Bacardi & Co. Ltd. v. Havana Club Holding S.A., 2003 FC 938

Date: 20030731

Docket: T-1181-01

Citation: 2003 FC 938

OTTAWA, ONTARIO, THE 31^st DAY OF JULY 2003

Present:          THE HONOURABLE MR. JUSTICE LUC MARTINEAU

BETWEEN:

                                                  BACARDI & COMPANY LIMITED

                                                                                                                                                       Applicant

                                                                              - and -

                                                    HAVANA CLUB HOLDING S.A.

                                                                                                                                                   Respondent

                                               REASONS FOR ORDER AND ORDER

[1]                 This is an appeal from a decision by the Registrar of Trade-marks (the Registrar) dated May 3, 2001, rejecting the opposition by the applicant, Bacardi & Company Limited, to the application of the respondent, Havana Club Holding S.A., for registration of the mark HAVANA CLUB Design (the new mark), based on its use in Canada since at least 1990 by the respondent or its predecessors in title, Cubaexport and H.R.L., in association with rum.

[2]                 To more readily understand this case, it is helpful to remember that the Trade-marks Act, R.S.C. 1985, c. T-13, (the Act) permits any person, whether interested or not, to oppose the application for registration by filing a statement of opposition within the time prescribed by subsection 38(1). Subsection 38(2) provides that the statement of opposition may be based on any of the following grounds:

           (a)         The application does not conform to the requirements of section 30: paragraph 38(2)(a).           

Section 30 specifies the information that must be contained in an application. In the case of a trade-mark that has been used in Canada, the applicant must, inter alia, state the date from which the applicant or his named predecessors in title, if any, have so used the        trade-mark in association with each of the general classes of wares or services described in the application: paragraph 30(b). The applicant must also state that he is satisfied that he is entitled to use the trade-mark in Canada in association with the wares or services described in the application: paragraph 30(i);

           (b)         The trade-mark is not registrable: paragraph 38(2)(b).

Reference must be made to section 12, which sets out the situations in which a trade-mark is not registrable. For example, a trade-mark that is confusing with a registered

trade-mark is not registrable: paragraph 12(1)(d). However, subsection 15(1) provides for an exception if the applicant is the owner of all such marks (which are known as "associated trade-marks");

           (c)         The applicant is not the person entitled to registration of the trade-mark: paragraph 38(2)(c).

This ground of opposition is linked to sections 16 to 23, which deal with persons entitled to registration of trade-marks, including certification marks;

           (d)         The trade-mark is not distinctive: paragraph 38(2)(d).

A trade-mark is "distinctive" within the meaning of section 2 if it 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 as to distinguish them.

[3]                 The applicant based its opposition before the Registrar on all the above-noted grounds, except the third one. The applicant submitted in its memorandum that the respondent is not the person entitled to registration of the new mark (see paragraphs 15, 39-46, 48 and 51 of the applicant's memorandum). However, at the hearing the applicant advised that it was no longer pursuing this additional ground of opposition. In any event, the applicant cannot raise on appeal a ground of opposition that was not raised in its statement of opposition: paragraph 38(3)(a); Molson Breweries v. Pernod Ricard S.A. (1995), 64 C.P.R. (3d) 356 at p. 357 (F.C.A.); and Édutile Inc. v. Automobile Protection Assoc. (C.A.), [2000] 4 F.C. 195 at p. 209.

[4]                 In this case, the grounds of opposition argued before the Registrar can be summarized as follows:

           (a)         The application does not comply with paragraph 30(b) because neither the respondent nor its predecessors in title have used the new mark in association with rum since at least 1990 (the first ground of opposition);

           (b)         The application does not comply with paragraph 30(i) because, given the facts outlined in the statement of opposition, the respondent cannot be satisfied that it is entitled to use the new mark in Canada in association with rum (the second ground of opposition);

           (c)         The new mark is not registrable under paragraph 12(1)(d) because it is confusing with the registered trade-mark HAVANA CLUB (Registration No. UCA003512) (the registered trade-mark) (the third ground of opposition); and

           (d)         The new mark is not distinctive within the meaning of section 2 (the fourth ground of opposition).

