Smart Cloud Inc. v. International Business Machines Corporation

Smart Cloud Inc. v. International Business Machines Corporation
Court (s) Database
Federal Court Decisions
Date
2021-03-18
Neutral citation
2021 FC 236
File numbers
T-1589-19
Decision Content
Date: 20210318
Docket: T-1589-19
Citation: 2021 FC 236
Ottawa, Ontario, March 18, 2021
PRESENT: Madam Justice Walker
BETWEEN:
SMART CLOUD INC.
Applicant
and
INTERNATIONAL BUSINESS
MACHINES CORPORATION
Respondent
JUDGMENT AND REASONS
[1] Smart Cloud Inc. (Smart Cloud) appeals the July 31, 2019 decision (Decision) of the Trademarks Opposition Board (TMOB) made on behalf of the Registrar of Trademarks. The TMOB rejected Smart Cloud’s opposition to an application by International Business Machines Corporation (IBM) for registration of the trademark IBM SMARTCLOUD (the Mark) in association with a broad range of computer hardware and software (Goods) and business management, development, network and consulting services (Services). The appeal is brought under section 56 of the Trademarks Act, RSC 1985, c T-13 (the Act).
[2] IBM, an international computer hardware, software and services company, filed its application for registration of the Mark (the Application) based on proposed use in Canada for the Goods, and use in Canada since September 2011 for the Services.
[3] Smart Cloud is a Canadian company, incorporated in October 2010 for the purpose of developing and offering business computing and consulting services centred on cloud computing, digital security, data storage and technical support in Canada and elsewhere.
[4] Smart Cloud’s opposition to the Application was primarily based on its position that the Mark is confusing with its prior use of the trademark SMARTCLOUD and the tradenames SMART CLOUD and SMARTCLOUD in association with services, including cloud computing services. The TMOB did not agree with Smart Cloud and concluded that, on a balance of probabilities, the issue of confusion “weighs slightly” in IBM’s favour. The TMOB referred to Smart Cloud’s trademark and tradenames collectively as SMARTCLOUD and I will do the same in this judgment to avoid repetition.
[5] In support of its appeal, Smart Cloud filed an affidavit dated November 14, 2019 sworn by Mr. Brian Everest, the co-founder and chief technology officer of Starport Managed Services Inc. (Starport), a Canadian information technology (IT) services company (Everest Affidavit). IBM filed two new affidavits: (A) an affidavit sworn by Ms. Carly Hicks, an articling student with IBM’s counsel, dated January 15, 2020 (Hicks Affidavit); and (B) an affidavit sworn by Ms. Hallie Newman, a research consultant with IBM’s counsel, also dated January 15, 2020 (Newman Affidavit). None of the affiants were cross-examined.
[6] Immediately prior to the hearing of the merits of this appeal, Smart Cloud submitted to the Court a motion seeking to file a supplemental affidavit from Mr. Everest (Supplemental Affidavit). The Respondent objected to the late-filed motion. I heard argument from the parties at the beginning of the hearing and declined to admit the Supplemental Affidavit. My written reasons for the refusal, which reflect in substance my oral ruling, are included in this judgment.
[7] The Trade-marks Act was amended on June 17, 2019 and is now the Trademarks Act. This appeal is governed by the former Act and all references in this judgment are to the former Act.
[8] For the reasons set out in this judgment, Smart Cloud’s appeal is dismissed. Briefly:
The Everest Affidavit contains inadmissible opinion evidence that I have disregarded. The remaining full or partial paragraphs of the Affidavit that contain factual information or speak to Mr. Everest’s own professional experience and recollections are admissible. His evidence regarding the TMOB’s reliance on a dictionary definition that was added after the material dates in the opposition could have led to a different conclusion on one or more of the issues before the TMOB. Accordingly, I have conducted a de novo review of the evidence before the TMOB and the parties’ admissible new evidence. I have reviewed for correctness the TMOB’s conclusions regarding the ordinary meaning of the word ‘cloud’ in the computing sense in April 2011 and the degree of inherent distinctiveness of the trademark and tradename SMARTCLOUD, and the TMOB’s resulting finding that SMARTCLOUD is a weak mark. I have reviewed the TMOB’s remaining findings for palpable and overriding error.
