I.
Overview
[1]
This application for judicial review bridges the
gap between a topic of interest to lawyers (trade-marks) and a topic of
interest to the general public (rum). It relates to a decision of the
Registrar of Trade-marks (Registrar) under subsection 56(1) of the Trade
Marks Act, RSC 1985, c T-13 as amended (Act). In that decision, the
Registrar allowed an opposition by Bacardi & Company Ltd (Bacardi or the
opponent) and refused an application (the Application) for the trade-mark RON
CASTILLO LABEL design filed on behalf of Corporativo de Marcas GJB, SA de CV
(Marcas or the applicant).
[2]
The judicial review turns on an issue of
fundamental importance to trade-marks: use. More precisely, whether or not the
Registrar’s decision to refuse the Application was reasonable depends on the
discharge of Bacardi and Marcas’s respective burdens under subsection 30(b)
of the Act in relation to the use by Marcas of the design mark.
[3]
I conclude in favour of Bacardi. In the near
five year period during which the mark had to be continuously used, the record
disclosed a mere three transactions, all occurring in the first seventeen
months of those five years. Further, a legal representative of Marcas has
admitted that sales of CASTILLO brand rum were halted in Canada in 1999, creating a hiatus of over three years during which there was no evidence of any
use. Marcas failed to show use throughout the relevant period of time, and as
a consequence, the Registrar’s decision was reasonable and Marcas’s design mark
application remains refused.
II.
Background
A.
Procedural History
[4]
The predecessor-in-title of Marcas – Jose
Cuervo, SA de DV (Cuervo) – filed the Application on April 23, 2003 regarding
the design mark, pictured below:
[5]
Cuervo later assigned its rights to the design
mark to Marcas. On August 17, 2005, the Application was advertised in the Canadian
Trade-marks Journal.
[6]
Bacardi filed a Statement of Opposition dated October
17, 2005.
[7]
The Registrar refused the Application on
December 19, 2011 (Bacardi & Company Ltd v Corporativo de Marcas GJB, SA
de CV, 2011 TMOB 255 at para 34 [Registrar’s Decision]). In
particular, the Registrar found that there was insufficient evidence of use of
the design mark in Canada (at para 33).
[8]
That decision to refuse the Application is the
subject of this judicial review.
B.
The Related Word Mark Hearing
[9]
In addition to the Application under review,
there were two rounds of summary expungement proceedings under section 45 of
the Act relating to the word mark CASTILLO.
[10]
On September 21, 1995, Bacardi launched the
first round of summary expungement proceedings against the word mark. In those
proceedings, the Registrar expunged Cuervo’s word mark. However, Cuervo
successfully appealed to the Federal Court (Quarry Corp v Bacardi & Co,
[1996] FCJ No 1671 (FCTD)), and that decision was upheld at the Federal Court
of Appeal (Quarry Corp v Bacardi & Co, [1999] FCJ No 345 (FCA)). As
a consequence, the word mark was initially sustained.
[11]
Then, a decade later, on October 26, 2005,
Bacardi launched a second round of summary expungement proceedings against the
word mark. This time, Bacardi was successful at all levels. The Registrar
expunged the word mark, and both the Federal Court (Jose Cuervo SA de CV v
Bacardi & Co, 2009 FC 1166) and the Federal Court of Appeal (Jose
Cuervo SA de CV v Bacardi & Co, 2010 FCA 248) dismissed Cuervo’s
appeal.
[12]
As will be discussed later, key evidence in the
Application originated with the section 45 proceedings.
III.
Standard of Review
[13]
The standard of review in this case is
reasonableness.
[14]
The first step in assessing the standard of
review is “ascertain[ing] whether the jurisprudence has already determined in a
satisfactory manner the degree of deference to be accorded with regard to a
particular category of question”: Dunsmuir v New Brunswick, 2008 SCC 9
at para 62, [2008] 1 S.C.R. 190.