[5]                 The parties acknowledge that decisions of the Registrar on matters within his area of expertise are to be reviewed on a standard of reasonableness simpliciter, at least in the absence of additional evidence on appeal: Molson Breweries v. John Labatt Ltd. (C.A.), [2000] 3 F.C. 145 at para. 51; see also: Law Society of New Brunswick v. Ryan (2003), 223 D.L.R. (4th) 577 at paras. 46-56 (S.C.C.); The College of Physicians and Surgeons of British Columbia v. Dr. Q (2003), 223 D.L.R. (4th) 599 at paras. 34-35 and 41 (S.C.C.); and Canada (Director of Investigation and Research, Competition Act) v. Southam Inc., [1997] 1 S.C.R. 748 at paras. 54-62 and 78-80.

[6]                 I note that the parties did not adduce any additional evidence as permitted by subsection 56(5) of the Act.

[7]                 The first and fourth grounds of opposition were rejected by the Registrar because they were not supported by the evidence in the record. Despite the general allegations in its memorandum, the applicant failed to establish that this finding of fact, which is within the Registrar's specialized expertise, was unreasonable. Moreover, the oral argument did not deal with that aspect of the decision. I therefore conclude that there is no reason to alter the Registrar's decision rejecting the first and fourth grounds of opposition.

[8]                 After a somewhat probing examination, I find that the reasons given by the Registrar, taken as a whole, support his decision to also reject the second and third grounds of opposition. In my view, the Registrar's decision is reasonable under the circumstances. Moreover, his conclusion that he did not have jurisdiction to determine the validity of the registration of the registered mark is, in my view, correct in law in every respect as well as consistent with the case law.

[9]                 The Act permits registration of a trade-mark that would otherwise be considered confusing with a registered trade-mark if the applicant is the owner of the two marks. Subsection 15(1) reads as follows:

[10]            In this case, the respondent relies on the fact that it is the registered owner of the registered trade-mark as evidenced by the register of trade-marks (the register). We note that the latter is maintained under the supervision of the Registrar, as set out in section 26 of the Act. Under section 54, the record in the register is evidence of ownership. Therefore, the respondent believes it has discharged the onus of establishing its right to register the new mark.

[11]            The applicant however takes the position that the record in the register of the respondent's name as owner is of no legal effect. The applicant argues that on an opposition proceeding, the Registrar may ignore that registration and treat it as invalid. In fact, the applicant contends that the respondent is not the real owner of the registered mark because its title and that of its predecessors is invalid. Relying, inter alia, on Lecouturier v. Rey, [1910] A.C. 262 (H.L. (Eng.)) and [1949] S.C.R. 530">Laane & Balster v. Estonian State Cargo and Passenger Steamship Line, [1949] S.C.R. 530, the applicant submits that courts will not give effect in their territorial jurisdiction to the provisions of a penal statute enacted by a foreign country whose goal was to expropriate without compensation an asset that might be outside the country; that would be the case here because on October 13, 1960, the Republic of Cuba apparently nationalized the assets of various companies by forced expropriation, including those of Jose Arechabala S.A. (the original registrant) whose name appeared in the register as owner of the registered trade-mark as of July 11, 1934. According to the applicant, the Registrar did not have the power to amend nor should he have amended the entry in the register, as he did on September 24, 1963, to substitute the name of the nationalized company, Jose Arechabala S.A. Nacionalizada, for that of the original registrant. Arguing that the ownership of a registered mark constitutes an intangible asset, the applicant submits that the respondent has not discharged its onus of establishing its right to register the new mark because nothing in the Registrar's record indicates that compensation was paid to those affected by the forced expropriation.

[12]            Moreover, in paragraph 6 of its statement of opposition, the applicant claims to have become owner of the registered mark pursuant to an agreement dated April 18,1997, with Jose Arechabala International Limited, which itself claims to have acquired ownership of the original registrant's registration on April 17, 1997. However, the Registrar's decision states that no evidence was adduced on that point. This finding of fact was not challenged on appeal because the applicant submitted that it did not have to prove its alleged right of ownership. The onus lay instead with the respondent to prove that it is the owner of the registered mark.

[13]            In this case, the Registrar concluded that he did not have jurisdiction to determine the validity of Registration No. UCA003512, other than to recognize that the respondent is the current owner of the registered mark. Essentially, the Registrar was of the view that the registration of a trade-mark must be accepted on its face, even in opposition proceedings. In the Registrar's opinion, the fundamental issue was whether he had jurisdiction to correct the errors that might be in the trade-mark register without actually amending it. He concluded that the Federal Court has exclusive jurisdiction to do so, under section 57 of the Act, and that until the register is amended in the manner set out in that provision, he cannot ignore Registration No. UCA003512 in the name of the respondent. According to the Registrar, to do otherwise would amount to usurping the exclusive jurisdiction of the Federal Court. He cannot do in fact what he cannot do in law: "[TRANSLATION] [i]f, in these proceedings, the opponent wishes to rely on its alleged ownership of regn. no. UCA003512, then the opponent must have the ownership of registration no. UCA003512 amended by the Federal Court." Considering section 57, the general scheme of the Act and the jurisprudence of this Court, this conclusion appears to me not only reasonable but also correct in law.

