Marks & Clerk v. Sparkles Photo Ltd, 2005 FC 1012

Date: 20050721

Docket: T-1594-04

Citation: 2005 FC 1012

Ottawa, Ontario, this 21^st day of July, 2005

Present:           The Honourable Mr. Justice Mosley                                   

BETWEEN:

                                                             MARKS & CLERK

                                                                                                                                            Appellant

                                                                           and

                                                   SPARKLES PHOTO LIMITED

                                                                                                                                        Respondent

                                            REASONS FOR ORDER AND ORDER

[1]                This is an appeal under section 56 of the Trade-marks Act R.S.1985, c. T-13 (the "Act") and Rule 300(d) of the Federal Court Rules 1998 (SOR/98-106), of the decision of the Registrar of Trade-marks, dated June 28, 2004, to amend but not to expunge the respondent's registered trade-mark NATURE'S CHOICE and design under subsection 45(3) of the Act.

[2]                The trade-mark was originally registered in September 1993 by Anan Rustom and Gary Moshonas, operating as the Nature's Choice Company, ("Nature's Choice") for use in association with the distribution and sale of packaged nuts, dried fruits, candies and potato chips. The mark was transferred in April 1997 to the A & G Corporation (owned by the same individuals), who later transferred it to Sparkles Photo Ltd..

[3]                On October 29, 1999 Marks and Clerk requested that the Registrar send a notice to Nature's Choice under section 45 of the Act. Section 45 requires the registered owner to show whether the mark has been used in Canada in association with each of the wares listed on the registration at any time within the three year period immediately preceding the date of the notice, and if not, the date when it was last in use and the reason for the absence of use since that date.

[4]                Written argument was subsequently filed by the parties and an oral hearing was held by a Senior Hearing Officer, exercising the Registrar's authority delegated under subsection 63(3) of the Act.

[5]                In section 45 proceedings, only the trade-mark registrant may file evidence. In this case, the respondent submitted an affidavit from Mr. Rustom to the effect that he and Mr. Moshonas had carried on the business of wholesale distributors of snack foods to small retailers during the relevant times, initially as a partnership and subsequently as a corporation. They purchased their wares in bulk and re-packaged them into individual snack-size bags bearing the NATURE'S CHOICE & Design trademark.

[6]                At the outset, Mr. Rustom deposed, they used the mark in substantially identical form to that registered. In mid-1994 they were told by a Mr. Peter Travers, an officer of the Ministry [sic] of Agriculture that the use of the eleven point maple leaf was prohibited under federal law and would leave the false impression that the nuts were Canadian products. Additionally, Mr. Rustom deposed, they were asked to add the abbreviation "Co." after the words "Nature's Choice" as the use of those words without the suffix left the impression that all the ingredients used were naturally occurring, which was not true of the candies sold. Accordingly, the partnership revised their packaging to delete the maple leaf and replaced it with a small version of the words "nature's choice" in a square box, and added a trade-mark symbol (®) and the word "Co." in slightly smaller font. The revised packaging was introduced in early 1995.

[7]                The mark as registered appears as follows:

[8]                This is the mark that has been in use since 1995:

[9]                The Senior Hearing Officer found that the use of the mark in association with potato chips was not established and that the register should be amended in that respect. That finding is not in dispute on this application. With respect to "nuts, dried fruits and candies" the officer was satisfied that sales employing the revised trade-mark were made during the relevant three year period.

[10]            Comparing the mark as registered and the revised design employed after 1995, the officer found that the essential and distinctive elements of the mark had not been modified and declined the request to cancel the registration. In her reasons for decision the officer stated:

There is no question in my mind that the words NATURE'S CHOICE are the prominent and essential features of the trade-mark as registered. The words actually dominate the trade-mark. The representation of the eleven-point maple leaf is prominent but less so. The third element, that is the box design, is in my view, an insignificant feature.

[11]            The officer found that the eleven point maple leaf was not a distinctive element of the design and its removal would not deceive or injure the public in any way so as to breach the principles laid down in Honey Dew, Ltd. v. Rudd, [1929] 1 D.L.R. 449 (Ex. Ct.). She relied upon the decision of the Federal Court in Saccone & Speed Ltd. v. Registrar of Trade-marks (1982), 67 C.P.R. (2d)119, in which changes to the trade-mark in question had been necessitated by legislation. The officer concluded that the situation here was similar in that changes had been requested by a government department. She found that the owner of the mark had acted in good faith throughout and that it would be unfair to take away the owner's rights where it had endeavoured to comply with requests made by a government department.

