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Trademarks: 2023 Year in Review

01/23/2024

 – Mark Davis, Sebastian D. Beck-Watt

Intellectual Property

Happy New Year from the Cassels Trademarks team! 2023 (and early 2024) saw several notable developments in Canadian trademark law and practice. We have prepared a summary of some of the most notable updates and decisions.

Draft Regulations Clarify Some Bill 96 Amendments to the Charter of the French Language

2022 saw the passage of Québec’s “Bill 96” — An Act respecting French, the official and common language of Québec — which included a number of important changes to the Charter of the French Language (Charter) affecting brand owners. As we recently reported, on January 10, 2024, the Québec government released draft regulations (Draft Regulations).

The Draft Regulations answer some, though not all, of the questions raised by Bill 96. Most notably, they provide some updates on the interpretation of the rules applicable to product labelling and posters and commercial advertising visible from outside premises (Street Visible Signs).

Bill 96 introduced section 51.1 of the Charter, which requires that any trademark on a product be registered in order to avoid translation and, even if registered, if a non-French trademark contains “a generic term or a description of the product” those terms/descriptions must appear in French “on the product or on a medium permanently attached to the product.”

The most important takeaways in the Draft Regulations with respect to products are:

  • Non-French trademarks can be used on products if they are either registered or there is a pending application to obtain registration.
  • Non-French generic terms and descriptions of a product that are included in a registered trademark or a trademark that is the subject of a pending application must be translated into French, and the French translation must be at least as prominent as the non-French text.
  • Products that do not comply with these requirements can still be sold in Québec until June 1, 2027, provided they are made before June 1, 2025.

Nevertheless, uncertainties remain, notably in connection with the requirement to translate to French generic terms/descriptions of products included in a non-French trademark.

Public signs and posters and commercial advertising must be in French. Other languages are permitted to be displayed provided the French is “markedly predominant” to any other language. Bill 96 introduced section 58.1 of the Charter, requiring that a non-French trademark on Street Visible Signs be registered to avoid translation and that French be markedly predominant.

There are several key takeaways from the Draft Regulations:

  • Street Visible Signs include those that can be seen from outside a space, closed or not, or inside a shopping centre.
  • “Markedly predominant” means the French text has a much greater visual impact than the text in the other language (i.e., the French text in the same visual field as the non-French must be at least twice as large and must be of at least equivalent permanency and legibility).
  • A registered non-French trademark on Street Visible Signs must be “accompanied by” terms in French to ensure that French is still markedly predominant.
  • The markedly predominant analysis does not factor in certain elements, including certain basic information in French; a family name or a place name, where permitted to be in a language other than French; and a non-French trademark on public signs and posters and commercial advertising that are not Street View Signs.
  • Unfortunately, for section 58.1, the Draft Regulations do not define “registered trademark” as including pending applications as they do for section 51.1.

The Draft Regulations also confirm that information published on websites or posted on social media must be in French and on terms that are at least as favourable as the version in any other language. Further, they require that text displayed to users on integrated software be translated and that the French be at least as prominent.

The Draft Regulations are now open for a 45-day consultation period and are scheduled to come into force on June 1, 2025.

The Trademarks Office’s Recovery Plan, Amendments to Opposition and Section 45 Practice, and New Fees

CIPO’s Recovery Plan – Optimizing Turnaround Times

As part of its five-year 2023-2028 Business Strategy, the Canadian Intellectual Property Office (CIPO) identified as a priority the “Timely delivery of quality IP services through operational excellence and a modern client experience.”

Consistent with this initiative, beginning January 1, 2024, CIPO has updated its service standards for the examination of trademark applications. As of January 1, applications filed online will receive a first office action, either an approval notice or an Examiner’s Report, within 18 months where the application uses CIPO’s pre-approved list (PAL) of goods and services, and within 28 months where the PAL is not used.

These service standards represent a significant improvement over current timelines; in 2023, the delay in examination was over 50 months from filing. Applications filed using the international Madrid system will continue to benefit from the issuance of a first office action within 18 months.

As is clear from the above, CIPO encourages the use of the PAL and continues to regularly expand the list of pre-approved goods and services appearing in the Goods and Services Manual.

