Lawful Use of a Trade Mark



LAWFULUSEOFATRADEMARK

by
HuguesG.Richard
LEGERROBICRICHARD,Lawyers
ROBIC,Patent&TrademarkAgents
CentreCDPCapital
1001Square-Victoria-BlocE–8
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Montreal,Quebec,CanadaH2Z2B7
Tel.:(514)9876242-Fax:(514)8457874
www.robic.ca-info@robic.com
OnJanuary24,1989,inMcCabev.Yamamoto&Co.(America)Inc.&al.,
CourtNoT-443-85,Mr.JusticeL.MarcelJoyaloftheFederalCourtofCanada,
TrialDivision,decidedthatundertheCanadianTradeMarksAct,theword
“use”hadtobeunderstoodasmeaning”lawfuluse”.Whilethisfindingwould
seemtobesomewhatobvious,itisthereasoningbehindthisfindingwhichis,
tosaytheleast,surprising.
Inthiscase,TerrillRossMcCabehadappealedtotheFederalCourt,Trial
Division,fromadecisionoftheRegistrarofTradeMarksrefusinghis
applicationfortheregistrationinCanadaofthetrademark”T-Line”in
associationwithgolfclubsandgolfclubheadcovers.Thisapplicationwas
basedonuseinCanadasinceatleastJune,1975andalsobasedonprior
useandregistrationintheUnitedStates.
Twostatementsofoppositionwerefiledagainsttheapplicationby
Yamamoto&Co.(America)Inc.(hereafter:Yamamoto)andT-LineGolf
Corporation(hereafter:T-LineGolf).Essentially,theopponentsallegedthat
theyhadusedthetrademarkappliedforinCanadaandtheydeniedthat
Mr.McCabehadusedthemarkinCanada.
Tomakealongstoryshort,theevidencerevealedthatMr.McCabehad
developedanewdesignforagolfputter,obtainedpatentprotectionforit,
createdthename”T-Line”foritandbeganselling”T-Line”puttersintheUnited
States.Atonepointintime,Mr.McCabelicensedT-LineGolftomanufacture
andsell”T-Line”golfclubs.Inturn,T-LineGolfappointedYamamotoasits
distributor.TheterritorygrantedtothedistributordidnotincludeCanada.
Mr.McCabeappliedintheUnitedStatesforregistrationofhistrademark”T-
Line”andthetrademarkwasregisteredonJuly17,1976.Afteraseriesof
events,theagreementsbetweenMr.McCabeandT-LineGolfaswellas
betweenT-LineGolfandYamamotowerecancelled.Despitethis,
Yamamotocontinuedtomarketgolfclubsunderthe”T-Line”markuntil



followinganinfringementactionintheUnitedStatesitwasfoundthatMr.
McCabe’smark”T-Line”wasavalidtrademarkwhichhadbeeninfringedby
Yamamoto.
TheRegistrarofTradeMarksfoundthatthesalesoruseofthemarkin
CanadabyYamamotoaccruedtothebenefitofT-LineGolfbutMr.
McCabe,beingonestepremovedfromthosetransactions,couldnotavail
himselfofsuchusetohisbenefit.Onappeal,theCourtwasthereforefaced
withtwocriticalissues.ThefirstissuewasthatinhisreasonstheRegistrarwas
dealingwith”useinCanada”unqualifedastowhetherornotsuchusewas
lawful.ThesecondissuerelatestotheRegistrar’sfailuretodealwithMr.
McCabe’sclaimforregistrationbasedonMr.McCabe’spriorregistrationof
themark”T-Line”intheUnitedStates.Forthepurposesofthepresentarticle,
onlythefirstissuewillbedealtwith.
TheQuestionofUse.Accordingtotheevidence,T-LineGolf’slicensewasto
manufactureT-LineclubsforsaleintheUnitedStatesandotherspecified
territoriesbutnotCanada.Similarly,Yamamotowasgranteddistribution
rightsfortheUnitedStatesandotherdesignatedcountriesbutnotCanada.
Onthefaceoftheserestrictiveterritorialprovisions,bothT-LineGolfand
YamamotowereinviolationoftheircontractualobligationswhentheT-Line
golfclubsweresoldinCanadainassociationwithMr.McCabe’strademark.
Inthislight,thequestionaskedbytheCourtwaswhetherornotsuchan
unlawfuluseofatrademarkcanbegood”use”ofatrademarkinCanada
undertheprovisionsoftheTradeMarksActormayotherwiseconstituteause
whichwoulddefeattherightsofitsostensibleowner.
TheCourtnotedthatinthebackgroundoftheabovequestionisthe
aberrationwhichmaybecreatedbyapurelytechnicalapplicationof
section29oftheAct,underwhichtheemphasismaytendtobeplacedon
whohasusedamarkinCanadaandnotenoughtonwhosemarkisbeing
used.ItseemedobvioustotheCourtthatthetrademarkbeingusedin
CanadabyeitherYamamotoorT-LineGolfwasMr.McCabe’smarkandno
else’s.
TheCourtstatedthatwhatmightbeunlawfulforsomepurposes,asinthe
breachofalicenseordistributorshipagreementgivingrisetoordinarycivil
remedies,wouldbebeyondthekenoftheTradeMarksActunlesssuchuse
wasinviolationofanexpressorimpliedprovisionofit.Ifsuchaviolation
occurs,theunlawfuluseofatrademarkcouldnotberaisedbyanopponent
todefeatitsowner’srights.ThisiswherethereasoningoftheCourtcanbe
saidtobequestionable.