[15]
For the particular category of question in this
case – an appeal of the Registrar under section 56 of the Act – the
jurisprudence establishes a general rule with an exception. Generally, the
Registrar’s decision is reviewable on a standard of reasonableness. However,
exceptionally, if there is additional evidence that would have materially
affected the Registrar’s findings of fact or the exercise of his discretion,
then the standard of review is correctness (see: Mattel, Inc v 3894207
Canada Inc, 2006 SCC 22 at paras 35-41, [2006] 1 S.C.R. 772; Molson
Breweries v John Labatt Ltd, [2000] FCJ No 159 at para 51, per Rothstein JA
(as he then was) (FCA)).
[16]
In this case, while there is additional evidence
raised on appeal, it would not have materially affected the Registrar’s
findings of fact or the exercise of his discretion. The Registrar summarized
his basis for refusing the Application as follows:
The evidence
suggests that the Applicant was not using any trade-mark that included the word
CASTILLO in Canada between November 24, 1999 and April 22, 2003. The issue
under s. 30(b) […] is whether [the Applicant] had continuously used [the design
mark] in the normal course of trade between July 1998 and April 22, 2003. As it
appears from the evidence that the Applicant was not using the Mark when it
filed the application on April 22, 2003, and had not used the Mark since
November 24, 1999, I have concluded that the Opponent has met its light initial
burden. The Applicant had ample opportunity to file evidence to counter the
conclusion that the Mark was not in use in Canada between November 24, 1999 and
April 22, 2003 but chose not to. Therefore the Applicant has not met its legal
burden. Accordingly, the s. 30(b) ground succeeds (Registrar’s Decision, at
para 33).
[17]
Put briefly, the Registrar refused the
Application because the evidence pointed to no use of the design mark between
November 24, 1999 and April 22, 2003, contrary to the requirement under section
2, and subsections 4(1), and 30(b) of the Act that the design
mark be continuously used in the “normal course of trade.”
[18]
The additional evidence raised on this appeal,
the affidavit of Ricardo Juarez Avina, sworn April 25, 2012 (2012 Avina
Affidavit) does not impact the basis for the Registrar’s decision, namely, the
lack of any evidence of continuous use (or any use for that matter) of the
design mark between November 24, 1999 and April 22, 2003. Consequently, the
standard of review is reasonableness.
IV.
Analysis
[19]
Use is central to trade-marks. As Professor
David Vaver opines:
Without “use” a
trade-mark is nothing. It cannot be registered; if registered, it can be expunged.
Anyone holding an unused mark probably cannot or does not want to invest in it,
may just want to play dog in the manger and block competitors from using it, or
may want to get into the business of selling marks, not goods or services. None
of this is worth encouraging and the system treats him as an undesirable (David
Vaver, Intellectual Property Law, 2d ed (Toronto: Irwin Law, 2011) at
471-72).
[20]
In this case, the material time under review
with respect to use falls between the claimed date of first use in the
application for the design mark (July 1998) and the date of filing for the
Application (April 22 2003): H & R Block, Inc v U & R Tax Services
Ltd, [1997] TMOB No 297 at para 9 (QL).
[21]
In the words of Justice Binnie: “in trade-marks
the watchword is ‘use it or lose it’” (Mattell, at para 5). Marcas has
not used the design mark during the material time, and so, it has lost it. The
Registrar’s decision was reasonable in this regard.
A.
Preliminary Issues
[22]
Before analyzing whether or not the design mark
has been used during the material time I will address two preliminary issues.
First, I describe the statutory background for the Application. Second, I
address the respective burdens of proof placed on the applicant and opponent
with respect to the Application.
[23]
With those preliminary issues resolved, I then
turn to the central question in this case: use of the design mark.
(1)
The Statutory Basis for Use in an Application to
Register a Trade-Mark
[24]
This judicial review centres on an application
for the registration of the design mark, and in particular, on the use
criterion for such an application.
