Coastal Culture Inc. v. Wood Wheeler Inc., 2007 FC 472

 

Date: 20070502

Docket: T-2208-05

Citation: 2007 FC 472

Toronto, Ontario, May 2, 2007

PRESENT:     The Honourable Mr. Justice O'Keefe

 

 

BETWEEN:

COASTAL CULTURE INC.

Applicant

 

and

 

 

WOOD WHEELER INC.

Respondent

 

 

REASONS FOR JUDGMENT AND JUDGMENT

 

O’KEEFE J.

 

[1]               This is an appeal by Coastal Culture Inc. (Coastal), pursuant to subsection 56(1) of the Trade-marks Act, R.S.C. 1985, c.T-13 (the Act), from a decision of the Trade-marks Opposition Board (the Registrar) dated October 5, 2005, which rejected the Coastal’s opposition to the registration of the trade-mark DIRT SHIRT by Wood Wheeler Inc. (Wheeler).

 

[2]               Coastal seeks:

            1.         an order reversing the Registrar’s decision to reject their opposition to the registration of DIRT SHIRT as a trade-mark;

            2.         an order pursuant to paragraph 38(2)(a) of the Act declaring that Wheeler’s trade-mark application for DIRT SHIRT does not conform with the requirements of section 30 of the Act in that:

                        (i)         contrary to subsection 30(b) of the Act, DIRT SHIRT has not been used in Canada since May 20, 1997, in association with the wares and services described in the trade-mark application;

            3.         an order pursuant to paragraph 38(2)(c) of the Act declaring that DIRT SHIRT is not registrable as a trade-mark in that:

                        (i)         pursuant to paragraph 12(1)(b), DIRT SHIRT is clearly descriptive of the character and quality of the wares and services described in the trade-mark application;

                        (ii)        pursuant to subsection 12(2), DIRT SHIRT is not distinctive; and,

4.                  an order granting Coastal its costs for this application.

 

[3]               Wheeler requests that:

            1.         this appeal be dismissed; and

            2.         the Registrar be directed to:

                        (a)        issue a notice of allowance with respect to Wheeler’s application to register its trade-mark DIRT SHIRT; and

                        (b)        enter Wheeler’s trade-mark in the register upon receipt of the applicable registration fees.

 

Background

 

[4]               Wheeler applied to register the trade-mark DIRT SHIRT (No. 1144955) (the mark) with the Canadian Intellectual Property Office (CIPO) on June 27, 2002. The application was based upon  Wheeler’s use of the mark in association with wares and services since May 20, 1997. Wheeler’s wares include souvenir T-shirts which are dyed with soil from Prince Edward Island.

 

[5]               Wheeler’s application for registration of the mark was advertised in the Trade-marks Journal of August 13, 2003. That day, Coastal filed a statement of opposition to the registration of the mark with CIPO. The grounds of opposition were:

(a)    pursuant to paragraph 38(2)(a) of the Act, the subject application contravened subsection 30(i) of the Act;

(b)   pursuant to paragraph 38(2)(b) of the Act, the subject application contravened paragraphs 12(1)(b) and (c) of the Act;

(c)    pursuant to paragraph 38(2)(c) of the Act, the subject application contravened subsection 16(1) of the Act; and

(d)   pursuant to paragraph 38(2)(d) of the Act, the applied for trade-mark was not distinctive within the meaning of section 2 of the Act.

 

[6]               Wheeler filed a counter-statement of opposition on October 24, 2003. Both parties filed affidavit evidence. Coastal filed the affidavit of Christopher Cudmore, sworn November 20, 2003, and Wheeler filed the affidavit of Michael Wheeler, sworn December 16, 2003. Written submissions were filed, but no oral hearing was held. By decision dated October 5, 2005, the Registrar rejected Coastal’s opposition to the trade-mark application. This is the appeal of the Registrar’s decision.

 

Registrar’s Reasons

 

Evidence

 

[7]               Coastal tendered evidence that the concept of a specialty dyed “dirt shirt” was common in the souvenir industry. The Registrar found that this did not constitute evidence that the term “dirt shirt” was widely used in Canada by others to describe the colour of the soil in the geographic location where the t-shirts were sold. Coastal tendered evidence that “dirt shirt” products were offered throughout North America and online. The Registrar did not accord significant weight to this evidence, as it referred to companies operating outside Canada and did not establish the online availability of the products to Canadians. 

 

[8]               Coastal’s evidence indicated that its predecessor company sold t-shirts called “P.E.I. Red Mud Shirts” and that other companies sold similar products in P.E.I. The Registrar did not consider this to be evidence that the predecessor company used the term “dirt shirt” to describe a type of shirt, or that the term was used to describe other types of souvenir t-shirts. Cudmore’s statements also fell short of constituting evidence that the names “P.E.I. Red Mud Shirt”, “Island Clay Company Shirt” and “P.E.I. Earth Shirt” were used as trade-marks or otherwise in association with t-shirts. The Registrar noted that Mr. Cudmore’s statements did not evidence use of the trade-mark RED DIRT SHIRT by Coastal in association with t-shirts within the meaning of subsection 4(1) of the Act. Should the evidence be taken at face value, the Registrar concluded that the earliest point at which Coastal had used the RED DIRT SHIRT trade-mark was June 20, 2002.

