Federal Court Decisions

 

 

Date: 20061221

Docket: T-693-06

Citation: 2006 FC 1542

Ottawa, Ontario, December 21, 2006

PRESENT:     The Honourable Barry Strayer

 

BETWEEN:

SMART & BIGGAR

Applicant(s)

and

 

THE ATTORNEY GENERAL OF CANADA

Respondent(s)

 

and

 

SCOTT PAPER LIMITED

Respondent(s)

 

APPLICATION UNDER Rule 300(d) of the

Federal Courts Rules, 1998 and Section 56 of the

Trade-marks Act, R.S.C. 1985, c. T-13, as amended

 

 

REASONS FOR JUDGMENT AND JUDGMENT

 

Introduction

[1]               This is an appeal under subsection 56(5) of the Trade-marks Act, R.S.C., 1985, c. T-13, (Act), from a decision of November 24, 2005 taken on behalf of the Registrar of Trade-Marks (Registrar), under section 45 of the Act, maintaining the registration of the Respondent, Scott Paper Limited (Scott), in its trade-mark VANITY.

 

Facts

[2]               Scott acquired this trade-mark by assignment in 1985.  At the request of Smart & Biggar the Registrar forwarded a section 45 notice to Scott on April 29, 2002 requiring it to show use of the trade-mark in the preceding three years. 

 

[3]               Scott filed as its only evidence the affidavit of Alejandro Teijeira.  This affidavit provided no explanation as to why the trade-mark had not been in use.  Its only explanation of the “special circumstances” explaining why the registration should not be cancelled was to the effect that in October, 2001, some 6 months before the section 45 notice was sent to it, it started developing plans for the manufacture and sale of paper products in association with the VANITY trade-mark.  The deponent provided an exhibit to his affidavit consisting of a copy of Scott’s “2002 Marketing Plan” which included a stated plan to “re-launch ‘VANITY’ brand in the second quarter of 2002”.  This required preparation for the manufacture of the intended products.  According to him the first sales of this product occurred in June, 2002.  He finished by asserting that Scott did not intend to abandon the trade-mark prior to or subsequent to the date of the section 45 notice. 

 

[4]               In his decision, the Senior Hearing Officer acting on behalf of the Registrar (SHO) reviewed the affidavit.  He first observed that, while the trade-mark registration covered both “paper and paper products”, there was no reference in the affidavit to its use with “paper”.  He therefore determined that such words should be deleted from the registered statement of wares.  With respect to “paper products”, he noted that subsection 45(1) of the Act requires that in response to a notice the registrant must show the date when the mark was last in use and the reason for the absence of such use.  Scott’s affidavit evidence provided neither.  He nevertheless held that he could apply subsection 45(3) which provides as follows:

 

[5]               The SHO, in the absence of evidence of last use, considered the date of registration in the name of Scott as the date of last use since Scott had produced no evidence that it had ever used this mark.  As the mark had been assigned to it in 1989, the SHO concluded that there had been no use of the mark in 13 years.  Further, in the absence of any evidence of reasons for the absence for such use, he drew the inference that “the absence of use has been due to a deliberate and voluntary decision of the registered owner”. 

 

[6]               The SHO accepted the registrant’s position that there are three criteria to be considered in deciding whether special circumstances exist that “excuse the absence of use” of a trade-mark during a 3-year period.  They are:

1.               the length of time of non-use;

2.               whether the reasons for not using the mark were due to circumstances beyond the registrant’s control; and

3.               whether there was a serious intention to resume use soon. 

 

These criteria were based on Registrar of Trade-marks v. Harris Knitting Mills Ltd. (1985), 4 C.P.R. (3d) 488 (F.C.A.) which had been subsequently followed by the Federal Court Trial Division in cases such as Ridout and Maybee v. Sealy Canada Ltd. (1999), 87 C.P.R. (3d) 307.  While he had found that the trade-mark had not been used by Scott for the 13 years preceding the section 45 notice, and that the non-use was due to a deliberate and voluntary decision by Scott, he nevertheless concluded that because Scott had commenced some 6 months prior to the notice to make serious plans to launch a new product with the trade-mark VANITY, a plan which was implemented by the sale of such product some 2 months after issue of the notice, this clearly showed that “the registrant’s trade-mark is not dead”.  Consequently, he found that the “registrant has provided evidence that qualifies as special circumstances excusing the non-use of the trade-mark with paper products” (see SHO decision, Applicant’s Record, Tab A, para. 28).  In doing so, he relied on two decisions of this Court, Ridout and Maybee v. Sealy Canada Ltd., above, and Oyen Wiggs Green & Mutala v. Pauma Pacific Inc. (1997), 84 C.P.R. (3d) 287 (F.C.A.).

