Date: 20061019
Docket: T-713-05
Citation: 2006 FC 1248
Ottawa, Ontario, October 19, 2006
PRESENT: The Honourable Madam Justice Mactavish
BETWEEN:
FAIRWEATHER
LTD.
Applicant
and
THE REGISTRAR OF TRADE-MARKS
and
BERESKIN
& PARR
Respondent
REASONS FOR JUDGMENT AND JUDGMENT
[1]
This
is an appeal by Fairweather Ltd. from a decision of the Registrar of
Trade-marks expunging its “TARGET APPAREL” trade-mark from the Trade-marks
Register. Fairweather asserts that the Registrar erred in finding that it had
not established a serious intention to commence using the TARGET APPAREL mark
in Canada in
association with the registered wares, and in failing to find that special
circumstances existed excusing the non-use of the mark.
[2]
Fairweather
argues that the new evidence filed on this appeal further supports a finding
that, as of the material time, it had the requisite intention to commence using
the mark in question in Canada within a reasonable time, such that the
mark should not be expunged.
[3]
For
the reasons that follow, I am satisfied that the new evidence does establish
that Fairweather had the intention to begin using its TARGET APPAREL mark in Canada within a
reasonable time. As a consequence, the appeal will be allowed.
Background
[4]
The
TARGET APPAREL mark was registered on July 31, 1981, for use in association
with “men’s clothing, namely suits, pants, jackets and coats”. The registered
owner of the mark was Dylex Ltd. A declaration of use with respect to the mark
was filed in 1981, and in 1996, the mark was renewed for a further 15 years.
[5]
In
August of 2001, Dylex was placed into receivership, and subsequently went
bankrupt. In October of 2001, Fairweather acquired various assets relating to
Dylex’s Fairweather stores from the receiver, including the registration for
the TARGET APPAREL mark.
[6]
On
April 19, 2002, the Registrar of Trade-marks issued a Notice pursuant to
section 45 of the Trade-marks Act at the request of the respondent,
Bereskin & Parr, requiring Fairweather to show use of the mark in Canada in
association with the specified wares.
[7]
In
response to the Notice, Fairweather filed an affidavit from Paul Brener. Mr.
Brener is the Secretary-Treasurer of Fairweather, as well as the Director of
Finance for International Clothiers Inc. International Clothiers and
Fairweather are related companies.
[8]
Mr.
Brener’s affidavit recited the circumstances leading up to Fairweather’s
acquisition of the TARGET APPAREL mark, and explained that at the same time
that it acquired the TARGET APPAREL mark from the receiver, Fairweather also
acquired over 70 stores employing more than 500 employees. This resulted in
the company being extremely busy as it attempted to manage and revitalize the
Fairweather stores and assets, and resulted in a delay in the re-launch of
TARGET APPAREL merchandise.
[9]
Mr.
Brener further deposed that because Fairweather stores do not sell men’s
clothing, it was anticipated that TARGET APPAREL merchandise would be licensed
to, and sold through, a related menswear company. According to Mr. Brener, it
was anticipated that TARGET APPAREL brand merchandise (namely suits, pants,
jackets and coats) would be re-launched in Canada in the Fall
of 2002, or early in 2003. To this end, Mr. Brener stated that they were in
the process of developing labelling and sourcing products to be sold in
connection with what he described as “this valuable brand”.
The Decision of the
Registrar of Trade-marks
[10]
The
Registrar found that the available evidence clearly failed to show any use of
the TARGET APPAREL mark in Canada in association with the registered wares
during the relevant period, which the Registrar identified as the six month
period between Fairweather’s acquisition of the mark in October of 2001, and
the issuance of the section 45 Notice in April of 2002. Thus the issue for the
Registrar was whether the evidence established that the absence of use was due
to “special circumstances” excusing non-use.
[11]
The
Registrar identified the test for special circumstances as being that
established by the Federal Court of Appeal in Registrar of Trade-marks v.
