Court of Appeal Decides: Canada is Not Malboro Country

1987-01-01

COURTOFAPPEALDECIDES:CANADAISNOTMARLBOROCOU
NTRY

HUGUESG.RICHARD*
ROBIC,
LLP
L
AWYERS,PATENTANDTRADE-MARKAGENTS

On29September,1987,theFederalCourtofAppealofCanadarenderedtwo
decisionsconfirmingthejudgmentofMr.JusticeRouleauoftheTrialDivisionin
whichhedismissedanapplicationunderSection57oftheTradeMarksActto
expungethetrade-mark“Marlboro”registeredunderNo.260/5598,anddismissed
anappealfromtherefusaloftheRegistrarofTradeMarkstostrikethesaid
registrationfromtheRegisterundersection44oftheTradeMarksAct.(PhilipMorris
Inc.andImperialTobaccoLtd.,No.A-906-85)
TheapplicationtoexpungeandtheappealfromtherefusaloftheRegistrarofTrade
MarkshadbeenbroughtbyPhilipMorrisInc.WhywouldPhilipMorrisInc.wantto
havethetrademark“Marlboro”struckfromtheCanadianTradeMarksRegister?
SimplybecauseinCanada,thetrademark“Marlboro”isregisteredinthenameof
ImperialTobaccoLtd.
ThisexplainswhythefamousAmericancigarettecannotbeboughtinCanada,
exceptinduty-freeshops.
Eventhosesalesmightonedaybeputtoastop,ifImperialTobaccoLtd.is
successfulinitsactionforinfringementofits“Marlboro”registrationinitiatedin
September1981,whichhasbeenstayedbyCourtOrderpendingtheoutcomeof
theexpungementproceedings.
ApplicationunderSection57oftheTradeMarksAct

PhilipMorrisInc.baseditsapplicationonallfourgroundsofinvaliditysetforthin
section18(1)oftheTradeMarksAct:thetrademarkwasnotregistrableatthedate
ofregistration;itisnotdistinctiveatthetimeproceedingsbringingthevalidityofthe
registrationintoquestionarecommenced;ithasbeenabandoned;ortheapplicant
wasnotthepersonentitledtosecuretheregistration.

©CIPS,1987.*WithROBIC,LLP,amultidisciplinaryfirmoflawyers,andpatentandtrademarkagents.Publishedat
(November1987),1:3WorldIntellectualPropertyReport3-5.Publication142.005

2
TheCourtseparatedtheallegedgroundsofinvalidityintotwogroups–thosewhich
gobacktothedateofregistrationofthetrademark,andthoserelatingtothe
situationexistingatthetimeoftheinstitutionoftheproceedings.

The1932Registration
TuckettTobaccoCompanyLtd.wasthefirstregistrantofthe“Marlboro”trademark
inCanada.TheCourtwassatisfiedafterhavingconsideredtheevidencethat
Tuckettwas,throughvariousassignments,thesuccessorintitletoMr.PhilipMorris,
whohadcommencedbusinessasatobacconistinLondon,England,approximately
in1846.
ThetrademarksownedbyPhilipMorrisInc.andImperialTobaccoLtd.bothhave
thesameoriginalpredecessorintitle,exceptthatalongthewaytheownershipof
thetrademarksinCanadaandintheUnitedStatesseparated.TheCourtstatedat
page4ofitsjudgment:“Thereisnoevidenceofawrittenassignmentofthe
MarlboromarkbytheultimateU.S.ownertoTuckett,the1932registrant,andthere
arenowitnessestoprovidefirst-handtestimonyastowhattranspired.”

TheCourt,however,consideredcircumstantialevidence,andagreedwiththeTrial
Judgethattherehadbeenatransferoftherights.TheCourtthereforeconcluded
thatthetrademarkwasregistrableatthedateofregistration,andthattheapplicant
forregistrationwasthepersonentitledtosecuretheregistration.

