Docket: A-396-14
Citation: 2015 FCA 253
CORAM:
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PELLETIER J.A.
STRATAS J.A.
GLEASON J.A.
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BETWEEN:
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CATHAY PACIFIC
AIRWAYS LIMITED
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Appellant
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and
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AIR MILES
INTERNATIONAL TRADING B.V.
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Respondent
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REASONS FOR
JUDGMENT
PELLETIER J.A.
[1]
This is an appeal from a decision of Mr. Justice
O’Reilly of the Federal Court which set aside a decision of the Trade-Marks
Opposition Board (“the Board”),
cited as 2012 TMOB 80 (the Decision), and returned the matter to the Board for
redetermination by a differently constituted Board. The Federal Court’s
decision is cited as 2014 FC 549 (“Reasons”).
[2]
The applicant before the Board, and the
appellant in this Court, is Cathay Pacific Airways Limited (“Cathay Pacific”), who sought to register five
trade-marks, one of which was a word mark ASIA MILES, and four of which were
design marks incorporating the word mark.
[3]
The registration was opposed by Asia Miles
International Trading B.V. (“Air Miles”) which
advanced 13 grounds of opposition including non-compliance with the technical
requirements of section 30 of the Trade-Marks Act, R.S.C. 1985 c. T-13
(the Act), lack of use of the marks in Canada (sections 4 and 50 of the Act),
and a cluster of grounds which turn on the question of distinctiveness and the
likelihood of confusion (sections 12, 16, and 18 of the Act).
[4]
The Board reviewed the evidence of the use of
the marks in Canada and, in particular, whether the use of the mark in Canada accrued
to Cathay Pacific given that the evidence showed that the marks were used by a
wholly owned subsidiary of the latter (Cathay Pacific Loyalty Management, “CPLP”). The question for the Board was whether, in the
words of section 50 of the Act, Cathay Pacific had “direct
or indirect control of the character or quality of the goods or services”.
If it did, then the use of the marks accrue to Cathay Pacific; if it did not,
the application for registration would have to proceed on a basis other than
the use of the marks in Canada by the applicant.
[5]
The Board examined the evidence and found that:
Having regard to the lack of specificity in
Ms. Poon’s evidence, to Ms. Poon’s inability at cross-examination to speak in
terms of a license agreement, and to the exhibit material attached to Ms.
Poon’s affidavit, I find that there are doubts concerning the applicant’s claim
that CPLP has been using the ASIA MILES marks in Canada under license in compliance
with s. 50 of the Trade-Marks Act. In this regard, I find that the weight of
the evidence does not support the applicant’s claim that the use of the mark
ASIA MILES in Canada accrues to the benefit of the applicant.
Decision at paragraph 25.
[6]
As a result, the applicant was unable to rebut
the other grounds of opposition to which the use of the marks in Canada was
relevant, particularly the factors to be considered under subsection 6(5) of
the Act in assessing the likelihood of confusion. In the end, the Board
dismissed all of the applications for registration.
[7]
Cathay Pacific appealed the decision to the
Federal Court and, as permitted by section 56 of the Act, it filed additional
evidence in support of its application for registration of the marks, as did Air
Miles.
[8]
When the matter came before the Federal Court,
it held that it did not need to review the additional evidence. It decided the
matter on the basis of the record before the Board. On the critical issue of
use of the marks in Canada by Cathay Pacific, the Federal Court found that the
Board’s conclusion was unreasonable. It held that:
The uncontradicted evidence before the Board
showed that Cathay Pacific licenses CPLP to use the “Asia Miles” mark. There
was sufficient evidence, therefore, for the Board to conclude that Cathay
Pacific had “direct or indirect control of the character or quality” of the mark’s use such that CPLP’s use of the mark should
have been credited to Cathay Pacific (s. 50, Trade-Marks Act).
Reasons, at paragraph 22.
[9]
As for the other grounds of opposition, the
Federal Court found that if the Board had not come to an unreasonable
conclusion on the issue of use of the marks, its conclusions on the issues of
distinctiveness and confusion would have been different: see Reasons at
paragraph 23.
