Docket: T-1909-11
Citation:
2014 FC 1161
Ottawa, Ontario, December 2, 2014
PRESENT: The Honourable Mr. Justice Rennie
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BETWEEN:
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MC IMPORTS LTD.
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Plaintiff
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and
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AFOD LTD.
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Defendant
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ORDER AND REASONS
[1]
This motion for summary trial relates to an
alleged trade-mark infringement by the defendant Afod Ltd of the trade-mark
LINGAYEN held by the plaintiff MC Imports. In response, the defendant
challenges by counter-claim the validity of the trade-mark’s registration under
the Trade Marks Act (RSC, 1985, c T-13) (the Act). The LINGAYEN
trade-mark covers Filipino food products such as fish/shrimp sauce, known as
bagoong, fish/shrimp preserves, fish paste, salted fish, soy sauce, and vinegar
(the wares) and food supplier and distributor services (the services). For the
following reasons, the plaintiff’s trade-mark is invalid and the action for infringement is dismissed.
II.
Background
[2]
The plaintiff MC Imports was incorporated in
2004 and is located in Mississauga, Ontario. The principal of MC Imports is
Mr. Alfredo C. Meneses III. His father started a family business in September,
1975, under the name “Meneses-Canso Bros Trading of Canada” (Meneses-Canso).
Meneses-Canso is the predecessor company to MC Imports an importer, packager
and distributor of fish and seafood products, including bagoong.
[3]
Meneses-Canso and now MC Imports have sold their
products through distributors and direct sales since 1975. In 1975, the
company began to use the mark LINGAYEN in Canada in association with the wares,
and since that time there has been continuous use of the mark. LINGAYEN
products are available in small, medium and national grocery stores across Canada. MC Imports has also advertised its products bearing the LINGAYEN trade-mark on the
internet since October, 2004.
[4]
On February 15, 2000, Meneses-Canso filed a
trade-mark application for LINGAYEN in Canada in association with the wares and
the services, under application No. 1,046,868. On March 6, 2000, a prior
trade-mark registration for LINGAYEN (registration No. TMA 432,060), owned by
Apo Products Ltd. was expunged on the basis of non-use. The application filed
by Meneses-Canso was approved for advertisement on May 17, 2001 and advertised
on June 20, 2001. The application was registered on August 27, 2003, under
registration No. TMA 588,314.
[5]
In 2004, Meneses-Canso assigned the trade-mark
to various members of the Meneses family, operating as a partnership (the
Partnership). After MC Imports was incorporated, the company became a licensee
of the trade-mark LINGAYEN and imported and sold food products under the mark.
The Partnership subsequently assigned the trade-mark to MC Imports on October
21, 2011.
[6]
The defendant Afod Ltd. is a company based in
Delta, British Columbia. The defendant imports food products, including bagoong,
from the Philippines and other Asian countries into Canada and then sells them
to grocery stores.
[7]
In about May 2011, the defendant imported from
the Philippines a shipment of bagoong products. The products included 49 cases
of bagoong alamang, a type of fish sauce, and 49 cases of bagoong guisado. The
labels from these products were marked with the defendant’s trademark Napakasarap;
however, the labels also included the language of “Lingayen Style” in
lesser-script, immediately below the defendant’s trademark. The defendant sold
the inventory of bagoong guisado between September and November 2011,
precipitating this litigation. The total sales revenue of those products was
less than $3,500.
[8]
Each party provided affidavit evidence to the
Court. The plaintiff filed affidavit evidence which addressed bagoong as a
regional, specialized product including its method of preparation, uses and
connection with the Lingayen municipality in the Philippines. Evidence was
also led about the history of MC Imports and the LINGAYEN trade-mark. The
plaintiffs also filed the affidavit of Professor Michael S. Mulvey, an expert
in consumer behaviour and consumer research. The sum of this evidence was that
LINGAYEN was a discrete and distinctive word, generally not known to Canadians
or in common use in the English language.
[9]
The defendant filed affidavit evidence from five
individuals who the defendant says are representative of ordinary users of the
goods in Canada, including the President of the defendant company. The
affidavits advise that Lingayen is a place in the Philippines known to Canadian
consumers, that Lingayen is also known to Canadians for its bagoong products,
and that products from Lingayen are known for their distinct aroma and flavour.
