Arterra Wines Canada, Inc. v. Diageo North America, Inc.

Arterra Wines Canada, Inc. v. Diageo North America, Inc.
Court (s) Database
Federal Court Decisions
Date
2020-04-09
Neutral citation
2020 FC 508
File numbers
T-23-19
Notes
Digest
Decision Content
Date: 20200409
Docket: T-23-19
Citation: 2020 FC 508
Ottawa, Ontario, April 9, 2020
PRESENT: The Honourable Madam Justice Fuhrer
BETWEEN:
ARTERRA WINES CANADA, INC.
Applicant
and
DIAGEO NORTH AMERICA, INC.
Respondent
JUDGMENT AND REASONS
I. Introduction
[1] Pursuant to subsection 56(1) of the Trademarks Act, RSC 1985, c T-13 [TMA], the Applicant Arterra Wines Canada, Inc. [Arterra or Opponent], the owner of NAKED GRAPE in Canada as detailed below, appeals the October 31, 2018 decision of the Trademarks Opposition Board [TMOB] made on behalf of the Registrar of Trademarks [Registrar]: Arterra Wines Canada, Inc v Diageo North America, Inc, 2018 TMOB 134 [Arterra Wines]. The TMOB rejected Arterra’s opposition to co-pending trademark application Nos. 1,561,944 for THE NAKED TURTLE [‘944 Application] and 1,592,265 for THE NAKED TURTLE Design – front label [‘265 Application], but refused co-pending trademark application No. 1,592,266 for THE NAKED TURTLE Design – back label [‘266 Application]. The ‘266 Application is not at issue in this appeal.
[2] For the reasons that follow, I allow the appeal and refuse the ‘944 Application and the ‘265 Application.
II. Background
[3] On January 30, 2012, the Respondent, Diageo North America, Inc. [Diageo], filed the ‘944 Application for the word mark THE NAKED TURTLE based on proposed use of the mark in Canada, initially in association with “alcoholic beverages except vodka and beers”. This application had a convention priority filing date of December 21, 2011. It was amended on August 21, 2012 to redefine the goods as “rum and rum-flavoured beverages (vodka and beer excluded)”. The application then was advertised on January 23, 2013 and opposed on June 23, 2013 by Constellation Brands Canada, Inc. [Constellation Canada or Opponent], which later became Arterra as described below. The ‘944 application was amended again on June 4, 2015 to redefine the goods as “distilled spirits, namely rum and rum-flavoured beverages (vodka and beer excluded)”.
[4] On August 30, 2012, Diageo filed the ‘265 Application for the design mark THE NAKED TURTLE Design – front label also based on proposed use of the mark in Canada, initially in association with “alcoholic beverages (except vodka), rum and rum flavoured beverages”. It was amended on May 7, 2013 to redefine the goods as “alcoholic beverages, namely rum and rum flavoured beverages”. The application then was advertised on November 6, 2013 and opposed by Constellation Canada on November 29, 2013. It was amended again on June 4, 2015 to redefine the goods as “distilled spirits, namely rum and rum-flavoured beverages”. This applied for mark is depicted immediately below:
[5] Constellation Canada opposed both applications pursuant to TMA ss 38(2)(b)/12(1)(d) [non-registerability], 38(2)(c)/16(3)(a) [non-entitlement] and 38(2)(d)/2 [non-distinctiveness], on the basis the applied for trademarks are confusing with the [registered] trademarks NAKED GRAPE [registration No. TMA659,543 for wines, wine spritzers, icewine], NAKED GRAPE & Grape Design [registration No. TMA720,829 for wines] and NAKED GRAPE FIZZ [registration No. TMA795,352 for wine]. [Three additional grounds of opposition based on TMA ss 38(2)(c)/16(3)(b) [pertaining to the ‘944 Application], 38(2)(a)/30(e) and 30(i) are not in issue before this Court.] The particulars of the opposition grounds as summarized by the TMOB are reproduced in Annex A to these Reasons. Arterra continued these oppositions after a change in title was recorded against these [and other] trademarks with the Canadian Intellectual Property Office [CIPO] on July 27, 2017, and the Statements of Opposition subsequently were amended, with leave of the TMOB, to name Arterra as the Opponent [with an intervening change in title to a numbered company].
[6] Constellation Canada filed as its Rule 41 evidence [under the Trade-marks Regulations, SOR/96-195 or the “Rules”] the affidavit of Steven Bolliger, Senior Vice-President, Marketing of Constellation Canada, sworn March 7, 2014 [‘944 Application] and July 25, 2014 [‘265 Application]. I note these affidavits are substantially similar and only one cross-examination of Mr. Bolliger was conducted, with the transcript and subsequent answers filed in both oppositions.
