Hilton Worldwide Holding LLP v. Miller Thomson

Hilton Worldwide Holding LLP v. Miller Thomson
Court (s) Database
Federal Court Decisions
Date
2018-09-07
Neutral citation
2018 FC 895
File numbers
T-515-17
Notes
Digest
Decision Content
Date: 20180907
Docket: T-515-17
Citation: 2018 FC 895
Ottawa, Ontario, September 7, 2018
PRESENT: The Honourable Mr. Justice Pentney
BETWEEN:
HILTON WORLDWIDE HOLDING LLP
Applicant
and
MILLER THOMSON
Respondent
JUDGMENT AND REASONS
[1] Hilton Worldwide Holding LLP appeals from the decision of the Registrar of Trademarks, which directs that Hilton’s registration for the trademark WALDORF-ASTORIA should be expunged from the register. The core question raised in this appeal is whether Hilton can establish that it used the trademark in association with “hotel services”, under the Trade-Mark Act, RSC 1985, c T-13 [the Act], despite the fact that there was no “bricks and mortar” hotel under the name Waldorf-Astoria in Canada during the relevant period.
[2] For the reasons that follow, I am allowing this appeal.
I. Background
[3] At the request of Miller Thomson LLP, on October 23, 2014, the Registrar of Trade-marks issued a notice under s. 45 of the Act to Hilton Worldwide Holding LLP, the registered owner of the trademark WALDORF-ASTORIA (Registration No. TMA 337,529). This notice required Hilton to demonstrate its use of the mark at any time within the three-year period immediately preceding the issuance of the notice, that is October 23, 2011 to October 23, 2014. If such use was not demonstrated, Hilton had to demonstrate the date it was last in use and the reason for non-use since that date. During the relevant three-year period, the registration was owned by Hilton IP LLC; it was assigned to Hilton Worldwide Holding LLP on November 13, 2014. Nothing turns on this in this appeal.
[4] The trademark WALDORF-ASTORIA is registered for use in association with “hotel services”. Hilton claimed to have used the mark in association with hotel services in Canada since at least 1988. As will be explained more fully below, Hilton filed evidence before the Registrar both as to its use of the mark, and as to its plans for the construction of a Waldorf-Astoria hotel in Montreal, as well as the reasons why that hotel was not built. The Registrar rejected Hilton’s claim, essentially based on the reasoning in a very recent decision of the Registrar in a case involving use of a mark in association with “hotel services and hotel reservation services”: Stikeman Elliott LLP v Millennium & Copthorne International Limited, 2015 TMOB 231 [M Hotel]. In that case, there was no “M Hotel” located in Canada during the relevant period, and the Registrar had concluded that the registration for “hotel services” should be expunged because the owner of the mark had not established that it performed or was able to perform hotel services in Canada during that time-frame. The Registrar maintained the registration for “hotel reservation services”.
[5] Applying this analysis to the present case, the Registrar ruled that the absence of a Waldorf-Astoria hotel in Canada was fatal to Hilton’s claim that it had used the trademark for “hotel services” in Canada during the relevant period, because the Registrar found that use of the trademark for such services required a physical location in Canada. Hilton’s operation of an interactive web site, its worldwide registration service, the discounts offered to customers who pre-paid for rooms, the offer of Hilton rewards points to members of its loyalty program, and the various communications to customers in Canada displaying the trademark, were not found to be sufficient to meet the definition of use under the Act in association with “hotel services”.
[6] The Registrar also rejected Hilton’s argument that special circumstances existed to excuse non-use of the mark during the relevant period, as permitted by s. 45(3) of the Act. Hilton had entered into an agreement to build a Waldorf-Astoria hotel in Montreal, but this did not materialize due to the economic downturn in 2008. The Registrar found that this did not constitute the type of special circumstance required by the case law and, in any event, Hilton had not demonstrated why it had not built or operated a Waldorf-Astoria hotel in Canada at any time since 1988, when its trademark was registered.
[7] Therefore, the Registrar ordered that the trademark should be expunged from the registry. Hilton launched the present appeal from this decision and filed new evidence in support of its position.
