Federal Court of Appeal Decisions

Date: 20030307

Docket: A-605-01

Neutral citation: 2003 FCA 120

CORAM:        ROTHSTEIN J.A.

PELLETIER J.A.

MALONE J.A.

BETWEEN:

                                             BOSTON PIZZA INTERNATIONAL INC.

                                                                                                                                                       Appellant

                                                                                 and

                                                        BOSTON CHICKEN INC. and

GLOBAL RESTAURANT OPERATIONS OF IRELAND LIMITED

                                                                                                                                               Respondents

                                 Heard at Vancouver, British Columbia, on December 16, 2002

                                    Judgment delivered at Ottawa, Ontario, on March 7, 2003.

REASONS FOR JUDGMENT BY:                                                                               PELLETIER J.A.

CONCURRED IN BY:                                                                                                   ROTHSTEIN J.A.

                                                                                                                                              MALONE J.A.

Date: 20030307

Docket: A-605-01

Neutral citation: 2003 FCA 120

CORAM:        ROTHSTEIN J.A.

PELLETIER J.A.

MALONE J.A.

BETWEEN:

                                             BOSTON PIZZA INTERNATIONAL INC.

                                                                                                                                                       Appellant

                                                                                 and

                                                        BOSTON CHICKEN INC. and

GLOBAL RESTAURANT OPERATIONS OF IRELAND LIMITED

                                                                                                                                               Respondents

                                                        REASONS FOR JUDGMENT

PELLETIER J.A.

[1]                 Boston Pizza International Inc. (the appellant, or Boston Pizza) appeals from dismissal of its application for expungement of the registration of the trade-marks BOSTON CHICKEN, registration number TMA398,700 and BOSTON CHICKEN design, registration number TMA396,282, a decision reported at 2001 FCT 21024, (2001) 15 C.P.R. (4th) 345. Nadon J. (as he then was) dismissed the application after concluding that there was no likelihood of confusion between the BOSTON CHICKEN marks and Boston Pizza's trade-mark BOSTON PIZZA. The learned judge decided out of hand that there was no possibility of confusion between the appellant's marks and the BOSTON CHICKEN design, so that his analysis was limited to the BOSTON CHICKEN trade-mark (the BOSTON CHICKEN mark).

[2]                 While a number of issues were raised in the materials filed by the parties, the argument before us came down to a single issue, namely whether, having regard to the learned trial judge's conclusion that the respondent's BOSTON CHICKEN mark lacked inherent distinctiveness, and considering the scant evidence of use of the mark in Canada, the respondent's registration was therefore invalid by reason of subsection 18(1)(b) of the Trade-Marks Act, R.S.C. 1985 c. T-13 (the Act):

[3]                 The appellant's argument was straightforward. Since the respondent's BOSTON CHICKEN mark was not inherently distinctive, and with the possible exception of one isolated incident, the mark had not been used in Canada so that it could not have acquired distinctiveness through use, the judge was bound to expunge the registration due to its invalidity pursuant to subsection 18(1)(b).

[4]                 The respondent's position was that, having regard to the general scheme of the Act including the definition of "distinctive" found in the Act, distinctiveness could be established without use in Canada. Section 2 of the Act defines "distinctive" as follows:

A trade-mark is distinctive if it "actually distinguishes" the wares and services of one trader from those of others or if it is "adapted so to distinguish them".

[5]                 To establish that the BOSTON CHICKEN mark "actually distinguishes", it must be shown that it has acquired distinctiveness through use. But the evidence of use is very scant, consisting of very general statements about spill-over advertising and use of the mark at one local event in the Windsor area after the expungement application was filed. According to the Trial Judge, there was "not much evidence" of the use of the BOSTON CHICKEN trade-mark in Canada. The evidence as to spill-over advertising consists of little more than an assertion that the respondent did some advertising on American television stations whose coverage area extended into Canada. There is no evidence as to the nature or amount of such advertising, nor any evidence as to its effect. The Trial Judge found the BOSTON CHICKEN trade-mark deserved little protection. Before this Court, the respondent conceded that, for purposes of this appeal, there was no evidence of use of the BOSTON CHICKEN trade-mark. I am satisfied the BOSTON CHICKEN mark has not acquired distinctiveness as a result of its use in Canada.

[6]                 The question then becomes whether the mark is adapted to distinguish the respondent's services from those of others. The respondent's position is that it is. The appellant cites authority to the effect that a trade-mark is adapted to distinguish when it is inherently distinctive. See Standard Coil Products (Canada) Ltd. v. Standard Radio Corp., [1971] F.C. 106 (T.D.) where Cattanach J. held as follows:

[para47]      If a trade mark is a coined or invented word it is obviously adapted to distinguish but if a trade mark is prima facie not distinctive, as for example a laudatory epithet or descriptive of the character of quality of the wares, then it becomes a question of fact if the trade mark actually distinguishes the wares.