III.
Issues
[10]
The issues engaged in this case and canvassed at
the trial were:
1.
Whether it is appropriate to determine this
matter by summary trial;
2.
Whether the plaintiff’s claim for infringement
should be dismissed because the trade mark is invalid:
a.
because it is either clearly descriptive or
deceptively misdescriptive (section 12(1)(b) of the Act); or
b.
because it is not distinctive (section 2 of the Act);
3.
Whether the plaintiff’s claim should be
dismissed independent of the trade-mark’s validity; and
4.
Remedies and costs.
A.
Appropriateness of Summary Trial
[11]
A motion for summary trial is permitted if the
motion post-dates the filing of a defence and pre-dates when the time and place
for trial have been fixed: Rule 213(1) Federal Courts Rules. The Court
may grant judgment on summary trial, either generally or on a particular issue,
“[i]f the Court is satisfied that there is sufficient
evidence for adjudication, regardless of the amounts involved, the complexities
of the issues and the existence of conflicting evidence […] unless the Court is
of the opinion that it would be unjust to decide the issues on the motion”
(Rule 216(6)).
[12]
Factors to be considered when assessing the
appropriateness of a summary trial include, the amount of money involved, the
complexity of the matter, the urgency of the matter, whether any prejudice is
likely to arise from delay, the cost of taking the case forward to a full trial
in relation to the amount of money involved, and the history of the proceedings
(Louis Vuitton Malletier SA v Singga Enterprises (Canada) Inc,
2011 FC 776 at para 96).
[13]
A majority of these factors weigh in favour of summary
proceedings. First, the amount of money involved is small: $3500 of sales
revenues with profits less than $1700 relating to the products in question.
Second, comparing this small amount of money at stake with the cost of a full
trial, which would surely exceed the money at stake, is disproportionate.
Third, the matter is relatively simple, and consists of a straightforward
record and clear legal issues. Finally, the course of proceedings, which is
currently at an early stage (discovery has yet to occur) favours a summary
trial because there is no concern that the parties have prepared for a
conventional trial only to have that time wasted through summary proceedings. To
conclude, summary proceedings are the most just and efficient use of judicial
resources in this case.
B.
Validity of Registration
[14]
The validity of the plaintiff’s mark is
challenged on the basis that it is clearly descriptive or deceptively
misdescriptive of the place of origin of the wares or services. The defendant
also argues that, as required under sections 19 and 20 of the Act, a
mark must be used for the purpose of distinguishing the wares, with the result
that words appearing in, or in association with wares will not infringe if they
are very descriptive of the content. The ground of invalidity based on
material false statements was not pursued at trial, and, in my view, properly
so.
(a)
Law Regarding Clear Description and Deceptive
Misdescription
[15]
A trade-mark registration is invalid if “the trade-mark was not registrable at the date of
registration” (section 18(1)(a)). A trade-mark is not registrable if it
is “clearly descriptive or deceptively misdescriptive” of
the “place of origin” of the wares or services it
is associated with (section 12(1)(b)). Accordingly, a registered trade-mark
which is clearly descriptive or deceptively misdescriptive of the place of
origin of its wares or services is invalid.
[16]
Differentiating between the distinct issues of a
mark being clearly descriptive or, alternatively, deceptively
misdescriptive, in the context of describing its place of origin, depends
on whether or not the ware or service actually originates from the place of
origin identified in the mark. If the ware or service does originate from the
place of origin (e.g. Dijon mustard) then a mark accurately identifying
that place of origin may be invalid because it is clearly descriptive of that
origin. In contrast, if the ware or service does not originate from the place
of origin identified in the mark then a mark falsely alleging that place or
origin (e.g. Dijon ketchup) may be deceptively misdescriptive of that
origin. Accordingly, the actual origin of the wares or services categorizes
the basis of invalidity as between clear description or deceptive
misdescription, and is not in itself decisive of the validity of the mark.