II. Issues
[8] There are four issues in this appeal:
What is the appropriate standard of review, in light of the new evidence filed on the appeal?
Is the decision of the Registrar that Hilton cannot establish use of its trademark without a “bricks and mortar” hotel in Canada either correct, or reasonable (depending on the resolution of issue A above)?
Is the decision of the Registrar that Hilton did not establish a valid reason for not using the mark reasonable (since there was no new evidence submitted on this point)?
In the alternative, should the Court issue an order pursuant to s. 57(1) of the Act, amending the statement of services in the registration from “hotel services” to “hotel services, namely hotel reservation services”?
III. Analysis
A. What is the appropriate standard of review on this appeal?
[9] The standard of review on an appeal under s. 56 of the Act reflects the somewhat unusual nature of this appeal provision. Unlike many appeal provisions, s. 56(5) expressly allows new evidence to be filed on appeal:
Additional evidence
Preuve additionnelle
(5) On an appeal under subsection (1), evidence in addition to that adduced before the Registrar may be adduced and the Federal Court may exercise any discretion vested in the Registrar.
(5) Lors de l’appel, il peut être apporté une preuve en plus de celle qui a été fournie devant le registraire, et le tribunal peut exercer toute discrétion dont le registraire est investi.
[10] The standard of review where new evidence is filed in an appeal of a decision in relation to a s. 45 notice was set out by the Federal Court of Appeal in Spirits International BV v BCF SENCRL, 2012 FCA 131 [Spirits International]:
[10] The standard of review to be applied by the Federal Court to the Registrar’s findings of fact and exercise of discretion in an appeal of a decision under subsection 45(1) is reasonableness. However, if the judge concludes that the additional evidence presented on the appeal would have materially affected the Registrar’s findings of fact or exercise of discretion, the judge must come to his own conclusion on the issue to which the additional evidence relates: Molson Breweries v. John Labatt Ltd. (C.A.), [2000] 3 F.C.R. 145 at paragraph 51.
[11] The law requires an assessment of whether the evidence which is filed on the appeal is: (i) new, in that it adds relevant additional information beyond that which was before the Registrar; (ii) probative and reliable, in that it addresses an issue relevant to the legal issues in dispute and is otherwise reliable given the usual legal tests; and (iii) whether it would have materially affected the Registrar’s findings of fact or exercise of discretion, in the sense that, based on the new evidence, the Registrar could reasonably have decided that the subject mark should not be expunged.
[12] To the extent that this new evidence meets this test, I must consider the evidence filed before the Registrar as well as the new evidence, in order to reach my own conclusions. For findings of fact or issues not affected by the new evidence, a reasonableness standard applies.
[13] In order to determine whether the new evidence would have materially affected the Registrar’s decision, the Court must assess the quality, not the quantity, of the evidence – considering its nature, significance, probative value, and reliability – to determine whether the evidence adds something of significance Mattel, Inc v 3894207 Canada Inc, 2006 SCC 22 at para 37 [Mattel].
[14] In approaching this task, I am guided by the long-standing principle that the purpose of s. 45 of the Act is to provide a simple, summary procedure for clearing the Registry of trademarks which have fallen into disuse – generally referred to as “deadwood”. It is not intended to be an adversarial process, nor is it a substitute for the usual inter partes attack under s. 57: Meredith & Finlayson v Canada (Registrar of Trade Marks) (1991), 40 CPR (3d) 409, [1991] FCJ No 1318 (QL) (FCA). The burden of demonstrating use for the purposes of s. 45 is not a heavy one, and any ambiguity in the evidence should be resolved in favour of the registered owner.
[15] At the hearing before the Registrar, Hilton filed an affidavit of Christian Eriksen, whose title was Counsel, Brands and Intellectual Property of Hilton Worldwide. This affidavit described the background and history of the Hilton Group and the original Waldorf-Astoria hotel in New York City, as well as other hotels in cities in the United States and other countries which are operated in association with that mark. It also described how reservations can be made to stay at any of the Waldorf-Astoria hotels worldwide, including through third party travel agent booking systems, or the Hilton web site and reservation booking system, or by calling reservation centres including Canadian toll-free (1-800) numbers. His affidavit indicated that the Waldorf-Astoria mark appears on the web site, as well as in e-mails sent to customers to confirm their booking.