LEGISLATION

[12]            The relevant statutory provisions are set out below.

ISSUES

[13]            Did the Registrar err in concluding that:

1.         the trade-mark owner had adduced evidence showing that the mark in question       was in use in Canada in the relevant period; and

2.         the deviation between the mark as registered and the mark as used did not result in non-use of the trade-mark as registered?

STANDARD OF REVIEW

[14]            The appellant argues that the standard of review should be correctness as the hearing officer was obliged to interpret and apply conflicting jurisprudence relating to section 45 proceedings. The respondent submits that the standard should be reasonableness simpliciter.

[15]            The court is required to apply a pragmatic and functional analysis to determine the appropriate standard of review for a particular administrative decision. That approach directs that four factors must be considered: (1) the existence of any privative clause or statutory right of appeal, (2) the expertise of the tribunal relative to that of the reviewing court in regards to the question at issue, (3) the purpose(s) of the legislation as a whole and the provisions at issue in particular, and (4) the nature of the question - being law, fact or mixed fact and law: Law Society of New Brunswick v. Ryan, [2003] 1 S.C.R. 247; Dr. Q. v. College of Physicians and Surgeons of British Columbia, [2003] 1 S.C.R. 226; Pushpanathan v. Canada (Minister of Citizenship and Immigration), [1998] 1 S.C.R. 982.

[16]            As for the first factor of the pragmatic and functional analysis, there is no privative clause and this proceeding has been brought pursuant to a statutory right of appeal under section 56 of the Act. This suggests that less deference should be shown to the Registrar's decision.

[17]            In the analysis of the expertise factor, there are three considerations: the nature of the question or questions at issue; the expertise of the administrative decision maker respecting those issues; and, the Court's own expertise relative to that of the decision maker: Dr. Q, supra at para. 28.

[18]            The appellant submits that this case turns on the interpretation and application of the relevant jurisprudence, notably Honey Dew and Saccone and Speed, supra and that there is no reason to consider that the hearing officer in this case would have any greater expertise than the court in applying the appropriate principles. This case differs, the appellant argues, from the fact-driven distinctive use or confusion cases in which the hearing officers have developed considerable expertise in assessing the evidence.

[19]            The issues in these proceedings are mixed questions of fact and law. The greater the fact component of the question, the greater the deference that ought to be given to the decision of the Registrar: Dr. Q. supra at para. 34.

[20]            The registrar's hearing officers have specialized knowledge with respect to trade-marks, their interpretation and the application of the statute. As noted by Justice Rothstein for the majority of the Court of Appeal in Molson Breweries, a Partnership v. John Labatt Ltd. (2000), 5 C.P.R. (4^th) 180 (F.C.A.) at para. 29, leave to appeal to the S.C.C. ref'd, [2000] S.C.C.A. No. 161:

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.

[21]            This is not a proceeding in which the Court is required to consider fresh evidence that may have materially affected the Registrar's findings.

[22]            While Molson v. Labatt, supra was a distinctive use case, the reasonableness simpliciter standard has been applied to an appeal from proof-of-use or expungement proceedings under s.45 of the Act: Société Nationale des Chemin de Fer Français v. Venice Simplon-Orient-Express Inc. (2000), 9 C.P.R. (4th) 443.

[23]            The general purpose of the Act is "clearly to provide for registration and regulation of trade marks used in commercial transactions": Molson Companies Ltd. v. Moosehead Breweries Ltd. et al. (1990), 32 C.P.R. (3d) 363 (F.C.T.D.), at 372. In Ridout & Maybee LLP v. Omega SA (Omega AG)(Omega Ltd.) and The Registrar of trade-marks 2004 FC 1703 at para. 23, Justice Tremblay-Lamer stated that the purpose of section 45 has repeatedly been found by this Court and the Federal Court of Appeal to be intended to establish a "simple, summary and expeditious procedure for clearing the register of trade-marks which are not bona fide claimed by their owners as active trade-marks." In short, the purpose of section 45 proceedings is to clear "deadwood" from the register.

[24]            The central inquiry in the standard of review analysis, as stated by the Supreme Court of Canada in Pushpanathan at para. 26, is determining the degree to which Parliament intended the administrative decision under review to be subject to judicial scrutiny.

[25]            I am satisfied that where the Registrar has concluded that a mark remains in active use and does not deviate substantially from the mark registered and fresh evidence is not submitted on the appeal, considerable deference ought to be shown to the Registrar's decision in order to avoid unnecessary appeals of a decision-making process intended by Parliament to be "simple, summary and expeditious." Accordingly, I see no reason to deviate from the reasonableness simpliciter standard of review.

