Canada: Trademarks Year In Review — 2015

Last Updated: February 8 2016
Article by Robert A. MacDonald

This article summarizes some of the more noteworthy Canadian trademark law decisions and developments from 2015.

Interlocutory Injunctions Make a Come Back

In Reckitt Benckiser LLC v. Jamieson Laboratories Ltd, 2015 FC 215, affirmed 2015 FCA 104, the Federal Court (FC) granted, and the Federal Court of Appeal (FCA) upheld, an interlocutory injunction in a trademark case – the first time that has happened in over 15 years. The decision sheds light on the "irreparable harm" requirement of the test for an interlocutory injunction which has frustrated brand owners for years. 

Reckitt was looking to enter the Canadian market and it held discussions to this end with both Jamieson and Schiff Nutrition. In December 2012, it acquired Schiff and with it the registration for the trademark MEGARED for use with omega-3 krill oil.  While MEGARED krill oil had been sold in the US, it was not sold in Canada until December 2013.

Prior to 2013, Jamieson sold SUPER KRILL, also an omega-3 product. In January 2013, it decided to rebrand the product as OMEGARED and the rebranded product (both krill oil based and salmon/fish oil based) was launched in the summer of 2013 followed by a $4.6 million marketing campaign in early 2014.

In October 2014, Reckitt sued for trademark infringement and sought an interlocutory injunction before the FC.  In assessing whether to grant the injunction, the FC applied a tri-partite test: (1) is there a serious issue to be tried; (2) will the Plaintiff suffer irreparable harm if the injunction is refused; and (3) does the balance of convenience favour granting the injunction?

The FC accepted that there was a serious issue to be tried and went on to find that there was irreparable harm based on three factors:

  1. No methodology to quantify loss arising from Jamieson's conduct because Reckitt never had the proper opportunity to enter the market;
  2. Loss of distinctiveness in MEGARED; and,
  3. A quality concern because of the difference in product composition.

Finally, the FC was satisfied that the balance of convenience was in favour of granting the injunction.

While the facts of this case may be somewhat unique, the decision has generated considerable interest as it may signal that the FC is once again open for business when it comes to the issuance of interlocutory injunctions.

Metatags

In Red Label Vacations Inc. v. 411 Travel Buys Ltd., 2015 FC 19, aff'd 2015 FCA 290, the FC dealt with claims of passing off and trademark infringement, among others, when the Defendant used metatags (embedded words or phrases that act targets for search engine algorithms) that were the same as or similar to the Plaintiffs marks.  

Ultimately, the FC was satisfied that there was no likelihood of deception and, therefore, no passing off.  In respect of infringement, the FC found that there was no infringement because the metatags were not used or displayed in the performance or advertising of the services.  In passing, it noted that the US concept of initial interest confusion has not gained a foothold in Canada. More to the point, the FC noted that the use of metatags in a search engine merely gives consumers a choice of links that they may choose to follow – the metatags do not direct a consumer to a particular company.  Confusion must be assessed once that consumer reaches the Defendant's website. If there is no likelihood of confusion with respect to the source of the goods or services on the website, there is no passing off.

That said, the FCA, in upholding the decision, seemed to leave the door open noting that the use of a registered trademark in a metatag, in some situations, could give rise to a claim for infringement.

As an aside, the BC Supreme Court dealt with a similar issue in Vancouver Community College v. Vancouver Career College (Burnaby) Inc., 2015 BCSC 1470, and reached a similar conclusion: it is the "first impression" of the searcher that must be considered when assessing a likelihood of confusion.  The relevant "first impression" is made when the searcher reaches the Defendant's website, not before.

Opposition Proceedings

In an appeal of an Opposition Board decision, the parties may file additional evidence which must be assessed by the FC  to determine what impact, if any, it would have had on the Board's decision.  But what happens when the FC fails to assess the additional evidence?  The FCA addressed that issue in Cathay Pacific Airways Limited v. Air Miles International Trading B.V., 2015 FCA 253. 

In 2005, Cathay Pacific applied to register the trademark ASIA MILES in association with a range of goods and services including a customer loyalty program.  The application was successfully opposed by Air Miles.  A key issue before the Board was whether or not Cathay Pacific could rely on use of its mark in Canada by a licensee.  The Board said "no", concluding that there were doubts concerning the claim that use of the mark in Canada had been under license.

Cathay Pacific appealed the decision and tendered new evidence on the appeal to address the deficiencies highlighted by the Board.  However, the FC did not consider the new evidence nor the impact it would have had on the Board's decision below.  Rather, it held that the Board's decision was unreasonable on the evidence that was before the Board, and ordered the Board to reconsider the opposition .

Neither party was satisfied with this result and both appealed.  Upon appeal, the FCA found two key errors.

The first error was in not considering the additional evidence. The FC was required to consider the additional evidence and then determine whether it should decide the appeal by way of a fresh hearing on the extended record or by way of review of the Board's decision based on the record before the Board.

The second error was in concluding that the Board's decision was unreasonable.  There was no reason, on the record before the FC, to hold that the decision of the Board was unreasonable – the decision fell within the range of acceptable and defensible outcomes having regard to the facts and the law.