[25]
The use criterion is outlined in subsection 30(b)
of the Act which provides that:
|
30. An
applicant for the registration of a trade-mark shall file with the Registrar
an application containing
[…]
(b) in the case of a trade-mark that has been used in Canada, the date from
|
30. Quiconque
sollicite l’enregistrement d’une marque de commerce produit au bureau du
registraire une demande renfermant
[…]
b) dans le cas d’une marque de
commerce qui a été employée au Canada, la date à compter de laquelle le
|
|
which the applicant or his named predecessors in title, if any,
have so used the trade-mark in association with each of the general classes
of wares or services described in the application;
|
requérant ou ses
prédécesseurs en titre désignés, le cas échéant, ont ainsi employé la marque
de commerce en liaison avec chacune des catégories générales de marchandises
ou services décrites dans la demande;
|
[26]
Thus, initially, Marcas need only assert a date
of first use. However, section 38 of the Act outlines the procedure
through which any person may launch an opposition against the application to
register a trade-mark. In particular, subsection 38(2) provides that “[a]
statement of opposition may be based on any of the following grounds” including
“that the application does not conform to the requirements of section 30.”
[27]
In the decision under review, Bacardi opposed
the design mark on the ground that it did not satisfy the use requirement under
subsection 30(b) of the Act.
(2)
The Burden of Proof Regarding Use of the Design
Mark
[28]
When dealing with non-compliance under section
30 of the Act, there is an initial evidentiary onus on the opponent to
adduce sufficient evidence supporting its claim of non-compliance by the
applicant. If Bacardi leads sufficient evidence of non-use the initial
evidentiary burden is discharged. Marcas must then, in response, substantiate
its claim of use during the material time.
[29]
The nature of this burden merits some discussion.
To adduce evidence of non-use of a mark by a competitor is problematic in two
ways: first, because it requires Bacardi to prove that something did not occur
(an inherently difficult exercise), and second, because such evidence is far
more likely to be in the possession of the applicant, not the party opposing
the mark. It would be a challenge for Bacardi to keep records of non-sale
(whatever those records might look like) of all of its competitor’s products.
[30]
How then have the courts grappled with this
unique burden of proof? The correct approach was succinctly put in Ivy Lea
Shirt Co Ltd v 1227624 Ontario Ltd, [1999]
TMOB No 182, 2 CPR
(4th) 562 (QL):
While the legal
burden is upon the applicant to show that its application complies with
Section 30 of the Trade-marks Act, there is an initial evidential
burden on the opponent to establish the facts relied upon by it in support
of its Section 30 ground […] However, the evidential burden on the opponent
respecting the issue of the applicant's non-compliance with Subsection 30(b) of
the Act is a light one […]. Further, the opponent may rely upon the applicant's
affidavit evidence to meet its evidential burden in relation to this ground. In
such a case, however, the opponent must show that the applicant's evidence is
'clearly' inconsistent with the applicant's claims set forth in its application
(at para 6).
[31]
Put differently, this approach amounts to a
two-stage inquiry: At the first stage, the opponent must satisfy its evidential
burden with respect to its ground of opposition under section 38 of the Act.
If that is satisfied, then the analysis proceeds to the second stage, at which
point the applicant must satisfy its legal burden with respect to the
compliance of its application under section 30 of the Act (Roger T.
Hughes, Hughes on Trade Marks, loose-leaf (consulted on 27 March 2014),
(Markham, Ont: LexisNexis, 2005), ch 43 at 719).
[32]
Further, the first stage of the Ivy Lea approach
depends on two factors which shift the evidential burden: (1) the source of
evidence relied upon by the opponent, and (2) the relative access to
information between the applicant and opponent related to the ground of
opposition.