[14]            Section 57 reads as follows:

[15]            Clearly, the Registrar's decision respects the jurisdictional scheme set out in the Act. It is also consistent with the (admittedly rebuttable) presumption in subsection 54(3) that "a copy of the record of the registration of a trade-mark . . . is evidence of the facts set out therein and that the person named therein as owner is the registered owner of the trade-mark for the purposes and within the territorial area therein defined."

[16]            Section 15 permits the registration of confusing trade-marks if they are owned by the same person. That is the case here. The fact that subsection 15(1) uses the term "owner" instead of " registered owner" does not compel the registered owner to prove that his title is valid, especially in this case where the Registrar already agreed to recognize the transfer of the registered mark in favour of the respondent's predecessors in title. Also, the applicant who is seeking to register a new trade-mark cannot be considered the "registered owner" of the associated trade-mark until the Registrar has issued the certificate of its registration. Section 40 provides for the issuance of such a certificate.

[17]            The registration of a trade-mark, other than a proposed trade-mark, is always made in the name of the applicant or his transferee: subsections 40(1) and (4). Similarly, pursuant to subsection 48(3), "[t]he Registrar shall register the transfer of any registered trade-mark on being furnished with evidence satisfactory to him of the transfer and the information that would be required by paragraph 30(g) in an application by the transferee to register the trade-mark." Similar provisions existed in The Unfair Competition Act, 1932, S.C. 1932, c. 38.

[18]            In this case, the history of Registration No. UCA003512 reveals that the Registrar accepted evidence of the change of title and on September 24, 1963, he entered the name Jose Arechabala S.A. Nacionalizada as the owner of the registered mark. Subsequently, Cubaexport, H.R.L. and the respondent were the successive registered owners of the registered mark. In accordance with subsection 46(4), the registration is still in effect. No application to amend the register under section 57 has been submitted. There is no proceeding before the Registrar under section 45. No action or proceeding has been taken by the original registrant or any interested person under section 55 against the respondent or its predecessors in title. There has been no appeal or application for judicial review of the decisions by the Registrar to accept the transfer of ownership in 1963 or to renew the registration of the registered mark in 1964 and every 15 years thereafter, in the name of the respondent's predecessors in title.

[19]            It must be remembered that the Registrar is a creature of statute and has no inherent jurisdiction. To determine the extent of his powers, reference must be made to the provisions of the Act that confer jurisdiction on him: Anheuser-Busch, Inc. v. Carling O'Keefe, [1983] 2 F.C. 71 at p. 78 (F.C.A.). In the case before me, I do not find any provision in the Act that either expressly or by necessary implication empowers the Registrar to declare that the applicant would henceforth be the owner of the registered trade-mark. Nor can he revise or set aside one of his decisions unless expressly authorized by the Act to do so.

[20]            In opposition proceedings, it is settled law that the only trade-mark "at issue" is the one that is the subject of the opposition: Consumers Distribution Co. Ltd. v. United Consumers Club, Inc. (1991), 35 C.P.R. (3d) 259 at p. 271 (F.C.T.D.); and Mr. P's Mastertune Ignition Services Ltd. v. Tune Masters (1984), 82 C.P.R. (2d) 128 at p. 134 (F.C.T.D.). By analogy, see also Sunshine Biscuits Inc. v. Corporate Foods Ltd. (1982), 61 C.P.R. (2d) 53 (F.C.T.D.); Maple Leaf Mills Ltd. v. The Quaker Oats Co. of Canada Ltd. (1984), 82 C.P.R. (2d) 118 at p. 127 (F.C.T.D.); and Renaud Cointreau & Co v. Cordon Bleu International Ltd. (2000), 193 F.T.R. 182 at paras. 38-39 (F.C.T.D.), which illustrate the general principle of trade-mark law that the registration of a trade-mark is valid when it is entered in the register and continues to be valid unless it is amended or struck out by the competent authority.

