two surrounding circumstances: (1) that the Court of Appeal had found the Registered Anheuser-Busch Marks confusing; and (2) an acknowledgement in the Memorandums of Fact and Law filed by both the parties that the marks were confusing.

The beer wars continue and we may very well see an appeal.

STENNER was registered as a trademark in the Canadian Intellectual Property Office (“CIPO”) in 2005.  The Application, filed in 2003, was objected to by the CIPO Examiner on the basis that the mark was primarily merely the surname of an individual.  That objection was overcome when the Applicant provided sufficient evidence of secondary distinctiveness – i.e. evidence that the mark was recognized as the source of the Applicant’s financial services and newsletters, as much or more than than it was recognized as a surname.  The Application was not opposed by anyone.

The Federal Court found that the evidence established that the registered owner had used the STENNER mark on and off over the years, commencing in the late 1980′s, though rarely, if ever, as a standalone mark and periods of use had been punctuated by lengthy periods of non-use.  In the early 2000′s, the principal of the registered owner had a bitter falling out with his two children who were also in the financial services industry and who also used the STENNER name in association with the performance of their services.  That falling out had been the subject of a separate lawsuit, however the Court in those proceedings specifically declined to rule on the validity of the trademark registration for STENNER.

The application to expunge the registration for STENNER was based on various grounds, but the argument that won the most favour with the Federal Court was that the mark was no longer distinctive (assuming it ever had been), due to extended periods of non-use, lack of use as a standalone mark and the results of expert evidence on the recognition of the mark as a source indicator for the registered owner’s services.   The expert evidence put forward showed that the mark was recognized by virtually no one outside of the Lower Mainland of British Columbia and even within that region, the recognition factor was very low.  Also, the use of the same mark by the two children in the same industry and geographic area also pointed to a lack of distinctiveness.

In the end result, the Federal Court ordered the expungement of the registration for the STENNER mark.  There is no indication yet of whether an appeal will be filed, though the deadline for doing so is fast approaching.

In addition, both of the earlier decisions stated that in order for prior use of a mark in Canada to be grounds for successfully expunging a registration, such prior use must have occurred in the same geographic area where the applicant used its mark; otherwise there could have been no likelihood of confusion at the time the application was filed.   In coming to the latter conclusion, both Courts appear, at least with respect to an action for expungement of a registration, to have imported into the test for likelihood of confusion, the test for common law passing off.   Given this, the decision of the Supreme Court of Canada on this issue will be eagerly awaited by practitioners.

On appeal to the Federal Court the central issue was whether Tucumcari had filed sufficient additional evidence regarding its licensing arrangements, which involved a licensee and sublicensee, so as to establish that it had control over the character and quality of the wares. The Respondent agreed that sublicensing was permitted under section 50(1) of the Trade-marks Act, but argued that the indirect control contemplated by the Act required an express condition in the sublicensing agreement requiring the registrant to determine whether the character and quality of the wares are maintained. The Court disagreed, holding that the  registrant’s control of its contractual rights through the intermediary was sufficient and express language was not required.

The Court was also satisfied that an express provision authorizing sublicensing was not required and, even if Tucumcari had not specifically agreed to the sublicensing, there was evidence it had acquiesced. Moreover, a provision that allowed the sublicensee to ultimately buy the trade-mark did not mean Tucumcari was not using the mark in the interim, since it retained ownership and had an interest in preserving the goodwill until such time as it ultimately assigned its interests.

The applicant appealed to the Federal Court pursuant to section 56 of the Act.  The applicant was allowed to present new evidence and the appeal was treated as a new hearing.  The applicant’s new evidence consisted of the affidavits of five clients, which all showed the transfer of wares with the trademark.  The affidavits also attached invoices proving the transfers took place.  The Court found that this new evidence went beyond mere allegations of use, noting that the applicant was only required to produce “evidence of a single sale, whether wholesale or retail, in the normal course of trade” so long as the sale was not deliberately manufactured or contrived to protect the registration of the trademark.  In applying the principle of use “in the normal course of trade”, the Court also noted that good faith is presumed when there is no evidence challenging the affiant’s credibility.  Thus, the Court found in the applicant’s favour, something the Board might have done if better evidence had been presented at first instance.

If research discloses that an applied for trademark consists of a professional designation, the examiner will apply a first impression test to determine whether a consumer would assume the goods and services are produced by a professional with a designation similar to the applied-for trademark and if so, the trademark will be unregistrable, being clearly descriptive of the persons employed in the production of the wares and services.  The addition of an abbreviation, acronym or initial to the professional designation will not make the trademark registrable.