[7] Diageo filed as its Rule 42 evidence the affidavits of: (i) Scott Schilling, sworn April 8, 2015 [‘944 Application] and August 21, 2015 [‘265 Application] [Mr. Schilling’s title in the earlier affidavit was stated as Vice President, Spirits and Innovation of Diageo, while in his later affidavit it had changed to Senior Vice President, North America Innovation]; (ii) Bruce Wallner, Master Sommelier, sworn April 2, 2015 [the same affidavit was filed for both oppositions]; (iii) Peterson Eugenio, Trademark Searcher, sworn April 9, 2015 [both the ‘944 Application and the ‘265 Application] and August 10, 2015 [‘265 Application]; and (iv) Dane Penney, Trademark Search Specialist, sworn April 9, 2015 [both the ‘944 Application and the ‘265 Application] and August 10, 2015 [‘265 Application]. With the exception of Mr. Wallner’s affidavit, which is identical in each case, I note the two affidavits of each of the other affiants are substantially similar. Only one cross-examination of each affiant was conducted, with the transcripts and subsequent answers filed in both oppositions. Diageo also was granted leave under Rule 44 to file a certified copy of registration No. TMA885,729 for SIMPLY NAKED for wine.
[8] Constellation Canada did not file any Rule 43 reply evidence in either case, and only Constellation Canada filed written arguments. The TMOB heard the oppositions together on June 13, 2018; by that time, Arterra was recorded as the Opponent. As mentioned, the TMOB rejected Arterra’s oppositions to the ‘944 Application and the ‘265 Application [while it refused the ‘266 Application] on October 31, 2018, and transmitted its decision to parties on November 8, 2018. As an aside, I note the TMOB dealt separately with two other oppositions by Constellation Canada involving two related co-pending applications by Diageo: Constellation Brands Canada, Inc v Diageo North America, Inc, 2018 TMOB 133 [Constellation Brands].
III. TMOB Decision under Appeal
[9] The TMOB noted the initial evidentiary burden on an opponent [Arterra] to support the allegations in its Statement of Opposition: John Labatt Limited v The Molson Companies Limited (1990), 30 CPR (3d) 293 (FCTD) at 298. Once the facts are proven sufficiently, consideration then turns to the legal onus an applicant for registration [Diageo] to prove its case [i.e. that the application does not contravene the provisions of the TMA as alleged by an opponent]. If a determinative conclusion cannot be reached on an issue, the issue must be decided against an applicant.
[10] Next, as a preliminary matter, the TMOB found Mr. Wallner, Master Sommelier was not qualified to render an opinion on whether the public would be confused by the trademarks at issue, as he was not an expert in human behaviour: Now Communications Inc v CHUM Ltd (2003), 32 CPR (4th) 168 (TMOB) [Now Communications] at para 13. Further, Mr. Wallner’s assessment of the inherent distinctiveness of either party’s trademarks was not considered relevant, as he did not provide evidence on what the casual consumer of wines and spirits would understand regarding the meaning of the term “naked” [i.e. as wines that are natural, or spirits that are pure, unadulterated, and usually unoaked], did not conduct any surveys, and acknowledged in cross-examination that he would have a more complete understanding of the terminology than the average consumer. Instead, he relied on his own personal and professional conversations and experiences which, in the TMOB’s view, did not approximate the buying experience of the average consumer for alcoholic beverages. Given these concerns, the TMOB concluded Bruce Wallner’s affidavit was not relevant, and hence inadmissible: R v Mohan, [1994] 2 SCR 9 (SCC).
[11] Notwithstanding Diageo’s submission on appeal that Mr. Wallner’s evidence regarding the meaning of “naked” in the wine industry in Canada is corroborated by other evidence, and hence is relevant, I agree with the TMOB’s conclusion regarding the Wallner affidavit. In my view, the TMOB’s assessment is in line with the Supreme Court of Canada’s guidance on expert evidence in Masterpiece Inc v Alavida Lifestyles Inc, 2011 SCC 27 [Masterpiece] at paras 80-99; as noted at para 92: “They [the trier] should use their own common sense, excluding influences of their ‘own idiosyncratic knowledge or temperament’ to determine whether the casual consumer would be likely to be confused”. I therefore find there is no reason to disturb this conclusion of the TMOB on appeal, under either the correctness or palpable and overriding error standard of appellate review discussed in greater detail below.
