Co-published editorial

Bereskin & Parr LLP Making the most of passing-off protection

While registration brings a number of advantages, owners in Canada can utilise the action of passing off to protect unregistered rights

Canada, a country, affords prevents one from misrepresenting one’s rights, the relevant date for showing the protection to both registered and goods or services as those of another party, acquisition of the necessary reputation unregistered and trade names or as sponsored by or associated with leading to common-law rights is the date and other business signs, including , another party. Generally speaking, there are when the alleged infringer first started to shapes and other non-traditional three necessary elements to a passing-off use its mark. Assuming that it can meet the trademarks. Such unregistered rights are action involving a : first hurdle of showing a reputation in the protected under the common law action of • the existence of goodwill or a reputation relevant geographical area by the date passing off. The owner of an unregistered in the trademark; applicable to any dispute, the owner of an trademark, trade name or other sign may • deception of the public due to a unregistered right must next demonstrate not only assert its rights over others; it may misrepresentation; and that there has been an unlawful also rely on these rights to prevent the • actual or potential damage to the plaintiff. misappropriation of its rights resulting in a registration by others of confusingly similar likelihood of confusion. In the case of a trademarks or the incorporation of similar A similar civil cause of action is available trademark or trade name, such names. However, as noted below, there are in Quebec under Article 1457 of the Quebec misappropriation will occur if there is use considerable advantages to registration. Civil Code. Misrepresentation may exist even of a confusingly similar mark or name. If In Canada, the term ‘infringement’ is if the defendant did not intend to deceive. rights are asserted in other commercial applied specifically to an action relating to a The key to a successful passing-off claim signs, the improper use must be likely to registered mark. Any claim involving an in Canada is to demonstrate that the owner result in consumer confusion or mistake. unregistered mark is referred to as a or licensee has acquired a reputation in the Confusion can arise from an improper ‘passing-off’ action, which can refer to geographical area where it seeks to enforce conclusion that the goods or services are activities beyond merely trademark or trade its rights, through either use in Canada or, produced by the owner of the unregistered name use, such as copying, in some cases, use elsewhere accompanied mark or that there is an affiliation between unfair advertising or misappropriation of by considerable spillover advertising or the owner of the known mark and an rights in names and personality. A passing- promotion in Canada. The onus will always alleged infringer. Confusion could also off action can be commenced in any of the be on the party seeking recourse to show include, as may be asserted in a grey goods provincial courts in Canada and, if it relates that it has the necessary reputation or case, the suggestion that the goods or specifically to a trademark or trade name, in goodwill. While registration of a trademark services are of the same general standard or the Federal Court of Canada. The latter can gives its owner the exclusive right to use the quality, or have the same attributes as those issue an injunction that applies throughout mark throughout Canada regardless of of an authorised distributor. the country. Section 7(b) of the Trademarks where the business is conducted, The assessment of confusion in a Act codifies passing off; however, if the unregistered marks are enforceable only passing-off case is similar to that involving a claim relates only to unregistered business where the mark, trade name or other indicia registered mark, taking into consideration signs, domain names or non-traditional has become known. A plaintiff’s goodwill factors such as: trademarks, the provincial courts will have extends only to the specific wares or • the similarities in the marks or names; jurisdiction. This is a significant issue, given services in association with which the • the inherent distinctiveness of the the difficulties of having judgments of one trademark has been used. marks/names; provincial court enforced in others. Canadian courts have occasionally • the extent to which the marks/names Section 7(b) provides that no party shall afforded protection to foreign traders whose are known; “direct public attention to his wares, trademarks have become known in Canada, • length of use; and services or business in such a way as to even without use in Canada. However, in • the nature of the goods, services and cause or be likely to cause confusion in most cases, a reputation without use in channels of trade. Canada” between its wares, services or Canada will require considerable effort and business and those of another. Stated cost to demonstrate. The final component for common-law simply, the common law of passing off In a dispute involving unregistered passing off is damage: without clear and