Harris Knitting Mills Ltd., [1985] F.C.J. No. 226, 4 C.P.R. (3d) 488.
There the Court identified three criteria that must be considered in
determining whether special circumstances excusing non-use could be found to
exist in a given case. These are:
1. The length of time
during which the trade-mark has not been in use.
2. Whether
the registered owner’s reasons for not using its trade-mark were due to
circumstances beyond its control; and
3. Whether there exists
a serious intention to shortly resume the use of the mark.
[12]
The
Registrar noted that it was not known whether the TARGET APPAREL mark had even
actually been used by Dylex, observing, however, that “where there has been a
recent assignment of the trade-mark, the period of non-use for purposes of
determining special circumstances will generally be considered starting from
the date the trade-mark was assigned”. In support of this contention, the
Registrar relied on the decision in Arrowhead Spring Water Ltd., v.
Arrowhead Water Corp., [1993] F.C.J. No. 138, 47 C.P.R. (3d) 217.
[13]
The
Registrar further observed that, in a case such as this, where Fairweather had
only acquired the mark some six months prior to the date of the section 45
Notice, it was only required to show a serious intention to start using the
mark in question in the near future.
[14]
After
examining the evidence submitted by Fairweather, together with the submissions
of the parties, the Registrar ordered the expungement of the registration on
the basis that the evidence did not show that Fairweather had established a
serious intention to commence using the trade-mark in Canada in the near
future in association with the registered wares.
[15]
In
coming to this conclusion, the Registrar noted that the evidence did not
demonstrate that any steps had been taken by Fairweather with respect to the
mark in the six months between its assignment of the mark and the issuance of
the section 45 Notice. Moreover, the Registrar observed that Mr. Brener’s evidence
regarding steps taken by the company after receipt of the section 45 Notice
consisted of bare statements that the company was in the process of developing
labelling and sourcing products. No details regarding the labelling and
sourcing processes had been provided, nor had any indication been given as to
where Fairweather was in the process.
[16]
The
Registrar further noted that no information had been provided to substantiate
Fairweather’s claim that it intended to re-launch the TARGET APPAREL mark in Canada in the Fall
of 2002 or early in 2003, nor was there any evidence as to steps having been
taken by Fairweather to sell merchandise through a related company.
[17]
While
the Registrar recognized that, in the circumstances, some time would reasonably
be required in order to make arrangements for the use of the TARGET APPAREL
mark, the Brener affidavit lacked specificity and detail with respect to what
efforts had actually been made by Fairweather to begin using the mark. This
was especially so, having regard to the fact that by the time that Mr. Brener
swore his affidavit, Fairweather had owned the TARGET APPAREL mark for over a
year.
[18]
As
a consequence, the Registrar found that the evidence did not show that
Fairweather had established a serious intention to begin using the TARGET
APPAREL mark in Canada in the near future, in association with the
registered wares. Having failed to discharge the burden on it to demonstrate
special circumstances excusing non-use, Fairweather’s TARGET APPAREL mark was
expunged.
The New Evidence Filed
on the Appeal
[19]
As
is permitted in appeals under section 56 of the Trade-marks Act,
Fairweather has filed additional evidence on this appeal. This consists of a
further affidavit from Mr. Brener, together with affidavits from Pauline Yu and
Chetna Patel. Ms. Yu is a Graphics Designer with International Clothiers Inc.,
whereas Ms. Patel was a Buyer’s Assistant with that company between 2001 and
2003.
[20]
This
new evidence addresses the steps that had been taken by Fairweather in relation
to the development of TARGET APPAREL hang tags and labels between the
acquisition of the mark by Fairweather in October of 2001, and the issuance of
the section 45 Notice in April of 2002. It also addresses the steps taken in
this regard after April of 2002.
[21]
The
new evidence also indicates that several hundred thousand dollars worth of
men’s clothing bearing the TARGET APPAREL mark was sold in Canada by
Fairweather’s sister company, International Clothiers. According to Mr.