 

[9]               Coastal provided evidence regarding the results of a trade-mark search in the CIPO for the terms “P.E.I. Dirt Shirt”, “Dirt Shirt”, and “Red Dirt Shirt”, and a search with respect to the business names “P.E.I. Dirt Shirt” and “Red Dirt Shirt”, with the Consumer, Corporate and Insurance Service Division of the Office of the Attorney General for P.E.I. The Registrar did not accord significant weight to these results. The Registrar noted that the use of the term “P.E.I. Dirt Shirt” in association with the operation of Wheeler’s business did not necessarily amount to trade-mark use under subsection 4(1) of the Act. Coastal’s evidence included a letter which indicated that the trade-mark used by Wheeler was actually P.E.I. DIRT SHIRT rather than DIRT SHIRT. The Registrar found that the letter could not serve as evidence of the allegations within it. The Registrar noted Coastal’s arguments with respect to non-use of the mark, but refused to consider the ground as it was not pleaded in the statement of opposition.

 

[10]           Wheeler (the trade-mark applicant) provided affidavit evidence indicating that on October 15, 1997, it had applied to register the trade-mark DIRT SHIRT in association with products which it had continuously manufactured and sold since May 20, 1997. At the time, Mr. Wheeler was aware of an application for the registration of the trade-mark RED DIRT SHIRT. Once this application was allowed, Wheeler abandoned its DIRT SHIRT application. However, the RED DIRT SHIRT application for registration was also later abandoned.

 

[11]           Mr. Wheeler deposed that since May 20, 1997, the DIRT SHIRT mark had appeared on Wheeler’s wares and the tags affixed to each product at the time of sale featured the words “P.E.I.” and DIRT SHIRT. Wheeler provided evidence that the wares were advertised throughout P.E.I. since May 1997. Wheeler filed a second application for the registration of DIRT SHIRT with CIPO on June 27, 2002. Mr. Wheeler deposed that at the date of this application, there were no other registered trade-marks similar to DIRT SHIRT, and that he was not aware of any other person using the mark in Canada prior to himself. Wheeler provided evidence that it had established goodwill in relation to the mark prior to any third party (including Coastal’s use of the RED DIRT SHIRT mark).

 

[12]           The Registrar concluded that Mr. Wheeler was of the opinion that anyone using a trade-mark confusingly similar to the mark would be doing so unlawfully if such use commenced after May 1997.

 

 

 

 

First ground of opposition:  subsection 30(i)

 

[13]           The Registrar found that Coastal had established that Wheeler was aware of Coastal’s use of the RED DIRT SHIRT mark on t-shirts. However, this did not prevent Wheeler from truthfully making the required statement under subsection 30(i). The Registrar found that Mr. Wheeler’s testimony was consistent with Wheeler’s claim that it was entitled to use the mark in Canada in association with its wares and services identified in the application. There was no evidence that Wheeler had acted in bad faith. This ground of opposition was dismissed.

 

Second ground of opposition: paragraph (12)(1)(b)

[14]           The Registrar found that the fact that Wheeler’s t-shirts were dyed using P.E.I. soil did not render the mark clearly descriptive of the place of origin of the wares under paragraph 12(1)(b), as there was no geographical connotation to the words “dirt” and “shirt.” In addition, Coastal failed to prove that the term “dirt shirt” was used descriptively in Canada at the time of the application.

 

[15]           The Registrar found that the mere suggestion that there might be a connection between P.E.I. soil and the clothing associated with the mark was not sufficient to prevent registration of the mark under paragraph 12(1)(b). It was not normal for clothing to be produced using dirt, and the word “dirt” could not be considered to be plainly descriptive of the character or conditions of production of the clothing, therefore a consumer would not have the immediate impression that the mark was clearly descriptive of the clothing’s character or conditions of production. The fact that there were competing souvenir t-shirts dyed with dirt was not evidence that their names were used as trade-marks, and in fact showed that it was not necessary for other traders to use the term “dirt shirt” in order to describe their wares. The Registrar dismissed this ground of opposition.

 

Third ground of opposition: paragraph (12)(1)(c)

 

[16]           The Registrar noted that a trade-mark which was the name in any language of a ware or service could not be registered. This ground of opposition was dismissed as Coastal had not met the burden of showing that the mark had an accepted definition in Canada as being the name of t-shirts.

 

Fourth ground of opposition: paragraph 16(3)(a)

 

[17]           The Registrar treated the reference to paragraph 16(3)(a) as one to 16(1)(a) of the Act, since Coastal’s written argument referred to Wheeler’s non-use of the mark in Canada. The Registrar found that Coastal had not met the evidential burden of showing that it had used the trade-mark RED DIRT SHIRT in Canada before May 20, 1997. Mr. Cudmore’s evidence indicated that any use of the RED DIRT SHIRT mark within the meaning of subsection 4(1) of the Act could not have taken place before June 20, 2002. This ground of opposition was dismissed.

 

 

 

 

Fifth ground of opposition: distinctiveness

 

[18]           The non-distinctiveness ground was restricted to a pleading that the mark was not distinctive because it was confusing with the RED DIRT SHIRT mark. The Registrar concluded that there was no direct evidence supporting Mr. Cudmore’s statement with respect to Coastal’s use of the RED DIRT SHIRT mark to the extent that it was known sufficiently to negate the distinctiveness of the DIRT SHIRT mark. This ground of opposition was dismissed. 

