2011 FC 805 (June 30, 2011)
Overview
The Federal Court upheld a decision of the Registrar of Trademarks to expunge Trademark Registration No. TMA208,808 on the basis of the trademark owner's failure to show that use of the trademark by its licensee accrued to the benefit of the owner. This case illustrates the kind of evidence of use by a licensee that was deemed insufficient by the Federal Court to establish that the registered owner of the trademark exerted control over the character and quality of such licensed use by its licensee during the relevant period.
Abstract
The Federal Court confirmed the Registrar's decision that Trademark Registration No. TMA208,808 should be expunged, as the registered owner failed to demonstrate that use of the mark by the licensee accrued to the benefit of the owner. In particular, Justice Scott found that the evidence failed to clearly demonstrate that the appellant exerted the requisite control, was unclear as to whether the licensee produced or sold the registered wares under the licence and failed to establish a temporal link between the licence and the sale invoices in the absence of a clear statement regarding the beginning or end of the licence.
Case summary
Facts. On June 18, 2008, at the request of BCF S.E.N.R.L., the Registrar gave notice under section 45 of the Trademarks Act ("Act") to Spirits International B.V. ("the appellant"), the registered owner of Trademark Registration No. TMA208,808.
In response, the appellant filed two affidavits, including an affidavit from the manager of the appellant's Swiss branch who asserted that "MY COMPANY" had direct or indirect control over the character and quality of the vodka sold in association with the trademark in Canada. "MY COMPANY" was defined as "S.P.I. Group and its affiliate companies as well as Spirits International B.V.'s acquired rights in 1999 from Closed Joint Stock Company Sojuzplodimport and its predecessors." Attached to the manager's affidavit was a corporate certificate indicating that S.P.I. Group SA was the sole or majority shareholder of the appellant, S.P.I. Spirits (Cyprus) Limited ("Cyprus") and other related companies.
The Registrar found that there was insufficient evidence of control to allow it to conclude that the sales of the wares in association with the trademark by "MY COMPANY," or any of the affiliated companies, would enure to the benefit of the appellant. The Registrar reasoned that the appellant did not provide any description of the control allegedly exercised, a copy of the license agreement, nor any details regarding the officers showing a common directing mind. As such, there was no need to assess the remaining evidence regarding use of the registered trademark.
On appeal to the Federal Court, the appellant argued that the Registrar created a two-stage procedure whereby the Registrar first decides whether the owner has control and then proceeds to determine use. The appellant also provided additional evidence in the form of an affidavit from the Head of the Legal Department of Cyprus, which alleged the following:
- Cyprus provides "legal support" to all members of the SPI Group of Companies, including the appellant;
- Cyprus was licensed by the appellant to use the trademark;
- the appellant sets the standards of character and quality of vodka labelled with the trademark;
- under licence, the appellant delegated to members of the SPI Group of Companies "the conduct of periodic testing" for compliance with the standards; and
- attached to the affidavit were invoices purportedly for sale of vodka by Cyprus in Canada, which had been tested, met the standards and had been labelled by an unnamed bottling company.
Analysis. The Federal Court confirmed that the alleged two-stage procedure by the Registrar was not improper. The Court held that use in Canada as defined by section 4 of the Act means use by the registered owner or its licensee. Where evidence of use of the trademark by the licensee is put before the Registrar in a section 45 proceeding, it must be shown that the licensee's use of the mark accrues to the benefit of the registered owner. Use of a trademark cannot be established from use by a competitor or a stranger.
The Federal Court then decided that the evidence as a whole, including the additional evidence from Cyprus, also failed to provide sufficient evidence establishing control. The Court held that while the additional evidence indicated that there was a licence between the appellant and Cyprus, it failed to clearly demonstrate that the appellant exerted the requisite control. Justice Scott found that the evidence was unclear as to whether Cyprus produced or sold vodka under the licence in view of the evidence stating that Cyprus provided "legal support" to related companies and that an unnamed company was involved in bottling the vodka. The Court also found that in the absence of a clear statement as to the beginning or end of the licence, it was impossible to establish a temporal link between the licence and the sale invoices. As such, without clear evidence that use of the trademark by Cyprus accrued to the benefit of the appellant, the Court held that there can be no evidence of use for the purposes of section 45.
Conclusion
This Federal Court decision provides guidance as to the nature of evidence required to establish control for the purposes of section 50 of the Act. This case illustrates that a licensee's use must be supported by sufficient details, clearly demonstrating that there was use by the licensee during the relevant period and that the registrant exerted control over the character and quality of such licensed use by that licensee during that period.
Jacky Wong, Ottawa
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