(“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.

Those of us who provide trademark prosecution and counselling services—and particularly those of us who work with clients that have multi-national trademark portfolios—know that clients are sensitive to developments not only in Canadian practice, but also in other key markets around the world.  Many of my clients were concerned about a line of United States cases, decided over the last several years, that regarded innocent filing errors in applications, renewal forms, and other correspondence with the US Patent and Trademark Office as attempts to perpetrate a fraud on the Office, justifying refusal, expungement, or some other highly punitive penalty.  These decisions had effectively broadened the notion of “fraud” on the USPTO to include innocent mistake and negligence.

However, it appears generally acknowledged that this trend halted in 2009 with a decision titled In re Bose Corp. In the most general terms, Bose served to restore the concept of fraud on the Office to a more conventional meaning.  Now, only if an applicant knowingly makes a false, material representation with the intent to deceive does their action rise to the level of fraud, meriting harsh punishment.

However, I am becoming concerned we may be seeing the start of a trend in Canada toward permitting challenges to applications for alleged lack of good faith akin to what our US friends experienced pre-Bose.  In decisions released over the last two years, the Canadian Trade-marks Opposition Board appears to be breathing new life into the ability of opponents to challenge applications on the basis of good faith.

Now, to be clear, opposition proceeding claims that an application has not been filed in good faith, and therefore does not conform to the requirements of the Trade-marks Act, are nothing new.  Many opponents’ counsel have been inserting claims to this effect in statements of opposition for years, if not decades, almost as a matter of course.  Seemingly frustrated by the claims’ prevalence in the 1974 case of Sapodilla Co. Ltd. v Bristol-Myers Co. (15 C.P.R. (2d) 152), the Canadian Trade-marks Opposition Board queried whether such claims actually created a valid ground of opposition, and expressed regret that the provision was so commonly asserted in opposition proceedings where “it serves no purpose other than to clutter up the proceedings.”

What is new, however, is that the Board now appears increasingly willing to entertain claims challenging the truthfulness of statements contained in applications, and to refuse applications where the Board has suspicions about the verity thereof, independent of other grounds.  Two recent decisions of the Board illustrate this.

The first—Cerveceria Modelo, S.A. de C.V. v. Marcon (2008, 70 C.P.R. (4th) 355)—was issued in 2008.  There, the Board upheld an opposition brought by Cerveceria Modelo against Marcon’s application to register the trademark CORONA for use in association with both a variety of beverages and with beverage bottling services.

Marcon’s application was opposed on several grounds, including alleged confusion with Cerveceria Modelo’s familiar CORONA trademark. Additionally, the opposition was also founded on Marcon’s alleged failure to comply with s. 30(i) of the Trade-marks Act, which provides that an application must contain a statement that the applicant is satisfied that he “is entitled to use the trademark in Canada in association with the wares or services described in the application.”

Certain trademark commentators, including the esteemed Hugues Richard, have previously suggested that the requirement to include this statement in an application amounts to a representation on the part of the applicant to the public that the application has been submitted in good faith, and that the applicant approves of the application.

In Marcon, relying upon an earlier decision purported to suggest that s. 30(i) challenges could be successful in “exceptional circumstances”, the Board concluded that the opponent had adduced sufficient evidence to properly support its allegation relating to s. 30(i), by:

• establishing that Marcon had filed applications for a number of other allegedly well-known marks contemporaneously with or following his application for the CORONA mark; and
• pointing out that when initially filed, Marcon’s CORONA application claimed beer, just as was claimed in the CORONA registration owned by the opponent, even though the statement was later revised to remove these directly overlapping wares, which Marcon claimed under cross-examination to have been included by mistake.

In addition, the Board appeared to draw a negative inference from Marcon’s failure to have approached a manufacturer to produce many of the proposed wares he desired to offer in association with the trademark.  In the Board’s view, these facts together constituted the sort of “exceptional circumstances” to put the good faith “entitlement” issue into question, requiring Marcon to establish grounds for his belief in his entitlement.