[para48]      The concluding words in s. 2(f) "or is adapted so to distinguish them" are obviously introduced to cover the circumstances of a proposed trade mark or one that has not enjoyed a long and extensive use. The word "or", as used in this context, is disjunctive. Therefore a word which is a proposed trade mark or one that has enjoyed limited use must be inherently distinctive to be registered, whereas a trade mark that is not inherently distinctive may be registered if it is established, as a fact, that it actually distinguishes the wares of its owner.

  

[7]                 The jurisprudence of the Trade-Marks Opposition Board is to the same effect:

"Distinctive" in relation to a trade mark means a trade mark that actually distinguishes the wares or services in association with which it is used by the owner from the wares or services of others or is adapted to distinguish them. The words "adapted to distinguish" refer to the inherent capability of a trade mark to distinguish the wares or services of the trade mark owner without the need of establishing acquired distinctiveness.

Hoechst Canada Inc. v. Sandoz Canada Inc. (1995), 60 C.P.R. (3d) 559 (T.M.O.B.)

[8]                 Nadon J.'s finding that the BOSTON CHICKEN mark lacked inherent distinctiveness amounts to a finding that the mark is not adapted to distinguish the respondent's services from those of other traders. Consequently, since the mark does not actually distinguish the respondent's services from those of other traders, and is not adapted to do so, its registration is invalid because of its lack of distinctiveness.

[9]                 The respondent attempts to avoid this result by arguing that acquired distinctiveness can arise from use of the mark outside Canada. It supports this argument by pointing out that foreign trade-marks will rarely be able to achieve or maintain registration in Canada if distinctiveness cannot be acquired by foreign use of a mark.

Section 16(2) of the Trade-Marks Act provides for entitlement to registration of trade-marks registered and used abroad. An applicant is entitled to secure registration of a trade-mark pursuant to s. 16(2) of the Trade-Marks Act without having used the trade-mark in Canada. If the Appellant's interpretation of "distinctiveness" is correct, such a registration would immediately liable to be expunged pursuant to 18(1)(b) on grounds that the mark was not distinctive because it had not been used in Canada.

Respondent's Submissions dated January 7, 2003 at para. 14

[10]            The difficulty with this argument is that it ignores the conditions for registration of foreign registered trade-marks which are found at section 14 of the Act:

14. (1) Notwithstanding section 12, a trade-mark that the applicant or the applicant's predecessor in title has caused to be duly registered in or for the country of origin of the applicant is registrable if, in Canada, (a) it is not confusing with a registered trade-mark; (b) it is not without distinctive character, having regard to all the circumstances of the case including the length of time during which it has been used in any country; (c) it is not contrary to morality or public order or of such a nature as to deceive the public; or (d) it is not a trade-mark of which the adoption is prohibited by section 9 or 10.

14. (1) Nonobstant l'article 12, une marque de commerce que le requérant ou son prédécesseur en titre a fait dûment déposer dans son pays d'origine, ou pour son pays d'origine, est enregistrable si, au Canada, selon le cas_: a) elle ne crée pas de confusion avec une marque de commerce déposée; b) elle n'est pas dépourvue de caractère distinctif, eu égard aux circonstances, y compris la durée de l'emploi qui en a été fait dans tout pays; c) elle n'est pas contraire à la moralité ou à l'ordre public, ni de nature à tromper le public; d) son adoption comme marque de commerce n'est pas interdite par l'article 9 ou 10.

[11]            The effect of section 14 is that a foreign registered trade-mark must still satisfy certain threshold conditions in order to be eligible for registration in Canada. One of those conditions is that the trade-mark must have a "distinctive character".    This is a less demanding test than distinctiveness but it still requires some evidence of use in Canada.

Thus, I think that it can be said that in reference to trade marks, the term "distinctive character"      means those trade marks which have the traits or characteristics of distinctive trade marks. To revert to the definition, set forth above, the characteristic of distinctive trade marks in Canada is that they actually distinguish the wares or services of the owner from the wares or services of others or are adapted to distinguish them. To put it another way, if a mark to some extent in fact distinguishes the wares or services of the owners from those of others, the mark is not without distinctive character. In the context of this case, the trade mark being descriptive, it may not be sufficiently distinctive to have acquired a secondary meaning in Canada to satisfy the definition of distinctive. None the less, it may have some distinctiveness. If that is so, it is not without distinctive character in Canada. (emphasis added)

W.R. Grace & Co v. Union Carbide Corp. et al. (1987), 14 C.P.R. (3^rd) 337 at p. 347.

