TABLEOFCONTENTS
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OVERVIEW ...... I PART I - STATEMENT OF FACTS ...... 2 PART II -QUESTIONS IN ISSUE ...... 5 PART Ill -ARGUMENT ...... 5 Legal Basis for Expungement ...... 5 Statutory Test for Confusion ...... 6 There Was Never an Issue as to Relevant Date ...... 8 Likelihood of Confusion Does Not Depend Upon Pre-existing Competition ...... 8 Internal Inconsistency and Reliance Upon Extraneous "Get-up" ...... 15 Decisions Below Import a Passing Off Test, Contrary to Legislative Intent ...... 18 Decisions Below Place Unregistered Trade-marks in Peril ...... 20 Likely Confusion is Patent When the Proper Test is Applied ...... 22 The Evidence Bearing on the Likelihood of Confusion ...... 22 The Trade-mark Registry's Conclusion ...... 22 The Expert Evidence Generally ...... 23 Alavida's Expert Dr . Mulvey ...... 23 Dr . Corbin v . Dr . Mulvey ...... 28 The Corbin Survey Evidence Merely Supports Her Basic Opinion ...... 30 Dr . Chakrapani's Critique Flawed and Limited to the Survey Evidence ...... 32 Mr . Marsh (Retirement Residence Industry Expert) ...... 35 Similarity in Ideas Associated With the Trade-marks ...... 36 Application of the Trade-marks Act Factors ...... 36 Inherent Distinctiveness ...... 36 Length of Time In Use ...... 37 Similarity of Wares and Services and Nature of Trade ...... 39 Resemblance in Appearance, Sound and Ideas ...... 39 Conclusion ...... 40 PART IV - SUBMISSIONS ON COSTS ...... 40 PART V - NATURE OF ORDER REQUESTED ...... 40 PART VI -TABLE OF AUTHORITIES ...... 41 OVERVIEW
1. The decision of the Federal Court of Appeal takes a novel and erroneous approach to the assessment of confusion under the Trade-marks Act:
(a) It finds that a likelihood of confusion between two trade-marks cannot exist unless they are already in competiiion in the same geographic area. This is contrary to the underlying objective of the Trade-marks Act and in effect converts Canada from a first-to-use to a first-to-file jurisdiction.
(b) It endorses an internally inconsistent approach of limiting the consideration of commercial circumstances to those which pre-date the application for registration of a proposed trade-mark, while basing a conclusion that confusion is unlikely upon the manner in which the trade-mark was used only after that date.
(c) Contrary to the legislative objective of protecting consumers from confusion, it finds that a likelihood of confusion between two trade-marks, as registered or as proposed, can be overcome by aspects of the "get-up" surrounding the use of one of them, notwithstanding that this "get-up" is extraneous to the mark itself and nothing compels its use in association with the mark.
2. While citing the scheme of the Trade-marks Act in support of its approach, the decision is inconsistent with one of the guiding principles of the legislation, Priority and attendant national monopolies are accorded not to first registrants of trade-marks, but rather to first users, anywhere in Canada, of those trade-marks or others confusingly similar thereto.
3. The decision in effect elevates the test for expungement to that applicable to a common law passing off action, in two respects:
(a) It requires that parties challenging trade-marks show that they have pre-existing reputations in the very geographic areas in which the registrant operates, rather than merely showing prior use of their trade-marks somewhere in Canada.
(b) It tests for confusion based solely upon the manner in which the competing trade- marks have actually been used to date, rather than upon any manner in which their owners are entitled to use them.
4. The decision puts in peril the multitude of unregistered common law trade-marks in Canada. By this decision first users are rendered liable to claims of trade-mark infringement, even in their own geographic areas of operation, when registration of a confusingly similar trade-mark is later obtained by someone else, operating anywhere else in Canada. 5. The analysis of the evidence on likely confusion was subject to the foregoing extricable errors of law and to other palpable and overriding errors in the courts below. This Court must therefore evaluate the evidence afresh utilizing the proper approach. When a proper approach to the analysis of confusion is applied to the evidence, the likelihood of confusion is readily apparent, and the Alavida trade-mark should be expunged.
PART I. STATEMENT OF FACTS
6. Both parties operate in the retirement residence industry. Masterpiece Inc. was incorporated in 2001 and began by constructing and operating three retirement residences in Alberta. However, by Dec. 1, 2005, when Alavida applied for registration of its trade-mark, Masterpiece Inc. had embarked on a rapid expansion across Canada. It was raising equity with the stated objective of constructing two new facilities each year, two major projects were already in progress in Montreal, and negotiations for an Ottawa site had commenced.1
7. The reality of the expansion that was underway by Dec. 2, 2005 was subsequently borne out, By April, 2007, Masterpiece Inc. had properties with a stabilized asset value of $90 million, and projected that by the end of 2008 it would have assets of $400 million, annual revenues of $70 million and a staff of 800.2 Masterpiece Inc, remained much smaller than the largest Canadian operators, but was the only one which designs, builds, markets, sells and operates retirement residences "under one roof".3
8. Masterpiece Inc. had since 2001 utilized the trade name "Masterpiece" and an evolving series of as yet unregistered trade-marks which included that trade name, either alone or together with references to Yiving" - "A Living Masterpiece", "Masterpiece Clubs", "Masterpiece The Art of Living" and "Masterpiece The Art of Retirement Living"? It had spent at least $3 million on promotion.5 An independent retirement residence industry expert gave evidence that Masterpiece
1 T.D. Reasons for Judgment para, 4 [Appellant's Record CAR) Vol I p. 31; Garforth-Bles Apr. 17,2007 Affidavit, paras. 7, 12 - 14, 18 [AR Vol I pp. 48 - 511; Excerpts from Financial Prospectus, Garforth-Bles April 17, 2007 Affidavit, Exhibit M [AR Vol I pp. 81-84] Garforth-Bles April 17,2007 Affidavit paras. 7,12 - 19 [AR I pp. 48 - 511 Garforth-Bles April 17,2007 Affidavit paras. 8 - 9 [AR Vol I pp. 48 - 491 T.D. Reasons for Judgment para. 4 [AR Vol I p. 31; Garforth-Bles April 17, 2007 Affidavit paras. 20 - 30 [AR Vol I pp. 51 - 551 Garforth-Bles April 17,2007 Affidavit para. 21(e) [AR Vol I p. 1511 Inc. had become quite distinctive in the retirement residence industry with the use of its trade name and trade-marks.6
9. Masterpiece Inc. utilized "Club Sierra" branding as part of a joint venture entered early in its corporate life with Medican Inc., because Medican had been using "Sierra" branding before the joint venture was established. However, Masterpiece Inc. bought out Medican even before the second project was completed.7 Even while the joint venture was in place, Masterpiece Inc. used its own trade name and trade-mark "Masterpiece" and the additional trade-mark "Masterpiece The Art of Living" together with "Club SierraNa
10. After the joint venture with Medican was terminated and prior to the relevant date of Dec. 1, 2005, Masterpiece Inc. placed ever more emphasis on "Masterpiece" and related trade-marks. Examples of the use of the Masterpiece Inc, trade-marks as they had evolved prior to Dec. 1,2005 can be seen in a brochure of which 15,000 copies were distributed commencing in January, 2005; and a trade show display which was in use commencing in June, 2005.10 In November, 2005, Masterpiece Inc. decided to shorten these most recent formulations of the trade-marks to simply "Masterpiece Living", in order to convey the same message in a more succinct fashion, and announced this to residents, staff and stakeholders in December, 2005.11
11. In the meantime, Alavida was incorporated in August, 2005. Despite its inventive corporate name,12 Alavida engaged a consultant to develop a different branding tagline. Banfield- Seguin developed "Masterpiece Living.l3 Alavida applied on Dec. 1, 2005 for registration of that trade-mark, but on the basis of proposed rather than actual use. Actual use did not commence until January, 2006.14
Warsh Affidavit paras. 11 -12 [AR Vol II p. 1161 Garforth-Bles April 17, 2007 Affidavit para. 23 [AR Vol I pp. 52 - 531; Garforth-Bles CE p. 76(8 - 21) [AR Vol II p. I] 8 Garforth-Bles April 17,2007 Affidavit Excerpts from Exhibits J and K [AR Vol I p. 73 - 781 9 Masterpiece Inc. brochure: Garforth-Bles April 17, 2007 Affidavit Exhibit N [AR Vol I pp. 85 - 1361 lo Masterpiece Inc, trade show booth: Garforth-Bles April 17, 2007 Affidavit Exhibit N [AR Vol I pp. 137 - 1381 Ii T.D. Reasons for Judgment para. 5 [AR Vol I p. 31; Garforth-Bles April 17, 2007 Affidavit paras. 31 - 32 [ARVol I p. 551; Garforth-Bles July 13,2007 Affidavit paras. 5 - 6 [AR Vol I p. 1461 l2Choo CE pp. 16(24) to 17(9) [ARVol II pp. 27 - 281 j3 Mulder Affidavit paras. 6 - 13 [AR Vol Ill p .30] l4T.D. Reasons for Judgment para. 6 [AR Vol I p. 41; Choo May 22, 2007 Affidavit paras. 12 - 13, Exhibit C [ARVol II pp. 11 - 12,19 - 231 12. Through its former lawyer, Masterpiece Inc. applied for registration of the trade-marks "Masterpiece" on January 23, 2006 and "Masterpiece Living" on June 29, 2006. By letters dated September 26, 2006, the Registrar of Trade-marks advised the lawyer that Masterpiece Inc, was not entitled to registration of either trade-mark in view of Alavida's co-pending and confusing application for "Masterpiece LivingN.15
13. Due to a soon-fatal cancer diagnosis, the lawyer failed to advise Masterpiece Inc. that it could oppose the registration. Afler learning that it could nevertheless seek expungement, Masterpiece Inc, commenced these proceedings.16 (Masterpiece lnc. is entitled to expungement of Alavida's registration if confusing similarity is established, regardless of whether it opposed that registration.)17
14, The present dispute results in large part from the failure of the consultants who developed Alavida's trade-mark to determine whether another industry participant was already utilizing "Masterpiece" in its retirement residence branding. Alavida expected Banfield-Seguin Ltd. to conduct such searches.18 They are necessary because a new trade-mark is subject to expungement for five years if it is confusing with another trade-mark or trade name already in use anywhere in Canada, even if the new registrant was not aware of it.I9 Banfield-Seguin agrees that it was expected to conduct such searches, but says this was its first experience with the retirement residence industry, and that it retained a lawyer for that purpose. Its own research related primarily to the U.S. marketplace, with not much review of the Canadian retirement residence industry.20
15. Alavida provided no evidence from the lawyer, and claimed privilege over communications with him.21 If the lawyer did not find any indication of the prior use of "Masterpiece" trade-marks in
15 T.D. Reasons for Judgment para. 5 [AR Vol I p. 31; Garforth-Bles April 17,2007 Affidavit paras. 43 - 44; Exhibits X and Y [AR Vol I pp. 57,139 - 1441 16 Garforth-Bles July 13,2007 Reply Affidavit paras. 25 - 27 [AR Vol I pp. 152 - 1541 17 Kelly Gill & Scott R. Jolliffe, Fox on Canadian Law of Trade-Marks and Unfair Competition, 4th ed., looseleai (Toronto: Carswell, 2007) at p. 11-32 [Authorities Tab 31; 18 T.D.Reasons for Judgment para. 6 [AR Vol I p. 41; Choo CE p, 24(3 to 16) [AR Vol II p. 291 I9 Trade-marks Act, R.S.C. 1985, c. T-13, s. 17 [Authorities Tab I];Report of the Trade Mark Law Revision Committee to the Secretary of State of Canada, January 20, 1953, Harold G. Fox, The Canadian Law of Trade Marks and Unfair Competition, Vol. 2., (2d ed. Toronto: The Carswell Company Limited, 1956) at 1168 - 1170. [Authorities Tab 21 20 Hume CE pp. 3(14) to 6(17) [ARVol Ill pp. 66 - 691 21 Objection during Choo cross-examination: Choo CE pp. 30(4) to 31(11) [AR Vol II pp. 35 - 361 the Canadian retirement residence industry, he must have searched only the trade-mark registry rather than undertaking the kind of investigation expected by Alavida and Banfield-Seguin. Any reasonable search would have revealed the presence of Masterpiece Inc. in the Canadian retirement residence industry, and the use in its branding of the trade-name "Masterpiece" along with various associated trade-marks.22
16. Evidence demonstrating the likelihood of confusion is most appropriately discussed in the Argument.
PART II -QUESTIONS IN ISSUE
17. Did the courts below err in finding there can be no likelihood of confusion between two trade-marks unless they are currently in competitive use in the same geographic area?