Amendments to Opposition and Cancellation Practice

The Trademarks Opposition Board (TMOB) announced changes to its practice, compressing the schedule in trademark opposition and non-use cancellation (Section 45) proceedings, effective December 1, 2023. These changes are intended to improve the timely and efficient disposition of matters and support the TMOB to provide timely hearing dates and decisions.

The changes reduce the available benchmark extensions of time for various stages of an opposition proceeding, as well as the time to file evidence of use in a Section 45 cancellation proceeding. We set out the amended extension timelines in our summary of the changes here.

Additionally, the updates reduce an opponent’s extension of time to cross examine an affiant by a month if it fails to complete a cross-examination by the deadline set after obtaining an extension of time to submit and serve its reply evidence.

The changes also introduce a new “acting diligently” section, applicable to both opposition and Section 45 proceedings. A party may be granted an extension of time where the party is able to demonstrate a consistent overall pattern of reasonable effort, promptness, and diligence in their efforts to meet an upcoming deadline.

CIPO Fee Increases Effective January 1, 2024

As of January 1, 2024, most trademark fees increased by 25%, including those for filing trademark applications, renewals, transfers of ownership, filing Statements of Opposition, and requesting Section 45 Notices. The new fees are as follows:

Fee Type 2023 Fee 2024 Fee
Filing $347.35 for the first class
$105.26 for each additional class		 $434.19 for the first class
$131.58 for each additional class
Renewal $421.02 for the first class
$131.58 for each additional class		 $526.28 for the first class
$164.47 for each additional class
Assignments/
Transfers of Ownership		 $100.00 $125.00
Statement of Opposition $789.43 $986.78
Section 45 Notice $421.02 $526.28

Limitations on Value of Co-existence Agreements and State of the Register Evidence in Confusion Analysis: Tweak-D Inc. v. Canada (Attorney General), 2023 FCA 238

In Tweak-D Inc. v. Canada (Attorney General), 2023 FCA 238, the Federal Court of Appeal (FCA) reinforced that the confusion analysis is first and foremost concerned with the consumer, regardless of any co-existence agreements between the parties. It also highlighted the limitations of state of the register evidence — when used, it should include a substantial number of registrations of analogous marks and evidence of their use to allow the decision maker to make inferences about the likelihood of confusion.

Tweak-D applied to register the trademark TRIBAL CHOCOLATE in association with a range of hair care preparations. The Registrar took the position that Tweak-D’s mark was confusing with the trademark TRIBAL, registered in association with, among other things, hair colourants and hair dyes. Tweak-D argued that two other TRIBE or TRIBAL marks were registered in association with similar goods: TRIBAL INDULGENCES and URBAN: TRIBE. Tweak-D also stated that it had a co-existence agreement with the owner of the TRIBAL mark. In refusing the application, the Registrar found that the state of the register evidence did not show a “clear pattern of registrability” of similar marks, and also noted the limitations of the co-existence in providing only contractual protection between the parties. Tweak-D appealed.

At the Federal Court (FC), Justice Manson upheld the Registrar’s decision, holding that:

  • the Registrar is not obligated to perpetuate past errors;
  • evidence of the state of the register must generally involve far more than three relevant registrations to be compelling;
  • there was no evidence of actual use of these marks that would help to demonstrate an absence of a likelihood of confusion in the marketplace; and
  • the Registrar did not err in its consideration of the co-existence agreement.

Tweak-D appealed to the FCA, which upheld the FC’s decision. The FCA agreed:

  • with Justice Manson’s comments on state of the register evidence, stating that, while such evidence may, in some cases, demonstrate a pattern of registrability of similar marks, inferences based on the register should only be drawn if there is a large number of relevant registrations and evidence of actual use;
  • that the Registrar’s past practice is not binding on it and that each application must be assessed on its intrinsic value, the proposed services, and its particular context; and
  • that the Court agreed that it was open to the Registrar to conclude that the co-existence agreement did not override the confusion analysis and stated that a registered trademark owner’s consent to the registration of a competing trademark is not dispositive of registrability.

Ultimately, the FCA endorsed the finding that as a matter of first impression and recollection the concurrent use of TRIBAL CHOCOLATE and TRIBAL for hair care products would likely lead to the inference that the products emanated from the same source.