A trademark that consists of or contains an abbreviation, acronym or initial will be considered unregistrable if considered as a whole and if as a matter of first impression the abbreviation, acronym or initial is clearly descriptive or deceptively misdescriptive of the wares and services.  Moreover, the addition of an abbreviation, acronym or initial to a clearly descriptive word or phrase will not render it registrable as a trademark.

The changes arise in light of a recent Federal Court decision, College of Traditional Chinese Medicine Practitioners and Acupuncturists of British Columbia v. Council of Nature Medicine College of Canada, that considered some 39 trademark applications and registrations containing abbreviations, acronyms and initials and allegedly confusing with certain professional designations.

The Plaintiff, a provincial body set up under British Columbia’s Health Professions Act to regulate the practice of traditional Chinese medicine and acupuncture, granted and controlled the use of various titles, including Doctor of Traditional Chinese Medicine (Dr. TCM) and Registered Acupuncturist (R. Ac.).  The Defendant was set up as a non-profit company under federal legislation and created educational programs and examinations in the field of traditional Chinese medicine which were offered by private schools.  The Defendant also proceeded to apply for and register trademarks for the various educational programs and licence graduates of the programs to use the trademarks.  The trademarks the Defendant registered included D.C.T.M. (DOCTOR OF TRADITIONAL CHINESE MEDICINE), REGISTERED D.P.C.M., D.P.C.M. (DOCTORATE IN PHILOSOPHY IN CHINESE MEDICINE), R. AC (REGISTERED ACUPUNCTURISTS).  There were a total of some 39 marks, some registered, some only applied for, although 24 of the marks were not ruled on by the Court because they were not set out in the Statement of Claim.

Extensive evidence was lead regarding the regulation of traditional Chinese medicine and, more importantly, the licences granted by the Defendant, the Defendant’s assertion that the Plaintiff was infringing its trademarks and the confusion arising in respect of the use of the trademarks by the Defendant’s licencees.

The Court agreed that the matter could proceed by summary trial and accepted the Plaintiff’s argument that the marks were contrary to section 12(1)(b) of the Act, being clearly descriptive or deceptively misdescriptive at the time they were applied for.  The Court noted that terms such as Dr. TCM and D.T.C.M. had been used in Yellow Page advertisements since 1995 to refer to a doctor of traditional Chinese medicine and trademarks such as REGISTERED D.P.C.M. were so similar that they remained descriptive, particularly when REGISTERED had been disclaimed.

Moreover, the Court was not convinced that the acronyms served to distinguish any of the trademarks because there was also a descriptive phrase dominating the trademarks. The Court concluded that an everyday user, faced with the acronyms and descriptive phrases, would conclude that doctors and acupuncturists delivering services in association with the trademarks were regulated as a professionals.  Thus, the marks were not registrable.  The Court then went on to find that the marks were contrary to section 10 of the Act (which prohibits adoption as a trade-mark of a mark that has by ordinary commercial usage become recognized as designating the kind, quality, quantity, destination, value, place of origin or date of production of any wares or services), as well as 7(d) of the Act (which prohibits a person from using a description in association with wares or services that is false in a material respect or likely to mislead the public).

Thus, the Defendant’s attempt to circumvent a provincial regulatory body by registering and licensing trademarks that appeared to be professional designations was not acceptable as a matter of trademark law.  To ensure that the Trade-marks Office does not approve similar marks in the future, CIPO is seeking to clarify in the proposed Practice Notices just when professional designations and acronyms will be contrary to section 12(1)(b).

This is not the first time CIPO has looked at the issue of Canada acceding to the Madrid Protocol.  Five years ago a similar consultation took place.   In response to a request for input, CIPO received feedback  from the Intellectual Property Institute of Canada and from the International Trademark Association, though no further action was taken by CIPO at that time.

According to CIPO’s backgrounder to the current consultation, the intervening five years have seen important trading partners such as the United States join both the Madrid Protocol and the Singapore Treaty.  As a result, according to CIPO, Canada is increasingly seen as isolated in its trademark laws and practices.

As many readers will be aware, the Madrid Protocol permits an applicant from a member country to file an application in its home country to register a trademark and to simultaneously file an international trademark application, under which the applicant designates other member countries in which the Applicant wishes to protect its mark.  Registrability of marks covered by Madrid Protocol applications is still subject to the national laws of each member country that an international application is filed in.

