Ottawa, Ontario, October 19, 2006
PRESENT: The Honourable Madam Justice Mactavish
BETWEEN:
and
THE REGISTRAR OF TRADE-MARKS and
BERESKIN & PARR
REASONS FOR JUDGMENT AND JUDGMENT
[1] This is an appeal by Fairweather Ltd. from a decision of the Registrar of Trade-marks expunging its “TARGET APPAREL” trade-mark from the Trade-marks Register. Fairweather asserts that the Registrar erred in finding that it had not established a serious intention to commence using the TARGET APPAREL mark in Canada in association with the registered wares, and in failing to find that special circumstances existed excusing the non-use of the mark.
[2] Fairweather argues that the new evidence filed on this appeal further supports a finding that, as of the material time, it had the requisite intention to commence using the mark in question in Canada within a reasonable time, such that the mark should not be expunged.
[3] For the reasons that follow, I am satisfied that the new evidence does establish that Fairweather had the intention to begin using its TARGET APPAREL mark in Canada within a reasonable time. As a consequence, the appeal will be allowed.
Background
[4] The TARGET APPAREL mark was registered on July 31, 1981, for use in association with “men’s clothing, namely suits, pants, jackets and coats”. The registered owner of the mark was Dylex Ltd. A declaration of use with respect to the mark was filed in 1981, and in 1996, the mark was renewed for a further 15 years.
[5] In August of 2001, Dylex was placed into receivership, and subsequently went bankrupt. In October of 2001, Fairweather acquired various assets relating to Dylex’s Fairweather stores from the receiver, including the registration for the TARGET APPAREL mark.
[6] On April 19, 2002, the Registrar of Trade-marks issued a Notice pursuant to section 45 of the Trade-marks Act at the request of the respondent, Bereskin & Parr, requiring Fairweather to show use of the mark in Canada in association with the specified wares.
[7] In response to the Notice, Fairweather filed an affidavit from Paul Brener. Mr. Brener is the Secretary-Treasurer of Fairweather, as well as the Director of Finance for International Clothiers Inc. International Clothiers and Fairweather are related companies.
[8] Mr. Brener’s affidavit recited the circumstances leading up to Fairweather’s acquisition of the TARGET APPAREL mark, and explained that at the same time that it acquired the TARGET APPAREL mark from the receiver, Fairweather also acquired over 70 stores employing more than 500 employees. This resulted in the company being extremely busy as it attempted to manage and revitalize the Fairweather stores and assets, and resulted in a delay in the re-launch of TARGET APPAREL merchandise.
[9] Mr. Brener further deposed that because Fairweather stores do not sell men’s clothing, it was anticipated that TARGET APPAREL merchandise would be licensed to, and sold through, a related menswear company. According to Mr. Brener, it was anticipated that TARGET APPAREL brand merchandise (namely suits, pants, jackets and coats) would be re-launched in Canada in the Fall of 2002, or early in 2003. To this end, Mr. Brener stated that they were in the process of developing labelling and sourcing products to be sold in connection with what he described as “this valuable brand”.
The Decision of the Registrar of Trade-marks
[10] The Registrar found that the available evidence clearly failed to show any use of the TARGET APPAREL mark in Canada in association with the registered wares during the relevant period, which the Registrar identified as the six month period between Fairweather’s acquisition of the mark in October of 2001, and the issuance of the section 45 Notice in April of 2002. Thus the issue for the Registrar was whether the evidence established that the absence of use was due to “special circumstances” excusing non-use.