Control Over Goodwill in a Trademark is Essential: Dragona Carpet Supplies Mississauga Inc. v. Dragona Carpet Supplies Ltd., 2023 FCA 228

A case involving rivalry in a family flooring business highlights the importance of maintaining control over the goodwill in trademarks and the relevance of commercial realities in disputes before the courts. In Dragona Carpet Supplies Mississauga Inc. v. Dragona Carpet Supplies Ltd., 2023 FCA 228, the FCA dismissed an appeal from a summary trial decision of the FC, which had dismissed the plaintiff’s claims for passing off and expunged the plaintiff’s trademark registrations.

What started as one flooring business owned by two brothers had grown successfully into two legal entities: one owned by brother Talal (Dragona Mississauga), and the other owned by his two nephews, Abad and Jamal (Dragona Scarborough). Both businesses sold flooring products under the DRAGONA mark, with locations in different parts of the Greater Toronto Area (GTA). At some point, Talal obtained several registrations for several DRAGONA marks. The litigation was prompted by the opening of a location in North York by Abad and Jamal. Talal claimed this was a breach of an unwritten agreement between Dragona Mississauga and Dragona Scarborough dividing up their territory in the GTA. Talal filed a claim for trademark infringement, depreciation of goodwill, and passing off. Abad and Jamal counterclaimed, seeking to expunge their uncle’s DRAGONA trademark registrations.

Despite significant factual disputes, the FC proceeded summarily and ultimately sided with Abad and Jamal, expunging the registrations held by their uncle and dismissing Talal’s passing off and depreciation of goodwill claims. On goodwill, the FC found that:

  • the use of the DRAGONA marks by Dragona Mississauga had at all material times been under licence from Dragona Scarborough, and so any goodwill in the mark belonged to the latter; and
  • the alleged agreement dividing the parties’ territory to be an “artificial construct” not affecting the actual goodwill.

On misrepresentation, the FC held that if two businesses rightfully use a trademark concurrently and in the same area, neither can restrain the other’s use. Despite any resulting confusion, there is no misrepresentation, and so no passing off — any confusion would be merely “one of the misfortunes which occur in life.” The Court also expunged the plaintiff’s DRAGONA marks on the basis that the applicant was not entitled to their registrations at the time of filing given Dragona Scarborough’s prior use.

The FCA dismissed the appeal. Dragona Mississauga argued that the trial judge erred in law in failing to identify the relevant market segment in which there was goodwill (the trial judge concluded that both parties sell to contractors, retailers, and the public). While noting that a separate analysis for a certain type of consumer will be necessary where the evidence shows that one group may clearly be confused while another may not be, the FCA found that was not the case here and that the trial court did not unduly restrict their analysis.

Dragona Mississauga also argued that the erred in its finding that there was adequate control by Dragona Scarborough over the DRAGONA marks via an oral licence between the parties, as required under section 50(1) of the Trademarks Act. The FCA disagreed, noting that while the FC reasons “swim dangerously close” to conflating the section 50(1) requirement that there be a licence to use a mark and a demonstration of direct or indirect control over the character of the quality of goods or services associated with the mark, there was sufficient evidence of control to support the FC’s conclusion. The FCA highlighted that the assessment of control is highly fact dependent.

Enhanced Remedies Available to Brand Owners in Counterfeiting Cases: Burberry Limited and Chanel Limited, et al v. Ward et al, 2023 FC 1257

We recently wrote about how Burberry Limited and Chanel Limited, et al v. Ward et al, 2023 FC 1257 marked a significant enhancement in the remedies available to rights-holders against purveyors of counterfeit goods.

The defendants imported, offered for sale, and sold a large number of counterfeit Burberry and Chanel goods on a large-scale through online channels, operating out of a residential location in Edmonton. The defendants continued their activities despite signing a cease-and-desist letter and relinquishing counterfeit goods detained by Canada Border Services Agency (CBSA). Among other things, they used fake names, rerouted deliveries, and used ever-changing social media profiles to mask their activities.

The FC granted default judgment for the plaintiffs, finding the defendants jointly and severally liable for trademark infringement and passing off contrary to sections 7(b), 7(c), 7(d), 19, 20, and 22 of the Trademarks Act and for violations of the Copyright Act contrary to sections 3 and 27. The FC granted declaratory relief and a permanent injunction restraining the defendants from infringing against the Burberry and Chanel trademarks and the Burberry copyrighted works. They also ordered the defendants to deliver and destroy any and all of their counterfeit merchandise.

