Date: 20070601
Docket: T-1005-05
Citation: 2007 FC 580
Ottawa, Ontario, June 1,
2007
PRESENT: The Honourable Madam Justice Tremblay-Lamer
BETWEEN:
CROSS-CANADA AUTO BODY SUPPLY
(WINDSOR) LIMITED, CROSS-CANADA
AUTO BODY SUPPLY (WEST) LIMITED and
AT PAC WEST AUTO PARTS ENTERPRISE LTD.
Applicants
-and-
HYUNDAI AUTO CANADA,
A DIVISION OF HYUNDAI MOTOR AMERICA
Respondent
REASONS FOR JUDGMENT AND JUDGMENT
INTRODUCTION
1.
This application seeks to expunge, pursuant to
section 57 of the Trade-marks Act, R.S.C. 1985, c. T-13 (the Act) from
the Canadian Trade-mark Register the following five Canadian trade-mark
registrations:
|
Trade-Mark
|
Registration No.
|
|
HD Design
|
314,286
|
|
HD & Hyundai
Design
|
315,465
|
|
HMC Design
|
346,818
|
|
Hyundai
|
302,619
|
|
Sonata
|
356,597
|
2. The applicants are re-sellers of
automotive parts and accessories, including parts for Hyundai automobiles
bearing the HYUNDAI trade-mark. The respondent is the registered owner of the
five trade-marks at issue. The applicants are also defendants in an
ongoing action in this Court for trade-mark infringement brought by the
respondent (T-898-05).
3. The trade-marks at issue were
originally owned and registered by Hyundai Motor Company, based in Seoul, Korea. The
respondent, Hyundai Auto Canada (HAC), is a division of Hyundai Motor America,
a California corporation.
Hyundai Motor America is a wholly owned subsidiary of Hyundai Motor Company.
HAC’s divisional head office is in Markham, Ontario.
4. Hyundai Motor Company does not
export automobiles, parts and accessories for sale in Canada to entities other than HAC; HAC imports
Hyundai automobiles and parts from Korea and the United
States. All new vehicles
are sold in Canada in
association with the trade-mark HYUNDAI, while the Sonata model is sold
in association with the trade-marks HYUNDAI and SONATA; all are sold
exclusively through HAC’s network of franchised dealers in Canada. These dealers also have service
departments that sell parts and accessories bearing HAC’s trade-marks.
5. On December 7, 1985, Hyundai Motor
Company assigned three of the trade-marks, HYUNDAI (302,619), HD & HYUNDAI
DESIGN (315,465) and HD DESIGN (314,286), to the respondent’s predecessor,
Hyundai Auto Canada Inc. (HACI). These trade-marks were assigned from HACI to
the respondent in December 1996, but were only registered with the Canadian
Trade-Marks Office on August 24, 2004.
6. The two other trade-marks at issue
in this application, SONATA (356,597) and HMC DESIGN (346,818), were assigned
by Hyundai Motor Company to the respondent on September 23, 2004.
7. The applicants’ position in the
present motion is essentially that the trade-marks are invalid on grounds that
they are not, and were not, distinctive of HAC at the time that the Notice of
Application was commenced, and that three of the trade-marks have been abandoned.
Issues
8. The issues raised in the present
application are as follows:
i) Are the applicants “persons interested” in the
trade-mark within the meaning of the Act?
ii) Are the trade-marks invalidity registered because
they were not distinctive at the time this application was commenced?
(a) What is the effect, if any, of the delay between the assignments of
the HYUNDAI, HD & DESIGN and HD & HYUNDAI DESIGN trade-marks and their
registration?
(b) Did the SONATA and HMC DESIGN trade-marks actually distinguish the
respondent’s wares from those of others, prior to their assignment in September
2004?
iii) Are the HD & DESIGN, HD &
HYUNDAI DESIGN and HMC DESIGN trade-marks invalidly registered because they
have been abandoned?
Analysis
1.
Are the applicants “persons interested” in the trade-mark within the meaning of
the Act?
9) Section 57(1) of the Act requires
that only a "person interested" may bring an expungement proceeding. “Person
interested” includes any person whose right may be restricted by a
registration. In view of the infringement and passing off action being brought
by the respondent against the applicants, the applicants are “persons
interested” as they are affected by the registration.
2. Are the trade-marks invalidly registered because
they were not distinctive at the time this application was commenced?