[33]
Regarding the first factor – source of evidence
– if the opponent relies on evidence led by the applicant, then the opponent
must show that the evidence is “clearly inconsistent” with the applicant’s
claims set forth in its application. Alternatively, if the opponent relies on
its own evidence, then it need not meet that higher threshold (Ivy Lea,
at paras 9-11 aff’d in Canadian Council of Professional Engineers v Kelly
Properties, LLC, 2012 FC 1344 at para 121; Hughes, ch 43 at 719).
[34]
In contrast, when relying on its own evidence,
the opponent need only “produce evidence to support
its objections” (Doris Hosiery Mills Ltd v Warnaco Inc, [2004]
FCJ No 2174, 38 CPR (4th) 519 at para 6) or “adduce
evidence from which it may reasonably conclude that the facts alleged to
support the grounds of opposition exist” (Hughes, ch 43 at 720).
[35]
Regarding the second factor – relative access to
information – if the opponent has less access than the applicant to information
pertinent to the applicant’s compliance with section 30 of the Act, then
the opponent’s evidential burden is lowered, though not eliminated (see: Tune
Masters v Mr P's Mastertune Ignition Services Ltd, 1986 CarswellNat 1210 at
paras 9-11, 10 CPR (3d) 84).
[36]
The foregoing outlines an opaque evidential
burden. First, it is described in Ivy Lea simultaneously as a “light”
burden while also demanding, in the case of an opponent who relies on the applicant’s
evidence, that the evidence be “clearly inconsistent” with the applicant’s
claims. Further, the two factors discussed above that shift the evidential
burden are conflicting. An opponent that relies on an applicant’s evidence
(the first factor) is likely doing so because they have less access to
information pertinent to opposing the application (the second factor). In this
way, the two factors counteract one another. For example, in this case,
Bacardi is relying on Marcas’s affidavits (shifting the burden higher).
However, presumably, Bacardi is relying on Marcas’s affidavits because Marcas
is more likely to have information in relation to its own sales (shifting the
burden lower). These criteria appear to negate each other. How should the court
approach assessing the “clear inconsistency” between the Marcas affidavits and
the claims in the Application (a higher burden demanded by the first factor)
while also shifting Bacardi’s burden lower in light of the minimal access
Bacardi has to Marcas’s personal sales information? Further, how do all of
these shifts fit within the general understanding of an evidentiary burden
being a “light” burden?
[37]
In my view, these two factors are more properly
understood as indicia or criteria by which any evidence is assessed such as its
provenance (including its quality and reliability), the absence of evidence
that might reasonably be expected to exist, and whether it has been tested on
cross-examination and if so, how it fared. Multiple diverse considerations inform
the assessment of evidence. While certain factors influencing the evidentiary
burden placed on Bacardi in this case are conflicting, inordinate emphasis on
resolving that conflict distracts from the key issue: whether evidence of
non-use has been established on a balance of probabilities.
[38]
A review of the evidence in this case, even with
the higher “clearly inconsistent” burden, shows that the evidence of non-use
meets this burden. As will be seen, the record is “clearly inconsistent” with
Marcas’s claim of continuous use, and therefore satisfies the highest possible
evidentiary burden imposed on Bacardi by the jurisprudence. As a consequence,
regardless of the shifts on the evidential burden, it has certainly been met in
this case.
B.
The Central Issue: Use of the Design Mark
[39]
I will begin by addressing the meaning of use
under the Act. Then, I will explain the meaning of “reasonableness” and
describe why the Registrar’s conclusion that the design mark was not
continuously used was reasonable.
