The House of Kwong Sang Hong International Ltd. v. Gervais, 2004 FC 554

Date : 20040413

Docket : T-583-01

Citation : 2004 FC 554

Ottawa, Ontario, this 13^th day of April, 2004

Present:           THE HONOURABLE MR. JUSTICE SIMON NOËL                              

BETWEEN:

                                           THE HOUSE OF KWONG SANG HONG

INTERNATIONAL LIMITED

Applicant

and

BORDEN LADNER GERVAIS and

THE REGISTRAR OF TRADE MARKS

Respondents

                                            REASONS FOR ORDER AND ORDER

[1]                The Applicant appeals, pursuant to Section 56 of the Trade-marks Act, RSC 1985, c. T-13 ("Act") from a decision of the Senior Hearing Officer (hereinafter the "Registrar") dated February 28^th, 2001 to expunge, pursuant to Section 45 of the Act, the Applicant's Trade-mark: "Two Girls & Design", TMA 414, 825.

FACTS

[2]                The Applicant, The House of Kwong Sang Hong International Limited owns Canadian trade-mark registration TMA 414, 825 for the trade-mark: TWO GIRLS AND DESIGN. The trade-mark subject of the registration comprises the words: TWO GIRLS (in a particular font) in combination with a series of Chinese characters. The trade-mark at issue was registered in respect of the following wares:

Perfumes, cosmetics, namely: lipsticks, nail enamels, eye shadows, pressed powders for the face and body, loose powders for face and body and blushers, fragrances, namely: colognes and eaux de toilette; hair lotion and cream, essential oils, toilet preparations for the care of the skin, namely skin cleansers, skin toners, skin moisturizers, facial scrubs, facial foams, hand lotions, body lotions, hand creams, bath gels, bath foams, shower gels, shower foams and body talcs, shampoos and soaps.

[3]                On August 31, 1999, at the instance of the Respondent, the Registrar issued a notice pursuant to section 45 of the Act requiring the Applicant, by means of affidavit or statutory declaration, to show inter alia that the trade-mark subject of TMA 414, 825 had been used in Canada during the three year period preceding the date of the notice with respect to each of the wares covered by the Registration. The Applicant filed Kong Chi Ming's affidavit, sworn March 2^nd, 2000 in response to the Section 45 notice.

[4]                Only the Respondent filed written arguments and no oral hearing was held. On February 28^th, 2001, the Registrar came to a two-fold conclusion that the subject trade-mark should be expunged on the basis that the evidence tendered did not show use by the Applicant (The House of Kwong SangInternational Ltd.), but rather use by another entity: The House of Kwong Sang Ltd. The Registrar also concluded that the evidence did not show use of the trade-mark as registered.

SUBMISSIONS

[5]                The Applicant claims that the Registrar erred in fact and in law by finding that the evidence and specimens provided failed to show use of the trade-mark: "Two Girls & Design", TMA 414, 825, most notably because the same specimens, when previously filed in response to the Registrar's request in the Notice of Allowance, were sufficient to show use in accordance with Rule 33 of the Trade-mark Regulations, C.R.C. 1978, c. 1559. The Applicant therefore claims that the earlier finding that the specimens demonstrated use for Rule 33 is binding on the Registrar when making a Section 45 determination under the Act.

[6]                The Applicant further claimed that the Registrar is estopped, by reason of the principles of res judicata and issue estoppel, from reversing an earlier finding that the specimens furnished demonstrated use and that such a reversal constitutes a breach of procedural fairness. However, at trial, counsel for the Applicant set aside this claim and the estoppel argument was withdrawn from the proceedings.

[7]                The Applicant also claims that the Registrar made a clerical error in ordering the expungement of Registration No. TMA 484, 825 as opposed to TMA 414, 825 and that the Registrar's decision ought to be set aside and Registration No. TMA 414, 825 permitted to remain on the Register.

[8]                The Respondent submits that the Applicant has failed to discharge the evidential burden upon it to show that the trade-mark subject of TMA 414, 825 was used as registered in the normal course of trade, at the relevant time, for the wares covered by the registration, by the Applicant or a proper licensee. They also claim that, regardless of the applicable standard of review, the Registrar's decision to expunge Registration No. TMA 414, 825 was both correct and reasonable.

