Date:
20120427
Docket:
A-357-11
Citation: 2012 FCA 131
CORAM: EVANS
J.A.
SHARLOW
J.A.
DAWSON J.A.
BETWEEN:
SPIRITS
INTERNATIONAL B.V.
Appellant
and
BCF S.E.N.C.R.L. and
REGISTRAR OF TRADE-MARKS
Respondents
REASONS
FOR JUDGMENT
SHARLOW
J.A.
[1]
On
June 18, 2008, at the request of the respondent BCF s.e.n.c.r.l. (“BCF”), the Registrar
of Trade-Marks sent a notice to the appellant Spirits International B.V. (“Spirits
BV”) pursuant to subsection 45(1) of the Trade-Marks Act, R.S.C. 1985, c.
T-13. The notice required Spirits BV to show that its trade-mark MOSKOVSKAYA RUSSIAN
VODKA & Design (Trade-Mark Registration TMA 208,808) had been used in Canada in association with vodka within the previous three years.
[2]
Spirits
BV responded with two affidavits. The affidavits were considered by P. Fung, a Hearing
Officer of the Trade-Marks Opposition Board, who concluded that the evidence was
not sufficient to show the required use. The decision of the Registrar was to expunge
the trade-mark (2010 TMOB 122).
[3]
Spirits
BV appealed to the Federal Court pursuant to section 56 of the Trade-Marks Act,
and submitted an additional affidavit. Justice Scott dismissed the appeal (2011
FC 805). Spirits BV now appeals to this Court. For the reasons that follow, I have
concluded that the appeal should be allowed.
Statutory
framework
[4]
This
case involves a proceeding under subsection 45 of the Trade-Marks Act, which
reads in relevant part as follows:
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45. (1) The Registrar may at any time
and, at the written request made after three years from the date of the registration
of a trade-mark by any person who pays the prescribed fee shall, unless the Registrar
sees good reason to the contrary, give notice to the registered owner of the trade-mark
requiring the registered owner to furnish within three months an affidavit or
a statutory declaration showing, with respect to each of the wares or services
specified in the registration, whether the trade-mark was in use in Canada at
any time during the three year period immediately preceding the date of the notice
and, if not, the date when it was last so in use and the reason for the absence
of such use since that date.
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45. (1) Le registraire
peut, et doit sur demande écrite présentée après trois années à compter de la
date de l’enregistrement d’une marque de commerce, par une personne qui verse
les droits prescrits, à moins qu’il ne voie une raison valable à l’effet contraire,
donner au propriétaire inscrit un avis lui enjoignant de fournir, dans les trois
mois, un affidavit ou une déclaration solennelle indiquant, à l’égard de chacune
des marchandises ou de chacun des services que spécifie l’enregistrement, si la
marque de commerce a été employée au Canada à un moment quelconque au cours des
trois ans précédant la date de l’avis et, dans la négative, la date où elle a
été ainsi employée en dernier lieu et la raison de son défaut d’emploi depuis
cette date.
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(2) The Registrar shall not receive any evidence other
than the affidavit or statutory declaration, but may hear representations made
by or on behalf of the registered owner of the trade-mark or by or on behalf of
the person at whose request the notice was given.
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(2) Le registraire ne peut recevoir aucune preuve autre que cet affidavit
ou cette déclaration solennelle, mais il peut entendre des représentations faites
par le propriétaire inscrit de la marque de commerce ou pour celui-ci ou par la
personne à la demande de qui l’avis a été donné ou pour celle-ci.
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(3) Where, by reason of the evidence furnished to the
Registrar or the failure to furnish any evidence, it appears to the Registrar
that a trade-mark, either with respect to all of the wares or services specified
in the registration or with respect to any of those wares or services, was not
used in Canada at any time during the three year period immediately preceding
the date of the notice and that the absence of use has not been due to special
circumstances that excuse the absence of use, the registration of the trade-mark
is liable to be expunged or amended accordingly.