(1)
The Meaning of Use for Trade-Marks
[40]
Beginning with the Act, Section 2 defines
“use” in relation to a trade-mark as follows:
|
any use that
by section 4 is deemed to be a use in association with wares or services
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tout emploi
qui, selon l’article 4, est réputé un emploi en liaison avec des marchandises
ou services
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[41]
Then, subsection 4(1) of the Act states
when a trade-mark is deemed to be used, namely:
|
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 added).
|
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 (je souligne)
|
[42]
These provisions were analyzed by Justice Sandra
Simpson in Labatt Brewing Co v Benson & Hedges (Canada) Ltd, (1996)
CarswellNat 392, as requiring “continuous use of a trade-mark in the
normal course of trade” (at para 11; emphasis added). Marcas takes exception
to Justice Simpson’s addition of the word “continuous” and argues that it
promotes too demanding a standard on applicants seeking to register
trade-marks. However, Justice Simpson qualified the meaning of “continuous
use” by stating that it “may involve periods of non-use” and that only when
non-use falls “outside the normal course of trade” would it be sufficient to
defeat an application for registration (at para 12). With these
qualifications, Justice Simpson’s interpretation reasonably articulates
subsection 4(1) of the Act. A literal interpretation of Justice
Simpson’s phrasing creates an unduly strict test for applicants (i.e. interpreting
“continuous use” as “use without interruption”). By contrast, Justice
Simpson’s discussion, when read in context, is a principled and persuasive
interpretation of use under the Act.
[43]
Accordingly, neither a discrete period of use
nor of non-use is conclusive of use under the Act. Indeed, neither a
single sale nor a single day without sales could reasonably decide the issue of
use “in the normal course of trade.” Rather, assessment of use is a contextual
exercise, to be resolved with respect to whether or not, throughout the
material time, there was continuous use in the ordinary course of trade.
[44]
On that standard, the registrar reasonably
concluded that the design mark was not sufficiently used.
(2)
The Meaning of Reasonableness
[45]
According to a majority of the Supreme Court of
Canada in Dunsmuir, reasonableness review consists of the following:
A court conducting a
review for reasonableness inquires into the qualities that make a decision
reasonable, referring both to the process of articulating the reasons and to
outcomes. In judicial review, reasonableness is concerned mostly with the
existence of justification, transparency and intelligibility within the
decision-making process. But it is also concerned with whether the decision
falls within a range of possible, acceptable outcomes which are defensible in
respect of the facts and law (at para 47).
[46]
As a consequence, my review of the Registrar’s
decision takes into account its “justification, transparency and
intelligibility” and whether it “falls within a range of possible, acceptable
outcomes which are defensible in respect of the facts and law.”
(3)
The Registrar’s Decision that the Design Mark
was Not Sufficiently Used was Reasonable
(a)
Bacardi’s Evidentiary Burden Regarding Non-use
[47]
The Registrar reasonably concluded that Bacardi
satisfied its evidentiary burden regarding Marcas’s non-use of the design mark.
[48]
For her part, the registrar concluded that
Bacardi satisfied its evidentiary burden as follows:
As it appears from
the evidence that the Applicant was not using the Mark when it filed the
application on April 22, 2003, and had not used the Mark since November 24,
1999, I have concluded that the Opponent has met its light initial burden (at
para 33).
[49]
The registrar’s reasoning is justifiable,
transparent, and intelligible.
[50]
The registrar demonstrates a keen awareness of
the evidentiary and legal burdens implicated in opposition proceedings in her
review of the relevant authorities (at para 16). Though she does not
specifically say that the evidence is “clearly inconsistent” with continuous
use by Marcas (as I have characterized the burden), such a stringent adherence
to particular language has never been required in judicial review. The
substance of the reasoning provided, rather than the specific words chosen, is
the proper focus of review.
[51]
Within the material time, the record contains
only three transactions over the course of nearly 5 years: (1) a
sale on July 3, 1998, from Tequila Cuervo La Rojeña, SA de CV to the Liquor
Control Board of Alberta for 50 cases of 12 bottles of 1000ml, (2) a sale on
November 24, 1998 of a bottle bearing the Design Mark at the Alten Duty Free
Liquor outlet in Coutts, Alberta, (3) a sale on November 24, 1999, from Tequila
Cuervo La Rojeña, SA de CV to UDV for consignment to the Alberta Liquor and
Gaming Commission for 100 cases of 12 bottles of 750ml. Note that all three
transactions occurred during a period of time representing less than the first
third of the material time.
