Candrug Health Solutions Inc. v. Thorkelson, 2007 FC 411

 

Date: 20070419

Docket: T-318-06

Citation: 2007 FC 411

OTTAWA, Ontario, April 19, 2007

PRESENT:     The Honourable Max M. Teitelbaum

 

 

BETWEEN:

CANDRUG HEALTH SOLUTIONS INC.

and PHARMAWEST PHARMACY LTD.

Applicants

and

 

KRIS THORKELSON

Respondents

 

 

REASONS FOR JUDGMENT AND JUDGMENT

 

[1]               This is an application by Pharmawest Pharmacy Ltd. (“Pharmawest”) to have Canadian Trademark Registration Nos. TMA581,915 and TMA581,899, for trade-marks CANADA DRUGS and CANADADRUGS.COM, struck from the Register.

 

Facts

 

[2]               The trademarks TMA581,915 and TMA581,899, for trade-marks CANADA DRUGS and CANADADRUGS.COM, were issued to registration in the name of the Respondent, Kris Thorkelson, on May 20, 2003, for use in association with “operation of a drugstore, dispensary and pharmacy; online operation of a drugstore, dispensary and pharmacy”.

 

[3]               Candrug Health Solutions Ltd. (“Candrug”) commenced an application to have the registrations of Mr. Thorkelson struck from the Register, by way of Notice of Application issued November 4, 2006, under Federal Court File No. T-2001-05. Pharmawest commenced an identical application on the same bases of invalidity under Federal Court File T-318-06. By Order of the Court dated March 15, 2006, the proceedings in both court files were consolidated under Court File T-318-06. By Notice of Discontinuance, Candrug discontinued its application against the Respondent. Pharmawest is therefore the sole Applicant.

 

[4]               The alleged invalidity of the CANADA DRUGS Registrations rests on the following bases:

a)      Pursuant to paragraph 18(1)(a) of the Trade-marks Act, R.S.C. 1985, c.T-13 (the “Act”), the Trade-marks were not registrable at the date of registration because they were clearly descriptive or deceptively misdescriptive in the English language of the character or quality of the services in association with which the trade-marks are allegedly used, and their place of origin, contrary to section 12(1)(b) of the Act; and

b)      Pursuant to paragraph 18(1)(b) of the Act, because the Trademarks do not actually distinguish the services in association with which they are registered or used by the Respondent from the wares or services of others, including those of the Applicant, nor are they adapted to so distinguish such services. 

 

[5]               The Applicant, Pharmawest, has provided distance-based prescription services to international consumers by way of the Internet since 2002. It uses the tradenames “GetCanadianDrugs.com” and “GetCanadianDrugs”, as well as a design trade-mark incorporating the words “GetCanadianDrugs.com”.

 

[6]               The Respondent, Mr. Thorkelson, is a pharmacist, who, on February 28, 2001, acquired the domain name “CanadaDrugs.com” in order to provide essentially the same services as the Applicant. On or about March 19, 2001, Mr. Thorkelson filled the first order of pharmaceuticals ordered through the CanadaDrugs.com web site. The order was placed by email via the website to Mr. Thorkeson’s “The Prescription Shop” pharmacy. Currently, the Canada Drugs Business has over 250 employees including 15 pharmacists, and fills approximately 2500 prescriptions a day.

 

[7]               The pharmaceuticals that are supplied to customers of the Canada Drugs business do not all originate from Canada, and the pharmacies that actually dispense and ship the pharmaceuticals are located around the world, with only around 50% being located in Canada. Furthermore, approximately 95% of customers for the Canada Drugs business are located in the United States, and less than 5% of customers are Canadian.

 

[8]               On March 23, 2001 Mr. Thorkelson applied to register the trade-mark CANADADRUGS.COM, and, on May 15, 2001, he applied to register the trade-mark CANADA DRUGS, both in association with the “operation of a drugstore, dispensary and pharmacy”. During prosecution of these applications, the Registrar of Trade-Marks considered whether either of these trade-marks was clearly descriptive or deceptively misdescriptive of the services covered by the application, and contrary to s.12(1)(b) of the Act. After hearing argument from Mr. Thorkelson’s Trade-mark Agent, the Registrar issued both registrations on May 20, 2003. The words “Canada” and “drugs” are disclaimed apart from the trade-marks.