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(3) Lorsqu’il apparaît au registraire, en raison de la preuve qui lui
est fournie ou du défaut de fournir une telle preuve, que la marque de commerce,
soit à l’égard de la totalité des marchandises ou services spécifiés dans l’enregistrement,
soit à l’égard de l’une de ces marchandises ou de l’un de ces services, n’a été
employée au Canada à aucun moment au cours des trois ans précédant la date de
l’avis et que le défaut d’emploi n’a pas été attribuable à des circonstances spéciales
qui le justifient, l’enregistrement de cette marque de commerce est susceptible
de radiation ou de modification en conséquence.
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[5]
Section
45 has been called a tool for removing deadwood from the trade-mark register (Justice
Desjardins used this expression in her dissent in Boutiques Progolf Inc. v. Marks
& Clerk (1993), 54 C.P.R. (3d) 451 (F.C.A.), at page 457). Justice Hugessen
provided a more formal description of the purpose of section 45 in Berg Equipment
Co. (Canada) v. Meredith & Finlayson (1991), 40 C.P.R. (3d) 409 (F.C.A.)
at page 412:
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Section
45 provides a simple and expeditious method of removing from the register marks
which have fallen into disuse. It is not intended to provide an alternative to
the usual inter partes attack
on a trade mark envisaged
by section 57.
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Other cases make
the same point: Austin Nichols & Co. v. Cinnabon, Inc. (F.C.A.), [1998]
4 F.C. 569 at paragraph 14; Lang Michener v. United Grain Growers Ltd. (F.C.A.),
[2001] 3 F.C. 102 at paragraph 16.
[6]
The
use that the registrant must show in response to a subsection 45(1) notice is stipulated
in section 4 of the Trade-Marks Act, which reads in relevant part as follows:
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4. (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.
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4. (1) Une marque de commerce
est réputée employée en liaison avec des marchandises si, lors du transfert de
la propriété ou de la possession de ces marchandises, dans la pratique normale
du commerce, elle est apposée sur les marchandises mêmes ou sur les colis dans
lesquels ces marchandises sont distribuées, ou si elle est, de toute autre manière,
liée aux marchandises à tel point qu’avis de liaison est alors donné à la personne
à qui la propriété ou possession est transférée.
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…
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[…]
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(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.
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(3)
Une marque de commerce mise au Canada sur des marchandises ou sur les colis qui
les contiennent est réputée, quand ces marchandises sont exportées du Canada,
être employée dans ce pays en liaison avec ces marchandises.
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[7]
In
proceedings under section 45, the registrant must show that during the relevant
period, the registrant used the subject mark or that it was used by another person
whose use accrued to the registrant’s benefit: Marcus v. Quaker Oats Co.
(1988), 20 C.P.R. (3d) 46 at pages 51 to 52 (F.C.A.). The requisite use may be by
a licensee if the registrant shows that it has, under the licence, direct or indirect
control of the character or quality of the wares as contemplated by subsection 50(1)
of the Trade-Marks Act: House of Kwong Sang Hong International Ltd. v.
Borden Ladner Gervais, 2004 FC 554 at paragraph 22.
[8]
The
burden on the registrant to prove use in a section 45 proceeding is not a heavy
one. An affidavit or statutory declaration will suffice if it provides a
factual description of the use of the subject mark demonstrating that the requirements
of section 4 are met: Eclipse International Fashions Canada Inc. v. Shapiro Cohen,
2005 FCA 64, at paragraph 6 (see also Central Transport, Inc. v. Mantha &
Associés/Associates (1995), 64 C.P.R. (3d) 354 (F.C.A.), and Plough (Canada)
Ltd. v. Aerosol Fillers Inc. (F.C.A.), [1981] 1 F.C. 679). It is always open
to the Registrar, as the finder of fact, to draw reasonable inferences from the
facts stated in the affidavit or statutory declaration.
[9]
Pursuant
to subsection 56(1) of the Trade-Marks Act, the Registrar’s decision under
subsection 45(1) may be appealed to the Federal Court. Subsection 56(5) permits
the appellant to adduce additional evidence in such an appeal.