I find that the TMOB incorrectly relied on a dictionary definition of the term ‘cloud’ that was added after the material date for Smart Cloud’s grounds of opposition based on paragraphs 16(3)(a) and (c) of the Act. However, my review of the admissible new evidence in this appeal demonstrates that the SMARTCLOUD trademark and tradename was comprised of two ordinary words on April 5, 2011. There are no errors in the TMOB’s conclusions that SMARTCLOUD is a highly suggestive mark and possesses a low degree of inherent distinctiveness. The TMOB correctly relied on these conclusions and its finding that the mark SMARTCLOUD had not acquired any measure of distinctiveness through use in its review of the jurisprudence regarding weak marks. The TMOB did not err in concluding that the SMARTCLOUD trademark was a weak mark on the material dates in the opposition.
There is no palpable and overriding error in the TMOB’s remaining analysis and conclusions in the Decision.
I. Background
[9] IBM filed the Application (trademark application no. 1,546,609) on October 5, 2011 and claims priority from French application no. 11/3820748, filed on April 5, 2011.
[10] The Application was advertised for opposition purposes in the Trademarks Journal on November 6, 2013.
[11] Smart Cloud filed its statement of opposition on November 26, 2013 in reliance on paragraphs 16(1)(a) and (c) and 16(3)(a) and (c), and section 2 of the Act, all of which turn on whether there is a likelihood of confusion between the Mark and Smart Cloud’s trademark and tradename SMARTCLOUD. Smart Cloud also pleaded grounds of opposition under paragraphs 30(a), (b), (e) and (i) of the Act.
[12] The parties filed two affidavits in the opposition proceedings: (A) Smart Cloud filed an affidavit from its president, Mr. Clayton Feick, dated May 28, 2014; and (B) IBM filed an affidavit from Ms. Patti Smith, Advertising Program Manager of IBM Canada Ltd., one of IBM’s wholly-owned subsidiaries, dated September 24, 2015. Both affiants were cross‑examined.
II. TMOB Decision
[13] The TMOB summarized the Application, its procedural history and the evidence filed by the parties, and summarily rejected each of Smart Cloud’s section 30 grounds of opposition. The TMOB’s Decision focuses on the issue of confusion.
TMOB’s summary of Smart Cloud’s evidence
[14] The TMOB reviewed Mr. Feick’s evidence from his affidavit and cross-examination in some detail in the Decision. The TMOB described Smart Cloud’s development of its online presence in 2010 and use of SMARTCLOUD on its web and login pages but noted that Mr. Feick provided no evidence that any customers in Canada saw or accessed the pages referenced. Mr. Feick stated that Smart Cloud’s website had been continuously active since 2010 and that, from January through April 2011, its employees contacted and kept records of their conversations with various potential clients. Copies of the emails attached to the affidavit used the words “Smart Cloud” in their subject lines. None of the contacts identified by Mr. Feick became clients.
[15] The TMOB summarized Smart Cloud’s use of its trademark and tradename in its advertising program, including exchanges with two prospective clients during the October 2010 to April 2011 timeframe. On cross-examination, Mr. Feick acknowledged that neither of the two entities became clients.
[16] The TMOB acknowledged Smart Cloud’s application (trademark application no. 1,546,072) on September 30, 2011 to register the trademark SMARTCLOUD based on use in Canada since October 2010. Finally, the TMOB drew the following facts and admissions from Mr. Feick’s cross-examination:
- Mr. Feick was asked whether Smart Cloud had performed any cloud computing services for a fee. He did not directly answer the question as his counsel consistently objected to it based on relevance.
- Smart Cloud had done no print advertising, by newspaper, magazine, flyer or brochure, nor had it undertaken any radio or television advertising.
- Smart Cloud was targeting the market for small and medium-size businesses (SMEs) but would not turn down any business that came its way.
TMOB’s summary of IBM’s evidence
[17] The TMOB summarized Ms. Smith’s evidence, stating that she is one of the individuals responsible for managing IBM’s marketing initiatives in Canada, including promotion of the IBM SMARTCLOUD brand. Ms. Smith explained IBM’s long and continuous history in technology dating back to the 19th century and emphasized its global reputation as one of the premier manufacturers of computer and computer-related goods and services.
[18] Ms. Smith spoke to IBM’s development of a new framework in association with the trademark SMARTER PLANET beginning in 2008. During the same period, IBM adopted a strategy around cloud computing. Ms. Smith attached to her affidavit IBM’s 2009 and 2010 annual reports, both of which discussed the “targeted growth areas” SMARTER PLANET and Cloud computing. In the April 2011 timeframe, IBM announced an initiative under its Cloud offerings called IBM SMARTCLOUD. IBM SMARTCLOUD services were offered for sale in Canada beginning in 2011. The TMOB noted attachments to Ms. Smith’s affidavit including: a welcome kit for customer administrators for the IBM SmartCloud enterprise offering (© 2011); the user guide for the IBM SmartCloud enterprise offering (© 2010, 2012); and representative printouts from the ibm.com website as it appeared on April 10, 2011, each promoting the Goods and Services offered by IBM in association with the IBM SMARTCLOUD trademark.