[16] In this affidavit, Mr. Eriksen indicates that approximately 41,000 different Canadian customers stayed at Waldorf-Astoria hotels during the relevant period, generating room revenue of approximately $50 million. Mr. Eriksen also states:
With respect to the figures above, and during the relevant period, over 1,300 reservations were paid for at the time the Canadian customer made the reservation. In other words, a transaction occurred in Canada, and confirmation of the payment was sent to these customers in Canada. These payments are not the same as a room deposit charged to a credit card upon booking; rather, these payments represent a non-refundable pre-payment in exchange for a discounted room rate.
[17] Mr. Eriksen also describes the operation of the Hilton Honours guest loyalty program. Finally, the affidavit traces the history of the efforts to develop a Waldorf-Astoria Hotel in Montreal, as well as the reasons that project did not proceed. It mentions more recent plans to develop a hotel, but provides no details.
[18] On this appeal, Hilton filed a further affidavit of Mr. Eriksen, as well as an affidavit of Linda Elford, a trademark searcher. There was no cross-examination of Mr. Eriksen; however, Ms. Elford was cross-examined on her affidavit.
[19] The second Eriksen affidavit provided better copies of various exhibits which had been attached to his original affidavit, which are screen shots of various pages from the Hilton web site. Nothing turned on the quality of the copies of the original exhibits, and I find that this portion of his affidavit is merely repetitive, and so would not affect the standard of review.
[20] The second Eriksen affidavit also provides information regarding the relationship between the various corporate entities in the Hilton group of companies, as well as more information about the operation of Hilton’s hotel reservation systems in Canada. This information supplements that which was contained in his original affidavit and is of some probative value, as will be explained below.
[21] The affidavit of Ms. Elford indicates that she was requested by a member of the law firm representing Hilton to locate the oldest possible copy of the Trade-Marks Office Wares and Services Manual (the Manual), and to search for the terms “hotel services”, “hotel registration services”, “reservation services”, “booking services”, and “management of hotels”.
[22] Ms. Elford indicates that the earliest version of the Manual that she could locate was dated January 18, 2006, and that this manual listed “hotel services” and “management of hotels” as acceptable services, but did not contain the other terms noted in the previous paragraph. She further states:
While I have not been able to locate a copy of the Wares and Services Manual dated prior to January 18, 2006, in my 45 years of experience, I don’t recall ever seeing a term added and then removed and then re-added. Accordingly, I do not believe that the terms “hotel reservation services”, “reservation services” and “booking of hotels” were listed in any edition prior to January 18, 2006.
[23] The Respondent argued that Ms. Elford’s evidence was inadmissible because it purports to offer expert opinion evidence, yet she was not presented or qualified as an expert, pursuant to rule 52.1 of the Federal Court Rules, SOR/98-106 [the Rules]. They submit that Ms. Elford’s evidence regarding the practices of the Trade-marks Office is opinion evidence, and that it is inadmissible because it does not comply with the Rules, nor does it meet the test set out for expert evidence in trademark cases established by the Supreme Court of Canada in Masterpiece v Alavida Lifestyles Inc, 2011 SCC 27 at para 75.
[24] I find that the Elford affidavit presents evidence which is both admissible and probative, but only insofar as it refers to the copy of the Manual that was in her possession, and to her personal knowledge about additions to the Manual.
[25] The Respondent’s argument that her affidavit presents expert opinion evidence has no application in regard to her statement of fact that the earliest copy of the Manual in her possession does not contain certain terms. The relevance of this will be addressed in greater detail below, but it is evident that a consideration of the state of the Manual at earlier dates could have prevented the Registrar from erring by referring to the current version. This is relevant to a consideration of the key issue in this case – whether use has been established in association with “hotel services” or whether it was necessary to specify “hotel reservation services”.
