A decision of the Federal Court illustrates the difficulties in establishing a chain of title and a date of first use. Sea Tow Services International, Inc. v. C-Tow Marine Assistance Ltd. 2025 FC 27 and costs at 2025 FC 355
The Facts
Sea Tow Services International, Inc. (Sea Tow) was incorporated in the State of New York in 1983. It uses a pre-paid membership model to deliver on-water services to recreational boaters including towing, fuel delivery, and repairs, as well as related membership services. It owns Canadian registrations for the word SEA TOW and a design version of the mark (together the Sea Tow Marks). It had filed previous applications for the same marks on December 20, 2002, but the applications, although allowed, were abandoned on September 20, 2010.
C-Tow Marine Assistance Ltd. (C-Tow) was incorporated in British Columbia in 2006. Its business model and the services it provides are similar to those of Sea Tow. C-Tow has filed pending applications for registration of its trademarks, the word C-TOW and a design version (together, the C-Tow Marks). C-Tow asserts that it and its predecessors in title have used the C-Tow Marks in Canada since 1984. An examiner has cited the Sea Tow marks against the applications.
The Sea Tow Marks were the subject of section 45 proceedings. After an appeal to the Federal Court, it was found that Sea Tow had used the Sea Tow Marks in Canada during the relevant period of February 13, 2014, to February 13, 2017, in connection with a broad list (although not all) of the services identified in the registrations and the registrations were amended accordingly.
On April 21, 2022, C-Tow filed a notice of application in the Federal Court attacking the validity of the Sea Tow Marks and to strike the Sea Tow Marks from the Register of Trademarks.
On April 28, 2022, Sea Tow filed a statement of claim against C-Tow alleging that C-Tow infringed Sea Tow’s rights in the Sea Tow Marks. Sea Tow brought a motion for summary judgment in the action.
The Application and the motion were ordered to be heard together because the matters in issue overlapped.
The Issues
Section 19 of the Act confers a presumption of validity on registered trademarks. In the Application C-Tow bore the burden to rebut that presumption of validity by establishing at least one of its asserted grounds of invalidity.
C-Tow said that Sea Tow was not the person entitled to secure the registration of the Sea Tow Marks in Canada because, contrary to section 16 of the version of the Act in force on September 9, 2010 (when Sea Tow filed the applications that ultimately matured into the registrations), those marks were confusing with the C-Tow Marks that had previously been used by C-Tow in Canada.
Since C-Tow commenced the Application more than five years after the date of the registrations the registrations are incontestable under this ground of invalidity and C-Tow can succeed only if it can establish Sea Tow adopted the Sea Tow Marks in Canada with knowledge of C-Tow’s previous use of the C-Tow Marks in Canada.
Use of the C-Tow Marks by C-Tow and its Predecessors in Title
C-Tow submitted substantial affidavit evidence to establish the chain of ownership of the C-Tow Marks and the intention of each owner to transfer its rights to the marks and business to each successive owner.
The C-Tow evidence was far from perfect. But the Judge was ready to accept that for the transfers, absent direct evidence on whether the right to a trademark was transferred, a transfer of the C-Tow Marks should be inferred from the facts established by the evidence. The Judge concluded that C-Tow established through admissible evidence facts from which it could be inferred, on a balance of probabilities, that it was the successor in title to a series of owners of the C-Tow Marks dating back to the incorporation of A&M C-Tow Assistance Ltd. on July 15, 1985.
Sea Tow’s adoption of the Sea Tow Marks
Unlike with C-Tow, there was no chain of title to be considered as the same company has owned the marks since its incorporation in the State of New York in 1983. The earliest use of the Sea Tow Marks shown was in connection with a Leamington franchise operated from 1987 to 1989. The franchise and use were found to have been abandoned. Sea Tow was also unsuccessful in showing they had made known the Sea Tow Marks in Canada.
It was common ground that date of adoption was governed by section 3 of the Act, which states that a trademark is deemed to have been adopted by a person when that person or his predecessor in title commenced to use it in Canada or to make it known in Canada or, if that person or his predecessor had not previously so used it or made it known, when that person or his predecessor filed an application for its registration in Canada.
The Judge accepted Sea Tow’s submission that the legislative intention underlying section 17 and related provisions is to afford an increased level of protection to trademarks that remain unchallenged for five years. The Act creates a fundamentally use-based regime and, even in the context of the increased protections available after five years, it would not be consistent with the purpose of the Act to infer that it provides a form of evergreening based on an abandoned application that does not necessarily reflect any use of the relevant mark. As result the date when Sea Tow filed applications for registration of the Sea Tow Marks and the date of adoption was September 9, 2010.
Did Sea Tow adopt the Sea Tow Marks with knowledge of C-Tow’s previous use of the C-Tow Marks?
C-Tow relied on a letter and several other communications to support its position. The Judge accepted these communications as evidence of the requisite knowledge by Sea Tow in 2009, which preceded Sea Tow’s 2010 adoption of the Sea Tow Marks. Based on this the Judge said C-Tow has met its burden to show that Sea Tow was not the person entitled to secure the registrations of the Sea Tow Marks. C-Tow was entitled to the requested declaration that the Registrations are invalid.
Comment
The decision illustrates the difficulties relating to showing a date of first use for a mark that has been used for some time by a relatively unsophisticated business entity. This was a moving target that changed in the course of the litigation. While decided under the wording of Act before the recent amendments the same issues can arise under the current Act.
The Judge’s interpretation of the date of adoption makes sense.
If you have questions, please contact me at mckeown@gsnh.com
John McKeown
Goldman Sloan Nash & Haber LLP
480 University Avenue, Suite 1700
Toronto, Ontario MSG 1V2
Direct Line: (416) 597-3371
Fax: (416) 597-3370
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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