Distinctiveness enjoys enhanced importance under new legislation

Amendments to the Trademarks Act were passed into law in 2014 and are not expected to come into force until 2016 at the earliest. These amendments focus on the importance of inherent distinctiveness in a mark that is adopted for use or registration in Canada.

Canadian and foreign rights holders will experience the benefits of a ‘trademark’ being redefined as a ‘sign’ and including within its scope: “a word, a personal name, a design, a letter, a numeral, a colour, a figurative element, a three-dimensional shape, a hologram, a moving image, a mode of packaging goods, a sound, a scent, a taste, a texture and the positioning of a sign.” These amendments will encompass matter currently described in the act as ‘distinguishing guises’ and for which evidence of distinctiveness is required as of the date of filing an application.

However, other amendments to the act are likely to call attention to a mark’s inherent distinctiveness, because the registrar will have the discretion to challenge whether any mark applied for under the amended legislation was distinctive when the application was filed. Currently, distinctiveness per se is not examined during prosecution – only during opposition or litigation.

All applicants will be able to file evidence of distinctiveness when filing an application in cases where a mark is challenged by the registrar as being primarily merely a name or surname, or being clearly descriptive of the character or quality of the goods or services claimed.

However, foreign applicants which hold registrations for their marks in their home country will no longer have the benefit of claiming registrability on the basis that a mark is not without distinctive character under Section 14 of the act. Traditionally, this was a popular route to registration for marks that may have lacked inherent distinctiveness, but for which a showing of evidence of use and advertising (not limited to Canada) could establish that the mark had acquired distinctive character in Canada.

The section has been repealed in the legislation amending the act, but remains available until the amendments come into force. Owners of foreign trademark registrations for marks which are names, surnames or descriptive of the goods or services of interest should consider filing for registration in Canada immediately. The impact that the removal of Section 14 will have is as yet unknown.

Case law

The Federal Court of Canada hears appeals against decisions of the Canadian Registrar of Trademarks, including the Trademarks Opposition Board, and also has exclusive jurisdiction for those seeking amendment or expungement of Canadian trademark registrations. Much of the case law decided in 2014 dealt with distinctiveness, both inherent and acquired.

The decisions underscore the importance that inherent distinctiveness already plays in establishing a mark’s registrability and the rights holder’s ability to enforce it.

Geographical terms

In a decision addressing the geographical significance of the word ‘London’ in association with retail services – London Drugs Limited v International Clothiers Inc (2014 FC 223) – the Federal Court found that: “The distinctiveness of a mark has to do with its originality, uniqueness and inventiveness, not with the absence of deception.” In addition, it held that “there is no logical link between the fact that a trade-mark is not deceptive and the fact that it will have some inherent distinctiveness”, concluding that “Nobody can claim a monopoly on a geographic name, especially when it is as well-known as LONDON”. Finally, it held: “there is no authority in support of the proposition that the inherent distinctiveness of a mark becomes irrelevant once it has acquired a reputation.”

Descriptiveness versus suggestiveness

The Federal Court also dismissed arguments that ‘Flip-Top’ was registrable for tobacco and cigarettes in Philip Morris Products SA v Imperial Tobacco Canada Limited (2014 FC 1237), finding that it may have been suggestive of a type of packaging for such products, but not the products themselves. An assessment of the message likely to be received by an ordinary user of tobacco products when viewing the trademark – in the absence of any evidence as to how the mark was used – led to a finding that consumers would see the mark FLIP-TOP as a reference to the package and not as a source identifier for the tobacco products.

Generic use

A long history of use and registration may be insufficient to maintain a registration if the registered mark is found to lack distinctiveness as of the date of proceedings challenging its validity. This was the case with the mark THE ATHLETIC CLUB and a related design for fitness-related services, which was registered in 2005 and expunged in 2014. In Ottawa Athletic Club Inc (Ottawa Athletic Club) v Athletic Club Group Inc (2014 FC 672) the court found – based on an assortment of evidence including dictionary definitions, newspaper archives, historic telephone directories and trade name searches – that the phrase ‘athletic club’ had been used extensively in Canada for fitness services more than a decade before validity proceedings commenced. The registration was expunged.

Third-party corporate names

On appeal from an opposition decision, in Allianz Asset Management of America LP v Middlefield Capital Corporation (2014 FC 619) an applicant sought to use evidence of third-party use of ‘IndexPlus’, an element of the opponent’s mark, to undermine the distinctiveness of the opponent’s trademark. However, the Federal Court found that: “Mere existence of the same word in corporate titles, or indeed as a registered mark in other jurisdictions, does not establish use in Canada by third parties sufficient to defeat distinctiveness.”