 

[9]               On June 18, 2001, the corporation that Mr. Thorkelson used to carry on the Canada Drugs Business, 2657733 Manitoba Ltd., changed its name to Canada Drugs Ltd., of which Mr. Thorkelson is the sole officer and director. After the name change, Canada Drugs Ltd. carried on the Canada Drugs Business and used the Canada Drugs Marks under an oral or implied license from Mr. Thorkelson. In response to an undertaking, Mr. Thorkelson indicated that there was no written license.

 

[10]           On or about February 27, 2003 the Canada Drugs Business was taken over by the CanadaDrugs.com Partnership (the “Partnership”). Also on February 27, 2003, the business name CanadaDrugs.com was registered to Canada Drugs Ltd. The business name CanadaDrugs.com was registered to the Partnership on February 11, 2005, claiming a date of first operation of February 1, 2003, and a written license effective May 21, 2003 (the day after the Canada Drugs Marks were registered) was executed by Mr. Thorkelson and the Partnership.

 

[11]           Canada Drugs Ltd. was the managing partner of the Partnership and, as sole officer and director of Canada Drugs Ltd., Mr. Thorkelson continued to exercise full control over all aspects of the Canada Drugs Business, including advertising, operation of the website, operation of a call centre, fulfillment of patient orders, and packaging and delivery of medicines to patients.

 

[12]           Effective January 1, 2006, there was a corporate reorganization of the Canada Drugs Business. Since that date, the entities controlled by Mr. Thorkelson that form the Canada Drugs Group of Companies have been as follows:

Entity                                                                Responsibility

5177077 Manitoba Ltd. (CanadaDrugs.com Customer Care)	Call centre
Thorkelson Consulting Ltd.	Management
CanadaDrugs.com LP	Pharmacy
5127173 Manitoba Ltd. (Canada Drugs IT)	Owns Canada Drug marks registrations
CanadaDrugs.com Logistics LP	Leasing

 

[13]           The Respondent assigned the Canada Drugs Trade-marks and Registrations to 5127173 Manitoba Ltd. (also known as Canada Drugs IT). The Canada Drugs Web Site, as it appeared on January 26, 2006, displayed the following trade-mark:

 

 

[14]           The website addresses “getcanadiandrugs.com” and “getcanadadrugs.com” were registered by Pharmawest on November 21, 2002. Since December 2002, Pharmawest has used these tradenames in association with the GetCanadianDrugs.com business. In February 2006, Pharmawest received a letter from the Canada Drugs business requesting that Pharmawest cease all use of the domain name “getcanadadrugs.com”. Canada Drugs IT has commenced proceedings in this Court for infringement of the CANADA DRUGS trade-marks, based on Pharmawest’s use of the domain name “getcanadadrugs.com”.

 

[15]           The Canadian Trademark Register contains other registrations and pending applications for trade-marks incorporating the words “Canada” or “drugs” in combination, such as CANADA WAY DRUGS, CANADA’S DRUG STORE, and SHOPPERS DRUG MART CANADA’S DRUG STORE. There also appears to be numerous entities operating online pharmacies who incorporate, in their business names, trade-names, domain names and/or trademarks, the words “Canada” or “Canadian” in combination with the words “drug” or “drugs”. The Respondent has actively discouraged the use of similar domain names against owners of the domain names “canadadrugs.ca”, “mycanadadrugs.com” and “wwwcanadadrugs.com”, all of which resulted in the transfer of the domain names to the Respondent.

 

[16]           The evidence shows that in 2005 alone there were 3,500,000 visits (during which a potential customer will browse through the site) to the CanadaDrugs.com website and that over $5,000,000 has been spent advertising and promoting the Canada Drugs Marks and Business, including pay-per-click advertising, as well as television, magazine, newspaper and radio advertising.

