Riches, Mckenzie & Herbert v. Pepper King Ltd., docket T-1431-99

Date: 20000928

Docket: T-1431-99

BETWEEN:

     RICHES, McKENZIE & HERBERT

     Applicant

     - and -

     PEPPER KING LTD.

     Respondent

     REASONS FOR ORDER

LEMIEUX J.:

[1]      These reasons confirm those I gave orally in Toronto on September 5, 2000, allowing an appeal, pursuant to section 56 of the Trade-marks Act, (the "Act") from a July 30, 1999 decision by C. Folz, Member, Trade-marks Opposition Board (the "Board") refusing to expunge the trade-mark VOLCANO in association with hot pepper sauce from the Register.

[2]      The trade-mark owner, Pepper King Ltd., did not participate in this appeal. It did not file additional evidence with the Court as it could have; it did not file a respondent's record and was not represented at the hearing. Before the Board, it had limited its participation to the filing of an affidavit by Nellie Small, an officer of the company.

NELLIE SMALL'S AFFIDAVIT

[3]      I reproduce the substance of Nellie Small's affidavit filed with the Board:

2.      Pepper King Ltd. has used the trade mark continuously since August 1991 on Hot Pepper Sauce by using the trademark on labels, affixing the labels to the product and selling the product in Ontario.

3.      Attached hereto and marked as Exhibit A to this my affidavit is an actual copy of the label in its current use;

4.      Attached hereto and marked as Exhibit B is a copy of an invoice issued October 21, 1997 to SoHo's PWG Restaurant & Tavern Eglington & Kennedy, Scarborough, Ontario, for 1 Gallon of Volcano Hot Pepper Sauce, October 21, 1997, being, by coincidence, the actual day that the section 45 notice was issued. Of course I had no idea that the Section 45 notice was to be issued on that day.

4.[sic]      Attached hereto and marked as Exhibit C to this my affidavit are copies of a number of other invoices evidencing regular sales.

5.      There is no intention to discontinue using the trade-mark VOLCANO on Hot Pepper Sauce. The intention of Pepper King Ltd. is to continue using the trade-mark VOLCANO indefinitely.

[4]      The invoices appended to Nellie Small's affidavit identify the supplier as Pepper King Ltd. and most contain the words "gal. Volcano Hot Pepper Sauce". The majority of the invoices, all during the relevant period defined by the Board, are to restaurants and taverns.

[5]      One invoice, however, was to the I.G.A. in Wilberforce, Ontario and described the wares as "two cases Volcano Hot Pepper Sauce". Another invoice was to "Esso" in Wilberforce, and the wares were described as "1 case Volcano Hot Pepper Sauce".

THE BOARD'S DECISION

(a)      Composite or separate mark

[6]      The Board noted the main argument by the applicant, Riches, McKenzie & Herbert, is that the trade-mark being used by the registrant is the composite mark VOLCANO HOT and not the mark, as registered, VOLCANO. The Board framed the main issue before it as "whether the trade-mark as used by the registrant is so different from the trade-mark as registered that it could not qualify as a use of the trade-mark as registered". The Board applied the test set out in Registrar of Trade-marks v. Compagnie Internationale pour l'Informatique CII Honeywell Bull, Société Anonyme et al. (1985), 4 C.P.R. (3d) 523 (F.C.A.) quoting the following extract from that case:

The real and only question is whether, by identifying its goods as it did, C.I.I. made use of its trade-mark BULL.. That question must be answered in the negative unless the mark was used in such a way that the mark did not lose its identity and remained recognizable in spite of the differences between the form in which it was registered and the form in which it was used. The practical test to be applied in order to resolve a case of this nature is to compare the trade-mark as it is registered with the trade-mark as it is used and determine whether the differences between the two marks are so unimportant that an unaware purchaser would be likely to infer that both, in spite of their differences, identify goods of the same origin.

[7]      The Board concluded as follows on the point:

... I would agree with the requesting party that the purchasing public would not perceive the mark as it appears on the label as use of the trade-mark VOLCANO per se. As the requesting party has pointed out, the word VOLCANO appears in the same colour, size and font as the word HOT. The requesting party also points out that the words VOLCANO and HOT appear in a different colour, size and font than all of the other words which appear on the label, including Pepper King Ltd. and Hot Pepper Sauce. Although it is arguable that the word "hot" is descriptive of the registrant's hot pepper sauce wares, I am of the view that, because the word "hot" is presented in the same size and style of lettering as the word VOLCANO, the public would perceive that the mark being used is the composite mark VOLCANO HOT and not the registered mark VOLCANO.

