2009 FC 669 (June 26, 2009); affirmed 2010 FCA 104 (April 16, 2010)
Overview
In what was described by the Federal Court of Appeal of Canada as "an acrimonious dispute between a father and son over the right to use the family's surname, Miranda" in connection with the selling and installation of windows and doors, Brian P. Isaac of Smart & Biggar successfully acted on behalf of Miranda Windows & Doors Inc. in resisting an application by the father to expunge registrations for the MIRANDA and MIRANDA & DESIGN trademarks.
Abstract
In an application to expunge registrations of the marks MIRANDA and MIRANDA & DESIGN for use in association with selling and installation of windows and doors, the Federal Court of Canada rejected all grounds of expungement asserted by the applicant. Although "Miranda" was found without question to be a surname, the marks were found to have acquired distinctiveness. The decision was upheld by the Federal Court of Appeal.
Case summary
Facts. When Tony was about 16 years old, Antonio was convicted of cocaine trafficking and sent to jail. In his father’s absence, Tony, who was still living at the family home, dropped out of school and incorporated his first business, T.M. Renovations Inc. ("TMR"). Tony operated TMR until 2005 when his present company, Miranda Windows & Doors, was incorporated. The MIRANDA word mark and the MIRANDA & DESIGN mark (the "Trademarks") were registered in 2007 on the basis of use since 1991. By the 2000s, Miranda Windows & Doors had gained considerable reputation and goodwill, especially in the Portuguese community of the Greater Toronto Area.
Following Antonio's release from jail, Tony employed Antonio as a salesman. Antonio continued to work sporadically for Tony while attempting to set up his own business. In 2000, Antonio incorporated Miranda Aluminum Inc.
Evidence in the case was found to support a finding that Antonio was passing off his business as that of Tony's, and there was evidence of actual confusion by customers. Tony took measures to dissociate his business from that of Antonio's in the minds of the public and filed the applications that matured into the registrations at issue.
In 2007, Antonio brought an application before the Federal Court of Canada to expunge the registrations. In 2008, the application was dismissed by the Federal Court. Antonio appealed to the Federal Court of Appeal. Unbeknownst to Tony, TMR was dissolved in 2004 under the Ontario Business Corporations Act (OBCA) for a technical breach, specifically for failure to respond to a requisition from the government to identify TMR's board of directors. The dissolution came to light during the course of the litigation. The technical effect of the dissolution pursuant to the OBCA was that TMR's assets were forfeited to the Crown. Counsel for Antonio argued that this created a break in title and emphasized this assertion in the Court of Appeal. The appeal was dismissed in the spring of 2010.
Analysis. Counsel for Antonio cast the case as a dispute between a father and son over the right to use the family name. Smart & Biggar, on behalf of Miranda Windows & Doors, argued that this case was actually about the ability of a trader to use Canada's trademark regime to prevent infringement of trademark rights, passing off and the resulting confusion in the minds of the public arising from confusing trademark use of the parties' surname.
Counsel for Antonio submitted various arguments as to why Miranda Windows & Doors should be expunged from the Register of Trademarks, including that MIRANDA is primarily merely a surname, that Antonio was a prior user of confusing trademarks, and that the registrations for the Trademarks were invalid because the claimed date of first use was a misrepresentation.
The Judge found that there was "no question that Miranda is a surname" and also found that the MIRANDA word mark had acquired distinctiveness as of the date it was applied for. The Judge based her findings on evidence submitted of awards received by Miranda Windows & Doors and client testimonials. The Judge found that the MIRANDA design mark, which consisted of the Miranda name and an outline of a house with a chimney on the roof, was not primarily merely a surname. In any event, the Judge found that the MIRANDA design had also acquired distinctiveness by the date it was applied for. Accordingly, the ground of expungement based on the marks being unregistrable because they were primarily merely a surname was rejected.
With respect to the prior use ground, the Judge found that Antonio's evidence of alleged prior use was not credible and rejected the argument. Moreover, she found that Antonio's later use of confusing trademarks was calculated to confuse customers.
In regards to the false date of first use argument, the lower Court found that the earliest documented evidence of use by Tony's company was two months after the claimed date of first use. The Judge noted that in Unitel Communications Inc. c. Bell Canada, 61 C.P.R. (3d) 12 ("Unitel"), which was relied upon by counsel for Antonio, the declarations of use were false as the marks had never been used. The Judge declined to apply Unitel as she found that there was no evidence establishing that Tony’s declaration of first use was false. The fact that the first documented evidence of use was two months after the stated date of first use was not "sufficient to justify expunging" the Trademarks.