The Singapore Treaty amends and expands on the Trademark Law Treaty of 1994 and aims to simplify and standardize many formalities and procedures relating to the administration of trademarks.  It also covers new forms of marks, such as holograms, sound marks and smell marks.  As with the Madrid Protocol, the Singapore Treaty does not affect substantive national trademark laws, such as the grounds on which applications for registration may be refused.

CIPO’s backgrounder seems to be slanted towards approval of both the Madrid Protocol and the Singapore Treaty, on the basis that they are necessary to align Canada’s trademark laws and procedures with “modern business practices”.   Whether the benefits of these two treaties would outweigh the potential negative consequences and whether such benefits would accrue more to foreign applicants than to Canadian trademark owners, remains to be seen.  While there are notable exceptions, Canadian brand owners tend not to file internationally as much as those from many other developed countries, such as the U.S. and the EU, and depending on various factors, the potential cost savings of filing under the Madrid Protocol generally arise only if an international application designates more than three member countries at the same time.

CIPO has asked for comments on its consultation to be submitted by March 15, 2010.

Currently, responses to examiner’s reports are due within six months of the date of issuance of the report.  Under the changed practice, CIPO will grant an applicant one extension of time up to a maximum of six months to respond to the examiner’s report, “if the request is justified”.

Once 12 months from the date of the examiner’s initial report has expired, CIPO will require the applicant to demonstrate exceptional circumstances to justify why it is not possible to respond to all objections raised or requests made in the examiner’s report.

CIPO has provided a list of examples of what could constitute an exceptional circumstance to justify a further extension of time, as follows:

• recent change in trade-mark agent for the applicant
• circumstance beyond the control of the person concerned (e.g. illness, death, bankruptcy or other serious or unforeseen circumstances)
• recent assignment of the trade-mark
• certified copy of the corresponding foreign registration (for applications including a claim of registration and use abroad) is not available as the foreign application has not issued to registration
• if a cited co-pending and confusing application is the subject of an opposition proceeding initiated by the applicant or if the application is going to be abandoned with the next two months
• if the cited registered mark is subject to a summary expungement proceeding (under Section 45 of the Trade-marks Act) initiated by the applicant
• if the applicant is negotiating for the consent from the holder of a cited official mark

It appears from the text of the practice notice that this list is illustrative and not exhaustive.

While this streamlining should result in faster prosecution of trade-mark applications, the shortened time frames will mean that applicants and their agents must act quickly to prepare full responses to examiner’s reports.

However, the practice notice perhaps raises more issues than it answers.  For example:

• When seeking the first six month request, CIPO indicates it will be granted where “the request is justified” – yet it is not clear what will constitute a justifiable request under this new regime.
• CIPO has not indicated what time frame it considers as “recent”  (with respect to a change in agent or an assignment of mark).
• Section 45 proceedings are often initiated by agents (on behalf of applicants) rather than the applicant itself, in order to shield the identity of the agent’s client.  However, it remains unclear if CIPO will grant a further extension on the above criteria if the Section 45 proceeding does not list the applicant as the requesting party.
• It is not clear if CIPO will require “proof” of negotiations between an applicant and the holder of an official mark for consent to the registration of the mark.
• There seems to be an element of subjectivity raised by the wording  “could amount to an exceptional circumstance”.

As well, examiner’s reports are still paper-based and delivered by postal mail.  If streamlining is indeed the goal, streamlining the method of delivery of examiner’s report  to include email would aid in the process.

Time will tell if this new practice will result in more effective prosecution of applications or if this “streamlining” will cause more problems than it is intended to remedy.

On appeal to the Federal Court, Trial Division, the Applicant filed further evidence and the Court, applying a standard of correctness, concluded that use of the mark in association with each of the listed wares had been shown. In doing so, the Court was also satisfied that the sale of “stoles” constituted the sales of “mufflers” and that the sale of “bed covers” or “blankets” constituted the sale of “throws”. The Applicant provided evidence explaining its use of the terms.

The Court referred to the 2006 decision of Levi Strauss & Co. v. Canada (Registrar of Trade-marks) which held that a section 45 proceeding is intended to be a simple, expeditious procedure to get rid of “deadwood” and is not intended to be a meticulous verbal analysis and stated, “where the language used to describe a ware has changed with common usage, but the use of the trade-mark has continued, the use of the outmoded word will be allowed to remain”.

The Court was also satisfied that while the use of the trademark deviated slightly from the trademark as registered, the differences were unimportant and would not mislead an unaware purchaser.