Nature Path Foods Inc. v. Quaker Oats Co. of Canada Ltd., 2001 FCT 366

Date: 20010420

Docket: T-690-00

Neutral Citation: 2001 FCT 366

BETWEEN:

                            NATURE'S PATH FOODS INC.

                                                                                         Applicant

                                               - and -

       THE QUAKER OATS COMPANY OF CANADA LIMITED

                                                                                     Respondent

                       REASONS FOR ORDER and ORDER

TREMBLAY-LAMER J.:

[1]    This is an application to expunge the respondent's Canadian Trade-mark Registration No. TMA500,621 for the trade-mark HONEY PUFFS pursuant to subsection 57(1) of the Trade-marks Act, R.S.C. 1985, c. T-13 (as amended) [hereinafter the Trade-marks Act, or simply the Act].

[2]    The evidence discloses long-standing use of the trade-mark MULTIGRAIN HONEY PUFFS by the applicant and its predecessors-in-title. The issue is whether that evidence precludes the respondent's registration.

FACTS

[3]    The applicant, Nature's Path Foods Inc., is a company duly incorporated pursuant to the laws of British Columbia. The applicant's principal office and place of business is in Delta, British Columbia. The applicant manufactures foods, including breakfast cereals.

[4]    In 1992, Kraft Canada Inc. and Lifestream Natural Foods Ltd., operating as a general partnership trading under the name Lifestream Natural Foods, began using the trade-mark MULTIGRAIN HONEY PUFFS in association with breakfast and snack foods derived from cereals.

[5]    On February 24 and April 15, 1992, the partnership applied to register the trade-marks MULTIGRAIN HONEY PUFFS and MULTI-GRAINS SOUFFLÉS AU MIEL, respectively, on the basis of proposed use. The Trade-marks Registrar deemed the applications abandoned on February 26, 1996 and January 30, 1996, respectively.

[6]                By an assignment dated March 6, 1995, the partnership assigned to Lifestream Natural Foods (1995) Inc. the trade-mark MULTIGRAIN HONEY PUFFS, together with its associated goodwill. On March 1, 1998, Lifestream Natural Foods (1995) Inc. and Nature's Path Foods Inc. amalgamated to form the applicant.

[7]                The applicant has provided evidence of sales, by either the applicant or its predecessors-in-title, of breakfast cereal in association with the trade-mark MULTIGRAIN HONEY PUFFS dating back to at least 1992. The applicant distributes its product across Canada, but not to the Maritime provinces. The applicant markets its product through large grocery chains as well as through natural and organic food specialty stores.

[8]                The respondent, The Quaker Oats Company of Canada Limited, is the owner of the trade-mark HONEY PUFFS, registered under Trade-mark No. TMA500,621 in association with "breakfast cereals".

[9]                The respondent applied to register the trade-mark HONEY PUFFS on August 18, 1997, on the basis of proposed use. The respondent prosecuted its application without incident, and the trade-mark was registered on September 15, 1998.

[10]            The respondent indicates that it has used the trade-mark HONEY PUFFS in association with breakfast cereal in Ontario since January, 1998, and throughout Canada since January, 1999. The respondent's evidence discloses substantial and growing sales.    The respondent also markets its product through large grocery chains, including some of those identified by the applicant.

ISSUES

[11]            The parties' submissions raise three issues:

     Did the applicant or its predecessors-in-title use the trade-mark HONEY PUFFS, or MULTIGRAIN HONEY PUFFS?

     Was the respondent entitled to register its trade-mark HONEY PUFFS in light of the applicant's prior use of an allegedly confusing trade-mark? and

     Was the respondent's trade-mark, HONEY PUFFS, distinctive of the wares of the respondent at any material time?

SUBMISSIONS

     Applicant

[12]            The applicant alleges that both the applicant and its predecessors-in-title have used the trade-mark HONEY PUFFS since at least as early as 1992.