The Court granted additional injunctive relief tailored to the nature and scope of the defendants’ importation and online business activities, including:

  • an order requiring the defendants to provide the names and contact information of the manufacturers and suppliers of their counterfeit merchandise;
  • an order restraining third parties with notice of the judgement from knowingly assisting the defendants and requiring such third parties to provide information regarding the defendants infringing activities; and
  • a rolling injunction for future shipments, which allows additional names used by the defendants, and shipments otherwise linked to the defendants, to be included in the delivery up from the CBSA without a new signed relinquishment or court order.

The Court also found that unlike in other recent counterfeiting cases, per incidence compensatory damages for online sales should not be given on a lower scale than what had previously been established and assessed the damages at the $6,000 retail per incident rate on the 1997 scale set by the FC, adjusted for inflation, multiplied per instance, and awarded to each of the rights-holders and Canadian distributors.

Total trademark damages for Burberry and Chanel were calculated as $395,000 and $394,000 respectively. The Court also awarded the statutory maximum damages for copyright infringement for a total award of $120,000 for the defendants’ bad faith conduct and punitive damages of $100,000 for the defendants’ evasive and intentional conduct and “considerable reach of her infringing activities.”

Comprehensive Discussion of Comparative Advertising: Energizer Brands, LLC v. Gillette Company, 2023 FC 804

In one of the most comprehensive discussions of comparative advertising under Canadian law, Energizer Brands, LLC v. Gillette Company, 2023 FC 804, the FC considered whether a comparative advertising campaign that made both direct and indirect references to a competitor’s brand violated the Trademarks Act or Competition Act. We wrote about that decision, involving leading consumer battery brands Duracell and Energizer, in detail here.

Duracell attached stickers to its battery packaging that claimed its batteries lasted longer than Energizer’s. Some of these stickers displayed Energizer’s registered trademarks ENERGIZER and ENERGIZER MAX (“15% Longer Lasting vs. Energizer”, “Up to 15% Longer Lasting vs. Energizer Max”), whereas others did not display Energizer’s registered trademarks but referred to Energizer’s products indirectly (“Up to 20% Longer Lasting vs. The Bunny Brand”, “Up to 15% Longer Lasting vs. The Next Leading Competitive Brand”).

Energizer brought a claim against Duracell under section 22(1) of the Trademarks Act, for depreciation of goodwill and relied on several statutory prohibitions on the use of false or misleading statements, including sections 7(a) and 7(d) of the Trademarks Act and sections 36(1) and 52(1) of the Competition Act. The FC held that:

  • Duracell’s stickers displaying the registered trademarks ENERGIZER or ENERGIZER MAX violated section 22(1), but that those that did not display the trademarks were not violations;
  • stickers with references to “the bunny brand” did not violate section 22(1) because there were too many additional mental steps that the average consumer would have to go through for these stickers to impact the goodwill of Energizer’s bunny registrations; and
  • stickers referring to “the next leading competitive brand” were not sufficiently similar to any of Energizer’s registered trademarks to satisfy the first step of the section 22(1) test since, while they might might depreciate the goodwill in Energizer’s business generally, there was no evidence that they would depreciate the goodwill in Energizer’s trademarks.

The Court relied on general marketing principles and its own common sense of how the average consumer of batteries would react to Duracell’s stickers and to what extent, if any, Duracell’s stickers would affect Energizer’s goodwill. It also noted the absence of direct evidence of how consumers in the relevant market are impacted by the advertisements.

On Energizer’s performance claims under sections 7(a) and 7(d) of the Trademarks Act and section 52(1) of the Competition Act, the FC found that they require an advertiser to have made a false or misleading statement and for that false or misleading statement to have been “material” in the sense that they could impact consumer behaviour, such as by influencing consumers to buy or use the advertised products or services. Here, the Court held that Duracell’s factual claims on its stickers were not false or misleading because Duracell’s data showed that the performance claims on its stickers were “reasonably attainable to customers in the circumstances.” In other words, they had a “reasonable basis” for making the performance claims. Even if they were false and misleading, the FC stated they were not materially so.