Brener’s second affidavit, these sales were carried out by International
Clothiers initially under an implied licence from Fairweather, and latterly,
pursuant to a written licence agreement.
Standard of Review
[22]
The
parties agree that the standard of review identified in cases such as Dion
Neckware Ltd. v. Christian Dior, S.A. et al. [2002] F.C.J. No. 95, 20
C.P.R. (4th) 155, 2002 FCA 29, John Labatt Limited v. Molson Companies
Limited, [1990] F.C.J. No. 533, 30 C.P.R. (3d) 293 (F.C.T.D.) at 298 and Molson
Breweries, a Partnership v. John Labatt Ltd. [2000] F.C.J. No. 159, 5
C.P.R. (4th) 180 at p. 196 applies to appeals under section 56 of the Trade-marks
Act from decisions of the Registrar of Trade-marks.
[23]
That
is, where no new evidence is filed on the appeal that would have materially
affected the Registrar’s decision, the test is whether the Board was clearly
wrong.
[24]
However,
where additional evidence is filed on the appeal that would have materially
affected the Registrar’s findings of fact or law, or the exercise of
discretion, the test is one of correctness. Although not an entirely apt
description, some cases refer to this as a hearing de novo. In these
cases, the Court is entitled to substitute its opinion for that of the
Registrar.
[25]
Fairweather
has filed a considerable volume of new evidence. What remains to be
determined, however, is the significance of this evidence.
[26]
In
deciding whether the impact of this new evidence is sufficient to warrant a
review on the standard of correctness, I am guided by the comments in Garbo
Group Inc. v. Harriet Brown & Co., [1999] F.C.J. No. 1763. Here,
Justice Evans noted that in assessing the impact that additional evidence will
have for the standard of review, the question is the extent to which the
additional evidence has a probative significance that extends beyond the
material that was before the Board. If the new evidence adds nothing of
significance, but is merely repetitive of existing evidence, without enhancing
its cogency, the issue will be whether the Board was clearly wrong.
[27]
I
am satisfied that the new evidence provided by Fairweather is of a probative
significance such that it would have affected the Registrar’s decision. In
this regard, it bears repeating that the Registrar’s decision was based in part
on the finding that Fairweather had not provided evidence showing that any
concrete steps had been taken with respect to the use of the TARGET APPAREL
mark in the six month period between its acquisition of the mark in the Fall of
2001 and the issuance of the section 45 Notice in the Spring of 2002.
[28]
The
new evidence of Ms. Yu and Ms. Patel demonstrates that concrete steps had
indeed been taken with respect to the development of graphics for hang tags and
labelling for TARGET APPAREL mark menswear in the pre-notice period.
[29]
The
Registrar also found that no details had been provided to substantiate
Fairweather’s claim that it intended to re-launch the TARGET APPAREL mark in Canada in the Fall
of 2002, or early in 2003, nor was there any evidence with respect to steps
having been taken by Fairweather to sell merchandise through a related company.
[30]
Mr.
Brener’s second affidavit provides evidence of work that was done by
International Clothiers to source product as early as February of 2003.
According to Mr. Brener, this was done in accordance with an implied licence
from Fairweather. Moreover, Mr. Brener’s second affidavit also describes sales
of TARGET APPAREL branded menswear through International Clothiers, one of
Fairweather’s sister companies.
[31]
As
was carefully demonstrated by counsel for the respondent in his submissions,
the new evidence provided by Fairweather is by no means perfect, and some of
the concerns with respect to frailties in the evidence will be addressed
further on in this decision. Nevertheless, for the purposes of determining the
appropriate standard of review, I am satisfied that the new evidence adduced by
Fairweather is of sufficient probative significance that the Registrar’s
decision should be reviewed against the standard of correctness.
Principles Governing
Section 45 Proceedings
[32]
Before
turning to consider the submissions of the parties, it is helpful to first have
an understanding of the nature and purpose of proceedings under section 45 of
the Trade-marks Act.