 

Issues

 

[19]           Coastal withdrew the following grounds of appeal:

            1.         Pursuant to paragraph 38(2)(a) of the Act, contrary to paragraph 30(i) of the Act, Wheeler was aware that DIRT SHIRT was confusing with Coastal’s RED DIRT SHIRT mark at the time of filing of the application.

            2.         Pursuant to paragraph 38(2)(d) of the Act, DIRT SHIRT was not distinctive.

            3.         Pursuant to paragraph 38(2)(c) of the Act, DIRT SHIRT was not registrable as a trade-mark because:

                        (i)         it was the name of the wares and services described in the application, as                                               per paragraph 12(1)(c); and

                        (ii)        it was confusing with Coastal’s RED DIRT SHIRT mark as per paragraph                                            16(1)(a) of the Act.

 

[20]           Coastal summarized the remaining issues as follows:

            1.         Was the Registrar incorrect in failing to consider paragraph 30(b) as a ground of opposition?

            2.         Does the evidence that was before the Registrar, and the additional evidence filed on appeal, support the conclusion that the application did not comply with paragraph 30(b)?

            3.         Was the Registrar unreasonable in concluding that DIRT SHIRT was not clearly descriptive of the character, quality, and method of manufacture of Wheeler’s wares, pursuant to paragraph 12(1)(b)?

            4.         Was the Registrar incorrect in finding that the evidence and arguments put forward by Coastal failed to meet the evidential burden for establishing that DIRT SHIRT had not acquired distinctiveness or secondary meaning pursuant to subsection 12(2)?

 

[21]           I would rephrase the issues as follows:

            1.         What is the appropriate standard of review?

            2.         Did the Registrar err in rejecting Coastal’s opposition to the registration of the proposed trade-mark by Wheeler?

 

Affidavits

 

 

[22]           On this appeal, Coastal filed additional evidence, consisting of the affidavit of Christopher Cudmore, sworn January 9, 2006. Mr. Cudmore deposed that he was currently Coastal’s business manager. His affidavit explained the nature of Coastal’s business, his observations of Wheeler’s wares and website, in addition to the availability of other “dirt shirt” products in P.E.I.  His affidavit stated the following:

 

• Coastal manufactures and sells wares, including the RED DIRT SHIRT, which are commercially dyed to resemble P.E.I. dirt.
• Wheeler’s wares are dyed using P.E.I. dirt and are available at various stores in P.E.I.
• In July 2005, he went to Wheeler’s store and observed wares labelled THE ORIGINAL P.E.I. DIRT SHIRT and P.E.I. DIRT SHIRT.  He did not observe any wares bearing the DIRT SHIRT mark.
• On January 6, 2006, he went to Mark’s Work Warehouse, and observed Wheeler’s wares for sale.  The wares were labelled P.E.I. DIRT SHIRT and THE ORIGINAL P.E.I. DIRT SHIRT.  He purchased one of the shirts and did not observe the use of the DIRT SHIRT mark on the wares, he found at the store.
• On January 6, 2006, he accessed Wheeler’s website and observed the use of the THE ORIGINAL P.E.I. DIRT SHIRT mark.
• Three companies produce and sell dirt shirts in P.E.I., including: P.E.I. Red Mud Inc., Island Beach Company Clothing & Graphics Incorporated, and Coastal.
• Exhibits attached to the affidavit included: photos of the P.E.I. DIRT SHIRT he purchased, and print-outs from Wheeler’s webpage.

 

[23]           Wheeler also filed additional evidence, consisting of the affidavit of Michael Wheeler, sworn February 2, 2006. Mr. Wheeler deposed that he was currently Wheeler’s president and sole shareholder. His affidavit explained the nature of Wheeler’s business, its use of the DIRT SHIRT mark in association with its wares, and the reason why the words “THE ORIGINAL” were used in association with the mark. His affidavit stated the following:

• Wheeler has manufactured, sold and advertised wares in P.E.I. bearing the DIRT SHIRT mark since 1997. The wares are affixed with a tag bearing the word “P.E.I.” and the DIRT SHIRT mark.
• Tourists have contacted Wheeler in order to buy DIRT SHIRT wares.
• In June 2002, Wheeler became aware that Coastal was making similar products, and received many inquiries regarding the difference between its wares and those sold by Coastal. As a result, Wheeler made an effort to distinguish its wares by using the words “the original” above the DIRT SHIRT mark.
• Wheeler launched a website in order to explain the nature of the company, its trade-mark and the differences between its wares and those sold by Coastal.
• Exhibits were attached to the affidavit, including a sketch, photos of the wares and emails from customers.

 

Coastal’s Submissions

 

Standard of Review

 

[24]           Coastal submitted that the applicable standard of review in this appeal was reasonableness. However, where new evidence was filed on appeal that would have materially affected the Registrar’s findings, the standard of review was correctness (see Molson Breweries v. John Labatt Ltd. (C.A.), [2000] 3 F.C. 145 (F.C.A.)).