Arbitration Clauses Should be Honoured in All But the Clearest Cases: General Entertainment and Music Inc. v. Gold Line Telemanagement Inc., 2023 FCA 148

In General Entertainment and Music Inc. v. Gold Line Telemanagement Inc., 2023 FCA 148, the FCA upheld a FC decision that reinforced that courts are generally unwilling to depart from the terms of commercial agreements and will favour arbitration where parties have agreed to arbitrate their disputes. Except for clear cases where the question of an arbitrator’s jurisdiction is a pure question of law that requires nothing more than a superficial examination of the evidence in the record, a court will refer the matter to arbitration. We discussed the case in detail here.

The plaintiff (GEM Inc.) sued the defendants (collectively, Gold Line) for copyright and trademark infringement, as well as infringement of its rights under the Radiocommunication Act. Gold Line started arbitration proceedings in Bermuda and sought a stay of the Federal Court proceedings, both after filing its defence. The Case Management Judge dismissed Gold Line’s stay motion, but the FC overturned that decision and granted the stay. GEM Inc. appealed.

Where there is an arbitration clause in an agreement, any challenges to the jurisdiction of the arbitrator must first be referred to the arbitrator. Questions of fact or mixed fact and law related to the jurisdiction of the arbitrator must first be referred to the arbitrator, unless the challenge to jurisdiction concerns a question of law alone. Where the issue of an arbitrator’s jurisdiction requires anything more than a superficial examination of the evidence in the record, courts will normally refer the question to the arbitrator.

Here, the main issue was whether GEM Inc. was bound by the agreement that contained the arbitration clause—a matter of mixed fact and law and the issues could not be resolved by a superficial examination of the documentary proof. The FCA held that it was not appropriate for it to make a determination on the arbitrator’s jurisdiction and dismissed this ground of appeal.

Because Gold Line filed its defence and counterclaim to GEM Inc.’s FC claim about two weeks before it commenced arbitration proceedings in Bermuda and brought a motion seeking the stay, GEM Inc. argued that Gold Line was not entitled to the stay. The FCA held that the requirement that the party seeking the stay not have taken any steps in the court proceeding only applies where there is an applicable statutory provision stating as much. Here, the parties identified none and the FCA dismissed this ground of appeal.

The FCA also found that Gold Line had not waived its right to arbitration and, indeed, had specifically pleaded that the FC was not the proper forum and had sent a request to GEM Inc. for arbitration prior to filing its defence and counterclaim.

Importance of Use by the (Actual) Owner in the Face of Cancellation Proceedings: Kiva Health Brands LLC v. Limoneira Company, 2023 FC 774

In Kiva Health Brands LLC v. Limoneira Company, 2023 FC 774, an appeal from a Section 45 cancellation decision from the TMOB, the FC held that the TMOB erred in refusing to consider certain evidence assessing who the real owner of the registered trademark KIVA, the subject of the proceeding. The case is a reminder that, in a Section 45 proceeding, it is essential that evidence of use be evidence of use by the owner of the mark at issue. The TMOB will look at evidence relating to the ownership of a registration and will not rely merely on the information on the Register.

The cancellation proceeding was commenced at the request of Kiva Health Brands LLC (KHB). The Registrar accordingly issued notice to the owner of the registration, Associated Citrus Packers Inc. (ACP), requiring that it show use of the mark in the preceding three-year period (October 2016 to October 2019). In 2020, Limoneira Company (Limoneira) filed affidavit evidence of use of the mark, which stated that Limoneira had acquired the registration from ACP by way of assignment in 2013, as part of its acquisition of ACP pursuant to a Merger Agreement. In 2022, two weeks before the TMOB hearing, the Registrar recorded a transfer of the registration from ACP to Limoneira, with a change of title date of September 6, 2013. The TMOB found that the recordal of the transfer of ownership was conclusive of the ownership of the registration and that Limoneira had shown use during the relevant period and maintained the registration.

On appeal, KHB filed affidavit evidence relating to the ownership of the mark and contradicting Limoneira’s evidence of ownership and argued that the TMOB erred by relying on the recordal of the change of title instead of assessing the Merger Agreement. The parties agreed that the KIVA mark was in use during the relevant period. The issue was whether it was used by its owner.