[33]
Section
45 provides, in part, that:
|
45. (1) The Registrar may at any time and, at the written request
made after three years from the date of the registration of a trade-mark by
any person who pays the prescribed fee shall, unless the Registrar sees good
reason to the contrary, give notice to the registered owner of the trade-mark
requiring the registered owner to furnish within three months an affidavit or
a statutory declaration showing, with respect to each of the wares or
services specified in the registration, whether the trade-mark was in use in
Canada at any time during the three year period immediately preceding the
date of the notice and, if not, the date when it was last so in use and the
reason for the absence of such use since that date.
(2)
The Registrar shall not receive any evidence other than the affidavit or
statutory declaration, but may hear representations made by or on behalf of
the registered owner of the trade-mark or by or on behalf of the person at
whose request the notice was given.
(3)
Where, by reason of the evidence furnished to the Registrar or the failure to
furnish any evidence, it appears to the Registrar that a trade-mark, either
with respect to all of the wares or services specified in the registration or
with respect to any of those wares or services, was not used in Canada at any
time during the three year period immediately preceding the date of the
notice and that the absence of use has not been due to special circumstances
that excuse the absence of use, the registration of the trade-mark is liable
to be expunged or amended accordingly…
|
45. (1) Le registraire peut,
et doit sur demande écrite présentée après trois années à compter de la date
de l’enregistrement d’une marque de commerce, par une personne qui verse les
droits prescrits, à moins qu’il ne voie une raison valable à l’effet
contraire, donner au propriétaire inscrit un avis lui enjoignant de fournir,
dans les trois mois, un affidavit ou une déclaration solennelle indiquant, à
l’égard de chacune des marchandises ou de chacun des services que spécifie
l’enregistrement, si la marque de commerce a été employée au Canada à un
moment quelconque au cours des trois ans précédant la date de l’avis et, dans
la négative, la date où elle a été ainsi employée en dernier lieu et la
raison de son défaut d’emploi depuis cette date.
(2) Le registraire ne peut recevoir aucune preuve autre que cet
affidavit ou cette déclaration solennelle, mais il peut entendre des
représentations faites par le propriétaire inscrit de la marque de commerce
ou pour celui-ci ou par la personne à la demande de qui l’avis a été donné ou
pour celle-ci.
(3) Lorsqu’il apparaît au registraire, en raison de la preuve
qui lui est fournie ou du défaut de fournir une telle preuve, que la marque
de commerce, soit à l’égard de la totalité des marchandises ou services
spécifiés dans l’enregistrement, soit à l’égard de l’une de ces marchandises
ou de l’un de ces services, n’a été employée au Canada à aucun moment au
cours des trois ans précédant la date de l’avis et que le défaut d’emploi n’a
pas été attribuable à des circonstances spéciales qui le justifient,
l’enregistrement de cette marque de commerce est susceptible de radiation ou
de modification en conséquence...
|
[34]
This
section has been described as the "use it or lose it" provision of
the Trade-marks Act: see NTD Apparel Inc. v. Ryan [2003] F.C.J.
No. 1008, 2003 FCT 780.
[35]
That
is, the purpose of the section is to provide a summary procedure for clearing
the Trade-mark Register of marks which are not bona fide claimed by
their owners as active trade marks: see Plough (Canada) Ltd. v. Aerosol
Fillers Inc. [1980] F.C.J. No. 198 (FCA), at ¶ 7.
[36]
The
procedure has been aptly described as one for removing "deadwood"
from the Register: Boutiques Progolf Inc. v. Canada (Registrar of Trade
Marks)
[1993] F.C.J. No. 1363.
[37]
Section
45 proceedings are not intended to act as a substitute for abandonment
proceedings. That is, the purpose of the section is not to resolve substantive
rights that may be in dispute between the parties: Noxzema Chemical Co. of
Canada v. Sheran Mfg. Ltd. Manufacturing Co. of Canada, [1968] 2
Ex.C.R. 446, at 155-56.
[38]
Because
of the summary nature of the proceedings, a respondent is precluded from filing
contradictory evidence, either before the Registrar, or on appeal.