A. ‘944 Application Findings
[12] The TMOB noted the application filing date [i.e. January 30, 2012] as the material date for assessing the TMA ss 30(e) and 30(i) opposition grounds. It rejected these grounds for lack of evidence, and noted there was no allegation of bad faith in respect of the TMA s 30(i) ground. I agree with the TMOB’s findings regarding these grounds. I further note that none of the parties’ new evidence, discussed below, is directed to these grounds and hence, these findings also remain undisturbed on this appeal.
[13] The TMOB next turned its attention to the TMA s 12(1)(d) opposition ground and noted the date of its decision [i.e. October 31, 2018] as the material date for assessing this ground: Park Avenue Furniture Corporation v Wickes/Simmons Bedding Ltd and The Registrar of Trade Marks (1991), 37 CPR (3d) 413 (FCA) [Park Avenue]. The TMOB considered that the Opponent’s best case was the registered trademark NAKED GRAPE, registration No. TMA659,543, which was the primary focus of the TMOB’s confusion analysis. In other words, if Arterra were not successful on this mark, it would not be successful on the others.
[14] Referring to the confusion test articulated in TMA s 6(2), the TMOB noted the TMA s 6(5) criteria, including all relevant surrounding circumstances, are not exhaustive and different weight may be given in a context-specific assessment; that said, the resemblance between the marks often has the greatest effect on the confusion analysis: Mattel, Inc v 3894207 Canada Inc, 2006 SCC 22 [Mattel] at para 54; Masterpiece, above at para 49. For a summary of how the test is to be applied, the TMOB referred to the following excerpt from Veuve Clicquot Ponsardin v Boutiques Cliquot Ltée, 2006 SCC 23 [Veuve Clicquot] at para 20:
“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.” [Bold emphasis added]
[15] The TMOB found both trademarks NAKED GRAPE and THE NAKED TURTLE inherently distinctive. A consumer may conclude, after consideration, that the word NAKED in the context of a beverage like wine or rum suggests that it was not aged in an oak barrel. The average consumer would not likely take more than casual care, however, to observe the meaning of the word “naked” as unoaked, as a matter of first impression, even where described as such on NAKED GRAPE labels: Coombe v Mendit Ltd (1913), 30 RPC 709 (Ch D) [Coombe] at 717, cited in Mattel, above. Nor did the evidence show the casual consumer was educated that “naked” means unoaked, “as opposed to the Opponent using a risqué word to position its product in a fun, cheeky manner”. The TMOB also was not persuaded that third party brands in Canada such as Chardonaked, Naked Pig Pale Ale, and Skinny Girl Naked Vodka did not lead to the inference that the casual consumer understands the word “naked” describes a product as unoaked.
[16] The TMOB noted the Opponent is Canada’s largest producer, marketer, and distributor of wines: its NAKED GRAPE line of wines has been available since October 2005, and from 2008-2013 annual Canadian sales have fallen in the range of $16-26 million while advertising expenditures for the period totalled nearly $10 million. Evidence of lengthy and extensive promotion and use in Canada of the trademark NAKED GRAPE, as further summarized in paragraph 24 of its decision, permitted the TMOB to conclude that such mark was quite well known, if not famous in Canada for wine: Arterra Wines, above at para 24. Evidence of Diageo’s American activities, however, did not give rise to any significant Canadian reputation for its trademark. While the TMOB noted the distinction between an alcoholic beverage made from the fermentation of grapes versus a spirit produced through distillation, nonetheless it found the potential for overlap in the parties’ channels of trade since their respective goods likely would be sold in restaurants and liquor stores and independent stores, albeit in different sections.
[17] The TMOB noted that when considering the degree of resemblance, the trademarks must be considered in their totality. The applicable test is not a side-by-side comparison but rather an imperfect recollection in the mind of a consumer of an opponent’s product bearing its mark: Veuve Clicquot, above at para 20. Begin by determining whether there is a striking or unique aspect of the trademark: Masterpiece, above at para 64. On this basis, the TMOB found the most striking aspect of Arterra’s trademark is the word NAKED, as the word GRAPE is descriptive of the associated goods, while Diageo’s trademark is likely to be viewed as a unitary phrase. Further, when considered as a whole, the TMOB found the marks were more different than alike as a matter of first impression despite the resemblance in sound and appearance, owing to the word NAKED being incorporated in its entirety in the trademark THE NAKED TURTLE. The TMOB concluded that NAKED GRAPE cheekily or playfully conveyed nakedness, whereas THE NAKED TURTLE conveyed the idea of a turtle who has no clothes on or is otherwise bare. In so concluding, the TMOB was mindful that the first portion of a trademark is often the most important: Conde Nast Publications Inc v Union des éditions modernes (1979), 46 CPR (2d) 183 [Conde Nast] at para 34.