Despite some efforts to establish his bona fides as an entrepreneur (from which, it appeared, he hoped the Board would infer his genuine interest in using the marks), Marcon failed to persuade the Board of his good faith belief.  Instead, the Board queried “how any reasonable person would be satisfied that he/she was entitled to file trademark applications for over 18 arguably well known marks for arguably related wares and/or services.” Of course, this is not the proper analysis: the consideration ought to focus on the good faith entitlement assertion for the particular application in which it appears—and in this regard, it is worth noting that the Examiner initially assigned to consider Marcon’s application didn’t think its claims to be entirely unreasonable, approving the application for advertisement, which ultimately lead to the opposition proceeding.  In any event, the Board found the opponent’s arguments persuasive, and Marcon’s application was refused.

This decision is somewhat troubling insofar as the rights of applicants are concerned: arguably, it has the effect of requiring an applicant to have a knowledge of the niceties of trademark law—and specifically,  questions around confusion and scope of protection—that the legislation does not require.  Under cross-examination Marcon made clear that he did not believe that he should have the right to claim CORONA in association with beer, but believed that no one would be confused as to the source of CORONA-branded water, juice or even wine products he might offer.  In this light, it appears Marcon turned his mind to the entitlement issue, and came to a (seemingly) honest, but (arguably) incorrect, conclusion.  Nonetheless, the Board concluded that Marcon’s actions brought his good faith into question, tainting the application.

In this way, the decision appeared to open the door to a slightly different line of attack against applications than had previously been available, imposing a standard not merely of the presence of the required s. 30(i) statement, but extending to the need for both some evidence of the bona fides of the applicant’s belief in his entitlement, and the correctness of that belief in entitlement at law.

The Board seemingly took another troubling step in this direction in a subsequent decision— FreemantleMedia North America Inc. v Wright Alternative Advertising Inc. (2009 77 C.P.R. (4th) 311).  In this case, the Board considered Freemantle’s opposition to Wright’s application to register the trademark CANADIAN IDOL.  Freemantle is the North American affiliate of the co-owner of the British Pop Idol television series, which developed the popular American Idol, Canadian Idol and World Idol television programs.

Wright, a marketing and advertising agency, had been engaged by Sears Canada to assist in the development of a national youth talent competition which it proposed be called CANADIAN IDOL.  The competition was to involve an open audition call: the top 20 performers from each region would compete at their local Sears store, with shoppers choosing the winner. Sears representatives suggested to Wright that they would like to see the competition receive some television exposure.

Wright filed an application to register CANADIAN IDOL for use in association with “entertainment services namely, television talent show, talent search show, national contest searching for talented individuals, and talent search services.” Freemantle opposed the application on a variety of bases, including that the application did not conform to s. 30(i) of the Act.

Relying upon its own decision in Marcon, the Board took the position that it could look behind an applicant’s s. 30(i) statement in “exceptional circumstances”, like those where “there is evidence of bad faith on the part of the applicant.”  However, the Board then redefined the test to an examination of “whether there was sufficient evidence …to suggest there may have been bad faith” [emphasis added]—arguably, a lower standard.

In applying the test to the facts at hand, the Board redefined it further.  The Board noted testimony by a Wright employee, unfamiliar with the niceties of Canadian trademark prosecution, who advised that a reference to television talent shows was inserted in the application before she had discussed the topic with Sears.  As the employee explained, the hope was simply that Sears would be happy and that Wright would get the work, and that she did not have any specific thoughts about making television programs at that time.  The Board took this as evidence that “raise[s] suspicion about the Applicant’s good faith in submitting the application”—again, a different standard than first expressed—and therefore required Wright to establish grounds for its belief in its entitlement as expressed in s. 30(i).

As was the case in Marcon, Wright failed to convince the Board of its bona fides with respect to its belief in its entitlement to use the CANADIAN IDOL mark in Canada in association with the claimed services. Despite testimony that its investigations led it to believe that no “Canadian Idol” program would be introduced in Canada—and in fact, no public announcement had been made in this regard prior to the time of Wright’s filing—the Board concluded that Wright had not sufficiently established that it was satisfied that it was entitled to file the application for CANADIAN IDOL, nor that its intentions were bona fide when it did so.