[8]      The Board then went on to examine the invoices appended to Nellie Small's affidavit. It noted that the trade-mark VOLCANO appeared in the body of the invoices and found:

As for the specimen invoices, I am of the view that they evidence use of the trade-mark VOLCANO in association with hot pepper sauce during the relevant period. In this regard, the requesting party concedes that the invoices attached as Exhibits B and C show some sales by the registrant of hot pepper sauce during the relevant period. Further, I note that the mark VOLCANO appears in the body of the invoices in such a manner that it would be perceived by the purchasers of the hot pepper sauce as being use of the trade-mark VOLCANO. Finally, although the affiant does not specifically state that the invoices accompanied the hot pepper sauce wares at the time of transfer, in my view, unless there is clear evidence that the invoices do not accompany the wares, it is reasonable to assume that it would be normal business practice for the invoices to accompany the wares when the wares are sold to the customer. Consequently, I am satisfied that the registrant has shown use of the trade-mark VOLCANO in compliance with s. 4(1) of the Act.      [emphasis mine]

ANALYSIS

[9]      The sole issue which arises in this appeal is whether the Board erred when it found that the invoices which were issued by the registered owner Pepper King Ltd. within the relevant period, (October 21, 1994 to October 21, 1997) amount to "use" of the trade-mark "VOLCANO" in association with hot pepper sauce. The body of the invoices all contained the words "Volcano Hot Pepper Sauce".

[10]      I accept the proposition that, in some circumstances, a trade-mark appearing on an invoice may be considered as "use" of the trade-mark.

[11]      This proposition is based on the definitions of "trade-mark" and "use" found in section 2 of the Act. Specifically, "use" is defined as follows:

"use", in relation to a trade-mark, means any use that by section 4 is deemed to be a use in association with wares or services;

« emploi » ou « usage » À l'égard d'une marque de commerce, tout emploi qui, selon l'article 4, est réputé un emploi en liaison avec des marchandises ou services.

[12]      Subsection 4(1), relating to wares, reads:

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.      [emphasis mine]

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.

[13]      In Gordon A. MacEachern Ltd. v. National Rubber Co. Ltd. (1963), 41 C.P.R. 149, a decision of Noël J. of the Exchequer Court in a trade-mark expungement case, held that invoices bearing the trade-mark is evidence of use falling within the words "or it is in any other manner so associated with the wares that notice of association is then given to the person to whom the property or possession is transferred".

[14]      In addition, and an important factor in this case, Gordon A. MacEachern, supra, stands for the proposition that the opening words of subsection 4(1) "if, at the time of the transfer of the property in or possession of the wares" applies to the three circumstances of use referred later in that subsection:

(1)      it is marked on the wares themselves;

(2)      or the packages in which they are distributed;

(3)      or it is in any other manner so associated.

[15]      The question in this case, therefore, is whether at the time of transfer of the hot pepper sauce from the manufacturer to the restaurants or to distributors, the invoices containing the trade-mark "VOLCANO" constituted notice of association i.e. of linkage, in other words, between the mark and the wares. This is a question of fact to be decided on the evidence adduced (Gordon A. MacEachern, supra), at page 157.

[16]      Counsel for the appellant points out Nellie Small's affidavit is silent on the following elements:

(1)      that any of the invoices were given to anyone at the same time as the transfer of the property or possession of the hot pepper sauce;

(2)      no evidence is present in that affidavit as to whether the wares were even shipped to the same physical place that the invoice is delivered;

(3)      there is no evidence to whom the invoice was given;

(4)      there is no evidence as to where the invoices were given or received by anyone;

(5)      there is no evidence as to whom the goods were physically delivered;

(6)      there is no evidence as to Pepper King's normal business practices or Pepper King's normal course of trade.

[17]      The Board itself acknowledged Nellie Small's affidavit did not state that the invoice accompanied the goods at the time of transfer. However, the Board held "unless there is clear evidence that the invoices do not accompany the wares, it is reasonable to assume that it would be normal business practice for the invoices to accompany the wares when the wares are sold to the customer".