 

 

Issues

 

1)      Whether the CANADA DRUGS marks are clearly descriptive or deceptively misdescriptive  in the English language of the character or quality of the services in association with which the trade-marks are allegedly used, and their place of origin, contrary to s. 12(1)(b) of the Act.

 

2)      Whether the CANADA DRUGS trade-marks do not actually distinguish the services in association with which they are registered or used by the Respondent, for the wares or services of others.

 

 

Preliminary Matters

 

[17]           The Applicant seeks to introduce evidence, specifically that contained within the Brady and Rogers Affidavits, which is intended to show substantial use of the Trade-marks by other third parties in Canada, and which makes extensive use of historical web sites. In referencing historical websites, the affidavits reference an Internet archive known as the Way Back Machine, which is located on the Internet at www.archive.org. The archive purports to store historical web pages for future reference.

 

[18]           The Respondent submits that the evidence acquired by means of the Way Back Machine is prima facie inadmissible pursuant to Rule 81 of the Federal Courts Rules (SOR/98-106), which states the following:

 

 

 

[19]           The Respondent maintains that in order for a party to be entitled to rely on hearsay evidence, that party must adduce evidence that the hearsay statements are necessary and reliable.

 

[20]           Evidence adduced by means of the Way Back Machine was considered by Madam Justice Tremblay–Lamer in ITV Technologies Inc. v. WIC Television Ltd., 2003 FC 1056 at para. 14:

 

There was the initial concern that the documents being retrieved on the Internet at trial would not be an accurate representation of how they appeared at the relevant time period. Given that web sites are continually changing and evolving, a web site which appears on the Internet today would not necessarily look the same as it did for example, in 1997. In order to look into the past, both parties relied on the web site www.archive.org, which contains a digital library of Internet web sites. By using the Way Back Machine, the parties were able to access the web sites as they had existed at the relevant time period. I am satisfied that this web site is reliable, and that the Court could rely on its digital library for an accurate representation of the web sites at the relevant time period.

 

 

[21]           Justice Tremblay–Lamer stresses at paragraph 22 of the ITV decision that the mere existence of a web site does not show that it was accessed or known of by Canadians at the relevant time. I agree with the reasoning and conclusion of my colleague, that the evidence produced by the Way Back Machine indicating the state of websites in the past is generally reliable. However, even if it is accepted that the website existed at the time, there must be evidence to show that Canadian consumers had visited the website. As there is no such evidence before me, I can ascribe no weight to the Brady and Rogers Affidavits.

 

 

Standing

 

[22]           First, the Applicant must have standing to bring this application. Section 57 of the Act provides that the Federal Court has exclusive original jurisdiction, on the application of the Registrar or of any person interested, to order that any entry in the register be struck out or amended on the ground that at the date of the application the entry as it appears on the register does not accurately express or define the existing rights of the person appearing to be the registered owner of the mark. Under s. 2 of the Act, a “person interested” includes any person who is affected or reasonably apprehends that he may be affected by any entry in the register, or by any act or omission or contemplated act or omission under or contrary to this Act. The Respondent has brought infringement proceedings in this Court against the Applicant on the basis of the CANADA DRUGS Trade-marks and Registrations. Because of this, the Applicant is affected by the Respondent’s entry in the Register, and therefore I am satisfied that the Applicant is a “person interested” within the meaning of s. 57 of the Act.

 

1)      Whether the CANADA DRUGS marks are clearly descriptive or deceptively misdescriptive in the English language of the character or quality of the services in association with which the trade-marks are allegedly used, and their place of origin, contrary to s. 12(1)(b) of the Act.

 

[23]           The Applicant seeks to invalidate the trademark by the action of subsections 18(a) and (b) of the Act. Section 18 sets out the circumstances under which a trade-mark registration may be found invalid:

 

 

 

[24]           Registrability is determined in part by s. 12 of the Act. If the trade-mark was not registrable at the date of registration then it will fall afoul of s. 18, and may be expunged from the Register by order of this Court under s. 57 of the Act. The applicant challenges the registrability based on s.12, the relevant portions of which read as follows:

 

 

 

[25]           By the action of subsection 12(2), a mark may retain its registrability, even if it falls afoul of 12(1)(b), if it has become distinctive at the date of filing an application for registration. Section 13 has to do with distinguishing guises and is not relevant in the present application.