[19] The TMOB set out Ms. Smith’s evidence regarding the promotion of the IBM SMARTCLOUD mark in Canada beginning in 2011 in print and web formats (Globe and Mail and National Post) and on other public websites. Advertising in connection with the Mark continued in 2012 in print and online mediums (Maclean’s, Financial Post, National Post, etc.). In each case, the Mark appeared in the materials attached to Ms. Smith’s affidavit.
[20] Finally, the TMOB drew the following facts and admissions from Ms. Smith’s cross‑examination:
- The target market for the Goods and Services associated with the Mark were mid‑market to large enterprise.
- IBM does not always appear directly in front of the word SMARTCLOUD. The TMOB found that such use was not use of the Mark and did not contribute to any acquired distinctiveness of the Mark.
- The last advertising in Canada associated with the Mark was at the end of Q1 2014. The Mark is still being used in Canada in association with software as a service, particularly cloud-based email, calendar management and instant messaging services on the IBM Cloud.
Smart Cloud’s initial evidentiary burdens (paras. 16(3)(a) and (c), 16(1)(a) and (c), s. 2)
[21] The TMOB began by addressing Smart Cloud’s initial burden of filing sufficient evidence from which it could reasonably be concluded that the facts alleged in support of its opposition exist:
(a) in respect of its paragraphs 16(3)(a) and (c) grounds of opposition pertaining to the Goods, Smart Cloud satisfied its obligation to show use of its SMARTCLOUD trademark and tradename prior to April 5, 2011, the priority filing date of the Application, and that it had not abandoned its trademark and tradename as of November 6, 2013, the date of advertisement of the Application;
(b) in respect of its paragraphs 16(1)(a) and (c) grounds of opposition pertaining to the Services, Smart Cloud satisfied its obligation to show use of its SMARTCLOUD trademark and tradename prior to September 2011, the alleged date of first use of the Mark in Canada in association with the Services; and
(c) in respect of its section 2 ground of opposition, Smart Cloud did not satisfy its initial burden of showing that, as of November 26, 2013, the date of filing of its opposition, its SMARTCLOUD trademark and tradename had become sufficiently known in Canada to negate the distinctiveness of the Mark.
Paragraphs 16(3)(a) and (c) grounds of opposition
[22] The TMOB analysed Smart Cloud’s opposition based on paragraphs 16(3)(a) and (c) of the Act, which it summarized as follows:
[70] The section 16(3)(a) and 16(3)(c) grounds of opposition allege that the Applicant is not the person entitled to register the Mark because as of April 5, 2011, the priority filing date of the application, [use of] the Mark in association with the Goods was confusing with the Opponent’s trademark SMARTCLOUD and its tradenames SMARTCLOUD and SMART CLOUD, all of which had been previously used by the Opponent in Canada in association with the Opponent’s services. […]
[23] The TMOB’s analysis of the likelihood of confusion is set forth in this part of the Decision but applies equally to Smart Cloud’s opposition based on paragraphs 16(1)(a) and (c) of the Act.
[24] The TMOB stated that the test for confusion is one of first impression and imperfect recollection and emphasized that subsection 6(2) of the Act is focused on confusion regarding the source of goods and services and not confusion of the trademarks themselves. In this case, the question is whether clients purchasing IBM’s Goods and Services under the Mark would believe the Goods and Services were provided by Smart Cloud.
[25] The TMOB’s assessment of the subsection 6(5) factors for determining confusion and the relevant surrounding circumstances (other than those the TMOB found favoured neither party and which are not relevant in this appeal) was as follows:
Para. 6(5)(a): The TMOB stated that Smart Cloud’s trademark and tradename consists of two ordinary dictionary words and referenced the definitions of those words in the online Oxford English Dictionary (OED). As Smart Cloud’s services are essentially cloud computing services, the TMOB considered its trademark and tradename to be highly suggestive, possessing a low degree of inherent distinctiveness. The TMOB found the Mark to also have a low degree of inherent distinctiveness as it shares the element SMARTCLOUD and the IBM prefix is a combination of letters. As Smart Cloud had provided minimal evidence of use, the TMOB was unable to find that its trademark and tradename had any measure of acquired distinctiveness “that would result in an ambit of protection greater than what would ordinarily be accorded to a weak mark”. The TMOB did not consider IBM’s promotional evidence because it post-dated April 5, 2011. The TMOB concluded that the paragraph 6(5)(a) factor favoured neither party.