Standard
of review
[10]
The
standard of review to be applied by the Federal Court to the Registrar’s
findings of fact and exercise of discretion in an appeal of a decision under subsection
45(1) is reasonableness. However, if the judge concludes that the additional evidence
presented on the appeal would have materially affected the Registrar’s findings
of fact or exercise of discretion, the judge must come to his own conclusion on
the issue to which the additional evidence relates: Molson Breweries v. John
Labatt Ltd. (C.A.), [2000] 3 F.C.R. 145 at paragraph 51.
[11]
The
task of this Court is to determine whether the judge correctly chose and applied
this standard of review: Dr. Q. v. College of Physicians and Surgeons of
British Columbia, [2003] 1 S.C.R. 226, 2003 SCC 19, at paragraphs 43 - 44.
[12]
In
the case of an appeal under section 56 of the Trade-Marks Act in which additional
evidence is submitted to the Federal Court, this Court must also consider the judge’s
conclusion on the question of whether the additional evidence would have
materially affected the Registrar’s findings of fact or exercise of discretion.
That is a question of mixed fact and law, and therefore the judge’s conclusion
will stand absent a palpable and overriding factual error or an extricable
error of law: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235.
Discussion
[13]
The
subject mark was registered in 1974 on the application of a predecessor of Spirits BV, which became the registrant in 1999. The initial application asserted the use of
the subject mark in Canada since June of 1966 in association with vodka.
[14]
On
June 18, 2008, the Registrar sent a notice to Spirits BV requiring it to show that
the subject mark had been used in Canada in association with vodka during the three
year period preceding the notice (June 18, 2005 to June 18, 2008). In response to
that notice, Spirits BV submitted two affidavits.
[15]
One
affidavit, sworn by Professor Michael S. Mulvey on December 12, 2008, addressed
only the question of whether the mark actually used by Spirits BV during the relevant
period was materially different from the mark as registered. The judge determined
that point in favour of Spirits BV and it is not in issue in this appeal. Therefore,
Dr. Mulvey’s affidavit need not be considered further.
[16]
The
other affidavit submitted to the Registrar was sworn by Mr. Pavel Fedoryna on December
11, 2008. That affidavit was intended to show the use of the subject mark in association
with vodka during the relevant period.
[17]
In
Mr. Fedoryna’s affidavit, all acts related to the use of the subject mark were attributed
to “MY COMPANY”. That term was used in the affidavit to refer to a group of related
corporations (the “SPI Group”) that included a Swiss corporation, S.P.I. Group SA,
and certain other corporations that it controlled, including Spirits BV.
[18]
An
assertion that a mark has been used by a group that includes the registrant is inherently
ambiguous. By itself, it cannot show that the mark was used by the registrant or
by another member of the group for the benefit of the registrant. That is well explained
in paragraphs 11 and 12 of the Hearing Officer’s reasons (my emphasis):
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¶11. In his affidavit, Mr. Fedoryna states in no uncertain
terms that MY COMPANY, not the Registrant, had direct and/or indirect control
over the character and quality of the vodka sold in association with the Mark
in Canada during the Relevant Period. In this regard, the affiant's sworn statements
as well as the "Certificate of S.P.I. Group SA" produced as Exhibit
"D" corroborate the Registrant's own submission that the Registrant
is merely one of the many corporate entities grouped under the name MY COMPANY.
This is the only statement of control furnished by the Registrant. There is no
description of the control nor is there a copy of the licensc [sic] agreement.
There is also no detail provided regarding the presidents, the directors or the
officers of the entities involved in MY COMPANY.
¶12. When the evidence is considered
in its entirety, I can only conclude that a group of companies designated as MY
COMPANY, which includes no less than five distinct entities, exercised some form
of control over the character or quality of the registered wares during the Relevant
Period. While the Registrant might belong to or be affiliated with one or all
of these entities, there is simply not sufficient evidence of control to allow
me to conclude that the sales of the registered wares in association with the
Mark by MY COMPANY or any of the affiliated companies would enure to the benefit
of the Registrant.
