2019 was a year to remember in Canadian trademark law primarily because, after a delay of five years, Canada finally implemented the amendments to the Canadian Trademarks Act introduced in 2014. Pursuant to the amendments, Canada joined the Madrid Protocol and the Nice Classification System. At the same time Canada dropped use as a requirement to obtain registration. The amendments to the Act were significant and far reaching – and much has been written about them. Suffice it to say that everyone is still coming to grips with the changes.
While the amendments to the Act were front and centre for everyone in 2019, we should not lose sight of the Federal Court and Federal Court of Appeal – they were still hard at work and some of the decisions issued in 2019 were of particular importance for brand owners. The courts gave guidance on a number of key issues particularly in relation to non-use cancellation. The following five decisions are particularly instructive for brand owners in Canada:
1. Some times you need use in Canada sometimes you don’t: Sadu Singh Hamdard Trust v. Navsun Holdings Ltd.
The Federal Court of Appeal issued two decisions relating to the trademark AJIT DAILY – one relating to an application to register the mark and one relating to passing-off. In the passing-off case, the Court ruled that the goodwill needed to support an action for passing off may exist in Canada by virtue of the reputation of the plaintiff even though the plaintiff may not have used the mark in Canada. However, in the opposition appeal, the Court reminded us that the distinctiveness needed to support registration must be acquired though use of the mark in Canada. So, Sadu Singh was successful in part in the passing-off action but failed to obtain registration for its mark. An interesting distinction to keep in mind.
2. Cancellation of a registration may not cancel all rights to a mark: Alliance Laundry Systems LLC v. Whirlpool Canada LP
We have watched over the past few years as a cancellation for non-use proceeding relating to the SPEED QUEEN mark worked its way up to the Supreme Court of Canada. Once the registration was cancelled, Alliance entered the Canadian market with its own SPEED QUEEN product. However, the cancellation of the registration did not mean that Whirlpool had no common law rights in the mark – it did and it was able to successfully enforce those rights against Alliance. A useful reminder that a cancellation proceeding is really only part of the picture.
3. You don’t need to have turned a profit for your trademark to be considered in use: Cosmetic Warriors Limited v Riches, McKenzie & Herbert LLP
In another non-use cancellation proceeding, the Federal Court ordered the registration cancelled – “given the absence of profit, the promotional and de minimis nature of the sales to employees, and the fact that the Respondent is not normally in the business of selling clothing” the mark was not used in the normal course of trade. However, the Federal Court of Appeal disagreed. Use of the mark is not synonymous with commercial success of the product – there is no requirement to show that sales generated a profit. Leave to appeal to the Supreme Court of Canada was denied.
4. Bricks and mortar not necessary but benefit in Canada is: Live! Holdings LLC v Oyen Wiggs Green & Mutala LLP
Still on the subject of cancellation for non-use, the Federal Court addressed the issue of what constitutes use in Canada in the absence of “bricks and mortar”. The Court reviewed the case law relating to services and determined that use required some tangible and meaningful benefit in Canada. Thus, an online service that enabled Canadians to book a hotel in the US did not provide a tangible benefit in Canada – “holding a reservation for a hotel in the US is not a tangible and meaningful benefit enjoyed in Canada, despite that it may ensure that a room will be available upon arrival. The tangible benefit occurs only once the person leaves Canada and travels to the US and fulfills the reservation”. The case is under appeal and we will anxiously await a decision from the Federal Court of Appeal.
5. It’s cheaper to update owner information on your registration then to have to prove use: Reusable Bag Industries Pty Ltd. v Gaisin
The Federal Court provided a useful reminder to keep title to your registration up to date. A non-use cancellation proceeding was commenced but the owner of the registration did not get notice of the proceeding until after the decision issued because title to the registration had not been kept up to date. The owner was forced to appeal the decision and file fresh evidence on the appeal. The mark was shown to be in use and the registration was maintained whereupon the registrant asked for its costs of the appeal – which would typically be awarded to the successful party. The Court said no – “The Applicant has requested costs of this appeal but I am not disposed to award them. This appeal would not have been necessary if RBI had kept its Canadian registration up-to-date. It should not now benefit from a problem of its own making”. A useful reminder that it is much cheaper to simply keep your registration up to date then to pay court costs at a later date.
While the amendments to the Act stole the thunder in 2019, we should never overlook what the courts have to say – and they will no doubt have lots to say as parties turn to the courts seeking guidance on the amended Canadian Trademarks Act.
By Robert A. MacDonald, Golwing WLG
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