Cancellation Proceedings Against A Registered Canadian Trademark: When Can 'Special Circumstances' Justify Non-use?

As in most jurisdictions around the world, a registered trademark in Canada is vulnerable to cancellation if it is no longer in use. In Canada, three years after registration, any person may request that a "section 45" notice issue, requiring the owner to provide evidence of use in order to maintain the registration.

Under new legislation that will likely come into force in 2017 (discussed in our March 31, 2014 IP Update), cancellation proceedings for non-use will become much more important. Since applicants will be able to obtain a registration without providing any information regarding use of a trademark, the ability to challenge a registration for non-use will be a valuable tool for those seeking to remedy situations where trademarks have been registered without any genuine use in the Canadian marketplace. At the same time, owners of registered trademarks will need to be aware of the requirements for proving use in the context of section 45 proceedings. Providing evidence of "special circumstances" justifying non-use is one option that can save a registered trademark from expungement.

The recent decision of the Federal Court of Canada in Gouverneur Inc v The One Group LLC ("Gouverneur"), 2015 FC 128, examined in detail the "special circumstances" that may justify non-use of a trademark in the context of a section 45 proceeding. Gouverneur concerned the trademark "STK", registered in 2008 in association with bar and restaurant services. At the request of Gouverneur, the Trademarks Office issued a section 45 notice to The One Group requiring proof of use of the STK trademark.

As no STK restaurant had ever been opened in Canada, The One Group sought to justify the absence of use by relying on business delays in expanding into Canada. For example, The One Group filed affidavit evidence that The One Group had conversations with a number of potential partners during the relevant period, in its attempts to secure an appropriate location to open a restaurant in Canada. These potential partners included the Gansevoort Hotel Group and the Thompson Hotel Group, both of whom had plans to open hotels in Toronto but ultimately both decided not to proceed with their Toronto-based projects. The One Group also filed an affidavit of the owner of the Gansevoort Hotel Group, who stated that he had discussions with The One Group in 2008 and that, if the Gansevoort Hotel Group project in Toronto had gone forward, he believed that an agreement with The One...