18. Did the courts below err in finding that a likelihood of confusion between two trade-marks can be overcome by the manner in which one is actually used after the relevant date, i.e. - by the "get-up" extraneous to the mark itself?
19. Did the courts below err in finding that there was no likelihood of confusion between Alavida's "Masterpiece Living" and the Masterpiece Inc. trade name and trade-marks in use prior to the relevant date, and in refusing to order expungernent?
PART Ill -ARGUMENT
Leqal Basis for Expunqement
20. Expungement is warranted under s. 57 of the Trade-Marks Act if a trade-mark "does not accurately express or define the existing rights of the person appearing to be the registered owner of the mark."23 It is submitted that Alavida's registration of "Masterpiece Living" was invalid under s. 18 as Alavida was not the person entitled to secure its registration:
18 (1) The registration of a trade-mark is invalid if ... and subject to section 17, it is invalid if the applicant for registration was not the person entitled to secure the registration.
22 Garforth-Bles July 13, 2007 Affidavit para, 21 [AR Vol I p. 1511; Marsh Affidavit paras. 10 - 12 [AR Vol II p. 1161 23 Trade-Marks Act, R.S.C. 1985, c. T-13, s. 57 [Authorities Tab I] 21. Section 16(3) of the Trade-Marks Act defines who is entitled to secure registration of a trade-mark filed on the basis of proposed use:24
16(3) Any applicant who has filed an application in accordance with section 30 for registration of a proposed trade-mark that is registrable is entitled, subject to sections 38 and 40, to secure its registration in respect of the wares or services specified in the application, unless at the date of filing of the application it was confusina with
(a) a trade-mark that had been previously used in Canada or made known in Canada by any other person;
(b) a trade-mark in respect of which an application for registration had been previously filed in Canada by any other person;
a trade-name that had been previously used in Canada by any other m,(c) [Emphasis added]
22. By December 1, 2005 when Alavida filed its application on the basis of proposed use, Masterpiece Inc. had for nearly five years been using its corporate name as a trade-name in the retirement residence business, as well as a series of trade-marks including the word "Masterpiece" either alone or in combination with references to "Living".
Statutorv Test for Confusion
23. The test for confusion is set out in s. 6 of the Trade-Marks Act?
6. (1) For the purposes of this Act, a trade-mark or trade-name is confusing with another trade-mark or trade-name if the use of the first-mentioned trade-mark or trade-name would cause confusion with the last mentioned trade-mark or trade- name in the manner and circumstances described in this section.
(2) The use of a trade-mark causes confusion with another trade-mark if the use of both trade-marks in the same area would be likely to lead to the inference that the wares or services associated with those trade-marks are manufactured, sold, leased, hired or performed by the same person, whether or not the wares or services are of the same general class. [Emphasis added]
24 Trade-Marks Acf, R.S.C. 1985, c. T-13, s. 16 [Authorities Tab I] 25 Trade-Marks Acf, R.S.C. 1985, c. T-13, s. 6 [Authorities Tab I] (5) In determining whether trade-marks or trade-names are confusing, the court or the Registrar, as the case may be, shall have regard to all the surrounding circumstances including
(a) the inherent distinctiveness of the trade-marks or trade-names and the extent to which they have become known;
(b) the length of time the trade-marks or trade-names have been in use;
(c) the nature of the wares, services or business;
(d) the nature of the trade; and
(e) the degree of resemblance between the trade-marks or trade- names in appearance or sound or in the ideas suggested by them.
24. It is not necessary to prove that actual confusion has occurred in the marketplace, but merely that confusion is likely to 0ccur.~6 As this Court has explained, "confusion" in the Trade- Marks Act is to be understood in a special sense:27
The test to be applied is a matter of first impression in the mind of a casual consumer somewhat in a hurry who sees the name Cliquot on the respondents' storefront or invoice, at a time when he or she has no more than an imperfect recollection of the VEUVE CLICQUOT trade-marks, and does not pause to give the matter any detailed consideration or scrutiny, nor to examine closely the similarities and differences between the marks. As stated by Pigeon J. in Benson & Hedges (Canada) Ltd. v. St. Regis Tobacco Corp., [I9691 S.C.R. 192 at p. 202:
It is no doubt true that if one examines both marks carefully, he will readily distinguish them. However, this is not the basis on which one should decide whether there is any likelihood of confusion.
... the marks will not normally be seen side by side and [the Court must] guard against the danger that a person seeing the new mark may think that it is the same one he has seen before, or even that it is a new or associated mark of the proprietor of the former mark.
2Waffel, Inc. v. 3894207 Canada Inc. [ZOO61 1 S.C.R. 722,2006 SCC 22 at para. 16 [Authorities Tab 121; Kelly Gill & Scott R. Jolliffe, Fox on Canadian Law of Trade-Marks and Unfair Competition, 4th ed., looseleaf (Toronto: Carswell, 2007) at pp. 8-66 [Authorities Tab 31 27 Veuve Clicquot Ponsardin v. Boutiques Cliquot [ZOO61 1 S.C.R. 824, 2006 SCC 23 at paras. 18 - 20 [Authorities Tab 201 There Was Never an Issue as to Relevant Date
25. Section 16(3) of the Trade-marks Act makes it clear that in this case Alavida was entitled to its registration "unless at the date of filing of the application it was confusing" with a trade-mark or trade name previously used in Canada. It was thus common ground in the courts below that the relevant date for assessing the likelihood of confusion was the date of Alavida's application for registration of "Masterpiece Living" - Dec. 1, 2005. It was for that reason that Masterpiece Inc, made no argument based upon its own use of the identical mark "Masterpiece Living". It did not do so because its use of that mark commenced only after the relevant date, albeit very shortly. Masterpiece Inc. restricted its arguments to the likelihood of confusion with its trade name and the other trade-marks it had used prior to Dec. 1,2005.28
Likelihood of Confusion Does Not Depend Upon Pre-existing Competition
26. The Courts below fell into fundamental error by ignoring the overall purpose of the Trade- marks Act, and its implicit treatment of Canada as a national market. Upon registration, the owner of a trade-mark is granted a national monopoly over its use and the use of any trade-mark which is likely to be confusing therewith. Essential to that legislative scheme is a test for likely confusion which disregards current geographical limitations on actual use of competing trade-marks. The Courts below adopted a test for confusion analogous to that applicable to a common law passing off action, and applied it to an expungement proceeding. By so doing they accorded priority to Alavida's trade-mark on the basis of first registration, whereas the intention of the Trade-marks Act is to accord priority on the basis of first use.
27. The Courts below interpreted s. 16(3) of the Trade-Marks Act as modifying the definition of "conf~sion",~~and thereby restricting consideration of Masterpiece evidence and arguments to circumstances which had already occurred by the date of Alavida's application for registration?
... [Slubsection 16(3) is crucial to the decision in the present case because, as has been said previously, it sets the date for the test of confusion to be applied as the date of filing of the application. ... At the date of filing of the respondent's
28 Masterpiece Inc. Court of Appeal Memorandum of Fact and Law, paras. 19 - 21 [AR Vol Ill pp. 72 - 731 29 T.D. Reasons for Judgment para. 9 [AR Vol I p. 51; F.C.A. Reasons for Judgment paras 11 - 18 [AR Vol 1 pp. 28 - 30 ] The Court of Appeal correctly observed that s. 16(3) establishes the date for agglyg the test for confusion, but incorrectly concluded that it modifies the nature of the test. 30 F.C.A. Reasons for Judgment paras. 22,26 [AR Vol I pp. 31 - 331 trade-mark, the appellant did not sell its product in the same market as the respondent. This Court need not consider the appellant's plans for expansion after that date.
Although subsections 6(2) and 6(3) of the Act use the expression "would be likely to lead to the inference ..." the case law of this Court and the Federal Court has explicitly defined the confusion test in the present tense: "b likely to lead to the inference ..." (emphasis added) (see Bohna v. Miss Universe, Inc. (F.C.A.), [I9941 F.C.J. No. 1642 at paragraph 9; United States Polo Assn. v. Polo Ralph Laurent Corp,, [2000] F.C.J. No. 1472 at paragraph 3; Alticor Inc. v. Nutravite Pharmaceuticals Inc., [ZOO41 F.C.J. No. 268 at paragraph 18). We are therefore of the view that section 6 of the Act constitutes a hypothetical rather than a forward-thinking test.
28. The Appellant utilized the terms "hypothetical" and "forward-looking" interchangeably in its Factum and oral argument.31 If there is some significant dichotomy between the two, the Court of Appeal fails to explain it. More importantly, it fails to explain how any restriction upon consideration of actual competition in the near future dictates a refusal to consider the hypothetical possibility of that competition at the relevant date. Commercial circumstances which will occur in the future are powerful illustrations of those which could hypothetically occur in the present.
29. It is submitted that s. 16(3) does not have the effect suggested by the courts below. Section 16(3) means only that confusion must be assessed against trade names and trade-marks already in use by the application date. The test itself remains the same in all contexts, and mandates consideration of a hypothetical scenario in which the competing trade-marks are used in the same geographic area. The Court of Appeal erroneously imposed not merely a temporal limitation on the hypothetical test, but a geographic one as well. It did so based upon the erroneous conclusion that prior case law refutes "the proposition [put forward by Masterpiece Inc.] that likely confusion may exist despite the fact that the competing trade-marks are not yet competing in the same geographic area."32
30. The proposition advanced by Masterpiece Inc., but rejected by the Court of Appeal, flows inevitably from the very nature of the test mandated in the Act - "if the use of both trade-marks in the same area would be likely to lead to the inference ...". A proper likelihood of confusion
31 Masterpiece Inc. Memorandum of Fact and Law, pp. 5 - 7 at para. 20 [AR Vol Ill pp. 72 - 731 32 F.C.A. Reasons for Judgment para. 19 - 26 [ARVol 1 pp. 30 - 331 analysis cannot be geographically limited in the way the Court of Appeal proposes. Upon registration the applicant gains a national monopoly over the trade-mark and any mark confusingly similar thereto.33 The legislation is thus premised upon a national market, with a resulting presumption that competing trade-marks will at some point be used in the same geographic areas.
31. With the exception of an appeal from one of them, none of the three cases cited by the Court of Appeal in support of its analysis had been referred to by either party. The passages cited merely describe the statutory test generally and do not address the question of whether the hypothetical test may be forward-looking in any respect, let alone support the proposition that pre- existing competition in the same geographic area is essential to a finding of likely conf~sion.3~
32. In any case, even if the statutory language "would be likely" is interpreted to mean "is likely", on the basis of the French version of the Act or otherwise, it is difficult to see how this places a temporal geographic limitation on the test. The Bohna decision relied upon by the Court of Appeal suggests there is no dichotomy between a hypothetical and a forward-looking test:35
The beauty pageants of the parties may therefore well become in direct competition, being held possibly in the same hotel at the same time, and the allegation that the pageants may differ in type is thus irrelevant.
33. Similarly, while the Court of Appeal relied upon the trial decision in Alticor, its own decision on appeal implicitly supports the view that there is a forward-looking aspect to the test?
It has been held that assessing the future operations of a company should not include speculation about possible new ventures [citing inter alia the Cochrane- Dunlop decision discussed below], The actual channels of trade are a preferable basis of projections as to the future likelihood of confusion.