[26] I find that this aspect of Ms. Elford’s evidence is not presented as “expert opinion” – it is simply a statement of fact as to something within her personal knowledge. In regard to Ms. Elford’s statements regarding her personal knowledge of the practice of the Trade-mark Office in relation to additions to the Manual, this is also a statement of fact which is admissible on this appeal, but of limited probative value, given that it is simply a statement as to her personal experience; there is no confirmation of this fact from anyone in authority within the Trade-mark Office, nor any other evidence to indicate that her experience represents the actual history. To the extent that Ms. Elford purports to provide opinion evidence, or that Hilton seeks to rely on her evidence as support for propositions that go beyond these factual statements, I agree with the Respondent that this evidence is not admissible.
[27] On this basis, I conclude that the standard of review on this appeal is correctness in relation to the issues addressed by the new evidence; otherwise I will apply a standard of reasonableness.
B. Can a hotel owner establish “use” of a trademark without the presence of a “bricks and mortar” hotel in Canada?
[28] This section will first outline the definition of use with regard to services and then briefly review the case law on the subject, before turning to the decision under review and my analysis of the question.
(1) The definition of “use” in regard to services
[29] Use is a central concept in Canadian trademark law, as Justice Binnie explained in Mattel:
[5] Unlike other forms of intellectual property, the gravamen of trade-mark entitlement is actual use. By contrast, a Canadian inventor is entitled to his or her patent even if no commercial use of it is made. A playwright retains copyright even if the play remains unperformed. But in trade-marks the watchword is “use it or lose it”. In the absence of use, a registered mark can be expunged (s. 45(3))…
[30] Section 2 of the Act defines “use” as “any use that by s. 4 is deemed to be a use in association with wares or services”. Subsection 4(2) defines use in regard to services:
(2) A trade-mark is deemed to be used in association with services if it is used or displayed in the performance or advertising of those services.
(2) Une marque de commerce est réputée employée en liaison avec des services si elle est employée ou montrée dans l’exécution ou l’annonce de ces services.
[31] It will be helpful to review the law in relation to what activities will be sufficient to demonstrate “use” of a service in Canada, since these decisions provide a useful context to consider the Registrar’s decisions relating to hotels and hotel services.
(a) The concept of “services” is to be liberally interpreted
[32] As noted above, the Act deems certain activities to be included within the concept of services, but it does not set out a comprehensive definition. Case law has tended to reject efforts to interpret the term narrowly. The leading decision on the point is Kraft Ltd v Registrar of Trade Marks (1984), 1 CPR (3d) 457, [1984] 2 FC 874 (TD) [Kraft]. The issue in that case was whether Kraft had established use of its trademark in relation to coupons for certain food products that it had published in newspapers etc. These coupons could be redeemed by customers for the goods at a discounted price. The Registrar took the position that this may have been a promotion of the business of Kraft, but it did not fall within the meaning of the term “services” in the Act. Justice Strayer noted that there was no common law right to a trademark in connection with services, and that this protection was only added to the Act in 1953, building on the model adopted in the United States.
[33] Justice Strayer declined to follow a line of American authorities that had found that services do not come within the meaning of the American law “if they are merely incidental or ancillary to, inter alia the sale of goods” (p 460). Instead, based on first principles, he ruled (at p 461):
The basic requirement of a trade mark with respect to services, then, is that it “distinguish…services…performed by [a person] from those…performed by others…”. It is this definition which brings within the scope of the Act trade marks with respect to services. I can see nothing in this definition to suggest that the “services” with respect to which a trade mark may be established are limited to those which are not “incidental” or “ancillary” to the sale of goods. Kraft has submitted that it is providing a service by making its coupons widely and randomly available to consumers who, by the use of such coupons, can obtain its products at a reduced price. I can see no reason why this cannot be described as a service…
[34] This approach has been followed more recently: see Sim & McBurney v Gesco Industries, Inc (2000), 186 FTR 283, 9 CPR (4th) 480 (FCA). In that case, Justice Rothstein overturned the Registrar’s decision and rejected the argument that services must be offered independently of wares (now “goods”) in order to receive protection under the Act. The Court of Appeal expressly adopted the reasoning of Strayer J. in Kraft, and concluded at para 11: “Here, the “STAINSHIELD” trademark is displayed in the advertising of the treatment of some of Gesco’s lines of carpets and rugs. The services may be ancillary to the wares, but that does not mean that the trade-mark is not used in association with the services.”