[11] The Registrar identified the test for special circumstances as being that established by the Federal Court of Appeal in Registrar of Trade-marks v. Harris Knitting Mills Ltd., [1985] F.C.J. No. 226, 4 C.P.R. (3d) 488. There the Court identified three criteria that must be considered in determining whether special circumstances excusing non-use could be found to exist in a given case. These are:
1. The length of time during which the trade-mark has not been in use.
2. Whether the registered owner’s reasons for not using its trade-mark were due to circumstances beyond its control; and
3. Whether there exists a serious intention to shortly resume the use of the mark.
[12] The Registrar noted that it was not known whether the TARGET APPAREL mark had even actually been used by Dylex, observing, however, that “where there has been a recent assignment of the trade-mark, the period of non-use for purposes of determining special circumstances will generally be considered starting from the date the trade-mark was assigned”. In support of this contention, the Registrar relied on the decision in Arrowhead Spring Water Ltd., v. Arrowhead Water Corp., [1993] F.C.J. No. 138, 47 C.P.R. (3d) 217.
[13] The Registrar further observed that, in a case such as this, where Fairweather had only acquired the mark some six months prior to the date of the section 45 Notice, it was only required to show a serious intention to start using the mark in question in the near future.
[14] After examining the evidence submitted by Fairweather, together with the submissions of the parties, the Registrar ordered the expungement of the registration on the basis that the evidence did not show that Fairweather had established a serious intention to commence using the trade-mark in Canada in the near future in association with the registered wares.
[15] In coming to this conclusion, the Registrar noted that the evidence did not demonstrate that any steps had been taken by Fairweather with respect to the mark in the six months between its assignment of the mark and the issuance of the section 45 Notice. Moreover, the Registrar observed that Mr. Brener’s evidence regarding steps taken by the company after receipt of the section 45 Notice consisted of bare statements that the company was in the process of developing labelling and sourcing products. No details regarding the labelling and sourcing processes had been provided, nor had any indication been given as to where Fairweather was in the process.
[16] The Registrar further noted that no information had been provided to substantiate Fairweather’s claim that it intended to re-launch the TARGET APPAREL mark in Canada in the Fall of 2002 or early in 2003, nor was there any evidence as to steps having been taken by Fairweather to sell merchandise through a related company.
[17] While the Registrar recognized that, in the circumstances, some time would reasonably be required in order to make arrangements for the use of the TARGET APPAREL mark, the Brener affidavit lacked specificity and detail with respect to what efforts had actually been made by Fairweather to begin using the mark. This was especially so, having regard to the fact that by the time that Mr. Brener swore his affidavit, Fairweather had owned the TARGET APPAREL mark for over a year.
[18] As a consequence, the Registrar found that the evidence did not show that Fairweather had established a serious intention to begin using the TARGET APPAREL mark in Canada in the near future, in association with the registered wares. Having failed to discharge the burden on it to demonstrate special circumstances excusing non-use, Fairweather’s TARGET APPAREL mark was expunged.
The New Evidence Filed on the Appeal
[19] As is permitted in appeals under section 56 of the Trade-marks Act, Fairweather has filed additional evidence on this appeal. This consists of a further affidavit from Mr. Brener, together with affidavits from Pauline Yu and Chetna Patel. Ms. Yu is a Graphics Designer with International Clothiers Inc., whereas Ms. Patel was a Buyer’s Assistant with that company between 2001 and 2003.
[20] This new evidence addresses the steps that had been taken by Fairweather in relation to the development of TARGET APPAREL hang tags and labels between the acquisition of the mark by Fairweather in October of 2001, and the issuance of the section 45 Notice in April of 2002. It also addresses the steps taken in this regard after April of 2002.
[21] The new evidence also indicates that several hundred thousand dollars worth of men’s clothing bearing the TARGET APPAREL mark was sold in Canada by Fairweather’s sister company, International Clothiers. According to Mr. Brener’s second affidavit, these sales were carried out by International Clothiers initially under an implied licence from Fairweather, and latterly, pursuant to a written licence agreement.