 

[26]           The purpose of the prohibition in s. 12(1)(b) is to prevent any single trader from monopolizing a term that is clearly descriptive or common to the trade, and thereby place legitimate competitors at an undue disadvantage (General Motors v. Bellows, [1949] S.C.R. 678, 10 C.P.R. 101 at 114.

 

[27]           For a trade-mark to be objectionable as descriptive under s. 12(1)(b), the word must be clearly descriptive, and not merely suggestive and, for a word to be clearly descriptive, it must be material to the composition of the goods or product (Provenzano v. Register of Trade-marks (1977), 37 C.P.R. (2d) 189 (F.C.T.D.)). Provenzano also teaches that to be “misdescriptive”, the word must somehow relate to the composition of the goods and falsely or erroneously describe something which is material or purport to qualify something as material to the composition of the goods when in fact it is not.

 

[28]           Madam Justice Danièle Tremblay-Lamer, in ITV Technologies Inc. v. WIC Television Ltd., 2003 FC 1056, summarizes the test for finding a mark to be clearly descriptive under s. 12(1)(b) of the Act:

 

[67]            With regard to ITV Technologies' first ground, in order for a mark to be clearly descriptive, pursuant to paragraph 12(1)(b), it must be more than merely suggestive of the character or quality of the wares or services in association with which it is used or proposed to be used. The descriptive character must go to the material composition of the goods or services or refer to an obvious intrinsic quality of the goods or services which are the subject of the trade mark, such as a feature, trait or characteristic belonging to the product in itself (Provenzano v. Registrar of Trade-marks (1977), 37 C.P.R. (2d) 189).

…

[71]            The test for determining whether a trade-mark infringes paragraph 12(1)(b) is the immediate or first impression formed. The determination must not be based on research into or critical analysis of the meaning of the words (Oshawa Group Ltd. v. Registrar of Trade Marks, [1981] 2 F.C. 18). The word "clearly" in paragraph 12(1)(b) is not synonymous with accurately, but rather means easy to understand, self-evident, or plain (Drackett Co. of Canada v. American Home Products Corp., (1968), 55 C.P.R. 29). The impression must also be assessed from the perspective of the ordinary, everyday purchaser or user of the wares or services (Wool Bureau of Canada Ltd. v. Registrar of Trade-marks (1978), 40 C.P.R. (2d) 25).    The perspective of experts or people with special knowledge is not representative of the average ordinary purchaser (Consorzio del Prosciutto di Parma v. Maple Leaf Meats Inc., 2001 CanLII 22030 (F.C.), [2001] 2 F.C. 536).

 

 

 

[29]           In light of the presumption of validity of a registered trade-mark, the onus in expungement proceedings to show that the mark is invalid lies on the party attacking the registration, in this case the Applicant, and the invalidity must be shown on a balance of probabilities (Havana House Cigar & Tobacco Merchants Ltd. v. Skyway Cigar Store, 1998 CanLII 7773 (F.C.) at para. 43). According to General Motors of Canada v. Décarie Motors Inc. (C.A.), [2001] 1 F.C. 665 at para. 31, the trial judge “exercises an original jurisdiction. He does not sit in appeal or in judicial review of the Registrar's decision to register the trade-mark. He must approach the issues before him with a fresh mind”.

 

[30]           Additionally, Justice Luc Martineau stated in Neptune S.A. v. Canada (Attorney General), 2003 FCT 715, that the decision-maker must not only consider the evidence at his or her disposal, but also apply his or her common sense in the assessment of the facts. The decision that the mark is either clearly descriptive or deceptively misdescriptive is based on his initial impression, and in light of the product or service in question. According to Mr. P’s Mastertune Ignition Services Ltd. V. Tune Masters (1984), 82 C.P.R. (2d) 128 (F.C.T.D.), the words should be considered in association with the wares or services, and the decision-maker should ascertain what those words in the context in which they are used would represent to the public at large who will see those words.