(b) Merely advertising or providing information about services is not “use” in Canada, where no aspect of the services are actually delivered here
[35] Although s. 4(2) of the Act deems advertising of services to be use, it is clear that the mere advertisement of services in Canada, where no aspect of the services themselves are performed or delivered in Canada, does not constitute use within the meaning of the Act: see Porter v Don the Beachcomber, [1966] ExCR 982, 48 CPR 280 [Don the Beachcomber], and Marineland Inc v Marine Wonderland and Animal Park Ltd, [1974] 2 FC 558 (TD) [Marineland].
[36] In Motel 6, Inc v No 6 Motel Limited, [1982] 1 FC 638 (TD) [Motel 6], the case involved claims for copyright infringement, as well as a series of claims relating to the trademark registration in association with “motel services”. Motel 6 is a large company that operates a chain of motels in the United States. It owned a United States service mark coving the name “Motel 6” as well as a logo. It brought these claims because the defendant opened and operated a number of motels in British Columbia under the Motel 6 name, and the defendant had registered a trademark for Motel 6 in association with motel services. The American company claimed that this caused confusion in the marketplace in breach of its copyright over its name and logo, and its trademark, which had become known in Canada. It is not necessary to consider the decision on the other grounds; I will simply review the findings regarding use of the trademark in Canada.
[37] Motel 6 did not operate any motels in Canada. It alleged that its trademark had become widely known in Canada through advertisements, as well as the sharing of information through the large number of Canadians who regularly stayed in its motels. The evidence showed that at the height of the tourism season, more than half of the stays in some of the American motels in the chain were by Canadians. Motel 6 did not operate any central reservation service, or deliver any other services in Canada. When people wanted to book a reservation, they could telephone a particular motel, or write, or make arrangements through a travel agent. Their reservation could be “confirmed” through a credit card or cheque payment, but there were no services or other benefits provided in Canada.
[38] Justice Addy found that Motel 6 had not established use of its trademark in Canada:
39 Correspondence or communication by phone with customers, prospective customers or their agents in Canada for the sole purpose of receiving and confirming reservations for motel accommodation in the U.S.A. does not constitute use of the mark in Canada in association with motel services. This is all the more true where the contract was not initiated by the person or firm furnishing the motel services. There must, at the very least, be some business facility of some kind in Canada in such circumstances…
[Citing Don the Beachcomber and Marineland.]
[39] Similarly, in Express File Inc v HRB Royalty Inc, 2005 FC 542, the Court upheld a Trademarks Opposition Board decision that found that there had not been use of the trade mark EXPRESS FILE in association with electronic tax filings in Canada. The evidence showed that the service was offered and delivered entirely in the United States. An unknown number of Canadians were alleged to have used the service by filing their American tax returns through a bank or credit union located in the United States. They needed a United States zip code in order to complete the transaction. There was no processing centre or office located in Canada; however, a 1-800 number was available to Canadians in the event they needed help filing the return electronically. There was no evidence that this service was ever advertised in Canada, or that there was any direct mailing to Canadians. There was no evidence that any individual Canadians had actually used the service. The Court found that this did not establish “use” in Canada.
[40] In Pro-C Ltd v Computer City, Inc (2001), 55 OR (3d) 577, 2001 CanLII 7375 (CA), the Ontario Court of Appeal ruled that the mere operation of a “passive” web site, which provided information to customers but did not facilitate direct interaction with them, was not sufficient to constitute use of a trade mark in Canada.
(c) Enabling Canadians to benefit directly from the service in Canada can constitute “use” in Canada
[41] There are several examples where courts have found that where the trademark owner takes steps to enable Canadians to benefit directly from the delivery of the service in Canada, it can establish use in Canada. This has evolved, as one might expect, in parallel with the changes in the delivery of retail services, and in particular with the expansion of the delivery of services “on-line”.