 

[25]           Coastal submitted that the Court should consider the issue of Wheeler’s non-compliance with subsection 30(b) of the Act without analysing whether the Registrar’s decision regarding  Coastal’s pleadings was correct. Since subsection 30(b) was raised on appeal, any prejudice that  Wheeler may have suffered in not knowing that it was being raised as a ground of opposition was rectified. It was submitted that Wheeler had adduced further evidence on the issue of non-use (see Novopharm Ltd. v. AstraZenecaAB, [2002] 2 F.C. 148 (F.C.A.)).

 

[26]           Should the Court consider the Registrar’s decision on sufficiency of pleadings, it was submitted that the issue be reviewed on a standard of correctness, since both parties had filed additional affidavit evidence on the issue of non-use. This evidence would have materially affected the Registrar’s decision regarding whether to consider the ground of non-compliance with subsection 30(b) of the Act, as it would have confirmed the fact that the ground was raised in the opposition proceedings.

 

Subsection 30(b)

 

[27]           Coastal submitted that the Registrar erred in precluding itself from considering the ground of the Wheeler’s non-conformity with subsection 30(b) of the Act. The Registrar found that Coastal had raised the issue of non-use in its affidavit and written submissions, but refused to consider the ground as it had not been pleaded correctly. Coastal cited a decision of the Federal Court of Appeal which held that the Registrar should not consider the sufficiency of the pleadings without regard to the evidence after evidence has been filed in an opposition, since this evidence is deemed to cure insufficiencies in the pleadings (see Novopharm Ltd v. Astrazeneca AB, [2002] 219 D.L.R. (4^th 290 (F.C.A.)). The Court held that the Registrar should consider whether the parties know the case to meet or are able to respond, on the basis of the evidence and the pleadings, before finding that the pleadings are insufficient.

 

[28]           Coastal noted that the case relied upon by the Registrar in refusing to consider Coastal’s arguments pertaining to subsection 30(b), dealt with a situation in which the Registrar had raised additional grounds of its own accord (see Imperial Developments Ltd. v. Imperial Oil Limited (1984), 79 C.P.R. (2d) 12 (F.C.T.D.)). It was submitted that the Court was bound to determine any arguments raised by a party on appeal, even if they were not raised before the Opposition Board or in the pleadings (see Piattelli v. A. Gold & Sons Ltd. (1991), 35 C.P.R. (3d) 377 (F.C.T.D.)).

 

[29]           Coastal submitted that Mr. Wheeler’s affidavit did not provide any evidence of the Wheeler’s alleged use of DIRT SHIRT as a trade-mark as of May 20, 1997. The affidavit included exhibits which made use of the trade-marks THE ORIGINAL P.E.I. DIRT SHIRT and P.E.I. DIRT SHIRT, rather than DIRT SHIRT. Coastal submitted that the affidavit also contained irrelevant exhibits which constituted hearsay. Should these exhibits be considered by the Court, it was submitted that they supported the submission that the Wheeler had not used the DIRT SHIRT mark since the date of first claimed use. Coastal submitted that Wheeler therefore failed to meet the legal burden of establishing the use of DIRT SHIRT since May 20, 1997.

 

[30]           Coastal submitted that subsection 30(b) contemplated continuous use as of the claimed date of first use (see Labatt Brewing Co. v. Benson & Hedges (Canada) Ltd. (1996), 67 C.P.R. (3d) 258 (F.C.T.D.)). It was submitted that had there been affidavit evidence showing that the DIRT SHIRT mark had been used by Wheeler, this use was not continuous. Mr. Cudmore stated in his affidavit that he did not observe wares marked DIRT SHIRT at Wheeler’s stores or on its website, but did observe wares marked THE ORIGINAL P.E.I. DIRT SHIRT and P.E.I. DIRT SHIRT. 

 

[31]           Coastal submitted that Wheeler’s alleged use of the DIRT SHIRT mark since May 20, 1997, was based on prior use of the marks P.E.I. DIRT SHIRT and THE ORIGINAL P.E.I. DIRT SHIRT.  It was submitted that as a matter of first impression, the public would not consider DIRT SHIRT to be a trade-mark separate from P.E.I. DIRT SHIRT or THE ORIGINAL P.E.I. DIRT SHIRT. Coastal submitted that there was a significant difference between P.E.I. DIRT SHIRT, THE ORIGINAL P.E.I. DIRT SHIRT, and the alleged DIRT SHIRT mark. Coastal noted the following with respect to the manner in which Wheeler used the P.E.I. DIRT SHIRT and THE ORIGINAL DIRT SHIRT marks on its wares: (1) the lettering on the wares labelled P.E.I. DIRT SHIRT was of the same font, size and colour. (2) The word “P.E.I.” was displayed at the beginning of the mark and was as prominent as the words “DIRT SHIRT”; (3) the words “THE ORIGINAL” were the same colour and font as the P.E.I. DIRT SHIRT portion of the mark; and (4) the words “THE ORIGINAL” are smaller but prominently displayed at the beginning of the mark.