[13]            The applicant submits that at no material time was the respondent's trade-mark distinctive of its wares. The applicant alleges that the respondent's trade-mark was and is confusing with a trade-mark previously and still used in Canada by the applicant and which the applicant has not abandoned. The applicant relies upon subsection 17(1) and paragraph 18(1)(b) of the Act.

[14]            The applicant further submits that the respondent was not entitled to register its trade-mark. The applicant alleges that at the date of the respondent's application, the respondent's trade-mark was confusing with a trade-mark previously used in Canada by the applicant. The applicant relies upon subsection 16(3) and section 18 of the Act.

     Respondent

[15]            The respondent alleges that neither the applicant nor its predecessors-in-title have ever used the trade-mark HONEY PUFFS, but at all times used the trade-mark MULTIGRAIN HONEY PUFFS.

[16]            The respondent submits that both parties' marks lack inherent distinctiveness, are descriptive and employ elements in common usage. The respondent submits that considered in their entireties, the parties' marks are not confusing with one another.

[17]            The respondent further submits that its trade-mark remains distinctive. The respondent argues that its sales are extensive, national, and accelerating, while the applicant's sales are regional, declining, and a fraction of the applicant's. The respondent concludes that the applicant's market presence is insufficient to deprive the respondent's trade-mark of distinctiveness.

ANALYSIS

[18]            Subsection 57(1) of the Trade-marks Act provides the Federal Court with exclusive jurisdiction to expunge a registered trade-mark.

[19]            As a threshold issue, the Act states that only a "person interested" may bring an expungement proceeding under subsection 57(1). Such persons include those whose rights may be restricted by a registration. In my view, the respondent's registration may well affect the scope of the applicant's trade-mark rights. Accordingly, the applicant is a "person interested" who may properly bring this application to this Court.

[20]            The Registrant benefits from a presumption that its trade-mark registration is valid: 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.

     Issue 1: The Applicant's Mark

[21]            The applicant led no evidence that it or its predecessors-in-title had ever used any trade-mark other than MULTIGRAIN HONEY PUFFS prior to 1997. In no case did the words HONEY PUFFS appear disassociated from the word MULTIGRAIN before 1997. In 1997, the applicant changed its packaging. Although the applicant continued to call its product MULTIGRAIN HONEY PUFFS, the words HONEY PUFFS appeared for the first time alone in the text of its packaging. However, the affidavit of Mr. R. Patrizio, Controller of the applicant, is silent on the date this change took place. Thus, there is no evidence that this change took place prior to August 18, 1997, the relevant date for determining the issue of non-entitlement. The evidence during the relevant period shows use of the trade-mark MULTIGRAIN HONEY PUFFS. In my view of the evidence, the use of the word MULTIGRAIN is meant to modify the words HONEY PUFFS. MULTIGRAIN is meant to be read with HONEY PUFFS. The respondent correctly notes that the applicant's own packaging includes the phrase, "Ways to enjoy Multigrain Honey Puffs". The invoices the applicant offers as proof of use of its products refers to "MULTIGRN HP".

[22]            In my view, the applicant and its predecessors in-title have not used the trade-mark HONEY PUFFS, but rather the trade-mark MULTIGRAIN HONEY PUFFS, prior to the material date.

[23]            This view is confirmed by the trade-marks assignment tendered into evidence by the applicant to establish chain of title to its trade-mark. That document in fact assigns the trade-mark MULTIGRAIN HONEY PUFFS and its associated goodwill to the applicant. It does not assign the trade-mark HONEY PUFFS.

[24]            That said, the evidence filed by the applicant establishes long-standing use of the trade-mark MULTIGRAIN HONEY PUFFS by the applicant and its predecessors-in-title. The assignment in evidence properly vests in the applicant title to that mark and the benefit of its use. The question remains as to whether the applicant's rights in the trade-mark MULTIGRAIN HONEY PUFFS affects the respondents's entitlement to register the trade-mark HONEY PUFFS or the distinctiveness of that trade-mark.