ISSUES

[9]                In accordance with Section 45 of the Act, there are three issues to be determined in this matter:

1.          whether or not there has been use of any of the wares as registered during the period from August 1996 to August 1999, in the normal course of trade with the consuming public, of the Applicant's Trade-mark: TWO GIRLS & DESIGN, TMA 414, 825;

2.          if there was such use of the trade-mark, was it made by the Applicant or rather some other entity; and

3.          if there was such use of the trade-mark, was it for each of the wares or services specified in the registration.

STANDARD OF REVIEW

[10]            The Federal Court of Appeal held in Molson Breweries v. John Labatt Ltd., [2000] 3 F.C. 145 that the Standard of Review applicable to the present appeal is, as outlined by Justice Rothstein :

I think the approach in Benson & Hedges v. St. Regis and in McDonald v. Silcorp are consistent with the modern approach to standard of review. Even though there is an express appeal provision in the Trade-marks Act to the Federal Court, expertise on the part of the Registrar has been recognized as requiring some deference. Having regard to the Registrar's expertise, in the absence of additional evidence adduced in the Trial Division, I am of the opinion that decisions of the Registrar, whether of fact, law or discretion, within his area of expertise, are to be reviewed on a standard of reasonableness simpliciter. However, where additional evidence is adduced in the Trial Division that would have materially affected the Registrar's findings of fact or the exercise of his discretion, the Trial Division judge must come to his or her own conclusion as to the correctness of the Registrar's decision.

[11]            In the case at bar additional evidence that would have materially affected the Registrar's findings of fact has been adduced before this Court in accordance with Section 56(5) of the Act and I will therefore come to my own conclusions as to the correctness of the Registrar's decision.

ANALYSIS

[12]            The first issue to determine is, pursuant to Section 45 of the Act, whether the Court can find use of the trade-mark for any of the wares as registered during the period from August 1996 to August 1999, in the normal course of trade with the consuming public?

Section 45 of the Act:

[13]            Section 45 of the Act reads as follows:

(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) Form of evidence.-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) Effect of non-use.-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.     

(4) Notice to owner.-When the Registrar reaches a decision whether or not the registration of a trade-mark ought to be expunged or amended, he shall give notice of his decision with the reasons therefor to the registered owner of the trade-mark and to the person at whose request the notice referred to in subsection (1) was given.

(5) Action by Registrar.-The Registrar shall act in accordance with his decision if no appeal therefrom is taken within the time limited by this Act or, if an appeal is taken, shall act in accordance with the final judgment given in the appeal.

APPLICATION TO THE FACTS

[14]            As outlined in the facts, the Applicant furnished the affidavit of Kong Chi Ming (Mr. Kong) sworn March 2^nd, 2000 in response to the Section 45 notice and the requesting party alone filed a written argument. In his affidavit, Mr. Kong indicated that the use of the trade-mark in association with all the wares covered in the registration was being effected in Canada through two Canadian distributors and that such use had been ongoing since the date of registration in 1993.

[15]            Mr. Kong also included two Exhibits to the Affidavit demonstrating the use of the trade-mark in Canada. Exhibit "A" included a sales report for sales in Canada from January 1994 to December 1998, as well as a series of invoices showing sales in Canada of face cream, hair care products, soaps, bath care products, powders and "Florida water". The invoices refer to The House of Kwong Sang Ho as the seller of the products. Exhibit "B" to the Affidavit was an envelope containing packaging (a small cardboard box) and a jar of face cream with a label showing use of the trade-mark as registered along with "additional matter" including other Chinese characters.

The Registrar's decision :

[16]            On February 28^th, 2001 the Registrar, in the decision to expunge the Applicant's Trade-mark: "Two Girls & Design" (TMA 414, 825) pursuant to Section 45 of the Act, stated:

The requesting party has raised several arguments concerning the evidence furnished. One of the main arguments is that the evidence fails to show use by the registered owner or use accruing to the registered owner. A second argument is that any use shown is not use of the trade-mark as registered.

Concerning the first argument, I agree with the requesting party that the use shown by the evidence is use by The House of Kwong Sang Hong Ltd. and not use by the House of Kwong Sang Hong International Limited (the registered owner).

