Masterpiece Inc. v. Alavida Lifestyles Inc.

Masterpiece Inc. v. Alavida Lifestyles Inc.
Collection
Supreme Court Judgments
Date
2011-05-26
Neutral citation
2011 SCC 27
Report
[2011] 2 SCR 387
Case number
33459
Judges
McLachlin, Beverley; Binnie, William Ian Corneil; LeBel, Louis; Fish, Morris J.; Charron, Louise; Rothstein, Marshall; Cromwell, Thomas Albert
On appeal from
Federal Court of Appeal
Subjects
Intellectual property
Notes
SCC Case Information: 33459
Decision Content
SUPREME COURT OF CANADA
Citation: Masterpiece Inc. v. Alavida Lifestyles Inc.,
2011 SCC 27, [2011] 2 S.C.R. 387
Date: 20110526
Docket: 33459
Between:
Masterpiece Inc.
Appellant
and
Alavida Lifestyles Inc.
Respondent
- and -
International Trademark Association
Intervener
Coram: McLachlin C.J. and Binnie, LeBel, Fish, Charron, Rothstein and Cromwell JJ.
Reasons for Judgment:
(paras. 1 to 114)
Rothstein J. (McLachlin C.J. and Binnie, LeBel, Fish, Charron and Cromwell JJ. concurring)
Masterpiece Inc. v. Alavida Lifestyles Inc., 2011 SCC 27, [2011] 2 S.C.R. 387
Masterpiece Inc. Appellant
v.
Alavida Lifestyles Inc. Respondent
and
International Trademark Association Intervener
Indexed as: Masterpiece Inc. v. Alavida Lifestyles Inc.
2011 SCC 27
File No.: 33459.
2010: December 8; 2011: May 26.
Present: McLachlin C.J. and Binnie, LeBel, Fish, Charron, Rothstein and Cromwell JJ.
on appeal from the federal court of appeal
Intellectual property — Trade‑marks — Confusion — Alberta company using unregistered trade‑marks prior to Ontario company’s registration of similar trade‑mark — Alberta company applying to expunge Ontario company’s trade‑mark registration from register of trade‑marks — Whether location where mark used is relevant to confusion analysis — What considerations are applicable in assessment of resemblance between proposed use trade‑mark and existing unregistered trade‑mark — How nature and cost of wares or services affects confusion analysis — Use of expert evidence in confusion analysis — Trade‑marks Act, R.S.C. 1985, c. T‑13, ss. 6 , 16(3) , 17 , 19 , 20 , 21 , 30 , 35 , 40(2) , 57(1) .
Masterpiece Inc. and Alavida Lifestyles Inc. (“Alavida”) are both involved in the retirement residence industry. Since 2001, Masterpiece Inc., operating in Alberta, has used several unregistered trade‑marks, including “Masterpiece the Art of Living”. Alavida, operating in Ontario, entered the market in 2005 and applied to register the trade‑mark “Masterpiece Living” on December 1, 2005 on the basis of a proposed use. Alavida began using this trade‑mark in January 2006. Shortly after Alavida’s application, Masterpiece Inc. also began using “Masterpiece Living” and applied to register it and the word “Masterpiece” as its trade‑marks in 2006. Because of Alavida’s prior application, which was eventually granted, Masterpiece Inc.’s applications were denied. Masterpiece Inc.’s subsequent application to expunge Alavida’s registration was dismissed by the trial judge who concluded that there was no likelihood of confusion between Alavida’s and Masterpiece Inc.’s marks. That decision was upheld on appeal.
Held: The appeal should be allowed and Alavida’s registration should be expunged.
This case concerns the basic approach and criteria applicable to the confusion analysis and in particular, whether there was a likelihood of confusion between Alavida’s trade‑mark and Masterpiece Inc.’s trade‑name and trade‑marks pursuant to s. 6 of the Trade‑marks Act . The test is whether, as a matter of first impression, the “casual consumer somewhat in a hurry” who encounters the Alavida trade‑mark, with no more than an imperfect recollection of any one of the Masterpiece Inc. trade‑marks or trade‑name, would be likely to think that Alavida was the same source of retirement residence services as Masterpiece Inc. Section 6(5) sets out the required approach to a confusion analysis. All surrounding circumstances must be considered, including: (a) the inherent distinctiveness of the trade‑marks or trade‑names and extent to which they have become known; (b) the length of time the trade‑marks or trade‑names have been in use; (c) the nature of the wares, services or business; (d) the nature of the trade; and (e) the degree of resemblance between the trade‑marks or trade‑names in appearance or sound or in the ideas suggested by them.