34. The decision of the Court of Appeal extends beyond the foregoing implicit conflicts with its own prior jurisprudence, to an express rejection of prior authority. The Court of Appeal expressly refused to follow a clear statement from its often-cited decision in Oshawa Holdings Ltd. v. Fjord
33 Trade-Marks Act, R.S.C. 1985, c. T-13, ss. 19 - 20 [Authorities Tab I] 34 Bohna v. Miss Universe, lnc., [I9941 F.C.J. No. 1642 (F.C.A.) at para. 9 [Authorities Tab 71; United States Polo Assn. v. Polo Ralph Laurent Corp., [2000] F.C.J. No. 1472 at para. 3 [Authorities Tab 191; Alticor Inc. v. Nutravite Pharmaceuticals Inc., [2004] F.C.J. No. 268 at para. 18 [Authorities Tab 51 35 Bohna, supra, at para. 25 [Authorities Tab 71 36 Alticor Inc. v. Nutravite Pharmaceuticals Inc., 2005 CarswellNat 2249 at para. 37 [Authorities Tab 61 Pacific Marine lndustries Ltd.. In that decision, the Court of Appeal had stated::3'
[I]t is not necessary ... for there to be actual use of conflicting marks in the same area, nor for there to be evidence of actual confusion. The test of ss. 2 and ss. 3 of Section 6 is not what has happened in fact but what inference would likely be drawn if the appellant and respondent did use the conflicting marks and trade names in respect of the different classes of goods in the same area.
35. It is difficult to see how this guidance is inconsistent with the hypothetical test which the Court of Appeal ultimately concluded is required by the Act. Nevertheless, the Court of Appeal rejected it on two grounds. It is submitted that both are erroneous.
36. First, the Court of Appeal construed Oshawa Holdings as having refused expungement because the parties were operating in different jurisdictions.38 However, nothing in that case suggests that one must ignore the likelihood of confusion if two parties were to operate in the same geographic area, merely because they are not presently doing so. The gravamen of Oshawa Holdings was not divergent geography but rather radical differences in the goods and the nature of the trade -wholesale pickled herring v, retail butter and ice cream.33 Indeed, the Court of Appeal itself made that very observation in the Pink Panther case it cites on another point.40
37. Second, the Court of Appeal distinguished Oshawa Holdings on the basis that it did not consider the effect of s. 16(3).41 This, however, is only a further illustration of the erroneous approach of modifying the nature of the test by reference to the context in which it must be applied.
38. The Court of Appeal's reliance upon the Pink Panther case is curious in a more important way. It is yet another case cited by neither party on the appeal, and yet another which acknowledges rather than rejecting the existence of some forward-looking aspects to the hypothetical test:42
3' Oshawa Holdings Ltd. v. Fjord Pacific Marine Industries Ltd., 1981 CarswellNat 553 at para. 11 [Authorities Tab 141 38 F.C.A. Reasons for Judgment para. 21 [AR Vol I pp. 30 - 311 39 Oshawa Holdings, supra, at para. 13 [Authorities Tab 141 40 Pink Panther Beaufy Corp. v. United Altists Corp. (C.A.) [I9981 3 F.C. 534 (F.C.A.) at para. 28 [Authorities Tab 151. Leave to appeal was granted by this Court: (1998) 235 N.R. 399 but the case was settled. 41 F.C.A. Reasons for Judgment para. 22 [AR Vol I p. 311 42 Pink Panther, supra, at paras. 52 - 53 [Authorities Tab 151 This is a proposed trade-mark. There has been no actual use of the mark in Canada as of yet. In any case of proposed use the likelihood of confusion will always be a speculative matter. There may be survey evidence, or there may be evidence of confusion in similar circumstances in other jurisdictions (though neither of these is present here). But regardless, the Court or the Reqistrar is forced to surmise as to future events. ...
[In Seagram, the] appellant had argued in that case that the general trend of corporate diversification would lead a consumer to presume that its liquor business was connected with the respondent's real estate business. MacKay J. dismissed this by saying:
I do not agree with this proposition. In my view, consideration of future events and possibilities of diversification is properly restricted to the potential expansion of existinq operations. It should not include speculation as to diversification into entirely new ventures, involving new kinds of wares, services or businesses.
I find this reasoninq to be applicable to the ~resentcircumstances. .
[Emphasis added]
39. In this case, Masterpiece lnc.'s expansion was already underway by the relevant date, and involved no diversification into a new venture, but rather simply the extension of its existing business into new geographic areas. It was well beyond mere planning and into implementation. These circumstances simply illustrate the appropriateness and necessity of analyzing the likelihood of confusion on the hypothetical basis that competition is already occurring.
40. It is submitted that the correct approach is that of the Ontario Court of Appeal in the often- cited decision in Cochrane-Dunlop Hardware Ltd. v. Capital Diversified Industries Ltd.:43
I think it is proper to consider that the possibility of confusion would increase as both parties expand the scope of their operations. The number of Pricegard stores rose from nine in 1969 to 24 at the time of trial in 1973. Although there have been temporary setbacks, the policv of the appellant is to expand and develop and, for this reason, I consider the learned trial iudqe was quite correct in anticipatinq a qreater likelihood of confusion between the trade marks of the parties. Section 6(2), which finds confusion where the use of marks "would be likely to lead to the inference" does not seem to me to preclude any reference to reasonably predictable future developments: Gray Rocks Inn Ltd. v. Snowy Eagle Ski Club Inc., supra, at p. 18. However, I think that consideration of future events
43 Cochrane-Dunlop Hardware Ltd. v. Capital Diversified Industries Ltd., 1976 CarswellOnt 1000 at para. 34 [Authorities Tab 81 must be limited strictly to possible expansion of present operations and cannot include speculation as to expansion into new activities involving kinds of wares, services or businesses. [Emphasis added]
41. The Federal Court of Appeal disregarded Cochrane-Dunlop on the basis that the relevant date for assessing confusion is different in an infringement case than on an expungement application. However, it fails to explain how the meaning of s. 6(2) could vary depending on the context.44 The same observation may be made of its rejection of the guidance of this Court in the Mattel case.45 There was and is no dispute about the date upon which the likelihood of confusion was to be assessed. The issue is as to the nature of the analysis to be performed
42. It has been understood until this case that pre-existing competition in the same geographic area is not essential to the establishment of a likelihood of confusion, and that the hypothetical test involves some forward-looking aspects:@
Competition is not a necessary factor. The question is whether the use of both trade-marks in the same area will be likely to lead to the inference that the wares and services associated with such trade-marks are provided by the same person. There is no difference in the standard of proof whether the case is one of infringement or opposition to registration. (at p. 921)
It is not necessary to prove that the wares are sold in the same places provided they are of the same general class, could eventually be sold in the same place, and the parties are entitled to do so and where, if geographically separate, the risk will decrease. (at p. 933)
Assessing the future activity of a party should not include speculation as to possible new ventures. The actual channels of trade are a preferable basis for projections as to future likelihood of confusion. It is not necessary to show that the wares are sold through the same types of places, so long as the parties are entitled to do so. ... Where the evidence demonstrates that a defendant's product will never be sold in the same establishment as the plaintiffs, likelihood of confusion is lessened. (at p. 936)
43. The reason for this has been explained by the Federal Court of Appeal itself:47
44 F.C.A. Reasons for Judgment para. 23 [ARVol I p. 311 45 F.C.A. Reasons for Judgment paras. 24 - 25 [AR Vol I p. 321 4Wughes, Ashton & Armstrong, Hughes on Trade-Mark, 2d ed., looseleaf, (LexisNexis Canada Inc: Markham, 2005) [Authorities Tab 41 47 U.A.P. Inc. v. Automaxi S.A. (1994) 59 C.P.R. (3d) 82 (F.C.A.), [I9941 F.C.J. No. 1993 at para. 31 FN 13 [Authorities Tab 181 It should be noted that s. 6 of the Act assumes, for the purposes of the comparison between the disputed trade marks, that each of them is used in a hypothetical market and the existence of confusion at the date of the Registrar's decision is to be determined on the basis of that assumed use. I adopt these comments by Daniel R. Bereskin: "Also, in Canada, confusion in relation to a registered trade mark is tested in a hypothetical marketplace where the two marks are both deemed to be used." ("Trade Mark Use", published in Trade Marks Law of Canada (Scarborough, Ontario: Carswell Thomson Professional Publishing, 1993) at p. 99)
44. The governing principle was correctly expressed as follows by Lutfy J., as he then was, in Prologic Systems Lid. v, Prologic Corp.:4*
It is not necessary in my view for there to be actual use of the conflicting marks in the same area, nor for there to be evidence of actual confusion. The test of s-ss. 12) and (3) of s. 6 is not what has happened in fact but what inference would likely be drawn if the appellant and respondent did use the conflictinq marks and trade- names in respect of the different classes of qoods in the same area. [Emphasis added]
45. The Prologic case involved a number of factual circumstances very similar to the present one. Lutfy J. expunged the trade-mark "PROLOGIC & Design" as confusingly similar to the trade- mark "PROLOGIC" and the trade-name "Prologic Systems Limited'. He found insufficient evidence of the applicant's use of its trade-& before first use by the respondent, However, it was sufficient for expungement that prior use of its trade-name was e~tablished.~~This is significant when analyzing Alavida's arguments about the extent to which specific trade-- were used by Masterpiece Inc. prior to Dec. 1, 2005. None of these arguments impact upon the clear and consistent use of "Masterpiece" as a trade-name in the retirement residence business.
46. Lutfy J. also expressly rejected other arguments very similar to those advanced by Alavida here. He found confusing similarity notwithstanding the lack of any inherent distinctiveness to the corporate name "Prologic" and despite minor variations in the sen~icesoffered by the parties and in the presentation of their competing marks.50
The applicant created "Prologic" as the operative word in its corporate name as a combination of the word "professional", "programming" and "logic" ... In my view,
48 Prologic Systems Ltd. v. Prologic Corp., [I9981 F.C.J. No. 80 at para. 8, 141 F.T.R. 72, 78 C.P.R. (3d) 435 (F.C.T.D.) at para. 11 [Authorities Tab 171 49 Prologic Systems Ltd., supra. [Authorities Tab 171 Prologic Systems Ltd., supra, at paras. 14 - 17 [Authorities Tab 171 "Prologic" as a trade-name which resembles the word "prolog" and as an acronym of "programming logic", is not inherently distinctive. The applicant's use of its trade-name has not become known to such a great extent as to increase substantially its distinctiveness. Similarly, the extent of the respondent's use of its trade mark has not enhanced its distinctiveness.
There is some merit to the respondent's submissions that the nature of the services offered by the respective parties is not identical... The services, however, are not sufficiently different to avoid the likelihood of confusion ... To paraphrase my colleague Mr. Justice Rothstein in Wellington County Brewery v. Corby Distilleries Ltd., the issue is not whether the applicant's services might be confused with the respondent's services but that the public might believe that both services originate from the same source.
Similarly, the Globe design which is depicted to the left of the respondent's trade- mark PROLOGIC does not diminish the degree of resemblance with the applicant's trade-name "prologic" or its corporate name. More specifically, the Globe design would not sufficiently distinguish the parties' use of the same word in appearance, sound and the ideas they suggest ... Customers will remember PROLOGIC, not the Globe design. There would be a likelihood of confusion within the meaning of sections 6 and 16.
Internal Inconsistency and Reliance Upon Extraneous "Get-up"
47, The Court of Appeal endorsed the reliance of O'Reilly J. upon the different "get-up" of the two trade-marks to eliminate any likelihood of confusion.51 In doing so, the Court of Appeal perpetuated a fundamental internal inconsistency. It ignored the impact on likely confusion if Masterpiece Inc, were to operate in the same geographic area as Alavida, because that was to commence only after the relevant date of Dec. 1, 2005. At the same time, in finding that confusion was unlikely, the Court relied upon the "get-up" or manner in which Alavida used its trade-mark, notwithstanding that such use occurred entirely after that date. Reliance upon such use is contrary to the guidance of one of the very cases cited by O'Reilly J. in support of his overall approach:52
Accordingly, no evidence concerning the use of the trade-mark VICTOR HUGO & Design can be considered given the appellant did not commence using such mark until after filing its application for proposed use.
