Charging Ahead: Canada's Federal Court Clarifies Trademark Rules For Comparative Advertising In Battery Giant Dispute

• Published date: 27 November 2023
• Subject Matter: Intellectual Property, Media, Telecoms, IT, Entertainment, Trademark, Advertising, Marketing & Branding
• Law Firm: Gowling WLG
• Author: Ms Charlotte McDonald and James Green

In the recent decision Energizer Brands, LLC v Gillette Company, 2023 FC 804, Canada's Federal Court has provided helpful guidance around the use of competitor trademarks in comparative advertising.

While this topic is frequently considered by brands and Canadian trademark practitioners, it is a subject that has been rarely adjudicated in Canada. The decision in Energizer therefore joins just a handful of Canadian cases to have considered these issues comprehensively, including with a notable discussion of expert evidence and remedies in comparative advertising cases.

Background to the dispute

From 2014 to 2017, Duracell began selling DURACELL-branded batteries in Canada featuring packaging labels or stickers that included the ENERGIZER or ENERGIZER MAX word trademarks, the phrase "the bunny brand," or the phrase "the next leading competitive brand," alongside various comparative claims touting the superiority of Duracell's products. The labels at issue are set out below:

Products featuring the ENERGIZER and ENERGIZER MAX word trademarks directly on packaging were only sold in limited quantities in Canada (less than 900 individual packages bearing the ENERGIZER MAX trademark). Duracell asserted that these packages were destined for other markets, but reached the Canadian market inadvertently due to an "unintended operational error." As noted by the Court, however, there was no evidence that Duracell made any efforts to recall these products from the Canadian marketplace, and had no quality controls in place to prevent this type of error in the first place.

Energizer sued, alleging that Duracell's use of the ENERGIZER word trademarks, "the bunny brand," or "the next leading competitive brand" violated s. 22(1) of the Trademarks Act by depreciating the goodwill associated with its registered ENERGIZER word trademarks and Energizer Bunny Design trademarks in Canada (shown below):

Energizer also alleged that the comparative claims made by Duracell were false and misleading and prohibited by s. 7(b) and 7(d) of the Trademarks Act and s. 52 of the Competition Act.

In the course of the proceedings, Duracell freely admitted that all of the various comparative claims were intended to reference and target its competitor, Energizer. Therefore the only issue for the Court was whether or not Duracell's activities constituted violations of the Trademarks Act and Competition Act, and if so, what remedies were appropriate.

Procedural history

Energizer's claim has a lengthy procedural history. Commenced in 2015, a two-week trial of the action was not heard until 2022, followed by the issuance of the Court's decision in 2023.

Prior to the trial of the action, the parties had contested a motion for summary judgment brought by Duracell, which sought to narrow Energizer's claims. Among other issues, Duracell argued that the phrases "the bunny brand" and "the next leading competitive brand" were not themselves registered trademarks of Energizer and therefore could not engage either s. 7 or 22(1) of the Trademarks Act. After an appeal of the first instance summary judgment decision to the Federal Court of Appeal, all of Energizer's trademark claims against the impugned packaging survived summary judgment and advanced to trial: Energizer Brands, LLC v The Gillette Company, 2018 FC 1003 and Energizer Brands, LLC v The Gillette Company, 2020 FCA 49.

The importance of context when considering the use of competitor trademarks

Section 22(1) of the Trademarks Act prohibits "use" of another's registered trademark in a manner that is likely to "depreciate the goodwill" associated with it. In contrast to "ordinary" trademark infringement, s. 22(1) can prohibit "non-confusing uses" and uses by another that do not distinguish the source of the goods or services.

The Canadian "depreciation" action is similar to "dilution" or "tarnishment"-type claims in other jurisdictions and is intended to prevent misuse of a brand owner's rights even in the absence of a likelihood of confusion that is required for "ordinary" trademark infringement or passing off claims.

Among other situations, s. 22(1) of the Trademarks Act may be engaged in cases of comparative advertising where a party uses a competitor's registered trademark on its own packaging or in advertising as part of comparative performance claims.

There have only been a small handful of cases where a claim under s. 22(1) of the Trademarks Act has been successfully prosecuted in the roughly six decades since the depreciation remedy became available in Canada. There have been fewer still arising in the comparative advertising context.

In Canada, the leading s. 22(1) case in the context of comparative advertising remains the 1968 Clairol International Corp. et al v Thomas Supply and Equipment Co. et al decision of the former Exchequer Court. In Clairol, the Court found that...