[18] The TMOB also considered several surrounding circumstances. Regarding the evidence of third party trademarks containing NAKED in association with alcoholic beverages in Canada, the TMOB found them insufficient to displace the acquired distinctiveness of the Arterra’s trademark NAKED GRAPE absent information on their sale or advertising. Neither Diageo’s use of its trademark in the United States nor other third party trademarks in the United States were considered relevant factors. Regarding the certified copy of registration No. TMA885,729 for SIMPLY NAKED for wine, though it stood in the name of a legal entity related to but separate from Constellation Canada, this too was considered an irrelevant factor absent evidence of use of the trademark in Canada. Though not mentioned in the TMOB’s decision, I note that in any event this registration was cancelled voluntarily on September 8, 2017. Regarding Arterra’s alleged “family” of trademarks, the TMOB found there was insufficient evidence to establish a family of NAKED GRAPE trademarks, such that there would be an increased likelihood of confusion, absent sales figures for NAKED GRAPE FIZZ.
[19] Finally, regarding the TMA ss 16(3)(a), 16(3)(b) [pertaining to the ‘944 Application], and 2 grounds of opposition, while Arterra met its applicable burdens, the TMOB found Arterra was in no stronger position as of the application filing date [the priority filing date in the case of the ‘944 Application] or the statement of opposition filing date. It therefore reached the same conclusion regarding the likelihood of confusion as in respect the TMA s 12(1)(d) ground and rejected these grounds as well.
B. ‘265 Application Findings
[20] Like the ‘944 Application, the TMOB considered that Arterra’s best chance of success was the trademark NAKED GRAPE. The TMOB found the trademark THE NAKED TURTLE Design – front label inherently distinctive, with the words NAKED TURTLE [at the top of the label] the most striking part of this trademark. The TMOB also found the turtle design in the middle label added a significant degree of distinctiveness. The TMOB did not mention the trademark NAKED GRAPE in its consideration of this TMA s 6(5)(a) factor. The TMOB then jumped to a consideration of the degree of resemblance between these trademarks and, finding the parties’ trademarks had very different visual impacts, concluded that Diageo had met its legal onus of proving, on a balance of probabilities, there was no reasonable likelihood of confusion. As with the word mark THE NAKED TURTLE, the design mark THE NAKED TURTLE Design – front label was considered more different than alike in respect of the mark NAKED GRAPE as a matter of first impression.
IV. Legislative Framework
[21] See Annex B for applicable provisions.
V. Issues
[22] This appeal raises essentially two issues:
What is the applicable standard of review on appeal, taking into account the new evidence filed?
Bearing in mind the applicable standard of review on appeal, as a matter of first impression would the “casual consumer somewhat in a hurry”, who sees Diageo’s trademarks, when that consumer has no more than an imperfect recollection of any one of Arterra’s trademarks, be likely to be confused; that is, would such consumer be likely to think that Diageo was the same source of alcoholic beverages [rum on the one hand and wines on the other] as Arterra? [Paraphrasing: Veuve Clicquot, above at para 20; Masterpiece, above at para 41.]
VI. Parties’ Evidence
[23] On appeal, Arterra filed (i) a further affidavit of Steven Bolliger, Senior Vice-President, Marketing of Arterra, sworn February 4, 2019, and (ii) the affidavit of Jason Williams, private investigator with Integra Investigation Services Ltd., sworn February 4 2019. Diageo filed the affidavits of (i) William Joynt, owner of William Joynt Investigations Ltd., sworn March 12, 2019, and (ii) Lori-Anne DeBorba, senior litigation clerk employed by Diageo’s counsel, sworn March 12, 2019. All these affiants were cross-examined.
[24] A summary of the parties’ evidence, both before the TMOB and on appeal to this Court, can be found in Annex C to these Reasons.
VII. Analysis
A. Standard of Review on Appeal
[25] The hearing of this matter was held a little more than two weeks prior to the Supreme Court of Canada’s seminal decision in Canada (Minister of Citizenship and Immigration) v Vavilov, 2019 SCC 65 [Vavilov]. I subsequently invited the parties to make written submissions regarding the impact of Vavilov on the statutory appeal mechanism in the TMA: Vavilov, above at para 144. Both parties filed submissions.