The first issue to be determined is whether the location where a mark is used is relevant when considering the likelihood of confusion between a registered trade‑mark and a prior unregistered one. Generally, pursuant to s. 19 , the owner of a registered trade‑mark is entitled to the exclusive use of that mark throughout Canada. The test for confusion is based upon the hypothetical assumption that the trade‑names and trade‑marks are used “in the same area”, irrespective of whether this is actually the case. In order for the owner of a registered trade‑mark to have exclusive use of the trade‑mark throughout Canada, there cannot be a likelihood of confusion with another trade‑mark anywhere in the country. For this reason, the location where the marks were actually used is not relevant.
The second question involves the considerations applicable in the assessment of the resemblance between a proposed use trade‑mark and an existing unregistered trade‑mark. It is the use of a trade‑mark and not registration itself that confers priority of title and the exclusive right to the trade‑mark. Rights are granted to the first user of a trade‑mark in two ways under the Act. First, under s. 16, a party normally gains a priority right to register a trade‑mark when it first uses that trade‑mark. Second, a user is also able to oppose applications, or apply to expunge registrations based on its earlier use of a confusing trade‑mark. Section 16(3) of the Act recognizes the right of a prior user against any application for registration based upon subsequent use. Masterpiece Inc. could apply to expunge Alavida’s trade‑mark pursuant to s. 16(3) of the Act on the grounds of likelihood of confusion between Alavida’s trade‑mark and any of its trade‑marks that had been in use before December 1, 2005. Further, Masterpiece Inc. was entitled to have each of its marks separately compared to Alavida’s “Masterpiece Living”. The trial judge erred in undertaking a single composite analysis, considering resemblance between “Masterpiece Living” and all of Masterpiece Inc.’s trade‑marks and trade‑name generally. Most confusion analyses should commence with an assessment of the resemblance between the marks in issue. The trial judge erred in considering Alavida’s actual use of its mark rather than addressing the entire scope of exclusive rights and potential uses that were granted to Alavida under its registration. His approach did not recognize that Alavida was entitled to use the protected words in any form including a format that closely resembled Masterpiece Inc.’s marks. Here, because Alavida’s proposed trade‑mark is only the words “Masterpiece Living”, the difference or similarity with each of Masterpience Inc.’s trade‑marks and trade‑name must be assessed on the basis of these words alone. The striking or unique aspect of each trade‑mark is the word “Masterpiece”. The idea evoked by each is also the same: high quality retirement lifestyle. Clearly, there is a strong resemblance between “Masterpiece the Art of Living” and “Masterpiece Living”.
A third issue is what effect the nature of the business and cost of the wares or services has in the confusion analysis. Here, the trial judge erred in considering that consumers of expensive goods and services would generally take considerable time to inform themselves about the source of those goods and services to suggest a reduced likelihood of confusion. Confusion must instead be assessed from the perspective of the first impression of the consumer approaching a costly purchase when he or she encounters the trade‑mark. The possibility that careful research could later remedy confusion does not mean that no confusion ever existed or that it would not continue to exist in the minds of consumers who did not carry out that research. The trial judge’s consideration should have been limited to how a consumer, upon encountering the Alavida mark in the marketplace, with an imperfect recollection of the Masterpiece Inc. marks, would have reacted. In circumstances where a strong resemblance suggests a likelihood of confusion, and the other s. 6(5) factors do not point strongly against a likelihood of confusion, cost is unlikely to lead to a different conclusion.
A final issue is the role of expert evidence in the trade‑mark confusion analysis. Generally, an expert should only be permitted to testify if the testimony is likely to be outside the experience and knowledge of the judge. Where the “casual consumer” is not particularly knowledgeable and there is a resemblance between the marks, expert evidence that simply assesses that resemblance will not usually be necessary. Judges should consider the marks at issue, each as a whole, but having regard to the dominant or most striking or unique feature of the trade‑mark, using their own common sense, to determine whether the casual consumer would be likely to be confused when first encountering the trade‑mark. In this case, Alavida’s expert engaged in a discussion of morphology and semantics instead of considering the marks as a whole. He also based his analysis on Alavida’s actual post‑registration use, rather than the full scope of rights granted to Alavida under its registration. Masterpiece Inc.’s survey was similarly unhelpful because it attempted to simulate consumers with an “imperfect recollection” when none was available. For this reason, the survey was not a valid assessment of the relevant question. Judges should be careful to question the necessity and relevance of such evidence, perhaps as part of a case management process, particularly in light of the substantial cost of evidence that may be of little utility.