     Issue 2: Non-entitlement

[25]            The applicant submits that the respondent was not entitled to register it's trade-mark since at the application date, it was confusing with the respondent's trade-mark which had been previously used in Canada.

[26]            The applicant bases this ground of attack on the following provisions of the Trade-marks Act:

[27]            Subsection 6(2) of the Trade-marks Act sets out the definition for confusion. It provides that:

[28]            Subsection 6(5) enumerates the factors to be considered when making a determination as to whether or not a trade-mark is confusing:

[29]            Assessment of a likelihood of confusion must consider, as a matter of first impression, the perspective of the average consumer, likely to purchase the wares in question, having a vague or imperfect recollection of the first trade-mark: Miss Universe, Inc. v. Bohna, [1995] 1 F.C. 614 at 621 - 22 (C.A.); Baylor University v. Governor and Co. of Adventurers Trading into Hudson's Bay (2000), 8 C.P.R. (4th) 64 at 74 (F.C.A.).

[30]            As mentioned above, the material date for this ground of attack is the application date of the respondent's trade-mark: Trade-marks Act, subsection 16(3), i.e. August 18, 1997.

[31]            The applicant states that given the close identity between the parties' wares and channels of trade, and the significant degree of resemblance between the marks, the respondent's trade-mark is confusing with the applicant's mark.

[32]            The respondent submits that in considering whether two trade-marks are confusing, the correct approach is to consider the marks in their entirety. It is inappropriate to dissect the trade-marks into their components: Park Avenue Furniture Corp. v. Wickes/Simmons Bedding Ltd. (1991), 37 C.P.R. (3d) 413 at 426 (F.C.A.).

[33]            The respondent submits that the first word or syllable in a trade mark is generally the most important for the purpose of distinction, and that the differing first words of the parties' marks serves to distinguish them from one another: Conde Nast Publications Inc. v. Union des Editions Modernes (1979), 46 C.P.R. (2d) 183 at 188 (F.C.T.D.).

[34]            The respondent further notes that both elements of its trade-mark, "HONEY" and "PUFFS", are commonly used in third party trade-mark registrations and applications relating to cereal. The respondent submits that in such circumstances, consumers will distinguish between products on the basis of subtle differences between marks. This is particularly so where traders adopt words in common use, where marks consist wholly or in part of words descriptive of associated wares (Walt Disney Productions v. Fantasyland Hotel Inc. (1994), 56 C.P.R. (3d) 129 (Alta. Q.B.), aff'd (1996), 67 C.P.R. (3d) 444 (Alta. C.A.)) and where competing marks possess little or no inherent distinctiveness (Kellogg Salada Canada Inc. v. Maximum Nutrition Ltd. et al. (1992), 43 C.P.R. (3d) 349 (F.C.A.)).

[35]            Applying the criteria of subsection 6(5) to the present facts, I note the following:

Inherent Distinctiveness – As noted above, the respondent submits that the parties' marks possess descriptive elements which are common to the industry. I agree that neither of the parties' marks possesses significant inherent distinctiveness.

Length of Use – The applicant's mark has been in continuous use since 1992. The respondent, in contrast, began to use its mark only in 1998, and only nationally in 1999, and not at all as of the material date, the date of filing of the respondent's application. This factor favours the applicant.

Nature of Wares – Where competing marks are similar, the similarity of the wares bearing those marks will be a significant factor in assessing confusion: Polo Ralph Lauren Corp. v. United States Polo Assn. (2001), 9 C.P.R. (4th) 51 at 59 (F.C.A.). The parties sell competing breakfast cereals. The respondent sought to distinguish the applicant's brand of breakfast cereal as targeting the health food market, while it directed its own product towards the mainstream breakfast cereal market. In my view, this subtle distinction does little to differentiate the parties' wares. Breakfast cereals are not the sort of product over which consumers will extensively deliberate: Park Avenue, supra at 429. The parties offer substantially similar products and directly compete with one another in the market.