[26] Vavilov suggests that where there is a statutory right of appeal, an appellate standard of review applies to appeals under the applicable Act: Vavilov, above at paras 36-37. As stated in paragraph 37:
Where, for example, a court is hearing an appeal from an administrative decision, it would, in considering questions of law, including questions of statutory interpretation and those concerning the scope of a decision maker’s authority, apply the standard of correctness in accordance with Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, at para. 8. Where the scope of the statutory appeal includes questions of fact, the appellate standard of review for those questions is palpable and overriding error (as it is for questions of mixed fact and law where the legal principle is not readily extricable): see Housen, at paras. 10, 19 and 26-37. Of course, should a legislature intend that a different standard of review apply in a statutory appeal, it is always free to make that intention known by prescribing the applicable standard through statute.
[27] Though not at issue in this appeal, I note that Vavilov considers in some depth the standard of review applicable to statutory interpretation in a manner that is nuanced and more in line with a robust reasonableness review, rather than correctness: Vavilov, above at paras 115-124. Vavilov also has eliminated “jurisdictional questions [i.e. questions of true vires or the scope of the decision-maker’s statutory authority] as a distinct category attracting correctness review”: Vavilov, above at para 65. Vavilov is silent, however, about the implications of an appeal mechanism that contemplates the filing of new evidence, as per TMA s 56(5).
[28] In my view, Vavilov does not necessarily displace the previous jurisprudence regarding new evidence filed with the Federal Court on appeal from a decision of the Registrar, but rather necessitates an adjustment. Specifically, as of the date of the hearing before this Court, the parties essentially were in agreement that the standard of review is determined on an issue-by-issue basis, depending on the materiality of any new evidence adduced affecting the issue[s]. If the new evidence is considered material to an issue, this Court must consider the outcome of that relevant issue de novo or on a correctness basis: Seara Alimentos Ltda v Amira Enterprises Inc, 2019 FCA 63 [Seara] at para 22; Advance Magazine Publishers, Inc v Banff Lake Louise Tourism Bureau, 2018 FC 108 [Advance] at paras 16 and 22; Molson Breweries v John Labatt Ltd, [2000] 3 FC 145 (FCA) at para 51; Spirits International BV v BCF SENCRL, 2012 FCA 131 [Spirits] at paras 10, 30; Keepsake Inc v Prestons Ltd (1983), 69 CPR (2d) 50 at para 46; Dart Industries Inc v Baker & McKenzie LLP, 2013 FC 97 at paras 21-22. The parties also were in agreement that new evidence may respond to the TMOB’s perceived evidentiary deficiencies: Mövenpick Holding AG v Exxon Mobil Corporation, 2011 FC 1397 at para 54, aff’d 2013 FCA 6; Advance Magazine Publishers Inc v Farleyco Marketing Inc, 2009 FC 153 [Farleyco] at paras 93-95, 98, aff’d 2009 FCA 348.
[29] To trigger a de novo review pursuant to TMA s 56(5), however, the new evidence must be “sufficiently substantial and significant; … evidence that merely supplements or repeats existing evidence will not surpass this threshold”: Scott Paper Limited v Georgia-Pacific Consumer Products LP, 2010 FC 478 [Scott Paper] at paras 48-49. The test is not whether the new evidence would have changed the TMOB’s mind but rather whether it would have a material effect on the decision: Scott Paper, above at para 49. In that regard, quality, not quantity, is key: Vivat Holdings Ltd v Levi Strauss & Co, 2005 FC 707 at para 27. In sum, “the Court must assess the quality, not quantity, of the [new] evidence – considering its nature, significance, probative value, and reliability – to determine whether the evidence adds something of significance” and hence, whether it would have affected the TMOB’s decision materially: Advance, above at para 16, citing Illico Communication Inc v Norton Rose SENCRL, 2015 FC 165 at para 26 [Illico Communications] and Mcdowell v The Body Shop International PLC, 2017 FC 581 at para 11.
[30] Thus, where new material evidence is filed, the correctness standard contemplated by TMA s 56(5) and applicable jurisprudence permits this Court to conduct a de novo analysis in respect of the relevant issue[s], according no deference to the conclusion[s] of the underlying decision-maker. Absent new material evidence, however, the Housen appellate standard of review will apply, as opposed to reasonableness. Leaving aside questions of statutory interpretation and jurisdiction, this means questions of law are to be assessed according to the correctness standard, while questions of fact and mixed fact and law [where the legal principle is not readily extricable] are to be considered for any palpable and overriding error.