[26]            As stated by Justice Iacobucci in Canada (Director of Investigation and Research) v. Southam, [1997] 1 S.C.R. 748 at para. 56, "an unreasonable decision is one that, in the main, is not supported by any reasons that can stand up to a somewhat probing examination. Accordingly, a court reviewing a conclusion on the reasonableness standard must look to see whether any reasons support it."

ARGUMENT & ANALYSIS

Evidence of Use

[27]            The Senior Hearing Officer accepted Mr. Rustom's affidavit as providing evidence of continuing use of the trade-mark and concluded that the changes made to the mark in use were not substantial. The officer also accepted Mr. Rustom's explanation that the changes were prompted by an intervention by an officer of a government department who was concerned that the mark as registered and used could mislead Canadian consumers.

[28]            The appellant submits that because section 45 evidence is not subject to cross-examination, and the requesting party cannot file evidence to contradict the registered owner's evidence, the onus is on the respondent to produce evidence that is reliable and of good quality. The evidence in para. 15 of Mr. Rustom's affidavit is ambiguous and unreliable, the appellant argues, so should have been insufficient to establish why a variation was required by the Agriculture Department: Gowling, Strathy & Henderson v. 200219 AB. Ltd. (1997), 80 C.P.R. (3d) 292 (T.M.H.O.); Mantha & Associates v. Cravatte di Pancaldi S.r.L (1998), 84 C.P.R. (3d) 455 (F.C.T.D..), aff'd (2000), 4 C.P.R. (4^th) 176 (F.C.A.).

[29]            I do not agree that the Rustom affidavit is unreliable. The description of the intervention by a government official and the firm's response to it is clear and unambiguous. Apart from that intervention, there was no reason for the respondent to change its packaging and use of the mark. They did so solely because they were told by that official that the mark as registered did not conform to federal law and would mislead consumers as to the source of the wares.

[30]            I am satisfied that it was open to the Senior Hearing Officer to accept the explanation provided in the Rustom affidavit and that her reasons for so doing stand up to a somewhat probing examination. The evidence need not be perfect, merely sufficient to show use (or, as in this case, why the changes were made): Mantha, supra.

[31]            The officer's conclusion that the respondent acted in good faith throughout in relying upon the advice received from a government department is supported by the evidence and was entirely reasonable in my view, as was her conclusion that it would be unfair in these circumstances to deprive the owner of its rights to the registered mark as a consequence of acting upon that advice.

Did the changes exceed the limits of permissible deviation from the registered trade-mark?

[32]            The appellant submits that the test in Honey Dew, Ltd. v. Rudd et al., supra for permissible deviation in a trade-mark from its registered form should apply. Only "cautious variations", maintaining the "same dominant features", and differences so unimportant as not to

mislead an unaware purchaser are permitted: Promafil Canada Ltée. v. Munsingwear Inc. (1992), 44 C.P.R. (3d) 59 (F.C.A.).

[33]            The appellant submits that the maple leaf portion of the Nature's Choice mark was important and distinctive and that its omission is sufficient reason to cancel the mark: Beiersdorf AG v. Becton, Dickinson & Co. (1992), 44 C.P.R. (3d) 151 (T.M.H.O.) at 154. In that case, the trade-mark B-D contained within a maple leaf outline was no longer being used. Only the letters B-D were used. The registration was expunged because a prominent feature of it was omitted.

[34]            The respondent argues that Beiersdorf is readily distinguishable, as the maple leaf in that design was one of two prominent features of the mark. The hearing officer found that the changed elements in the Nature's Choice mark are not prominent.

[35]            The test for whether an owner is using the trade-mark as registered is whether it is used in such a way that it does not lose its identity and remains recognizable, whether the differences are so unimportant that an unaware purchaser would be likely to infer that both identify goods having the same origin: Registrar of Trade Marks v. Compagnie International pour l'informatique CII Honeywell Bull et al. (1985), 4 C.P.R. (3d) 523 (F.C.A.) at 525.

[36]            In Saccone & Speed v. Registrar of Trade Marks, supra, relied upon by the Senior Hearing Officer in this instance, Justice Cattanach found that the obligation to comply with legislation other than the Trade-Marks Act should not be held against a trade-mark holder that changes its mark to comply with new legislation: see also The Molson Companies v. Mitches & Co. (1980), 50 C.P.R. (2d) 180 (F.C.T.D.) at para. 4.