[12]            Use in Canada seems to be implicit in the passage which I have emphasized above. However, the question was specifically addressed by McKeown J. in Supershuttle International, Inc. v. Registrar of Trade-marks (2002), 19 C.P.R. (4^th) 34 (F.C.A.).

[23] In this case the applicant submitted there was no need for the mark to be have been used or made known in Canada under this section [14(1)(b)]. However, I disagree, since the language of the provision explicitly uses the words "in Canada", stating that a trade-mark is registrable if "in Canada . . . it is not without distinctive character". In my view, this language suggests a requirement of at least some knowledge of the mark in Canada. Knowledge or use exclusively in another country would be insufficient.

[13]            While there may be some difference between distinctive character and the distinctiveness of a mark, the jurisprudence is consistently to the effect that distinctiveness can only be acquired by use in Canada. It is not obvious why the demonstration of "distinctive character" should not be subject to the same condition. The following comments of Tomlin J. in Impex Electrical Ltd. v. Weinbaum (1927), 44 R.P.C. 405, at p. 410 have frequently been cited in the Federal Court:

For the purpose of seeing whether the mark is distinctive, it is to the market of this country alone that one has to have regard. For that purpose foreign markets are wholly irrelevant, unless it be shown by evidence that in fact goods have been sold in this country with a foreign mark on     them, and that the mark so used has thereby become identified with the manufacturer of the goods.

  

See S.A.F.T. -- Societe des Accumulateurs fixes et de traction v. Charles Le Borgne Ltee (1975), 22 C.P.R. (2^nd) 178 (F.C.T.D.), Madger v. Brecks Sporting Goods Co. (1973), 17 C.P.R. (2^nd) 201 (F.C.A.), Consorzio del Prosciutto di Parma v. Maple Leaf Meats Inc. (2001), 11 C.P.R. (4^th) 48 (F.C.T.D), Unitel Communications Inc. v. Bell Canada (1995), 61 C.P.R. (3^rd) 95. (F.C.T.D).

[14]            The result is that foreign registered trade-marks which are not inherently distinctive may well see their registration in Canada at risk in expungement proceedings unless they can show some degree of acquired distinctiveness through use in Canada. Since the date at which distinctiveness is to be assessed for purposes of section 18 is the date at which expungement proceedings are begun, delay in using the marks following registration works against the registrant. In this case, there is a gap of some three years between the date of registration and the date of expungement proceedings. It may well have been possible for the BOSTON CHICKEN mark to acquire distinctiveness had it been used in Canada in that period of time.

[15]            The respondent has failed to satisfy me that its BOSTON CHICKEN mark is either inherently distinctive, or has acquired distinctiveness by virtue of its use in Canada. For those reasons, it is liable to be expunged from the register.

[16]            However, the registration of the BOSTON CHICKEN design, registration number TMA396,282, is not subject to the same attack.    Nadon J.'s finding that the BOSTON CHICKEN mark was not inherently distinctive was restricted to the words BOSTON CHICKEN alone. He made no such findings with respect to the BOSTON CHICKEN logo or design. The onus is on the appellant to demonstrate that the design is not distinctive. There was no argument in this Court directed to whether the logo was adapted to distinguish. Consequently, there is no basis upon which the BOSTON CHICKEN design or logo should be expunged.

[17]            I would allow the appeal in part. There will be an order that the registration for BOSTON CHICKEN number TMA398,700 be expunged from the register. The appellant is entitled to its costs here and below.

  

          "J.D.Denis Pelletier"                   

J.A.   

"I agree

Marshall Rothstein J.A."

"I agree

B. Malone J.A."

                          FEDERAL COURT OF APPEAL

    NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                                 A-605-01

STYLE OF CAUSE:              BOSTON PIZZA INTERNATIONAL INC.

v. BOSTON CHICKEN INC. ET AL

PLACE OF HEARING:         VANCOUVER, B.C.

DATE OF HEARING:           DECEMBER 16, 2002

REASONS FOR JUDGMENT BY:             PELLETIER J.A.

DATED:                                    MARCH 7, 2003

CONCURRED IN BY:          ROTHSTEIN J.A.

MALONE J.A.

APPEARANCES:                    Mr. Gregory Harney

Mr. Andrew Morrison

For Appellant

Mr. Glen Bloom

For Respondents

SOLICITORS OF RECORD:                        Shields Harney

Vancouver, B.C.

For Appellant

  

Osler Hoskin & Harcourt          

Ottawa, ON

For Respondents