Canadian distributor not entitled to register trade-marks, federal court rules in infringement action
CANADIANDISTRIBUTORNOTENTITLEDTOREGISTERTRADE-MARKS,FEDERAL
COURTRULESININFRINGEMENTACTION
By
BarryGamache
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
Inarecentdecision,theTrialDivisionoftheFederalCourtofCanadahasruled
thataCanadiandistributorcannotbesaidtohave »used »trade-marks
registeredinitsnamewhenthosetrade-marksclearlyindicatedthatthesource
ofthemarkswasamanufacturerabroad(HavanaHouseCigar&Tobacco
MerchantsLtd.etalsv.SkywayCigarStore,T-2144-96,May19,1998(Teitelbaum
J.)).
InSeptember1996,plaintiffHavanaHouseCigar&TobaccoMerchantsLtd.
(hereinafter »HavanaHouse »)initiatedtrade-markinfringementproceedings
againstdefendantSkywayCigarStore(hereinafter »Skyway »).Initsstatementof
claim,HavanaHouseallegeditsuseandownershipoffour(4)registeredtrade-
marksinassociationwithcigarproducts.Thesetrade-marks(HOYODE
MONTERREYDEJOSÉGENERHABANA,MONTECRISTOHABANA,MONTECRISTO
andROMEOYJULIETA)wereregisteredinthenameofHavanaHousein1994on
astateddateoffirstuseofMarch1988.InJune1994,HavanaHousesignedan
exclusivedistributoragreementwithCubatabaco,astate-ownedCuban
corporationwhichhasamonopolyoverthedistributionfromCubaofallcigars
manufacturedbythegovernment-ownedcigarfactoriesinthatcountry;the
agreementsignedwithCubatabacoentitledHavanaHousetodistributethese
cigarsinCanada.
DefendantSkywayisanOntarioimporterandretaileroftobaccoandtobacco
products.Duringthesummerof1996,negotiationsoccurredbetweenHavana
HouseandSkywaysothattheformercompanycouldsupplytobaccoproducts
tothelatter.ThesenegotiationseventuallyfailedandHavanaHousetold
Skyway’srepresentativethatitwouldnotsellanycigarproductstoitscompany
becauseSkywaywasalreadybuyingthemfromothersources,namelyfrom
outletsinCuba.Someoftheseproductsoriginatingfromthoseoutletsexhibited
oneormoreofthetrade-marksownedandregisteredinCanadabyHavana
House.InAugust1996,HavanaHouserequestedthatSkywayceaseanddesist
fromimportingtobaccoproductsfromCubabearingthetrade-marksregistered
inthenameofHavanaHouseinCanada.Skywayrefusedandtheactionwas
filedinSeptember.
Insupportofitsclaim,HavanaHousearguedthatthecigarssoldbySkyway
wereunauthorizedsincetheydidnotcomethroughplaintiff’schannelof
distributionandthereforedidnotmeetitsqualitycontrolrequirements.
Additionally,itpleadedthatdefendantknewofHavanaHouse’strade-mark
rightsinCanadaasearlyas1995butnonethelesscontinueditspurchaseof
unauthorizedcigarsbearingthetrade-marksregisteredinHavanaHouse’s
name.
InNovember1996,Skywaycounteredbyfilingastatementofdefenceand
counter-claimrequestinganordertostrikeHavanaHouse’sfourregistered
trade-marksonthegroundsthatplaintiffwasnotentitledtosecureregistrationof
thosemarksandthatsaidregistrationswereinvalidsincethetrade-marksatissue
werenotdistinctiveoftheplaintiffatthetimetheproceedingstoexpungewere
initiated.Defendantappliedforasummaryjudgmentinsupportofitsposition.
SkywayarguedthatHavanaHousewasmerelyadistributorandwasnotentitled
toregisterthefour(4)abovetrade-marksin1994.Itfurtherclaimedthatitself
couldnotbefoundliableinapassingoffactionwhenitsoldproductsbearing
whatwerereallytheCubanmanufacturer’strade-marks;inthedefendant’s
view,nodeceptiontothepublicoccurrediftheproductsemanatedfromthe
originatorsofthemarks;itreliedonSmith&NephewInc.v.GlenOakInc.,[1996]
3F.C.565(F.C.A.)(seecommentaryat(1996),10W.I.P.R.309).
Inreviewingtheparties’arguments,Mr.JusticeTeitelbaumaskedwhether
HavanaHousehad »used »thetrade-marksinissuewithinthemeaningofsection
4oftheTrade-marksAct,R.S.C.1985,c.T-13.AspointedoutbyRouleauJ.in
CitrusGrowersAssn.Ltd.v.WilliamD.BransonLtd.[1990]1F.C.641(F.C.T.D.), »the
jurisprudenceunders.57isclearthatanimporteroragenthasnorighttoregister
atrade-markownedbytheforeignprincipal,underhisownnameandforhis
ownbenefit.Anythingtheimporterdoeswithrespecttothemarkmustbeforthe
benefitoftheforeignsupplierandownerofthemark. »
Mr.JusticeTeitelbaumalsodealtwiththequestionofpossibleacquiescenceby
theforeignowner:Thispossibility »doesnotmeanthatthedistributorisentitledto
thetrade-markunlessthedistributorhasusedthemarkandithasbecome
distinctiveofthedistributor ».WasthisthecasewithHavanaHouse?
Mr.JusticeTeitelbaumconcludedinthenegativestatingitwasclearthat
HavanaHousewasactingasadistributorforCubatabacoandtheCubanstate-
ownedtobaccomanufacturers.ThosecigarsdistributedbyHavanaHousein
CanadaweremanufacturedandsoldinCubawiththetrade-marksHavana
HouseregisteredinCanada.Becausethetrade-marksclearlyindicatedthatthe
sourceofthemarkswasthemanufacturerinCuba,HavanaHousecouldonly
distributetheseproductsinCanadaforthebenefitofsaidmanufacturerand
couldnotbesaidtohave »used »thosemarksforitsownbenefit.Thecourt
thereforeconcludedthatHavanaHousewasnotentitledtoregisterthemarks;it
consequentlyallowedSkyway’sapplicationforsummaryjudgmentandordered
thatthefour(4)trade-markregistrationsbeexpungedfromtheregister.Havana
Househasfiledanappealagainstthecourt’sdecision.
Mr.JusticeTeitelbaum’sdecisionisareminderofadistributor’sobligationsand
responsibilityvis-a-visamanufacturer’strade-mark.Insuchcase,inorderto
determinewhoisentitledtoregistration,onemustnotaskwhoisusingthetrade-
markbutratherinquirewhosetrade-markisbeingused(seeS.A.Jetstreamv.
R.D.InternationalStyleCollectionsLtd.(1993),49C.P.R.(3d)336).Althoughinthis
case,thedistributorhadtheconsentoftheCubanmanufacturertoregisterthe
trade-marks,themessagesentouttothepublicinCanadaappearedtobe
thatthetrade-markscouldbetracedbacktothemanufacturer.
Publishedat(1998),12W.I.P.R.259-260underthetitleDistributorNotEntitledto
RegisterTrade-Marks,FederalCourtDecides.
©LEGERROBICRICHARD,1998.
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