This decision too is troubling: in recasting the threshold to be met to put s. 30(i) into question from “exceptional circumstances” where there is “evidence of bad faith” to one merely requiring evidence that “raise[s] suspicion about the Applicant’s good faith”, the Board appears to have materially lowered the standard required to bring s. 30(i) into play on its own.

Whether these decisions are mere anomalies, or whether they signal the start of trend where the bona fides of an applicant’s s. 30(i) claims will, in and of themselves, regularly be in play remains to be seen.  Certainly the success of the opponents in these two cases will do nothing to stem the practice of “cluttering up the proceedings” with the sort of s. 30(i) challenges that the Board itself complained about in the Sapodilla decision, so many years ago.

Yet, neither of these two recent decisions appears to be well-supported by jurisprudence.  Somewhat curiously, both the Marcon and Freemantle cases in fact rely upon the Sapodilla decision to support the approach of alleging defects in the bona fides of an applicant’s s. 30(i) as a legitimate and independent ground of opposition.  Review of Sapodilla suggests that such an interpretation is not clearly tenable.

Moreover, the Federal Court has previously endorsed the view that an opponent cannot properly successfully oppose an application by merely challenging the verity of an applicant’s s. 30(i) claim without some other shortcoming first being found.  As the court put it:

Scholarly analysis also appears to indicate that unless a person alleging the validity of a trade mark can base his argument on other grounds, he cannot rely on s. 30(1)(d)(i) [as it then was, now s. 30(i)] simply by saying that the applicant does not have the right to use the trade mark. That is simple common sense. If the applicant is entitled to registration of his trade mark in accordance with the relevant provisions of the Act, a fortiori he is entitled to say that he is the person authorized to do so. (Optagest Canada v. Services Optometriques (S.O.I.) (1991), 37 C.P.R. (3d) 28 at 32)

In any event, until the Board eschews this approach—or until there is new jurisprudence from the Federal Court clearly pronouncing on the ability of an opponent to challenge the bona fides of an applicant’s s. 30(i) claims independent of other grounds—it remains clear the allegation will stay a part of many statements of opposition.  The trend, though, is unfortunate: it serves to introduce more indeterminacy in the law, which will make pre-filing application due diligence slower and more expensive, and will most likely claim self-represented filers as victims.

In the interim, applicants ought to be reminded of the need to take care in confirming both the propriety of their belief to their entitlement to use a trademark in Canada in association with prescribed wares and services, and to ensure the availability of evidence to support such a claim.

The Opposition Board member found that “vibe” was not inherently distinctive, relying on an earlier decision of the Court, Vibe Ventures LLC v. 3681441 Canada Inc.  The Board also found that VIBETRAIN consisted of two ordinary dictionary words that were disconnected from their respective meanings and which, when juxtaposed, were inherently distinctive.  The Board member referred to the Oxford English Dictionary for the definition of “vibe”.  Before the Court, the  Opponent argued that other dictionaries did not define “vibe” and it was therefore not an ordinary dictionary word.

On appeal, the Court found that “vibe” may no longer be inherently distinctive, but through continuous use it had become suggestive of the Opponent’s magazine, something the Board had acknowledged in its decision.  The Opponent also submitted new evidence on the appeal to show that the word “train” suggested a series of musical performances, that no other magazine titles in Canada began with VIBE and that VIBE had been used in Canada with programs, websites, books and recordings related to music.

The Court concluded there was a broad overlap in the music, culture and clothing wares and services that the VIBE and VIBETRAIN trademarks sought to identify, as well as similar channels of trade, since both targeted people with an interest in music, entertainment and culture.  Thus, there was a likelihood of confusion for a “casual consumer somewhat in a hurry”.

