Docket:
T-1932-11
Citation: 2013 FC 1034
Ottawa, Ontario, October
11, 2013
PRESENT:
The Honourable Mr. Justice
O’Reilly
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BETWEEN:
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HORTILUX SCHRÉDER B.V.
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Applicant
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AND
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IWASAKI ELECTRIC CO., LTD.
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Respondent
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REASONS FOR JUDGMENT AND JUDGMENT
I. Overview
[1]
Both parties have sought to register the
trade-mark “Hortilux” in association with lighting equipment used in the
horticultural industry. Each party has also opposed efforts by the other to
register that mark.
[2]
In the first set of proceedings, the respondent,
Iwasaki, succeeded in registering the “Hortilux” mark (over the objections of
the applicant, Hortilux Schréder) before the Trade-marks Opposition Board.
However, on judicial review, Justice James Russell overturned the Board’s
decision on the basis that Hortilux Schréder had used the mark first (Hortilux Schréder BV v Iwasaki Electric Co Ltd, 2011 FC 967, at paras 54, 89,
aff’d Iwasaki Electric Co Ltd v Hortilux Schréder BV, 2012 FCA).
[3]
In the second set of proceedings, also beginning
in 2002, Hortilux Schréder applied to register “Hortilux”, claiming to have used
that mark since August 1997. Iwasaki opposed Hortilux Schréder’s application,
arguing that, contrary to the information in its application, Hortilux Schréder
had not actually used the mark in Canada during the relevant period. Further,
Iwasaki contended that the mark did not meet the statutory requirement of
distinctiveness because it was confusing when compared with Iwasaki’s mark.
[4]
In 2011, the Board refused Hortilux Schréder’s
application for two reasons. First, it concluded that Hortilux Schréder’s use
of its corporate name did not constitute use of “Hortilux” alone. Second, both
parties were seeking to use the same mark in respect of similar wares,
essentially in the same industry; therefore, “Hortilux” was not distinctive.
[5]
Hortilux Schréder now seeks judicial review of
the Board’s decision refusing to register the mark, maintaining that the Board erred
in both of its conclusions. Hortilux Schréder has tendered new evidence that it
says would have materially affected the Board’s findings and asks me to come to
different conclusions based on all of the evidence. Alternatively, it asks me
find the Board’s decision unreasonable. Iwasaki has also filed new evidence.
[6]
I find that Hortilux Schréder’s new evidence
would not have materially affected the Board’s decision. That evidence does not
help prove that Hortilux Schréder used the trade-mark “Hortilux” during the
relevant period, or that the mark is distinctive. Further, the Board’s
conclusions constituted defensible outcomes based on the evidence before it and
the law. They were, therefore, reasonable.
[7]
The issues are:
1. Would
the new evidence have materially affected the Board’s decision?
2. Did the Board err in finding that Hortilux Schréder’s
claimed period of use was incorrect?
3. Did the Board err in finding that Hortilux Schréder’s
trade-mark was not distinctive?
II. The
Board’s Decision
1.
The Evidence before the Board
(a) Hortilux Schréder’s evidence
[8]
Hortilux Schréder argued before the Board that
its use of “Hortilux Schréder” constituted use of “Hortilux”. Consumers would
likely regard “Schréder” merely as a surname.
(i) The Dickinson affidavit
[9]
Mr George Dickinson, a sales representative with
Hortilux Schréder’s Canadian subsidiary, PL Light Systems Canada Inc, explained
that Hortilux Schréder has licensed PL Light to use the trade-mark “Hortilux”. He
pointed out that Hortilux Schréder only sells products to commercial greenhouses
or dealers, either directly or through PL Light. Unlike Iwasaki, neither
Hortilux Schréder nor PL Light sells wares to retailers or consumers.
[10]
Mr Dickinson confirmed that Hortilux BV changed
its name to Hortilux Schréder in 1997. He provided a sample of the packing tape
that accompanies products sold in Canada:
[11]
The tape displays the company’s location in the Netherlands, its telephone number, and an email address including the word “hortilux”
alone. Mr Dickinson also provided samples of pages from the company’s website
to show that it is known by the name “Hortilux.”
(ii) The MacIsaac affidavit
[12]
Ms Gwendoline MacIsaac, a student-at-law in the
office of Hortilux Schréder’s agent, provided evidence about the prevalence of
surnames in Canada that resemble “Schréder”. “Schreder” appears only 14 times
in the Canada411 directory. “Schréder” (with an accent) did not appear at all.