[17]
The parties contend that there is a doctrinal
divide in the decisions with respect to the role that the perception of
ordinary consumers plays in the analysis under section 12(1)(b). One perspective
is that the recognition of a name as a place of origin is irrelevant to a
finding under section 12(1)(b). The alternate view is that a mark must have,
in the mind of the consumer a generally recognized connection to the
wares or services at issue. As stated in Fox on Trade-Marks (Fox on Canadian
Law of Trade-Marks and Unfair Competition, 4th Ed., (Toronto :
Carswell, 2012), ch 5 at 43), “[t]he intent of the
prohibition against geographical names is to prevent any one person from
acquiring a monopoly on a word that is generally recognized as a locality
connected to the wares or services in issue.” Consequently, if the
place of origin within the mark is generally recognized as being linked to the
particular ware or service it is associated with, then the mark is liable to be
invalid.
[18]
There are two subsidiary issues imbedded in this
alternate formulation of the description/deceptive misdescription which merit
attention: (1) whether or not the perspective of ordinary consumers is relevant
and (2) how the “ordinary consumer” is defined.
[19]
In my view, it is not necessary to determine
which approach is, doctrinally, correct, as under either formulation, the mark
is invalid by reason of section 12(1)(b). As the legal and evidentiary
analysis on the first approach is straightforward, I turn to whether the mark
is invalid because of its perception by the ordinary consumer.
(i)
The Perspective of Ordinary Consumers
[20]
The perspective of ordinary consumers is
relevant to the assessment of clear description and deceptive misdescription.
In particular, a mark can only be clearly descriptive or deceptively
misdescriptive of place of origin if it would be perceived by the
ordinary consumer as relating to the ware’s place of origin. Otherwise, it
could neither describe nor deceive. This is in contrast with the view, which I
have adopted, that the perspective of ordinary consumers is irrelevant because
any mark identifying a ware’s authentic place of origin is invalid regardless
of the public’s perception of it.
[21]
A line of authorities support the relevance of
the perception of ordinary consumers. As Justice Cattanach held in Atlantic
Promotions Inc v Canada (Registrar of Trade Marks) (1984), 2 CPR (3d) 183
at 186 (FCTD):
[T]he proper test to be applied to the
determination as to whether a trade mark in its entirety is deceptively
misdescriptive must be whether the general public in Canada would be misled
into the belief that the product with which the trade mark is associated had
its origin in the place of a geographic name in the trade mark [Emphasis added].
[22]
This test was applied in Consorzio del
Prosciutto di Parma v Maple Leaf Meats Inc, [2001] 2 FC 536 (TD) at para
12. The decision was affirmed, without reasons, on appeal (Consorzio del
Prosciutto di Parma v Maple Leaf Meats, 2002 FCA 169). The Court of Appeal
did note that it was in general agreement with the reasons for judgment of the
trial judge.
[23]
In contrast, a more recent decision held that
the perspective of the ordinary consumer is not relevant to the assessment of
clear description and deceptive misdescription. Justice Sean Harrington, in Sociedad
Agricola Santa Teresa Ltda v Vina Leyda Ltda, 2007 FC 1301 at para 9, held
that clear description and deceptive misdescription “is
not dependent on the knowledge, or lack thereof, of the average Canadian
consumer.” Instead, Justice Harrington held that a connection between a
region and a particular ware, in reality (rather than in perception), is
decisive of the issue. Put differently, if certain wares come from a region,
the region cannot be contained in a trade-mark relating to those wares.
Once the Registrar found as a fact, as he did,
that Leyda is a wine producing region in Chile, as a matter of law he was
required to conclude on the record before him that the opposition was well
founded.
Those “far away places with strange sounding
names” may call some more than others, but section 12(1)(b), at least as far as
“place of origin” is concerned, is not dependent on the knowledge, or lack
thereof, of the average Canadian consumer. The Registrar rightly pointed
out that there was no real evidence before him as to the state of mind of such
a person. Would he or she be one who reads the wine magazines referred to by
those who opposed the application, or one whose knowledge is limited to red,
white, rosé or bubbly? Over the past several years, a great many wines have
been introduced to the market from “new world” countries such as Chile, Argentina, Australia and New Zealand. Other countries may follow suit. Although decided in a
different context, the decision of the Supreme Court in Home Juice Co. v.