 

[32]           Coastal submitted that the use of a trade-mark did not constitute use of a portion of that trade-mark (see Burroughs Wellcom Inc. v. Kirby, Shapiro, Eades & Cohen (1983), 73 C.P.R. (2d) 13 (F.C.T.D.)). Coastal submitted that Wheeler should not be able to remove components of its trade-mark in order to rely on the date of claimed first use. It was submitted that the words “THE ORIGINAL P.E.I.” and “P.E.I.” formed the first part of the trade-marks and were a dominant part of them. Coastal noted that Mr.Wheeler’s affidavit indicated that the words THE ORIGINAL were added to distinguish the mark from similar products.

 

Paragraph 12(1)(b)

 

[33]     Coastal submitted that the standard of review applicable to the issue of descriptiveness was reasonableness. It was submitted that whether a trade-mark was clearly descriptive was a matter of first impression (see Wool Bureau of Canada Ltd. v. Canada (Registrar of Trade-Marks) (1978), 40 C.P.R. (2d) 25 (F.C.T.D.)). Coastal submitted that the issue of descriptiveness must be viewed from the point of view of the average consumer dealing with the particular wares or services (see Atlantic Promotion Inc. v. Registrar of Trade-Marks (1984), 2 C.P.R. (3d) 183 (F.C.T.D.)). It was submitted that a trade-mark may also be unregistrable if it is clearly descriptive of the conditions or persons employed in their production (see Staffordshire Potteries Ltd. v. Registrar of Trade-Marks (1976), 26 C.P.R. (2d) 134 (F.C.T.D.)).

 

[34]     Coastal submitted that the Registrar misapplied the reasoning in Staffordshire Potteries.  Coastal submitted that the alleged mark DIRT SHIRT used the common English words “dirt” and “shirt”, the meaning of which contributed to what their combination suggested. It was submitted that as a matter of first impression, the term DIRT SHIRT was clearly descriptive of the method of manufacture of the products, and of their quality and character, in that it referred to garments dyed to take the colour of dirt. 

 

Distinctiveness

 

[35]     Coastal submitted that DIRT SHIRT was not registrable because it lacked distinctiveness. It was submitted that the standard of review applicable to this issue was correctness, as new affidavit evidence was submitted by both parties that would have materially affected the Registrar’s decision on the issue. Coastal submitted that the Registrar overlooked its arguments related to non-distinctiveness and failed to address the lack of evidence provided by Wheeler in support of the mark’s distinctiveness. It was submitted that based upon the arguments already outlined regarding non-use, the DIRT SHIRT mark had not acquired distinctiveness through use, and Wheeler had not met the burden of showing the contrary. 

 

Wheeler’s Submissions

 

[36]           Wheeler submitted that Coastal had not adduced any evidence in addition to that which was before the Registrar, thus the appropriate standard of review was reasonableness. The Court must therefore determine whether the Registrar’s decision was clearly wrong (see Molson Breweries, above). 

 

Section 30(b)

 

[37]           Wheeler submitted that the Registrar correctly refused to consider Coastal’s submissions regarding subsection 30(b) of the Act, on the basis that the ground had not been pleaded in its statement of opposition (see Imperial Developments Ltd., above). It was submitted that since Coastal did not raise subsection 30(b) in its statement of opposition, it could not  raise a new ground of opposition during the appeal process. The Federal Court has held that a party may introduce new evidence on appeal but may not raise a new issue (see S.C. Johnson & Son, Inc. v. Esprit De Corp. et al. (1986), 8 F.T.R. 81 (F.C.T.D.)).

 

[38]           In the event that the Registrar should have considered Coastal’s allegations of non-compliance with subsection 30(b), Wheeler submitted that its use of the words “P.E.I.” and “THE ORIGINAL” in association with the DIRT SHIRT mark did not disentitle it to registration. It was submitted that the mere addition to a trade-mark was not sufficient to disentitle a person who otherwise used the whole of his trade-mark, where such a deviation did not injure the public (see Honey Dew Ltd., v. Rudd & Flora Dew Co., [1929] 1 D.L.R. 449 (Ex. Ct.)). Wheeler submitted that this principle was affirmed by the Federal Court of Appeal, which held that one may deviate from a trade-mark without adverse consequences, if the same dominant features are maintained and the differences are so unimportant as not to mislead an unaware purchaser (see Promafil Canada Ltee. v. Munsingwear Inc. (1992), 142 N.R. 230 (F.C.A.)). 

 

[39]           Wheeler submitted that its evidence showed that the DIRT SHIRT mark was always dominantly featured on its wares, in spite of the addition of the words “P.E.I.” and “THE ORIGINAL”. It was submitted that any minor deviations in the use of its trade-mark from the mark applied for did not constitute non-use such as to disentitle the mark to registration.

 

Paragraph 12(1)(b)

 

[40]           Wheeler submitted that the Registrar, having regard to the Coastal’s evidence and the established case law, was correct in finding that the mark was not clearly descriptive of its ware or services.

 

Distinctiveness

 

[41]           Wheeler submitted that the Registrar was not clearly wrong in failing to consider the Coastal’s submissions that the DIRT SHIRT mark was not distinctive pursuant to subsection 12(2) of the Act. Coastal’s evidence indicated that it only began producing its RED DIRT SHIRT wares in February 2002. In addition, Coastal’s evidence regarding the use of the “dirt shirt” concept throughout North America was restricted to examples from Texas and Hawaii.