 

[31]           The mark as a whole must be considered. Although individual words might be clearly descriptive, the mark as a whole may not be objectionable if the mark comprises words that do not go together in a natural way. A unique combination of individually descriptive words may be considered a “coined” phrase, and found to be registrable (Pizza Pizza v. Registrar of Trade Marks (1982), 67 C.P.R. (2d) 202 (F.C.T.D.)).

 

 

“Clearly Descriptive”

 

[32]           The Applicant Pharmawest submits that the words “Canada”, “drugs”, and “.com” all have readily discernible meanings as “a country”, “medicinal substances”, and a “commercial organization”, respectively. Pharmawest argues further that the ordinary consumer, when viewing the CANADA DRUGS mark on the whole, would attribute such common meaning in the context of the Respondent’s services, namely, the online operation of a drugstore based in Canada. It adds that no other meaning of these words is even remotely likely to be attributed to such services.

 

[33]           Pharmawest also maintains that, while the phrase “Canada Drugs” is grammatically incorrect as opposed to “Canadian Drugs”, this does not render the trade-marks registrable, as the combination still clearly describes an intrinsic characteristic and place of origin for the Respondent’s services. Moreover, Canada is known as a source of inexpensive pharmaceuticals, in comparison with the United States, and, according to the Applicant, this reputation enhances the meaning that would be attributed by the ordinary consumer to the CANADA DRUGS trademarks. Pharmawest argues that to allow registration of the phrases “Canada Drugs” and “Canadadrugs.com” would rob other pharmacy businesses in Canada of the ability to properly describe the origin of the pharmaceuticals sold through such establishments, thereby placing legitimate competition at an undue disadvantage.

 

[34]           Pharmawest cites examples of jurisprudence in which seemingly grammatically incorrect combinations of two descriptive words have been held to be clearly descriptive:

·        TUNE MASTER for engine tune-up centres (Mastertune)

·        STUDENT LIFE for group life insurance for students (Ingle v. Registrar of Trade Marks (1973), 12 C.P.R. (2d) 75 (F.C.T.D))

·        SUPERWASH for yarns or fabrics (Wool Bureau of Canada Ltd. V. Registrar of Trade-marks (1987), 40 C.P.R. (2d) 25 (F.C.T.D.))

 

 

[35]           The Respondent, on the other hand, argues that CANADA DRUGS mark is merely suggestive of the Respondent’s services, and not clearly descriptive. He maintains the registration of CANADA DRUGS does not place legitimate competitors at an undue disadvantage because the individual elements “Canada”, “drugs” and “.com” have been disclaimed, and are therefore free for use by others. The exclusive right only extends to the specific combination of words CANADA DRUGS, and CANADADRUGS.COM.

 

[36]           Furthermore, the Respondent submits that the marks do not, as a matter of first impression, plainly or evidently describe the respondent’s services to the average consumer. Firstly, he argues that the nature of the services would not be readily apparent as a matter of first impression, since the consumer might assume that the Respondent offers informational services relating to drugs, or is engaged in the manufacture of drugs, drug marketing, or drug merchandising, for example. According to the Respondent, it follows that since “drugs” could connote a variety of drug-related services, it is not clearly descriptive. Similarly, the word “Canada” is capable of multiple meanings. Secondly, since “Canada drugs” is not a grammatically correct phrase, it would, in the Respondent’s opinion, be viewed by the ordinary consumer as a coined phrase, and therefore also as a brand identifier, such as was found to be the case in Pizza Pizza.

 

[37]           The Respondent cites the following cases as those within which a suggestive mark is sufficiently capable of distinguishing the wares or services of the owner so as to be registrable:

• KOOL ONE for beer (Provenzano, supra)
• CALLING CARD for telecommunication services charged to authorized account numbers (Unitel Communications Inc. v. Bell Canada (1995), 61 C.P.R. (3d) 12 (F.C.T.D.))