Orange Maison Ltée, 1970 CanLII 153 (SCC), [1970] S.C.R. 942, 16 D.L.R.
(3d) 740, can be relied upon for the proposition that a shrewd trader should
not be permitted to monopolize the name of a foreign wine district in Canada by
registering it as a trade-mark. [Emphasis added]
[24]
No one appeared for the respondent in Leyda.
Justice Harrington nevertheless, considered the Consorzio case, and
observed:
The respondent did not appear to contest this
appeal. Nevertheless, the Registrar’s decision stands until set aside, and this
Court does not give judgment on the pleadings. Indeed, rule 184 provides that
an allegation of fact in a pleading that is not admitted is deemed to be
denied. Applicants’ counsel properly brought to the Court’s attention the
decision of Mr. Justice McKeown in Consorzio del Prosciutto di Parma v.
Maple Leaf Meats Inc., 2001 CanLII 22030 (FC), [2001] 2 F.C. 536, 11 C.P.R.
(4th) 48, affirmed without additional reasons, 2002 FCA 169 (CanLII), 2002 FCA
169. However, that case is distinguishable on the grounds of prior use. At the
time the application was made to expunge the trade-mark “Parma”, it had been
used in Canada for 39 years, 26 of which as a registered trade-mark. Thus
sections 12(2) and 18(1)(b) were in issue. A trade-mark not otherwise
registrable because it is descriptive of the place of origin of the wares is
nevertheless registrable if it had become distinctive at the date the
application was filed. Furthermore, the registration is not invalid if it was
distinctive at the time proceedings bringing its validity in question were
commenced.
The facts in this case are quite different. The
evidence is that “Leyda” had not been in use in Canada in association with wine
at the time the trade-mark application was made, and had not become
distinctive.
[25]
In light of the distinction between the facts of
Prosciutto di Parma and those before Justice Harrington, I do not think
the jurisprudential divide, if it exists at all, does so to the extent urged by
counsel. In any event, it is not necessary, in this case, to resolve the
tension between what is said to be two divergent schools of thought.
Regardless of how broadly the consumer is scoped, the mark in question fails.
I say this for the following reasons.
[26]
It is clear on the evidence that Lingayen is a
geographical location. It is a city of 100,000 people or more, and is situated
on a large bay of the same name. The plaintiff’s website displayed information
confirming Lingayen as a place of origin for bagoong, referencing media reports
and literature emphasizing the Philippine origin of bagoong. Municipal,
regional and national tourism and trade websites identify Lingayen both as a
place, and as a source of bagoong. As such, the wares are clearly descriptive
of this place of origin, and not registerable under section 12(1)(b); Leyda.
[27]
Secondly, the goods in question originate from
Lingayen. While the plaintiff does not admit that the goods come from
Lingayen, saying that it has no knowledge as to the origin and “that the specific region in the Philippines cannot be
determined”, the plaintiff admitted Lingayen as the place of origin in
proceedings before the Unites States Trademark Office. Third, the plaintiff,
in its evidence, is silent on the source of origin, a matter which presumably
is, or ought to have been, in its knowledge.
[28]
As I find that the goods originate from
Lingayen, the wares were clearly descriptive of their place of origin and not
registerable under section 12(1)(b).
[29]
I turn to the alternate formulation, in which
clear description and deceptive misdescription pivot on the perceptions held by
ordinary consumers are engaged. Three observations are in order.
[30]
First, on a statutory basis, for a trade-mark to
be “clearly descriptive” of place of origin (section 12(1)(b)) it must
be self-evident to a consumer, on “immediate impression,” that the mark
signals the origin of the ware (Hughes on Trade Marks, looseleaf,
Butterworths, Toronto, 1984 at page 427, paragraph 25; Neptune SA v Canada
(Attorney General), [2003] FCJ No 917 at para 14). By necessity, then, the
ordinary consumer must recognize such a connection (and, it follows, that the
ordinary consumer’s perception must be relevant). Otherwise, though the mark
would be descriptive in theory, such description would not be clear
to consumers. A prohibition of trade-marks which are clearly descriptive
of place of origin as in this example would not preclude trade-marks which in
no way communicate place of origin to the average, or even any, Canadian
consumers. Similarly, such a mark could not deceive consumers about a
ware’s place of origin, since no consumers would perceive one way or the other
that a product was related to a place of origin in the first place.