10) The Registrant benefits from a
presumption that its trade-mark registration is valid (Nature’s Path Foods
Inc. v. Quaker Oats Co. of Canada, [2001] F.C.J. No. 646 (QL) at para. 20;
Mr. P's Mastertune Ignition Services Ltd. v. Tune Masters (1984), 82
C.P.R. (2d) 128 at 134 (F.C.T.D.)). The onus remains on the attacking party to
show that the registration should be expunged (Golden Happiness Bakery Ltd.
v. Goldstone Bakery & Restaurant Ltd. (1994), 76 F.T.R. 52 at para.
12). The relevant date for the purpose of considering expungement of the
trade-marks based on allegations of non-distinctiveness and abandonment is the
date of the application for expungement, i.e., June 8, 2005 (see for example Remo
Imports Ltd. v. Jaguar Cars Ltd. (c.o.b. Jaguar Canada), 2006 FC 21, [2006] F.C.J. No. 47 (QL) at para.
321).
Distinctiveness
11) The applicants allege the trade-marks
are invalid as they did not distinguish the respondent’s products from the
wares of others at any time up to the commencement of these proceedings.
12) They object to the distinctiveness of
the trade-marks based on the change in ownership from the Hyundai Motor Company
of Korea to the respondent and
its predecessor, HACI. Specifically, although the assignment of the HYUNDAI, HD
& DESIGN and HD & HYUNDAI DESIGN trade-marks was executed on December
7, 1985, it was not filed in the Canadian Trade-marks office until August 24,
2004, almost 20 years after its execution. Thus, there was no notice to the
consuming public as to the change of ownership of the trade-marks affected by
the assignment.
13)
There is no evidence of license agreements
between the respondent and dealers pertaining to the trade-marks, and this
failure to ensure quality standards relating to their use by dealers in
relation to wares and services led to their non-distinctiveness.
14) Until September 2004, when the
SONATA trade-mark was assigned from the Hyundai Motor Company to HAC, the
HYUNDAI and SONATA trade-marks were owned by different entities, despite the
fact that they appeared together on products sold in Canada. There was no notice of this divided ownership to the public.
15) These failures to publicly
advise the change of ownership in the trade-marks produced public confusion as
to the source of the wares, in turn resulting in the non-distinctiveness of
these trade-marks.
16) With regard to distinctiveness,
paragraph 18(1)(b) of the Act provides as follows:
|
When registration invalid
18. (1) The registration of a trade-mark is invalid if […]
(b) the trade-mark is not
distinctive at the time proceedings bringing the validity of the registration
into question are commenced, […]
|
Quand l’enregistrement est invalide
18. (1)
L’enregistrement d’une marque de commerce est invalide dans les cas suivants:
[…]
b) la marque de commerce n’est pas distinctive à l’époque où sont
entamées les procédures contestant la validité de l’enregistrement; […]
|
Section 2 of the Act defines the term
“distinctive” as follows:
|
Definitions
2. In this Act, […]
"distinctive" , in relation to a trade-mark,
means a trade-mark that actually distinguishes the wares or services in
association with which it is used by its owner from the wares or services of
others or is adapted so to distinguish them;
|
Définitions
2. Les
définitions qui suivent s’appliquent à la présente loi. […]
«distinctive » Relativement à une marque
de commerce, celle qui distingue véritablement les marchandises ou services
en liaison avec lesquels elle est employée par son propriétaire, des
marchandises ou services d’autres propriétaires, ou qui est adaptée à les
distinguer ainsi.
|
17) As recently cited by the Supreme Court in Mattel Inc.
v. 3894207 Canada Inc., [2006] 1 S.C.R. 772 at paragraph 75, and originally
stated by Justice Audette in Western Clock Co. v. Oris Watch Co.,
[1931] Ex. C.R. 64 at 67 (Can. Ex. Ct “[d]istinctiveness is of the very essence
and is the cardinal requirement of a trade mark. Distinctiveness
is a question of fact where the test is whether a clear message has been given
to the public that the wares with which the trade-mark is associated and used
are the wares of the trade-mark owner and not those of another party (Tommy
Hilfiger Licensing Inc. v. Produits de Qualité I.M.D. Inc., [2005] F.C.J.
No. 17 (QL) at para. 58 (T.D.); White Consolidated Industries, Inc. v. Beam
of Canada Inc. (1991), 39 C.P.R. (3d) 94 (F.C.T.D.)).
18) Confusion in the context of distinctiveness relates to
confusion as to the source of wares associated with trade-marks.
19) The applicants argue that the message
conveyed by the trade-marks to the Canadian purchasing public is that the
source of the goods associated with the trade-marks was the Hyundai Motor
Company of Korea, the
manufacturer, causing confusion.