[...] In my view the case is analogous to that found in Mayborn Products Ltd. V. Registrar of Trade-Marks, 70 C.P.R. (2d) 1, and therefore on the basis of the marking on the packaging and the jar, I conclude that the use shown is not use by the registered owner.

Concerning the second argument raised by the requesting party, I agree that the sample carton (packaging) does not bear the trade-mark as registered. The words "TWO GIRLS" are being used without the Chinese characters and this in my view constitutes a substantial deviation of the type which is not acceptable. Concerning the "jar", the trade-mark as registered appears but with additional matter and I cannot conclude that the trade-mark "per se" would be perceived as being used (Nightingale Interloc Ltd. v. Prodesign Ltd., 2 C.P.R. (3d) 535).(my emphasis added)

As I have concluded that the use is not by the registered owner and further as I cannot conclude that the use shown constitutes use of the registered trade-mark, it follows that the evidence furnished is insufficient to meet the requirements of the Trade-marks Act, I conclude that the trade-mark registration ought to be expunged [...]

[17]            In this decision the Registrar came to a two-fold decision that the evidence tendered did not show use by the Applicant: The House of Kwong Sang International Ltd., but rather by another entity: The House of Kwong Sang Ltd. The Registrar also concluded that the evidence did not show use of the trade-mark as registered. In coming to these conclusions it should be noted that the evidence before the Registrar was limited and, as was decided in Lindy v. Registrar of Trade Marks, [1982] 1 FC 241 at 245-247 (TD), in response to a Section 45 notice, the onus is on the owner of the trade-mark (the Applicant in this case) to establish use by the registered owner or licensee of the trade-mark as registered without material differences.

Nature of the Section 45 and 56 Proceedings :

[18]            A useful summary of the nature of Section 45 and 56 Proceedings can be found starting from par. 16 of Osler, Hoskin & Harcourt v. United States Tobacco Co. et al., 77 C.P.R. (3d) 475, in which Mr. Justice Richard J. (as he was then), outlined the following:

Section 45 is intended to be a simple, summary and expeditious procedure for cleaning up the trade-mark register of trade-marks that have fallen in to disuse. It is designed to clear the dead wood from the register, not to resolve issues in contention between competing commercial interests, which should be resolved in expungement proceedings under section 57 [...]

Section 45 does not contemplate a determination on the issue of abandonment, but is merely a summary procedure whereby the registered owner of a mark is required to provide either some evidence of use in Canada or evidence of special circumstances that excuse the absence of use [...]

Subsection 45(1) of the Act directs an inquiry as to whether the trade-mark was in use in Canada at any time during the relevant period.

However, a bald assertion of use will be insufficient. The affidavit materials filed in response to a section 45 notice from the Registrar need only supply facts from which, on balance, a conclusion of use may follow as a logical inference.

The nature of the proceeding before this Court under section 56 of the Act is similar to a trial de novo in that the appellant has the right to adduce evidence which was not presented to the Registrar. The Court is not restricted to deciding whether the Registrar was right or wrong. However, the Court should be circumspect about interfering with a Registrar's decision [...]

Additional evidence :

[19]            New evidence not furnished to the Registrar, but adduced before this Court pursuant to Section 56(5) of the Act includes an additional affidavit by Kong Chi Ming, sworn on June 11^th, 2001 (Mr. Kong's second affidavit) and an affidavit by Mung Ping Po, sworn on June 11^th, 2001.    Mr. Kong's second affidavit attests to "a close corporate connection between HOUSE CO. (The House of Kong Sang Hong International Limited - the owner of the trade-mark) and the Applicant" and states that "HOUSE CO. is a wholly-owned subsidiary of the Applicant and is licensed by the Applicant to use its trade-marks including the TWO GIRLS & Design trade-mark and to market products bearing the TWO GIRLS & Design trade-mark in many countries, including Canada". He further states that there is no written license agreement between the Applicant and HOUSE CO. with respect to the use of said trade-mark, but there "has always been an oral licensing arrangement under which the Applicant requires strict quality control over the products produced and marketed by HOUSE CO. under the TWO GIRLS & Design trade-mark".    Mr. Kong's second affidavit also includes as Exhibit "E" a copy of the product list for TWO GIRLS products with product codes that correspond to those found on the invoices at Exhibit "A" of his first affidavit. Mr Kong further states in his second affidavit that "the trade-mark appears exactly as registered on the pot of cream itself and he adds that the Chinese characters, which appear in larger lettering under the trade-mark on the product itself, constitute descriptive language and can be translated as "living rose cream". The said larger lettering is not part of the trade-mark. Any person who can read Chinese would be able to distinguish the trade-mark from the description on the product [...]."