[31]
Second, on a doctrinal basis, the Federal Court
of Appeal affirmed Consorzio del Prosciutto di Parma, which held that
the proper perspective is the average consumer. Admittedly, the Court of
Appeal did not specifically discuss this issue and, importantly, as Justice
Harrington notes in Leyda, the Consorzio del Prosciutto di Parma
case was decided on the basis of prior use.
[32]
Third, academic commentary has considered the Leyda
decision, and while the editors of Fox on Trade-Marks may have
overlooked paragraph 23, their observation at ch 5 at 44.1 n 199.1 is worth
noting:
The Court in Sociedad Agricola Santa Teresa
Ltda c Vina Leyda Ltda, 2007 FC 1301 (FC) incorrectly held that “section
12(1)(b), at least as far as ‘place of origin’ is concerned, is not
dependent on the knowledge, or lack thereof, of the average Canadian consumer.”
It is clear from all authorities that the average Canadian consumer must
perceive the mark in the context of the wares or services at issue to be
clearly descriptive or deceptively misdescriptive. […] This decision […] should
be approached with great caution.
[33]
For these reasons, the perspective of ordinary
consumers is relevant to the assessment of clear description and deceptive
misdescription. This does not, however, end the inquiry. A further nuance
relates to how the ordinary consumer is itself defined, the second aspect of
this area of law meriting specific discussion.
(ii)
Who is the Ordinary Consumer?
[34]
Who is the “ordinary consumer”? Is it the
ordinary consumer or is it a subset of the ordinary consumers – the consumers
of niche products?
[35]
To begin, Justice McKeown in Consorzio del
Prosciutto di Parma affirms the broad conception of the ordinary consumer
relied upon by Justice Cattanach in Atlantic Promotions Inc – “the general public in Canada” (at para 12). Then,
Justice McKeown rephrases this ordinary consumer as “a
consumer of ordinary intelligence and education” seeing the mark “in context” (at para 13). Both of these conceptions of
the ordinary consumer appear broad and would include consumers who do not
typically (or who may have never) purchased the particular wares in question.
Again, the Federal Court of Appeal, when hearing Consorzio del Prosciutto di
Parma, generally agreed with these views. Moreover, Fox on Trade-Marks
accepts Justice Cattanach’s description of the notional consumer as “the general public in Canada” (ch 5 at 43).
[36]
However, it is contended that Justice Yves de
Montigny, more recently, described a narrower conception of the notional
consumer – “the average retailer, consumer or user of the
type of wares or services the mark is associated with” (Cliche v Canada (Attorney General), 2012 FC 564 at para 22). In other words, counsel interpret
Justice de Montigny’s judgment as defining a notional consumer who is not the
average Canadian consumer in general (i.e. the general public), but
rather, the average Canadian consumer of the particular wares in question (i.e.
the subset of the public that typically consumes the wares in
question).
[37]
Justice de Montigny describes the perspective
flowing from the above passage as “the average retailer,
consumer or user of the type of wares or services the mark is associated with”
(at para 22). From this wording, counsel argues, persuasively, that Justice de
Montigny identifies a narrow perspective which contemplates only those
Canadians who are familiar with and typically purchase the ware in question.
[38]
There is support for the position that the
ordinary consumer is the actual consumer of the wares in question. In Cross-Canada
Auto Body Supply (Windsor) Limited v Hyundai Motor America, 2007 FC 580,
affirmed 2008 FCA 98. Justice Tremblay-Lamer observed:
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.
[39]
There is also an air of unreality in positing a
test of an average Canadian consumer who would never purchase the goods in
question and would approach the purchase with no knowledge whatsoever. The
average consumer has, presumably, some intelligence and is concerned about what
he or she is purchasing, its contents and its origins. Seeing the words
“Lingayen” or “Lingayen Style” would reasonably prompt a series of questions –
the answers to which are that Lingayen is a city in the Philippines, known for its fish sauce. In this case, there was evidence that the average
consumer of the goods in question, Canadians of Filipino or South East Asian
origins, are the main users of the wares in question. Put otherwise, the
“ordinary Canadian” of these wares is a discrete subset of the general
population, and somewhat more informed.