Acquired distinctiveness

Long-term extensive use of an inherently weak mark, such as an acronym, may create sufficient distinctiveness to prevent the registration of a similar acronym. The Trademarks Opposition Board found that the mark GIA was not inherently distinctive of diamond grading services and that another weak mark, GHI, should be able to co-exist with it. This was based on the logic that small differences will suffice to distinguish between two weak marks. However, on appeal in Gemological Institute of America v Gemology Headquarters International (2014 FC 1153), the Federal Court held that evidence of extensive use of the mark GIA in Canada “resulted in its enhanced reputation in the industry and consumer market in Canada”. Thus, the application for GHI covering the same services was not registrable owing to a likelihood of confusion. This decision came as a surprise to many practitioners, who would likely have advised that GHI was not sufficiently close to GIA – even given extensive use and reputation in Canada. It will, hopefully, stand as the high-water mark in this area.

Essential attribute not lost through third-party infringement

An attempt to invalidate registrations of the marks CANADIAN FAST FOOD and CANADIAN POLAR BEAR IN SNOW STORM for shirts and souvenir-type items in Gary Gurmukh Sales Ltd v Quality Goods Imd Inc (2014 FC 437) failed because the party seeking invalidation submitted evidence of only its own use of merchandise bearing the same or similar marks. Stating that “The jurisprudence is clear that distinctiveness is the most important attribute of a trade-mark”, the Federal Court found such evidence insufficient to establish that distinctiveness in the marks had actually been lost. Instead, it found that: “A trade-mark does not lose its distinctiveness because someone has infringed the owner’s rights. A substantial degree of use is necessary to show a loss of distinctiveness due to competing use.” The court held that a registrant’s failure “to adduce evidence that its trade-marks distinguish its products” is “insufficient to prove that a trade-mark is no longer distinctive”.

Scope of services claimed

In a Section 45 trademark registration cancellation proceeding before the Trademark Opposition Board – Fetherstonhaugh & Co v Supershuttle International, Inc (2014 TMOB 155), now under appeal – the registration of SUPERSHUTTLE for “airport passenger ground transportation services” was expunged on the basis that the actual airport shuttles needed to exist in Canada in order for ground transportation services to be available there. The registrant had evidenced reservation services in Canada.

This finding is something of a departure from a line of comforting decisions, which allowed for an expansive interpretation of general service descriptions utilising preliminary language, such as ‘retail service’ and ‘travel services’, to be supported by demonstration of limited customer service activity carried out in Canada where the rights holder did not operate the full range of its business services in the country. In distinguishing SUPERSHUTTLE from that line of decisions, the hearing officer found that the language of services is insufficiently nebulous to allow for a broad scope of activity to be presumed. Additionally, he questioned whether ‘reservation services’ can constitute a bona fide service for a rights holder, as opposed to a service offered by a third party. However, having raised the point, the hearing officer did not address it further.

Other decisions of interest

Other 2014 decisions from the Federal Court demonstrate that it is refining its approach to important factors that can trip up rights holders, including:

• standing to bring proceedings respecting validity before the court;
• geographic descriptiveness;
• the impact of how a mark sounds; and
• the importance of carefully defining goods and services.

Reputation in Canada:Use and reputation of marks in Canada are critical when it comes to determining distinctiveness. A party seeking to invalidate a trademark registration should ensure that the facts on which it relies meet all aspects of Canadian law and not merely tests arising from the Trademarks Act. In UNICAST SA v South Asian Broadcasting Corporation Inc (2014 FC 295) an attempt to invalidate the registration of RED FM for radio broadcasting services foundered, in part on the basis that the party applying to have the registration invalidated was a broadcast entity based in Switzerland and thus was not regulated under the relevant federal Canadian legislation governing broadcasting services.

Geographical terms – redux: In Lum v Dr Coby Cragg Inc (2014 FC 1171), which is now under appeal, the mark OCEAN PARK was found registrable of dental services, despite being the name of a geographical area in the community of South Surrey, British Columbia. Competing dental practices in that community led to an application for invalidation of the registration. The court accepted an argument put forth by the registrant that a two-part test applied: first, whether Ocean Park is the name of a geographic place and second, whether “Ocean Park is indigenous to dental services”. The court found no evidence that Ocean Park was geographically descriptive of dental services. It will be interesting to see whether the appeal includes a closer consideration of the two-part test, as well as the idea that place names should be assessed to determine whether they are ‘indigenous’ to claimed services.