[42]           It was submitted that Coastal failed to provide evidence of the use of its RED DIRT SHIRT mark prior to Wheeler’s priority date, nor did it provide evidence that use outside Canada led to a similar mark being known in Canada prior to Wheeler’s priority date.  It was submitted that, in order to be successful on this ground, Coastal would have had to establish that a similar mark was used or made known in Canada prior to Wheeler’s date of first use. Wheeler submitted that the Registrar was correct in stating that Coastal’s evidence and argument showed that it began using the unregistered RED DIRT SHIRT trade-mark after Wheeler’s use of its DIRT SHIRT mark.     

 

Analysis and Decision

 

[43]           Issue 1

            What is the appropriate standard of review?

            An appeal of the Registrar’s decision pursuant to subsection 56(1) of the Act is generally subject to review on a reasonableness standard. However, the decision is subject to review on the standard of correctness should new evidence be submitted on appeal which would have materially affected the Registrar’s findings (see Molson Breweries, above).

 

[44]           I have reviewed the affidavits submitted by the parties, and it is my opinion that some of this evidence was new. I will make reference to the appropriate standard of review when considering the challenged elements of the Registrar’s decision.

 

 

[45]           Issue 2

            Did the Registrar err in rejecting the Coastal’s opposition to the registration of the proposed trade-mark by the Wheeler?

            Pursuant to paragraph 38(3)(a) of the Act, a statement of opposition shall set out the grounds of opposition in sufficient detail to enable the applicant to reply there to.

 

Paragraph 30(b)

Coastal submitted that this ground of opposition should have been considered by the Registrar, as the written submissions and affidavit evidence provided by Coastal raised the issue of non-compliance with paragraph 30(b), and Wheeler responded to the ground. Wheeler submitted that the Registrar was not obligated to consider the ground of opposition in question, as it had not been pleaded in Coastal’s statement of opposition. I note that paragraph 30(b) of the Act was not specifically pleaded by Coastal in its statement of opposition. In addition, it does not appear that any application was made to the Registrar in order to amend the initial statement of opposition. The Registrar stated the following when refusing to consider this ground of opposition (see paragraph 17 of the decision):

 

In rounding up my analysis of the Opponent’s evidence, I note that Mr. Cudmore’s contention that the Applicant has not used the Mark in association with its wares and services but rather the trade-mark ORIGINAL P.E.I. DIRT SHIRT or P.E.I. DIRT SHIRT is recurring in the Opponent’s written argument. As the Opponent appears to argue a ground of opposition based upon non-use of the Mark by the Applicant since the date of first use claimed in the application or based upon use of a trade-mark that differs from the trade-mark applied for registration, I find that such a ground of opposition would have been properly pleaded in alleging that the application does not conform to the requirements of Section 30(b).  However, I am of the opinion that no such ground of opposition was raised in the statement of opposition and I am therefore precluded from considering it [see Imperial Developments Ltd. v. Imperial Oil Ltd. (1984), 79 C.P.R. (2d) 12 (Fed. T.D.)].

                                                                                    (Emphasis Added)

 

[46]           In Novopharm Ltd. v. AstraZeneca AB (C.A.), [2002] 2 F.C. 148 (C.A.), AstraZeneca filed a counterstatement to Novopharm’s statement of opposition, arguing that the grounds of opposition were insufficiently pleaded. Both parties filed written submissions and affidavits, and an oral hearing was held before the Registrar. The Registrar found that the pleadings in the statements of opposition were insufficiently detailed. The Registrar’s decision was appealed to the Federal Court, and the trial Judge did not deal with the issue of the insufficiency of the pleadings. On appeal to the Federal Court of Appeal, the Court stated the following at paragraphs 42 to 43 of the decision:

We find it unnecessary in appeals A-333-00 and A-334-00 (the '536 and '537 applications) to decide whether the Registrar's finding on sufficiency was reasonable simpliciter or not.

 

By the time the matter came before the Judge below, the appellant was completely aware of the opponent's case. Subsection 56(5) of the Trade-marks Act permits the parties to adduce further evidence in addition to that adduced before the Registrar, so that there could have been no prejudice to the appellant when the matter came before the Trial Judge. The appellant declined to take advantage of this opportunity thus indicating that it had filed all the evidence it wished before the Registrar. This may explain why the Trial Judge simply dealt with the matter on the merits and ignored the procedural point on the pleadings.

 

[47]           In Novopharm Ltd. v. AstraZeneca AB, [2002] 219 D.L.R. (4^th) 290 (F.C.A.), the Federal Court of Appeal stated the following at pages 294 to 296:

Novopharm argues that when the Registrar considered the adequacy of its Statements of Opposition, he erred by considering the Statements of Opposition without regard to the evidence that was filed. In support of this position, Novopharm relies on the decision of this Court in Novopharm Limited v. Ciba-Geigy Canada Limited; Novopharm Limited v. Astra Aktiebolag, [2002] 2 F.C. 148, 15 C.P.R. 327.

Novopharm, supra, which I find to be dispositive of the procedural issues in this appeal, was decided after both the decisions of the Registrar and the Trial Judge in this case.