[40]
In this regard, the evidence establishes that
the main users of bagoong are Canadians of Filipino or South-East Asian
origin. Both of the products come from the Philippines; the plaintiff’s
website indicates that bagoong is “a condiment to
compliment your favourite Filipino dish” and as being “a popular accompaniment to native Filipino dishes”.
The evidence also establishes that they are sold in the speciality products
sections of grocery stores or at “your local Asian
supermarket or neighbourhood store”.
[41]
All of the emphasized portions in the passage
above convey that the relevant perspective is the average Canadian consumer
that typically purchases the ware. Admittedly, there is some ambiguity
in the reference to “the average retailer, consumer or
user of the type of wares or services the mark is associated with.”
This phrasing could be read as outlining a narrow notional consumer who
typically purchases the ware in question, in other words, a subset of the
notional consumer, which, in this case, would be aficionados of the use of fish
sauce.
[42]
In conclusion, given that the wares at issue do
originate from Lingayen, and that Lingayen, as a region, has a generally
recognized connection to fish sauce products from the perspective of the
average Canadian consumer of the wares in question, it is clearly descriptive
of those products’ place of origin. Regardless of which approach is taken to
the question of geographic marks – the outcome is the same.
[43]
I turn to alternate grounds for invalidity.
[44]
Trade-mark infringement requires a defendant to
use the trade-mark “as a trade-mark” i.e. for the purpose of distinguishing its
wares and services from others (sections 2 and 20; Pepper King Ltd v
Sunfresh Ltd et al (2000), 8 CPR (4th) 485 at 493-97 (FCTD); Osmose-Pentox
Inc v Société Laurentide Inc, 2013 FC 626 at paras 74 and 94-96).
Accordingly, if a trade-mark is not used for the purpose of distinguishing a
defendant’s wares, then there is no infringement of the trade-mark.
[45]
That the words “Lingayen Style” are not used as
a trade-mark is confirmed by the fact that the defendant’s products were
prominently marked with the defendant’s Napakasarap trade-mark which was
identified as a trade-mark (by the presence of the ™ symbol). The defendant
did not display the ™ symbol with the words “Lingayen Style” or otherwise
indicate that “Lingayen Style” was a trade-mark. The words “Lingayen Style”
appear in lesser-script, immediately below the defendant’s trademark Napakasarap,
which is prominent. The dominant color is red on the Lingayen product and orange on the Napakasarap which
are different and would be recognized as such by an ordinary consumer who was
somewhat in a hurry.
[46]
The clear message to the public in the present
case was that Napakasarap was used as a trade-mark with the defendant’s
bagoong products and the words “Lingayen Style” were used to indicate a
characteristic of the bagoong products. As such, there can be no infringement
under sections 19 or 20 of the Act.
[47]
The presence of a clearly marked trade-mark on
the products was an important factor in the Court determining that VOLCANO and
“wood CONSERVATOR” were not “used as a trade-mark”
in Pepper King and in Osmose-Pentox Inc. v Société Laurentide Inc.,
2013 FC 626, respectfully. As in Pepper King, the words are not used
for a distinguishing purpose, rather to indicate the characteristic of the
product (i.e. degree of spiciness), and not the source. To the same effect in Osmose-Pentox,
paras 74, 94-96, the Court held that the words “wood conservator” had not been
used as a mark, but rather as an accurate description of the character and
quality of the defendants’ products. I note as well that the use of the word
“style” as a descriptor of the quality and characteristics of the defendant’s goods
across its product range – such as “Pinoy Style” liver spread (Pinoy means
Filipino) and “Pampanga style” pork (Pampanga is a province in the
Philippines).
[48]
In my view, based on the
evidence before me, the words “Lingayen Style” are descriptive of the quality
and nature of the goods and therefore there has been no use of the word
LINGAYEN as a trade-mark as required by section 2 of the Act.
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