[42] In Saks & Co v Canada (Registrar of Trade Marks) (1989), 25 FTR 65, [1989] FCJ No 28 (QL) (TD) [Saks & Co], a s. 44 (now s. 45) notice was issued requiring Saks to demonstrate use of its trademarks in association with the wares and services listed in the registration. Although there was no actual retail store in Canada, the company relied on evidence showing over 7,000 active Canadian charge account customers, as well as a number of purchases from the store through mail or telephone orders, which were then delivered to addresses in Canada. In addition, there was evidence of extensive advertising in publications which had a large Canadian circulation, as well as the honouring of warranties and guarantees in relation to goods purchased and delivered to Canada.
[43] Justice Addy found at para 54: “These services are performed without the Canadian customer ever having to leave Canada and the Saks Fifth Avenue mark is used in association with all of these services by marking it on all documents and materials issued by the company relating to same.” While the guarantees would likely be honoured from the United States, and any repair work would likely be performed there, Addy J. nonetheless concluded: “These services, guarantees and warranties and the offer to Canadian customers of performing them constitute ‘retail department store services’ as mentioned in the application and also constitute the furnishing of services in Canada within the meaning of the Act.”
[44] Justice Addy distinguished the facts in this case from those which were before him in Motel 6 and those in Don the Beachcomber, on the basis that in those cases “there was no connection whatsoever with Canada except the advertising itself which in fact invited Canadians to attend in the U.S. in order to benefit from the services advertised. No person, whilst residing in Canada, could benefit in any way from the services nor did they relate to anything situated in Canada.”
[45] The requirement to assess each case on its particular facts was underlined in Boutique Limité Inc v Canada (Registrar of Trade-Marks) (1998), 84 CPR (3d) 164, [1998] FCJ No 1419 (QL) (CA), where the Court of Appeal found that merely offering refunds to Canadians in relation to sales carried out in the United States and advertising in publications which circulate in Canada were not sufficient evidence of use of the trademark in Canada. It ruled that Saks rested on its particular facts.
[46] In HomeAway.com Inc v Hrdlicka, 2012 FC 1467 [HomeAway], the dispute concerned whether an American-based company that operated a web site offering vacation real estate listings could establish use in Canada of its trademark VRBO (which stands for “vacation rental by owner”). The web site offered a service by which owners seeking to rent their properties could list them, and people looking to rent such properties could locate available properties and enter into rental agreements with the owners. It appeared that the web site was operated from the United States. The evidence showed that the web site was available to Canadian users, and that Canadian properties had been listed on it. The trademark VRBO was displayed prominently on the web site.
[47] The Court concluded that in light of developments in relation to the Internet, and in view of how this has been approached in other areas of the law, the Act should be interpreted in a manner which best gives effect to its purpose and objectives. The fact that information can be stored in one jurisdiction, and be accessed and used or owned in another, means that legal regimes must recognize that this can occur “both here and there”.
[48] Justice Hughes concluded at para 22 of HomeAway: “I find, therefore, that a trade-mark which appears on a computer screen website in Canada, regardless where the information may have originated from or be stored, constitutes for Trade-Marks Act purposes, use and advertising in Canada.” It should be noted that the evidence showed that people in Canada had used the service to post available properties located in Canada, and that such postings were available on-line to customers in Canada and elsewhere.
[49] Another example of on-line access to retail store services arose in TSA Stores, Inc v Registrar of Trade-Marks, 2011 FC 273 [TSA Stores]. TSA Stores had registered trademarks in association with the “operation of retail stores for the sale of sporting equipment and clothing” as well as “retail store services featuring sporting equipment and clothing” but it did not operate any store in Canada. Its claim for use in Canada rested on the operation of its web site, accessible to Canadians, which had features that assisted customers in choosing the goods they wished to purchase, as well as a store locator feature that enabled Canadian customers to find out where the nearest store was located.