[10]
The Federal Court did not deal with the argument
related to the applicant’s compliance with section 30 of the Act.
[11]
In the end, the Federal Court Judge allowed the
appeal and returned the matter to the Board for reconsideration by a different
member of the Board.
[12]
Cathay Pacific appeals from the Federal Court
Judge’s disposition of the appeal, arguing that it was entitled to have the
Court allow the registration of the trade-marks. Air Miles cross appeals on the
merits of the Federal Court’s decision so, for that reason, I will deal with it
first.
[13]
While the parties raised a number of points in
support of their positions, I am of the view that the Federal Court’s decision
must be set aside for two reasons.
[14]
First, the Federal Court erred in law in
its treatment of the new evidence tendered pursuant to section 56 of the Act:
56. (1) An appeal lies to the Federal Court
from any decision of the Registrar under this Act within two months from the
date on which notice of the decision was dispatched by the Registrar or
within such further time as the Court may allow,
either before or after the expiration of the two months.
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56. (1) Appel de toute décision rendue par
le registraire, sous le régime de la présente loi, peut être interjeté à la
Cour fédérale dans les deux mois qui suivent la date où le registraire a
expédié l’avis de la décision ou dans tel délai supplémentaire
accordé par le tribunal, soit avant, soit après l’expiration des deux mois.
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(5) On an appeal under subsection (1),
evidence in addition to that adduced before the Registrar may be adduced and the Federal Court may exercise any discretion vested in the
Registrar.
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(5) Lors de l’appel, il peut être apporté
une preuve en plus de celle qui a été fournie devant le registraire, et le tribunal peut exercer toute discrétion dont le registraire
est investi.
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[my emphasis.]
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[VIDE]
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[15]
The effect of section 56 was described as
follows by the Supreme Court in Mattel, Inc. v. 3894207 Canada Inc., 2006
SCC 22, [2006] 1 S.C.R. 772, at paragraph 35:
Where fresh evidence is admitted, it may,
depending on its nature, put quite a different light on the record that was
before the Board, and thus require the applications judge to proceed more by
way of a fresh hearing on an extended record than a simple appeal (Philip
Morris Inc. v. Imperial Tobacco Ltd. (No. 1) (1987), 17 C.P.R. (3d) 289
(F.C.A.)). Section 56 suggests a legislative intent that there be a full
reconsideration not only of legal points but also of issues of fact and mixed
fact and law, including the likelihood of confusion.
[16]
In the case at bar, the Federal Court declined
to consider the fresh evidence put forward by the appellant. Instead, it
proceeded directly to an analysis as to whether the Board’s decision was
reasonable.
[17]
The question which the Federal Court no doubt
asked itself was “Why do I need to consider the fresh
evidence if it is possible for me to decide the case in favour of the appellant
on the original record on the standard of review most favourable to the
respondent? In such a case, is the appellant’s fresh evidence not surplus to
requirements?”
[18]
The answer is that the Act requires the judge to
consider the fresh evidence, bearing in mind that both parties are entitled to
submit fresh evidence. What may be surplus to requirements for one party may be
critical to the outcome for the other. The parties are entitled to have the
Federal Court consider, in light of the fresh evidence, whether it should
decide the case by way of a fresh hearing on the extended record or,
alternately, by way of a review of the Board’s decision on the record as it was
before the Board.
[19]
As a practical matter, since the Federal Court’s
decision is subject to appeal to this court, both the Court and the parties are
entitled to have the Federal Court’s assessment of the probative value of the
new evidence. If this Court finds that the Federal Court erred in a way which
justifies its intervention, the absence of that assessment is a factor which
militates for the return of the matter to the Federal Court for redetermination,
rather than for the exercise of this Court’s discretion under subparagraph
52(1)(b)(i) of the Federal Courts Act, R.S.C. 1985 c. F-7.
[20]
The second reason for which this appeal must be
allowed is that, while purporting to apply the reasonableness standard to the
Board’s decision, the Federal Court applied the correctness standard instead.