72 World Trademark Review December/January 2013 www.WorldTrademarkReview.com Country Correspondent: Canada

non-speculative evidence of a likelihood of there to be infringement by unauthorised use damage, there can be no passing off. Damage of a registered mark on the same goods or can be in the form of lost profits, customers services as covered by the registration (Section or market share, or can arise from the loss of 19). Similarly, a claim of depreciation of control over the use of a mark. Use of an goodwill, as set out in Section 22 of the act, is owner’s mark may even cause the owner to available only for misuse of a registered suffer loss of control over its mark, despite trademark. The bottom line is that the owner’s absence from the relevant enforcement will be easier, cheaper and market. Such loss is sufficient to ground the probably faster with a registration. damage component of the passing-off test. In Canada, owners of unregistered Simply owning a mark with some trademarks and trade names may oppose an reputation will not guarantee success in a application for registration of a confusingly passing-off action. The normal rules of ‘use’ similar mark, relying on previous use in apply, and no rights can be asserted unless Canada or use elsewhere that has resulted in there is ‘use’ as defined by the Trademarks the mark or name becoming well known in Act, by both the alleged owner and infringer a significant region of the country. Even (BMW Canada Inc v Nissan Canada Inc (2007) Megan Langley Grainger without meeting the threshold of showing 60 CPR (4th) 181 (FCA), where there was no Associate that a mark has become well known, if the evidence that the plaintiff had used either of [email protected] use or advertising of the unregistered mark the trademarks M and M6 in association or trade name is significant, it may be used with automobiles or automobile parts, and Megan Langley Grainger is an associate to challenge both the entitlement of an the passing-off claim was dismissed). lawyer with Bereskin & Parr LLP. Her applicant to register its mark and the If an alleged trademark could not be practice focuses on trademarks, related distinctiveness of the applied-for mark. registered due to a lack of inherent litigation and marketing and advertising Masterpiece Inc v Alavida Lifestyles Inc distinctiveness or other grounds, common law. Prior to attending law school, Ms ((2011), 92 CPR (4th) 361 (SCC)) considered an law or unregistered rights cannot be Langley Grainger spent several years in the context of an asserted in such marks in a statutory gaining industry experience in the field of expungement proceeding. The applicant passing-off claim brought in the Federal consumer packaged goods marketing. relied on its prior rights in an unregistered Court. For example, the Supreme Court of trademark to argue that the respondent had Canada has held that the doctrine of not been entitled to registration of its mark functionality applies equally to registered at the time of registration. In Masterpiece and unregistered trademarks. Kirkbi AG v the Supreme Court clarified that the test for Ritvik Holdings Inc ((2005) 43 CPR (4th) 385 confusion is based on the hypothetical (SCC)) involved the famous LEGO brick, assumption that both trade names and which was copied, in all essential features, trademarks are used “in the same area”, by a competitor. The evidence showed that whether or not this is actually the case, and the LEGO bricks had acquired the necessary therefore geographical separation does not reputation and also proof of some play a role. It was therefore not relevant that consumer confusion. However, the issue one party used its mark in Alberta while the was whether the shape of the LEGO brick other used its mark in Ontario (although was merely functional or a trademark geography is relevant in passing-off cases). capable of registration. The court concluded Further, the court did not require that the that there could be no passing off because applicant’s mark have been used to a the LEGO brick design was functional and particular extent (eg, to become distinctive) thus not a valid trademark. in order for the applicant to argue that it An interesting, and unresolved, question had used its mark before the respondent, is whether a passing-off claim relying on a Cynthia Rowden and therefore that the applicant, rather than mark brought in the provincial courts Partner the respondent, was entitled to registration might succeed even though the subject [email protected] of the mark. The applicant was required to matter of the complaint might not be file only evidence that its mark had been registrable as a trademark. Cynthia Rowden is a partner, barrister, used before the relevant date. While a court may order the same solicitor, and registered trademark agent Unregistered trademarks and trade remedies in a passing-off action as in an with Bereskin & Parr LLP and head of the names are frequently relied on in opposition infringement action involving a registered firm’s trademarks practice group. Much of cases, often in association with registered mark, owners of unregistered marks suffer a her practice relates to managing the trademarks. What matters is not so much the number of impediments. As noted above, the trademark portfolios of large Canadian status of the rights relied on (ie, registered or starting point of all passing-off actions is the companies and the Canadian portfolios of unregistered) as the quality of the evidence demonstration of the required reputation in international companies, ranging from introduced by the opponent to show that its the relevant geographical area, as of the selection to enforcement of trademarks. mark or name has been used or made known pertinent date. This initial evidentiary burden in Canada. The issues of use and valid marks, is not required of registered trademark as discussed above, apply equally in owners. Owners of unregistered marks cannot take advantage of the provision deeming opposition proceedings. WTR www.WorldTrademarkReview.com December/January 2013 World Trademark Review 73