 

 

[38]           The ordinary, everyday consumer in this case is an individual in Canada who purchases pharmaceuticals over the Internet. I note that there is no direct evidence, survey or otherwise, going to the first impression of the relevant consumers. However, this is not determinative, since past jurisprudence shows several cases where marks were found to be clearly descriptive without any consumer or survey evidence in the record (Mastertune, A. Lassonde Inc. v. Canada (Registrar of Trade-Marks), (2000), 180 F.T.R. 177, Wool Bureau of Canada). Notwithstanding that the phrase CANADA DRUGS is not grammatically, correct, I am not convinced that it would seem like a “coined phrase” to the ordinary consumer.

 

[39]           Furthermore, the meaning of “drugs”, in the eyes of the ordinary, everyday consumer would not mean an organization providing information relating to drugs, or drug marketing or merchandising, as the Respondent has suggested, since the ordinary consumer in this case would not generally be familiar with drug marketing or merchandizing. A pharmaceuticals manufacturer would typically identify itself using the term “pharmaceuticals” and not “drugs”. In considering the product or service, I find on a balance of probabilities that, as a matter of first impression and as a matter of common sense, the ordinary consumer would consider the descriptive character of the marks to go to the material composition of the services; meaning that “Canada Drugs” would indicate pharmaceuticals from Canada to the ordinary consumer. In concluding that the Mark is clearly descriptive, I am conscious of the decision in Mastertune, which emphasizes the importance of not critically analyzing alternate implications of words but rather looking at the words in association with the service from the perspective of the public at large.

 

[40]           The purpose of the prohibition in s. 12(1)(b) is to prevent any single trader from monopolizing a term that is clearly descriptive or common to the trade, and thereby place legitimate competitors at an undue disadvantage. In light of the characteristics embodied by the ordinary consumer, we must consider the importance of the phrase “Canada Drugs” with respect to Internet search engines and search terms, which would be a primary method of finding products online. Considering that much of the Internet is centred around the American market, a consumer trying to find a pharmacy in Canada might very well type “Canada” , “Canada” and “drugs” are two generic terms that would be used by the ordinary consumer identified in this case to locate pharmacies in Canada on the Internet. As the evidence shows that there are many businesses which would match this description, I am of the opinion that permitting this combination of words common to the trade to be trademarked would result in an undue disadvantage for legitimate competitors. Moreover, the evidence shows that the terms “Canada” and “drugs” are used by the press in describing pharmaceuticals from Canada. For example, CNN.com carried a story on January 19, 2004, the headline of which reads “FDA: U.S. generics better buy than Canada drugs”. In the Chicago Sun-Times, a headline reads “Blagojevich asks Bush for help with Canada drugs”, and on Forbes.com a story dated February 2, 2004, carries the headline “U.S. FDA turns up heat in battle over Canada drugs”. None of these stories refer to the Respondent Canada Drugs Ltd, nor do they use “Canada” and “drugs” as a trade-mark. I note that while the press clippings in evidence are products of U.S. media, the sources, particularly those online, would have been available in Canada. I come to the same conclusion in respect of CANADADRUGS.COM. The terminator “.com” is so common in Internet-oriented trade-marks that it has lost any meaning it once had. Without this, the remainder is merely a conflation of “Canada” and “drugs”.

 

 

“Deceptively Misdescriptive”

 

[41]           The purpose of denying the registration of deceptively misdescriptive trade-marks is to prevent the public from being misled (Atlantic Promotions Inc. v. Registrar of Trade-marks (1996), 2 C.P.R. (3d) 183 at 186 (F.C.T.D)). Deception is a key element in this. To be found deceptively misdescriptive, a mark must first be found to be descriptive so as to suggest that the wares or service are or contain something that is not the case (Atlantic, supra). Provenzano teaches that the word must also relate to the composition of the goods and falsely or erroneously describe something which is material or purport to qualify something as material to the composition of the goods when in fact it is not.

 

[42]           Pharmawest submits that the Respondent’s trade-marks clearly describe services relating to pharmaceuticals that originate from Canada. The evidence shows that even though the orders are taken in Canada, the pharmaceuticals do not all originate in Canada, nor are the dispensing facilities all located in Canada. The Respondent counters that, since the trade-marks are not clearly descriptive, they cannot be found to be deceptively misdescriptive.