 

From paras 38 to 43 of Novopharm, supra, I deduce the following principles in respect of the adequacy of pleadings:

 

1.         A Statement of Opposition must be in conformity with para 38(3)(a) of the Act.  In particular, the grounds of opposition must be set out in sufficient detail to enable the trade mark applicant to reply to it. Paragraph 38(3)(a) provides:

 

38(3) A statement of opposition shall set out

 

(a)  the grounds of opposition in sufficient detail to enable the applicant to reply thereto;

 

2.         The sufficiency of pleadings should be determined on an interlocutory basis.  If sufficiency is determined at an interlocutory stage, only the pleadings need be considered in making the determination.

 

3.         In determining the sufficiency of a Statement of Opposition after evidence is filed, regard must be had to the evidence, as well as the Statement of Opposition, to see if the applicant has been provided with sufficient detail to make an adequate reply.       

 

As the Court implied in Novopharm, supra, once evidence is filed, it is too late to go back and assess the pleadings as if the evidence was not filed. The time to assess the adequacy of the pleadings in isolation has past.  Once evidence is filed, the Registrar must take the evidence into consideration when deciding whether the parties know the case they have to meet and whether they are able to respond. The filed evidence may cure whatever inadequacy may be in the pleadings.

 

The Respondent says there is no provision in the Canadian Trade-mark Regulations (1996) SOR/96-195 to have the adequacy of pleadings determined in interlocutory proceedings. It is true there is no express regulation that provides for interlocutory motions to strike pleadings for failure to comply with a requirement such as paragraph 38(3)(a). However, nothing in the Regulations precludes interlocutory motions. Moreover, s. 40 of the Regulations provides for amendments to Statements of Opposition or Counter Statements with leave of the Registrar. Section 40 provides:

 

40.       No amendment to a statement of opposition or counter statement shall be allowed except with leave of the Registrar and on such terms as the Registrar determines to be appropriate.

 

Even though there is no express provision in the Regulation, s.40 necessarily implies that an applicant or opponent may make an interlocutory motion to amend its own pleadings. I think it must also follow that the applicant or opponent may make an interlocutory motion to strike all or any portion of the other party's pleadings. As determined in Novopharm, supra, the appropriate time to challenge pleadings is at an interlocutory stage before evidence is filed.

 

If the adequacy of the pleadings is challenged after evidence is filed, then the Registrar should not consider the pleadings without regard to the evidence. At this stage, the Registrar  should be considering whether the parties know the case they have to meet and whether they can respond to it on the basis of the evidence, as well as the pleadings.  If the Registrar finds, without regard to the evidence filed,  that the parties do not know the case they have to meet and cannot respond to it, he makes a discretionary decision without regard to a relevant consideration - namely, the evidence filed.

 

[48]           On the facts of this case, it appears that while the ground in question was not raised in  Coastal’s statement of opposition, Wheeler became aware of Coastal’s position with respect to the issue, due to the contents of Coastal’s submissions and the affidavit evidence filed. Wheeler also filed an affidavit which addressed the issue of non-use. I would note that the Registrar did not make an interlocutory decision with respect to the sufficiency of pleadings, and instead waited to consider the issue after evidence was submitted. The Registrar then proceeded to consider the sufficiency of the pleadings in isolation, without reference to the evidence. As a result, I am of the opinion that the Registrar erred in considering the sufficiency of the pleadings in isolation, and refusing to consider Coastal’s submissions with respect to subsection 30 (b) of the Act. Given that the Registrar did not make a decision with respect to this issue, there is no need to consider the applicable standard of review.

 

[49]           I will now consider the merits of Coastal’s opposition to the registration of the DIRT SHIRT mark by Wheeler, on the basis of non-compliance with subsection 30(b) of the Act.  Pursuant to subsection 30(b) of the Act, an applicant for the registration of a trade-mark shall file with the Registrar an application containing, in the case of a trade-mark that has been used in Canada, the date from which the applicant has so used the trade-mark in association with each of the general classes of wares or services described in the application. Section 2 of the Act indicates that the term “use” in relation to a trade-mark, means any use that by section 4 is deemed to be a use in association with wares or services.  Section 4 of the Act states that:

 (1) A trade-mark is deemed to be used in association with wares if, at the time of the transfer of the property in or possession of the wares, in the normal course of trade, it is marked on the wares themselves or on the packages in which they are distributed or it is in any other manner so associated with the wares that notice of the association is then given to the person to whom the property or possession is transferred.

 

(2) A trade-mark is deemed to be used in association with services if it is used or displayed in the performance or advertising of those services.

 

(3) A trade-mark that is marked in Canada on wares or on the packages in which they are contained is, when the wares are exported from Canada, deemed to be used in Canada in association with those wares.

 

 

[50]           Coastal submitted that Wheeler’s evidence did not demonstrate its use of DIRT SHIRT as a trade-mark as of May 20, 1997. It was submitted that the evidence indicated that the words P.E.I. DIRT SHIRT and THE ORIGINAL DIRT SHIRT were used in association with Wheeler’s wares, not simply DIRT SHIRT. While one exhibit to Mr. Wheeler’s affidavit included a sketch with the words DIRT SHIRT printed on a shirt, there was no evidence that the shirt was manufactured, advertised or sold by Wheeler as of the date in question. Coastal submitted evidence showing that the t-shirts sold at Wheeler’s stores and shown on its website were marked with the labels THE ORIGINAL P.E.I. DIRT SHIRT and P.E.I. DIRT SHIRT. It was submitted that Wheeler should not be able to remove components of it trade-mark in order to rely on the date of first use of May 20, 1997.