48. Moreover, the "get-up" relied upon by the courts below is external to the trade-mark. Alavida's trade-mark is a pure word mark consisting of only the words "Masterpiece Living". 5' F.C.A. Reasons for Judgment paras. 33 - 35 [AR Vol I p. 351 52 Hugo BOSSAG v. Paragon Clothing Ltd. (1994) 87 F.T.R. 124 (F.C.T.D.) at para. 22 [Authorities Tab 101; cited by O'Reilly J.: T.D. Reasons for Judgment para. 9 [ARVol I p. 51 Reliance upon "get-up" external to the trade-mark itself is flawed when nothing compels Alavida to utilize any distinguishing "get-up" in association with its trade-mark in the future. Indeed, Alavida had conceded that the likelihood of confusion was to be assessed on the basis of the trade-mark "as it appeared on the Trade-Marks RegistryU.53 Even if it were otherwise, Dr. Mulvey's own Exhibit B reveals variations from significant prominence to the complete absence of Alavida's corporate name in the use of its "Masterpiece Living" trade-mark.54
49. The Court of Appeal misinterpreted the guidance of this Court in the Matte1 case, that "what is at issue is what the registration would authorize the respondent to do, not what the respondent happens to be doing at the moment". The Court of Appeal interpreted it as follows:55
The question can therefore be accurately expressed as follows: what is at issue is what the registration would authorize the respondent to do at the time of registration, not what the respondent happened to be doinq prior to registration. [Italics in original; Underlining added]
50. This may be so, but it supports the position of Masterpiece Inc. rather than that of Alavida. Registration of Alavida's trade-mark grants it a national monopoly over the use of "Masterpiece Living" and any confusingly similar mark. After registration it has the exclusive right to use that trade-mark - with or without its corporate name, in any font it chooses, and with or without the small TM indicator. On the Court of Appeal's own reasoning, the fact that Alavida happened to be using this particular additional "get-up" is irrelevant, and yet it is that get-up upon which the Court of Appeal relied to reject a likelihood of confusion.
51. The Court of Appeal's approach on this issue is also directly contrary to its own observations in the Bohna case. That case suggests that likely confusion cannot be eliminated by the use of extraneous "get-up" which the registrant is free to discontinue in the future:56
24 Not only are these differences inconclusive, in view of the basic similarity between the services and business or industry involved, but they are irrelevant to the extent that reaardless of the present intention of the respondent, either he, or any sLccessor in lille, sno~ldlhe rrade mar6 Miss Nude Lniverse be found reqislrable and hencefonn be reaislered, wou d be free ro cnanae roe format.
53 Alavida Trial Division Memorandum of Fact and Law, para. 22 [ARVol Ill p. 70 - 711 " Mulvey Initial Affidavit, Exhibit B [AR Vol I1 p. 641 " F.C.A. Reasons for Judgment para. 25 [AR Vol I p. 321 56 Bohna, supra, at para. 24 [Authorities Tab 71 location, style or character of his beauty pageants at any time. Again as noted by Thurlow C.J, in Mr. Submarine case:
... Nor is the appellant's exclusive right confined to the sale of sandwiches by the methods it now employs or has employed in the past. Nothing restricts the appellant from changing the colour of its signs or the style of lettering of "Mr. Submarine" or from engaging in a telephone and delivery system such as that followed by the respondent or any other suitable system for the sale of its sandwiches. Were it to make any of these changes its exclusive right to the use of "Mr. Submarine" would apply just as it applies to its use in the appellant's business as presently carried on. Whether the respondent's trade marks or trade names are confusinq with the appellant's reqistered trade mark must accordinqly be considered not only havinq reqard to the appellant's present business in the area of the respondent's operations but having reqard as well to whether confusion would be likely if the appellant were to operate in that area in any way open to it usinq its trade mark in association with the sandwiches or services sold or provided in the operation,
[Emphasis added]
52. Similarly in this case, nothing compels Alavida to use the word mark "Masterpiece Living" in the ways considered by the courts below to minimize the risk of confusion - together with its corporate name, in any distinctive font, or with the small TM indicator, As Dr. Corbin explained in her Affidavit in addressing this very issue, the risk of confusion must be assessed with reference to all plausible consumer settings.57
53. On issues of registration, expungement or infringement, any surrounding get-up should be irrelevant to the analysis unless it forms part of the registration itself - either as part of the mark (e.g, a design mark) or as part of the description of the wares or services. By rejecting any likelihood of confusion and refusing expungement on the basis of the "get-up" extraneous to the challenged trade-mark, the decision impinges upon the legislative objective of preventing consumer confusion, since the registrant has no obligation to continue that manner of use in the future. The purpose of the trade-mark system is to prevent consumer confusion not only at the date of registration, but on a continuous basis thereafter.
- 57 Corbin Affidavit, para. 26 [AR Vol II p. 1431 Decisions Below Import a Passing Off Test. Contrary to Leaislative Intent
54. By holding that likely confusion cannot exist unless two trade-marks are already in competition in the same geographic area, and by ruling out likely confusion on the basis of differential "get-ups" external to the marks, the Court of Appeal has in effect introduced the common law passing off test into an expungement proceeding. This requires that a claimant prove that it had established a pre-existing reputation in the area in which the defendant is operating, and that the defendant has caoitalized on actual consumer confusion.
55. Such a test is inapplicable to a trade-mark registration system in which national monopolies are granted regardless of the geographic scope of the registrant's operations, The Court of Appeal cites the overall scheme of the Trade-marks Act, and its establishment of different relevant dates for assessing confusion, as one of the grounds for its decision.58 In fact, the decision is fundamentally inconsistent with the overall scheme and purpose of the Act, The Act accords priority to trade-marks based upon first use, not first registration, and this because the legislation is aimed at protecting the public from confusion:59
The following quote from the Supreme Court of Canada aptly and succinctly summarizes the foundation, rationale and necessary limits of trade-mark law:
Its claim to monopoly rests not on conferring a benefit on the public in the sense of patents or copyrights, but on sewing an important public interest in assuring consumers that they are buying from the source from whom they think they are buying and receiving the quality which they associate with that particular trade-mark. Trade-marks thus operate as a kind of shortcut to get consumers to where they want to go, and in that way perform a key function in a market economy. ...
Use creates the riqht to a trade-mark, whether in Canada or a country of the Union, reqistration does not. With one important exception, registration merely serves to confirm the title which has already been established by use. In Patflo v. Todd, Ritchie C.J. succinctly explained this theory of confirmation of title by 58 F.C.A. Reasons for Judgment paras. 11 - 18 [AR Vol I p. 28 - 301 59 Gill and Jolliffe, Fox on Canadian Law of Trade-marks and Unfair Competifion 4th ed., Looseleaf, Toronto: Thomson Carswell, 2002 at pp 1-1 and 5-4 [Authorities Tab 31 The proposition that trade-mark rights flow from use rather than registration has been described as "trite": Eurofase Inc. v. lndustrias Fase, S.A., 119991 F.C.J. No. 1377, (1999) 2 C.P.R.(4h) 70 (F.C.T.D.) at paras. 20 - 21 [Authorities Tab 91 registration: 'It is not reqistration that makes the party proprietor of a trade-mark; he must be proprietor before he can reqister'. [Emphasis added]
56. Because of this, expungement is warranted if there was prior use of a confusingly similar trade-mark "in Canada", i.e. - anywhere in Canada, not everywhere in Canada.60 The priority accorded to first users, and the absence of any requirement of pre-existing competition to demonstrate the likelihood of confusion, are both confirmed and reflected further in the text and underlying purpose of s. 17 of the Act.
57. Under that section, a new trade-mark gains some protection from an expungement application by an unregistered prior user only after 5 years have passed since its registration. Until then it is subject to expungement if it is confusing with another trade-mark or trade name in prior use anywhere else in Canada, even if the new registrant was not aware of it61 As pointed out above, the present dispute results from the failure of Alavida's consultant to conduct the sort of searches Alavida expected in order to ensure that no one else was already using "Masterpiece" branding in the retirement residence industry in Canada.62
58. The purpose of s. 17, and the role it occupies in Canada's "first-to-use" trade mark registration system, is apparent from the 1953 Report of Trade Mark Law Revision Committee to the Secretary of State of Canada, upon which the current legislation is based?
There are essentially three possible legal systems respecting the registration of trade marks. One is a system in which trade mark rights depend solely on registration. This is the system which is the basis of the law in a number of South American countries. Such a system, though having the advantage o'f certainty, is open to the gravest abuses by enabling persons having no colour or right to register and thereby appropriate to themselves trade marks which may have become well known by use. A second system is one in which trade mark rights depend wholly upon use. Such a system is more just than the first, but it suffers from the disadvantage of uncertainty in that a registration may always be set aside on the basis of some previous use which may have been very small and localized. The result in such circumstances may moreover be unjust and lead to confusion of the public because the registrant who adopted and registered without knowledge
60 Alavida recognized this in its Statement of the Issue before O'Reilly J.: Alavida Trial Division Memorandum of Fact and Law, para. 22 [AR Vol Ill p. 70 - 711 61 Trade-marks Act, R.S.C. 1985, c. T-13, s. 17 [Authorities Tab I]; 62 See Statement of Facts, paras. 14 - 15 Report of the Trade Mark Law Revision Committee to the Secretary of State of Canada, January 20, 1953: Appendix to Harold G. Fox, The Canadian Law of Trade Marks and Unfair Competition, Vol. 2., 2d ed. (Toronto: The Carswell Company Limited, 1956) at 1168 - 1170. [Authorities Tab 21 of the earlier localized use may in the meantime have made the trade mark very well known to the bulk of the public. The third possible system is a compromise between the first two, such a compromise system being the basis of the law in many important countries, e.g. Great Britain and the United States. Obviously various compromises are possible, depending upon the emphasis towards the first or second system. The committee was impressed with the weight of opinion in answer to its questionnaire in favour of certainty, but kept in mind the importance of minimizing the incidence of cases of public confusion and injustice. We have consequently concluded that the most satisfactory system will be one in which trade mark rights depend primarily upon use but in which the existence of a registration should, after a reasonable period from its grant (during which any earlier user may apply to set it aside), be terminative [sic] of trade mark rights, subject to a measure of protection for the unregistered first user and for the public familiar with his goods in the area of his operations. In general terms that is similar to the system of trade mark law in Great Britain and the United States.
It will be seen from the preceding discussion of the provisions of the Bill that the right to registration depends essentially on use or making known of the trade mark in Canada. If there are rival claims to a trade mark by two persons, the one who first used it in Canada is the person entitled to its registration regardless of the fact that he may be the later to apply. According to the Bill it is proposed that this should remain the position during the first five years after the grant of a registration, and that thereafter a registration will acquire a certain measure of incontestability, as will be later explained in Section 22 of this Report.
59. It would appear that one of the factors which led the courts below to ignore this legislative scheme was Alavida's emphasis upon December 1,2005 as the relevant date for assessment, the limited size of Masterpiece lnc.'s operations as of that date, and its prior use of different "Club Sierra" branding during the currency of an earlierjoint venture with Medican Inc.
60. However, the underlying premise of Alavida's entire line of argument in this respect, and the effect of the decisions of the Courts below, is that a first user cannot block the registration of a first filer unless the first user's reputation already extends into the geographic area of the first filer, That is contrary to the scheme of the legislation, amounts to the application of a common law passing off test to a trade-mark registration case, and erroneously treats the Trade-marks Act as having established Canada as a first-to-file rather than a first-to-use jurisdiction,
Decisions Below Place Unreqistered Trade-marks in Peril
61. The approach of the courts below exposes the multitude of unregistered common law trade-marks to the risk of infringement actions notwithstanding that they may have been in use prior to the registration of a confusingly similar trade-mark. This risk for common law trade-marks arises from the important exception referred to in the quotation above from the Fox text?
The exception is that discussed earlier in this chapter, namely, that the common law only protects trade-marks so far geographically as the reputation in the trade-mark extends, whether that be a small locality or indeed across the country. Registration under the Trade-marks Act automatically extends the "reputation" of the trade-mark across the country regardless of the actual geographic use and extent of the common law trade-mark's common law reputation and therefore will protect against the use of confusing trade-marks by third parties anywhere in the country.