Standard of Review
[22] The parties agree that the standard of review identified in cases such as Dion Neckware Ltd. v. Christian Dior, S.A. et al. [2002] F.C.J. No. 95, 20 C.P.R. (4th) 155, 2002 FCA 29, John Labatt Limited v. Molson Companies Limited, [1990] F.C.J. No. 533, 30 C.P.R. (3d) 293 (F.C.T.D.) at 298 and Molson Breweries, a Partnership v. John Labatt Ltd. [2000] F.C.J. No. 159, 5 C.P.R. (4th) 180 at p. 196 applies to appeals under section 56 of the Trade-marks Act from decisions of the Registrar of Trade-marks.
[23] That is, where no new evidence is filed on the appeal that would have materially affected the Registrar’s decision, the test is whether the Board was clearly wrong.
[24] However, where additional evidence is filed on the appeal that would have materially affected the Registrar’s findings of fact or law, or the exercise of discretion, the test is one of correctness. Although not an entirely apt description, some cases refer to this as a hearing de novo. In these cases, the Court is entitled to substitute its opinion for that of the Registrar.
[25] Fairweather has filed a considerable volume of new evidence. What remains to be determined, however, is the significance of this evidence.
[26] In deciding whether the impact of this new evidence is sufficient to warrant a review on the standard of correctness, I am guided by the comments in Garbo Group Inc. v. Harriet Brown & Co., [1999] F.C.J. No. 1763. Here, Justice Evans noted that in assessing the impact that additional evidence will have for the standard of review, the question is the extent to which the additional evidence has a probative significance that extends beyond the material that was before the Board. If the new evidence adds nothing of significance, but is merely repetitive of existing evidence, without enhancing its cogency, the issue will be whether the Board was clearly wrong.
[27] I am satisfied that the new evidence provided by Fairweather is of a probative significance such that it would have affected the Registrar’s decision. In this regard, it bears repeating that the Registrar’s decision was based in part on the finding that Fairweather had not provided evidence showing that any concrete steps had been taken with respect to the use of the TARGET APPAREL mark in the six month period between its acquisition of the mark in the Fall of 2001 and the issuance of the section 45 Notice in the Spring of 2002.
[28] The new evidence of Ms. Yu and Ms. Patel demonstrates that concrete steps had indeed been taken with respect to the development of graphics for hang tags and labelling for TARGET APPAREL mark menswear in the pre-notice period.
[29] The Registrar also found that no details had been provided to substantiate Fairweather’s claim that it intended to re-launch the TARGET APPAREL mark in Canada in the Fall of 2002, or early in 2003, nor was there any evidence with respect to steps having been taken by Fairweather to sell merchandise through a related company.
[30] Mr. Brener’s second affidavit provides evidence of work that was done by International Clothiers to source product as early as February of 2003. According to Mr. Brener, this was done in accordance with an implied licence from Fairweather. Moreover, Mr. Brener’s second affidavit also describes sales of TARGET APPAREL branded menswear through International Clothiers, one of Fairweather’s sister companies.
[31] As was carefully demonstrated by counsel for the respondent in his submissions, the new evidence provided by Fairweather is by no means perfect, and some of the concerns with respect to frailties in the evidence will be addressed further on in this decision. Nevertheless, for the purposes of determining the appropriate standard of review, I am satisfied that the new evidence adduced by Fairweather is of sufficient probative significance that the Registrar’s decision should be reviewed against the standard of correctness.
Principles Governing Section 45 Proceedings
[32] Before turning to consider the submissions of the parties, it is helpful to first have an understanding of the nature and purpose of proceedings under section 45 of the Trade-marks Act.
[33] Section 45 provides, in part, that:
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45. (1) The Registrar may at any time and, at the written request made after three years from the date of the registration of a trade-mark by any person who pays the prescribed fee shall, unless the Registrar sees good reason to the contrary, give notice to the registered owner of the trade-mark requiring the registered owner to furnish within three months an affidavit or a statutory declaration showing, with respect to each of the wares or services specified in the registration, whether the trade-mark was in use in Canada at any time during the three year period immediately preceding the date of the notice and, if not, the date when it was last so in use and the reason for the absence of such use since that date.
