A recent decision of the Ontario Court of Appeal has recognized an important reason to register trademarks in Canada.
In Molson Canada v. Oland Breweries Limited (May 27, 2002)(19 C.P.R. (4th) 201 (Ont. C.A.)) the Ontario Court of Appeal dismissed Molson's claims of passing off by Oland as a result of the sale of OLAND EXPORT ale in Ontario. The Court found that Oland's registration of its label as a trademark was a complete defence to Molson's claim. As stated by the Court, "the respondent holds the trump card." The Court's rationale was that, pursuant to section 19 of the Trademarks Act, the owner of a registered mark has the exclusive right to the use of the trademark throughout Canada. Thus, if a competitor takes exception to the use of the registered mark the competitor must attack the validity of the owner's registration. Molson failed to do so in this case.
No leave to appeal to the Supreme Court of Canada has been sought and accordingly, it is now clearly settled law in Ontario that a registration, unless found to be invalid, will constitute a complete defence to an action for passing off.
From a practical point of view, the decision exemplifies the benefits that may be realized through obtaining trademark registrations in Canada. In addition to the ability to stop others from using confusing trademarks in Canada, a registration may also provide some comfort as a shield. While a competitor may seek to invalidate the registration, the onus will be on that competitor to show that the registration is invalid. Further, after five years a registration can be invalidated on the basis of prior use only if it can be shown that the registrant had knowledge of the prior mark at the time of filing. This decision thereby reinforces the importance of monitoring the Register of Trademarks and the Canadian Trademarks Journal for potential confusing applications.
The decision not only confirmed a fundamental point in Canadian trademark law, but also clarified the ability of Oland to sell its product in the Province of Ontario and awarded significant legal costs payable from Molson to Oland.
Oland Breweries Limited was represented both at trial and on the appeal by Nicholas H. Fyfe, Q.C., Brian P. Isaac and Kevin K. Graham of Smart & Biggar.