A decision of the Federal Court deals with the concept of incidental and ancillary services and the obligation to show use of a trademark in association with services.
Trademark Use
Trademark “use” is of fundamental importance under the Trademarks Act since rights are determined by “use”. Section 4 provides specific closed definitions of use in association with goods, services, and exported goods which can be restrictive, particularly for goods.
A trademark is deemed to be used in association with a service if it is used or displayed in the performance or advertising of the service in Canada. The word “service” is not defined in the Act and its meaning depends on the facts of each case. A service is not restricted to those that are independently offered to the public and a service may be ancillary to or connected with goods.
There is no distinction in the Act between primary, incidental, or ancillary services. If some members of the public, consumers, or purchasers receive a benefit from the activity and notwithstanding the service is provided without charge it is a service.
The Facts
The Registrar of Trademarks issued a section 45 notice on July 28, 2020, at the respondent’s request, that required the registered owner, (the “Owner”), to show it had used the trademark PIEOLOGY in Canada with each of the registered services in the three-year period preceding the notice, or alternatively, to show special circumstances that would excuse non-use. The services included several specific restaurant services and the more general “restaurant services”.
The Owner filed an affidavit of its chief executive officer. The affidavit explained that the business started in 2011 as a single-location pizza restaurant in California and grew to run an international chain of over 140 pizza restaurants serving the Owner’s “famous build-your-own pizzas alongside salads, side dishes and desserts in sit-down dining environments and through take-out services”. It states that the Owner extensively advertised its services in Canada in association with the PIEOLOGY trademark, on its website and social media accounts that were accessible to Canadians. It also states that the Owner advertised to and sought franchisees in Canada and attaches a brochure provided to potential franchisees. According to the affidavit, the Owner had been pursuing the expansion of its business into Canada but encountered difficulties attracting qualified Canadian franchisees, in part due to the disruption of the COVID-19 pandemic. Negotiations with potential franchisees who submitted applications in July 2020 and February 2021 failed. The Owner was continuing to seek Canadian franchisees.
The Decision of the Trademarks Opposition Board - DJB and The Little Brown Box Pizza, LLC 2023 TMOB 005
The Hearing Officer was not satisfied that the Owner’s affidavit showed use of the PIEOLOGY trademark, in association with any of the registered services. While the Owner argued that its website and social media sites displaying the PIEOLOGY trademark were accessible to Canadians there was no evidence that Canadians accessed the sites. Even if they did, the Registrar was not satisfied the Owner was offering and prepared to perform the advertised services in Canada. Canadians might access information about the Owner’s services being offered outside of Canada, but that was not enough.
The Owner also argued that the distribution of the brochure was evidence that the registered services were used in Canada because franchising services were ancillary restaurant services. The Registrar accepted that “restaurant services” should be given a broad interpretation to include incidental or ancillary services but rejected the Owner’s arguments that franchising services were incidental or ancillary to restaurant services. The Registrar agreed with the respondent that an ordinary understanding of “restaurant services” would include, at a minimum, the provision of food and beverages rather than steps to open a location where they would be provided.
The Hearing Officer was also not satisfied that the Owner had shown special circumstance excusing non-use.
The Appeal - Little Brown Box Pizza, LLC v. DJB 2024 FC 1592
The Owner appealed to the Federal Court and filed additional evidence. Where the new evidence would have affected the Registrar’s decision materially, the Court undertakes a de novo review of issues that relate to this evidence.
The additional evidence showed that several thousand unique users in Canada visited the PIEOLOGY website during the relevant period, and at least one Canadian downloaded the PIEOLOGY mobile app. Together, the website and mobile app let consumers review the Owner’s menu, look up restaurant locations in the US, pre‐plan customized pizzas, save favourite pizzas for future ordering, and receive news about the Owner’s latest product offerings. The Judge agreed that the additional evidence was material and remedied the deficiencies identified by the Hearing Officer.
The Judge refused to find that the Owner was using the mark concerning franchisees. The brochure distributed to potential franchisees refers to “operational support” and lists things like leadership training, safety audits, and operations manuals and videos. However, it was not established this operational support, when considered from the public’s perspective and the Owner’s perspective, fell within the scope of “restaurant services”.
The situation concerning consumers was different. The PIEOLOGY trademark was displayed on the Owner’s website and mobile app during the relevant period and, like earlier decisions, the ability to customize pizzas provided a level of interaction and a service that could be considered akin to visiting a bricks and mortar PIEOLOGY restaurant. The Owner was trying to expand PIEOLOGY restaurants into Canada and building its brand through social media. The Judge was satisfied that the Owner’s online advertising during the relevant period was intended to target Canadian consumers and showed use of the mark in association with “restaurant services”.
The Judge also concluded that the owner had not shown special circumstances excusing non- use of the PIEOLOGY trademark. The Judge considered the length of non-use, whether the reasons for non-use were beyond the owner’s control, and whether the owner had a serious intention to resume use shortly.
The appeal was allowed in part and the registration was amended to delete all the specific restaurant services leaving only restaurant services. The owner was only partly successful and was not awarded any costs.
Comment
The concept of incidental and ancillary services in this type of case needs to be carefully considered as it can be useful.
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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