20) The respondent submits that it is the
exclusive “source” of the products in Canada, through its network of franchised dealers, and there is no
confusion among the relevant public in this regard. The extensive reference to
HAC and Hyundai Canada at the
point of transfer to the consumer, at the franchised dealerships, in
association with the products and the trade-marks clearly identifies it as the
source. Further, it retains control over the dealers’ use of its trade-marks
through licence agreements, and has engaged in extensive advertising to build
the Hyundai brand throughout Canada and public recognition of HAC. With respect to the SONATA
trade-mark, HAC took responsibility as the source of all products sold in Canada in association with it.
21) It is the
respondent’s view that the use by a domestic corporation of a trade-mark
acquired from a foreign manufacturer indicates that the goods in question come
from the domestic holder of the mark. Although the goods are not made by it,
the reputation of the domestic entity is nevertheless reliant on the character
of the goods it sells; a trade-mark can be a seller’s mark, such as in the
present case, where the trade-marks distinguish wares and services used
by HAC and its network of dealers. Finally, the trade-mark should come to the
attention of the transferee in a direct way at the time of transfer, which is
the critical point in time.
22) For its part, in advancing its
position that there is confusion as to the source associated with the
trade-marks, the applicant has produced affidavits indicating that vehicles
sold at the respondent’s dealerships bear markings in the doorjambs and in the
engine compartment they inspected, indicating that the source of the equipment
is Hyundai Motor Company in Korea.
23) The problems with the
affidavit evidence relied upon by the applicants, essentially opinion evidence
provided by four individuals employed by the applicant’s former law firm, has
been amply addressed by the Federal Court of Appeal in Cross-Canada Auto
Body Supply (Windsor) Ltd. v. Hyundai Auto Canada, 2006 FCA 133, [2006]
F.C.J. No. 539 (QL) at paragraph 4, where the Court stated:
(…) Opinion evidence is meant to be objective. The goal of
objectivity is not furthered by having employees of the law firms give crucial
opinion evidence. Such employees may be motivated by loyalty to their employer
or fear or reprisal or lack of advancement in giving such opinions.
24) Further,
the evidence clearly demonstrates that the affiants were specifically directed by
the applicants’ former counsel to examine the doorjambs and engine
compartments of vehicles at a Hyundai dealership in search of labels indicating
the manufacturer.
25) I find this evidence deserves little,
if any, weight, for its lack of objectivity. Moreover, it is too limited a
sample to be representative of the relevant public’s perception of the
source of the wares associated with the trade-marks in issue.
26) In my opinion, the only objective evidence
relating to the issue of public confusion regarding the source of wares
associated with the trade-marks is the survey evidence conducted by Dr. Heeler.
27) Dr. Heeler concludes that the
purchasing public is not confused as to the source of the products associated
with the trade-marks. The public perception is generally that the dealer is
responsible for selling and leasing, as well for addressing consumer issues,
and therefore that HAC’s dealers are viewed as the “source”.
28) The applicants challenge the
methodology of Dr. Heeler’s survey and his conclusions relied upon by the
respondent, with respect to admissibility and weight, and specifically with
regard to the way it was conducted, the specific questions used and how they
were framed.
29) I note that Dr. Heeler is a professor
of marketing at the Schulich School of Business at York
University, holds an MBA and PH.D in marketing and has
40 years experience in the design, execution and analysis of marketing surveys
and research studies. He conducted the analysis and drew conclusions from the
survey results.
30) I am not persuaded that the data upon
which Dr. Heeler relied in drawing his conclusions was defective. The survey
was implemented by a reputable and established marketing and public opinion company.
I also find that the questions were not leading, and that the verbatim
responses were provided to Dr. Heeler. Further, I am satisfied that the survey
was a representative Canada-wide survey, as its tabulation was properly
weighted to correspond to actual population distribution by age and sex within
each region of Canada.
31) As
held by the Court in McDonald’s v. Coffee Hut Stores Ltd. (1994), 55
C.P.R. (3d) 463 (F.C.T.D.) it is not the view of the
"average person" that is relevant but rather, the view of the
consumer. I am satisfied that the correct
consumer was surveyed, as the survey was limited to individuals who were
aware of the Hyundai brand, and likely to purchase the relevant
wares, at the time that the expungement application was commenced.
32) The applicants have not convinced me
that the submitted grounds are sufficient to undermine its reliability. After
reviewing the survey at issue and its data, and also in light of the
credentials and experience of Dr. Heeler, I am satisfied that this survey
evidence relied upon by the respondent is relevant and reliable.