Considering all the circumstances of the case, and particularly the strong similarity between Alavida’s “Masterpiece Living” and Masterpiece Inc.’s “Masterpiece the Art of Living”, Masterpiece Inc. has proven that the use of Alavida’s trade‑mark in the same area as those of Masterpiece Inc.’s would be likely to lead to the inference that the services associated with Masterpiece Inc.’s trade‑marks were being performed by Alavida. Because Masterpiece Inc.’s use preceded Alavida’s proposed use, Alavida was not entitled under s. 16(3) to registration of its trade‑mark and it should be expunged from the register.
Cases Cited
Applied: Mattel, Inc. v. 3894207 Canada Inc., 2006 SCC 22, [2006] 1 S.C.R. 772; Veuve Clicquot Ponsardin v. Boutiques Cliquot Ltée, 2006 SCC 23, [2006] 1 S.C.R. 824; Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235; Hollis v. Dow Corning Corp., [1995] 4 S.C.R. 634; considered: R. v. Mohan, [1994] 2 S.C.R. 9; Ultravite Laboratories Ltd. v. Whitehall Laboratories Ltd., [1965] S.C.R. 734; esure Insurance Ltd. v. Direct Line Insurance plc, 2008 EWCA Civ 842, [2008] R.P.C. 34; General Electric Co. v. The General Electric Co. Ltd., [1972] All E.R. 507; referred to: Partlo v. Todd (1888), 17 S.C.R. 196; Benson & Hedges (Canada) Ltd. v. St. Regis Tobacco Corp., [1969] S.C.R. 192; Leaf Confections Ltd. v. Maple Leaf Gardens Ltd. (1986), 12 C.P.R. (3d) 511, aff’d (1988), 19 C.P.R. (3d) 331; Mr. Submarine Ltd. v. Amandista Investments Ltd., [1988] 3 F.C. 91; Conde Nast Publications Inc. v. Union des éditions modernes (1979), 46 C.P.R. (2d) 183; General Motors Corp. v. Bellows, [1949] S.C.R. 678.
Statutes and Regulations Cited
Trade-marks Act, R.S.C. 1985, c. T-13, ss. 2 , 4 , 6 , 16(1) , (3) , 17 , 18 , 19 , 20 , 21 , 30 , 35 , 40 , 57(1) .
Trade-marks Regulations, SOR/96‑195.
Authors Cited
Gill, Kelly, and R. Scott Jolliffe. Fox on Canadian Law of Trade‑marks and Unfair Competition, 4th ed. Toronto: Carswell, 2002 (loose-leaf updated 2006, release 2).
Hughes, Roger T., and Toni Polson Ashton. Hughes on Trade Marks, 2nd ed. Markham, Ont.: LexisNexis, 2005 (loose‑leaf updated 2010, release 22).
Shorter Oxford English Dictionary on Historical Principles, 5th ed. Oxford: Oxford University Press, 2002, “resemblance”.
Vaver, David. Intellectual Property Law: Copyright, Patents, Trade‑marks, 2nd ed. Toronto, Ont.: Irwin Law, 2011.
APPEAL from a judgment of the Federal Court of Appeal (Sexton, Layden‑Stevenson and Trudel, JJ.A.), 2009 FCA 290, [2010] 4 F.C.R. 243, 397 N.R. 180, 78 C.P.R. (4th) 243, 312 D.L.R. (4th) 532, [2009] F.C.J. No. 1263 (QL), 2009 CarswellNat 3122, affirming a decision of O’Reilly J., 2008 FC 1412, 338 F.T.R. 168, 72 C.P.R. (4th) 160, [2008] F.C.J. No. 1826 (QL), 2008 CarswellNat 4970. Appeal allowed.
W. Clarke Hunter, Q.C., Kelly Gill and Brandon Potter, for the appellant.
Scott Miller, Sharon Griffin and Heather Gallant, for the respondent.
Daniel R. Bereskin, Q.C., and Mark L. Robbins, for the intervener.
The judgment of the Court was delivered by
Rothstein J. —
I. Introduction
[1] Trade-marks in Canada are an important tool to assist consumers and businesses. In the marketplace, a business marks its wares or services as an indication of provenance. This allows consumers to know, when they are considering a purchase, who stands behind those goods or services. In this way, trade-marks provide a “shortcut to get consumers to where they want to go”, per Binnie J. in Mattel, Inc. v. 3894207 Canada Inc., 2006 SCC 22, [2006] 1 S.C.R. 772, at para. 21. Where the trade-marks of different businesses are similar, a consumer may be unable to discern which company stands behind the wares or services. Confusion between trade-marks impairs the objective of providing consumers with a reliable indication of the expected source of wares or services. This case provides this Court with the opportunity of reviewing the basic approach and criteria applicable to a confusion analysis between competing trade-marks under the Trade-marks Act, R.S.C. 1985, c. T-13 (“Act ”).