[21]            In the case before us, subsection 38(8) defines the Registrar's jurisdiction, which is quite limited. This provision clearly states that "[a]fter considering the evidence and representations of the opponent and the applicant, the Registrar shall refuse the application or reject the opposition and notify the parties of the decision and the reasons for the decision." (my emphasis). The Registrar can only refuse applications or reject oppositions. Therefore, the suggestion in the Registrar's decision that his predecessor should not have recognized the transfer of the registered trade-mark in 1963 is of no legal effect and cannot bind the Court, which has exclusive jurisdiction to determine an application under section 57 or to amend a decision of the Registrar.

[22]            It is equally clear that, subject to sections 21, 32 and 67, the registration of a trade-mark, unless shown to be invalid, gives to the owner the exclusive right to the use throughout Canada of the trade-mark in respect of the wares or services described in the registration: section 19. The registered mark here has not been shown to be invalid nor has the applicant ever contended that the registered mark is invalid on one of the grounds set out in section 18.

[23]            Both parties referred to the onus that lies, respectively, with the applicant and the opponent on an application for registration. After carefully reviewing the Registrar's decision, the evidence and the representations of the parties, I am unable to conclude that the Registrar wrongly interpreted or misapplied the applicable principles in this case.

[24]            However, there is more. In addition to the legal ramifications of an entry in the register, there is evidence in the record that the respondent's predecessor, Jose Arechabala S.A. Nacionalizada, acquired a right of ownership in the assets of the original registrant, which included the registered mark. Accordingly, the issue is not to determine whether the respondent's predecessor was the owner of the registered mark, but to define the effects of the title outside the Republic of Cuba (insofar as those affected by the expropriation received no compensation). The very nature of the issues that have been raised more than 40 years after the expropriation of the original registrant's assets in 1960 confirms that the Registrar has no expertise on this point. Respect for jurisdictional boundaries dictates that the import in Canada of a foreign law whose invalidity (or inoperability) is now being raised must be judicially determined in a context in which all interested parties will have an opportunity to be heard.

[25]            Moreover, in accordance with subsection 57(1), the Federal Court has exclusive jurisdiction to determine an application under that provision. I note that subsection 57(2) does not confer any new jurisdiction on the Registrar, but merely states that an application under section 57 does not constitute an alternate method of appealing a decision of the Registrar where an appeal could have been instituted under section 56. Generally, subject to an appeal validly brought under section 56, the Federal Court has exclusive jurisdiction to hear an application for judicial review of a decision of the Registrar: sections 18, 18.1 and 18.5 of the Federal Court Act, R.S.C. 1985, c. F-7. In short, regardless of the angle used to consider the issue, the Registrar did not have jurisdiction to determine the validity of Registration No. UCA003512, other than to recognize that the respondent is the current owner of the registered mark and that the marks at issue in this proceeding are associated marks.

[26]            I am also of the view that upon reviewing the evidence, the Registrar could reasonably conclude that the respondent's application conformed to the requirements of the Act, that the new mark was registrable, that the respondent was the person entitled to registration of the mark and that the new mark was distinctive. Accordingly, the Registrar's decision to reject the applicant's opposition is not, in my view, unreasonable nor wrong in law.   

                                                                            ORDER

THE COURT ORDERS that the appeal filed by the applicant from the decision of the Registrar dated May 3, 2001, rejecting the applicant's opposition to the registration of the mark HAVANA CLUB Design (Application No. 845,949), is dismissed with costs.

                                                                                                                                                               Judge                            

Certified true translation

Mary Jo Egan, LLB

                                                                 FEDERAL COURT

                              NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                                             T-1181-01

STYLE OF CAUSE:                           BICARDI & CO. LTD. v. HAVANA CLUB HOLDING S.A.

PLACE OF HEARING:                     OTTAWA, ONTARIO

DATE OF HEARING:                       MAY 26, 2003

REASONS FOR ORDER

AND ORDER:                                    THE HONOURABLE MR. JUSTICE MARTINEAU

DATED:                                                JULY 31, 2003

APPEARANCES:                               

MR. ROBERT MacDONALD                                                     FOR THE APPLICANT

MS. MONIQUE COUTURE

MR. BARRY GAMACHE                                                            FOR THE RESPONDENT

SOLICITORS OF RECORD:         

GOWLING, LAFLEUR, HENDERSON                                    FOR THE APPLICANT

OTTAWA, ONTARIO

LÉGER ROBIC RICHARD                                                        FOR THE RESPONDENT

MONTRÈAL (QUEBEC)