The Judge rejected all grounds of expungement asserted by Antonio and dismissed the proceedings with costs awarded to Tony.
In the Court of Appeal, counsel for Antonio strenuously argued that since rights in the Trademarks had been forfeited to the Crown in 2004 by virtue of the OBCA dissolution of TMR and TMR had not assigned the rights in the Trademarks to Miranda Windows & Doors prior to the dissolution, the first use date of the Trademarks could not have been any earlier than the date of incorporation of Miranda Windows & Doors in 2005. Therefore, he argued, the lower Court erred in finding that Tony had not misrepresented the claimed date of first use (citing General Motors of Canada v. Decarie Motors Inc., [2001] 1 FC 665, in which the Federal Court of Appeal found that a trademark registration may be invalidated by a material misstatement in the application, even if the misstatement was made innocently). The Court of Appeal rejected the argument, holding that even if the lower Court had erred in finding that the 1991 claimed date of first use was false, the misstatement did not warrant expungement of the Trademarks. The Court of Appeal confirmed that "innocent misstatements will only invalidate a trademark if they are material" in the sense that without them the statutory barriers to registration "would have been insurmountable." Given the lower Court’s findings of fact, there would have been no bar to registration of the Trademarks at the time they were applied for even if the date of first use had been stated to be in 2005. Moreover, the Court of Appeal found that there was no evidence that Antonio was prejudiced by the misstatement.
The Court of Appeal rejected the argument based on the dissolution of TMR, holding that “this is a highly technical and artificial argument that overlooks the essential realities of the situation.” The Court of Appeal found that, inter alia: (i) TMR's dissolution was involuntary and technical; (ii) the son was the directing mind of the corporations (i.e., TMR and Miranda Windows & Doors) and the Miranda name had acquired distinctiveness through the services provided by the son and such distinctiveness flowed through to his companies; (iii) there was no evidence that the use of the Miranda name or Miranda Windows & Doors by the son caused any confusion in the minds of the public after the dissolution of TMR, which is "after all, the mischief at which the law of trademarks is aimed"; and (iv) there was no allegation that the Crown objected to or was damaged by the son's or the company's use of the Miranda name. Therefore, whatever technical irregularity may have occurred did not warrant expungement of the Trademark registrations.
Counsel for Antonio also argued both before the lower Court and in the Court of Appeal that the Trademarks were unregistrable because they were not distinctive of the son and his businesses by virtue of use of the Miranda name by other members of the Miranda family. In particular, Antonio's brother (Tony's uncle), John Miranda, conducted a wholesale business using two corporate names that included the Miranda surname. The lower Court Judge held that since John's business had always been at the wholesale level, his use of the Miranda name had no bearing on the distinctiveness of the Trademarks, which were used at the end consumer level. Despite a plea by Antonio's counsel to do so, the Court of Appeal declined to reweigh the evidence submitted in respect of distinctiveness and upheld the lower Court's finding.
Counsel for Antonio argued in the further alternative that the Trademarks were registered without any geographical restriction even though the evidence only allegedly supported distinctiveness in the Portuguese community of the Greater Toronto Area. The Court of Appeal declined to overturn or vary the decision, at least in part for the reason that the argument was not advanced in the lower Court.
Conclusion
Everyone, including the Court, acknowledged that Miranda is a surname. Moreover, several members of the Miranda family were engaged in similar lines of business. However, the reality, as supported by the evidence, was that the Miranda name had become distinctive of Tony's business alone in association with the specific services at issue. In fact, it had become so distinctive that Antonio was apparently attempting to trade off the goodwill that Tony had built in the name and trademarks including the name. This case demonstrates that where facts support the need for one party to maintain a right in order to promote the purpose of the right at law, courts may dismiss assertions of invalidity based on technicalities that do not reflect marketplace realities. While Tony's registrations may have suffered from technical irregularities due to the dissolution of TMR, at the end of the day, they were not intentional or material and no "mischief at which the law of trademarks is aimed" was committed.
Brian P. Isaac and Cheryl M. Ng, Toronto