ItwouldseemthattheCourtwasnotsatisfiedtofindthattheusewhichwas
allegedinsupportoftheoppositionwasunlawfulbyvirtueofeitherthe
licenseordistributorshipagreement.Thisreasoningmayresultfromthefact
thattheFederalCourtisacourtcreatedbystatutewithalimitedjurisdiction
whichwouldnormallyexcludecontractlawandcivilremediesderiving
therefrom.Buttheselimitscannotgoasfarasprecludingapartytoan
agreementfromrelyingbeforethisCourt,indefenseorinrebuttal,onthe
rightsandobligationsofthepartiestosuchanagreement
Inthiscase,astheCourtwasnotsatisfiedtofindtheuseunlawfulbecauseof
noncompliancewiththeconditionsofthelicenseandthedistributorship
agreements,itdecidedhadtolookfor”unlawfulness”intheTradeMarksAct.
Anditisonsection7(e)thattheCourtrestsitsattention.
ItseemedevidenttotheCourtthattheactsofbothopponentsinmaking
unauthorizedsalesinCanadawouldviolatesubsection7(e)assuchconduct
couldbesaidtobecontrarytohonestindustrialorcommercialusagein
Canada.TheCourtwasmindfulinthisrespectthattheSupremeCourtof
CanadainMacDonald&al.v.VaporCanadaLtd.,[1977]2S.C.R.134,had
ruledsection7(e)ultraviresofParliament.Mr.JusticeJoyalfoundthatthe
reasoningoftheSupremeCourtinthatcase,however,mightappeartoallow
continuedlimitedapplicationofthatparticularsubsection.Itisverydifficult
tosupportsuchaproposition.
WhenMr.JusticeLaskinoftheSupremeCourtofCanadawrote:
“Section7(e)is,howevernourishedforlegislativepurposesinso
farasitmaybesaidtoroundoutregulatoryschemesprescribed
byParliamentintheexerciseofitslegislativepowerinrelationto
patents,copyrights,trademarksandtradenames.The
subparagraphsofsection7,iflimitedinthisway,wouldbe
sustainable,and,certainly,ifs.7(e)whosevalidityisalonein
questionhere,couldbesolimited,Iwouldbepreparedto
upholdittothatextent.Iamoftheopinion,however(andhereI
drawupontheexpositionofs.7(e)intheEldonIndustriescase),
thatthereisnosubjectmatterleftfors.7(e)inrelationtopatents,
copyright,trademarksandtradenameswhenoncetheseheads
oflegislativepoweraregivenaneffectunderthepreceding
subparagraphsofs.7″.
Thisshouldhaveputanendtothespeculationastowhetherornots.7(e)of
theTradeMarksActwasultraviresorintravires
ofParliament.Ifasstatedby
JusticeLaskin”thereisnosubjectmatterleftfors.7(e)inrelationtotrade
marks”,itisverydifficulttounderstandhowinthepresentcase,s.7(e)could



haveanyintraviresapplicationsimplybecausethepresentcasedealswitha
trademarkmatter.
Inconclusion,whiletheresultinthiscasewouldappeartobecorrect,the
reasoningwouldseemdifficulttoaccept.Indeed,itisnotalallevidentthatit
wasnecessaryfortheCourttorelyons.7(e)andthusaddyetanother
nuancetotheSupremeCourt’sfindingofunconstitutionality.
Publishedat(1989),3W.I.P.R.96-97underthetitleUseofTradeMarkin
CanadaMeansLawfulUse,FederalCourtDecides.
LEGERROBICRICHARD,1989.





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