[2] The question in this case is whether the trade-mark “Masterpiece Living”, proposed and subsequently registered by Alavida Lifestyles Inc. (“Alavida”), a company entering the retirement residence industry in Ontario, was then confusing with the unregistered trade-marks or trade-name previously used by another company, Masterpiece Inc., in the retirement residence industry in Alberta.
[3] Masterpiece Inc. contends that Alavida’s trade-mark, on the date its application for registration was filed with the Canadian Intellectual Property Office, December 1, 2005, was confusing with Masterpiece Inc.’s trade-name and trade-marks. It argues that Alavida was not entitled to apply for registration of its mark because of its confusing similarity to Masterpiece Inc.’s trade-name and trade-marks, which were used prior to Alavida’s application. Thus, it argues, the registration is invalid and should be expunged.
[4] Masterpiece Inc. was unsuccessful in the Federal Court (2008 FC 1412, 72 C.P.R. (4th) 160) and Federal Court of Appeal (2009 FCA 290, [2010] 4 F.C.R. 423) and now appeals to this Court.
[5] I am of the respectful opinion that the learned trial judge and the Federal Court of Appeal in this case did not interpret and apply the criteria for determining confusion correctly. Upon a correct interpretation and application, I conclude that Alavida’s proposed trade-mark “Masterpiece Living” was confusing with at least one of Masterpiece Inc.’s trade-marks when the registration application was filed on December 1, 2005. Therefore, Alavida was not entitled to registration of its proposed mark. Because I have found confusion between one of Masterpiece Inc.’s trade-marks and Alavida’s mark, it is not necessary to perform a confusion analysis between the other of Masterpiece Inc.’s trade-marks and its trade-name with Alavida’s mark. I would allow the appeal and order the Registrar of Trade-marks to expunge Alavida’s registration from the register of trade-marks.
[6] I should make clear that this decision deals only with the question of expungement of Alavida’s trade-mark registration for “Masterpiece Living”. Whether Masterpiece Inc. may register a trade-mark that comprises or includes the word “Masterpiece” will now be a matter for Masterpiece Inc. and the Registrar.
II. Facts
[7] Both Masterpiece Inc. and Alavida operate in the retirement residence industry. Prior to December 2005, Masterpiece Inc. used several trade-marks which included the word “Masterpiece”, as well as its trade-name “Masterpiece Inc.”. Alavida entered the market near the end of 2005 and applied to register the trade-mark “Masterpiece Living” to market its services.
[8] Masterpiece Inc. was incorporated in 2001. In the years between 2001 and 2005, it undertook two retirement residence construction and operation projects in Alberta and began a third. During this time, it used its corporate name, Masterpiece Inc., as a trade-name on materials including prospectuses, contracts and advertisements.
[9] Concurrently, Masterpiece Inc. used several unregistered trade-marks which involved the word “Masterpiece” including “Masterpiece the Art of Living”, “Masterpiece the Art of Retirement Living”, and a stylized word “Masterpiece” alongside a butterfly logo. It also used other marks, including the trade-mark “Club Sierra”, in its advertisements.
[10] Alavida, a subsidiary of Ashcroft Homes Inc., was incorporated on August 4, 2005. It applied to register the trade-mark “Masterpiece Living” on December 1, 2005, on the basis of a proposed use. The mark was registered unopposed on March 23, 2007. Since January 2006, Alavida has used “Masterpiece Living” as its trade-mark.
[11] Shortly after Alavida’s application, Masterpiece Inc. changed its branding slightly, and began using the very same trade-mark “Masterpiece Living”. The result of these almost simultaneous decisions was that, beginning in 2006, there were two Canadian companies, one operating in Alberta, another in Ontario, using the trade-mark “Masterpiece Living” in the retirement residence industry.
[12] In January 2006, Masterpiece Inc. applied to register “Masterpiece” as a trade-mark, and in June 2006, it applied to register the trade-mark “Masterpiece Living”. As a result of Alavida’s prior application, which was eventually granted, Masterpiece Inc.’s applications for both the trade-mark “Masterpiece Living” and the trade-mark “Masterpiece” were denied, as the Registrar concluded that they were confusing with Alavida’s trade-mark “Masterpiece Living”.