With respect to the KHB affidavit, the FC confirmed that only the registered owner can file evidence in Section 45 proceedings, even on appeal, and disregarded the affidavit.

On the issue of the Merger Agreement, the FC stated that the TMOB should look at the quality of the evidence adduced by the parties’ knowledge of the true circumstances, i.e., the assignee and the assignor. While the FC agreed that Section 45 affidavits are to be afforded substantial credibility, it noted that the Merger Agreement contradicted the only paragraph in the owner’s affidavit addressing ownership. The FC found that the Merger Agreement as filed contained no assignment of the KIVA mark and that there was no evidence of a verbal assignment. The FC concluded, therefore, that the TMOB erred when it refused to consider the evidence filed by Limoneira in assessing who the real owner of the KIVA trademark was at the time the Section 45 notice was sent and during the relevant period. The TMOB’s decision was set aside, and the matter was returned to the TMOB for redetermination.

Puma Loses Final Appeal in Attempt to Register PROCAT: Puma SE v. Caterpillar Inc., 2023 FCA 4

Since 2012, Puma SE (Puma) has sought to register the PROCAT trademark in Canada in association with “footwear, namely athletic, sports and causal shoes and boots; headgear, namely hats and caps.” In Puma SE v. Caterpillar Inc., 2023 FCA 4, was the final bar to that attempt, with leave to appeal to the Supreme Court denied.

Caterpillar Inc. (Caterpillar) opposed the application on the grounds that it was confusing with Caterpillar’s registered trademark and not distinctive of Puma.

The TMOB rejected Caterpillar’s opposition, in part on the grounds that the use of the CAT mark by Caterpillar’s licensees was not deemed to be use by Caterpillar.  Section 50(1) of the Trademarks Act requires that a licensor have direct or indirect control of the character or quality of the goods or services with which the licensed mark is used by its licensees in order to benefit from the use of the mark. Caterpillar was found not to have the necessary control, and the TMOB held that the CAT mark would not necessarily be associated by consumers only with Caterpillar.

On appeal, new evidence triggered a de novo review and the FC reversed the TMOB’s decision. The Court found that the control requirements were satisfied and that the TMOB did not consider all of the licensing Caterpillar had with two of its licensees. The FC also held that the prefix PRO was laudatory and therefore the distinctiveness analysis should focus on the element CAT. As a result, the inherent distinctiveness of the marks at issue favoured Caterpillar. The Court held that there was a likelihood of confusion between the CAT and PROCAT marks.

In the appeal to the FCA, Puma argued that the FC erred in its assessment of the degree of resemblance between the parties’ marks, their inherent distinctiveness and extent they have become known, and the surrounding circumstances. The FCA rejected these arguments. It found that the judge had not erred in:

  • holding that the laudatory meaning of PRO did not make the PROCAT mark distinctive;
  • focusing on the similarities between the CAT elements, noting that despite the fact that marks consisting of commonly used words are deserving of a smaller ambit of protection, this generally requires some evidence that the word is so commonly used in the trade that a consumer will be sensitive to smaller differences in the mark, of which there was none here; and
  • not drawing an inference against Caterpillar given the lack of evidence of actual confusion. The FCA noted that there was no evidence of use of the PROCAT mark and that the burden to show common use of the term CAT with footwear and headgear was on Puma.

This case is a reminder of the importance of ensuring that trademark licenses meet the control requirements of section 50(1). It also highlights the effect of filing new material evidence on appeal, which can trigger a de novo review of the case.

When is Use of a Trademark not Use as Registered? North Brewing Company Ltd. v. DLA Piper (Canada) LLP, 2023 FC 1188

“Use” is fundamental to trademark law and to maintaining an owner’s trademark rights. In North Brewing Company Ltd. v DLA Piper (Canada) LLP, 2023 FC 1188, the FC considered the extent to which variations of a registered trademark used by the trademark owner will constitute use of the registered trademark. In this appeal from a Section 45 proceeding, the FC reversed the Registrar’s decision and maintained the registration, albeit amended, for the trademark NORTH BREWING.

NORTH BREWING was registered in association with the goods “Brewed alcoholic beverages, namely, beer, ale, lager, malt liquor; Promotional items, namely, beer glasses, mugs, bottle openers, key chains, clothing, namely, shirts, hats, jackets, and pants.” The trademark owner filed new evidence of use of the mark on appeal (the owner had not filed evidence in the underlying proceeding).