 

[43]           While section 26(1)(c) of the Unfair Competition Act, R.S.C. 1952, c. 274, used the expression “clearly misdescriptive”, when the provision was incorporated into the Trade-marks Act the adjective modifying descriptive was changed to “deceptively”. The jurisprudence cited above shows that to be “deceptively misdescriptive”, a trade-mark must be descriptive, and must incorporate an element of deception. Concerning the CANADA DRUGS Mark, the evidence shows that the pharmaceuticals used to fill the prescriptions are manufactured all around the world, and not just in Canada. In itself, this may not be sufficient to find that the Mark is “deceptively misdescriptive” because the general public would know that some pharmaceuticals being sold were produced by American or European corporations. However, in light of the fact that the prescriptions are not always filled by a Canadian pharmacy, I find that the ordinary consumer would be deceived as to the product. Of importance here is the recognition that Canadian consumers would trust prescription fulfillment from a Canadian pharmacy more than that from other countries. The only consistent connection with Canada, besides the mark CANADA DRUGS, seems to be the Respondent’s office where orders are processed. On a balance of probabilities, the ordinary consumer would think that there is a greater connection to Canada than merely the location of the office, such as the origin of the drugs themselves or, at a minimum, the dispensing services. As a result, I find that CANADA DRUGS Mark is “deceptively misdescriptive”. The same reasoning applies to CANADADRUGS.COM for the above-mentioned reason.

 

 

2)      Whether the CANADA DRUGS trade-marks do not actually distinguish the services in association with which they are registered or used by the Respondent, for the wares or services of others.

 

[44]           Distinctiveness is an essential characteristic to a valid trademark. “Distinctive” is defined in s. 2 of the Act as meaning “a trade-mark that 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 to distinguish them”. In considering whether a trade-mark is distinctive or not, it is appropriate to examine the first impression of the relevant consumers, who are in this case individuals in Canada purchasing pharmaceuticals over the Internet. A mark that otherwise is found to be “clearly descriptive” or “deceptively misdescriptive” under s. 12(1)(b) of the Act may be saved from unregistrability and consequent expungement by s. 12(2), which is met where the mark has been so used in Canada as to have become distinctive at the date of filing an application for its registration.

 

[45]           Alternatively, a trademark may be challenged under s.18(b), where a registration may be found invalid where a trademark is not disctinctive at the time proceedings bringing the validity of the registration into question are commenced. In light of my conclusion in respect of s. 12(2), it is not necessary for me to consider this challenge.

 

[46]           When a trademark does not have inherent distinctiveness, which is present where a mark has a unique or invented name such that it could only refer to one thing, it may still acquire distinctiveness through continual use in the marketplace. However, to establish that distinctiveness has been acquired, it must be shown that the mark has become known to consumers as originating from one particular source (Tommy Hilfiger Licensing Inc. v. Produits de Qualité I.M.D. Inc., 2005 FC 10 at para. 53).

 

[47]           Justice Barry Strayer discussed the operation of s. 12(2) of the Act in Carling Breweries Ltd. v. Molson Companies Ltd., 1 C.P.R. (3d) 191 at pp. 196-197, as follows:

 

That subsection creates an exception to the general rule, laid down in para. 12(1)(b) that, as in this case, a mark descriptive of the place of origin of the product is prima facie not registrable. As in any case where a party wishes to take advantage of an exception in the law, the onus is on him to show that he comes within it.

…

There are various authorities to the effect that where one must prove that a normally descriptive word has acquired a secondary meaning so as to make it descriptive of a particular product, the onus is indeed heavy: see, for example, Canadian Shredded Wheat Co. v. Kellogg Co. et al., [1938] 2 D.L.R. 145 at pp. 151-2, 55 R.C.P. 125 at p. 142 (J.C.P.C.); J.H. Munro Ltd. v. Neaman Fur Co. Ltd. (1946), 6 C.P.R. 97 at p. 113, [1947] 1 D.L.R. 868, 5 Fox Pat. C. 194 at p. 208 (Ex. Ct.).