[20]            The affidavit sworn by Mung Ping Po (Miss Mung) on June 11^th, 2001 confirms the information provided by Mr. Kong regarding the close corporate connection between HOUSE CO. and the Applicant. She further states that HOUSE CO. and the Applicant shared premises in Hong Kong, that "before early 1998, four out of five Directors of the Applicant also sat on the Board of Directors of HOUSE CO." and that since 1998 both companies have had common directors.    Miss Mung also states that "in view of the close corporate and working relationship between the Applicant and HOUSE CO. and in view of Mr. Kong's functions within both companies, the Applicant continues to maintain control over the use of the TWO GIRL & Design trade-mark by HOUSE CO. and control over the quality of the HOUSE CO. products bearing the said trade-mark".

1.         USE OF THE REGISTERED TRADE-MARK

[21]            When the Court considers the first issue both in light of the evidence that was before the Registrar as well as the new evidence presented, it cannot loose sight of the purpose of section 45 of the Act and, as was stated by Thurlow C.J. in Plough (Canada) Limited v. Aerosol Fillers Inc., [1981] 1 F.C. 679 must keep in mind that:

"[...] it is to the statute that one ought to look to ascertain what the owner of the registration is required to show by affidavit or declaration, remembering always that the object of the procedure is to clear the register of entries of trade marks which are not bona fide claimed by their owners as active trade marks."

The Court must also consider that, when parties choose to undertake section 45 proceedings, that such proceedings, as stated by Justice Hugessen in Berg Equipment Co. (Canada) v. Meredith & Findlayson [1991] F.C.J. No. 1318 (F.C.A.):

"(Section 45) provide(s) a simple and expeditious method of removing from the register marks which have fallen into disuse. It is not intended to provide an alternative to the usual inter partes attack on a trade-mark envisaged by s. 57. The fact that an applicant under s.45 is not even required to have an interest in the matter speaks eloquently to the public nature of the concerns the section is designed to protect."

The evidence therefore taken as a whole, that is to say what was before the Registrar as well as the additional evidence adduced before this Court, now permits me to conclude with regards to this first issue that there has been use of at least one of the wares as registered in the normal course of trade with the consuming public during the three year period. However, I have yet to conclude whether there was use for each of the wares or services specified in the registration and if there was use, whether it was made by the Applicant or some other entity.

2.        USE OF THE TRADE-MARK BY THE APPLICANT OR SOME OTHER ENTITY

[22]            The second issue to be determined is whether use of the trade-mark was made by the Applicant or some other entity. As was decided in Well's Dairy Inc. v. UL Canada Inc. [2000] F.C.J. No. 876, Section 50 of the Act stipulates when use of a trade-mark by a licensee accrues to a registered owner. I am satisfied, based on the additional affidavit evidence brought before this Court, that HOUSE CO. and the Applicant shared corporate premises, that HOUSE CO. is a wholly-owned subsidiary of the Applicant licensed to use the TWO GIRLS & Design trade-mark and to market products bearing the TWO GIRLS & Design trade-mark in many countries, including Canada; and that a valid oral license exists between HOUSE CO. and the Applicant. Furthermore, as was set out in Osler, Hoskin & Harcourt v. United States Tobacco Co. (Supra), the additional evidence submitted in the form of the Canadian sales reports for Dec 1994-1998, to the invoices submitted along with the cross references made to the product code list shows that the Applicant "initiated the first link in the chain of transaction leading to sales in Canada". I also find that this additional evidence filed by the Applicant establishes, as set out in A & A Jewellers Ltd. v Malcolm Johnston & Associates, (2000) 8 C.P.R. (4^th) 56 (F.C.T.D.), that de facto control was exercised over the licensed use. Therefore, based on an overall review of the evidence in light of the principles set out in Well's Dairy Inc. v. UL Canada Inc. (Supra), I conclude that there is sufficient evidence before the Court for me to find use of the trade mark by a corporate entity duly directed and supervised by the Applicant.