(2) The Registrar shall not receive any evidence other than the affidavit or statutory declaration, but may hear representations made by or on behalf of the registered owner of the trade-mark or by or on behalf of the person at whose request the notice was given.
(3) Where, by reason of the evidence furnished to the Registrar or the failure to furnish any evidence, it appears to the Registrar that a trade-mark, either with respect to all of the wares or services specified in the registration or with respect to any of those wares or services, was not used in Canada at any time during the three year period immediately preceding the date of the notice and that the absence of use has not been due to special circumstances that excuse the absence of use, the registration of the trade-mark is liable to be expunged or amended accordingly…
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45. (1) Le registraire peut, et doit sur demande écrite présentée après trois années à compter de la date de l’enregistrement d’une marque de commerce, par une personne qui verse les droits prescrits, à moins qu’il ne voie une raison valable à l’effet contraire, donner au propriétaire inscrit un avis lui enjoignant de fournir, dans les trois mois, un affidavit ou une déclaration solennelle indiquant, à l’égard de chacune des marchandises ou de chacun des services que spécifie l’enregistrement, si la marque de commerce a été employée au Canada à un moment quelconque au cours des trois ans précédant la date de l’avis et, dans la négative, la date où elle a été ainsi employée en dernier lieu et la raison de son défaut d’emploi depuis cette date.
(2) Le registraire ne peut recevoir aucune preuve autre que cet affidavit ou cette déclaration solennelle, mais il peut entendre des représentations faites par le propriétaire inscrit de la marque de commerce ou pour celui-ci ou par la personne à la demande de qui l’avis a été donné ou pour celle-ci.
(3) Lorsqu’il apparaît au registraire, en raison de la preuve qui lui est fournie ou du défaut de fournir une telle preuve, que la marque de commerce, soit à l’égard de la totalité des marchandises ou services spécifiés dans l’enregistrement, soit à l’égard de l’une de ces marchandises ou de l’un de ces services, n’a été employée au Canada à aucun moment au cours des trois ans précédant la date de l’avis et que le défaut d’emploi n’a pas été attribuable à des circonstances spéciales qui le justifient, l’enregistrement de cette marque de commerce est susceptible de radiation ou de modification en conséquence... |
[34] This section has been described as the "use it or lose it" provision of the Trade-marks Act: see NTD Apparel Inc. v. Ryan [2003] F.C.J. No. 1008, 2003 FCT 780.
[35] That is, the purpose of the section is to provide a summary procedure for clearing the Trade-mark Register of marks which are not bona fide claimed by their owners as active trade marks: see Plough (Canada) Ltd. v. Aerosol Fillers Inc. [1980] F.C.J. No. 198 (FCA), at ¶ 7.
[36] The procedure has been aptly described as one for removing "deadwood" from the Register: Boutiques Progolf Inc. v. Canada (Registrar of Trade Marks) [1993] F.C.J. No. 1363.
[37] Section 45 proceedings are not intended to act as a substitute for abandonment proceedings. That is, the purpose of the section is not to resolve substantive rights that may be in dispute between the parties: Noxzema Chemical Co. of Canada v. Sheran Mfg. Ltd. Manufacturing Co. of Canada, [1968] 2 Ex.C.R. 446, at 155-56.
[38] Because of the summary nature of the proceedings, a respondent is precluded from filing contradictory evidence, either before the Registrar, or on appeal.
[39] As to the type of evidence that must be adduced by a trade-mark owner in a section 45 proceeding, the Federal Court of Appeal observed in the Plough decision, previously cited, that it is not sufficient for a registrant to simply state that a mark is in use. Rather, the owner must:
[S]how with respect to each of the wares and services specified in the registration whether the trade mark is in use in Canada and if not the date when it was last used and the reason for the absence of such use since that date. The purpose is not merely to tell the Registrar that the registered owner does not want to give up the registration but to inform the Registrar in detail of the situation prevailing with respect to the use of the trade mark so that he, and the Court on appeal, can form an opinion and apply the substantive rule set out in s- s. 44(3) [now subsection 45(3)]. There is no room for a dog in the manger attitude on the part of registered owners who may wish to hold on to a registration notwithstanding that the trade mark is no longer in use at all or not in use with respect to some of the wares in respect of which the mark is registered. [at ¶10]
[40] Evidence of use in the period prior to issuance of the section 45 Notice is essential. However, evidence of use by a registrant after issuance of the Notice may be relevant, to the extent that it supplements the evidence of pre-notice use, thus establishing continuity of use: Boutiques Progolf, above.