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[19]
On
the basis of this analysis, the Registrar made an expungement order. The judge found,
and I agree, that the decision of the Registrar was reasonable based on the Fedoryna
affidavit.
[20]
Spirits
BV appealed to the Federal Court, and in support of its appeal presented as additional
evidence the affidavit of Mr. Dmitry Denisov sworn November 10, 2010. That required
the judge to consider whether the Denisov affidavit could have materially affected
the Registrar’s decision. The judge concluded, at paragraph 32 of his reasons, that
the answer was no because the Denisov affidavit did not resolve the deficiencies
in the Fedoryna affidavit and did not have probative significance extending beyond
the evidence before the Registrar. In my respectful view, that conclusion was
not reasonably open to the judge, for the reasons set out below.
[21]
The
Denisov affidavit was intended to supplement the Fedoryna affidavit, not replace
it. For that reason, my analysis begins with a summary of what I consider to be
the relevant factual allegations made in the two affidavits.
(a)
Spirits
BV is the registered owner of the subject mark (Denisov, paragraph 5).
(b)
The
section 45 proceedings were initiated by BCF. At the time, BCF represented Les Distilleries
Ltée., a party to several other proceedings opposing the position of Spirits BV in respect of applications for the registration of trade-marks for use in association
with vodka. Some of those proceedings are still pending (Denisov affidavit, paragraphs
7-12).
(c)
During
the period relevant to this proceeding, S.P.I. Group S.A. owned directly 83.5% of
the shares of Spirits BV, and owned indirectly 100% of the shares of S.P.I. Spirits
(Cyprus) Limited (“Spirits Cyprus”) (Denisov affidavit, paragraph 13 and Exhibit
DD-1; Fedoryna affidavit, paragraphs 1 and 15 and Exhibit D).
(d)
Spirits
Cyprus was licensed by Spirits BV to use the subject mark in association with vodka
sold in Canada during the relevant period (Denisov affidavit, paragraphs 17 and
22).
(e)
Under
the licence, Spirits BV set the standards of character and quality of vodka labeled
with the subject mark that was sold in Canada during the relevant period, and did
so by delegating to other corporate members of the SPI Group the conduct of periodic
testing for compliance with the standards of character and quality set by Spirits
BV (Denisov affidavit, paragraph 18).
(f)
Under
the licence, Spirits BV ensured that only vodka that met its standards was labeled
with the subject mark (Denisov affidavit, paragraph 19).
(g)
The
subject mark appeared on labels affixed to bottles containing vodka that had been
tested under, and met the standards of character and quality set by, the
licence and that was sold in Canada during the relevant period (Denisov affidavit,
paragraph 20).
(h)
The
invoices submitted with the Fedoryna affidavit to prove sales of vodka designated
MOSKOVSKAYA to buyers in Canada indicate that sales to Canadian buyers were made
on several dates during the relevant period. The invoices show the name “SPI Group”
as well as the name of Spirits Cyprus, with the latter indicated as the issuer of
the invoice and the person to which payment is to be made, and in some cases as
the shipping agent (Fedoryna affidavit, Exhibit C).
(i)
In
the invoices attached to the Fedoryna affidavit, the product designated MOSKOVSKAYA
is the vodka that was tested, met the standards, and was labeled as described in
the preceding paragraphs, and the name “SPI Group” shown on some of the invoices
indicates the membership of Spirits Cyprus in the SPI Group (Denisov affidavit,
paragraphs 17, 22, and 23).
(j)
The
dollar value of products sold in Canada in association with the subject mark during
the relevant period is approximately $5.3 million (Fedoryna affidavit, paragraph
13).
[22]
In
my view these factual allegations, together with the inferences that can reasonably
be drawn from them, are sufficient to show the requisite use of the subject mark
during the relevant period. It follows that the Hearing Officer could reasonably
have decided, based on these allegations, that the subject mark should not be expunged,
and that therefore the Denisov affidavit could have materially affected the Registrar’s
decision.
[23]
The
judge concluded the contrary because he accepted a number of BCF’s submissions relating,
among other things, to the role of Spirits Cyprus, the absence of details about
the licence, and the vagueness of the allegations about the testing of the vodka.