 

 

[7]               The Applicant appeals this decision on the basis that the SHO had no evidence before him of “special circumstances” which could “excuse” the absence of use as required by subsection 45(3) of the Act, as quoted above.

 

Analysis

Standard of Review

[8]               I accept the analysis of a majority of the Federal Court of Appeal in Molson Breweries, a Partnership v. John Labatt Ltd. (1999), 5 C.P.R. (4^th) 180 at para. 29 where it was held that in Appeals under section 56 of the Act where no new evidence is produced the Registrar’s decision should be reviewed on the standard of reasonableness simpliciter.  Such is the case here.  While this is an appeal without any privative clause, deference must be shown to the Registrar who by the scheme of the Act must be deemed to have a certain expertise in such matters.

 

Established Criteria for Application of Subsection 45(3) of the Act

[9]               The leading authority on this subject, to which most subsequent decisions including that of the SHO pay lip service, is Registrar of Trade-marks v. Harris Knitting Mills Ltd., above.  This was an appeal from a decision of a Trial Division Judge reversing the decision of the Registrar and restoring a registration which had been set aside under the equivalent of section 45 of the Act.  The Court at para. 8 stressed the necessity for “special circumstances” being shown by a registrant and clarified that such circumstances must be those “not found in most cases of absence of use of a mark”.  It was emphasized that there must be circumstances which by their nature “excuse” the non-use.  The Court went on to say at para. 9:

It is impossible to state precisely what the circumstances referred to in subsection 44(3) must be to excuse the absence of use of a mark. The duration of the absence of use and the likelihood it will last a long time are important factors in this regard, however; circumstances may excuse an absence of use for a brief period of time without excusing a prolonged absence of use. It is essential, as well, to know to what extent the absence of use is due solely to a deliberate decision on the part of the owner of the mark rather than to obstacles beyond his control. It is difficult to see why an absence of use due solely to a deliberate decision by the owner of the mark would be excused.

 

[Emphasis added]

 

 

In that case there was evidence that the clothing associated with the trade-mark in question had gone out of fashion and the registrant had therefore ceased to use the trade-mark.  It had, however, because of changes in the fashion cycle, resumed use of the trade-mark some 18 months after notice was given under the equivalent of section 45.  The Federal Court of Appeal seemingly gave no significance to this commercial explanation for non-use of the trade-mark or the fact that the registrant had resumed use of it when those circumstances changed.  It therefore allowed the appeal and restored the expungement order of the Registrar.

 

[10]           While in the present case the SHO specifically cited the Registrar of Trade-marks v. Harris Knitting Mills Ltd., above, he does not seem to have given any significance to the statement therein that:

It is difficult to see why an absence of use due solely to a deliberate decision by the owner of the mark would be excused.

 

 

The SHO specifically found that in this case the absence of use had “been due to a deliberate and voluntary decision of the registered owner” (see SHO decision, Applicant’s Record, Tab A, para. 20).

 

[11]           I find it difficult to understand, as a matter of law, how a bona fide intention to use a trade-mark, even though formed prior to service of a notice under section 45, can “excuse the absence of use” for 3 years, considering that those 3 years were preceded by another 10 years in which it was not used.  Would one “excuse” a truant schoolboy for an absence of a month because, when confronted, he demonstrated that although he had no explanation for his past absences he genuinely intended to go to school the next week?