[41] Finally, any doubt there may be with respect to the evidence must be resolved in favour of the trade-mark owner, without reducing the burden on the owner to provide prima facie evidence of use: Boutiques Progolf, per Justice Desjardins, dissenting, but not on this point.
Analysis
[42] The evidence of Mr. Brener, Ms. Yu and Ms. Patel demonstrates that in the six month period between Fairweather’s acquisition of the TARGET APPAREL mark in the Fall of 2001 and the issuance of the section 45 Notice in the Spring of 2002, some concrete steps were indeed taken by the company with respect to the use of the mark.
[43] Specifically, preliminary artwork was done in order to develop labels and hang tags for use in connection with TARGET APPAREL branded menswear. It is true that this work was actually carried out by employees of International Clothiers Inc., as opposed to Fairweather. However, Ms. Yu’s affidavit indicates that the request came from the assistant to President of International Clothiers Inc.
[44] Issac Benitah is the President and a director of International Clothiers Inc., and he is also the President and a director of Fairweather Ltd.. According to Mr. Brener, Mr. Benitah directs and controls the day to day operations of both companies.
[45] Moreover, it appears from the evidence of Mr. Brener that the two companies were closely related, and shared common premises and management. In addition, the companies share many employees. It also appears that the lines between the activities of the two entities were not sharply delineated.
[46] In all of the circumstances, I am satisfied that efforts by employees of International Clothiers Inc. to develop artwork for TARGET APPAREL branded apparel were made at the behest of the registered owner of the mark, namely Fairweather.
[47] In these circumstances, I am satisfied that the new evidence before the Court establishes an ongoing intention on the part of Fairweather to use the TARGET APPAREL mark during the period prior to the issuance of the section 45 Notice. On this basis alone, the appeal should be allowed.
[48] Moreover, while activity with respect to the TARGET APPAREL mark did not progress rapidly after issuance of the section 45 Notice in April of 2002, it did continue. In this regard, Ms. Yu deposes that she was asked to provide revised artwork for the TARGET APPAREL labels and hang tags in June of 2002 and June of 2003, which she did.
[49] There is also evidence before the Court regarding work having been done in 2003 with respect to the manufacture and sale of TARGET APPAREL menswear. While there is some dispute as to whether the International Clothiers Inc. documents seemingly relating to orders for TARGET APPAREL clothing are indeed true purchase orders, or simply worksheets, they do reflect considerable ongoing work having been done to re-launch the TARGET APPAREL brand of menswear.
[50] Moreover, Mr. Brener stated in cross-examination that he had personally seen TARGET APPAREL menswear on sale in International Clothiers Inc. stores in 2004, and had himself bought a TARGET APPAREL shirt in the Spring of 2005.
[51] The respondent questions whether the use of the TARGET APPAREL mark by International Clothiers Inc. can be attributed to Fairweather, in the absence of there having been a formal licence agreement between the two companies that would trigger the deeming provisions of section 50(1) of the Trade-marks Act. This subsection deems use of a mark by a licensee to be use by the registered owner, provided that the owner has direct or indirect control over the character or quality of the wares in question.