Para. 6(5)(b): The TMOB also concluded that the paragraph 6(5)(b) factor did not significantly favour either party because the Application was based on proposed use with the Goods and Smart Cloud had not shown that its trademark and tradename had acquired any distinctiveness through use or promotion as of April 5, 2011.
Paras. 6(5)(c) and (d): The TMOB found that there was some overlap in the nature of IBM’s Goods and Smart Cloud’s services as they both relate to cloud computing. There was also overlap in the nature of trade because the parties’ intended markets included medium/mid-market to large enterprises. The fact that the parties’ prospective customers may be sophisticated or the goods and services offered specialized in nature did not diminish the potential for confusion.
Para. 6(5)(e): Turning to degree of resemblance, the TMOB considered Smart Cloud’s position that the Mark is virtually identical to its trademark and tradename against IBM’s argument that the use of the prefix IBM would distinguish the Goods and Services. The TMOB acknowledged a fair degree of resemblance between the parties’ marks even though the component SMARTCLOUD was not the most striking element of the Mark by virtue of its highly suggestive connotation and positioning. The TMOB concluded that the Mark clearly signalled cloud computing-related goods and services emanating from IBM.
Surrounding circumstance - renown of the trademark IBM: The TMOB reviewed Ms. Smith’s evidence on this point and concluded that the reputation of IBM and its use as the prefix of the Mark would assist consumers in distinguishing the source of the Goods and Services associated with the Mark. This surrounding circumstance strongly favoured IBM.
Surrounding circumstance - jurisprudence concerning weak trademarks: The TMOB stated that it is well-established that a weak trademark (a mark of low inherent distinctiveness) is not entitled to a wide ambit of protection and that comparatively small differences will be sufficient to distinguish between weak marks. As Smart Cloud had not shown extensive use of its trademark and tradename, the low degree of distinctiveness of the SMARTCLOUD mark had not been enhanced. The TMOB concluded that the jurisprudence concerning weak trademarks favoured IBM.
[26] The TMOB concluded that the balance of probabilities with respect to the issue of confusion “weighs slightly in favour” of IBM and rejected Smart Cloud’s grounds of opposition based on paragraphs 16(3)(a) and (c) of the Act. The TMOB recognized the significant overlap in the paragraphs 6(5)(c) and (d) factors and found that the inclusion of the prefix IBM in the Mark significantly impacted the ideas suggested by the Mark such that it would clearly signal to the average consumer that the source of the Goods and Services was IBM. The TMOB also found that the jurisprudence on weak trademarks favoured IBM as Smart Cloud’s evidence of use was very limited.
Paragraphs 16(1)(a) and (c) grounds of opposition
[27] The TMOB reached the same conclusion with respect to confusion notwithstanding Smart Cloud’s paragraphs 16(1)(a) and (c) grounds of opposition pertain to the Services and have a material date of September 2011, the alleged date of first use of the Mark in Canada in association with the Services. The TMOB again found that the balance of probabilities slightly favoured IBM and rejected these grounds of opposition.
Section 2 ground of opposition
[28] The TMOB rejected Smart Cloud’s opposition pursuant to section 2 of the Act. Smart Cloud had not satisfied its evidentiary burden of establishing that the SMARTCLOUD trademark and tradename had become sufficiently known in Canada to negate the distinctiveness of the Mark as of November 26, 2013. The TMOB found that Smart Cloud had provided no evidence of sales generated by the provision of services under SMARTCLOUD. Its evidence of advertising and promotion was narrow and limited to the period from late 2010 to mid-2011. Despite Mr. Feick’s statement that Smart Cloud’s website had been continuously active since 2010, there was no evidence indicating the number of Canadian consumers that may have visited the site.