The FC considered whether the evidence showed use of the mark as registered. The traditional test is to compare the trademark as registered with the trademark as used and determine whether the differences between them are so unimportant that an unaware purchaser would be likely to infer that both identify goods having the same origin.

The FC divided this test into two parts:

  1. Examine whether the differences in the versions of the mark under consideration likely would deceive the public as to the origin of the applicable goods (or services); and
  2. If not, whether the mark was used in such a way that the mark did not lose its identity and remained recognizable in spite of the differences between the form in which it was registered and the form in which it was used.

The maintenance of the identity and recognizability of the mark and the preservation of dominant details are key considerations.

Here, the FC concluded that the added terms in NORTH BREWING COMPANY and NORTH BREWING CO. were inconsequential or minor additions, with the dominant features, the words North Brewing, maintained. Similarly, the FC held that the use of those terms with the addition of partially filled and filled glasses, shown below, also constituted use of the mark, as those design elements were mere descriptive additions.

However, the Court noted that it might have found to the contrary, were there evidence of third party brewed alcoholic beverages being sold.

On the other hand, the use of composite logo marks was held not to be use of NORTH BREWING:

The FC found that the logos involved the creation of a composite mark with a significant design feature, not just the addition of descriptive material. The registered mark was not being used as the dominant feature in these examples and was subsumed in the logos. The same was found in respect of a design that appeared on a shirt, showing NORTH BREWING COMPANY superimposed on a cloud beneath the unicorn design:

The FC found evidence of use of the mark with all the registered goods except malt beverages, beer glasses, shirts, pants, and jackets and maintained the amended registration accordingly.

Not only does this case reiterate the test for use of a mark as registered, but it serves as a reminder to brand owners to ensure they use their trademarks as they appear on the Register, and, as a corollary, apply to register their marks in the form they use or intend to use them.

Knowledge of Prior Trademark Rights May Support a Finding of Bad Faith: Cheung’s Bakery Products Ltd v Easywin Ltd, 2023 FC 190

We have previously written that a registered trademark can be invalidated if it is found to have been filed in bad faith. In Cheung’s Bakery Products Ltd v Easywin Ltd, 2023 FC 190 the FC expunged two trademark registrations owned by Easywin Ltd. (Easywin), a direct competitor of Cheung’s Bakery Products (Cheung’s Bakery) in the field of bakery goods and related services, including on the ground of bad faith. This case highlights the fact-specific and flexible interpretation of “bad faith” under section 18(1)(e) of the Trademarks Act and that knowledge of a party’s prior use and rights may in some cases suffice to invalidate a registration.

Cheung’s Bakery had operated a bakery in Vancouver, BC since 1974. It owned the following trademark registrations and applications:

Trademark Reg./App. No. and Date
TMA354194
March 31, 1989
TMA480506
August 14, 1997
TMA667403
July 12, 2006
2026952
May 6, 2020

Easywin and its related company Saint Honore Cake Shop Limited (Saint Honore) manufacture, distribute and sell bakery and other products in Hong Kong, Macau, China and foreign markets, including in Canada. Saint Honore also sells packaged foods. Easywin obtained the following trademark registrations in Canada:

Trademark Reg. No. and Date
TMA1044058
July 23, 2019
          TMA1044062
July 23, 2019

Easywin claimed that its marks had been used in Canada since at least as early as August 2020.

Cheung’s Bakery alleged that Easywin’s registrations were invalid on several grounds, and primarily on the basis that they were confusing with Cheung’s Bakery’s marks and that the applications were filed in bad faith. Notably, Cheung’s Bakery and Saint Honore had a previous dispute about similar issues that was resolved before Easywin filed its trademark applications.

The FC concluded that there was a likelihood of confusion between the marks, including because of the degree of resemblance, the inherent distinctiveness and extent known, and length of time in use, of the Cheung’s Bakery marks, and the nature of the parties’ goods and services and channels of trade. In particular, the FC reiterated that the relevant average Canadian consumer for assessing confusion is “persons who are likely to buy the goods or services associated with the trademarks in the particular market in which those goods or services are offered”. As a result, in this case the average consumer was one who can read and understand Chinese characters, albeit with varying degrees of fluency because “these are the persons who are more likely than not to buy the goods or services in the Chinese-Canadian market in which the parties offer their bakery goods and services”.