[52]
It is reasonable for the Registrar to draw an
adverse inference from so little evidence of use and conclude that the
evidentiary burden with respect to use has been met by Bacardi on that basis
(see: Labatt Brewing Co v Molson Breweries, A Partnership (1996), [1996]
FCJ No 729 at para 38).
[53]
Further, Cuervo’s own legal representative (Mr.
Avina) indirectly explained the reason for there being so little evidence of
use of the design mark during the material time. In his affidavit from 2009,
Mr. Avina advised the court that sales of CASTILLO rum into Canada were halted
in 1999, and did not occur again for the better part of a decade (2009 Avina
Affidavit, at paras 4-6). This admitted moratorium on sales in Canada of rum
bearing the word mark (CASTILLO) beginning in 1999, combined with no evidence
of use of the design mark (RON CASTILLO LABEL Design) post-1999, supports the
Registrar’s reasonable conclusion that Bacardi had dispensed with its
evidentiary burden.
[54]
Interpreting the Registrar’s reasons as applying
too low a burden would be misplaced. Admittedly, the registrar’s describes a
“light” evidentiary burden. She expressly describes the burden as “light” in
her reasons (at para 18). Further, she opines that the evidence “casts doubt”
on continuous use (at para 26) and that “it appears from the evidence” that the
design mark was not continuously used (at para 33). However, this phrasing
reflects, in a general sense, the “light” evidentiary burden placed on
opponents who understandably lack evidence of an applicant’s own sales (as the
Registrar explains at para 31 of her decision, and as I explain above at para
36). Moreover, the evidence relied upon by the registrar – Marcas’s “clear
admission against interest” (at para 30) that it halted sales of CASTILLO rum
from 1999 to 2008 – is “clearly inconsistent” with continuous use from 1998 to
2003. Indeed, it strains credulity to think of a record more inconsistent with
continuous use than an admission by the applicant of that very point.
[55]
As I stated in Komolafe v Canada, 2013 FC 431 at para 11: “Newfoundland Nurses allows reviewing courts to connect
the dots on the page where the lines, and the direction they are headed, may be
readily drawn.” This is such a case. The registrar provided the “dots on the
page”: she concluded a lack of continuous use based on three early sales and a
clear admission against interest that sales of CASTILLO rum were halted during
a majority of the material time. In essence, she viewed the record as clearly
inconsistent with Marcas’s claim of continuous use. She need not specifically
use those words to survive judicial scrutiny. As a consequence, the Registrar
reasonably concluded that Bacardi met its evidentiary onus with respect to
non-use of the design mark.
(b)
Marcus’s Legal Burden Regarding Use
[56]
The Registrar also reasonably concluded that
Marcas failed to satisfy its legal burden regarding the continuous use of the
design mark during the material time.
[57]
For her part, the registrar concluded that
Marcas failed to satisfy its legal burden as follows:
The Applicant had
ample opportunity to file evidence to counter the conclusion that the Mark was
not in use in Canada between November 24, 1999 and April 22, 2003 but chose not
to. Therefore the Applicant has not met its legal burden” (at para 33).
[58]
This reasoning is also justifiable, transparent,
and intelligible.
[59]
As described above, the evidence points strongly
against continuous use of the design mark during the material time. The 2009
Avina Affidavit outlines a moratorium on CASTILLO rum sales in Canada in 1999, four years before the end of the material time. Further, the only evidence
supporting Marcas’s claimed use of the design mark was three transactions early
on during the material time. Without any reasonable explanation about how a
total void of evidence of use for a majority of the material time is consistent
with continuous use in the ordinary course of business, it was reasonable for
the Registrar to dismiss the application.
[60]
The test for continuous use being qualified by
the “ordinary course of trade” provides crucial flexibility to the analysis.