62. To illustrate in this case, suppose Alavida were to cease use of the "get-up" relied upon by the courts below as minimizing the likelihood of confusion, thereby creating a greater likelihood of confusion with the Masterpiece Inc. trade name and associated trade-marks. Is Masterpiece Inc. then exposed to an infringement action anywhere it operates, regardless of whether Alavida even competes there? Would that exposure extend even to geographic areas in which Masterpiece Inc, was operating and using those marks long prior to Alavida's application for registration?
63. In this particular case that exposure may not exist by virtue of the manner in which Alavida has presented its case and resisted expungement of its trade-mark. However, in other cases such arguments may not be available, and the party having first use of a trade-mark would be exposed to liability for infringement of a subsequently registered mark with which it is confusing, even though that other mark was later in use. The junior mark would gain priority over the senior one,
64. The inconsistency of the decisions below with the scheme of the Trade-marks Act is further illustrated by the fact that Masterpiece Inc, would have some possibility of further protection from this exposure if it had not challenged Alavida's trade-mark until more than 5 years had passed from its registration. As explained above, Alavida's trade-mark would then have become incontestable under s. 17(2), absent proof that it was aware of the Masterpiece Inc, trade name or trade-marks when it applied for registration. But in that unique circumstance, Masterpiece Inc. would have the possibility of convincing a Court under s. 21 that it should be permitted to continue using its own marks in a defined territorial area. The absence of any such protection when the challenge occurs within 5 years makes it clear that expungement is the proper remedy here.
64 Kelly Gill & Scott R. Jolliffe, Fox on Canadian Law of Trade-Marks and Unfair Cornpetifion, 4th ed,, looseleaf (Toronto: Carswell, 2007) at p. 5-4 FN 3 [Authorities Tab 31 Likelv Confusion is Patent When the Proper Test is Applied
65. By virtue of the erroneous approaches described above, the chambers judge committed extricable errors of law and other palpable and overriding errors in his consideration of the evidence on the likelihood of confusion. He ignored serious flaws in the evidence of Alavida's expert witnesses, relied upon evidence which by his own reasoning should have been ignored, and disregarded other evidence highly relevant to the likelihood of confusion. These errors of law were then adopted by the Court of Appeal, with the result that neither court below has assessed the evidence in accordance with the correct legal principles.
66. It thus falls to this Court to do so. An appellate court "is able to conduct its own analysis on the issue of confusion" - a power that "has long been established in the jurisprudence concerning trade-mark confusion."~5
67. It is submitted that there is an obvious likelihood of confusion when Alavida uses "Masterpiece Living" in the same industry in which Masterpiece Inc, has for years used its trade- name "Masterpiece" and the trade-marks "Masterpiece", "A Living Masterpiece", "Masterpiece Clubs", "Masterpiece The Art of Living", and "Masterpiece The Art of Retirement Living".
The Evidence Bearinq on the Likelihood of Confusion
The Trade-mark Reqistrv's Conclusion
68. The Registrar of Trade-marks denied Masterpiece Inc, registration of "Masterpiece" on the basis of confusion with Alavida's application for "Masterpiece Living". This evidences the view of the Registrar of Trade-marks that the two would likely be confusing with one another if both were used in the retirement residence industry.6Uhe logical obverse is that Alavida's "Masterpiece Living" is likely to be confusing with Masterpiece lnc.'s prior use of its trade name and trade-mark "Masterpiece':
a Polo Ralph Lauren Corp. v. United States Polo Assn. (2000),9 C.P.R. (4th) 51;286 N.R. 282, 215 F.T.R. 160 (F.C.A.)at para. 15 and FN 12 [Authorities Tab 161 T.D. Reasons for Judgment para. 5 [AR Vol I p. 31; Garforth-Bles April 17, 2007 Affidavit paras. 43 - 44; Exhibits X and Y [AR Vol I pp. 57, 139 - 1441; Corbin Affidavit paras. 60 - 62 [AR Vol II pp. 159 - 1601 The Ex~ertEvidence Generally
69. Alavida responded to the expungement application with an opinion from Dr. Mulvey that there was no likelihood of confusion. It is submitted that his opinion is counter-intuitive on its face, and suffers from several fundamental flaws which the courts below failed to address by virtue of their erroneous approach to the test for likely confusion.
70. On behalf of Masterpiece Inc., Dr. Corbin reviewed Dr. Mulvey's opinion and expressed a contrary view from two standpoints - first from the standpoint of marketing theory and business logic, and second by testing the competing theories with a survey to determine how potential consumers actually react to the competing trade-marks. Dr. Mulvey admitted the potential value of a survey, but never considered conducting one. His opinion therefore stands alone, isolated from any evidence about real-life potential c0nsumers.6~
71. Alavida chose instead to engage a separate expert to critique Dr. Corbin's survey. However, Dr. Chakrapani was given no mandate to comment on the more fundamental competing opinions of Drs. Mulvey and Corbin on the likelihood of confusion. While he had Dr. Mulvey's Affidavit, he did not respond to it "in any shape or form" and "didn't pay much attention" to Dr. Corbin's opinion on the likelihood of confusion as he was "sticking to [his] mandateV.6a In the result, Dr. Corbin was the only marketing and consumer behaviour expert to express an opinion based on the integration of both theory and testing in the real world. As explained below, she was also the only expert to demonstrate a correct understanding of the basis upon which the likelihood of confusion is to be assessed.
Alavida's Exped Dr. Mulve~
72. Dr. Mulvey conceded the possibility of confusion between Alavida's "Masterpiece Living" and some of the Masterpiece Inc. marks.69 He agreed that confusion would increase in any market categories served by both companies.70 Significantly, he also agreed that it would increase if the companies were to compete in the same geographic area.71 However, he did not consider
67 Mulvey CE pp. 23(2) to 24(23) [AR Vol II pp. 90.911 68 Chakrapani CE pp. 17(10) to 18(22) [AR Vol Ill pp. 44 - 451 69 Mulvey Initial Affidavit paras. 14(b) and (c) [AR Vol II p. 531 Mulvey Initial Affidavit para. 20 [AR Vol II p. 591 Mulvey Initial Affidavit paras. 21,24 [AR Vol II pp. 59,601 the likelihood of confusion if that were to occur:72
Well, I am not looking prospectively here. I am looking at the facts when the evidence was presented. So, it wasn't dealinq with the hypothetical possibility of one enter in^ the other's market. It was dealing with the way they were then. [Emphasis added]
Thus, the only expert who opined that confusion was unlikely reached that conclusion without applying the hypothetical test mandated by the Act.
73. Moreover, Dr. Mulvey relied upon Alavida's assertion that even in their own geographic areas, the two companies were targeting different market segments. The degree of similarity in the wares and services of Alavida and Masterpiece Inc. is one of the specific factors to which the Trade-Marks Act directs consideration. It was "an important factor" in Dr. Mulvey's assessment, and he relied upon Mr. Choo's Affidavits and assumed them to be accurate.73 He thus formed his opinion under the erroneous impression that Masterpiece Inc. was focused on the nursing home market and did not operate in the over-50 lifestyle market74 whereas Alavida was "steering away from [and] consciously avoiding" clientele who face very difficult health care situations.75
74. In fact, Alavida's own website made clear that it was not steering away from the long-term care market. To the contrary, one of its new projects featured "a secure floor dedicated to residents with dementia and an assisted living level that will cater to residents who need extra care to overcome various physical challenges." It had "a stabilization room, which uses special lighting, sound and aromas to stimulate and soothe those who have Alzheimer's disease and related dementia." Alavida promoted the fact that "there is no need to move on" from this facility as care requirements increase.76 This was all "new information" which Dr. Mulvey had not known when he formed his opinion, and presented a different impression than Mr. Choo's Affidavit."
75. Dr. Mulvey's own credibility suffered when he volunteered the contention that Mr. Choo's
72 Mulvey CE pp. 56(16) to 57(16) [ARVol II pp. 109 - 1101 73 Mulvey CE pp. 6(11) to 7(4); 18(24) to 19(4) [AR Vol II pp. 78- 79; 85 - 861 74 Mulvey Initial Affidavit para. 20 [AR Vol II p. 591; Mulvey CE pp. 18(24) to 20(2) [AR Vol II pp. 85 - 871 75 Mulvey Initial Affidavit paras. 19 - 20 [AR Vol II p. 591; Mulvey CE pp. 13(37) to 15(2) [AR Vol II pp. 80 - 821 76 tho0 CE Exhibit A [AR VOI Ill p. 831; Mr. Choo attempted to reconcile these website statements with those he had made in his Affidavit by claiming that anyone, including himself, might benefit from the calming effect of the stabilization room: Choo CE pp. 56(10) to 64(19) [AR Vol II pp. 38 - 461 77 Mulvey CE pp. 15(4) to 19(4) [AR Vol II pp. 82 - 861 Affidavit was not inconsistent with the website. Moreover, in response to an objectionably leading question in re-direct, Dr. Mulvey claimed that his opinion was unaffected by the new inf~rmation.~~ It is submitted that this evidence seriously impinges Dr. Mulvey's credibility. In any event, it is clear that his opinion was formed under an erroneous impression of Alavida's wares and services.
76. Moreover, both Mr. Garforth-Bles of Masterpiece lnc, and a retirement residence industry expert confirmed that Masterpiece Inc, was not focused on the nursing home market, that the two companies had in fact identical target markets, and would be direct competitors if and when they were operating in the same geographic area. The expert witness, Mr. Marsh, expressed the opinion that there would definitely be confusion in that situation.79 While Dr. Mulvey acknowledged the importance of this type of information, he was not shown the Reply Affidavits of Mr. Garforth- Bles or Mr. Marsh, so was "not in the loop" in that respect.80 He thus formed his opinion under misapprehensions about the target markets of both companies.
77. Using these misapprehensions, and without even considering hypothetical competition in the same geographic area, Dr. Mulvey conducted an analysis of the "morphology" and "semantics" of the competing trade-marks, and a side-by-side analysis of the Masterpiece Inc. marks against the manner in which Alavida actually used its mark after Dec. 1, 2005. He did this despite having previously acknowledged an understanding (based on a 1960 Federal Court decision) that this is not the correct approach, as indeed it is not?' It would appear that Dr. Mulvey was unaware of the modern case law in this regard until advised by Alavida's former counsel. Despite this advice, he was unable to relinquish his own approach, insisting that it was still useful, depending upon how "molecular" one becomes. He would concede only that breaking the trade-marks down into individual letters would be "probably less useful than looking at sets of words."82
78. Dr. Mulvey made the counter-intuitive claim that when Alavida uses "Masterpiece Living", the focal element of the trade-mark is on "Living", whereas when Masterpiece Inc. uses its marks, the focal element is "Masterpiece". He made the former claim despite expressly noting that "Living" is a common feature in product names and branding, and that it is the noun modifier
78 Mulvey CE pp. 20(8) to 22(10); Mulvey Re-direct pp. 58(23) to 60(7) [AR Vol II pp. 87 - 89, 111 - 1131 79 Garforth-Bles July 13, 2007 Reply Affidavit paras. 8 - 17 [AR Vol I pp. 147 - 1501; Marsh Affidavit paras. 17 - 24 [ARVol I1 pp. 117- 1191 80 Mulvey CE pp. 22(11) to 23(1) [AR Vol II pp. 89 - 901 8' Mulvey Initial Affidavit para. 11 FN 2 [AR Vol II pp. 52 - 531 82 Mulvey CE pp. 29(12) to 30(4) [AR Vol II pp. 92 - 931 ("Masterpiece" in this case) which enables consumers to distinguish products and offerings.8 Dr. Corbin described this inconsistency, charitably it is submitted, as "perplexing", adding that survey responses demonstrated "Masterpiece" was the dominant indicator in both cases.84
79. In his Reply Affidavit, Dr. Mulvey went so far as to insist that even when considering the two companies' identical trade-marks "Masterpiece Living", the focal elements are different depending on which company is using When this was pointed out to him, he claimed it was "a new exposure" and he would "want to read this again".86
80. It is difficult to imagine an analysis more at odds with judicial guidance than that conducted by Dr. Mulvey. Confusion is not to be assessed by laying competing trade-marks side-by-side and conducting a minute analysis of contrasting details. It is not necessary to prove actual confusion in the marketplace, but merely that confusion is likely to occur.s7 The Court's task is to consider whether Alavida's use of "Masterpiece Living" in association with its retirement residences would be likely to lead to the inference that they come from the same source as those which are or may in the future be operated by Masterpiece Inc. under any of the trade-marks or the trade-name it used prior to December 1,2005.