[13] On March 16, 2007, Masterpiece Inc. commenced this application to expunge Alavida’s registration. It appears that Masterpiece Inc. did not oppose Alavida’s application. However, it was not argued that its failure to do so had any impact on the expungement proceedings.
III. Federal Court
[14] O’Reilly J. dismissed Masterpiece Inc.’s application to expunge the Alavida trade-mark.
[15] He found that if Alavida’s trade-mark was confusingly similar to any trade-marks or trade-names that had previously been used, Alavida would not be entitled to the registration. He held that when considering whether a confusing mark was used prior to an application, “the relevant date is the date of filing of the application” (para. 9).
[16] The trial judge found that Masterpiece Inc. had shown “some use” of the trade-name “Masterpiece” and related marks including the word “Masterpiece” prior to Alavida’s application (at para. 19 (emphasis in original)), although he found the use was rather sporadic. He then considered whether there was a likelihood of confusion, under s. 6(5) of the Act , between Alavida’s trade-mark and these prior marks on the date of filing of Alavida’s application for registration.
[17] In conducting the confusion analysis under s. 6(5) of the Act , he found that the word “Masterpiece” in association with retirement residences or services was somewhat inherently distinctive (para. 41), but that there had been no acquired distinctiveness through use in any of Masterpiece Inc.’s marks on the relevant date (para. 42). On the issue of the resemblance between the marks, the trial judge accepted observations made by one of Alavida’s experts that Alavida’s post-registration use of its marks differed from Masterpiece Inc.’s use of its marks, both in design and in the focus of the advertisements. He found that although there was “obviously a degree of resemblance” as between the two companies’ marks, these differences in use served to reduce the likelihood of confusion (para. 46). He also observed that the choice of retirement residence was an important and expensive decision. As a result, consumers could be expected to research their decisions carefully, which would also reduce the likelihood of confusion.
[18] On the basis of these considerations, he concluded that Masterpiece Inc. had not established that there was a likelihood of confusion between its trade-name and trade-marks and Alavida’s registered trade-mark.
IV. Federal Court of Appeal
[19] At the Federal Court of Appeal, Sexton and Trudel JJ.A., writing for the court, dismissed Masterpiece Inc.’s appeal.
[20] The Court of Appeal upheld the findings of the trial judge that the relevant date for the confusion analysis was the date of filing of Alavida’s trade-mark application, December 1, 2005. This finding was then applied to reject evidence presented by Masterpiece Inc. that by December 1, 2005, it had unexecuted plans to expand into the central Canadian market. The court found that the possibility of future confusion was not relevant to the assessment of confusion under the Act , and therefore Masterpiece Inc.’s intention to expand its operations into new markets was irrelevant. It stated, at para. 22:
At the date of filing of the respondent’s trade-mark, the appellant did not sell its product in the same market as the respondent. This Court need not consider the appellant’s plans for expansion after that date.
[21] The balance of the Court of Appeal reasons also generally agreed with the trial judge’s approach to the confusion analysis, and found no palpable and overriding errors in his consideration of the evidence. Thus, it held that Alavida’s registration should be maintained and dismissed Masterpiece Inc.’s appeal.
V. Issues on Appeal
[22] There are four issues for consideration by this Court:
1. Is the location where a mark is used relevant when considering the likelihood of confusion between an applied for or registered trade-mark and a prior unregistered trade-mark or trade-name?
2. What considerations are applicable in the assessment of the resemblance between a proposed use trade-mark and an existing unregistered trade-mark?
3. When considering the “nature of the trade” under s. 6(5) of the Act , what effect does the nature and cost of the wares or services have on the confusion analysis?
4. When should courts take into account expert evidence in trade-mark or trade-name confusion cases?
VI. Analysis
[23] Sections of the Act relevant to this appeal are reproduced in the Appendix at the conclusion of these reasons.
A. Is the Location Where a Mark Is Used Relevant When Considering the Likelihood of Confusion Between an Applied for or Registered Trade-Mark and a Prior Unregistered Trade-Mark or Trade-Name?
[24] In the Federal Court of Appeal, a major focus in the reasons was whether Masterpiece Inc.’s plan to expand into eastern Canada, which could lead it into direct competition with Alavida, was relevant to the determination of confusion. While those plans have now been executed, and Masterpiece Inc. is operating in the retirement residence industry in Quebec, on December 1, 2005, they were merely plans.
[25] The Federal Court of Appeal concluded that these plans were not relevant. However, in doing so, it distinguished several authorities which Masterpiece Inc. submitted to support the relevance of its plans. Some of these authorities suggested that the geographical location where two trade-marks are used or proposed to be used does not affect the likelihood of confusion.
