In a decision rendered on October 15, 2002, the Canadian Federal Court of Appeal (FCA) allowed appeals of two decisions of the Trial Division and remitted the matters back to the Trial Division for a determination of the merits.
The proceedings in the Trial Division were appeals, under Section 56 of the Trademarks Act, of two decisions of the Registrar of Trademarks. The Registrar had rejected Novopharm's Statements of Opposition to AstraZeneca's applications to register two trademarks in relation to tablets containing the active ingredient felodipine. One application was in relation to tablets that are pink, round and bi-convex in shape (5 mg) and the other in relation to tablets that are red-brown in colour, round and bi-convex in shape (10 mg). The primary basis for the Registrar's rejection of the oppositions was that Novopharm's Statements of Opposition were insufficiently detailed to enable AstraZeneca to respond to the assertions that its trademarks were not distinctive. A secondary basis for the Registrar's rejection was that there was no quantitative, and insufficient qualitative, evidence of the sale and use of any pharmaceutical tablets that have a colour and shape combination resembling the marks applied for by AstraZeneca. The Trial Judge dismissed Novopharm's appeals and upheld the Registrar's decisions.
On appeal to the Trial Division, Novopharm filed additional evidence, presumably in view of the Registrar's secondary basis for rejection of the oppositions. However, the Trial Judge was of the opinion that she was to review the Registrar's decisions on a standard of reasonableness simpliciter. She found that the Registrar was not clearly wrong in rejecting the Novopharm oppositions on the basis that the oppositions were insufficiently detailed to enable AstraZeneca to know the case it had to meet and to respond to it. As the requirement for detailed pleadings was statutory, the Trial Judge found that she could not say that the Registrar was unreasonable for requiring compliance with the statute. Because that conclusion was dispositive of the appeal, the Trial Judge did not go on to consider the Registrar's secondary, insufficient evidence, basis for rejecting the oppositions.
The FCA found its intervening decision in Novopharm Limited v. Ciba-Geigy Canada Limited; Novopharm Limited v. Astra Aktiebolag, [2002] 2 F.C. 148 to be dispositive of the procedural issues on the appeal. In particular, the FCA deduced the following principles to apply from the Novopharm case with respect to the adequacy of pleadings:
1. A Statement of Opposition must be in conformity with Section 38 (3)(a) of the Act and hence must set out the grounds of opposition in sufficient detail to enable the trademark applicant to reply.
2. The sufficiency of pleadings should be determined on an interlocutory basis, at which time only the pleadings need to be considered in making that determination.
3. In determining the sufficiency of a Statement of Opposition after evidence is filed, regard must also be had to the evidence to see if the applicant has been provided with sufficient detail to make an adequate reply.
In view of these principles, the FCA concluded that once evidence is filed, the Registrar must take that evidence into consideration when deciding whether the parties know the case they have to meet and whether they are able to respond. The evidence filed may cure whatever inadequacy there may have been in the pleadings. In a departure from existing practice in Canada, the FCA ruled that Section 40 of the Trademark Regulations (which provides a procedure for amendment of a Statement of Opposition and a Counter-statement) can be relied on by a trademark applicant or opponent to not only amend its own pleading, but also to strike all or any portion of the other party's pleading.
Consequently, the FCA reasoned that the Registrar had, in the circumstances, failed to consider the evidence in assessing whether AstraZeneca knew the case it had to meet and was able to respond to it. This constituted a failure to consider a relevant factor and therefore, a failure to apply the correct legal test for determining the adequacy of the pleadings. Similarly, the Trial Judge should have found that the Registrar's failure to consider the evidence constituted a reviewable error.
The FCA reviewed the additional evidence filed by Novopharm and concluded that whatever deficiency there may have been in the evidence before the Registrar, it was cured by the additional evidence filed in the Trial Division. While the FCA appears to have been tempted to decide the merits of the distinctiveness issue, it concluded that it is normally preferable to remit to the Trial Division matters involving the assessment of evidence for determination on the merits.
The FCA's decision is noteworthy in several respects. Firstly, it represents another setback in the attempts of the brand-name industry to obtain trademark registration for the arbitrary features of appearance of prescription pharmaceuticals. Secondly, the decision appears to be unfair to AstraZeneca who filed the trademark applications in 1992 and fought Novopharm's oppositions based on Novopharm's Statements of Opposition filed in 1993 and the jurisprudence at the time, only to find out many years later that it could not rely on the prima facie inadequacy of Novopharm's pleadings. Thirdly, the decision represents a significant change to trademark opposition practice in Canada insofar as the FCA has now determined that subsequently filed evidence can cure a deficient pleading in a Statement of Opposition. The latter will require both sides in trademarks opposition proceedings to revisit long-established procedural strategies in such matters.