Nature of Trade – Where competing marks are similar, the distribution of wares bearing those marks through similar types of stores or marketing mechanisms will be a significant factor in assessing confusion: Cartier Inc. v. Cartier Optical Ltd. (1988), 20 C.P.R. (3d) 68 at 74 (F.C.T.D.). Both parties distribute their products through major grocery chains, although the applicant also sells to specialty food stores. In fact, the evidence discloses that the parties utilize at least some common distributers, namely Overwaitea and Oshawa Food Group. Accordingly, there is near identity of channels of trade. Further, both parties target the same class of purchasers, namely, consumers preferring pre-packaged breakfast cereals. While, again, there is some suggestion that the applicant also targets specialty food purchasers, there is no suggestion that the applicant exclusively targets such consumers. Given the nature of the parties' products and the care consumers will lend towards its purchase, the overlap between the parties' channels of trade and actual distributors is significant.

Degree of Resemblance – The applicant's trade-mark, MULTIGRAIN HONEY PUFFS, incorporates the entirety of the respondent's mark, HONEY PUFFS. The respondent correctly points out that the first element of a trade-mark is the most important part of the mark, and that the two marks differ in that respect. However, in my view the importance of the first element of the applicant's mark is attenuated somewhat in the present case. While marks must be assessed in their entirety, it is still possible to focus on particular features of the mark that may have a determinative influence on the public's perception of it: Pink Panther Beauty Corp. v. United Artists Corp., [1998] 3 F.C. 534 (C.A.) at para. 34.    Where the parties' marks share features but the differences serve to dominate those common features, there will be little likelihood of confusion: Foodcorp Ltd. v. Chalet Bar B Q (Canada) Inc. (1982), 66 C.P.R. (2d) 56 at 73 (F.C.A.). However, the opposite result flows here. In the applicant's mark, the word "MULTIGRAIN" modifies "HONEY PUFFS". While the applicant's mark bears little inherent distinctiveness, what distinctiveness it does boast originates with the latter component, not the former. Indeed, consumers may well regard the differences between the marks as compounding rather than eliminating confusion: see, e.g., Cartier Men's Shops Ltd. v. Cartier Inc. (1981), 58 C.P.R. (2d) 68 at 73 (F.C.T.D.). Consumers may well regard the parties' products as related "multi-grain" and "plain" varieties of the same cereal. In these circumstances, the degree of resemblance between the marks is significant.

Other Surrounding Circumstances – The respondent points out that the applicant has tendered no evidence of actual confusion. I agree that it would have been preferable for the applicant to have adduced at least some evidence of actual confusion. See, e.g., Asbjorn Horgard A/S v. Gibbs/Nortac Industries Ltd., [1987] 3 F.C. 544 (F.C.A.). However, on the evidentiary record before me, it would not be proper to infer from the absence of actual confusion evidence that confusion is not likely, much less would not have been likely on the material date: Eli Lilly and Co. v. Novopharm Ltd. (1997), 73 C.P.R. (3d) 371 at 422 (F.C.T.D.), aff'd [2000] F.C.J. No. 2090 (QL) (C.A.).

[36]            Having regard to all of the evidence in the record and all of the surrounding circumstances, including the factors outlined in subsection 6(5) of the Act, in my view, the applicant has established a likelihood of confusion between the respondent's trade-mark HONEY PUFFS and the applicant's trade-mark MULTIGRAIN HONEY PUFFS as of the material date.    The high degree of resemblance between the trade-marks, combined with the parties' overlapping products, distribution channels and consumers, indicates a likelihood of confusion. Simply, the parties directly compete. In my view of the evidence, the average consumer of breakfast cereals, having a vague or imperfect recollection of the applicant's mark MULTIGRAIN HONEY PUFFS, would on the material date likely have confused the respondent's mark HONEY PUFFS, as a matter of first impression, for the applicant's mark.