[26] Distinguishing these authorities could be seen as an acceptance that the geographical locale in which marks are used or proposed to be used is relevant for determining whether there is a likelihood of confusion. Indeed, in this Court, there was an intervention by the International Trademark Association which sought to address only this point. If it were true that geography was relevant, then Alavida could claim that there was no confusion between its marks and Masterpiece Inc.’s marks because on December 1, 2005, Masterpiece Inc. was only operating in Alberta, while it was operating in Ontario.
[27] While it is not entirely clear that the Federal Court of Appeal’s reasons should be read as suggesting that geography is relevant, I would take this opportunity to dispel any doubt on this point.
[28] The Canadian trade-marks regime is national in scope. The owner of a registered trade-mark, subject to a finding of invalidity, is entitled to the exclusive use of that mark in association with the wares or services to which it is connected throughout Canada. Section 19 of the Trade-marks Act provides:
19. Subject to sections 21 , 32 and 67 , the registration of a trade-mark in respect of any wares or services, unless shown to be invalid, gives to the owner of the trade-mark the exclusive right to the use throughout Canada of the trade-mark in respect of those wares or services.
[29] With respect to confusion, ss. 6(1) and (2) of the Trade-marks Act provide:
6. (1) For the purposes of this Act , a trade-mark or trade-name is confusing with another trade-mark or trade-name if the use of the first mentioned trade-mark or trade-name would cause confusion with the last mentioned trade-mark or trade-name in the manner and circumstances described in this section.
(2) The use of a trade-mark causes confusion with another trade-mark if the use of both trade-marks in the same area would be likely to lead to the inference that the wares or services associated with those trade-marks are manufactured, sold, leased, hired or performed by the same person, whether or not the wares or services are of the same general class.
Section 6(3) deals with trade-mark confusion with a trade-name and 6(4) with trade-name confusion with a trade-mark. In subsections (2), (3) and (4), the same formula is used “if the use of both . . . in the same area would be likely to lead to the inference”.
[30] It is immediately apparent from these words, “if the use of both . . . in the same area”, that the test for confusion is based upon the hypothetical assumption that both trade-names and trade-marks are used “in the same area”, irrespective of whether this is actually the case. As a result, geographical separation in the use of otherwise confusingly similar trade-names and trade-marks does not play a role in this hypothetical test. This must be the case, because, pursuant to s. 19 , subject to exceptions not relevant here, registration gives the owner the exclusive right to the use of the trade-mark throughout Canada.
[31] In order for the owner of a registered trade-mark to have exclusive use of the trade-mark throughout Canada, there cannot be a likelihood of confusion with another trade-mark anywhere in the country.
[32] Section 16(3) confirms this conclusion, stating that an applicant for a proposed mark will be entitled to registration unless at the date of filing the trade-mark it is confusing with a trade-mark or trade-name that had been previously used in Canada. Section 16(3) provides:
16. . . .
(3) Any applicant who has filed an application in accordance with section 30 for registration of a proposed trade-mark that is registrable is entitled, subject to sections 38 and 40 , to secure its registration in respect of the wares or services specified in the application, unless at the date of filing of the application it was confusing with
(a) a trade-mark that had been previously used in Canada or made known in Canada by any other person;
(b) a trade-mark in respect of which an application for registration had been previously filed in Canada by any other person; or
(c) a trade-name that had been previously used in Canada by any other person.
[33] Whether in assessing trade-mark infringement under s. 19 or entitlement under s. 16, the test for likelihood of confusion is the same. The application of the hypothetical test reflects the legislative intent to provide a national scope of protection for registered trade-marks in Canada (see D. Vaver, Intellectual Property Law: Copyright, Patents, Trade-marks (2nd ed. 2011), at p. 536).
B. What Considerations Are Applicable in the Assessment of the Resemblance Between a Proposed Use Trade-Mark and an Existing Unregistered Trade-Mark?
[34] To clarify the proper approach to assessing the resemblance between a proposed use trade-mark and existing unregistered marks, it will be useful to address a number of issues:
(1) the relationship between use and registration;
(2) the test for confusion;
(3) the necessity to consider each mark separately;
(4) the approach to testing for resemblance;
(5) the necessity to consider the proposed use trade-mark according to its terms, rather than by its actual use;
(6) the requirement to assess the unregistered marks according to their actual use; and
(7) the resemblance between the trade-marks in issue.