[50] There was evidence that the web site and on-line retail store was visited by hundreds of thousands of Canadians. Justice Simpson noted that the word “services” is not defined in the Act, and that it should receive a liberal interpretation. She further observed at para 17 that “[i]t has also been recognized that the Act makes no distinction between primary, incidental or ancillary services. As long as some members of the public, consumers or purchasers, receive a benefit from the activity, it is a service…” [citations omitted]. On the facts, Simpson J. concluded at para 19 that visiting the store services on the TSA web site was “akin to visiting a bricks and mortar store and benefitting from a discussion with a knowledgeable salesperson.” On this basis, TSA had established use of the trademarks in Canada.
[51] These decisions confirm that determining whether use in Canada has been established requires a case-by-case assessment, which involves an analysis of the scope of the services referred to in the trademark registration, as well as of the nature of the benefits delivered to people physically present in Canada. Both of these elements were discussed in Société Nationale des Chemins de Fer Français SNCG v Venice Simplon-Orient-Express Inc (2000), 9 CPR (4th) 443, 2000 CanLII 16547 (FC TD) [Orient-Express]. This involved a s. 44 notice in relation to two trademarks for Orient-Express, and Venice Simplon-Orient Express, registered in association with “[t]ravel services, namely railway and passenger service”.
[52] The requesting party claimed that the trademark registration referred to “service”, not “services”, and therefore it should be limited to the operation of a railway train. Since the respondent did not operate a train in Canada, its registration should be expunged. The registrant claimed that the registration, whether singular or plural, includes a number of services involved in getting a passenger from point A to point B, and the operation of a train was but one aspect of such services.
[53] The evidence included invoices showing bookings arranged by travel agents in Canada, for Canadian clients who wished to use the rail services. The travel agents acted as intermediaries between the respondent and the Canadian clients. The Registrar found that these booking services constituted “travel services, namely railway passenger services” because that phrase is broad enough to encompass incidental or ancillary services such as train ticketing and train reservations. The Registrar noted that there is no definition of “services” in the Act, and it does not distinguish between primary, incidental and ancillary services. This suggested a broad, rather than a restrictive, definition.
[54] On appeal, Justice McKeown upheld the Registrar’s decision. He found that the Registrar’s broad interpretation of “services” to include primary, incidental and ancillary services was consistent with the Act and case law, citing the decision of Strayer J. in Kraft, as well as the decision in Saks & Co.. Justice McKeown concluded, at para 10: “Thus, it was reasonable to find that the performance in Canada by a travel agency of booking, reservation and ticketing services constitutes the performance in Canada of such services by the registrant.”
[55] The next question was whether the registrant had established use of the trademark in Canada, since it did not have a direct presence in Canada or a direct relationship with Canadian customers. It was not disputed that the trademark appeared on invoices; the question was whether the registrant could demonstrate use in Canada where there was no evidence of a direct sale to the ultimate customer. The Court concluded at para 12 that it was not necessary to show a direct sale to a customer: “Any use of the trade-mark along the chain of distribution is sufficient to demonstrate use…”
[56] In summary, the concept of performing or delivering services to Canadians underlies all of these authorities. As this Court held in UNICAST SA v South Asian Broadcasting Corporation Inc, 2014 FC 295, the concept of performing services is key, and it is essential that some aspect of the services must be offered directly to Canadians or performed in Canada.
[57] In contrast to these authorities, in a series of recent decisions, the Registrar has found that the operation of a “bricks and mortar” hotel in Canada is necessary to establish use of the trademark for “hotel” or “hotel services”: in addition to the decision under appeal, see Bellagio Limousines v Mirage Resorts Inc, 2012 TMOB 220; Stikeman Elliott LLP v Millennium & Copthorne International Limited, 2017 TMOB 34 [M Hotel & Design]; M Hotel; and Ridout & Maybee LLP v Sfera 39-E Corp, 2017 TMOB 149 [Blue Diamond]. Since this line of authority forms the backbone of the decision under appeal, I will review these decisions in the next section.