 

 

[48]           Given that the Applicant Pharmawest has demonstrated to my satisfaction that the Trademarks are “clearly descriptive” and “deceptively misdescriptive”, the onus is now on the Respondent to show that the Mark is saved by the exception contained in s. 12(2) of the Act. The relevant dates are those of the registration applications, in this case March 23, 2001 for CANADADRUGS.COM and May 15, 2001 for CANADA DRUGS.

 

[49]           The Respondent provides evidence that he has ensured that the Canada Drugs Marks have been displayed on the “www.canadadrugs.com” website; on relevant invoices and packaging materials; on letterhead, stationery and business cards; on the signage of the buildings where the business is carried on; and on promotional items such as T-shirts, coffee mugs, pill counters and refrigerator magnets. Since April of 2001, the website home page has always displayed both Canada Drugs Ltd. Marks.

 

[50]           The Canada Drugs business contends that it employs over 250 employees including 15 pharmacists, carries on business with an established clientele of more than 150,000 patients, offering 2700 prescription products, and fills approximately 2500 prescription per day. During 2005 there were roughly 3,500,000 visits to the website, of which the statistics show that approximately 12.6% are from a Canadian top-level domain (with a “.ca” suffix). Over $5,000,000 had been spent advertising and promoting the Canada Drugs Marks and Business, including pay-per-click advertising, as well as television, magazine, newspaper and radio advertising.

 

[51]           Considering that the website was only accessible, at the earliest, on February 28, 2001, and that the evidence shows the bulk of the advertising targeted a U.S. audience, it is difficult to imagine that Canadian consumers would have been sufficiently familiar with the Marks such that they acquired distinctiveness in the 2-3 months between the inception of the website and the applications for registration. In any event, the Respondent provides little, if any, evidence to show that the trademarks had acquired distinctiveness by May 15, 2001. As a result, I find the Respondent has not discharged his onus to take advantage of the exception in s. 12(2).

 

 

Conclusion

 

[52]           I have found the trade-marks CANADA DRUGS and CANADADRUGS.COM to be both “clearly descriptive” and “deceptively misdescriptive” under s. 12(1)(b) of the Act. The Respondent has not discharged his onus under s. 12(2) to show the Marks have acquired distinctiveness as of the registration application, and consequently the Marks are not registrable. By s. 18(1)(a), the Trademarks are invalid, and I therefore order that they be expunged from the Register, pursuant to s. 57 of the Act since the Register does not accurately express or define the existing rights of the Registrant with respect to this Mark. As such, the Marks will be expunged from the Register.

 

 

JUDGMENT

 

            For these reasons, the Canadian Trademark Registration Nos TMA581,915 and TMA581,899 for trade-marks CANADA DRUGS and CANADADRUGS.COM shall be struck from the Trademark Register, the whole with costs.

 

 

 

“Max M. Teitelbaum”

FEDERAL COURT

 

SOLICITORS OF RECORD

 

 

 

DOCKET:                                          T-318-06

 

STYLE OF CAUSE:                          PHARMAWEST PHARMACY v.

                                                            KRIS THORKELSON

 

PLACE OF HEARING:                    Vancouver, BC

 

DATE OF HEARING:                      March 15, 2007

 

REASONS FOR JUDGMENT:       TEITELBAUM D.J.

 

DATED:                                             April 19, 2007

 

APPEARANCES:

 

Mr.Timothy Lo	FOR THE APPLICANT
Mr. Mark Robbins	FOR THE RESPONDENT

 

SOLICITORS OF RECORD:

 

Mr. Timothy Lo SMART & BIGGAR Box 11560 Vancouver Centre 2200 – 650 West Georgia St. Vancouver, BC V6B 4N8	FOR THE APPLICANT
Mr. Mark Robbins BERESKIN & PARR Scotia Plaza, 40th Floor 40 King Street West Toronto, ON M5H3Y2	FOR THE RESPONDENT