81. This is to be tested by reference to the first impression of a casual consumer somewhat in a hurry, who sees one mark with an imperfect recollection of the other, and without any ability to scrutinize the two side-by-side for similarities and differences.88 While citing it for other points, O'Reilly J, did not refer to this aspect of Veuve Cliquot, and it is submitted that his analysis of the Mulvey opinion fundamentally ignored this guidance.
82. The courts have developed a number of other practical guidelines for use in determining the likelihood of confusion. Many of these practical guidelines were summarized in Polo Ralph
83 Mulvey Initial Affidavit paras. 16(c)(i) and (ii) [AR Vol II pp. 55 - 561 84 Corbin Afidavit paras. 35 - 37 [AR Vol II pp. 148 - 1491 85 Mulvey Reply Affidavit paras. 6 and 7(c) [AR Vol II pp. 70 - 721 86 Mulvey CE pp. 48(10) to 50(14) [AR Vol II pp. 101 - 1031 Mattel, Inc., supra, at para. 16 [Authorities Tab 121; Kelly Gill & Scott R. Jolliffe, Fox on Canadian Law of Trade-Marks and Unfair Compefition, 4" ed., looseleaf (Toronto: Carswell, 2007) at pp. 8-55, 8-66 [Aurthorities Tab 31; Cochrane-Dunlop, supra. at para. 35[Authorities Tab 81 88 Veuve, supra, at paras. 18 - 20 [Authorities Tab 201; See also Mattel Inc., supra, at paras. 56 - 58 [Authorities Tab 121 Lauren Corp. v. United States Polo Assn.:89
(a) The court is to put itself in the position of an average consumer who is familiar with the earliest mark but has an imperfect recollection of it.
(b) The court must ask whether the ordinary consumer will, on seeing the later mark, infer on first impression that its wares or services are in some way associated with the wares or services of the earlier mark or are from the same person's trade, whether as manufacturer, wholesaler, distributor or retailer.
(c) The trade-marks must be considered in their totality, not dissected into their constituent elements or laid side-by-side for comparison.
(d) The trade-marks must not be considered in isolation but in association with the wares or services with which they are used. Other cases have pointed out that the likelihood of confusion is accentuated the greater the similarity between the wares or services.90 However, it is not enough to simply consider the trade in which the parties currently or propose to engage. The full range of the trade available to them in the circumstances must be considered.$l
(e) The enumerated factors in s. 6(5) need not be attributed equal weight. 83. Dr. Mulvey's side-by-side comparison of the trade-marks is reflected in para. 17 of his Affidavit and Exhibits B and Cg2 It is submitted that in the course of his analysis, Dr. Mulvey made a number of observations which fail on their face to meet the test of practical application or common sense. Several suffer from a single fundamental flaw. As a pure word mark, there is no requirement that Alavida use it in association with its corporate name, in any particular script or font, or with a lower case "I" in "Living", and even Dr. Mulvey admitted as much.93
84. Finally, Dr. Mulvey argued that the likelihood of confusion was reduced by the fact that consumers making a decision on a retirement residence will undertake the level of investigation required to overcome any confusion that might result from the competing use of confusingly similar
89 Polo Ralph Lauren Corp. v. Unifed States Polo Assn. (2000), 9 C.P.R. (4th) 51, at para. 18, 286 N.R. 282, 215 F.T.R. 160 (F.C.A.) [Authorities Tab 161 As is apparent from the fact that dissimilarity in the competing wares and services augers against a finding of confusion: Matte1Inc., supra, at paras. 78 - 87 [Authorities Tab 121 9i Mattel Inc., supra, at paras. 53 and 74 [Authorities Tab 121 92 Mulvey Initial Affidavit para. 17, Exhibits B and C [AR Vol II pp. 56 - 58,63 - 661 93 Mulvey CE p. 32(14 to 24) [AR Vol II p. 951; See also Corbin Afidavit paras. 26,41,42(d) [AR Vol II pp. 143, 151-1531 trade-marks. In his Reply Affidavit, he went so far as to suggest that consumers not prepared to undertake that detailed analysis are "irrelevant" to the assessment of likely confusion:94
People who don't care about the product category are irrelevant to the task of assessing confusion because they lack the feelings of involvement and personal relevance that impel consumer behaviour.
85. No authority was cited for this proposition, and it is submitted there is none. Dr. Mulvey could not explain his claim that someone "doesn't care" about his retirement residence because he approaches Alavida in the belief that its "Masterpiece Living" offering emanates from the same company which offers "Masterpiece The Art of LivingU.95 The care with which that customer makes his decision on whether to buy may never disabuse him of that misimpression. As Dr. Corbin pointed out, Dr. Mulvey's approach ignores consumers' vulnerability to initial interest confusion, even if they are ultimately disabused of that confusion.96
Dr. Corbin v. Dr. Mulve~
86. Masterpiece lnc.'s expert Dr. Corbin did not operate under the same misapprehensions of fact or errors in approach as Dr. Mulvey. She examined the competing trade-marks and trade name from the standpoint of marketing theory and business logic, and concluded there was a clear likelihood of confusion. She was reinforced in this conclusion by a survey demonstrating the highest levels of confusion she has encountered in the last 15 years of conducting them37
87. Dr. Corbin's qualifications are outstanding. One of Alavida's own experts characterizes her as among "the best known practitioners and academics in the world" and her book as "an indispensible referen~e".~~Her opinion is commended to the Court in its entirety as a very careful analysis which combines theoretical analysis with convincing empirical examples and common sense, and goes on to test and confirm the resulting conclusions in the real world.
88. Quite apart from the other errors of law inherent in his adoption of the Mulvey analysis, O'Reilly J. rejected Dr. Corbin's critique of it in a single paragraph, but with no real analysis.99 He
94 Mulvey Reply Affidavit para. 14 [AR Vol II p. 751 95 Mulvey CE pp. 55(4) to 57(16) [AR Vol II pp. 108 - 110j 9Worbin Affidavit paras. 49 - 53 [AR Vol II pp. 156 - 1581 97 Corbin Affidavit, paras. 15 - 20 and 76 IARVol I1 pp. 139 - 140, 165 - 1661 98 Chakrapani CE pp. 2(7) to 4(5) [AR Vol Ill pp. 34 - 361; Exhibits CC-6 [AR Vol Ill p.. 871 99 T.D. Reasons for Judgment para. 25 [AR Vol I p. 101 simply cited Dr. Mulvey's complaint that Dr. Corbin's criticisms were based on an unfair reading of his opinion. However, O'Reilly J. provided no explanation of how or why her reading was unfair. It is submitted there was nothing unfair in it, and that this is readily apparent when her opinion is reviewed on a proper approach to the test for likely confusion.
89. By way of example only, despite his use of a side-by-side analysis of morphology and semantics, Dr. Mulvey made it clear that he understood the assessment was to be based on a global first-impression assessment of the trade-marks, not by dissecting them into parts and comparing them that way.100 Yet he saw it as an example of "malignant rhetoric" on Dr. Corbin's part for her to point this out in her Affidavit. Dr. Corbin had quoted Dr. Mulvey's own statement that "the average consumer rarely examines trademarks in a careful deliberate manner".lol
90. Similarly, Dr. Mulvey took Dr. Corbin to task for suggesting that he "observes that consumers make sense of trade-marks by dissecting them into parts." He characterized this as "a lie" on Dr. Corbin's part.lO2 It is difficult to understand his umbrage in view of the paragraph upon which she was commenting, in which Dr. Mulvey stated:1O3
Morphology is the branch of linguistics that studies patterns of word formation within and across languages. Words are often related to other words. ... Other words are compounds of other words that are complete words in their own right. For example, "dishwasher" is a compound of the words "dish" and "washer". structure and rules of word-formation have implications on how consumers make sense of word trademarks. [Emphasis added]
91. Another illustration of misplaced criticism of Dr. Corbin can be seen in Dr. Mulvey's denial that he suggested consumers "will" fail to notice "The Art of Living" in the Masterpiece Inc, trade- mark. He pointed out that he said only that they "may" do so. He was forced to admit, however, that he had characterized it as "likely". It is illuminating that he would still have complained even if Dr. Corbin had used that very word.104 Moreover, he failed entirely to address Dr. Corbin's observation on the internal inconsistency of his contention that consumers would distinguish
Alavida's trade-mark by the TM indicator and the small "I" in "living", but would likely miss the much looMulvey Reply Affidavit para. 5(a) [AR Vol II pp. 68-69]; Mulvey CE p. 45(1 to 7) [AR Vol II p. 981 Io1Mulvey Reply Affidavit para. 2, 5(a)(i) [AR Vol II pp. 68 -691; Corbin Affidavit paras. 34 and 42(f) See also second last bullet on p, 20 [AR Vol II pp. 148, 152 - 1531 lo2 Mulvey Reply Affidavit para. 5(a)(ii) [AR Vol II p. 691; Mulvey CE pp. 43(11) to 44(12) [AR Vol II pp. 96
- 971~ ~ lo3iulvey Initial Affidavit para. 13 [AR Vol II p. 531 'a4 Mulvey CE pp. 47(5) to 48(9) [ARVol II pp. 100 - 1011 more prominent "The Art of Living" in the Masterpiece Inc. mark.105
92. It is submitted that Dr. Mulvey's reaction to Dr. Corbin's analysis reflects a defensive recognition of weaknesses in his opinion rather than legitimate criticism of Dr. Corbin. His credibility suffered further from gratuitous criticism that the evolution of the Masterpiece Inc. trade- marks may give rise to "inferences of a flighty or schizophrenic company".1°6 In fact, the evolution in branding in which Masterpiece Inc, has engaged is an industry trend, as Mr. Marsh explained.lO7 Moreover, the trade-marks were consistent in their inclusion of "Masterpiece", which if anything engages the stronger protection accorded by the "family of marks" doctrine.lo8
The Corbin Survev Evidence Merely Supports Her Basic Opinion
93. The Corbin survey was aimed only at illustrating the common sense analysis explained in her overall opinion. It involved interviews of 251 people meeting criteria directed at establishing them as part of the market for Masterpiece Inc. and Alavida ~ervices.~0gTwo groups in each of three cities were shown the trade-mark "Masterpiece Living", one as a simple word mark on a white card and the other as Alavida actually uses it - in colour, with italicized font, the TM indicator and the small "I" in "living".
