A decision of the Federal Court expunged the registration of a trademark under section 57 of the Trademarks Act based on the applicant’s unregistered trademark. 51.ca Inc. v. Huang 2024 FC 1202
The Facts
The respondent is the owner of an unregistered, common law trademark consisting of four Chinese characters, the (Characters):
PICTURE OF CHINESE CHARACTERS
the (Trademark)
The transliteration of the characters is “jia guo wu you” and the translation is “do not worry in Canada”.
The respondent’s initial registration was expunged on June 30, 2020, as a result of proceedings under section 45 but an extension application had been granted on November 8, 2018, to extend the registered services to add “publishing of books and magazines” and “hosting websites on the internet, hosting internet sites for others and intellectual property consulting services offered from a website”. These services were not subject to the section 45 proceedings.
The applicant has run a website since 2001 that publishes commercial advertisements, a directory of commercial information, and coupons intended for a Chinese Canadian audience. Over the years, its business has grown to expand the services offered through the website and extend the services to other online and print media platforms. The applicant alleges it has used the Characters as an unregistered trademark since 2001. It states the Characters were displayed on its website, its mobile app launched in 2015, and printed publications distributed in the Greater Toronto Area between 2011 and 2018.
The applicant’s unregistered trademarks are shown below:
The applicant brought an application under section 57 of the Trademarks Act, for an order striking the respondent’s registration from the register and other relief.
The Limitation Period
The respondent asserted that the application was statute barred since subsection 17(2) of the Act states that no trademark registration older than five years shall be expunged, amended, or held invalid on the ground of any previous use or making known of a confusing trademark by another person, unless it is established that the owner of the registered trademark adopted it with knowledge of the previous use or making known.
The Judge said the applicant did not begin the proceeding outside the five-year period. When the application was begun on September 23, 2022, the registration only covered the extended services added to it on November 8, 2018. An application to extend the goods or services covered by a registration has the same effect as an application to register the trademark with the goods or services specified in the extension application. Such an extension application requires examination and advertisement so third parties can oppose it. Subsection 17(2) of the Act was not triggered in this case.
The respondent also alleges that the applicant acquiesced to his rights by allowing him to promote his business in association with the Trademark on the applicant’s website for many years. He contends that he registered as a user of the website, created multiple user accounts, purchased advertising space, advertised his business, and participated in the community forum on the website, and that the applicant issued 46 invoices for commercial advertisements between October 2010 and March 2021. The respondent argued these facts amounted to more than delay; he reasonably relied on a pattern of permissive behaviour regarding commercial use of a trademark.
Acquiescence may preclude relief where a party has consented to a breach of its rights and the breaching party has detrimentally relied on that consent, but mere delay is insufficient, and silence alone does not bar a proceeding. The rights holder must do something to encourage the wrongdoer, and the wrongdoer must act to its detriment in reliance on that encouragement. In this case, the respondent did not establish that the applicant encouraged his actions. The respondent did not file evidence explaining why he believed the applicant was consenting to his actions and did not intend to pursue its rights, or how he detrimentally relied on the applicant’s consent or inaction.
The primary grounds of expungement were based on entitlement and lack of distinctiveness.
Non-Entitlement
A registration will be invalid for non-entitlement if the applicant shows that, as of the material date, the trademark was confusing with a trademark that had been previously used in Canada; subsection 18(1)(d) and 16(1). The material date for assessing entitlement is the earlier of the filing date or the date of first use in Canada of the mark. Here the material date was the filing date of the extension application as the respondent did not file evidence establishing the date when he first used the Trademark in Canada with any of the registered services.
The applicant has used the Characters as a trademark since as early as 2001. The Characters are prominently displayed in association with its online and print media, and they stand out in a way that would be perceived by the public as a trademark having a distinct identity from the surrounding text and designs of the composite marks.
The Court’s confusion analysis must be between the Trademark as registered and applicant’s unregistered trademark as it was used.
The use of a trademark causes confusion with another trademark if the use of both trademarks in the same area would be likely to lead to the inference that the goods or services associated with the trademarks are manufactured, sold, leased, hired, or performed by the same person, whether or not the goods or services are of the same general class or appear in the same class of the Nice Classification.
In determining whether trademarks are confusing, the Court must have regard to all the surrounding circumstances, including: (a) the inherent distinctiveness of the trademarks and the extent to which they have become known; (b) the length of time the trademarks have been in use; (c) the nature of the goods, services, or business; (d) the nature of the trade; and (e) the degree of resemblance between the trademarks in appearance, sound, or the ideas suggested by them.
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 Trademark when he or she has no more than an imperfect recollection of applicant’s trademark and does not pause to give the matter any detailed consideration or scrutiny, nor to examine closely the similarities and differences between the marks. The casual consumer is an average Canadian who can read and understand Chinese characters.
The Judge concluded that the respondent was not entitled to register the Trademark, as it was confusing with a trademark that had been previously used in Canada by the applicant. The registered Trademark consists of a distinctly recognizable and dominant component of the applicant’s unregistered composite marks it has used since 2001, and the registration covers overlapping services. The casual consumer seeing the Trademark on first impression would likely believe that the services specified in the registration and the applicant’s services offered in association with its unregistered trademark were offered by the same person.
Distinctiveness
A trademark must be distinctive of a single source. A trademark that leads to confusion as to the source of the goods or services cannot enable the owner to distinguish its goods or services from those of others.
The applicant argues that its unregistered trademarks had gained substantial, significant, or sufficient reputation in Canada which negated any distinctiveness of the Trademark, assuming the respondent used the Trademark in association with the services specified in the registration. While the material date for assessing distinctiveness is the date the proceeding was commenced neither party asserted that the confusion analysis would be any different from the analysis set out above. The Judge concluded that the registration was invalid because the Trademark was not distinctive.
Comment
The decision provides a useful review of the application of the relevant principles. It comes as a surprise to many people that the owners’ of unregistered trademarks do in fact have rights. This is why it is important to search common law references when doing trademark availability reviews.
If you have questions, please contact me at mckeown@gsnh.com
Goldman Sloan Nash & Haber LLP 480 University Avenue, Suite 1600 Toronto, Ontario M5G 1V2 Direct Line: (416) 597-3371 Fax: (416) 597-3370 Email: mckeown@gsnh.com
These comments are of a general nature and not intended to provide legal advice as individual situations will differ and should be discussed with a lawyer.
A version of this article originally appeared in the Law360 Canada published by LexisNexis Canada Inc.
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