Distinctivenessin1981
TheevidenceshowedthatPhilipMorrisInc.wasverysuccessfulinpromotingand
sellingits“Marlboro”cigarettes.Infact,theevidencedemonstratedthatthe
“Marlboro”brandhadbecomethenumberonesellingbrandintheworldby1972
andintheUnitedStatesby1975.
ImperialTobaccoLtd.wasnoassuccessful.ItwasdemonstratedthatImperial
sufferedadeclineinsalesfrom1976to1980.However,anewpackagewasthen
designedfortheCanadian“Marlboro”cigarette.Itwouldappearthatthenew
packageswerefirstsoldattheretaillevelon26June,1981,thedayonwhichthe
appellantinstitutedproceedings.Thenewpackagingconsiderablyimprovedsalesin
CanadaduringtheperiodfromJune1981to31December,1981.

AsurveyconductedbyPhilipMorrisInc.showsthateveninCanada,76percentof
Canadiansmokerswhoassociatedthetrademark“Marlboro”withasource
identifiedthatsourceastheappellant,whereasonly9percentidentifiedthatsource
astherespondent.TenpercentofallCanadiansmokersspontaneouslyofferedthe
commentthatitis“anAmericancigarette”.

3
Based,interalia,onthesefacts,theappellantarguedthatthetrademarkwasnot
distinctiveatthetimeofthecommencementoftheaction.TheCourtdidnotagree;it
confirmedtheopinionoftheTrialJudgethatthedistinctivenessinquestionmustbe
determinedinrelationtootherwares“offeredonthesamemarket”,thatis,within
Canada.
TheCourtfoundthattherewasnofirmevidencetoshowthattherewereever
American“Marlboro”cigarettesactuallyavailableinCanada,exceptintheduty-free
shops.Itdecidedthat,althoughsignificantinquantity,especiallyby1980,salesin
suchlimitedcircumstances(duty-freeshops)didnotdeprivetherespondent’smark
ofitsdistinctivenessby1981.
Abandonmentasof1981
Theappellantarguedthattheuseandtheintentiontousemustbeinthenormal
courseoftrade.Itfurtherarguedthatamarkusedonlyonatokenbasistomaintain
aregistration,ratherthanasaninstrumentinthemarketingofwares,isnotusedas
atrade-mark.
TheCourtdoesnotseemtohavegrantedmuchmerittothisargument.Itwould
seemthattheCourtonlyconsideredtheactualusewhichwasmadeofthe
Canadiantrademark,withouthavingregardtothemotivationsbehindtheusemade
byImperialTobaccoLtd.ofthetrademark“Marlboro”inCanada.TheCourt
confirmedthefindingsoftheTrialJudgethattherespondenthadnotabandonednor
hadanyintentionofabandoningthetrademark“Marlboro”.

TheapplicationforexpungementoftheCanadian“Marlboro”trademarkwas
thereforedismissed.
AppealinRespectofSection44NoticeundertheTradeMarksAct

ThissectionprovidesasummaryproceedingempoweringtheRegistrartoexpunge
oramendtheregistrationofatrademarknotinusewhenitspresenceonthe
Registerisnolongerjustified.
Theappealwasheardtogetherwiththeappealinrelationtotheapplicationunder
section57oftheTradeMarksAct,andwasbasedonsimilarfacts.TheCourts
reiteratedthatsection44isdesignedprimarilytocleartheRegisterifdeadwood,
nottoresolveissuesincontentionbetweencompetinginterests,whichshouldbe
resolvedinexpungementproceedingsundersection57(8).