The FC also found that the Easywin registrations were invalid as having been filed in bad faith, because “Easywin simply ignored the very facts that should have given it pause before filing the trademark applications.” In other words, Easywin was familiar with Cheung’s Bakery and their market, and was aware of the prior dispute between Cheung’s Bakery and Saint Honore. The FC concluded that Easywin could not have been satisfied that it was entitled to apply for the trademarks at issue.

Cessation of a Business Evidence of Intention to Abandon a Trademark: Travel Leaders Group, LLC v. 2042923 Ontario Inc. (Travel Leaders), 2023 FC 319

A trademark registration is invalid where it has been abandoned by the owner. In Travel Leaders Group, LLC v. 2042923 Ontario Inc. (Travel Leaders), 2023 FC 319, the FC expunged the trademark registration for TRAVEL LEADERS, owned by 2042923 Ontario Inc. (Ontario Inc.) on this basis. Notably, the FC was prepared to infer an intention to abandon the trademark from the cessation of Ontario Inc.’s business. It also considered the types of activities that can amount to “bad faith.”

In 2004, Ontario Inc. decided to offer travel agency services in association with the name TRAVEL LEADERS and obtained a business licence and the domain name travelleaders.ca. Travel Leaders Group, LLC (TLG) applied to register the trademark TRAVEL LEADERS in 2008. Ontario Inc. opposed the application. TLG did not contest the opposition, but offered to purchase the TRAVEL LEADERS trademark for $4,000 plus a license back to Ontario Inc. The offer was rejected and the TLG application was abandoned in 2010.

Also in 2020, Ontario Inc. applied to register the same mark, which was not opposed and was registered in 2011. Later that year, TLG offered to purchase the registration for $25,000, plus the right to operate as a TLG member agency in Canada, or to purchase the business for fair market value. Ontario Inc. countered, asking for $850 million. In 2015, Ontario Inc. advertised their registration for sale, for $80 million, and specifically referenced TLG’s inability to operate in Canada without the mark. In 2017, TLG began these proceedings, seeking, among other things, the expungement of the Ontario Inc. registration.

The bar to proving abandonment of a registered trademark is a high one—there is a presumption of validity for registered trademarks. TLG thus had to show that Ontario Inc. (1) did not use the trademark in Canada; and (2) intended to abandon the trademark. An intention to abandon may be inferred from a person’s failure to use the mark for an extended period of time but an owner’s intention to abandon is a factual determination in which a long period of non‑use is not necessarily required. The FC noted that the fact that the cessation of a business lead to the natural and probable inference that it is no longer using and has abandoned its trademark.  It also found that just because a business maintains signage and has minimal business activity is not necessarily sufficient to establish use and show that the mark has not been abandoned.  The Court found that use of a trademark in association with services requires the services be offered and the trademark be communicated to consumers.

Here, the FC found that there was copious evidence pointing to Ontario Inc. being an inactive business and that Ontario Inc. had furnished no evidence of its use of TRAVEL LEADERS in association with the performance of its travel services, including after the proceedings were commenced. Its evidence was of only de minimis business operations, and the FC held that the mere existence of signage with the mark “does not establish that it associates in clients’ minds Ontario Inc.’s travel services with the TRAVEL LEADERS trademark.” The FC found this evidence of non-use fully supported an inference that Ontario Inc. intended to abandon the trademark.

The FC found that there was insufficient evidence in the record to warrant a finding of bad faith on the part of Ontario Inc. on the relevant date — i.e., on the date it applied for the registration. However, the FC noted that “Ontario Inc.’s later actions can reasonably be characterized as conduct in bad faith,” including its actions intended to harm TLG’s business. The FC also dismissed Ontario Inc.’s counterclaim for, among other things, infringement of the TRAVEL LEADERS registration, depreciation of goodwill, and passing off.

In addition to expunging the registration, the FC awarded TLG injunctive relief, nominal damages of $2,000, and punitive damages of $20,000 for Ontario Inc.’s “planned, malicious and high‑handed” actions and motive to harm TLG.

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