In a recent decision, the Federal Court dealt with a claim brought by a U.S. based non-profit, Telugu Association of North America (the "Applicant"), against a Canadian federal corporation and various individuals (collectively the "Respondents" and each a "Respondent") for trademark infringement, passing off, and depreciation of goodwill. This case serves as a good reminder that trademark issues are not exclusive to the for-profit industry, and that care also needs to be taken in the non-profit world when incorporating and branding an organization1.
In its decision, the court noted that sections 19, 20, and 22 of the Trademarks Act, RSC 1985, c T-13 (the "Act") applied only to the trademark which the Applicant had registered in Canada, which was the word mark "TANA." The unregistered trademarks (two design marks and the word mark "TELUGU ASSOCIATION OF NORTH AMERICA") were to be analyzed under section 7(b) of the Act, which pertains generally to unfair competition.
The TANA trademark was registered in association with "social organization service, namely, services relating to preserving and propagating the Telugu cultural heritages and maintaining the identity of people of Telugu origin and to provide a forum for Telugu literacy, cultural, education, social, and charitable interactions among its members."
The Applicant submitted that they had used their various trademarks in Canada for some time (for instance, through social media accounts or printed materials disseminated in Canada) and that the Applicant had members located in Canada.
The Respondents, without the Applicant's permission, adopted and used in Canada: (i) the trade name TELUGU ASSOCIATION OF NORTH AMERICA; (ii) both of the word marks used by the Applicant; and (iii) a design mark that was very similar to one of the Applicant's design marks. The corporate Respondent used the tradename and trademarks in advertising its business and services, which overlapped with those of the Applicant. In addition, the two individual Respondents were previously extensively involved with the Applicant for many years, including as the Canadian regional representatives responsible for: (i) organizing the Applicant's activities within Canada; (ii) enrolling eligible persons within Canada as members of the Applicant; and (iii) raising funds for the Applicant. The two individual Respondents appeared on the Applicant's website, at conferences, and were known to the Canadian public as the representatives of the Applicant in Canada.
Section 19 of the Act grants the Applicant, as owner of the registered trademark, exclusive use of the TANA trademark in respect of the registered services throughout Canada. The court found that since the TANA mark used by the Respondents was identical to the Applicant's registered mark, and used in connection with identical services, the corporate Respondent infringed the Applicant's TANA trademark under section 19 of the Act.
While infringements under section 19 of the Act require identical use of a mark, infringements under section 20 of the Act only require use of a confusingly similar mark. The court outlined the following test for determining whether trademarks are confusingly similar: whether, as a matter of first impression, a casual consumer somewhat in a hurry who sees the respondent's trademarks, having no more than an imperfect recollection of the applicant's trademark, would be likely to think that the respondent's services would be from the same source as the applicant's, regardless of whether the services are of the same general class, having regard to all relevant surrounding circumstances as set out in the Act (such as the inherent distinctiveness of the trademark, the length of time it has been in use, the nature of the services, and the degree of resemblance between the marks)2. These factors weighed in favor of the Applicant since the Applicant's trademark was registered in Canada for over 10 years, it was well known by its Canadian members, there was clear overlap in the targeted communities, and the marks were identical. Another factor weighing in favor of the Applicant was the confusion that could stem from the past extensive involvement of the individual Respondents with the Applicant. As a result, the court found that the corporate Respondent infringed the Applicant's TANA trademark under section 20 of the Act through its use of a confusingly similar word mark and design mark.
The court also considered the Applicant's unregistered design marks and whether the Respondents' use of confusingly similar marks constituted passing off under section 7(b) of the Act. This section of the Act codifies the common law tort of passing off and requires the applicant to establish that:
- There is goodwill in the applicant's trademark;
- The respondent deceives the public by misrepresentation (this element will be met if the applicant shows that the respondent used a trademark that is likely to be confused with the applicant's mark); and
- The applicant has suffered actual or potential damage through the respondent's actions3
The court found that the Applicant had established a reputation and goodwill in each of its trademarks amongst Canadian consumers and that the mark used by the Respondents was likely to be confused with the Applicant's mark. While there was no evidence showing that the Applicant had lost members, sales or revenue as a result of the Respondents' use of their marks, the Applicant argued that it had lost control over of the use and commercial impact of its trademarks, and the court agreed that that was sufficient evidence to show that actual or potential damage had been suffered. The court concluded that the test for passing off had been met.
Finally, the court also found that the use of the registered trademark by the Respondents had the effect of depreciating the value of the goodwill attached thereto, contrary to section 22(1) of the Act. The Applicant referred to instances of the Respondents' use of its marks in an unprofessional manner and in ways that would not have been condoned by the Applicant. The court agreed that the trademark's association with such events damaged the reputation and goodwill of the Applicant and concluded that the corporate Respondent's activities depreciated the value of the goodwill attached to the trademarks.
The court awarded damages in the amount of $18,750 and costs in the amount of $13,000 to the Applicant.
While this is an extreme case of one organization offering identical services to an identical community using the same or similar marks as a pre-existing organization, this case serves as a good reminder that organizations need to be mindful of trademark issues when incorporating and branding, and that trademark owners have rights, regardless of whether their mark is registered.
Footnotes
1. Telugu Association of North America, a Corporation of the State of Maryland, USA v. Telugu Association of North America, a Canadian Federal Corporation with No. 1243934-4, 2024 FC 631.
2. Ibid at para 29.
3. Ibid at para 38.
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