 

[12]           The SHO relied, as does the Respondent Scott here, on two decisions subsequent to Registrar of Trade-marks v. Harris Knitting Mills Ltd., above, namely the Oyen Wiggs Green & Mutala case, and the Ridout and Maybee case, both cited above.  I think they are distinguishable.  In the Oyen Wiggs Green & Mutala case the absence of use was shown to be less than 3 years, at a time when the time requirement under section 45 was 2 years, and the Registrar maintained the registration.  The Trial Division Judge on appeal declined to interfere with the decision of the Registrar as did the Federal Court of Appeal.  In a brief set of reasons delivered from the bench, the latter Court cited the Registrar of Trade-marks v. Harris Knitting Mills Ltd. case without reference to Justice Pratte’s statement therein quoted above that:

It is difficult to see why an absence of use due solely to a deliberate decision by the owner of the mark would be excused.

 

 

However there was no finding in that case that failure to use was a deliberate decision of the registrant and the Federal Court of Appeal was not prepared to dispute the position of the Registrar, as confirmed by the Federal Court Trial Division, that the proof of steps to resume use taken prior to delivery of the notice under section 45 was sufficient to prove an intent to use. 

 

[13]           In the Ridout and Maybee case, above, in the Trial Division, the learned Trial Judge found that the period of non-use was scarcely more than 3 years.  While he found that the registrant had not proved that the non-use was due to special circumstances beyond its control, there was clear evidence that during the relevant period it planned to recommence use of the mark and had done so after the notice was served.  These facts are far different from those in the present case where there had been non-use for 13 years; in fact there was no evidence of use by this registrant at any time prior to the delivery of notice under section 45.  With respect, I am also inclined to give far more weight to the fact that the SHO found that the non-use was not due to circumstances beyond the control of the registrant.  I believe that the application of this factor to deny an excuse would be consistent in law with the position of the Federal Court of Appeal in the Registrar of Trade-marks v. Harris Knitting Mills Ltd. case, above.

 

[14]           There are many references in decisions by the Registrar and the Court that the purpose of section 45 is to remove “deadwood” from the register.  The implication appears to be that if the registrant has any bone fide intention to use the trade-mark it should not be expunged in section 45 proceedings.  With respect, I believe it is important to keep in mind that the entitlement to obtain a trade-mark and to keep it is by law predicated on use of the trade-mark.  As former Chief Justice Thurlow said in Aerosol Fillers Inc. v. Plough (Canada) Ltd. (1980), 53 C.P.R. (2d) 62 (F.C.A.) at 66:

…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.

 

 

[15]           I have therefore concluded that the SHO erred in applying the law to the facts in finding that a 3-year period of non-use (preceded by a further 10 years of non-use) due to a deliberate decision of the registrant could be “excused” for the purposes of subsection 45(3) by reason of the registrant’s intention to use it in the near future.  I believe this is not reasonable:  it does not stand up to careful scrutiny.

 

Disposition

[16]           For these reasons, I will set aside the decision of the Registrar and order that the trade-mark be expunged.  I will award costs to the Applicant. 

 

 

JUDGMENT

            THIS COURT ADJUDGES that the decision of the Registrar be set aside, the registration of Scott Paper Limited TMDA 52,444 for the trade-mark VANITY be expunged, and costs be awarded to the Applicant.

 

 

 

“ B. L. Strayer ”

FEDERAL COURT

 

SOLICITORS OF RECORD

 

 

 

DOCKET:                                          T-693-06

 

STYLE OF CAUSE:                          SMART & BIGGAR

                                                            v.

                                                            AGC ET AL

 

 

 

PLACE OF HEARING:                    Toronto, Ontario

 

DATE OF HEARING:                      7-DEC-2006

 

REASONS FOR JUDGMENT

AND JUDGMENT:                          JUSTICE STRAYER

 

DATED:                                             December 21, 2006

 

 

 

APPEARANCES:

 

Ms.  Andrea Rush Ms.  Joanna Fine	FOR THE APPLICANT
Mr. Christopher J. Pibus Ms. Taren Wilkens	FOR THE RESPONDENTS

 

 

SOLICITORS OF RECORD:

 

HEENAN BLAIKIE LLP Toronto, ON	FOR THE APPLICANTS
GOWLING LAFLEUR HENDERSON LLP Toronto, ON	FOR THE RESPONDENTS