Trade-Mark Registration As a Valid Defence To a Passing-Off Action



TRADE-MARKREGISTRATIONASAVALIDDEFENCETOAPASSING-OFFACTION

by
MarcelNaud*
LEGERROBICRICHARD,Lawyers
ROBIC,Patent&TrademarkAgents
CentreCDPCapital
1001Square-Victoria-BlocE–8
thFloor
Montreal,Quebec,CanadaH2Z2B7
Tel.:(514)9876242-Fax:(514)8457874
www.robic.ca-info@robic.com
Ithasbecomeclearoverthelastfewyearsthattheregistrationofatrade-
markdoesnotnecessarilyconstituteadefencetoaclaimofpassing-offin
Canada.ThishasresultedinpartduetothedecisionrenderedbyJustice
MuldooninWing(c.o.b.WingHingElectricalEngineersCo.)v.GoldenGold
EnterprisesCo.(1996),66C.P.R.(3d)62(F.C.T.D.).
TheevidenceintheWingcaseclearlyestablishedthattheuseofthe
registeredtrade-marksbythedefendantswascalculatedtodeceiveand
directpublicattentiontotheirwaresandbusinessinsuchawayastocause
orbelikelytocauseconfusion.Thejudgeinthatcaseagreedwithplaintiff’s
argumentthatevenifthetrade-markswereregisteredbyorforthe
defendants,thelattercouldnotusesaidtrade-marksinadeceptivemanner.
TheOlandCase
TherecentdecisionoftheOntarioCourtofAppealinMolsonCanadav.
OlandBreweriesLtd.(2002),19C.P.R.(4
th)201(C.AOnt.;Carthy;Cronk;
GilleseJJ.A.)(the”Olandcase”)hasarguablychangedthestateof
Canadianlawonthatparticularpoint,becauseofthegroundsonwhichthe
trialjudge’srulingwasreversed.
ThelitigationintheOlandcasearosebecausein1996therespondent,Oland
BreweriesLtd.(“Oland”)introduced“OlandExportAle”intotheprovinceof
Ontarioafterhavingoffereditforsaleincertainotherprovincesformany
years.Theappellant,MolsonCanada(“Molson”),hadbeensellingaleinthe
provinceofOntariounderthename”MolsonExport”since1955.Molsonheld
aCanadianregistrationforthetrade-mark“MolsonExport”forale,butOland




























































LEGERROBICRICHARD,2003.
*OfthelawfirmLEGERROBICRICHARD,g.p.andofthepatentandtrademarkagencyfirm
ROBIC,g.p.Publication173.13.



alsoheldaCanadianregisteredtrade-markforits“OlandExportAle”since
1951.
MolsonsoughtaninjunctionpreventingOlandfromsellingitsOlandExportAle
inOntariobasedonthecommonlawrecourseofpassingoffands.7(b)of
theCanadianTrade-marksAct,R.S.C.1985,c.T-13(the”Act”).Molsonalleged
thatitcausedorwaslikelytocauseconfusionwithMolsonExportale.
Molson’sactionalsosoughtdamages,butitdidnotchallengethevalidityof
Oland’sregisteredtrade-mark.
AlthoughOlandarguedthatthefactthatitwasusingaregisteredtrade-mark
constitutedadefencetoMolson’sclaim,thetrialjudgefoundthatsection19
oftheActonlyconferredtherighttotheregisteredownertopreventothers
fromusingthemarkinassociationwiththeirownwares.Furthermore,a
registeredtrade-markdoesnotconferarighttousesametodeceiveor
confuse.However,thetrialjudgealsoruledthatMolson’sactionoughtto
havebeendismissedbecauseitlackedthenecessaryingredientsfora
successfulpassing-offaction.
Onappeal,theCourtconsideredthatitwasunnecessarytoanalyzeMolson’s
groundsforappealbecauseitagreedwithOland’sargumentthatthefact
that“OlandExportAle”wasaregisteredtrade-markwasacompleteanswer
toMolson’sclaim.
ThedifferenceliesinthefactthattheCourtrefusedtofollowtheEnglish
authoritieswhichstatedthateveniftheownerofaregisteredtrade-mark
benefitedfromtheexclusiveuseofitstrade-markwithinagiventerritory,this
didnotconstituteadefencetoapassing-offaction.
IntheCourt’sview,theEnglishauthoritiescouldbedistinguishedbecausethe
Actdoesnothaveaprovisionanalogoustosection45oftheU.K.TradeMarks
Act,1905whichprovidesthatnothingintheactshallbedeemedtoaffect
rightsofactionagainstanypersonforpassingoffgoodsasthoseofanother
person.
Instead,theCourtcitedthecasesofChemicalsInc.andOverseas
CommoditiesLtd.v.Shanahan’sLtd.(1951),15C.P.R.1,BuildingProductsLtd.
v.B.P.CanadaLtd.(1961),36C.P.R.121andMrSubmarineLtd.v.Amandista
InvestmentsLtd.(1987),19C.P.R.(3d)3(F.C.A.)asillustrationsoftheprinciple
thattheholderofaregisteredtrade-markhastheexclusiverighttousethe
markthroughoutCanadaunlessshowntobeinvalid.Onthatbasis,theCourt
foundthatOlandwasentitledtouseitstrade-markthroughoutCanadain
associationwithitsbeer,withouthavingtoexaminethemeritsofMolson’s
argumentsbasedonpassing-off.