BCF made substantially the same submissions in this Court.
[24]
BCF’s
main submission in the Federal Court and in this Court is that the Denisov affidavit
does not say specifically that Spirits Cyprus is licensed to use the subject mark
to make or sell vodka in Canada. However, it is reasonable to infer from the Denisov
affidavit, considered in conjunction with the invoices attached to the Fedoryna
affidavit (which are referenced in the Denisov affidavit), that under the
licence from Spirits BV, Spirits Cyprus acts as the selling agent for Canadian sales
of vodka bearing the subject mark. BCF cited no authority for the proposition that
this is not a sufficient use of a trade-mark to satisfy the requirements of section
4, and I am unable to see why it should not be sufficient.
[25]
BCF
relied on the statement in the Denisov affidavit that Spirits Cyprus provides legal
support to the companies in the SPI Group as something that undermined any allegation
of use of the subject mark by Spirits Cyprus. The portion of the Denisov affidavit
to which BCF refers is background information that is intended to describe the role
of the affiant (who is the head of the legal department of Spirits Cyprus), and
to explain how and why he has knowledge of the relevant facts. It is not inconsistent
with the allegation that Spirits Cyprus is a selling agent under licence.
[26]
BCF
also relied on the fact that the Denisov affidavit does not state the dates of the
beginning or end of the licence. In my view, that omission is irrelevant. The Denisov
affidavit says with sufficient clarity that Spirits Cyprus was licensed during the
relevant period to use the subject mark, and that the specific sales upon which
Spirits BV relies to establish the requisite use (the dates of which are stated
on the invoices) were made during the relevant period. It would add nothing to state
the beginning or ending date of the licence.
[27]
BCF
submitted that the statements in the Denisov affidavit are too vague to establish
that Spirits BV exercised sufficient control over the nature and character of the
vodka sold under the subject mark during the relevant period. I do not agree. As
I read the statements in the Denisov affidavit, they are more than bare assertions
that the control required by section 50 of the Trade-Marks Act exists. They
are assertions of fact describing how Spirits BV had and exercised the required
degree of control.
[28]
BCF
also argues that the weight to be given to all of the evidence is diminished because
there are inconsistencies between the Fedoryna and Denisov affidavits. That is not
a fair characterization. The Denisov affidavit clarifies and adds important details
to the Fedoryna affidavit. It does not contradict the Fedoryna affidavit.
[29]
Finally,
BCF argued that it is fatal to the case of Spirits BV that the Denison affidavit
says that labels bearing the subject mark were affixed to the bottles containing
vodka, but not to the boxes in which the vodka was shipped to the buyers named in
the invoices attached to the Fedoryna affidavit. It is not clear whether this argument
was made for the first time in this Court because it is not mentioned by the judge.
In any event, I see no merit to the argument. BCF cited no authority for the proposition
that in the circumstances of this case, the subject mark must not only be on the
bottles in which the product is delivered to consumers, but also on the box in which
the bottles are shipped to wholesalers. I am not persuaded that such a proposition
can be justified on the facts of this case.
[30]
For
these reasons, I conclude that on the basis of the two affidavits, the Hearing Officer
could reasonably have held that the requisite use of the subject mark was shown
during the relevant period, and therefore the Denisov affidavit could have materially
affected the Registrar’s decision. The judge should have considered the matter de
novo and reached his own conclusion. Since he did not do so, that task falls
to this Court. As my analysis of the affidavits has led me to conclude that the
requisite use during the relevant period was shown, Spirits BV is entitled to
succeed in this appeal.
Conclusion
[31]
I
would allow the appeal and set aside the judgment of the Federal Court. Making the
judgment the Federal Court should have made, I would allow the appeal of the Registrar’s
decision, and set aside the decision of the Registrar requiring the expungement
of the subject mark. Spirits BV is entitled to its costs in this Court and the
Federal Court, payable by BCF.
“K.
Sharlow”
“I
agree
John M. Evans J.A.”
“I
agree
Eleanor R. Dawson J.A.”
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