Ms MacIsaac also searched for surnames beginning with “Schre” and ending with
“er”, “ers” or “dl” and found 217 individuals or couples. For the similar
family name “Schroeder”, she found 1,591 listings, and a further 171 listings
for “Schroder”.
(b) Iwasaki’s
evidence
[13]
Iwasaki argued before the Board that Hortilux
Schréder had not used “Hortilux” since December 1997, when the company changed
its name from Hortilux BV. Further, it contended that “Hortilux” was not
distinctive, since Iwasaki also uses that mark in association with similar
wares in the same industry.
(i) The
Ward affidavit
[14]
Mr Keith Ward, president and COO of Iwasaki’s US subsidiary, EYE Lighting International of North America Inc, explained that his company is
licensed to sell Iwasaki lamps that display the “Hortilux” trade-mark. It has
done so at least since December 31, 1997. The word “Hortilux” is prominently
displayed on labels, packing materials, and promotional literature, usually
preceded by the word “EYE”.
[15]
EYE Lighting also distributes Iwasaki products
in Canada through its distributor, Standard Products Inc. Mr Ward provided
sales figures for Canada during the years 1997 to 2007, promotional and
marketing expenses from 2003 to 2007, as well as samples of marketing
materials.
(ii) The
Burkhout affidavit
[16]
Mr Peter Burkhout, former General Manager of PL
Light, Hortilux Schréder’s Canadian subsidiary, stated that he became aware of
Iwasaki’s Hortilux products in late 1999. PL Light’s US distributors had been
purchasing Iwasaki products even before that. PL Light purchased Iwasaki
“Hortilux” products from Standard Products Inc beginning in 2000 and
subsequently sold them in Canada. Managers at Hortilux Schréder were aware of
this arrangement.
(iii) The
Thomas affidavit
[17]
Mr Len Thomas, Marketing Manager for EYE
Lighting, explained how Iwasaki’s Hortilux products were developed and advertised
from 1997 to 2001. In the summer of 1997, he was involved in the creation of
the monogram that would later appear on those products. The artwork was
completed in the fall of 1997 and began to appear on Iwasaki products soon
thereafter. The monogram used the words “EYE Hortilux”. The first sale of
products bearing that mark in the normal course of trade took place on December
31, 1997. Thereafter, the same mark appeared on technical literature and
promotional materials. Beginning in 1999, the monogram reduced the prominence
of the word “EYE”; the word “Hortilux” became the dominant element. Since 2005,
Iwasaki products have been promoted on the website eyehortilux.com.
2. The
Board’s Conclusions
[18]
The Board first considered whether Hortilux
Schréder’s claim to have used the trade-mark “Hortilux” from August 1997 until
the date of its application (May 31, 2002) was accurate. Applicants have a
statutory obligation to include in their applications the date from which they
have “used the trade-mark in association with each of the general classes of
wares or services described in the application” (Trade-marks Act, RSC
1985, c T-13, s 30(b); provisions cited are set out in an Annex).
[19]
The Board noted that Hortilux Schréder had
changed its corporate name from Hortilux BV to Hortilux Schréder BV in December
1997. Almost all of its usage of “Hortilux” from that point on was in
connection with “Schréder”. The Board concluded that the addition of “Schréder”
was not an unimportant appendage to “Hortilux.” The average consumer would be
unlikely to regard “Schréder” merely as a surname. As such, use of “Hortilux
Schréder” did not constitute use of “Hortilux” alone. Therefore, in its
application, Hortilux Schréder had incorrectly claimed to have used “Hortilux”
since 1997.
[20]
On the issue of distinctiveness, the Board
considered whether Iwasaki’s “Hortilux” mark was known in Canada to some extent as of the date of its statement of opposition (March 26, 2007). It concluded
that Iwasaki’s use of the mark had generated sufficient awareness to put the
burden on Hortilux Schréder to prove lack of confusion. While Justice Russell
had already found confusion in the earlier proceeding, Hortilux Schréder
pointed out that the differences in the parties’ channels of trade were not in issue
before Justice Russell. Hortilux Schréder argued that it operated mainly in the
commercial horticultural trade, whereas Iwasaki targeted the retail market.