To expect that the continuous use of Dom Perignon Champagne at a high end
liquor store and a pack of gum at a corner store would be identical in volume
would belie important context and how the rate of sales in different industries
can vary widely. Still, trade-marks should not be registered over broad periods
of time simply based on sporadic sales concentrated near the start of that
period of time that fall below the ordinary course of trade. Otherwise, the
use criterion, a cornerstone of trade-mark law, would be reduced to a
technicality that any applicant could meet with isolated and manufactured sales
that do not serve the principles underlying trade-mark law.
[61]
Marcas advanced a number of arguments attempting
to counteract what is, quite plainly, a clear record of non-use. None of those
arguments hold water, and it was therefore reasonable for the Registrar to
dismiss them.
[62]
First, Marcas, in submitting the 2012 Avina
Affidavit on appeal, tried to explain the lack of evidence of use based on
Marcas’s internal record-keeping policies. In particular, Mr. Avina states
that Marcas cannot provide evidence of use in this case because the internal
policy of its predecessor (Cuervo) during the material time was to keep its
business records for only 5 years. However, this claim does little to save
Marcas’s case. It is inconsistent with Mr. Avina’s later comment that Cuervo
made an exception to this rule for “business records which have been used in
the context of legal or administrative proceedings.” As the business records
regarding sales of CASTILLO rum were used in the context of the section 45
proceedings discussed earlier, according to Cuervo’s own policies, records of
sales of CASTILLO rum in Canada should have been kept (2012 Avina Affidavit, at
paras 6-7).
[63]
Second, Marcas argued that a mere three
transactions satisfies its legal burden regarding use. The Registrar’s view
that this slim record supported the inference that Marcas “had not used the
Mark since November 23, 1999” even though it had “ample opportunity to file
evidence to counter” that inference is reasonable (at para 33).
[64]
In response to this conclusion, Marcas pointed
to the decision of Phillip Morris Inc v Imperial Tobacco Ltd, 1987
CarswellNat 607, in which Justice McNair opined that “[e]vidence of a single
sale, whether wholesale or retail, in the normal course of trade may well
suffice so long as it follows the pattern of a genuine commercial transaction
and is not seen as being deliberately manufactured or contrived to protect the
registration of the trade mark” (at para 12). However, those comments were
made in the context of expeditious section 45 proceedings to expunge a
trade-mark, not an application to register a trade-mark, which is the subject
of the current judicial review. In this regard, Justice McNair explicitly
qualified the low threshold he refers to within the context of a summary
section 45 expungement proceeding:
It is well
established that the purpose and scope of s. 44 [now s 45] is to provide a
simple, summary and expeditious procedure for clearing the register of trade
marks which are not bona fide claimed by their owners as active trade marks.
The procedure has been aptly described as one for removing "deadwood"
from the register. The section does not contemplate a determination on the
issue of abandonment but rather simply places on the registered owner of the
trade mark the onus of furnishing evidence of use in Canada or of special
circumstances excusing non-user [sic]. The Registrar's decision is not
one that finally determines substantive rights but only whether the trade mark
entry is liable to be expunged under s. 44 or not (at para 12).
[65]
Three early transactions could be adequate to
support the claim that the design mark was not “deadwood,” but they are
inadequate to support the claim that the design mark was sufficiently used to
support the registration of a trade-mark for the material time – a period of
time extending 40 months beyond that which was covered by the three
transactions.
[66]
Third, Marcas argued that Bacardi’s reliance on
evidence from section 45 proceedings is irrelevant and inadmissible. The
registrar dealt with these arguments reasonably as well.