3.         USE OF THE WARES SPECIFIED IN THE REGISTRATION

[23]            The third and final issue to be determined is whether there was use, pursuant to Section 45 of the Act, of each of the wares specified in the registration. To facilitate analysis of this issue, I have divided the wares as registered (see paragraph 2 of this decision) into the following categories:

A.         Wares not proven in use as admitted by the Applicant;

B.          Wares identified as exhibits G, H, I, J and L of Mr. Kong's second

affidavit;

C.         Florida water soap, exhibit K of Mr. Kong's second affidavit;

D.         Wares identified in cross-examination; and

E.          Skin moisturizers.

[24]            As previously cited in this decision, in response to a Section 45 notice, the onus is on the Applicant both before the Registrar and this Court to establish use by the registered owner or licensee of the trade-mark as registered without material differences.

Other wares in general :

[25]            As was decided in , Registrar of Trade Marks v. Cie Informatique CII Honeywell Bull, [1985] 1 F.C. 406, the practical test to determine whether the trade-mark "so used" is sufficiently close to the trade-mark "as registered" so as to sustain registration is to compare the two and determine whether the differences are so unimportant that an unaware purchaser would be likely to infer that both, in spite of their differences, identify goods having the same origin.    I also refer to the decision of the Federal Court of Appeal in United Artists Corp. V. Pink Panther Beauty Corp., (1998), 80 C.P.R. (3d) 247 (F.C.A.), where Linden, J.A., writing for the majority said at p. 257-258:

What is important is that the trade-mark be associated in the minds of the public with the goods produced by the trade-mark owner. It is the association of a trade-mark with a particular source which is the key to understanding the rights protected by the Act.

[26]            With regards to the Applicant showing, with respect to each of the wares or services specified in the registration, whether the trade-mark was in use in Canada, I have carefully reviewed the evidence that was before the Registrar as well as the additional written and oral submissions subsequently presented by both parties in this matter. Upon comparison, I am generally of the opinion that with the notable exception of the "skin moisturizers", there are significant differences between the trade-mark as registered and the trade-mark so used for most or all of the other wares listed in the registration.

A. Wares not proven in use as admitted by the Applicant

[27]            Moreover, the Applicant admits that the burden of proof to demonstrate use was not met for the following other wares that were registered: perfumes, cosmetics, namely: lipsticks, nail enamels, eye shadows, pressed powders for face and body, loose powders for face and body and blushers; and fragrances, namely: colognes, eaux de toilette, hair lotion and cream, as well as essential oils.

B. Exhibits G, H, I, J and L of Mr. Kong's second affidavit

[28]            Although a trade-mark can be used in combination with other marks on the label it must be clearly distinguishable. As was decided in Promafil Canada Limitée v. Munsingwear Inc., (1992) 44 C.P.R. (3d) Canadian law emphasizes the maintenance of identity and recognition as well as the preservation of dominant features, as the criteria for trade-mark use. In the case at bar, the use shown of the trade-mark as registered on the Other wares identified as exhibits G, H, I, J and L of Mr. Kong's second affidavit represents a substantial variation from the trade-mark as registered.    The trade-mark as registered does not appear on any of these wares, but the labelling that was shown can be summarised as follows:

a.          Exhibit "G" - talcum powder (pages 137 to 139): neither the words TWO GIRLS, nor the series of Chinese characters appear;

b.          Exhibit "H" - shampoo (pages 141 and 142): the series of Chinese characters appear at the top of both the front and back labels without the words TWO GIRLS. Use is made of other registered trade-marks on the front of the product including a design of two standing women wearing traditional Chinese attire and the words "Two Girls Brand ®" at the bottom of the label;

c.          Exhibit "I" - conditioner (pages 144 and 145): the series of Chinese characters appear at the top of both the front and back labels without the words TWO GIRLS. Use is made of other registered trade-marks on the front of the product including a design of two standing women wearing traditional Chinese attire and the words "Two Girls Brand ®" at the bottom of the label;

d.          Exhibit "J" - shower gel (pages 147 and 148): the series of Chinese characters appear at the top of both the front and back labels without the words TWO GIRLS. Use is made of other registered trade-marks on the front of the product including a design of two standing women wearing traditional Chinese attire and the words "Two Girls Brand ®" at the bottom of the label;

e.          Exhibit "L" - roll on deodorant (pages 154 to 156): this product does not appear to belong to any of the categories of wares registered (see paragraph 2 of this order) nonetheless an examination of the label reveals use of the series of Chinese characters at the top front without the words TWO GIRLS. Use is made of other registered trade-marks on the front of the product including a design of two standing women wearing traditional Chinese attire and the words "Two Girls Brand ®" at the bottom of the label;