Nevertheless, the Board found that the marks were identical and both parties
sold lighting products for horticultural use. Therefore, as Hortilux Schréder
had not proved that its mark was not confusing, the mark did not meet the
statutory requirement of distinctiveness (s 38(2)(d)).
III. Issue
One – Would the new evidence have materially affected the Board’s decision?
[21]
On appeals from decisions of the Board, the
parties may tender new evidence (s 56(5)). If I find that the new evidence
would have materially affected the Board’s decision, I must then consider the
evidence as a whole and determine whether Hortilux Schréder can register its
mark (Molson Breweries v John Labatt Ltd, [2000] FCJ No 159 (FCA), at
para 51). Otherwise, I must defer to the Board’s decision and overturn it only
if it was unreasonable.
[22]
In my view, the new evidence would not have
materially affected the Board’s decision.
1. Hortilux
Schréder’s New Evidence
(a) The
Brok affidavit and cross-examination
[23]
Mr Marco Brok began working for Hortilux
Schréder in 1997 and became manager of research and development in 2001. He
explained that Hortilux Schréder’s Canadian subsidiary, PL Light, has imported
its wares since 1997. He attached invoices between Hortilux BV (the predecessor
to Hortilux Schréder) and PL Light dated between August and October 1997. The
invoices display the name “Hortilux” in capital letters:
[24]
Mr Brok also provided schematic drawings
prepared in July 1997 by Hortilux BV for its Canadian subsidiary PL Light that
also showed the company name as “Hortilux” in capital letters.
[25]
On cross-examination, Mr Brok conceded that he
had not seen the invoices before swearing his affidavit and could not be sure
where they came from. He also stated that, as of December 3, 1997, all company
documentation – drawings, packing materials, invoices, stationery – would have been
changed from showing the company name as “Hortilux” to the new name “Hortilux
Schréder”.
[26]
Mr Brok stated that Hortilux Schréder’s
customers often refer to the company and its wares as “Hortilux”. In addition,
the company’s website, since 1998, has been hortilux.com. Between 2004 and
2009, the website referred to the company and its products as “Hortilux”,
although the web pages make clear that the company is “Hortilux Schréder”. “Schréder”
is described as a “partner”. On cross-examination, Mr Brok explained that Canadian
customers looking for hortilux.com are directed to the company’s main website,
which is hortilux.nl. From there, North American customers are directed to the
PL Light website.
[27]
Mr Brok also confirmed on cross-examination that
PL Light buys Iwasaki Hortilux products through Iwasaki’s US subsidiary, EYE
Lighting.
(b) The
de Gier, Westerhoff, and Van Wingerden affidavits
[28]
Mr Edwin de Gier, Mr Kendrick Westerhoff, and Mr
Johannes Van Wingerden, all customers of Hortilux Schréder, confirmed that its
wares always bear the name “Hortilux Schréder”. However, they refer to Hortilux
Schréder and its products as “Hortilux”.
2. Iwasaki’s
New Evidence
(a) The
Gates affidavit
[29]
Ms Anne Gates, a vice-president of EYE Lighting,
provided figures for sales of Iwasaki’s Hortilux products in Canada from 2000 to 2007. Sales ranged from approximately $1.5 million (2005) to $5.2
million (2001). She also gave details of EYE Lighting’s promotional and
advertising expenses, which ranged from approximately $600,000 (2000) to $1.3
million (2007). Her evidence expanded on the evidence provided in the Ward
affidavit.
(b) The
Anderson affidavit and cross-examination
[30]
Mr Mike Anderson, Director of Specialty Products
for EYE Lighting, described the discussions between his company and PL Light
regarding sales of Iwasaki Hortilux products to PL Light, beginning in 2000. In
fact, PL Light displayed Iwasaki’s Hortilux products at its booth at a
trade-show in 2000.
[31]
On cross-examination, he admitted that he had no
knowledge of any actual orders placed, or resales by, PL Light.
(c) The
Nathaniel affidavit and cross-examination
[32]
Mr David Nathaniel, CEO and President of EYE
Lighting’s Canadian distributor, Standard Products Inc, provided figures for
sales of Iwasaki’s Hortilux products to PL Light from 2000 to 2005. Sales
ranged from $18,000 (2005) to $540,000 (2002).
[33]
On cross-examination, Mr Nathaniel conceded that
he was not personally aware of sales of Iwasaki products by PL Light.
3. Would
the New Evidence Have Materially Affected the Board’s Decision?