AccordingtotheCourtofAppeal,thesolerecourseinsuchcasesistoattack
thevalidityofthemark.SinceMolsondidnotattackthevalidityofOland’s
trade-mark,theCourtdismissedtheappeal.
CommentsontheOlandCase
Initsdecision,theCourtappearstoassumethatsection45oftheEnglish
trade-markstatutecreatesanexceptiontotheexclusiverightgrantedtoa
registeredtrade-markownertouseitsmark.TheCourtalsoseemstoassume
thatforsuchan”exception”tobefoundinCanada,itwouldhavetobe
explicitlystatedintheAct.However,itcouldbearguedthattheCourtcould
havearrivedatthesameconclusionbyrelyingexclusivelyontheexisting
provisionsoftheAct.
Inparticular,section7oftheActclearlystatesthat”noperson”shalldirect
publicattentiontohiswares,servicesorbusinessinsuchawayastocauseor
belikelytocauseconfusioninCanadabetweenhiswares,servicesor
businessandthoseofanother.Presumably,”noperson”insection7oftheAct
canbeinterpretedtoincludeownersofregisteredtrade-marks.
Therefore,evenifsection19oftheActisconstruedasgrantinganexclusive
righttouseatrade-markthroughoutCanada,onecouldarguethatsuchuse
couldstillbecontrarytosection7oftheActthattheownerofaregistered
trade-markusesitsmarktodeceive.Section7oftheActmakesnodistinction
betweenregisteredandunregisteredtrade-marksinthatrespect.Inall
likelihood,hadthelegislator’sintentionbeentoexcluderegisteredtrade-
markownersfromtheapplicationofsection7oftheAct,anexceptionwould
havebeenexpresslystated.
TheChemicalsInc.,BuildingProductsLtd.andMr.SubmarineLtd.casessimply
confirmtheapplicationoftheprinciplefoundatsection19ofheActthat”a
holderofaregisteredtrade-markhastheexclusiverighttousethemark
throughoutthecountryuntilsuchtimeasthemarkisshowntobeinvalid.”
However,thesecasesdonotaddresstheissueraisedbyanapplicationof
section7oftheActinacaseliketheOlandcase,oratleastnotinamanner
whichwouldsupporttheCourt’sview.
TheexcerptoftheChemicalsInc.casereviewedbytheCourtdoesnot
alludetotheapplicationofsection7oftheAct.Itonlystatesthatinthe
opinionoftheBritishColumbiaCourtofAppeal,theActtakesawaytheright
tosueforpassing-offatcommonlawapartfromtheAct.TheCourtdoesnot
considerthepossibilityofaregisteredtrade-markownerusingitsmarkfor
fraudulentmisrepresentation,suchasintheWingcase.