33)
The applicant’s take the position that the
present matter is virtually identical to the factual situation addressed in (Wilkinson
Sword (Canada) Ltd. v. Juda (1966), 51 C.P.R. 55 (Ex. Ct.))., where
a transfer of marks by a foreign parent company to its
Canadian subsidiary, and sales in Canada by a third party of wares purchased abroad from the parent company,
resulted in the non-distinctiveness of the trade-marks in question.
34)
They also rely on the Supreme Court of Canada’s
judgment in Breck’s Sporting Goods Co. v. Magder, [1976] 1 S.C.R. 527,
in which Chief Justice Laskin described the duty of an assignee as follows:
It
is not enough for the appellant to rely on its registration and on the fact
that it has promoted, by assiduous cultivation of the market in Canada, the
widespread sale of Mepps lures if it be the case that at the material date or
dates, those wares, so marked by the French supplier, have not become
identified with the appellant as its wares either as their manufacturer or
seller.
35) The function and
the purpose of a trade-mark is to indicate the source of the goods, and by definition, it
must be and remain distinctive of a single source (Tommy Hilfiger,
above, at para. 52;
Havana House Cigar & Tobacco Merchants
Ltd. v. Skyway Cigar Store (1998), 81
C.P.R. (3d) 203, 147 F.T.R.
54 (F.C.T.D.) at para. 63, varied on other grounds, (1998),
147 F.T.R. 54, [1999]
F.C.J. No. 1749 (QL) (F.C.A.).
36) In the present case, the respondent
and its predecessor have owned the trade marks since their assignment in 1985,
even though this was not officially registered with the Canadian Trade-marks
office until much later. HAC and its predecessor HACI had a significant period
of time to build up the goodwill from the time of this assignment until the
time of the present application for expungement. This factually distinguishes
the present matter from both Wilkinson Sword, above, and Breck’s,
above, as relied upon by the applicants.
37)
The evidence establishes that HAC has spent more
that 220 million dollars on national advertising from 2000 to July 2005, in the
form of print media, television, internet and promotional materials available
at dealerships, direct mailings and auto shows. Further, all of HAC brochures
and “Service Passports” provided to purchasers direct the reader to HAC
website. This website indicates at the bottom of each webpage that copyright is
held by HAC.
38)
The respondent filed evidence of these “Service
Passports” for various Hyundai vehicles for the years 1997 through 2005, which
are given to all purchasers of these automobiles. They refer specifically to
the respondent in relation to the warranty policies, as well as a secondary
recourse in the event of consumer disputes, after the dealer. They also specify
that owner information may be registered with HAC. The 2005 version refers to
HAC in relation to a Roadside Assistance Program, and clearly indicates that
the respondent provides and regulates this service.
39)
This kind of situation factually distinguishes
the present case from other cases where products at issue can have many
different sellers in the market. HAC dealers are the exclusive source for new
Hyundai vehicles and remain responsible for warranties, services and recalls.
HAC exercises control over its dealers in their use of HAC’s trade-marks. There
is no evidence that any mention of Hyundai Motor Company or Korea in relation
to Hyundai automobile other than the vehicle’s door joint or engine
compartment, which are not visible to the public during regular vehicle
operations.
40) Further, and as stated above, Dr.
Heeler concludes that there is a high awareness that the entity for purchasing
or leasing a Hyundai automobile is the dealer and similarly that the entity
responsible for problems with a purchased or leased Hyundai automobile is the
dealer. I am persuaded that the relevant public believes that the dealer is the
party responsible for Hyundai wares.
41) It is well established that to have an effective assignment, the trade-mark must be distinctive
and subsequent use must not deceive or confuse the public as to the source of
those goods (Wilkinson Sword, above).
42)
While there was a significant delay in
registering the assignment of the trade-marks, I am not persuaded that there is
sufficient reliable evidence that this delay has caused public confusion with
regard to the source among the relevant public likely to purchase the goods in
question (McDonald’s,above). I am satisfied that the evidence
demonstrates that the respondent, through its network of franchised
dealerships bound by licensing agreements with HAC and its extensive
advertising, is the uninterrupted face to the public, whom the public holds
responsible for its products, and is therefore is the proper “source” for the
purposes of the present matter.
43) In this case, the source of the
products associated with the trade-marks has not changed. In my view, and in
light of all of the circumstances in the present matter, it follows that any
reputation acquired by these products as coming from a particular source has
not been called into question by the failure to register the assignment of the
related trade-marks to the respondent until relatively recently.
44) In light of the above, I am not
satisfied that the applicant has established confusion as to the source in the
present matter, and thus their challenge on the basis of non-distinctiveness
fails.