Geography came into play again in a decision addressing whether LINGAYEN was clearly descriptive or deceptively misdescriptive in association with Filipino food products (MC Imports Ltd v Afod Ltd (2014 FC 1161)). LINGAYEN was found to be the name of a city with a population of 100,000, situated on a bay of the same name in the Philippines. The Federal Court addressed a “doctrinal divide in the role that the perception of ordinary consumers plays in the analysis” of whether a trademark is descriptive of origin, finding one perspective to be that recognition of the place name is irrelevant; the second being that the place name must, in the minds of consumers, establish a recognised connection to the place bearing it.

The court adopted the view that the perspective of ordinary consumers is irrelevant “because any mark identifying a ware’s authentic place of origin is invalid regardless of the public’s perception of it”.

The decision also highlighted a growing concern before both the Federal Court and the Trademarks Opposition Board. In particular, parties may be found to have defeated their own interests by use of language which muddies the impact of the trademark. Using the phrase ‘Lingayen style’ on food product packaging and attaching the TM symbol to another mark on the product, but not to LINGAYEN or LINGAYEN STYLE, led to a finding that ‘Lingayen Style’ was not a use of LINGAYEN as a trademark, but rather indicated a characteristic of the products.

How marks sound when spoken

Trademark applicants often encounter the problem of their marks being found descriptive when spoken and, therefore, not being registrable. In an appeal of an opposition decision where the marks of both parties comprised the letters SK in design form – SK Corporation v Safety-Kleen Systems, Inc (2014 FC 140) – the problem resurfaced, resulting in a finding that visual differences between the design portions of the marks were insufficient to avoid a likelihood of confusion because the marks were identical when sounded. Given that, the nature of the goods of the parties became central to the outcome.

Channels of trade – probable versus possible overlap

Three decisions turned on how to interpret a description of goods or services.

In an appeal of a failed opposition to the registration of POTENZA for cycle parts not including tyres, based on a registration of POTENZA for tyres and inner tubes (Bridgestone Corporation v Campagnolo SRL (2014 FC 37)), the court found that the statements of goods for competing parties must be read for the purpose of determining probable channels of trade as opposed to possible channels of trade. The channels of trade were found sufficiently different that the appeal also failed. This gives renewed hope to applicants facing cited prior marks when the likelihood of confusion is more theoretical than practical, based on the wording used in the prior registration.

An analogous decision, Hayabusa Fightwear Inc v Suzuki Motor Corporation (2014 FC 784), arose in respect of goods in another opposition decision appeal, where an application for HAYABUSA for clothing had been refused on the basis of likelihood of confusion with the opponent’s registered mark HAYABUS for motorcycles and fittings for motorcycles, but also in use for caps, which were not covered by the registration. The Federal Court overturned the opposition decision, finding that the opponent’s actual channels of trade for caps were quite narrow, being limited to the opponent’s authorised motorcycle dealers. In addition, since the caps were not covered by its registration, consideration of all possible channels of trade for the opponent’s caps was inappropriate.

Finally, in a decision involving the trademark URBAN PLANET (Jacques Vert Group Limited v YM Inc (Sales) (2014 FC 1242)), the Federal Court balanced the applicant’s current channels of trade with the fact that the wording of its goods did not dictate fixed channels of trade. In this instance the court chose to rely on evidence of existing channels of trade because there was no evidence to suggest that these might change.

Quebec language laws

In a decision that could prove significant to traders doing business in Quebec, the attorney general of that province has appealed a finding of the Superior Court of Quebec that public signs and commercial advertising bearing a trademark in a language other than French need not be accompanied by a generic French-language term. The case arose under the Charter of the French Language, which governs use of the French language in commerce in Quebec.

The court found that trade names and trademarks are distinct legal concepts, and that a Quebec regulation allowing a non-French term to appear in a trade name on signage or in advertising provided that a generic term in the French language is also present, does not apply where a trademark appears on signs or in commercial advertising.

Conclusion

Rights holders should be aware that the ability to register and defend or assert their trademark rights in Canada already turns on a close reading of factors that underpin inherent distinctiveness in a trademark and actual distinctiveness or ability to distinguish. Accordingly, care should be taken in choosing or creating original and non-descriptive marks and defining the goods and services claimed in trademark applications.

In contested proceedings, close consideration should be given to whether evidence explaining or challenging channels of trade should be presented, particularly where a party is relying on common law rights or goods and services claims in an application as opposed to a registration. Traders should frequently check packaging, labelling, advertising and signage in order to ensure that their trademarks appear separate and distinct from any text or elements which obscure the primary function of a trademark – that is, to indicate origin.

This scrutiny of both inherent distinctiveness and actual evidence of ability to distinguish in the marketplace will only increase once the amendments to the Trademarks Act come into force.