TheexcerptoftheBuildingProductsLtd.casecitedbytheCourtessentially
statesthatanactionforpassingoffinrelationtoplaintiffs’trade-marksmust
failincasesoftrade-marksregisteredbydefendantsinabsenceofany
evidencethatsuchtrade-markshavebeenusedotherthanbywayofthe
“permitteduse”.Inotherwords,theCourtinthatcaseseemedto
acknowledgethattherecouldbeinstanceswheretheuseofaregistered
trade-markmaynotbelawful.Beforerulingthatpassing-offactionmustfail,
theCourtseemedtohavetakenintoaccountthefactthattherewasno
fraudulentmisrepresentationbythedefendantinrelationtotheuseofits
registeredtrade-marks,somethingtheCourtfoundunnecessarytodointhe
Olandcase.
TheexcerptoftheMr.SubmarineLtd.casecitedstatesthattheexclusiveuse
ofaregisteredtrade-markisnotconfinedtoaparticularregionofCanada,a
particularmethodofsellingtherelatedwares,nortoaspecificappearance
ofthemark;ifanychangestotheseelementsweretobemade,theexclusive
righttousethemarkwouldapplyjustasitappliedtoitscurrentuse.Whilethis
mayhelptodefinethescopeoftherighttouse,itdoesnotaddressthe
questionofwhetheranexclusiverighttousemeans(1)therighttoprevent
othersfromusingthemarkor(2)therighttousethemark,eveninadeceitful
manner.
Afterreviewingtheabove-mentionedcases,theCourtfoundthatOlandwas
entitledtouseitsmarksthroughoutCanadainassociationwithitsbeerand
thatthesolerecourseofacompetitorinsuchasituationistoattackthe
validityoftheregistration.TheCourt’sjustificationforsuchfindingisthat”[i]fit
wereotherwise,aplaintiffcomplainingofconfusioncausedbyacompetitor’s
registeredmarkwouldhimselfbeinfringingonthemarkbyestablishingthat
confusion”.
Thisseemstoimplythattheconfusionbetweentheregisteredtrade-markofa
defendantandthetrade-markofaplaintiffcanonlyarisebyreasonofuseof
thelattersubsequenttotheregistrationoftheformer.Butitdoesnot
contemplatecaseswheretheuseoftheregisteredtrade-markiscalculated
todeceive.Insuchcases,theregisteredtrade-markcouldbeviewedasthe
confusingtrade-mark,anditsusecouldbeconsideredasameansbywhich
todirectthepublic’sattentiontowares,servicesorbusinessinsuchawayas
tocauseorbelikelytocauseconfusionwiththoseofanother,thewhole
contrarytosection7oftheAct.
Infact,onecanimagineasituationwheretheownerofaregisteredword
markpurposelymakessuchmarklookliketheregistereddesignmarkofa
competitorsubsequenttoitsregistration.Butfollowingthereasoningofthe
CourtintheOlandcase,atribunalcouldnowrefusetoexaminethe



competitor’sclaimsofpassing-offbecausetheregisteredtrade-markwould
beacompleteanswertosuchclaims.
However,theCourtcouldhavediscardedMolson’sgroundsofappealona
differentbasis:ratherthanconcludingthatpassing-offcouldnotbe
committedthroughtheuseofaregisteredtrade-mark,theCourtcouldhave
concludedinfavourofOlandthroughtheproperapplicationofpassing-off
principles.
ThepracticalresultderivingfromtheCourt’sdecisionisthattheownerofa
registeredtrade-markmaynowpossiblyusethemarkdeceitfully,while
shelteredfrompassing-offclaims,regardlessofwhetherthereismisuseofsuch
mark.
IntheOlandcase,therewasnoevidenceattrialindicatingthatOland
attemptedtoimitatetheget-upoftheMolson’swares.Theintroductionof
OlandExportAleinOntariowasdirectedbyLabattBrewingCompanyLtd.
(“Labatt”),aCanadiancompetitorofMolsonandtheownerofOland,witha
viewtoconfirmingitsrighttotradeinOntarioandtoimprovingLabatt’s
positioninitsoppositionproceedingsagainstMolson’sapplicationforthe
registrationofthetrade-mark”EXPORT”.
Conclusion
TheCourtarguablyextendedthescopeofrightsgrantedtoaregistered
trade-markownerbymakingasomewhatliteralinterpretationofsection19of
theActandbyfailingtoaddresswhysection7oftheActcouldnotbe
construedtoalsoapplytoregisteredtrade-markowners.This,inturn,could
beviewedasweakeningabasictenetofCanadiantrade-marklaw,namely
thattherightsinatrade-markarederivedfromitsuseratherthanfromits
registration.
AsJusticeMacGuiganoftheFederalCourtofAppealputitinAsbjorn
HorgardA/Sv.Gibbs/NortacIndustriesLtd.(1987),14C.P.R.(3d)314atp.327,
thereisnoneedforabusiness”toregisteritsmarkinordertoprotectitsrightto
usethetrademarkandpreventthemisuseofitstrademarkbyother
businesses.Thepassing-offactionwastheenforcementmechanismavailable
fortheprotectionoftrademarkrights.Withoutthepassing-offaction,
commonlawtrademarkrightswouldhavelittlevalue.”



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