III. Motion to admit the Supplemental Affidavit – Rule 312(a)
[29] One week prior to the hearing of this appeal, Smart Cloud filed a motion requesting leave of the Court to file Mr. Everest’s Supplemental Affidavit pursuant to Rule 312(a) of the Federal Courts Rules, SOR/98-106. The motion was served on IBM and received by the Court on September 21, 2020. The Supplemental Affidavit consists of one substantive paragraph in which Mr. Everest confirms that the statements he made in paragraphs 8, 9, 16 and 20 of the Everest Affidavit referring to April 2011 or April 5, 2011 would also be true if he had made them in reference to September 2011. The September 2011 date is the alleged date of first use of the Mark in association with the Services and is the material date for the TMOB’s consideration of Smart Cloud’s paragraphs 16(1)(a) and (c) grounds of opposition.
[30] On September 22, 2020, I directed that the motion record be received but not filed and that IBM advise the Court whether it would consent to the motion. IBM responded on September 23, 2020 that it did not consent to the motion and that the motion should not be heard because:
Smart Cloud filed its motion on short notice in violation of Rule 362. It did not seek leave of the Court in the notice of motion, nor has any argument been made to satisfy the Court of the urgency of the motion, a requirement under Rule 362(2)(b).
Smart Cloud cannot satisfy the Court of the urgency of the motion as Smart Cloud raised the issue of supplemental evidence in February/March 2020 and IBM made its opposition to the filing of supplemental evidence clear at that time. The September 24, 2020 hearing date was set on July 20, 2020 but Smart Cloud failed to raise the issue until Thursday, September 17, 2020, when it failed to produce a motion record.
IBM opposes any adjournment of the hearing to accommodate a short served motion, or to permit it to file additional evidence or conduct cross-examination.
[31] IBM also filed a responding motion record on September 23, 2020.
[32] At the beginning of the hearing on September 24, 2020, I heard submissions from the parties as to whether the Court should entertain the Rule 312(a) motion. I agreed to hear the merits of the motion in the interests of affording Smart Cloud a full opportunity to explain the circumstances of the motion. Following the parties’ substantive submissions regarding admission of the Supplemental Affidavit and a brief recess, I provided my ruling and reasons for denying Smart Cloud’s motion. I indicated I would set out more fulsome reasons in this judgment.
[33] The timeline of the parties’ discussions concerning the Supplemental Affidavit is:
February 20, 2020: Smart Cloud’s counsel informs IBM that they would like to file an amended Notice of Application to include reference to September 2011.
February 24, 2020: IBM consents to the amendment of the Notice of Application.
February 27, 2020: Smart Cloud’s counsel requests IBM’s consent to file the Supplemental Affidavit.
March 3, 2020: IBM’s counsel replies, stating that the evidence phase of the application had passed and Smart Cloud would be splitting its evidence, necessitating supplemental evidence from IBM. Counsel stated that IBM would oppose the filing of any supplemental evidence from Smart Cloud.
March 3, 2020: Smart Cloud’s counsel responds to IBM and indicates that it would consent to any supplemental evidence IBM wished to file. Smart Cloud states that it would be seeking leave to refer to the Supplemental Affidavit and to make it part of the record at the hearing.
July 20, 2020: The Court issues an Order fixing the hearing of Smart Cloud’s appeal for September 24, 2020.
September 17, 2020: Smart Cloud’s counsel emails IBM, referencing the parties’ March 3 correspondence, and reiterates that Smart Cloud will be seeking leave to refer to the Supplemental Affidavit and to make it part of the record at the hearing. Counsel proposes to send the Supplemental Affidavit to the Court with the March 2020 correspondence in advance of the hearing.
September 18, 2020: IBM’s counsel replies, stating they are not agreeable to Smart Cloud’s proposal. IBM repeats their opposition to the request and states that they had heard nothing on this topic even after the hearing date was set in mid-July. IBM assumed Smart Cloud had decided against the time and expense associated with bringing a motion and had not prepared supplementary evidence in response.
September 20, 2020: Smart Cloud informs IBM’s counsel that it will be serving and filing a motion on September 21, 2020 to be heard at the start of the hearing. Smart Cloud states that IBM had since March to file supplemental evidence or to cross-examine Mr. Everest. If IBM requires more time, Smart Cloud would consent to an adjournment.
September 21, 2020: Smart Cloud serves and files this motion.
September 22, 2020: The Court receives the motion and issues a direction requesting IBM’s submissions.
September 23, 2020: IBM responds to the Court as described above and files its responding record.
September 24, 2020: The hearing date.
[34] The parties agree that the Court will admit additional affidavits under Rule 312(a) only where it is “in the interests of justice” and that the Court must have regard to whether:
(a) the evidence will assist the Court;
(b) the evidence will not cause substantial or serious prejudice to the other side; and
(c) the evidence sought to be adduced was not available when the party filed its affidavit(s).
