The reputation of your trademark, an asset to protect

Rosalie Jetté[1] and Catherine Bergeron[2]
ROBIC, LLP
Lawyers, Patent and Trademark Agents

A cannabis shop in Vancouver now needs a new name and logo! On June 11, 2020 the Federal Court of Canada rendered a judgment[*] ordering the store to cease using its HERBS R US trademark on the ground that it depreciates the value of the goodwill attached to the trademark of the children’s games and toys giant Toys “R” Us.

The Protection of Goodwill Under Section 22 of the Trademarks Act

« Goodwill » refers to the positive association that attracts customers towards a trademark owner’s products or services rather than those of its competitors. This asset is protected, among others, by section 22 of the Trademarks Act[†], which prohibits the use of a registered trademark in a manner that is likely to depreciate the value of its goodwill.

In the case at bar, it was decided that the TOYS R US trademark was well-known considering its 80 Canadian retail stores, its website visited more than 22 million times in one year and its considerable advertising efforts. The challenge for the toy retailer was rather to demonstrate the use of its trademark by the defendant, as well as the likely effect of this use on its reputation (the « damage »).

In this regard, the Court specified that, for the purpose of section 22, the trademark used by the unauthorized third party does not necessarily have to be the trademark as registered by its owner. In fact, it only has to be « sufficiently similar » to evoke a mental association in the consumer’s mind. In this case, in comparing the two trademarks, the Court determined that they were so similar that this connection was « all but inevitable ».

On the issue of the damage, the Court once again sided with Toys “R” Us in concluding that « the creation of an association between the [sic] Toys « R » Us and a cannabis ‘dispensary’, particularly one that appears to be operating without a licence, and one that markets through social media with adult-themed content said to include nudity and swear words, is ‘utterly inconsistent’ with the reputation of the TOYS R US brand » and therefore risks tarnishing it.

Section 22 to the Rescue

The recourse under section 22 is an interesting avenue to protect one’s trademark; it can be particularly useful, as was the case for the TOYS R US mark, when the Court concludes that there is no infringement on the basis of confusion or under the doctrine of passing-off. Since a recourse under section 22 does not require a test of confusion, it is an alternative recourse allowing owners of registered trademarks to assert their rights in the reputation of their trademarks, even if the defendants operate in a different field and offer goods and services that are of a completely different nature.

ROBIC’s team is available to provide advice on the best protection strategies for your trademarks. Do not hesitate to contact us!