This can be seen when the Board’s treatment of the evidence of control is
compared to the Federal Court’s treatment of the same evidence. In the passage
quoted at paragraph 5, the Board considers the quality of the applicant’s
evidence on Cathay Pacific’s control of the quality or character of the goods
and services associated with the marks and finds it wanting. In the passage
quoted at paragraph 8, the Federal Court re-weighs the evidence itself and
finds that there is support for the view it takes of the matter.
[21]
A decision is not unreasonable because the
evidence would support another conclusion. The question is whether the
decision-maker’s conclusion falls within the range of acceptable and defensible
outcomes, having regard to the facts and the law:
…certain questions that come before
administrative tribunals do not lend themselves to one specific, particular
result. Instead, they may give rise to a number of possible, reasonable
conclusions. Tribunals have a margin of appreciation within the range of
acceptable and rational solutions. A court conducting a review for
reasonableness inquiries into the qualities that make a decision reasonable,
referring both to the process of articulating the reasons and to outcomes. In
judicial review, reasonableness is concerned mostly with the existence of
justification, transparency and intelligibility within the decision-making
process. But it is also concerned with whether the decision falls within a
range of possible, acceptable outcomes which are defensible in respect of the
facts and law.
Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190, at paragraph 47.
[22]
We have not been given any reason to believe
that the Board’s decision was unreasonable, given the record which it had
before it.
[23]
It follows that, in my view, the cross appeal
should be allowed.
[24]
As I understand Cathay Pacific’s appeal, it adopts
the Federal Court’s conclusion on the merits but argues that it should have
arrived at that conclusion by a different route, a route which would have left
the way clear for it to allow the registration of the trade-marks rather than
referring the matter back to the Board. So, while Cathay Pacific argued the
merits of the Federal Court’s decision, it did so only as a means of setting
aside the Federal Court’s decision to return of the matter to the Board for
reconsideration instead of giving the judgment which the Federal Court should
have given pursuant to subparagraph 52(1)(b)(i) of the Federal Courts
Act, namely allowing the registration of the trade-marks in issue.
[25]
Since the decision of the Federal Court should
be set aside, Cathay Pacific’s claim for a different remedy based on the
Federal Court’s conclusion on the merits cannot succeed.
[26]
That said we are left with the issue of the
disposition of this appeal. In its memorandum of fact and law, Air Miles does
not ask us to do what Cathay Pacific would like us to do:
291. In view of the foregoing, Air Miles
respectfully requests that:
a)
Its Cross-appeal be allowed;
b)
This decision vacate and set aside the decision
of Justice O’Reilly;
c)
This Court restore the decision of the Trademarks
Opposition Board;
d)
In the alternative, Cathay’s appeal be dismissed
and the decision of Justice O’Reilly affirmed; and,
e)
The costs of Cathay’s Appeal and Air Miles’
Cross-appeal be awarded to Air Miles.
[27]
Given the basis upon which I would allow the
cross-appeal, it is not appropriate to make an order restoring the Decision. The
Federal Court’s review of the Decision was flawed; the outcome of that review
in light of the fresh evidence remains in issue.
[28]
There are cases in which this Court’s analysis
of the decision under appeal leaves no doubt as to the conclusion to which the
Federal Court should have come. In other cases, there may be other factors that
suggest that it is in the interests of justice for this Court to make the
decision the Federal Court should have made. This is not such a case. While the
additional costs to the parties of returning the matter to the Federal Court
are a relevant consideration, the fact that Cathay Pacific can continue to use
its marks as it has since 1999 persuades me that there is no compelling reason
for us to undertake an analysis which Parliament has conferred upon the Federal
Court.
[29]
On the issue of costs, I would note that neither
party obtained the remedy which it sought from this Court. The Decision has not
been restored nor has this Court allowed the registration of the marks. In the
circumstances, I think it equitable that each party bears its own costs.
[30]
As a result, I would order that:
a)
The order of the Federal Court be set aside;
b)
The appeal be dismissed;
c)
The cross-appeal be allowed;
d)
The matter be returned to the Federal
Court for redetermination of all issues raised by the appeal by a different
Federal Court Judge.
"J.D. Denis Pelletier"
“I agree
Stratas J.A.
“I agree
Gleason J.A.”