(Tsleil-Waututh Nation v Canada (Attorney General), 2017 FCA 128 at para 11)
[35] Smart Cloud submits that its late motion reflects a somewhat naïve assumption that IBM would respond to its March 3, 2020 invitation to file supplemental evidence and/or cross‑examine Mr. Everest should it wish to do so. Smart Cloud emphasizes that its timing in raising this matter does not reflect a tactic to delay the appeal or an attempt to split its case.
[36] Addressing the discrete factors of the test for admission, Smart Cloud argues that Mr. Everest’s statement updating his original evidence to September 2011 is of great importance to its case and would assist the Court in having a complete evidentiary record in which both parties have covered the two material dates. Smart Cloud also argues that the admission of the Supplemental Affidavit will cause IBM no prejudice because any adjournment of this matter would result in an immaterial delay and, in any event, the September 2011 date is already addressed in IBM’s evidence. IBM has known since March of this issue and any misunderstanding as to Smart Cloud’s intention lies partly with IBM.
[37] IBM submits that Smart Cloud has not discharged its onus of satisfying the Court that it is in the interests of justice and appropriate to grant leave to admit the Supplemental Affidavit. IBM emphasizes that it is not seeking to exploit any inadvertent error on Smart Cloud’s part or any misunderstanding between the parties. Rather, IBM has the right to object to the admission of additional affidavits pursuant to Rule 312(a). It objected to admission of the Supplemental Affidavit in March 2020 and took a consistent position in the week prior to the hearing once Smart Cloud again raised the issue.
[38] IBM argues that the Supplemental Affidavit will not assist the Court in deciding the underlying appeal because it contains irrelevant and inadmissible opinion evidence. IBM also argues that admitting the evidence would prejudice IBM by either resulting in an unwanted adjournment to enable it to respond or by proceeding with the hearing on a moving evidentiary record. IBM states that it had no obligation to consent to Smart Cloud’s request or to file additional evidence in rebuttal. Unless the Court grants leave, the Supplemental Affidavit is not evidence and was not part of the record. Any response on its part would have been premature. Finally, IBM submits that the evidence contained in the Supplemental Affidavit was available to Smart Cloud long before the date of the hearing.
[39] The parties agree that Smart Cloud bears the onus of satisfying the Court that the Supplemental Affidavit should be admitted into evidence in the interests of justice, balancing the Rule 312(a) factors. I agree with Smart Cloud that the three factors are not mandatory elements of a conjunctive test that must each be satisfied. They are factors that must be considered and balanced in the exercise of my discretion under Rule 312 (Havi Global Solutions LLC v IS Container PTE Ltd., 2020 FC 803 at paras 47, 58).
[40] By way of preliminary comment, I find no suggestion in the material that Smart Cloud has engaged in a tactical manoeuvre designed to split its evidence and prejudice IBM by bringing forward its motion the week before the hearing. Similarly, I find no fault with IBM’s insistence on its right to object to the motion, either in March 2020 or at the hearing, or in its conduct in waiting for a formal motion before determining whether to file additional evidence or to cross‑examine Mr. Everest. There is no indication in the correspondence between the parties or in IBM’s Court filings that it is unfairly exploiting what I accept was an unintentional oversight on Smart Cloud’s part stemming from its omission in the original Notice of Application to refer to September 2011.
[41] Consistent with my ruling at the hearing, I have declined to grant Smart Cloud leave under Rule 312(a) to file the Supplemental Affidavit. I find that Smart Cloud has not discharged its burden under the Rule. On balance, the interests of justice do not favour late admission of this evidence. With respect to the Rule 312(a) factors:
(a) Importance of the Supplemental Affidavit: I accept Smart Cloud’s submission that the Supplemental Affidavit is an important piece of evidence in its case and would assist the Court. Without it, Smart Cloud has adduced no evidence regarding Mr. Everest’s knowledge of the meaning of cloud computing in September 2011. I acknowledge IBM’s position that the Supplemental Affidavit is not admissible, consistent with its submissions regarding opinion evidence and the Everest Affidavit, which I discuss below. However, material parts of the Everest Affidavit are admissible. As a result, there is value to Smart Cloud in the admission of the evidence. I find that this factor weighs in Smart Cloud’s favour.