[18]      With respect, I find the Board made two errors when it made this finding:

(1)      the Board shifted the evidentiary onus to the requestor when it is clear the entire burden remains with the registered owner in a section 45 Act proceeding;

(2)      the Board was not entitled to assume the invoices accompanied the goods at the time of transfer.

[19]      The special nature of a section 45 proceeding flows from the statute itself. The registered owner is the only person who is entitled to submit evidence of use and this by way of affidavit; the Registrar cannot receive any other evidence but may receive submissions from the person at whose request the section 45 notice was given; the registered owner's affidavit cannot be cross-examined upon and the requestor cannot file any evidence in this Court (see Marcus, carrying on business as Marcus & Associates v. Quaker Oats Co. of Canada, 20 C.P.R. (3d) 46 (F.C.A.) and Aerosol Fillers Inc. v. Plough (Canada) Ltd., 45 C.P.R. (2d) 194 at 198 where Cattanach J. said this:

By s. 44 (now section 45) the Registrar is not permitted to receive any evidence other than the affidavit and his decision is to be made on the material therein. The allegations are not subject to the crucible of cross-examination and contradictory affidavits are prohibited.

[20]      Based on the statutory provisions and the case law under section 45, my colleague Teitelbaum J. in 88766 Inc. Canada v. George Weston Ltd. (1987), 15 C.P.R. (3d) 260 at 266, held that the entire burden is with the registered owner to satisfy the Registrar that the trade-mark is in use in Canada.

[21]      The Federal Court of Appeal in Plough (Canada) Ltd. v. Aerosol Fillers Inc.(1980), 53 C.P.R. (2d) 62, made several comments about the nature of the affidavits responding to a section 45 notice. At page 66, Thurlow C.J., on behalf of the Court, said this:

What s-s. 44(1) [now section 45(1)] requires is an affidavit or statutory declaration not merely stating but "showing", that is to say, describing the use being made of the trade mark within the meaning of the definition of trade mark in s. 2 and of use in s. 4 of the Act.... The purpose is not merely to tell the Registrar that the registered owner does not want to give up the registration but to inform the Registrar in detail of the situation prevailing with respect to the use of the trade mark so that he, and the Court on appeal, can form an opinion and apply the substantive rule set out in s-s. 44(3) [now s-s. 45(3)]. There is no room for a dog in the manger attitude on the part of registered owners who may wish to hold on to a registration notwithstanding that the trade mark is no longer in use at all or not in use with respect to some of the wares in respect of which the mark is registered.

[22]      At page 67, the Chief Justice said this:

Further, the failure to describe what is referred to as use of the trade mark leaves in doubt the meaning of what is said. A deponent who does not describe what he refers to as use of the trade mark may well be saying in ordinary language that he is using the trade mark when in fact all that is happening is that it appears in advertising of the business of the registrant.

     . . .

The statute requires the facts to be shown and when that has been done the Registrar, and the Court in its turn, will determine whether the facts stated show use.

[23]      Here, I was struck by the fact the respondent Pepper King Ltd. did not file a further affidavit in this Court on appeal. It was aware of the Board's findings and, in particular, the statement made by the Board that the affiant does not specifically state that the invoice accompanied the hot pepper sauce wares at the time of transfer. In Aerosol Fillers, supra, the Chief Justice commented on the failure to file a further affidavit in this Court in the following terms at page 66:

Further, the fact that the appellant, in response to the notice of appeal from the Registrar's decision, did not file, as it might have, a further affidavit describing the use made of the trade-mark, if indeed there was any use of the relevant kind, lends support to the inference that in fact the trade-mark was not in use as a trade-mark, either in the period leading up to the notice or subsequently.

[24]      I am satisfied the registrant Pepper King Ltd. did not meet the onus compelled by section 45 to establish, in a clear and unambiguous way, that the invoices bearing the mark "VOLCANO" met the statutory requirements of subsection 4(1) of the Act, i.e. establishing that, at the time of transfer, the purchaser had notice of association between the mark and the wares.

[25]      For all of these reasons, this appeal is allowed, the decision of the Registrar is set aside and Registration Number TMR 415,846 will be expunged from the Register. No costs were requested and none are awarded.

    

    

     J U D G E

OTTAWA, ONTARIO

SEPTEMBER 28, 2000