2011 FC 1216 (October 26, 2011)
Overview
The Federal Court has clarified under what circumstances a respondent in a section 57 expungement proceeding might challenge an applicant's standing to bring the application. This case is of particular importance as it provides a basis for determining when an applicant might not qualify as a "person interested" under the Trademarks Act, including, for example, where the applicant has delayed bringing the application.
Abstract
This decision provides some support for respondents in section 57 proceedings when attacking the standing of an applicant to bring the application. In this case, the Federal Court expressed its "serious doubts" that the applicant, McCallum Industries Limited, could be a "person interested" under the Trademarks Act ("Act"), pointing to the nearly five-year delay of the applicant in bringing the application after the registration of the respondent's trademark; the failure of the applicant to oppose the respondent's trademark when advertised; and the continued growth of the applicant's sales and revenues after the respondent's mark was registered. Ultimately, however, the Court declined to dismiss the application for lack of standing and noted that a de minimis threshold should be applied to the "person interested" requirement. Although ultimately not successful on the issue of standing, the respondent, Heinz Company Australia Ltd., was successful on the merits, and McCallum Industries Limited's application was dismissed on the basis that the respondent's trademark OX & PALM was not confusing with the applicant's trademark PALM & Device under section 6 of the Act.
Case summary
Facts. This was an expungement proceeding under section 57 of the Act. By way of this proceeding, the applicant, McCallum Industries Limited ("McCallum"), sought to expunge the respondent HJ Heinz Company Australia Ltd. ("Heinz")'s trademark OX & PALM from the Register of Trademarks ("Register").
In August 1995, McCallum filed an application for registration in Canada of the trademark PALM & Device for the specific wares of "meat and meat products, including canned and processed meat products." McCallum started using the trademark in 1998 when it began selling PALM & Device labeled wares. Since 1998, McCallum used the PALM & Device trademark continuously in Canada, and the annual sales of PALM & Device wares had increased. In July 2003, the trademark application for PALM & Device was approved and registered.
In December 2002, Heinz applied to register the trademark OX & PALM for the specific wares of "meat and processed meats, namely corned meat and tinned meat." This application was never opposed. In October 2005, Heinz's application issued to registration.
In October 2010, McCallum filed a notice of application under section 57 of the Act to have Heinz's registered trademark OX & PALM expunged.
Analysis. Prior to addressing the substantive issues on the merits of the application, the Court addressed the applicant's standing to bring the proceeding under section 57 of the Act.
Pursuant to section 57 of the Act, the Federal Court has exclusive jurisdiction on the application of any "person interested" to order that an entry in the Register be struck out on the ground that at the date of the application, the entry, as it appears on the Register, does not accurately express or define the existing rights of the person appearing to be the registered owner of the mark.
"Person interested" is defined in section 2 of the Act:
"person interested" includes any person who is affected or reasonably apprehends that he may be affected by any entry in the register, or by any act or omission or contemplated act or omission under or contrary to this Act, and includes the Attorney General of Canada;
Heinz alleged that McCallum did not qualify as a "person interested" as defined under section 2 for the following reasons:
- McCallum never opposed the registration of OX & PALM;
- McCallum waited near the end of the prescribed five-year deadline to bring its application for expungement; and
- McCallum did not establish that its business had suffered as a consequence of the registration of OX & PALM.
In addressing this issue, Justice Pinard considered the jurisprudence on the definition of "person interested." He noted that McCallum must first establish that it is affected or reasonably apprehends that it may be affected by the entry of OX & PALM on the Register. In other words, following the holdings of previous caselaw on this point, "the entry must be shown to stand in the applicant's way."
The Court also held that to qualify as a "person interested", it is necessary for an applicant to show that it would suffer damage if the trademark remained on the Register. Justice Pinard found that carrying on the same type of business as the respondent is insufficient to prove such damage. Moreover, continuous business growth negated a finding that any harm occurred.
Ultimately, the Court concluded that an applicant does not qualify as a "person interested" if the registration of the respondent's trademark "does not diminish or limit its rights in any way, which would not be greater, even if the attacked trademark was struck out of the register."
Applying these principles to the facts at hand, Justice Pinard found that there was no evidence that McCallum could reasonably apprehend that it would be affected by the presence of OX & PALM on the Register. On the contrary, the Court found that the facts established that McCallum could not reasonably apprehend to be affected, and indeed, has not been affected, by the presence of OX & PALM on the Register for the last five years. In coming to this conclusion, the Court pointed to the following evidence:
- the Examiner never cited OX & PALM as being confusingly similar to McCallum's registered trademark PALM & Device;
- McCallum's sales have steadily increased since the year of registration of the trademark OX & PALM;
- 2010 was the best year for McCallum in terms of sales, and McCallum continues to sell its products in 2011;
- McCallum never opposed Heinz's OX & PALM application prior to registration; and
- McCallum waited nearly five years after the registration of the OX & PALM trademark to commence these proceedings
In respect of the latter point regarding the five-year delay of the applicant to commence the expungement proceedings after the registration of the respondent's trademark, the Court found such a delay "inconsistent with the behaviour of a party that perceives itself to be a 'person affected'" by the existence on the registry of the OX & PALM trademark. This delay further supported the Court's finding that McCallum's situation would likely "remain unchanged" if OX & PALM continued to exist on the Register.
In the Federal Court's view, these considerations, when taken together, offered "significant support to the finding that the applicant has failed to establish that it is a person interested." Justice Pinard concluded that he had "serious doubts" as to whether McCallum had standing to bring the application.
However, interestingly, the "serious doubts" expressed by the Court were not sufficient to dismiss the application for lack of standing of the applicant. In this regard, Justice Pinard referenced the de minimis threshold requirement for qualifying as a "person interested", noting that the requirement generally exists to defeat nuisance applications. It is an implied term of the judgment that the Court did not view McCallum's application as a mere nuisance. As such, the Court proceeded to dispose of the application on the merits.
Although ultimately not successful on the issue of standing, Heinz was successful on the merits, and McCallum's application was dismissed on the basis that the respondent's trademark OX & PALM was not confusing with the applicant's trademark PALM & Device under section 6 of the Act.
Conclusion
This decision provides some support for respondents in section 57 proceedings when attacking the standing of an applicant to bring the application. In particular, a respondent may have cause to challenge an applicant's standing in a section 57 proceeding on the ground that the applicant is not a "person interested" where that applicant has delayed the filing of the notice of application; where the applicant has failed to oppose the respondent's trademark when advertised; where there is clear evidence that the applicant's sales have continued to increase despite the existence of the respondent's mark on the Register; or where the Examiner did not cite the applicant's mark against the respondent's mark during prosecution.
It is important to note, however, that each of these considerations may be insufficient on its own to support a challenge to an applicant's standing. Further, even where the totality of the evidence appears to demonstrate that the applicant could not be a "person interested", the Court may still exercise its discretion not to dispose of the application on this basis in view of the de minimis threshold that applies. As such, absent clear evidence of a "nuisance" application, it may be difficult for a respondent to seek to have a section 57 application dismissed on the basis of lack of standing alone.
As a final note, this decision was appealed on November 25, 2011. It remains to be seen whether the Federal Court of Appeal will further consider the issue of "person interested" in the context of section 57 proceedings.
Cameron P. Weir, Ottawa
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