[29]            In summary neither the series of Chinese characters, nor the words TWO GIRLS appear on exhibit "G". Additionally, only the series of Chinese characters appear at the top front and back of the labels in exhibits H, I, J and L without the words TWO GIRLS. Two other registered trade-marks appear prominently on the front labels of these exhibits including the words "Two Girls Brand ®", and the words are not located in proximity to the Chinese characters on the label. Based on these facts as well as the jurisprudence set out in Promafil Canada Limitée v. Munsingwear Inc., I can therefore only conclude that the differences between the trade-mark as registered and the trade-mark as used in these exhibits are evidently substantial, to the extent that it is unlikely that any unaware purchaser would recognise that both, in spite of their differences, were goods from the same origin.

C. Florida water soap, exhibit "K" of Mr. Kong's second affidavit

[30]            The Applicant has also submitted a sample of Florida water soap, as exhibit "K" of Mr. Kong's second affidavit (pages 150 to 152).    The trade-mark as registered does not appear on any of these wares, however the elements comprising the trademark can be found separately on the packaging. The words TWO GIRLS appear at the very top of the packaging's back panel and the Chinese characters are included half way down the panel and separated from the words TWO GIRLS by Chinese and English descriptive text. Although, the use shown of the trade-mark as registered for this particular exhibit represents a less substantial variation from the trade-mark as registered than that found in the other exhibits, I find that the trade-mark is no longer clearly distinguishable. The mark used on the soap packaging, when compared to the trade-mark as registered, has not only had its identity diluted, but by dividing it into two distinct elements separated by descriptive text, the Applicant has not preserved the trade-mark's dominant features. I therefore conclude that the variation of the trade-mark as registered in this exhibit is significant and that the two elements comprising the trade-mark as registered can no longer be considered sufficiently identified together to sustain the registration (see Anheuser-Busch Inc v. McDermid and Co, unreported (February 3, 2000, Fed Ct No T-1418-97).

D. Wares identified in Cross-Examination

[31]            Furthermore, the Applicant relies on the Cross-Examination of Kong Chi Ming (Mr. Kong) to establish use of the following wares which, according to him, bear the labelling shown in Exhibit "F" to his Affidavit, sworn June 11, 2001:

1.          Skin cleansers;

2.          Skin toners;

3.          Facial foams;

4.          Body lotions; and

5.          Hand Creams.

[32]            Case law clearly sets out that, for these wares, the onus is still on the Applicant to show the "use" made of the "trade-mark" as defined in Sections 4 and 2 of the Act and after having carefully reviewed the written and oral arguments presented by the Applicant as well as the statements made by Mr. Kong under Cross-Examination, I cannot reliably conclude, on the basis of this evidence, that use of the trade-mark as registered was made for any of the wares registered other than the "Skin moisturizers".

[33]            As was decided in Plough (Canada) Limited v. Aerosol Fillers Inc. (Supra) at par. 10 and 13:

10. What subsection 44(1) [now 45(1)] requires is an affidavit or statutory declaration not merely stating but "showing", that is to say, describing the use being made of the trade-mark within the meaning of the definition of "trade-mark" in section 2 and of use in section 4 of the Act. The subsection makes this plain by requiring the declaration to show 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 subsection 44 (3) [now 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 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.

[...]

13. Moreover, like the affidavit considered in American Distilling Co. v. Canadian Schenley Distilleries Ltd., (1979) 38 C.P.R. (2d) 60, the affidavit must be considered from the point of view of what it does not say. [...]