TheCourtfurtherreiteratedthatevidenceastouseinthenormalcourseoftradeis
notlimitedtousepriortothenoticedate.TheCourtthereforeadmittednotonly
evidenceofsalesof166,000“Marlboro”cigarettesduringtheperiodofJanuary

4
throughJune,1981,butalsoevidenceofsalesof1.35millionduringtheperiodof
June1981through31December,1981,aftertheredesignandrelaunchingofthe
cigarette.
TheCourtfoundthatnoproofwasmadeastowhatconstitutedthenormalcourseof
tradeinthetobaccoindustryinCanada.Intheabsenceofsuchevidence,theCourt
foundthatwithinthelimitednatureofsection44proceedings,thecourtshouldnot
questiontheevidenceonthebasisofitsownviewastowhatconstitutesthenormal
courseoftrade.
Havingfoundthatthecourthadnobasisonwhichtointerferewiththedecisionof
theTrialJudge,itdismissedtheappeal.
Comments
Nojudgmentcansatisfyall.Thisisparticularlytrueinthiscase.WouldPhilipMorris
Inc.haveobtainedbetterresultsiftheattackontheCanadian“Marlboro”trademark
hadbeenbasedstrictlyoncommon-lawprinciples(orcivillawintheprovinceof
Quebec)?WouldthecasehavebeenmorefavourablebeforeaSuperiorCourtof
onetheCanadianprovinces?
Iftheuseofatrademarkisfoundtobeunfair,basedoncommon-lawprinciples(or
civil-lawprinciplesintheprovinceofQuebec),isthefactofhavingthattrademark
registeredundertheTradeMarksAct(aFederalstatute)sufficientto“sanctify”an
unfairusetoapointwhereitbecomesfair?
Thequestionistheoretical,andwouldhavetobesupportedbyevidenceofunfair
use.SomemaybeoftheopinionthattheusebyImperialTobaccoLtd.ofthetrade
mark“Marlboro”inCanadaisunfair,butneithertheTrialJudgenortheCourtof
Appealmadeanyfindingstothateffect.

ROBIC,ungrouped’avocatsetd’agentsdebrevetsetdemarquesdecommerce
vouédepuis1892àlaprotectionetàlavalorisationdelapropriétéintellectuelledans
touslesdomaines:brevets,dessinsindustrielsetmodèlesutilitaires;marquesde
commerce,marquesdecertificationetappellationsd’origine;droitsd’auteur,
propriétélittéraireetartistique,droitsvoisinsetdel’artisteinterprète;informatique,
logicielsetcircuitsintégrés;biotechnologies,pharmaceutiquesetobtentions

5
végétales;secretsdecommerce,know-howetconcurrence;licences,franchiseset
transfertsdetechnologies;commerceélectronique,distributionetdroitdesaffaires;
marquage,publicitéetétiquetage;poursuite,litigeetarbitrage;vérificationdiligente
etaudit.ROBIC,agroupoflawyersandofpatentandtrademarkagentsdedicated
since1892totheprotectionandthevalorizationofallfieldsofintellectualproperty:
patents,industrialdesignsandutilitypatents;trademarks,certificationmarksand
indicationsoforigin;copyrightandentertainmentlaw,artistsandperformers,
neighbouringrights;computer,softwareandintegratedcircuits;biotechnologies,
pharmaceuticalsandplantbreeders;tradesecrets,know-how,competitionandanti-
trust;licensing,franchisingandtechnologytransfers;e-commerce,distributionand
businesslaw;marketing,publicityandlabelling;prosecutionlitigationandarbitration;
duediligence.
COPYRIGHTER
IDEASLIVEHERE
ILATOUTDEMÊMEFALLUL’INVENTER!
LAMAÎTRISEDESINTANGIBLES
LEGERROBICRICHARD
NOSFENÊTRESGRANDESOUVERTESSURLEMONDEDESAFFAIRES
PATENTER
R
ROBIC
ROBIC+DROIT+AFFAIRES+SCIENCES+ARTS
ROBIC++++
ROBIC+LAW+BUSINESS+SCIENCE+ART
THETRADEMARKERGROUP
TRADEMARKER
VOSIDÉESÀLAPORTÉEDUMONDE,DESAFFAIRESÀLAGRANDEURDELA
PLANÈTE
YOURBUSINESSISTHEWORLDOFIDEAS;OURBUSINESSBRINGSYOUR
IDEASTOTHEWORLD
Trade-marksofROBIC,
LLP(“ROBIC”)