[39]
As
to the type of evidence that must be adduced by a trade-mark owner in a section
45 proceeding, the Federal Court of Appeal observed in the Plough
decision, previously cited, that it is not sufficient for a registrant to
simply state that a mark is in use. Rather, the owner must:
[S]how
with respect to each of the wares and services specified in the registration
whether the trade mark is in use in Canada and if not the date when it was last
used and the reason for the absence of such use since that date. The purpose is
not merely to tell the Registrar that the registered owner does not want to
give up the registration but to inform the Registrar in detail of the situation
prevailing with respect to the use of the trade mark so that he, and the Court
on appeal, can form an opinion and apply the substantive rule set out in s- s.
44(3) [now subsection 45(3)]. There is no room for a dog in the manger
attitude on the part of registered owners who may wish to hold on to a
registration notwithstanding that the trade mark is no longer in use at all or
not in use with respect to some of the wares in respect of which the mark is
registered. [at ¶10]
[40]
Evidence
of use in the period prior to issuance of the section 45 Notice is essential.
However, evidence of use by a registrant after issuance of the Notice may be
relevant, to the extent that it supplements the evidence of pre-notice use,
thus establishing continuity of use: Boutiques Progolf, above.
[41]
Finally,
any doubt there may be with respect to the evidence must be resolved in favour
of the trade-mark owner, without reducing the burden on the owner to provide prima
facie evidence of use: Boutiques Progolf, per Justice Desjardins,
dissenting, but not on this point.
Analysis
[42]
The
evidence of Mr. Brener, Ms. Yu and Ms. Patel demonstrates that in the six month
period between Fairweather’s acquisition of the TARGET APPAREL mark in the Fall
of 2001 and the issuance of the section 45 Notice in the Spring of 2002, some
concrete steps were indeed taken by the company with respect to the use of the
mark.
[43]
Specifically,
preliminary artwork was done in order to develop labels and hang tags for use
in connection with TARGET APPAREL branded menswear. It is true that this work
was actually carried out by employees of International Clothiers Inc., as
opposed to Fairweather. However, Ms. Yu’s affidavit indicates that the request
came from the assistant to President of International Clothiers Inc.
[44]
Issac
Benitah is the President and a director of International Clothiers Inc., and he
is also the President and a director of Fairweather Ltd.. According to Mr.
Brener, Mr. Benitah directs and controls the day to day operations of both
companies.
[45]
Moreover,
it appears from the evidence of Mr. Brener that the two companies were closely
related, and shared common premises and management. In addition, the companies
share many employees. It also appears that the lines between the activities of
the two entities were not sharply delineated.
[46]
In
all of the circumstances, I am satisfied that efforts by employees of
International Clothiers Inc. to develop artwork for TARGET APPAREL branded
apparel were made at the behest of the registered owner of the mark, namely
Fairweather.
[47]
In
these circumstances, I am satisfied that the new evidence before the Court
establishes an ongoing intention on the part of Fairweather to use the TARGET
APPAREL mark during the period prior to the issuance of the section 45 Notice.
On this basis alone, the appeal should be allowed.
[48]
Moreover,
while activity with respect to the TARGET APPAREL mark did not progress rapidly
after issuance of the section 45 Notice in April of 2002, it did continue. In
this regard, Ms. Yu deposes that she was asked to provide revised artwork for
the TARGET APPAREL labels and hang tags in June of 2002 and June of 2003, which
she did.
[49]
There
is also evidence before the Court regarding work having been done in 2003 with
respect to the manufacture and sale of TARGET APPAREL menswear. While there is
some dispute as to whether the International Clothiers Inc. documents seemingly
relating to orders for TARGET APPAREL clothing are indeed true purchase orders,
or simply worksheets, they do reflect considerable ongoing work having been
done to re-launch the TARGET APPAREL brand of menswear.
[50]
Moreover,
Mr. Brener stated in cross-examination that he had personally seen TARGET
APPAREL menswear on sale in International Clothiers Inc. stores in 2004, and
had himself bought a TARGET APPAREL shirt in the Spring of 2005.