94. They were first asked whether they had an opinion on what company promotes retirement services using that brand name. If they expressed no opinion, they were shown a list of ten companies, including Masterpiece Inc., Alavida Lifestyles Inc. and a fictitious control company named Quality Lifestyles. On the first question, 6% answered Masterpiece or Masterpiece Inc. and none answered Alavida Lifestyles. On the second, an additional 42% chose Masterpiece Inc. and none chose Alavida Lifestyles.ll0
95. The explanations of respondents were revealing, illustrating the tendency to identify a company using the name "Masterpiece" as the source of retirement residences marketed under
'05 Corbin Affidavit para. 40 [AR Vol II pp. 150 - 1511 '06 Mulvey Reply Affidavit, para. 7 [AR Vol II pp. 71 - 731; Mulvey CE pp. 50(15) to 54(11) [AR Vol II pp. 103.107] $07 Marsh CE pp. 13(11) to 15(15) [ARVol II pp. 129 - 1311 Kelly Gill & Scott R. Jolliffe, Fox on Canadian Law of Trade-Marks and Unfair Competition, 4th ed., looseleaf (Toronto: Carswell, 2007) at pp. 8-76.1 to 76.8 [Authorities Tab 31 lo9 Corbin Affidavit para. 63 [AR Vol II p. 1601 110 Corbin Affidavit paras. 65 - 70 [AR Vol II pp. 160 - 1631 "Masterpiece Living", One remarked, "If it isn't they've stolen the name because Masterpiece is in both", another that "I go by the obvious ...", and others simply that, "It's the same name."lll
96. Respondents who expressed no opinion on either question were then shown an example of the actual use of one of the Masterpiece Inc, trade-marks in a promotional display, and asked whether they thought this was used by the same or a different company than that which used the "Masterpiece Living" trade-mark they had viewed earlier. Fully 67% thought it would be the same company. In another version of this questionnaire, some respondents were asked the question without having had prior exposure to a list of ten names, with equally compelling results. Once again the explanations of respondents were revealing. For example, one said, "Because it says the same thing", and another "Because another company can't use their name."ll2
97. The survey structure thus involved an initial open-ended question followed by either one or two closed-end questions to probe respondents' reactions to the competing trade-marks. The design was based on standard practice and a specific precedent previously utilized by Dr. Corbin and endorsed in preference to a competing design by the Ontario Superior Court.113
98. The survey methodology thus conformed exactly with the manner in which the court is to test for likely confusion. It showed hypothetical consumers the Masterpiece Inc. mark, and then tested their imperfect recollection of it against the Alavida mark. Moreover, Dr. Corbin's evidence in the present case actually involved four different versions of that design, varying the number and type of questions, and also the display of trade-mark usage by Masterpiece Inc. In each of the four separate versions, offered to four separate groups of people, the results provided compelling support for her opinion regarding the likelihood of confusion.
99. To establish a likelihood of confusion, it is not necessary to show a high percentage of respondents demonstrated confusion. As this Court has pointed out, "It is relevant if even a limited percentage of the population surveyed is confused ...".I14 Upon consideration and endorsement of
"1 Corbin Affidavit para. 71 [AR Vol II p. 1631 112 Corbin Affidavit paras. 73 - 75, [AR Vol II pp. 163 - 1651 "3 Corbin CE pp. 4(20) to 5(4) [ARVol Ill p. 1 - 21; Corbin Re-direct pp. 182(22) to 183(14) [ARVol Ill pp. 12 - 131; Corbin, "Will There Be Fries With That: A Discourse on the Benefits and Risks of Probing" (Vue Magazine May 2007), contained in Exhibit RC-6 [AR Vol Ill pp 93 - 961; Kraff Jacobs Suchard (Schweiz) AG v. Hagemeyer Canada Inc. [I9981 O.J. 415, (1998) 78 C.P.R. (3d) 464 (Ont. Gen. Div.) at paras. 26-27 [Authorities Tab Ill 'I4Maffellnc., supra, at para. 49 [Authorities Tab 121 one of Dr. Corbin's surveys, the Trade-mark Opposition Board observed that even 11% of respondents showing confusion is sufficient to confirm a likelihood thereof.115
100. In this case, however, there was a very high percentage. Dr. Corbin observed that one cannot add the 6%, 42% and 67% together. However, the 74% of respondents who demonstrated confusion at one level or another was the highest level of confusion she had encountered in 15 years of conducting surveys, After deducting for confusion appearing in the control group, there was a very high minimum estimated level of confusion of 53%. She could think of no reason why similar perceptions would not be found in the larger population.ll6
101. Dr. Corbin noted as well that her opinion tended to be confirmed by the trade-mark registry's denial of Masterpiece lnc.'s registration of not only "Masterpiece Living" but also "Masterpiece" on the basis of its likely confusion with Alavida's co-pending application.117 The logical obverse is that Alavida's "Masterpiece Living" is confusing with "Masterpiece" in the retirement residence industry. With his focus upon the Masterpiece Inc. trade-marks, and his failure to separately consider its trade name, O'Reilly J. ignored this important point.
Dr. Chakrapani's Critique Flawed and Limited to the Sunfev Evidence
102. Dr. Chakrapani challenged the validity of the Corbin survey results but expressed no opinion on the likelihood of confusion. However, his criticism of the survey was based on the premise that only persons actually aware of the existence of Masterpiece Inc, could provide evidence of a likelihood of confusion.ll8 This is clearly not the case. Even Alavida's other expert witness, Dr. Mulvey, recognized that the test for confusion depends upon the likelihood of an inference of common source rather than knowledge of both of the two sources in question.ll9 As the Trade-Mark Opposition Board has observed:I20
Whether or not a consumer can match up a specific trade-mark with a particular company is not a prerequisite for considering the issue of confusion. The test for
115 New Balance Athletic Shoes Inc. v. Matthews 1992 CarswellNat 1550 at paras. 19 - 21 [Authorities Tab 13 ''6 Corbin Affidavit paras. 76 - 79 [AR Vol II pp. 165 - 1661 If7 Corbin Affidavit paras. 60 - 62 [AR Vol II pp. 159 - 1601 ''8 Chakrapani CE pp. lO(16) to 13(19) [ARVol Ill pp. 37 - 401 $I9 Mulvey CE pp. 5(9) to 6(2) [AR Vol II pp. 77 - 781; See for example New Balance Athletic Shoes Inc, supra, at para. 17 [Authorities Tab 131 lZ0See for example New Balance Athletic Shoes Inc., supra, at paras. 17 - 18 [Authorities Tab 131 confusion is not whether a consumer identifies two trade-marks at issue with the same specifically identified company. That is much too hiqh a standard. The test is whether or not a consumer familiar with one trade-mark and the associated goods is likely to infer that the goods associated with a second trade-mark come from the same source, whether or not that source is known. .., The test ... is not whether there is confusion as to the companies associated with the trade-marks at issue. The test is whether a consumer is likely to infer a common source, whether or not that source is known. [Emphasis added]
103. O'Reilly J, appears to accept Dr. Chakrapani's critique of the Corbin survey, but without mentioning let alone addressing Dr. Corbin's responses nor any of the challenges to Dr. Chakrapani's evidence.121 He fails to even mention the flawed premise upon which Dr. Chakrapani's critique was based. Dr. Chakrapani's entire approach in effect presumes, contrary to the guidance of this Court, that likelihood of confusion is insufficient and that only evidence of actual confusion will do.
104, It was this assumption which drove Dr. Chakrapani's contention that Dr. Corbin should have used different questions and a different survey structure.122 He did not understand that expungement depends not upon actual confusion, but rather upon its likelihood based upon inferences. The acceptance of the Chakrapani critique thus involves another extricable error of law in the assessment of the evidence.
105. As a result, Dr. Chakrapani's complaint that survey respondents may have engaged in word association is a flawed criticism. As Dr. Corbin explained, the type of word association that is inadequate to demonstrate confusion is of the type, "If you say cat, I say dog". That clearly does not demonstrate any source confusion between cats and dogs. However, when consumers or survey respondents explain their inferences about a common source, based on their linkage between the words in a trade-mark ("Masterpiece Living") and the name of a company (Masterpiece lnc.), it is probative. The explanation merely provides the basis of the respondent's inferen~e.12~Indeed, similarity of words alone plainly demonstrates the existence of "resemblance in appearance or sound" -one of the criteria expressly recognized in the Act for testing confusion.
106. Dr. Chakrapani's questioning of five similar responses in a row in the Calgary survey,
12' T.D. Reasons for Judgment paras. 37 ff [AR Vol I pp. 13 ffj 122 Chakrapani CE p. 15(2 to 16) [AR Vol Ill p. 421 Iz3Corbin Re-direct pp. 177(1) to 178(3) [AR Vol Ill pp. 7 - 81 accepted as meritorious by Mr. Justice 01Reilly,'24 is unsupportable. Dr. Chakrapani admitted that the element he found troubling was the respondents' consistent reference to a brochure. However, he was forced to admit there was no such reference at all in the fifth answer, so there were only four. He next admitted that the fourth reference to a brochure did not come from the respondent, but was only an interpretation by the interviewer. He claimed to have included it in his list of five anyway because he "didn't want to be accused of suppressing thingsU.l2s Furthermore, Dr. Corbin's production of the original questionnaires revealed that it was in fact Dr. Chakrapani rather than the interviewer who had inserted the word "brochure" into his own depiction of the fourth response. The actual response referred to a "card", not the br0ch~re.I~~
107. There was also no evidence to support Dr. Chakrapani's inference that the numbering of questionnaires denoted the order in which interviews were conducted in the first place.Iz7 Even if there had been three, or even five responses in a row citing the brochure, it is difficult to see anything suspicious in this when the brochure was the only thing in front of the respondents. Moreover, Dr. Chakrapani's flawed contention that this occurrence is as remote as 1 in 200,000, presumes that the answers are random events like a coin toss rather than depending upon intelligent inference by human beings. It is like saying there is only a 1 in 200,000 chance that five respondents in a row will answer "Toronto" if asked to name the city whose hockey jersey features a blue maple leaf. Dr. Chakrapani's attempt to maintain otherwise lacked credibility.128
108. Dr. Chakrapani criticized Dr. Corbin's control condition in this case, but admitted that in other cases he has used no control condition at all.129 He criticized Dr. Corbin's use of "Fine Quality" as the control alternative for "Masterpiece" because it contained two words rather than one. It is submitted that there is no substance to any criticism of the control name based on whether it contains one word or two, and Dr. Chakrapani admitted he spent little time thinking
124T.D. Reasons for Judgment para. 37 [ARVol I pp. 13-14] lZ5Chakrapani CE pp. 25(3) to 27(6) [AR Vol Ill pp. 52 - 541 Corbin Re-Direct pp.181(14) to 182(21) [ARVol Ill pp. 11 - 121 j27 Alavida's counsel declined an invitation to explore this question with Dr. Corbin: Chakrapani CE pp, 31(5) to 32(7) [AR Vol Ill pp. 58 - 591 128 Chakrapani CE pp. 27(23) to 31(4) [AR Vol Ill pp. 54 - 581 Dr. Chakrapani's explanation of how he calculated 1 in 200,000 is flawed even if his premises had been correct. There is no explanation of where 7140 came from, but that fraction to the fifth degree would result in a calculated chance of 1 in 6,200 - nothing close to 1 in 200,000. lZ9Chakrapani CE pp. 21(25) to 23(3) [AR Vol Ill pp. 48-50] about it.I30 Dr. Corbin fully explained the significance of her use of this control condition.131 O'Reilly J. erroneously construed her evidence on this point as favouring Alavida instead.132
109. Finally, Dr. Chakrapani adopted a "subtraction method" of calculating confusion, without disclosing in his Affidavit that this method is controversial in the expert literature.I33 He was not suggesting that the subtraction method was appropriate in this case.134
110. Interestingly, Dr. Chakrapani admitted that he has on six occasions commented on Dr. Corbin's surveys in litigation. Three times he was retained by the same client and supported her work. On the other three (including this one) he was retained by the opposite side and criticized her.135 There was one more in the former category when cross-examinations took place.136
Mr. Marsh (Retirement Residence Industry Exped)
111. Mr. Marsh was the only witness before the court with specific and acknowledged expertise in the Canadian retirement residence industry.137 He explained that Masterpiece Inc. was among the first operators in the Canadian retirement residence industry to take the concept of branding seriously, and had become quite distinctive with its use of the word "Masterpiece" both alone and in association with references to "Living".13* Despite this evidence, and indeed without even mentioning it, O'Reilly J, suggested that he had no evidence before him on the extent to which the Masterpiece Inc. trade-marks have become known.139
112. As noted above, Mr. Marsh also expressed the view that the two companies were in the same target markets, and that there would definitely be confusion once they were competing in the
Chakrapani CE pp. 34(12) to 36(21) [AR Vol Ill pp. 61 - 631 l3lCorbin CE pp. 78(19) to 79(15) [AR Vol Ill pp. 3 - 41; Corbin re-direct pp. 179(5) to 181(8) [AR Vol Ill pp 9 - 111 132 T.D. Reasons for Judgment para, 34 [AR Vol I pp. 12-13] 133 Chakrapani CE p. 23(4 to 11) [ARVol Ill p. 501 134 Chakrapani Re-direct pp. 39(5) to 40(2) [AR Vol Ill pp. 64 - 651 135 Chakrapani CE pp. 23(17) to 24(17) [ARVol Ill pp. 50 - 511 136 Corbin CE pp. 165(25) to 166(4) [AR Vol Ill pp. 5-61 Marsh Affidavit para. 1, Exhibits A & B [AR Vol II pp. 114, 121- 1231; Mr. Marsh was a director of Health Trust from 2004 - 2007, and Mr. Choo himself acknowledged the prominence of Health Trust as one of only two major consultants to the Canadian industry: Choo CE pp. lO(1) to 1l(21) [AR Vol II pp. 25 - 261 138 Marsh Affidavit paras. 11 - 12 [AR Vol II p. 1161 T.D. Reasons for Judgment, para. 42 [AR Vol I p. 161 same geographic area.i40 He gained this impression despite never having worked out of Calgary where Masterpiece Inc. is based. His opinion was an overall impression formed through his preparation of feasibility and market studies for various clients. These involve not only market research but also "mystery shopping" in which he poses as a consumer, visiting and gathering from competing projects the same material which any actual consumer might obtain.141 The Courts below failed to even mention this evidence, presumably because they rejected consideration of the prospect of competition between the companies in the same geographic area.
