It’s quite rare for the Supreme Court of Canada to rule on trademark issues.
“Over the past 10 years, the Supreme Court has considered only three trademark appeals and only one since 2006,” says Jane Caskey of Ogilvy Renault LLP.
But the top court’s decision last April to grant leave to appeal in Masterpiece Inc. v. Alavida Lifestyles Inc. has the potential to be an adrenalin injection for trademark law.
The court heard the substantive appeal on Dec. 8 and reserved its decision on the three key issues before it: whether the test for confusion should take into account potential future confusion; whether a likelihood of confusion can exist between two existing trademarks that aren’t competing in the same geographic area; and whether parties can overcome a likelihood of confusion by reference to the designs that accompany trademarks.
Masterpiece and Alavida Lifestyles were both in the retirement residence business. Masterpiece claimed it had been using various trademarks that included the word “masterpiece” for about five years before Alavida registered the mark “Masterpiece Living” in 2007.
Masterpiece was unaware of the registration and didn’t oppose it but subsequently moved to expunge it on the basis that it had already acquired the rights to it and because Alavida’s mark was likely to create confusion.
The Federal Court of Appeal ruled against Masterpiece. It concluded that future confusion wasn’t a relevant consideration because the statutory language prohibited registration only if confusion existed “at the date of filing” of the application.
“We are therefore of the view that in an application for expungement grounded on paragraph 16(3)(a) [of the Trademarks Act], the relevant time to test for confusion is the date of filing of the application for the trademark for which expungement is sought.”
The court also ruled that confusion wasn’t a consideration for the purposes of an expungement application when the parties weren’t using the marks in the same geographic area at the date of application.
“At the date of filing of the respondent’s trademark, the appellant did not sell its product in the same market as the respondent,” the court noted. “This court need not consider the appellant’s plans for expansion after that date.”
Finally, the court held that judges in expungement actions could consider designs surrounding marks in deciding whether confusion existed.
Indeed, the court observed that Masterpiece had provided no precedent for the proposition that the consideration of designs was an unacceptable method of analyzing confusion.
“On the other hand, we refer the appellant to United Artists Corp. v. Pink Panther Beauty Corp. [sic] [where] this court specifically stated that the ‘getup,’ or the way that a product is packaged and as a consequence the way the mark is presented to the public, is an important factor in determining whether confusion is likely.”
These issues were significant enough to attract global interest to the case.
“The International Trademark Association intervened in the case because of the importance of the principles involved,” says Clarke Hunter of Macleod Dixon LLP’s Calgary office. He represents Masterpiece.
This marked the second time in recent years that the Supreme Court has recognized the association as an intervener in a trademark case. In 2006, it intervened in Veuve Clicquot Ponsardin v. Boutiques Cliquot Ltée., in which the top court clarified the law of dilution in Canada.
Among other things, the association, represented by Daniel Bereskin of Bereskin & Parr LLP’s Toronto office, argued in Masterpiece that the Federal Court of Appeal incorrectly took into account the geographic separation between a prior user and an applicant when determining if there’s a likelihood of confusion between the two marks.
“The decision of the Federal Court of Appeal, unless corrected, can complicate trademark clearance in Canada,” Bereskin said in a press release after the hearing. “It also contradicts the Trademarks Act, which requires that the owner of a valid trademark registration must be the first to have applied to register or used the mark before anyone else uses a similar mark or name anywhere in Canada.”