(b) Prejudice to IBM: Smart Cloud is of the opinion that there is no necessity for IBM to file additional evidence in response to the Supplemental Affidavit but of course this is not a determination for Smart Cloud to make. Its opinion is necessarily informed by its own interests and is speculative. IBM informed Smart Cloud in March 2020 that it objected to admission of the Supplemental Affidavit. As part of its March 3, 2020 email, IBM stated that the filing of the Supplemental Affidavit “would necessitate supplemental evidence in response from the Respondent”. IBM was entitled to await filing of a formal motion by Smart Cloud and a determination by the Court as to the admissibility of the Supplemental Affidavit. IBM was under no obligation to take action and incur additional costs in anticipation of evidence that may or may not be added to the record.
IBM submits that its Rule 307 evidence, the Hicks and Newman Affidavits, necessarily focused on the April 5, 2011 date because those Affidavits were filed in response to the Everest Affidavit. Although Smart Cloud argues that IBM’s April 5, 2011 evidence in the Hicks and Newman Affidavits necessarily addresses the later date of September 2011, IBM must be permitted to make its own determination.
The prejudice to IBM in the admission of the Supplemental Affidavit lies in the fact it would be forced to accept an adjournment to properly consider its evidentiary position or to move forward on an evidentiary record that the Court has permitted to change at the last hour.
Smart Cloud argues that its counsel informed IBM on March 3, 2020 that it would request the Court’s leave to file the Supplemental Affidavit at the hearing. While Smart Cloud is entitled to its interpretation of that correspondence, the email acknowledged IBM’s opposition and stated “[b]ut we will be seeking leave to refer to it and to make it part of the record at the hearing”. In my view, IBM reasonably read the email to mean that Smart Cloud would seek the Court’s leave prior to the hearing. If leave were granted, the Supplemental Affidavit would then become “part of the record at the hearing”.
Smart Cloud’s inaction from March 2020 to July 2020 may have been due to any number of factors, including the advent of the COVID-19 pandemic and the upheaval and restrictions that have fundamentally altered the Court’s and counsels’ practices. However, after this matter was set down on July 20, 2020, the necessity of pursuing this issue assumed a new urgency. Any obligation to take the next step in resolving admission of the Supplemental Affidavit lay with Smart Cloud. I do not agree with Smart Cloud’s argument that it was incumbent on IBM to take action following the parties’ March 2020 correspondence.
I find that admission of Smart Cloud’s late-filed Rule 312(a) motion would cause serious prejudice to IBM. The second Rule 312(a) factor weighs heavily in favour of IBM.
(c) Availability of the evidence: Mr. Everest’s evidence in the Supplemental Affidavit was available well before the hearing. Smart Cloud knew there was a gap in its Court documents when it sought to amend the Notice of Application in February 2020. Smart Cloud had ample opportunity to act after March 3, 2020 and arguably should have taken action after July 20, 2020. It did not and this final factor weighs in IBM’s favour.
[42] The evidence in the Supplemental Affidavit has been available to Smart Cloud for many months and Smart Cloud knew that IBM objected to its admission in March 2020. In balancing my findings on the Rule 312(a) factors, I find that Smart Cloud’s inaction and the resulting prejudice to IBM outweigh the importance of the evidence to Smart Cloud. I have considered, as part of my balancing exercise, whether admission of the Supplemental Evidence would alter my conclusion regarding the appropriate standard of review in this appeal and have concluded that it would not.
[43] This issue has been outstanding since March 3, 2020. IBM explained its opposition to Smart Cloud on that date and was not required to repeat its opposition in the absence of further action by Smart Cloud. The parties read the email of March 3, 2020 from Smart Cloud’s counsel differently and each is a reasonable reading of the words used but the prejudice to IBM remains.
[44] I conclude that it is not in the interests of justice to allow the late filed Rule 312(a) motion and the motion will be dismissed.
IV. Issues
[45] This appeal raises the following issues:
What is the appropriate standard of review, taking into consideration IBM’s objection to admission of the Everest Affidavit and the materiality of the admissible new evidence?
Did the TMOB err in its analysis and conclusions regarding the likelihood of confusion between the Mark and Smart Cloud’s trademark and tradenames?
V. Standard of review, admission of the Everest Affidavit and evaluation of the admissible new evidence
Jurisprudence regarding appeals under section 56 of the Act
[46] Subsection 56(5) of the Act permits the parties to a section 56 appeal to file new evidence. Where a party does so and the new evidence is “sufficiently substantial and significant” (Vivat Holdings Ltd. v Levi Strauss & Co., 2005 FC 707 at para 27), the Court may exercise any discretion vested in the Registrar. The appeal takes the form of an appeal de novo and calls for the correctness standard (The Clorox Company of Canada, Ltd. v Chloretec S.E.C., 2020 FCA 76 at para 21 (Clorox Company); see also Obsidian Group Inc. v Canada (Attorney General), 2020 FC 586 at paras 26, 28 (Obsidian)). In such case, the Court accords no deference to the conclusions of the original decision maker.