Similaritv in ideas Associated With the Trade-marks
113. One of the enumerated criteria for assessing confusion is "resemblance in sound, appearance and ideas".l42 The evidence makes apparent the similarity in ideas associated with the competing trade-marks. The cover of the Masterpiece Inc, brochure features the trade-mark "Masterpiece The Alt of Refirement Living" along with the idea, "Colour The Portrait of Your Life".143 Banfield-Seguin says it developed Alavida's trade-mark by thinking about "how people would paint the 'portrait' of their lives" and that you could "paint your retirement with the colours of Alavida". In addition, the Alavida trade-mark evolved from "Living Your Masterpiece" to "Masterpiece Living" - similar to the evolution in the Masterpiece Inc. marks from "A Living Masterpiece" to "Masterpiece LivingH.'44
Application of the Trade-marks Act Factors
114. It is submitted that every factor mandated for consideration by s. 6(5) of the Trade-Marks Act favours a conclusion of likely confusion in this case.
Inherent Distinctiveness
115. O'Reilly J. accepted that the use of "Masterpiece" in the retirement residence industry involves some degree of inherent distinctiveness.145 Dr. Corbin explained that the application to that industry of a common word, normally associated with art and artists, is a fanciful application
14Q Marsh Affidavit paras. 17 - 24 [ARVol I1 pp. 117 - 1191 I4l Marsh CE pp. 3(19) to 4(10); lO(14) to ll(24) [AR Vol II pp. 124 - 1271 '42 Trade-Marks Act, s. 6(5)(e) [Authorities Tab I] la Masterpiece Inc. brochure cover: Garforth-Bles April 17, 2007 Affidavit Exhibit N [AR Vol I p. 851 i44 Mulder Affidavit paras. 10 - 12 [ARVol Ill p. 301 i45 T.D. Reasons for Judgment para. 41 [AR Vol I p. 151 creating a "surprise value" which captures attention.l4Wr. Marsh confirmed its distinctiveness as an industry expert.147 Dr. Mulvey offered no response to either of these points.
116. Alavida's own lay evidence tends to confirm that the competing trade-marks are all distinctive, and in precisely the same way. The extensive searching of Ms. Schimmens, Mr. Benton and Ms. Boer revealed that there are many companies whose names, branding or trade- marks include either "Masterpiece" or "Living". However, none other than Alavida and Masterpiece Inc. combine the two words in the Canadian retirement residence industry.
117. Even more significantly, Ms. Schimmens located 13 cases where subsisting trade-marks use the single word "Masterpiece" or "Masterpieces", but none in the retirement residence industry.148 The allowance of a registration is not determinative evidence before the Court. However, it certainly suggests that the use of "Masterpiece" by itself can be distinctive when applied to a particular set of wares and services, It @ distinctive when first applied to the retirement residence industry.
118. Indeed, Alavida would be in effect arguing for the expungement of its own trade-mark if it were to assert there is no distinctiveness to the use of "Masterpiece" alone or in combination with references to "Living" in the retirement residence business.
Lenqth of Time In Use
119. By the time Alavida first used "Masterpiece Living" on its website on January 4, 2006, Masterpiece Inc. had for nearly five years utilized its "Masterpiece" trade name and a series of trade-marks incorporating it, either alone or in combination with references to "Living.349 While that use had been primarily in Alberta, Mr. Marsh provided expert evidence of the broader reputation of the "Masterpiece" branding.150 In any event, however, for the reasons outlined
I4WorbinAffidavit paras, 27 - 29 [AR Vol II pp. 143 - 1451 '47 Marsh Affidavit para. 12 [ARVol II p. 1161; Marsh CE pp. 21(24) to 22(17) [ARVol II pp. 132 - 1331 '48 Schirnmens Affidavit para. 34, Extract from Exhibit 33 [AR Vol Ill p. 17, 21 - 241; Schimmens CE pp. 2(16) to 5(10) [AR Vol Ill pp. 25 - 281; Benton CE p. 2(2 to 12) [AR Vol Ill p. 331; Boer CE p. l(6 to 25) [AR Vol Ill p. 321. The subsisting registrations for "Masterpiece" or "Masterpieces" are in the areas of clocks, soaps and toiletries, computer software, insurance, tobacco, art supplies, mattresses, appliances, chocolates and ice cream, laminate flooring, synthetic doors, floor care preparations, and insurance again. 149 Garforth-Bles April 17,2007 Affidavit paras. 20 - 32 [AR Vol I pp. 51 - 551 150 Marsh Affidavit paras. 10 - 12 [AR Vol I1 p. 1161 above, the prior use which is relevant for purposes of expungement is use anywhere in Canada, not everywhere in Canada.
120, O'Reilly J. concluded that Masterpiece Inc, had demonstrated only "some" but "rather sporadic" and "not extensive" use of various "Masterpiece" trade-marks prior to December 1, 2005.151 Later he said he had "no evidence" on the extent to which these trade-marks had become known.152 These findings fail to address the use of "Masterpiece" as a trade name and trade-mark on its own, as is plain from O'Reilly J.'s reference to the emphasis upon "Masterpiece" in the trade-mark usage.'53 They ignore the uncontradicted evidence that Mr. Garforth-Bles' Affidavit provided only examples of trade-mark usage, that there were over 1,000 advertisements, and that some of the exhibits were in "continuous useW.l54 Finally, they ignore the unchallenged evidence from an industry expert that Masterpiece Inc. had become quite distinctive in the retirement residence industry with the use of its trade name, alone or together with trade-mark references to "Living".l55
121. Alavida's position appears to be that Masterpiece Inc, was obliged to provide an exhibit for every instance upon which it used its trade-marks, and that it was inadequate for Mr. Garforth-Bles to provide examples and sworn testimony that the marks were used in that way extensively.
122. O'Reilly J. erred as well in suggesting that Masterpiece Inc, had given more priority to the trade name "Club Sierra",156 In so stating, he failed to recognize that Masterpiece Inc. utilized "Club Sierra" branding as part of a joint venture which it entered early in its corporate life with Medican Inc., because Medican had been using "Sierra" branding before the joint venture was established. However, Masterpiece Inc, bought out Medican even before the second project was completed.157
I5lT.D. Reasons for Judgment paras. 15 - 19 [ARVol I pp. 7 - 81 '52 T.D. Reasons for Judgment para. 42 [AR Vol I p. 161 '53 T.D. Reasons for Judgment para. 18 [AR Vol I p. 81 154 Garforth-Bles April 17, 2007 Affidavit paras. 20 - 30 [AR Vol I pp. 51 - 551; Garforth-Bles Re-direct pp. 179(1) to 183(18) [AR VOI II pp. 3 - 71 155 Marsh Affidavit paras. 11 -12 [ARVol II p. 1161 156 T.D. Reasons for Judgment, para. 18 [ARVol Ip. 81 157 Garforth-Bles April 17, 2007 Affidavit para. 23, Exhibit H [AR Vol I pp. 52 - 53, 59 - 721; Garforth- Bles CE p. 76(8 - 21) [AR Vol II p. I] 123. Even while the joint venture was in place, Club Sierra marketing referred to "Masterpiece" and "Masterpiece The Art of Living" as well as "Club SierraH.I58 After the joint venture was terminated and prior to the relevant date of Dec. 1, 2005, Masterpiece Inc, placed ever more emphasis on "Masterpiece" and related trade-marks. Good examples can be seen in the dominance of "Masterpiece The Art of Retirement Living" over any reference to Club Sierra in both the 20,000 copy brochure used since January, 2005,159 and the trade show display which was in continuous use commencing in June, 2005,160 and even earlier in the emphasis upon Masterpiece as the operator of Club Sierra projects on the www.clubsierra.ca website.161
Similaritv of Wares and Services and Nature of Trade
124. As pointed out above, notwithstanding Mr. Choo's failed attempt to suggest otherwise, Alavida and Masterpiece Inc. provide essentially identical services.
Resemblance in Appearance, Sound and Ideas
125. There is a patent resemblance in appearance and sound between Alavida's use of "Masterpiece Living" commencing in January, 2006 and the series of marks used by Masterpiece Inc. over the previous five years. Significantly as well, the ideas associated with them are remarkably similar, as evident from the history of Banfield Seguin's development of Alavida's trade-mark described above.
126. Mr. Choo's explanation of the ideas conveyed by the combination of "Masterpiece" and "Livingn is revealing. He suggested that it evokes "a sense [of] ongoing achievement, of future growth, and of activity."l62 It is self-evident that to the extent this is so, the same is inevitably true of "Masterpiece The Art of Living" and "Masterpiece The Art of Retirement Living". Similarly, Dr.
'58 See for example Garforth-Bles April 17, 2007 Affidavit Exhibits J and K [AR Vol I pp. 73 - 781 1sSee the prominent use of "Masterpiece The Art of Retirement Living" on the cover and in the lower right corner of every numbered page as compared with the very limited reference to "Club Sierra" anywhere: Garforth-Bles April 17, 2007 Affidavit Exhibit N [ARVol I pp. 85 - 1361 Garforth-Bles April 17, 2007 Affidavit Exhibit N [AR Vol I pp. 137-1381 Club Sierra Website: Garforth-Bles CE Exhibit GB-8 [ARVol Ill p. 751 '62 Choo Affidavit para. 11 [AR Vol II p. 111 Mulvey's characterization of "Masterpiece Living" as signifying "a lifestyle brand that epitomizes incomparable excellence" clearly applies equally to Masterpiece lnc.'s marks.7631
127. Alavida included in its original "Masterpiece Living" brochure a reference to "Your Own Living Masterpiece", and on the cover of one of its recent ones the statement, "Master The Art of Living".'64 Alavida's decision to use these phrases in association with its trade-mark is a further illustration of the similarity in ideas conveyed, given how remarkably close they are to the Masterpiece lnc.'s trade-marks "A Living Masterpiece" and "Masterpiece The Art of Living".
Conclusion
128. It is submitted that when a proper approach is applied to the evidence as a whole, it becomes clear that there is a likelihood of confusion between Alavida's trade-mark "Masterpiece Living" and the trade name and trade-marks utilized by Masterpiece Inc. for years before Alavida's registration. The Alavida trade-mark should therefore be ordered expunged from the Register.
PART IV - SUBMISSIONS ON COSTS 129. It is submitted that the Appellant should be awarded costs of this appeal, and of the proceedings in the courts below.
PART V - NATURE OF ORDER REQUESTED
130. It is respectfully submitted that this appeal be allowed, and the Respondent's trade-mark ordered expunged from the Register, all with costs to the Appellant throughout.
ALL OF WHICH IS RESPECTFULLY SUBMITTED this 15thday of July, 2010
MACLEOD DlXON LLP Counsel for the Appellant
rci. Clarke Hunter Q.C.
Mulvey Initial Affidavit para. 17(b) [AR Vol II p. 571 164 Choo Affidavit, Exhibit F [AR Vol II p. 241; Choo CE pp. 70(1) to 72(11) [AR Vol II pp. 47 - 491; Exhibit DC-3 [AR Vol Ill p. 841 PART VI -TABLE OF AUTHORITIES
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