[34]               I am not satisfied that the evidence gleaned from Mr. Kong under Cross-Examination is sufficient to demonstrate use primarily because his statements (particularly those at page 68, line 21 to page 74 of the Transcript of Cross-Examination, December 10^th, 2001) are vague and irreconcilable with the evidence he has presented in his first affidavit. The most glaring inconsistency is at page 71, line 8 where Mr. Kong testified that a product called "Shower Gel" was sold in Canada with a label that included the trade-mark exactly as registered (exhibit "F") when in fact this is not the case. Mr. Kong himself provided the label for the "Shower Gel" product (Exhibit "J") which does not include the trade-mark as registered, but shows the series of Chinese characters at the top of both the front and back labels of the product without the words TWO GIRLS. As previously determined use is made of other registered trade-marks on the front of this product including a design of two standing women wearing traditional Chinese attire and the words "Two Girls Brand ®" at the bottom of the label.   

[35]            Mr. Kong seems to give reliable evidence at page 69 of the Transcript concerning a product called "Cleansing Foam" and makes specific reference to product No. 2073. However, at page 72 he again discusses "Cleansing Foam" which he then associates with another product called "Bath Foam" by stating :"I believe [Cleansing Foam] is a similar product to bath foam" and further states, at pages 73 and 74, that he is mistaken between exhibits "G" (Talcum Powder) and "J" (Shower Gel) when describing the label on the foam products. In light of these inconsistencies in his testimony, the statements Mr. Kong has made under Cross-Examination appear to include mere assertions of use rather than showing assertions of fact. I also must take into consideration the fact that the Applicant has failed to show use for a large number of the other wares registered and I am therefore of the opinion that the transcript from Mr. Kong's Cross-Examination is an unreliable basis upon which to conclude use for these additional wares. As was decided in Union Electric Supply Co. v. Registrar of Trade-Marks, [1982] 2 F.C. 263 (F.C.T.D.):

In Section 44 (now Section 45) proceedings the registrant bears the onus of "showing", as opposed to merely "stating", that the trade mark is being used within the meaning of Sections 2 and 4 of the Trade Marks Act. It is my opinion that the use of the word "showing" in subsection 44(1) imposes upon the registrant the responsibility to produce reliable evidence from which the Registrar can draw conclusions and render a decision concerning use of the trade mark.

[36]            I agree with the Applicant's submission that the threshold to demonstrate use under Section 45 of the Act is low and that, as was decided in Cordon Bleu International Ltée v. Renaud Cointreau & Cie (2000), 10 CPR (4^th) 3799 (FC TD), under certain Section 45 proceedings when the Registrant has furnished invoices bearing the trade-mark as registered for sales of the wares for which it is registered, it is not necessary to provide additional evidence or "evidentiary overkill" to further show use of the trade-mark; for example: submitting individual labels for each of the wares registered. However, upon close examination it is my assessment that, far from overkill, the Applicant in this case has not met the burden of showing, based on reliable evidence, that the trade-mark was used in Canada on any of the wares except for one. I am therefore of the opinion that both the evidence furnished to the Registrar and the additional evidence submitted before this Court is insufficient to meet the requirements of the Act and conclude that the use shown for all of the wares except for the "skin moisturizers", which will be dealt with in the next part of this decision, does not constitute use of the trade-mark as registered.   

E. Skin moisturizers

[37]            A "skin moisturizer" product was presented before the Registrar and this Court in the form of a jar of face cream and accompanying packaging. Copies of the jar and packaging were also submitted as exhibit "F"to Mr. Kong's first affidavit. In addition, the Applicant has submitted invoices and product codes to show sales of this product in Canada during the relevant time period. I am satisfied upon observation, as was the Registrar, that there is no doubt that the trade-mark "Two Girls & Design", TMA 414, 825 appears exactly as registered on the side of the jar with the words: TWO GIRLS (in a particular font) in combination with a series of Chinese characters. On February 28^th, 2001 the Registrar, in the decision to expunge the Applicant's Trade-mark also concluded that:

Concerning the "jar", the trade-mark as registered appears but with additional matter and I cannot conclude that the trade-mark "per se" would be perceived as being used (Nightingale Interloc Ltd. v. Prodesign Ltd., 2 C.P.R. (3d) 535).(my emphasis added)