[51]
The
respondent questions whether the use of the TARGET APPAREL mark by
International Clothiers Inc. can be attributed to Fairweather, in the absence
of there having been a formal licence agreement between the two companies that
would trigger the deeming provisions of section 50(1) of the Trade-marks Act.
This subsection deems use of a mark by a licensee to be use by the registered
owner, provided that the owner has direct or indirect control over the
character or quality of the wares in question.
[52]
There
is no requirement that a license agreement be in writing: see TGI Friday’s
of Minnesota Inc. v. Registrar of Trademarks, [1999] F.C.J. No. 682,
(F.C.A.). I have referred earlier in this decision to the close relationship
between Fairweather and International Clothiers Inc. In all of the
circumstances, I am satisfied that an inference can reasonably be drawn that
International Clothiers Inc.’s use of the mark was made under an arrangement
with Fairweather that was tantamount to an oral licence, and that the mark
remained under the effective control of Mr. Benitah and Fairweather.
[53]
It
should also be noted that in June of 2004, this arrangement was reduced to
writing in a formal licence agreement, which confirms Fairweather’s control
over the mark.
[54]
The
respondent has also pointed out that the TARGET APPAREL mark is registered for
use in association with men’s clothing, namely “suits, pants, jackets and
coats”. The evidence before the Court relates to the manufacture and sale of
TARGET APPAREL shirts, ties, T-shirts, jackets, and pants. Thus, the respondent
says, at a minimum, the mark should be expunged as it relates to men’s suits
and coats.
[55]
A
review of Mr. Brener’s first affidavit discloses a general intention to
re-launch TARGET APPAREL brand merchandise, namely suits, pants, jackets and
coats, and I have already found, based upon the new evidence, that concrete
steps were in fact taken prior to the issuance of the section 45 Notice to
achieve this goal, with the result that the appeal should be allowed.
[56]
As
was noted earlier, post-notice evidence may be of some assistance, to the
extent that it supplements or confirms the evidence of pre-notice intent to
use. In this case, the post-notice evidence shows that some of the listed
wares have indeed been manufactured and sold under the TARGET APPAREL mark,
thus confirming that there was indeed a genuine continuing intention on the
part of Fairweather to use the mark.
[57]
Finally,
the respondent submits that the mark actually used differed materially from the
registered mark, and that Fairweather never formed the intention to use the
TARGET APPAREL mark as registered.
[58]
The
artwork created by Ms. Yu does display variations on the mark: namely “TARGET
APPAREL CO.” or simply “TARGET”. The packaging used on products appears to
bear the name “TARGET APPAREL CO.”.
[59]
It
is common ground that the law of trade-marks does not require the maintenance
of the absolute identity of marks. Cautious variations may be made to a mark,
as long as the same dominant features are maintained: Promafil Canada Limitée v. Munsingware
Inc. [1992] F.C.J.
No. 611, 44 C.P.R. (3d) 59, at 71-2, (F.C.A.).
[60]
The
practical test is to compare the registered mark with the mark that has been
used, and to determine whether the differences in the marks are sufficiently
unimportant that an unaware purchaser would likely infer the marks to emanate
form the same source: Registrar of Trade-marks v. Compagnie Internationale
pour l'Informatique CII Honeywell Bull, Société Anonyme et al. [1985] 1
F.C. 406, 4 C.P.R. (3d) 523, at 525 (F.C.A.).
[61]
In
all of the examples of the mark in evidence in this case, the word “TARGET”
appears to be the dominant feature, with the words “APPAREL” and “CO.” appearing in a smaller
font. In these circumstances, I am satisfied that the addition of the word
“Co.” does not amount to a material variation in the mark.
Conclusion
[62]
For
these reasons, the appeal is allowed, with costs.
JUDGMENT
THIS COURT
ORDERS AND ADJUDGES that this appeal is allowed, with costs.
“Anne
Mactavish”
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