2. Are the trade-marks invalidly registered because
they have been abandoned?
45) The applicants argue that three of
the trade-marks have been abandoned and that accordingly their registration is
invalid under paragraph 18(1)(c) of the Act, which provides as follows:
|
When
registration invalid
18. (1) The registration of a trade-mark is invalid
if (…)
(c) the trade-mark has been
abandoned, (…)
|
Quand
l’enregistrement est invalide
18. (1)
L’enregistrement d’une marque de commerce est invalide dans les cas suivants:
[…]
c) la marque de commerce a été abandonnée. […]
|
46) Specifically, the applicants argue
that the trade-marks HD DESIGN (314,286), HD & HYUNDAI DESIGN (315,465) and
HMC DESIGN (346,818) have not been used for at least 15 years in association
with the wares for which they are registered.
47) As the party asserting abandonment,
the burden of proof is on the applicants to demonstrate that the respondent has
abandoned its marks (Gordon A. MacEachern Ltd. v. National Rubber Co., [1964]
Ex. C.R. 135, 41 C.P.R. 149; Jean Patou Inc. v. Luxo Laboratories Ltd.,
[1998] 158 F.T.R. 16, F.C.J. No. 1910 (QL) at para. 32 (T.D.)).
48) In order to establish abandonment of
a mark, the applicants must prove two elements: the mark is no longer in use in
Canada, and an intention to abandon the mark (J.A. & M. Cote Ltee v.
B.F. Goodrich Co. (1949), 14 C.P.R. 33 at 58 (Ex. Ct.); Promafil Canada
Ltée v. Munsingwear Inc. (1992), 44 C.P.R. (3d) 59 at 64 (F.C.A.)). The
abandonment of a trade-mark
is a question of fact to be decided in view of the particular circumstances of
each case; non-use is not sufficient to establish abandonment, though an
intention to abandon can be inferred from a long period of non-use (Tommy
Hilfiger, above, at para. 45; Omega Engineering, Inc. v. Omega SA,
2006 FC 1472, [2006] F.C.J. No. 1855 (QL) at para. 43.).
49) Maintaining
the trade-marks’ registration and renewals are evidence of an intention not to
abandon the trade-mark (Philip Morris Inc. v. Imperial Tobacco Ltd. (No. 1) (1987),
17 C.P.R. (3d) 289 at para. 31 (F.C.A.)), and a respondent
can successfully oppose a claim of abandonment by demonstrating the smallest
use of the trade-mark (Omega, above, at
para. 42).
The HMC DESIGN
trade-mark (#346,818)
50) The affidavit of Arthur Bode, sworn
September 7, 2005, states at paragraph 12 that the respondent has continued to
sell bumper covers, fan belts, and bumper energy absorbers in association with
the HMC DESIGN trade-mark. The respondent has also provided photographs to
demonstrate its continued use of this trade-mark.
51) Based on this evidence, I accept that
the HMC DESIGN trade-mark is still in use in Canada, that there is no intention to abandon it, and conclude that
the respondent has therefore not abandoned it.
The HD & HYUNDAI DESIGN trade-mark (#315,465)
52) The evidence indicates that
the HD & HYUNDAI DESIGN trade-mark is currently used on bin boxes in which
the respondent stores parts at its warehouse. The respondent argues that it has
not made a deliberate decision to abandon the trade-mark, and has regularly
renewed its registration. I find that maintaining the trade-mark’s registration
and renewals are evidence of an intention not to abandon the trade-mark, and
that its use on bin boxes meets the low threshold of demonstrating the
“smallest use”; this trade-mark has not been abandoned.
The HD DESIGN trade-mark (#314,286)
53) The respondent admits that the HD
DESIGN trade-mark is not currently used, but submits that it has made no
deliberate decision to abandon it and has regularly renewed its registration. It
is uncontested that there has been no use of this trade-mark for a long period
of time, if any, and there is no evidence of a plan to use it. I am satisfied
that the respondent has abandoned the HD DESIGN trade-mark, and consequently
that it should be struck from the Canadian Trade-mark Register.
54) For the reasons above, the HD DESIGN
trade-mark (#314,286) is ordered to be struck from the Canadian Trade-mark
Register, and the remainder of the application is dismissed with costs awarded
to the respondent.
JUDGMENT
The HD DESIGN trade-mark (#314,286) is ordered
to be struck from the Canadian Trade-mark Register, and the remainder of the
application is dismissed with costs awarded to the respondent.
“Danièle Tremblay-Lamer”
Email this Content