[52] There is no requirement that a license agreement be in writing: see TGI Friday’s of Minnesota Inc. v. Registrar of Trademarks, [1999] F.C.J. No. 682, (F.C.A.). I have referred earlier in this decision to the close relationship between Fairweather and International Clothiers Inc. In all of the circumstances, I am satisfied that an inference can reasonably be drawn that International Clothiers Inc.’s use of the mark was made under an arrangement with Fairweather that was tantamount to an oral licence, and that the mark remained under the effective control of Mr. Benitah and Fairweather.
[53] It should also be noted that in June of 2004, this arrangement was reduced to writing in a formal licence agreement, which confirms Fairweather’s control over the mark.
[54] The respondent has also pointed out that the TARGET APPAREL mark is registered for use in association with men’s clothing, namely “suits, pants, jackets and coats”. The evidence before the Court relates to the manufacture and sale of TARGET APPAREL shirts, ties, T-shirts, jackets, and pants. Thus, the respondent says, at a minimum, the mark should be expunged as it relates to men’s suits and coats.
[55] A review of Mr. Brener’s first affidavit discloses a general intention to re-launch TARGET APPAREL brand merchandise, namely suits, pants, jackets and coats, and I have already found, based upon the new evidence, that concrete steps were in fact taken prior to the issuance of the section 45 Notice to achieve this goal, with the result that the appeal should be allowed.
[56] As was noted earlier, post-notice evidence may be of some assistance, to the extent that it supplements or confirms the evidence of pre-notice intent to use. In this case, the post-notice evidence shows that some of the listed wares have indeed been manufactured and sold under the TARGET APPAREL mark, thus confirming that there was indeed a genuine continuing intention on the part of Fairweather to use the mark.
[57] Finally, the respondent submits that the mark actually used differed materially from the registered mark, and that Fairweather never formed the intention to use the TARGET APPAREL mark as registered.
[58] The artwork created by Ms. Yu does display variations on the mark: namely “TARGET APPAREL CO.” or simply “TARGET”. The packaging used on products appears to bear the name “TARGET APPAREL CO.”.
[59] It is common ground that the law of trade-marks does not require the maintenance of the absolute identity of marks. Cautious variations may be made to a mark, as long as the same dominant features are maintained: Promafil Canada Limitée v. Munsingware Inc. [1992] F.C.J. No. 611, 44 C.P.R. (3d) 59, at 71-2, (F.C.A.).
[60] The practical test is to compare the registered mark with the mark that has been used, and to determine whether the differences in the marks are sufficiently unimportant that an unaware purchaser would likely infer the marks to emanate form the same source: Registrar of Trade-marks v. Compagnie Internationale pour l'Informatique CII Honeywell Bull, Société Anonyme et al. [1985] 1 F.C. 406, 4 C.P.R. (3d) 523, at 525 (F.C.A.).
[61] In all of the examples of the mark in evidence in this case, the word “TARGET” appears to be the dominant feature, with the words “APPAREL” and “CO.” appearing in a smaller font. In these circumstances, I am satisfied that the addition of the word “Co.” does not amount to a material variation in the mark.
Conclusion
[62] For these reasons, the appeal is allowed, with costs.
JUDGMENT
THIS COURT ORDERS AND ADJUDGES that this appeal is allowed, with costs.
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-713-05
STYLE OF CAUSE: FAIRWEATHER LTD. v.
THE REGISTRAR OF TRADE-MARKS and BERESKIN & PARR
PLACE OF HEARING: Toronto, Ontario
DATE OF HEARING: September 5, 2006
APPEARANCES:
Mark K. Evans. FOR THE APPLICANT
Mark L. Robbins FOR THE RESPONDENT -
BERESKIN & PARR
SOLICITORS OF RECORD:
SMART & BIGGAR FOR THE APPLICANT
Barristers & Solicitors
Toronto, ON
BERESKIN & PARR FOR THE RESPONDENT -
Barristers & Solicitors BERESKIN & PARR
Toronto, ON
John H. Sims, Q.C. FOR THE RESPONDENT -
Deputy Attorney General of Canada THE REGISTRAR OF
Toronto, ON TRADE-MARKS