[47] If no new evidence is filed in the appeal or if any new evidence filed is not sufficiently substantial and material, the Court will apply the appellate standard of review and assess questions of law according to the correctness standard and questions of fact and of mixed fact and law (other than extricable questions of law) for palpable and overriding error (Clorox Company at paras 22-23, citing Canada (Minister of Citizenship and Immigration) v Vavilov, 2019 SCC 65 at para 36 (Vavilov) and Housen v Nikolaisen, 2002 SCC 33). The presumption of reasonableness review of the merits of administrative decisions established by the Supreme Court in Vavilov is rebutted by the words of subsection 56(5).
[48] New evidence will trigger a de novo review of the Decision if, as stated above, it is material and significant to the issues addressed by the original decision maker. In the context of this appeal, the admissible new evidence cannot merely repeat or supplement the evidence that was before the TMOB. The test this Court is to apply is whether, on preliminary assessment, the new evidence could lead to a different conclusion on one or more of the issues considered by the TMOB (AIL International Inc. v Canadian Energy Services L.P., 2019 FC 795 at paras 20-21). My colleague, Justice Fuhrer, recently summarized the nature of the Court’s assessment of new evidence in a section 56 appeal (Obsidian at para 29):
[29] Accordingly, I must assess the nature, significance, probative value, and reliability of the Obsidian’s new evidence, in
the context of the record, and determine whether it would have enhanced or otherwise clarified the record in a way that might have influenced the Registrar’s conclusions on a finding of fact or exercise of discretion, had it been available at the time of the Decision: Seara Alimentos Ltda v Amira Enterprises Inc, 2019 FCA 63 at paras 23-26.
The Everest Affidavit
[49] The Everest Affidavit was the focus of considerable debate before me. IBM submits that the Everest Affidavit is not admissible because it consists largely of opinion evidence. Smart Cloud argues that not only is the Affidavit admissible but also that Mr. Everest’s evidence is material. Smart Cloud submits that his evidence would have influenced the TMOB’s finding that the term ‘cloud’ was an ordinary dictionary word in April 2011 and its conclusion that the trademark SMARTCLOUD possesses a low degree of inherent distinctiveness.
[50] Mr. Everest does not purport to be an expert, nor was he qualified as an expert in this appeal. Nevertheless, the Everest Affidavit states that he has worked as a senior IT executive and consultant for over 25 years. Mr. Everest speaks to his own experience in the IT industry and with Starport, and to his recollection and opinions as to awareness, usage and rate of adoption of cloud and cloud computing in the Canadian IT industry. The Everest Affidavit also contains evidence from the OED website indicating that the definition of cloud was only amended to refer to use of the word in relation to computing in June 2012.
Hicks and Newman Affidavits
[51] The Hicks Affidavit sets out the results of a series of web searches undertaken by Ms. Hicks in December 2019. The searches include the OED website and webpages containing information that explains the OED’s use of a quotation system in support of its entries. One set of search results focuses on OED entries for the word ‘cloud’ in the sense of telecommunications and computing and the sub-entry ‘cloud computing’. A number of the quotations for those entries bear dates prior to April 5, 2011. The Hicks Affidavit also contains online search results for: federal and provincial government publications in 2010 about cloud computing; papers by industry, national and international organizations predating April 5, 2011 on the risks, benefits and strategies of or for cloud computing; and the archival Wayback Machine website for Amazon entries relating to the cloud up to 2011.
[52] The Newman Affidavit contains the results of Ms. Newman’s December 9, 2019 search of the Lexis Advance Research platform to locate news articles published on or prior to April 5, 2011, in the Globe and Mail, National Post, Toronto Star and Calgary Herald that included the term ‘cloud computing’. Ms. Newman culled the articles based on their use of cloud and cloud computing as terms of general use and as applications for individuals and SMEs. She attaches to her Affidavit numerous articles based on these criteria.
Should the new evidence be admitted?
[53] IBM submits that no new evidence should be admitted in this appeal. In the alternative, if I admit all or portions of the Everest Affidavit, IBM states that the Hicks and Newman Affidavits should also be admitted as new evidence. Smart Cloud has not objected to the admissi