[34]
Hortilux Schréder argues that the evidence
tendered on this appeal would have materially affected the Board’s decision. It
points out that the Board specifically noted that some evidence - namely, the
Brok affidavit - had been presented to Justice Russell in the earlier
proceeding but had not been filed before it. Justice Russell found that the
Brok affidavit showed Hortilux Schréder’s “continuing use of the trade-marks
and trade-names HORTILUX and HORTILUX SCHREDER” (at para 96). He mentioned the
company’s web pages, as well as the evidence from customers that they refer to
the company and its wares simply as “Hortilux”. Based partly on that evidence,
Justice Russell found that Hortilux Schréder had not abandoned its claimed
mark. That evidence was not before the Board but is now before me.
[35]
I cannot agree with Hortilux Schréder’s
submission that this evidence would have materially affected the Board’s
decision. It is important to make clear that the issue before Justice Russell (date
of first use and non-abandonment) is not the same as the issue before me
(actual use during the relevant time period).
[36]
Justice Russell found that Hortilux Schréder had
established use of the trade-mark “Hortilux” before Iwasaki used it (ie before
December 31, 1997). Clearly, before it changed its name in December 1997,
Hortilux Schréder used the trade-mark “Hortilux”. As before me, the invoices and
schematic drawings Justice Russell reviewed showed use of the mark prior to
December 1997. The question is whether it was used thereafter.
[37]
Justice Russell did not have to consider whether
Hortilux Schréder actually used the mark “Hortilux” alone from 1997 to 2002.
Rather, he had to decide whether Hortilux Schréder had deliberately abandoned
the “Hortilux” mark. He found no such intention. Further, he found that the
company’s web pages, and some of its customers, referred to the company as
“Hortilux”. This supported Hortilux Schréder’s claim that it did not
intentionally abandon the “Hortilux” mark.
[38]
The issue before me, though, is whether that same
evidence – the web pages and customer testimonials – proves actual use of the
“Hortilux” mark. In this context, “use” means use in association with the
company’s wares (s 2). 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” (s 4(1)).
[39]
In my view, the web pages and testimonials do
not show that “Hortilux” was used in association with Hortilux Schréder’s
wares. In fact, all the evidence before me indicates that, as of December 1997,
all of Hortilux Schréder’s wares were accompanied by documentation showing the
trade-mark “Hortilux Schréder” not “Hortilux” alone. Neither the web pages nor
the statements of customers prove use of the mark in association with wares. Similarly,
in the Federal Court of Appeal’s decision in respect of the first set of
proceedings in this matter, Justice Wyman Webb concluded that the web pages and
the schematic drawings were not evidence of use of the mark – they merely
showed a lack of intention to abandon it (at para 22).
[40]
Accordingly, the new evidence tendered on this
appeal could not have materially affected the Board’s conclusion that Hortilux
Schréder had not used the “Hortilux” mark continuously during the relevant
period, from August 1997 to May 2002.
IV. Issue
Two – Did the Board err in finding that Hortilux Schréder’s claimed period of use
was incorrect?
[41]
An applicant for a trade-mark must show that its
claimed date of first use is accurate. More specifically, it must show that its
mark has been continuously used between the claimed date of first use and the date
it filed its application. Here, Hortilux Schréder had to show continuous use
from 1997 to 2002. It argues that the Board unreasonably concluded that it had
not met its burden.
[42]
I disagree.
[43]
As mentioned, the Board concluded that Hortilux
Schréder had used the mark “Hortilux Schréder” after December 1997, but not
“Hortilux”. Use of the combined mark did not amount to use of “Hortilux” alone.
[44]
In reaching that conclusion, the Board relied on
the legal principles set out in Registrar of Trade Marks v Compagnie
L’informatique CII Honeywell Bull, Société Anonyme et al (1985), 4 CPR (3d)
523. There, Justice Louis Pratte addressed the issue of whether use of a
compound mark (“CII Honeywell Bull”) amounted to use of one of its constituent
elements (“Bull”). He stated that the question is whether the differences
between the two “are so unimportant that an unaware purchaser would be likely
to infer that both, in spite of their differences, identify goods having the
same origin” (at para 24). In the result, he concluded that use of “CII Honeywell
Bull” did not constitute use of “Bull” alone.