[38]            However, as previously outlined Section 45 of the Act is intended to be a simple, summary and expeditious procedure for cleaning up the trade-mark register of trade-marks that have fallen in to disuse. It is designed to clear the dead wood from the register, not to resolve issues in contention between competing commercial interests, which should be resolved in expungement proceedings under section 57. Furthermore, new evidence was submitted before this Court to explain that the other Chinese characters in larger font appearing underneath the trade-mark are descriptive in nature and can be translated as: "Living Rose Cream". I am therefore satisfied that, as set out in Promafil Canada Limitée v. Munsingwear Inc. (Supra) for the purposes of Section 45 proceedings, the trade-mark as used has been maintained despite the additional material appearing below it, and that as a result the trade-mark as registered does appear on the jar.    I am also mindful of the fact that, as was decided at par. 45 of Meridith and Finlayson v. Canada (Registrar of Trade-marks), (1991) 40 CPR (3d) 409 at 412 (FCA):

Section 45 is meant to provide a simple and expeditious method of removing from the Register, marks which have fallen into disuse. It is not intended to provide an alternative to the usual inter partes attack on a trade-mark envisaged by Section 57. It is not intended to be a trial of contested issues of fact. The proceedings simply provide an opportunity for the registered owner to show that his mark is in use and if not, why not. An appeal to the Court under s. 56 does not have the effect of enlarging the scope of that inquiry.

As the jurisprudence shows, it is not the purpose of section 45 proceedings to decide matters that are clearly litigious. In order for the Respondent to successfully seek expungement based on the allegation that this additional material dilutes the trade-mark to such an extent that use can no longer be found, I am therefore of the opinion that a separate proceeding must be initiated under section 57 of the Act.

CONCLUSION

[39]            In summary, the additional evidence brought before this Court is substantially different than what was before the Registrar and has been significantly improved by the further affidavits and Cross-Examination filed. With regard to all of the wares registered except the skin moisturizers, I find that the Registrar, based on the evidence presented at the time, exercised discretion on reasonable grounds and came to a decision based on proper judicial principles. However; the new evidence presented before this court supports a reversal of the Registrar's decision concerning the jar of face cream and a finding that trade-mark registration TMA 414, 825 for the trade-mark: TWO GIRLS AND DESIGN, which appears on a skin moisturizing product, namely face cream, was in use in Canada at any time during the relevant period.

[40]            The parties did request costs but since the Respondent was largely successful and costs follow the event, costs is granted to the Respondent.

FOR ALL THESE REASONS, THE COURT ORDERS THAT:

-            Pursuant to Section 56(5) of the Act, this appeal is allowed in part and the Registrar's decision to expunge the wares listed in the registration for Registration No. TMA 414, 825 other that skin moisturisers is upheld.

-            The Registrar's decision to expunge the Applicant's Trade-mark: "Two Girls & Design", TMA 414, 825 is reversed with regards to all of the wares registered as skin moisturizers.

-            The Registrar is directed to ensure that the proper Registration number is reflected in the Register.

-            The Applicants shall pay the costs of this proceeding to the Respondent in accordance with column III to the table to Tariff B of the Federal Court Rules, 1998.

             "Simon Noël"                                                                                                                       Judge       

                         FEDERAL COURT OF CANADA

                                      TRIAL DIVISION

    NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                  T-583-01                      

STYLE OF CAUSE: The House of Kwong Sang Hong International Limited

v.

Borden Ladner Gervais and others

PLACE OF HEARING:                                 Ottawa, Ontario

DATE OF HEARING:                                   February 19^th, 2004

Reasons for Order and Order: THE HONOURABLE MR. JUSTICE S. NOËL

DATED:                     April 13^th, 2004

APPEARANCES:

Adele Finlayson                                                 FOR APPLICANT

Susan D. Beaubien                                            FOR RESPONDENT,

Borden Ladner Gervais

no one appearing                                                FOR RESPONDENT,                                                          Department of Justice

SOLICITORS OF RECORD:

Adele Finlayson                                                FOR APPLICANT

Macer & Jarzyna

Ottawa, Ontario          

Susan D. Beaubien                                            FOR RESPONDENT,

Borden Ladner Gervais LLP                                               Borden Ladner Gervais

Ottawa, Ontario

Morris Rosenberg                                              FOR RESPONDENT

Deputy Attorney General of Canada                  Department of Justice