[31] The Federal Court of Appeal defines, and provides guidance on identifying, palpable and overriding errors in Mahjoub v Canada (Citizenship and Immigration), 2017 FCA 157 [Mahjoub] at paras 61-70, cited in favour recently by Justice Kane in Pentastar Transport Ltd v FCA US LLC, 2020 FC 367:
[61] Palpable and overriding error is a highly deferential standard of review: Benhaim v. St. Germain, 2016 SCC 48, [2016] 2 S.C.R. 352 at para. 38; H.L. v. Canada (Attorney General), 2005 SCC 25, [2005] 1 S.C.R. 401. When arguing palpable and overriding error, it is not enough to pull at leaves and branches and leave the tree standing. The entire tree must fall. See Canada v. South Yukon Forest Corporation, 2012 FCA 165, 431 N.R. 286 at para. 46, cited with approval by the Supreme Court in St. Germain, above.
[62] “Palpable” means an error that is obvious. Many things can qualify as “palpable.” Examples include obvious illogic in the reasons (such as factual findings that cannot sit together), findings made without any admissible evidence or evidence received in accordance with the doctrine of judicial notice, findings based on improper inferences or logical error, and the failure to make findings due to a complete or near-complete disregard of evidence.
[63] But even if an error is palpable, the judgment below does not necessarily fall. The error must also be overriding.
[64] “Overriding” means an error that affects the outcome of the case. It may be that a particular fact should not have been found because there is no evidence to support it. If this palpably wrong fact is excluded but the outcome stands without it, the error is not “overriding.” The judgment of the first-instance court remains in place.
[65] There may also be situations where a palpable error by itself is not overriding but when seen together with other palpable errors, the outcome of the case can no longer be left to stand. So to speak, the tree is felled not by one decisive chop but by several telling ones.
[66] Often those alleging palpable and overriding error submit that a first-instance court forgot, ignored, misconceived or gave insufficient weight to evidence because it did not mention the evidence in its reasons. ... But a non-mention in reasons does not necessarily lead to a finding of palpable and overriding error.
[67] For one thing, first-instance courts benefit from a rebuttable presumption that they considered and assessed all of the material placed before them: Housen at para. 46.
[68] Further, when an appellate court considers a submission of palpable and overriding error, often it focuses on the reasons of the first-instance court. But its reasons are to be viewed in context and construed in light of both the evidentiary record before it and the submissions made to it: R. v. R.E.M., 2008 SCC 51, [2008] 3 S.C.R. 3 at paras. 35 and 55. Although the reasons may not mention a particular matter or a particular body of evidence, the evidentiary record and the context may shed light on why the first-instance court did what it did. They may also confirm that although a matter is not mentioned in the reasons, it was nevertheless within the court’s contemplation and considered by it.
[69] Sometimes counsel submit that gaps in the reasons of the first-instance court show palpable and overriding error. In considering this sort of submission, appellate courts must remember certain realities about the craft of writing reasons. It is an imprecise art suffused by difficult judgment calls that cannot be easily second-guessed. …
[70] Palpable and overriding error is often best defined by describing what it is not. If an appellate court had a free hand, it might weigh the evidence differently and come to a different result. It might be inclined to draw different inferences or see different factual implications from the evidence. But these things, without more, do not rise to the level of palpable and overriding error.
[32] With these principles in mind, I must consider the materiality of the parties’ new evidence filed on appeal to this Court, including the cross-examination of the affiants, and determine whether the new evidence is sufficiently substantial and significant such that it could have had a material effect on the TMOB’s decision, not whether it would have changed the TMOB’s mind. Accordingly, I must assess the quality, probative value, and reliability of the parties’ new evidence in the context of the record, and determine whether it would have supplemented or otherwise clarified the record in a way that it might have influenced the TMOB’s conclusions on a finding of fact or exercise of discretion had it been available at the time of the Board’s decision: Seara, above at paras 23-26.