[45]
In my view, applying the correct test, the Board
reasonably concluded that use of “Hortilux Schréder” did not equate with use of
“Hortilux” alone. In all appearances of the word “Hortilux”, the word
“Schréder” was given equal prominence even though the word “Hortilux” came
first. “Schréder” was an equally important element of Hortilux Schréder’s mark.
[46]
In addition, given the rarity of the surname
“Schréder” (and even close variants on it), the Board reasonably found that
average consumers would be unlikely to regard the addition of that word to
“Hortilux” as an unimportant appendage.
[47]
Based on the evidence and the proper test, the
Board reasonably concluded that the differences between “Hortilux Schréder” and
“Hortilux” were not so insignificant that an unaware purchaser would infer that
goods associated with one would have the same origin as goods associated with
the other.
V. Issue
Three – Did the Board err in finding that Hortilux Schréder’s trade-mark was
not distinctive?
[48]
Hortilux Schréder argues that the Board
unreasonably concluded that it had not satisfied its burden of establishing
distinctiveness of the “Hortilux” mark. It relies primarily on the differences
in the channels of trade between its operations and Iwasaki’s, a factor not
given substantial weight by the Board. Hortilux Schréder contends that within
each of the two companies’ markets, purchasers would be unlikely to be confused
about the origin of the wares they bought.
[49]
Hortilux Schréder also argues that the Board did
not apply the proper burden of proof on this issue. Iwasaki bore the initial
burden of showing that its mark had become sufficiently known in 2007 to negate
the distinctiveness of Hortilux Schréder’s mark. However, the Board stated that
it was satisfied that Iwasaki had proved its mark was “known in Canada to some extent at the relevant date” (at para 49).
[50]
I am not persuaded by Hortilux Schréder’s
submissions. I find that the Board’s conclusion was not unreasonable.
[51]
Regarding the burden of proof, the Board, at the
outset of its analysis, correctly identified the burdens of proof falling on
the respective parties, citing Motel 6, Inc v No 6 Motel Ltd (1981), 56
CPR (2d) 44, at p 58, and Muffin Houses Inc v The Muffin House Bakery Ltd (1985),
4 CPR (3d) 272. It went on to summarize the relevant evidence put forward by
Iwasaki, and then concluded that the evidence showed that Iwasaki’s mark was
known in Canada “to some extent” at the relevant time.
[52]
While the Board would have been well-advised to
be consistent in its statement of the burden on Iwasaki, I cannot conclude that
it was unaware of the proper test or failed to apply it. There was considerable
evidence before the Board of Iwasaki’s use of the “Hortilux” mark – namely, the
Thomas, Ward, and Berkhout affidavits summarized above – even though that mark
often included (usually in a comparatively insignificant way) the word “EYE”.
In the circumstances, therefore, I am satisfied that the Board articulated and applied
the correct test and reasonably concluded that Iwasaki had met its initial
evidentiary burden.
[53]
In respect of the parties’ respective channels
of trade, the Board was clearly aware that Hortilux Schréder operated in the
commercial horticultural industry, selling lighting fixtures, while Iwasaki
sold light bulbs in the retail market. Still, it found that both companies were
selling lighting products for horticultural use. Further, any differences in
trade could not offset the most obvious and important circumstance, the degree
of resemblance between the two marks (according to Masterpiece Inc v Alavida
Lifestyles Inc et al, 2011 SCC 27). The marks used by both companies were
virtually identical. This factor caused Justice Russell to conclude that the
marks were confusing. The Board concluded likewise.
[54]
Again, I cannot conclude that the Board’s
conclusion was unreasonable in light of the evidence before it. While
“Hortilux” has inherent distinctiveness as a made-up word incorporating
allusions to lighting (“lux”) and horticulture (“horti”), the fact that both
companies used the same mark in the same general industry could well cause
average consumers to believe that the wares of one company originated with the
other. The Board’s conclusion, therefore, that Hortilux Schréder had not met
its burden of proving distinctiveness was not unreasonable.
VI. Conclusion
and Disposition
[55]
The new evidence before me would not have
materially affected the Board’s conclusions regarding the duration of Hortilux
Schréder’s use of the “Hortilux” and the distinctiveness of that mark. On the
evidence before it, the Board reasonably found that Hortilux Schréder had not
used the “Hortilux” mark after 1997. Similarly, it reasonably concluded that
the mark is not distinctive, given that Iwasaki uses the same mark in respect
of lighting equipment in the horticultural industry.
[56]
Therefore, I must dismiss this appeal with
costs.
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