[37]            In this case the changes were not made in response to new legislation, but in response to a request from a government authority. However, it was reasonable in my view for the Hearing Officer to conclude that the situation before her was comparable to that which occurred in Saccone, considering that a relatively small business would not readily distinguish between the requirements imposed by new legislation and the administration of existing regulations by a federal government department.

[38]            The appellant points to a decision of another hearing officer in Nightingale Interloc Ltd. v. Prodesign Ltd. (1984), 2 C.P.R. (3d) 535 to the effect that the Saccone principle should only apply to more substantial variations where the changes were necessitated by legislation. Other than this decision, there is nothing in the jurisprudence brought to my attention that supports this proposition. I note that the officer in this case was not bound by that decision and, in any event, found that the changes were not substantial and would not deceive or injure the public in any way.

[39]            I agree with the officer that the dominant features of the mark in question are the words "Nature's Choice" in the font and arrangement that the company continued to use. The maple leaf was not a predominant element of the design. Nor was the addition of the "Co." a significant design element.

[40]            The appellant argues that there is no good reason given by the trade-mark holder that the mark could not have continued to be used with the maple leaf for products that were Canadian, or that the mark without "Co." could not have continued in use for naturally occurring food products. It was the use of the mark in association with the products chosen by the company that was objected to by the Agriculture official, not the mark itself. Further, the use of the ® symbol does not have the effect suggested by the Senior Hearing Officer, of making it clear that the words "Nature's Choice" are a trade-mark. "Co." is meaningless on its own: Nightingale, supra.

[41]            The officer reasonably inferred, in my view, that if the request to remove the maple leaf applied to nuts because they were imported, it would also apply to the other imported products. The packaging clearly shows that all of the products were imported. I would also defer to her opinion that the use of the ® symbol would make it clear that the words constituted a trade-mark although I would agree that the addition of "Co." adds little meaning other than to indicate that the company operated under that name.

[42]            I conclude that the Senior Hearing Officer applied the correct test and reasonably found that the main and most significant features of the mark were preserved: Honey Dew, supra. Considerable deference should be given to her interpretation of the drawing and verbal description of a trade-mark: Novopharm v. Astrazeneca AB (2001), 13 C.P.R. (4^th) 61 (F.C.A.) at para. 19.

[43]            The appellant raised several other collateral issues, such as the respondent's compliance with the Ontario Business Names Act, which the Senior Hearing Officer concluded ought not to be addressed in section 45 proceedings. I agree with the respondent that while a Hearing Officer may take judicial notice of other legislation when interpreting the Trade-Marks Act, there is no obligation for it to do so. The validity of a business registration is not the sort of issue that should be addressed in a section 45 proceeding. Nor is the question of whether the business' use of the mark is an appropriate one. I see no reason to interfere with her findings on those questions.

[44]            I find that the Senior Hearing Officer made a reasonable decision that should not be disturbed. The primary findings of fact are reasonable. The changes were necessary because of the intervention of a federal department. It would not have made good business sense to either revise the entire product line to Canadian products or to revise the entire product line to include only naturally occurring food products in order to preserve the rights in the trade-mark. Nor would it have made sense to use two (or more) variations of the mark, depending on the product packaged. Rather, a conservative revision of the mark was the only sensible alternative.

[45]            The appeal is therefore dismissed with costs to the respondent.

                                               ORDER

THIS COURT ORDERS that the application is dismissed with costs to the respondent.

" Richard G. Mosley "

F.C.J.

                                     FEDERAL COURT

                              SOLICITORS OF RECORD

DOCKET:                  T-1594-04

STYLE OF CAUSE: MARKS & CLERK v.

SPARKLES PHOTO LIMITED

PLACE OF HEARING:                                 OTTAWA

DATE OF HEARING:                                   March 7, 2005

REASONS FOR ORDER

AND ORDER BY : The Honourable Mr. Justice Mosley

DATED:                     July 21, 2005                 

APPEARANCES:

Gary Partington

Coleen Morrison                                               FOR THE APPLICANT

Tamara Ramsey                                                 FOR THE RESPONDENT

SOLICITORS OF RECORD:

GARY PARTINGTON

COLEEN MORRISON

MARKS & CLERK

OTTAWA, ONTARIO                                                 FOR THE APPLICANT

TAMARA RAMSEY

McCARTHY TÉTRAULT LLP

TORONTO, ONTARIO                                              FOR THE RESPONDENT