     Issue 2: Lack of Distinctiveness

[37]            The applicant alleges that the respondent's registration is invalid as the respondent's mark was and is not distinctive of the respondent's wares. Paragraph 18(1)(b) of the Act provides that:

[38]            The material date for a challenge pursuant to paragraph 18(1)(b) of the Act is the date of the commencement of the present application: Patou (Jean) Inc. v. Luxo Laboratories Ltd. (1998), 158 F.T.R. 16 at para. 12.

[39]            Section 2 of the Trade-marks Act defines "distinctive", in relation to a trade-mark, as meaning:

[40]            Distinctiveness is a question of fact: White Consolidated Industries, Inc. v. Beam of Canada Inc. (1991), 39 C.P.R. (3d) 94 at 109 - 110 (F.C.T.D.). A trade-mark must meet the following three conditions to be distinctive: (1) the mark and wares must be associated; (2) the mark's "owner" must use this association in manufacturing and selling its wares; and, (3) this association must enable the mark's owner to distinguish its wares from those of others: Philip Morris Incorporated v. Imperial Tobacco Ltd. et al. (1985), 7 C.P.R. (3d) 254 at 270 (F.C.T.D.), aff'd (1987),17 C.P.R. (3d) 237 (F.C.A.) and (1987),17 C.P.R. (3d) 289 (F.C.A.).

[41]            The applicant claims that the trade-mark HONEY PUFFS was not and is not distinctive of the respondent's wares in light of prior use of that mark by the applicant and its predecessors-in-title. Where more than one party uses a trade-mark, that mark cannot be said to be distinctive:

Since distinctiveness of a mark is, inter alia, related to source, when the trade mark is related to more than one source, it cannot be distinctive.

Moore Dry Kiln Co. of Canada Ltd. v. U.S. Natural Resources Inc.(1976), 30 C.P.R. (2d) 40 at 49 (F.C.A.).

[42]            The issue is not settled so easily as suggested by the applicant. The evidence discloses that prior to 1997, the applicant and its predecessors-in-title used the trade-mark MULTIGRAIN HONEY PUFFS, not HONEY PUFFS. The evidence discloses some use of the trade-mark HONEY PUFFS apart from the word MULTIGRAIN since 1997. The question remains, however, whether the respondent's trade-mark HONEY PUFFS is distinctive in light of the uncontested, long-term use of the trade-mark MULTIGRAIN HONEY PUFFS.

[43]            The respondent submits that as of the material date, it had been selling its product under the HONEY PUFFS trade-mark for two years. The respondent notes that it sells its cereal throughout Canada, while the applicant appears not to sell into the Maritimes, and that the respondent sells three times as much product as the applicant. The respondent's sales are increasing while the respondent's sales are declining. The respondent concludes that the applicant's sales are insufficient to impair the distinctiveness of the respondent's mark. Further, the respondent argues that the applicant has provided no evidence of actual confusion to support its claim that the respondent's mark is actually distinctive of the applicant.

[44]            The evidence relevant to the different material date for distinctiveness analysis does not alter my finding of a likelihood of confusion between the parties' marks. Indeed, the applicant's evidence of post-1997 use of the trade-mark HONEY PUFFS, apart from the word MULTIGRAIN, reinforces that conclusion. A likelihood of confusion between the parties' marks remains.    Given that conclusion, the respondent's mark cannot meet the third condition of the test for distinctiveness articulated in Philip Morris Incorporated v. Imperial Tobacco Ltd. et al., supra. The association between the respondent's wares and trade-mark cannot enable the respondent to distinguish its wares from those of others. Accordingly, the respondent's mark lacks distinctiveness as of the material date.

[45]            This application is granted with costs. The trade-mark HONEY PUFFS will be struck from the Register of Trade-marks.

                                                                 "Danièle Tremblay-Lamer"

JUDGE

OTTAWA, ONTARIO

April 20, 2001.