The Opposition Board had concluded that “the distinctiveness of the Opponent’s mark was sufficient to negate the distinctiveness of the applied for mark”.  Notwithstanding additional evidence filed on appeal, the Federal Court agreed, noting the similarity of the wares and services, and that the only difference between the Applicant’s mark, CANNABIS CULTURE SHOP, and the Opponent’s mark, CANNABIS CULTURE was the use of the word “shop”, which was not in itself inherently distinctive.

The Opposition Board had also refused FRIENDLY STRANGER CANNABIS CULTURE SHOP on a balance of probabilities, since it resembled the Opponent’s mark and both parties targeted the same market.  However, the Federal Court was satisfied that this mark should be allowed since additional evidence shifted the emphasis to the words “Friendly Stranger” from “Cannabis Culture Shop”.

The Court also considered section 6(2) of the Trade-marks Act, which provides that a trademark causes confusion with another trademark if the use of both trademarks in the same area would lead to the inference that the wares or services associated with the trademarks are marketed by the same person.  On this point the Court referenced the finding in United Artist Corp. v. Pink Panther Beauty Corp. [1998] F.C.J. No. 441 that “the question posed by [section 6(2)] does not concern the confusion of the marks, but confusion of goods or services from one source as being from another source”.  Although the wares of the parties were similar, the Court was satisfied there was also no confusion as to source since the marketplaces were very different.  Friendly Stranger Cannabis Culture shop had a strong presence in Toronto, while the Opponent’s marketplace was Vancouver.  Moreover, the internet sales were only a small fraction of what was sold in the stores and the domain names of the parties were very different.  Presumably, if the Opponent had had a stronger internet presence the Court might have found confusion on the basis of section 6(2) since it would have then been difficult to differentiate the “marketplaces” in Vancouver and Toronto.  However, this was not the case.

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.

In the course of the earlier expungement action, the Appellant’s predecessor in title to the trademark had, on appeal, produced evidence of a sale of 41 cases of CASTILLO rum on November 21, 1994 to the Ontario Liquor Control Board. Thus, in Quarry Corp. v. Bacardi & Co (1996) 124 F.T.R. 264, the Court concluded the transaction was in the normal course of trade and set aside the Registrar’s decision to expunge. On further appeal, the Federal Court of Appeal upheld the Trial Division’s decision, but commented that a “single sale divorced from all context” would not normally be sufficient use. In other words, a single sale contrived to protect a trademark was not sufficient.

On October 26, 2005, at Bacardi’s request, the Registrar again issued a section 45 notice requiring evidence of use within the previous three years. The manager of Jose Cuervo’s legal department provided an affidavit dated June 23, 2006 attaching the invoice of November 21, 1994 evidencing the sale to the Ontario Liquor Control Board and an invoice of November 24, 1999 evidencing 100 cases sold to the Alberta Liquor and Gaming Commission (neither sale being within the 3-year limit). The manager also deposed that the Appellant had undertaken a new marketing strategy in 2002 to incorporate a secondary trademark, COHIBA, into the label (owned by a related company), but the co-branding strategy had triggered a worldwide dispute, including threatened litigation that was not yet resolved.

The Registrar concluded there was no use within the requisite 3-year period and, while threatened litigation might be a reasonable excuse for a short period, six years was not reasonable. Relying on the reasoning in Scott Paper Ltd. v. Smart & Biggar (previously discussed) the Registrar concluded that there were no special circumstances.

On appeal, Jose Cuervo provided an affidavit stating that it had resumed use of CASTILLO on August 4, 2008 and attached an invoice for a consignment to the Alberta Liquor and Gaming Commission. The Court noted that the standard of review should be resonableness. The new evidence was not such that it would have affected the Registrar’s decision (being evidence of use well after the 3-year limit) and therefore the standard of review was not correctness.

The Court affirmed the Registrar’s decision, noting that Jose Cuervo produced no evidence as to why the co-branding could not be suspended, stating that it ws “illogical to suspend the use of a valid Canadian trade-mark because of a threat of impending trade-mark litigation with respect to a secondary trade-mark”. The decision to suspend use of CASTILLO in Canada was voluntary and a trade-mark dispute over a secondary mark did not constitute exceptional circumstances.