(2) The decision under review
[58] In the case under appeal, there were two issues before the Registrar: (i) whether the owner had demonstrated use of the trademark in association with hotel services in Canada during the relevant period, and, if not, (ii) whether the owner had demonstrated “special circumstances” to excuse non-use, pursuant to s. 45(3) of the Act. On the first issue, as noted previously, the Registrar relied on the decision in the M Hotel case, which was released at approximately the same time as the parties were making their submissions in this case. Since that decision forms the essential basis for the reasoning in the decision under appeal, I will review it in some detail.
[59] The M Hotel case involved a hotel located in Singapore, and the question was whether the registration of a trademark in Canada in association with “hotel services and hotel reservation services” should be upheld. The Registrar decided that the registration in regard to “hotel services” should be expunged, while the registration in association with “hotel registration services” should be maintained.
[60] The Registrar in M Hotel found that the Federal Court decision in Orient-Express did not establish a general principle that services should be interpreted broadly to include primary, incidental and ancillary services; instead, the Court had only accepted that it was reasonable for the Registrar to find that “‘travel services, namely passenger rail services’ could be interpreted broadly to encompass the travel agency-type services actually in evidence” (para 34). Thus, the Orient-Express decision did not overturn the principles set out in Marineland and Motel 6 with respect to what constitutes performance of services in Canada. The Registrar found that cases involving the performance of retail store services had no application to the operation of a hotel (at para 38): “Unlike retail store services, however, a hotel cannot be operated via the Internet or a telephone number; it is contrary to common sense to equate the ability to make hotel reservations or other bookings with the operation of a hotel…”
[61] The Registrar also rejected the idea that services should be interpreted to include associated activities related to the delivery of a service:
[40] Notwithstanding the use of the terms “primary”, “ancillary” or “incidental” in some jurisprudence, these terms are not found in the Act at all, much less defined. The point in Kraft was that distinguishing between “ancillary”, “incidental” or “primary” services was unnecessary in determining what constitutes a “service” under the Act. It follows that using such terms when determining whether a particular activity constitutes a particular registered service is unwarranted. Such an exercise has little basis in the Act and inevitably leads to absurd arguments and results.
[62] Instead, the Registrar found that s. 30 of the Act required that services must be stated in “ordinary commercial terms” and therefore “registered services should be interpreted in accordance with common sense and given their ordinary meaning” (para 41). Applying this approach to the case, the Registrar concluded that advertisement or promotion of hotel services in Canada could not constitute use within the meaning of the Act, unless the hotel itself was actually located in Canada:
[43] This is consistent with the plain meaning of the statement of services and in light of the evidence furnished. “Booking”, “planning” and “reservation” services are not “hotel services”, and the registration should not be maintained in this respect simply because the service actually available “in Canada” is tangentially related.
[44] The argument that some activity is “technically” use should not be successful. In line with this, courts have generally taken a dim view of token commercial activity designed to protect intellectual property rights. I note the following observation from the Federal Court in Plough, supra, at paragraph 10:
There is no room for a dog in the manger attitude on the part of registered owners who may wish to hold on to a registration notwithstanding that the trade mark is no longer in use at all or not in use with respect to some of the wares in respect of which the mark is registered.
[45] Maintaining the registration with respect to “hotel services” in this case would give the Owner an overly broad scope of protection over services that it does not actually perform in Canada. Where a trade-mark owner performs services in another jurisdiction and wishes to obtain and maintain a registration in Canada in association with the same trade-mark and same services, it should generally mirror the performance of those services in Canada; merely casting the shadow of those services is insufficient.
[63] The Registrar in the case under appeal applied this reasoning to the facts, and found no error in the conclusion that the ordinary commercial sense of “hotel services” did not include booking, planning or reservation services. The following passage encapsulates the core of the analysis of the Registrar:
[55] Statements of goods and services need to be in ordinary commercial terms and should be interpreted as such. It is a purposive interpretation, not an academic one. If someone says they offer “hotel services” in Canada, the average consumer is expecting a hotel. If the customer has to leave Canada to actually enjoy the service, this is not “hotel services”. As stated in Bellagio and M Hotel, it is contrary to common sense to equate the ability to make hotel reservations or other bookings with the operation of a hotel. Likewise, even if a loyalty program can be enjoyed in/from Canada, this is not offering “hotel services”.