a) Affidavit of Jason Williams dated February 4, 2019
[33] Jason Williams was a private investigator retained by Arterra’s counsel. His evidence consisted of online search results for alcoholic beverage products whose names contained animal names from each official provincial liquor website [he located hundreds of such names], and photographs of 83 products containing animal names in their title on sale at an LCBO [Liquor Control Board of Ontario] he attended in person in Toronto. Arterra submitted this evidence in support of its position that the word “naked” is likely to be viewed as the most striking feature of both parties’ marks by casual consumers of alcoholic beverages as a matter of first impression, as consumers are used to seeing animal names on alcohol labels, while the word “naked” is rare outside Arterra’s marks. On cross-examination, Diageo’s counsel sought to establish that a number of the animal names located by Mr. Williams involved place names or geographic regions [such as “Hawkes Bay”, “Monkey Bay”, “Cariboo” and “Horse Heaven Hills”], or personal names [such as “Wolf Blass”], or had other connotations [such as “Ironhorse”, “Moscow Mule”, “Henhouse”, “Landshark” and “Cowhorn”]. Notwithstanding the [unproven] possibility that other connotations may apply to some of the names, this does not detract from the fact that on their face these product names contain animal names or close phonetic equivalents of animal names. Furthermore, as highlighted by Mr. Williams’ evidence itself and during cross-examination, the use of the word “turtle” appears to be rare; his evidence disclosed references to “Painted Turtle” and “Alpha Estate Malagouzia Turtles” among the hundreds of animal names he located. That said, I am sympathetic to the argument that Mr. Williams was not tasked with searching specifically for product names and images involving turtles and hence, there could be other such products in the market place.
[34] Absent any context for Mr. Williams’ evidence such as sales volumes, the reputation of alcoholic beverages with labels involving animal names, or the proportion of the overall alcoholic beverages market in Canada such labelled products represent, however, I am not prepared to make any inferences about what the casual consumer might perceive when confronted with such labels in the market place. Though not articulated as such, this is what Arterra is requesting that this Court do. As noted by Steven Bolliger during cross-examination on his third affidavit dated February 4, 2019, “[t]here are tens of thousands of SKUs of wines in Canada – or hundreds of thousands of SKUs in Canada” [in answer to Q277-278, when he was asked how many other unoaked wines are being sold in Canada]. Moreover, by asserting that the word “naked” is likely to be viewed as the most striking feature of Diageo’s trademarks by reason of other animal names on alcoholic beverage labels impermissibly discounts the apparent rarity or striking nature of the word “turtle” [as disclosed by Mr. Williams’ evidence itself, subject to the shortcoming that Mr. Williams was not tasked to look specifically for product names involving turtles] and is tantamount to dissecting Diageo’s trademarks: Battle Pharmaceuticals v British Drug Houses Ltd, [1944] Ex CR 239 [Battle Pharmaceuticals] at page 251, aff’d [1946] SCR 50. As discussed below, the TMOB also engaged in an impermissible dissection of Arterra’s trademark NAKED GRAPE; two wrongs do not make a right.
[35] In my view, Mr. Williams’ evidence, including his cross-examination, merely reinforces the need for a reviewing body to consider the entirety of the marks at issue when assessing the likelihood of confusion. The TMOB found both parties’ marks, NAKED GRAPE and THE NAKED TURTLE, to be inherently distinctive, and was alive to the unique quality the word “turtle” brought to Diageo’s proposed mark when considering the degree of resemblance between these marks. In the end, I am not convinced this evidence would have influenced the TMOB’s assessment of the relative importance of the words “naked” and “turtle”. Accordingly, as this evidence merely confirms the conclusions of the TMOB, it is not material in my view: Seara, above at para 24.
b) Affidavit of Steven Bolliger dated February 4, 2019
[36] This was the third affidavit in these proceedings of Steven Bolliger, the Senior Vice President of Marketing for Arterra as of the date of his affidavit; it came to light during cross-examination that he subsequently retired. It is clear this affidavit was offered to bolster Arterra’s asserted “family” of trademarks [as a “surrounding circumstance” in the confusion analysis] and in particular, further to the following finding of the TMOB: “Given that there are no sales figures for NAKED GRAPE FIZZ, I do not find the Opponent has evidenced that it has a family of NAKED GRAPE trade-marks such that there would be an increased likelihood of confusion”: Arterra Wines, above at para 42.
[37] In this affidavit, Mr. Bollinger provided sales figures and sample invoices for NAKED GRAPE FIZZ sold in Canada since 2012, indicating approximately $5.27 million in sales since then. Notably, NAKED GRAPE FIZZ products have been sold exclusively in Ontario since 2014; and only the white varietal has been available since 2015. Mr. Bolliger also referenced a fourth trademark, NAKED GRAPE & Design, which issued to registration under registration No. TMA999,626 within a matter of days after the TMOB hearing. The alleged family of trademarks therefore consists of the following trademarks:
Trademark
Registration No. & Date
Goods
NAKED GRAPE [word mark]
TMA659,543
2006-02-21
Wines; wine spritzers; ice wine
NAKED GRAPE & Grape Design
TMA720,829
2008-08-14
Wines
NAKED GRAPE FIZZ [word mark]
TMA795,352
2011-04-12
Wine
NAKED GRAPE Design
TMA999,626
2018-06-21
Alcoholic beverages namely wines
[38] As an aside, I note that Arterra did not request leave at any time to amend its Statements of Opposition, pursuant to Rule 40, to revise the ground based on TMA ss 38(2)(b)/12(1)(d) to include registration No. TMA999,626. As the relevant date for assessing this ground is the date of the trier’s decision, whether the TMOB or this Court as applicable, in my view it would have been open to Arterra to pursue this course of action. That Arterra recognized the significance of the fourth mark to the TMA s 12(1)(d) ground of opposition is evident from its Memorandum of Fact and Law submitted in the appeal.
