The Fight Over Depreciation Of Goodwill In Canada Keeps Going And Going '

• Published date: 03 June 2020
• Author: Mr Noelle Engle-Hardy and Mark Biernacki
• Subject Matter: Intellectual Property, Media, Telecoms, IT, Entertainment, Trademark, Advertising, Marketing & Branding
• Law Firm: Smart & Biggar

This article was originally published by the World Trademark Review on March 25, 2020. It has been republished with permission.

While comparative advertising can be an effective tool for comparing and contrasting competing brands, there are limits on what claims can lawfully be made. One such limit is provided by Section 22 of the Trademarks Act, which prohibits use of "a trademark registered by another person in a manner that is likely to have the effect of depreciating the value of the goodwill attaching thereto."

The plain language of Section 22 of the Trademarks Act suggests that a claim for depreciation of goodwill may be limited to use of registered trademarks. However, in Veuve Clicquot Ponsardin v Boutiques Cliquot Ltée, the Supreme Court of Canada found that such claims could extend to use of marks "sufficiently similar" to the registered mark to evoke in consumers a mental association of the two marks that is likely to depreciate the value of goodwill attaching to the registered mark.¹ Now, in a dispute² over use of "the bunny brand" and "the next leading competitive brand" in comparative advertising for Duracell batteries, the scope of depreciation of goodwill is once again at issue.

While a recent Federal Court of Appeal decision³ means that this issue may not be determined until trial, the outcome could have a significant impact on comparative advertising in Canada.

Background

The two leading brands of batteries in Canada are DURACELL and ENERGIZER. In 2014, Duracell started using stickers on packaging of its DURACELL brand batteries with claims that they were "Up to 15% longer lasting vs. the next leading competitive brand" and "Up to 20% LONGER LASTING vs. the bunny brand." Energizer commenced an action against Duracell asserting that the claims on Duracell's stickers depreciate the goodwill attaching to Energizer's trademarks contrary to section 22 of the Trademarks Act.⁴ Energizer's registered trademarks include the following design marks for its pink bunny mascot:

Duracell brought a motion for summary judgment seeking to strike Energizer's claim for depreciation of goodwill on the basis that neither "the bunny brand" nor "the next leading competitive brand" are registered trademarks owned by Energizer. In response, Energizer argued that these phrases evoke an association with Energizer's registered trademarks. At first instance, the Federal Court refused to strike portions of the claim relating to use of "the bunny brand", finding...