While these issues are relevant in this case, they are not intended to be an exhaustive list of all considerations that are relevant in assessing resemblance.
(1) The Relationship Between Use and Registration
[35] At the outset, it is important to recall the relationship between use and registration of a trade-mark. Registration itself does not confer priority of title to a trade-mark. At common law, it was use of a trade-mark that conferred the exclusive right to the trade-mark. While the Trade-marks Act provides additional rights to a registered trade-mark holder than were available at common law, registration is only available once the right to the trade-mark has been established by use. As explained by Ritchie C.J. in Partlo v. Todd (1888), 17 S.C.R. 196, at p. 200:
It is not the registration that makes the party proprietor of a trade-mark; he must be proprietor before he can register . . . .
[36] That principle established under Canada’s early trade-mark legislation continues under the present Act . Rights arising from use have been incorporated into the Act by granting rights to the first user of a trade-mark in two ways. First, under s. 16 , a party normally gains a priority right to register a trade-mark when it first uses that trade-mark. Second, a user is also able to oppose applications or apply to expunge registrations based on its earlier use of a confusing trade-mark. This explains why an unregistered trade-mark of Masterpiece Inc. can be the basis of a challenge to Alavida’s subsequent registration application. Section 16(3) of the Act recognizes the right of a prior user against any application for registration based upon subsequent use. Section 17(1) preserves that right, subject to certain limitations that are of no relevance here, where the trade-mark has been registered.
[37] It should also be explained why Alavida’s application for a proposed trade-mark on December 1, 2005, would preclude Masterpiece Inc.’s subsequent trade-mark applications based on actual use. As noted above, at common law, trade-mark protection only arose from actual use. However, under the current Trade-marks Act , the opportunity was created for an applicant to claim priority as of the date the applicant files for a proposed but yet unused trade-mark. Registration will, however, not occur unless the applicant subsequently provides a declaration demonstrating that the proposed trade-mark was actually used within the time specified in s. 40(2) of the Act .
[38] In this case, Alavida did provide such a declaration, with the result that its priority claim as of December 1, 2005, the date it filed its registration application, precluded Masterpiece Inc. from obtaining registration of “Masterpiece Living”, the exact same trade-mark as Alavida, by a subsequent application based on use after December 1, 2005. Instead, it would have had to oppose Alavida’s application or would have to apply to expunge Alavida’s trade-mark registration on the grounds of likelihood of confusion between Alavida’s trade-mark and its trade-marks or trade-name that had been in use before December 1, 2005. Because Masterpiece Inc. did not oppose Alavida’s application, which was granted, the only remedy open to Masterpiece Inc. was to apply to have Alavida’s mark expunged. If successful, this remedy would allow Masterpiece Inc.’s application for registration of its own trade-marks to be considered on its merits by the Registrar of Trade-marks.
(2) The Test for Confusion
[39] The question at the centre of this case is whether there was confusion between Alavida’s and Masterpiece Inc.’s trade-marks or trade-name in terms of s. 6 of the Act . In my respectful opinion, the learned trial judge erred in law when conducting the confusion analysis, and thereby erred in his conclusion that Masterpiece Inc. had not established confusion between its trade-name and trade-marks and Alavida’s now registered trade-mark.
[40] At the outset of this confusion analysis, it is useful to bear in mind the test for confusion under the Trade-marks Act . In Veuve Clicquot Ponsardin v. Boutiques Cliquot Ltée, 2006 SCC 23, [2006] 1 S.C.R. 824, Binnie J. restated the traditional approach, at para. 20, in the following words:
The test to be applied is a matter of first impression in the mind of a casual consumer somewhat in a hurry who sees the [mark], at a time when he or she has no more than an imperfect recollection of the [prior] trade-marks, and does not pause to give the matter any detailed consideration or scrutiny, nor to examine closely the similarities and differences between the marks.
Binnie J. referred with approval to the words of Pigeon J. in Benson & Hedges (Canada) Ltd. v. St. Regis Tobacco Corp., [1969] S.C.R. 192, at p. 202, to contrast with what is not to be done — a careful examination of competing marks or a side by side comparison.
[41] In this case, the question is whether, as a matter of first impression, the “casual consumer somewhat in a hurry” who sees the Alavida trade-mark, when that consumer has no more than an imperfect recollection of any one of the Masterpiece Inc. trade-marks or trade-name, would be likely to be confused; that is, that this consumer would be likely to think that Alavida was the same source of retirement residence services as Masterpiece Inc.