Since the FCA did not have before it an assessment of the additional evidence, it returned the case to the FC to have the evidence properly assessed.

Given the outcome, the FCA did not have to consider the decision of the FC to send the case back to the Board for rehearing – a rather unusual remedy in opposition proceedings and one which would have had significant ramifications if allowed to stand. 

Cancellation Proceedings

In cancellation proceedings, it is well established that there is a low evidentiary threshold to be met in order to maintain the registration.  However, in an unusual split decision, the FCA issued a reminder that there is a threshold and it must be taken seriously:  Alliance Laundry Systems LLC v. Whirlpool Canada LP, 2015 FCA 232.

Whirlpool owns the trademark SPEED QUEEN, registered in Canada for use in association with laundry washing machines and laundry dryers.  In response to a cancellation proceeding commenced by Alliance, Whirlpool was required to submit proof of use relating to the period October 5, 2008 to October 5, 2011.  The evidence filed consisted of:

  1. A statement that the mark had been used in Canada in the normal course of trade within the three year period;
  2. Photographs showing the mark prominently displayed on the front of the appliances;
  3. Invoices for sales in December 2011 (i.e. outside the material period) as representative of the way in which the mark was used on invoices within the material period; and,
  4. A statement that sales during the period 2001 to 2010 totaled $100,504.69 and a portion of those sales fell within the material period.

The Board was satisfied that the evidence showed use of the mark within the material period and maintained the registration. 

On appeal to the FC, the decision was maintained.  The FC noted the low evidentiary threshold that the registrant must meet in a cancellation proceeding and concluded that the Board decision was reasonable and should be maintained. The FC was satisfied that the assertions of fact contained in the affidavit, together with the photographs of the appliances themselves, was sufficient to support a finding of use within the material period.

On appeal to the FCA, a hearing was held and a short decision was issued from the bench.  Justice Nadon and Justice Trudel overturned the decisions below, but provided little guidance as to what they saw as being the deficiencies in the evidence:

[2]  In my view, the appeal should be allowed. I am satisfied that the evidence of Mr. English, the Director/Manager of Whirlpool Corporation, does not, even on a generous view of its contents, meet the low threshold of evidence required to show use of the trade-mark at issue in association with the respondent's goods.

[3]  To conclude that Mr. English's evidence was sufficient to show use within the meaning of section 45 ... is, in my respectful view, unreasonable.

[4]  Thus the Judge below ought to have intervened. Her failure to do so constitutes a palpable and overriding error which justifies intervention on our part.

We are left to speculate as to how the evidence did not meet the low threshold but, based on the arguments before the FC, it seems likely that the FCA wanted to see evidence establishing dates on which sales occurred during the material period (i.e. invoices) or at least an indication of total sales during the material period.

That said, while Justices Nadon and Trudel ordered the registration expunged, Justice Scott could find no palpable and overriding error in the assessment of the evidence and would have maintained the registration.  Again, no details were provided.

The FCA's decision provides owners of Canadian trademark registrations with little guidance as to the type of evidence needed to support a registration in a cancellation proceeding but it does serve as a useful reminder that, while the evidentiary threshold may be low, there is still a threshold to be met and proof of a transaction within the material period by means of invoices would seem to be essential.  An application for leave to appeal to the Supreme Court of Canada has been filed.Expungement

In Dr. Patrick Lum v. Dr Coby Cragg Inc., 2015 FCA 293, the FCA ordered the expungement of the registration of OCEAN PARK for dental clinics..

Cragg ran a dental clinic in Ocean Park.  He called his clinic Ocean Park Dental Centre and ultimately obtained a registration for OCEAN PARK. Lum opened a dental clinic in the same area and called his clinic VILLAGE DENTAL IN OCEAN PARK.  Cragg sued for infringement and Lum responded by seeking to expunge the registration for OCEAN PARK.  

Lum argued that the mark was clearly descriptive of the place of origin of the services.  The FC applied a two part test – the trademark must point to a place (and it was agreed by both parties that it did) and the place must be indigenous to the services in question.  Lum failed on the second part of the test.  The FC asked the question "If someone were to say 'I was in Ocean Park today,' a reasonable person would naturally say to herself 'he must have been there to get his teeth cleaned'." Given that there was no evidence to suggest that a reasonable person hearing "Ocean Park" would automatically think of going to the dentist, the attack failed.

The FCA took a different view of the matter and held that a reasonable person could only conclude that the words "Ocean Park" were prima facie descriptive of the geographic location (place of origin) where the respondent's services were actually provided. A service provider is not entitled to monopolize the name of a geographic location so as to prevent other service providers from using that word to actually describe where their own services are provided.

Quebec Language Law

AG Quebec v. 156158 Canada Inc., 2015 QCCQ 354, concerned the exemption for recognized trademarks under the French language requirements of the Charter of the French Language. Several businesses were charged under the Charter with respect to the use of English on store signage.  In response to the charges, the businesses argued that their use of English on signage was exempted as it was use of a recognised (common law) trademark.   The Court held that common law marks, and not only registered trademarks, enjoy the benefit of the exemption.  However, the Court held that "Italian Fancy Leather Goods" did not qualify as a trademark whereas "everything inside packed with pride" did noting that "The phrase rings like a slogan; it even rhymes". 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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