2019 Will Go Down In History As 'The Year Of Change' In Canadian Trademark Law Part III

In this last installment of Bereskin & Parr's summary of trademark developments in 2019, we review brand enforcement. During the year, Federal and provincial courts issued decisions impacting damage calculations, defences, and forum selection. While the Supreme Court of Canada did not weigh in specifically on trademark law, it did, as noted in Part II, address the standard of review on appeal, an issue that has already impacted appeals from the Registrar. Border enforcement of counterfeits seems to have been more active in 2019, with more use of Canada's Request for Assistance procedure permitting temporary seizure of suspected counterfeit merchandise. It will hopefully become even more effective with amendments to legislation permitting seizure of goods “in transit”, in compliance with the recently signed free trade agreement involving Canada, Mexico and the United States.

Summarized below are some of the most noteworthy decisions from the Canadian courts, with added comments on strategic lessons for brand owners and their advisors. We conclude with a comment about dispute resolution options, since it is important to select the most efficient and cost-effective solutions for resolving trademark and branding disputes in Canada.

1. FEDERAL COURT DECISIONS

   Sometimes expungement may be faster and easier than a non-use proceeding: While section 18 of the Trademarks Act permits the Federal Court to expunge a registration for abandonment (amongst other grounds), normally the two-part test of showing both non-use in Canada and an intent to abandon deters parties from using this option. Instead, non-use proceedings under section 45 of the Act, which assess only “use” and not “intent”, and are heard before the Trademarks Opposition Board, are much more common. In Beijing Jingdong 360 Du E-Commerce Ltd. v Yue Zhang, 2019 FC 1293, Mr. Justice Brown of the Federal Court inferred from the evidence that the registrant intended to abandon its mark, and ordered the trademark to be expunged. Beijing Jingdong—seeking expungement to remove a block to registration of its own mark—filed evidence suggesting there was no public display or advertising of the registered mark or evidence of sales, meeting the first criteria of “no use”. The registrant filed no evidence. The Judge was prepared to infer the registrant's intent to abandon from (i) the cessation of retail store activities since 2017, (ii) no corporate return filings, (iii) default in mortgage payments, (iv) disrepair and impending foreclosure of another business address, (v) abandonment of internet domain names, and (vi) inactivity on social media since 2016.

   Takeaway: The Court inferred intent to abandon from the facts, as opposed to requiring direct evidence of the registrant's intent to maintain (or not) use of its mark. Despite the apparent simplicity and summary nature of s. 45 non-use proceedings before the Registrar, with the right set of facts, expungement under section 18 may turn out to be more expeditious given the steps and timelines built into s. 45 proceedings. Here, obvious absence of business activity, as well as the normal elements of operating a business, suggested an intent to abandon a registered mark. For more details about this case, see here. If a registered trademark is infringing, it must be invalid: The Federal Court's decision in Wenger SA v Travelway Group International Inc., 2019 FC 1104 is the latest in a series involving two parties with registered design marks. The original dispute involved claims by Wenger of infringement and passing off based on its registered marks against Travelway, who had its own registered marks. Wenger also claimed that the Travelway registrations were invalid and ought to be expunged, based on Wenger's prior use. The Federal Court of Appeal (in 2017) held that Travelway's marks infringed Wenger's, passed off its goods as those of Wenger, and enjoined Travelway from using its infringing marks, but, somewhat surprisingly, did not order Travelway's registrations to be expunged. Instead, it referred the issue of expungement and damages back to the Federal Court. Before that Court, Travelway conceded that the registrations were invalid, but, possibly to diminish its exposure to damages, questioned the grounds of expungement. For example, it disputed that passing off was a ground of expungement. The Federal Court, per Justice St. Louis, agreed that a finding of invalidity was implied from the Federal Court of Appeal's findings, otherwise, the Travelway registrations would have been a complete defence to the passing off action (and also to the infringement claim, although that was not specifically stated). She also held that since Travelway accepted some of the expungement grounds, the Court would not resolve any disagreement on others, and specifically ordered expungement. Damages were not awarded, on the basis that once the Federal Court of Appeal ordered an injunction, Travelway stopped selling, and would have no profits relating to the infringing marks after that date. Prior to that date, Travelway's marks were registered, making damages for past actions inappropriate. However, the Judge left open the possibility of a reference for damages should her position on past damages be incorrect.

   Takeaway: Trademark practitioners were left wondering why a separate application was required to specifically expunge the infringing registered marks. This adds time, costs and complexity to a proceeding when an order for expungement was a possible outcome in the original action. While it is unusual for two parties with registered marks to find themselves before the Courts, this decision suggests that if a finding of infringement or passing off is made, it is not only implied that the other party's registration is invalid, but the...