[39] In any event, in light of the TMOB’s finding above regarding NAKED GRAPE FIZZ and absent analysis on whether a family of trademarks would have been found to exist had use of the trademark NAKED GRAPE FIZZ been evidenced, I am of the view that the proffered evidence of sales could have impacted the TMOB’s decision materially. I therefore must consider this issue, that is the alleged “family” of trademarks, on a de novo basis and whether, if decided in Arterra’s favour, it would have changed the outcome. For several reasons, I am not persuaded that Arterra has established a family of trademarks with its new evidence such that the balance concerning the confusion analysis is tipped in Arterra’s favour on this basis alone.
[40] As a preliminary issue, I note that in its Statements of Opposition and Notice of Application, Arterra alleged it owns or has a family of [registered] trademarks in Canada which include the element NAKED in association with alcoholic beverages in the nature of wine. The Opponent’s Written Argument contained no discussion of the issue and it is unknown what Arterra argued about its alleged family of trademarks at the oral hearing before the TMOB. What is known is that the TMOB found there was insufficient evidence to establish a family of NAKED GRAPE trademarks. These positions are not necessarily inconsistent, as NAKED GRAPE contains NAKED. On appeal, Arterra simply asserted in writing that the third Bolliger affidavit addressed the evidentiary gap identified by the TMOB [regarding sales figures for NAKED GRAPE FIZZ], and asked this Court to consider the issue on a de novo basis and find Arterra has established a family of registered trademarks, thus heightening the likelihood of confusion. This assertion is consistent with Arterra’s submissions on the issue at the hearing of the matter. As Arterra does not have a registration for NAKED per se but does have a registration for NAKED GRAPE per se, the latter being in my view the common feature of its asserted family of trademarks, my de novo assessment focuses on whether Arterra has established a family of NAKED GRAPE trademarks.
[41] A family of trademarks is “a series of marks all having the same features and … all owned by the same trader”: Molnlycke Aktiebolag v Kimberly-Clark of Canada Ltd. (1982), 61 CPR (2d) 42 (FCTD) at para 25. I accept a family of trademarks, if established, attracts a broader scope of protection, and in the right circumstances can impact the confusion assessment. To rely on the broader protection afforded to a family of marks, the party alleging the family must demonstrate actual use [i.e. sales figures, advertising campaigns, and/or evidence of expanding lines] of several products bearing the common feature[s] that define the family [i.e. the words NAKED GRAPE]: Techniquip Ltd v Canadian Olympic Assn (1998), 145 FTR 59 (FCTD) [Techniquip] at para 19, aff’d 250 NR 302 (FCA); London Life Insurance Co v Manufacturers Life Insurance Co, [1999] FCJ No 394 at para 24; Everex Systems Inc v Everdata Computer Inc (1992), 44 CPR (3d) 175 (FCTD) at paras 28-30; Toys “R” Us (Canada) Ltd v Babies-R-Us Inc, 36 ACWS (3d) 1186 at paras 6-7. The TMOB has found previously, however, one word mark and one design version of the word mark insufficient to create a family: Now Communications, above at para 35, citing British Columbia Hydro and Power Authority v Union Gas Limited (1998), 85 CPR (3d) 231.
[42] In the case before this Court, Arterra now has evidenced use of one word mark NAKED GRAPE, two design versions of the word mark [with no other words added to the words NAKED GRAPE, and in one case displayed with the design of a grape which evokes or describes pictorially the word GRAPE], and one other word mark which adds the word FIZZ to NAKED GRAPE. I further note the newest registered design trademark [registration No. TMA999,626] is merely comprised of the top half of the earlier registered design trademark [registration No. TMA720,829]. In my view, the two registered design marks are merely design versions of the word mark NAKED GRAPE. They would be sounded the same and they suggest the same ideas as the word mark; and they differ from each other only in relatively minor visual respects [apart from the design of a grape which simply evokes or describes pictorially a grape]. This conclusion is reinforced by the first and second Affidavits of Steven Bollig