On appeal, the Federal Court recently considered two of the applications agreeing with the Opposition Board and dismissing the appeals. At issue were a mark for the colour green (Application 1,187,491) and a mark for the colour greyish-green (PANTONE 5635C) (Application 1,205,529), both as applied to fastener brackets, claiming use in association with fastener brackets for attaching deck boards.

The Opponent filed additional evidence on its appeal to the Federal Court, but the Court did not agree there was evidence of third parties in the Canadian marketplace using grey or khaki green on items for purposes that included deck building. Thus, there was no confusion.

The Court also refused to consider the Opponent’s arguments concerning non-distinctiveness, since those allegations were raised for the first time on appeal, and “while a party is open to raise new evidence on appeal, it cannot raise new issues”.

The Court also concluded that the mark was not purely or primarily functional. The Opponent, based on certain statements made during the course of cross-examination, argued that green or greyish coating was added to products primarily to reduce corrosion. However, the Court noted that the coating could be produced in many colours and, following the decision of the Federal Court in Smith, Kline & French Canada Ltd. v. Registrar, concluded that “colour applied to the whole of the visible surface of an object can function as a trademark”.

The clothing line in question features various items in the national colours of Canada, the U.S., Sweden and Germany. Notably, the Canadian hoodies feature gold zippers while the zippers in the colours of other countries have silver zippers. Lululemon lost out to the Hudson’s Bay Company in its bid to be the official apparel supplier to the Canadian Olympic team for the Summer and Winter Games during the period from 2006 to 2012.

Readers of the Knowledge Bytes newsletter will be aware of the legislative hammers that are at VANOC’s disposal to enforce its trademark rights against both would-be infringers and ambush marketers alike. These include the Olympic and Paralympic Marks Act, which contains lists of specific words that either can’t be used at all, or that can’t be used in combination with other specific words–for example the combination of “Vancouver” and “2010″.

Lululemon, for its part says that it carefully did its legal homework and selected a brand that doesn’t fall afoul of any legislative prohibitions. VANOC appears to have conceded this point, indicating that it will use non-legal tactics to attempt to persuade Lululemon to back off.

As the start of the Winter Games quickly approaches, VANOC will no doubt have its hands full with other creative ambush marketing ploys. VANOC has published spectator guidelines about what will not be tolerated at the Winter Games event venues, including “Ambush marketing of any kind, distribution of leaflets, pamphlets and non-approved publications, promotional material and wearables”.

Given the new evidence the appeal proceeded on a de novo, or fresh, basis and applying the test for confusion set out in sections 6(2) and (5) of the Trade-marks Act, the Court concluded there was confusion, such that WISE GOURMET could not be registered.  Although GOURMET was not inherently distinctive, its use over time had gained the Opponent a certain reputation in relation to its magazine and associated wares and services.  The mark had also been in use for a long time, while the Applicant was a new entry into the market.  The nature of the wares and services and the nature of the trade were similar.  There was also a fair degree of resemblance between the two marks since the Applicant had incorporated the Opponent’s mark, GOURMET, in its entirety, into WISE GOURMET.  While the first word, ”wise”, helped distinguish the marks to some degree in terms of sound and appearance, the idea suggested by both marks was similar.

Although it chose not to participate in the appeal, the original Applicant had submitted a letter to the Court advising that the Opponent would soon cease publication of its magazine, something the Opponent did not deny.  The Court declined to accept the letter as evidence since it was not submitted in affidavit form, but did note that the fact publication might cease in future did not affect its decision given the relevant dates.  Following the recent case of Masterpiece Inc. v. Alavida Lifestyles Inc. the Court noted that the relevant date for assessing confusion under the applicable sections of the Act was the date of disposition of the matter (either by the Court or the Registrar) and therefore a future date was not a relevant fact.