[67]
First, Marcas argued that the section 45
expungement proceedings (regarding the word mark) were too remotely connected
to the Application (regarding the design mark) to be probative. While it is
true that evidence originating from litigation regarding distinct marks should
be scrutinized carefully before cross-application, the mere assertion that such
evidence in this case is not probative is flawed. Mr. Avina admitted that
Cuervo halted sales of rum bearing the CASTILLO word mark in Canada in 1999, and there is no evidence of sales of rum bearing the RON CASTILLO LABEL design mark
after 1999. The inference that halting sales on CASTILLO rum products would
also halt the use of the RON CASTILLO LABEL design is reasonable (see: Nightingale
Interloc Ltd v Prodesign Ltd (1984), [1984] TMOB No 52, 2 CPR (3d) 535 at
paras 5-11). It was open to Marcas to elaborate on how CASTILLO rum halted
sales while simultaneously continuing to use the RON CASTILLO LABEL design, but
it did not. As a consequence, the registrar’s view that an interruption in
CASTILLO rum sales “is equivalent to saying that there was no use of the Mark
during that time period” is reasonable (at para 28).
[68]
Marcas also argued that the section 45
proceedings are not res judicata with respect to the Application. The
registrar’s response to this point, that the section 45 evidence “is merely
being relied upon to meet an evidential burden” and not “as conclusive as to
the matters at issue in this proceeding,” was reasonable (at para 29).
[69]
The relevant authorities have consistently
recognized the ability for section 45 evidence to satisfy the evidentiary
burden in opposition proceedings (see e.g. Imperial Tobacco Ltd v Phillip
Morris Products Inc, [1990] TMOB No 468, 30 CPR (3d) 410). At first blush,
it may appear unfair to provide for a summary proceeding with a lower standard
of evidence under section 45, and to then allow an opponent to rely on that
summary evidence to demonstrate an insufficient record on which to support
continuous use. However, Marcas was not bound to the slim evidentiary record
that it raised in the section 45 proceeding. Rather, it was entirely open to
Marcas to raise further evidence of use in this case. Absent any further
evidence than the few transactions raised under section 45, it is reasonable to
draw an adverse inference in support of the lack of continuous use of the
design mark.
[70]
The merit of such an adverse inference is
evident in Marcas’s own argument. Marcas points out that the overlap between
the material time in the section 45 proceedings and the material time for this
judicial review encompasses only 6 months (between October 17, 2002 – the date
of first use of the word mark – and April 23, 2003 – the filing date for the
design mark). In light of this narrow window of time, Marcas argues that “it
is utterly prejudicial to the applicant that a possible lack of use for a few
months would result in the refusal of the subject application” (Applicant’s
Memorandum of Fact and Law, at para 26). However, Marcas is presumably arguing
that this period of non-use misrepresents the use of the design mark during the
material time – which it does not. Indeed, to the contrary, the record demonstrates
non-use of the design mark for not only the 6 month overlap between the design
mark and word mark hearings, but rather, for the latter two thirds of the
material time. Further, this lack of evidence of use is corroborated by the
2009 Avina Affidavit in which Avina describes how Cuervo had decided to halt
the sale of CASTILLO rum into Canada as of 1999 (2009 Avina Affidavit, at paras
4-6).
[71]
The Registrar concluded that the absence of
evidence of any use between November 24, 1999 and April 22, 2003 supported the
ground of opposition based on use. This conclusion was reasonable. A few
early sales at the start of a four year window, during the majority of which
there are no sales, reasonably supports the conclusion that the design mark was
not continuously used during the material time.
V.
Conclusion
[72]
The Registrar’s decision to dismiss Marcas’s
application for the registration of the design mark was reasonable.
[73]
Without use, a trade-mark cannot be registered.
The design mark was not continuously used. The record discloses only three
transactions, all concentrated near the beginning of the material time.
Further, by the admission of its own legal representative, Marcas ceased to
sell CASTILLO brand rum in Canada in 1999.
[74]
Marcas chose to stop using the design mark in Canada. As a consequence, it has lost the design mark. The Registrar’s reasonable
decision is upheld, and Marcas’s application for judicial review dismissed.
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