(3) The Necessity to Consider Each Mark Separately
[42] As noted above, the basis for Masterpiece Inc.’s claim under s. 16(3) of the Act is that the trade-mark for which Alavida applied was confusing with any trade-mark or the trade-name it had used prior to December 1, 2005.
[43] Under s. 16(3), even one confusingly similar trade-mark or trade-name will invalidate Alavida’s registration. In pleading several potentially confusingly similar trade-marks and trade-names, Masterpiece Inc. presented several distinct bases for an invalidation of Alavida’s registration.
[44] Section 6(5) of the Act sets out the required approach to a confusion analysis. All surrounding circumstances must be considered including:
6. . . .
(5) . . .
(a) the inherent distinctiveness of the trade-marks or trade-names and the extent to which they have become known;
(b) the length of time the trade-marks or trade-names have been in use;
(c) the nature of the wares, services or business;
(d) the nature of the trade; and
(e) the degree of resemblance between the trade-marks or trade-names in appearance or sound or in the ideas suggested by them.
[45] Some of the s. 6(5) factors that guide the confusion analysis will be the same for each of the trade-marks and trade-name in this case. For example, all of the evidence suggests that Masterpiece Inc. only engaged in the retirement residence industry and used all of its marks in relation to that industry. In others, each mark will have to be considered separately. For example, because the Masterpiece Inc. trade-marks are different in content from one another, and are different from the trade-name, it will be necessary to consider the similarity of Alavida’s proposed trade-mark, “Masterpiece Living”, to each of the trade-marks and trade-name for which Masterpiece Inc. has established use.
[46] The trial judge found that Masterpiece Inc. demonstrated that it had used the trade-name “Masterpiece” and the trade-marks “Masterpiece the Art of Retirement Living” and “Masterpiece the Art of Living”. Alavida’s application for registration was for the trade-mark “Masterpiece Living”. It was therefore necessary to compare Alavida’s “Masterpiece Living” with each of Masterpiece Inc.’s trade-marks and trade-name separately.
[47] However, instead of undertaking a separate resemblance analysis comparing each of Masterpiece Inc.’s marks and trade-name with Alavida’s mark, the trial judge undertook a single composite analysis. He only considered the issue of resemblance between “Masterpiece Living” and all of Masterpiece Inc.’s trade-marks and trade-name generally. At para. 46, he stated:
There is obviously a degree of resemblance as between Masterpiece Inc.’s trade-name and marks and Alavida’s registered mark for “Masterpiece Living”. However, as part of the overall circumstances, I note that Alavida’s use of “Masterpiece Living” has been in the nature of a slogan accompanying its corporate identity. By contrast, Masterpiece Inc. uses “Masterpiece” to identify the company itself, along with various other words and phrases of far lesser prominence, alongside a distinctive butterfly logo. These differences help reduce the likelihood of confusion. [Emphasis added.]
[48] However, under ss. 16(3) (a) and (c) of the Act , Masterpiece Inc. was entitled to assert, and have considered, any of the marks or trade-name that it had used prior to December 1, 2005, as a basis to challenge Alavida’s application for registration. In my opinion, the trial judge erred in not conducting the separate analysis required by the Act . Some of the expert evidence which treated Masterpiece Inc.’s trade-marks and trade-name as a whole instead of one by one (see, e.g., paras. 21-23 and 36), may have contributed to this error.
(4) The Approach to Testing for Resemblance
[49] In applying the s. 6(5) factors to the question of confusion, the trial judge conducted his analysis in the order of the criteria set forth in s. 6(5) , concluding with a consideration of the resemblance between the marks. While it is no error of law to do so, the degree of resemblance, although the last factor listed in s. 6(5) , is the statutory factor that is often likely to have the greatest effect on the confusion analysis (K. Gill and R. S. Jolliffe, Fox on Canadian Law of Trade-marks and Unfair Competition (4th ed. (loose-leaf)), at p. 8-54; R. T. Hughes and T. P. Ashton, Hughes on Trade Marks (2nd ed. (loose-leaf)), at §74, p. 939). As Professor Vaver points out, if the marks or names do not resemble one another, it is unlikely that even a strong finding on the remaining factors would lead to a likelihood of confusion. The other factors become significant only once the marks are found to be identical or very similar (Vaver, at p. 532). As a result, it has been suggested that a consideration of resemblance is where most confusion analyses should start (ibid.).
[50] I will therefore first review the trial judge’s consideration of the degree of resemblance of the marks.
(5) The Necessity to Consider the Proposed Use Trade-Mark According to Its Terms, Rather Than by Its Actual Use
[51] In his analysis, the trial judge found that there was “obviously a degree of resemblance as between