 

[51]           Wheeler relied upon the case of Honey Dew Ltd. above, and submitted that the DIRT SHIRT mark was the dominant feature on its wares, in spite of the addition of the words “P.E.I.” and “THE ORIGINAL”. It was submitted that this minor deviation did not constitute non-use of the mark, and should not disentitle it to registration. 

 

[52]           In Honey Dew Ltd. above, the Court stated the following at page 89:

The practice of departing from the precise form of a trademark as registered is objectionable, and is very dangerous to the registrant. The mark as used here is not however substantially different from the mark as registered. Nobody has been deceived, no injury could occur to anybody by the deviation from the form of the registered mark, and I do not think the plaintiff should lose his right to protection because of this.

 

 

[53]           In Promafil above, the Federal Court of Appeal stated the following at paragraph 37:

Obviously, with every variation the owner of the trade mark is playing with fire.  In the words of Maclean J., "the practice of departing from the precise form of a trade mark as registered . . . is very dangerous to the registrant."  But cautious variations can be made without adverse consequences, if the same dominant features are maintained and the differences are so unimportant as not to mislead an unaware purchaser.

 

[54]           In order to determine whether Wheeler’s alleged deviation from the DIRT SHIRT mark, through the addition of the words “P.E.I.” and “THE ORIGINAL” to the mark, rendered it unable to comply with paragraph 30(b) of the Act, I must assess whether the variations of the DIRT SHIRT mark were so minor as not to mislead a purchaser. In my view, the evidence is clear that Wheeler never used the DIRT SHIRT mark in isolation, and that its wares were always labelled P.E.I. DIRT SHIRT or THE ORIGINAL P.E.I. DIRT SHIRT. This is evident from a consideration of the photographs of Wheeler’s wares filed by both parties. The tags affixed to Wheeler’s wares also feature these words in conjunction with DIRT SHIRT. The word “P.E.I.” is written in the same font and size as the words “DIRT SHIRT” on Wheeler’s wares. The words “THE ORIGINAL” are smaller and displayed above the words “P.E.I. DIRT SHIRT”.

 

[55]           In Burroughs Wellcom  above, at page 21, the Court stated:

I am not oblivious of a provision in the United Kingdom Trade Marks Act, 1938 (U.K.), c. 22, that the use of the whole of a registered trade mark shall be deemed also to be the use of a registered trade mark which forms part of the whole if the registered owner is the same.

 

However there is no provision to that effect in the Trade Marks Act, 1952-53 (Can.), c. 49, in force in Canada.

 

[56]           I would note that Mr. Wheeler deposed that the words “THE ORIGINAL” were added to the alleged mark in order to distinguish Wheeler’s wares from those of other vendors.  While I accept that this may be a minor deviation to the alleged mark, there is no evidence that Wheeler ever sold wares with the DIRT SHIRT mark, absent the word “P.E.I.”. In my view, the word “P.E.I.” has always been an element of the alleged mark, and thus the use of the trade-mark DIRT SHIRT since May 20, 1997 was not established. The appeal must be granted for this reason, and the Registrar’s decision is set aside. Coastal’s opposition is maintained, and the Registrar is directed to refuse Wheeler’s application for registration of DIRT SHIRT.

 

[57]           Coastal shall have its costs of the appeal.

 

[58]           Because of my finding on this issue, I need not deal with the other issues.

 

 

 

 

 

JUDGMENT

 

THIS COURT ADJUDGES that:

 

            1.         The appeal of Coastal is allowed and the decision of the Registrar is reversed.

            2.         The Registrar is directed to refuse Wheeler’s application.

            3.         Coastal shall have its costs of the appeal.

 

                                                                                                              “John A. O’Keefe”

 

 

ANNEX

 

Relevant Statutory Provisions

 

The relevant statutory provisions are set out in this section.

 

The Trade-marks Act, R.S.C. 1985, c. T-13.:

 

 

 

The Trade-marks Regulations, S.O.R./96-195 :

 

 

 

FEDERAL COURT

 

NAMES OF COUNSEL AND SOLICITORS OF RECORD

 

 

 

DOCKET:                                                      T-2208-05

 

STYLE OF CAUSE:                                      COASTAL CULTURE INC. v. WOOD WHEELER INC.

 

 

                                                                       

CONSIDERED AT TORONTO, ONTARIO, MOTION IN WRITING WITHOUT PERSONAL APPEARANCE OF THE PARTIES

 

 

REASONS FOR JUDGMENT

AND JUDGMENT:                                      O’KEEFE J.

 

DATED:                                                         May 2, 2007

 

 

 

SOLICITORS OF RECORD:

 

Geoffrey D. Connolly

Keya Dasgupta

Stewart McKelvey Stirling Scales                    

65 Grafton Street

Charlottetown, PE CIA 8B9                             FOR THE APPLICANT

 

 

 

Michael D. Brenton

Barry Spalding

55 Union Street, Suite 710

Saint John, NB E2L 5B7                                  FOR THE RESPONDENT