Cathay Pacific Airways Limited v. Air Miles International Trading B.V.

Cathay Pacific Airways Limited v. Air Miles International Trading B.V.
Court (s) Database
Federal Court Decisions
Date
2016-10-12
Neutral citation
2016 FC 1125
File numbers
T-1314-12
Decision Content
Date: 20161012
Docket: T-1314-12
Citation: 2016 FC 1125
Ottawa, Ontario, October 12, 2016
PRESENT: The Honourable Mr. Justice Southcott
BETWEEN:
CATHAY PACIFIC AIRWAYS LIMITED
Applicant
and
AIR MILES INTERNATIONAL TRADING B.V.
Respondent
JUDGMENT AND REASONS
I. Overview [1] The Applicant, Cathay Pacific Airlines Limited [Cathay Pacific], has appealed a decision of the Trademarks Opposition Board [the Board] dated April 25, 2012, which refused its applications to register five trade-marks in association with the operation of a loyalty reward program and various other wares and services. These trade-marks are the word mark ASIA MILES and four marks which incorporate the words ASIA MILES and a stylized A design feature [the ASIA MILES Marks]. The Respondent, Air Miles International Trading B.V. [Air Miles], opposed these applications before the Board, based on several grounds but primarily based on allegations of confusion with its mark AIR MILES. The AIR MILES mark is used in association with an incentive reward program where consumers collect miles which can be redeemed for air travel and other rewards. Air Miles now seeks to have the Board’s decision upheld.
[2] Cathay Pacific has filed new evidence in this appeal and wishes to have its applications considered de novo by the Court, in accordance with its articulation of the standard of review. Air Miles argues that the new evidence would not have materially affected the Board’s decision and that the decision should accordingly be reviewed on a standard of reasonableness.
[3] For the reasons explained below, my conclusion is that the standard of correctness applies to my review of certain aspects of the Board’s decision, although not to findings of the Board that are unaffected by the new evidence, where deference is still applicable. Applying such principles, I find that the new evidence does materially affect aspects of the Board’s decision related to use of the ASIA MILES Marks by Cathay Pacific under license to its subsidiary. On certain of those aspects of the decision, I have made findings different from those of the Board. However, my finding is that the Board has not erred in its overall conclusion refusing Cathay Pacific’s applications, as a result of which this appeal must be dismissed.
II. Background A. Applications and Opposition [4] On September 8, 2005, Cathay Pacific filed five applications to register the ASIA MILES Marks for use in association with various wares and services. The following table sets out the ASIA MILES Marks and the application date and basis of registration for each:
[5] Air Miles opposed these applications before the Board, raising various grounds of opposition under the Trade-marks Act, RSC 1985, cT-13 [the Act]. Referencing the relevant sections of the Act, the grounds raised in opposition to the application to register the mark ASIA MILES were as follows:
A. s.30(a): The Applicant’s wares and services are not stated in ordinary commercial terms;
B. s.30(b): The Applicant had not used its mark in Canada since the date claimed;
C. s.30(d): The Applicant had not used its mark in Hong Kong as claimed;
D. s.30(e): The Applicant does not intend to use its mark in Canada as claimed;
E. s.12(1)(d): ASIA MILES is not registrable because it is confusing with the opponent’s registered mark AIR MILES;
F. s.16(1)(a) and (b): The Applicant is not entitled to register the ASIA MILES mark because at the claimed date of first use in Canada it was confusing with one or more of the opponent’s marks including AIR MILES, which had been previously used in Canada by the opponent;
G. s.16(1)(c): The Applicant is not entitled to register the mark ASIA MILES because at the claimed date of first use in Canada it was confusing with one or more of the opponent’s trade-names that it had previously used;
H. s.16(2)(a) and (b): The Applicant is not entitled to register the mark ASIA MILES because at the date of filing the application in Canada it was confusing with one or more of the opponent’s marks;
I. s.16(2)(c): The Applicant is not entitled to register the mark ASIA MILES because at the time of filing the application in Canada it was confusing with one or more of the opponent’s trade names which it had previously used in Canada;
J. s.16(3)(a) and (b): The Applicant is not entitled to register the mark ASIA MILES because at the date of filing in Canada it was confusing with one or more of the opponent’s marks including AIR MILES, which had been previously used in Canada by the opponent;
K. s.16(3)(c): The Applicant is not entitled to register the mark ASIA MILES because at the date of filing in Canada it was confusing with one or more of the opponent’s trade names including AIR MILES, which had been previously used in Canada by the opponent;
L. s.2: The mark ASIA MILES is not distinctive and not adapted to distinguish the Applicant’s wares and services from those of the opponent; and
M. s.2: That the Applicant does not intend to use the mark ASIA MILES and/or has abandoned it.
[6] Each of the parties filed affidavit evidence in support of its position, along with transcripts of cross-examination of Cathay Pacific’s deponents.
B. Decision of the Trademarks Opposition Board [7] The Board released its decision on April 25, 2012, reviewing the parties’ evidence and addressing first the technical grounds of opposition under ss. 30(a), (b) and (e) of the Act and then the remaining grounds of opposition which turned on the issue of confusion between the ASIA MILES and AIR MILES marks.
[8] First, the Board considered Cathay Pacific’s evidence of its use of the ASIA MILES Marks under license to its wholly-owned subsidiary, Cathay Pacific Loyalty Programmes Limited [CPLP]. However, the Board concluded that there were doubts concerning Cathay Pacific’s claim that CPLP had been using the marks in Canada under license in compliance with s.50 of the Act, which sets out the requirements for the owner of a trade-mark to demonstrate that a licensee’s use of the mark accrues to the owner’s benefit. The Board therefore refused the application pursuant to the ground of opposition under s.30(b) of the Act related to use in Canada.
[9] The Board then refused the application on the ground of opposition under s.30(e) of the Act, related to intended use in Canada, on the basis that Cathay Pacific’s intended use would be consistent with its past use, that is that such use would accrue to the benefit of CPLP rather than to Cathay Pacific.
[10] The remaining basis for registration was use and registration of the wares and services in Hong Kong. However, in relation to the wares, the Board concluded that they were incidental to the services rather than standalone wares. The Board found that the ASIA MILES Marks were not used in a trade-mark sense for the litany of wares in the application, but just for advertising and promoting a loyalty program, and agreed with Air Miles that the wares were stated overly broadly and therefore not in compliance with s.30(a) of the Act. The application was therefore refused on this ground of opposition in relation to the wares.
[11] The grounds of opposition for the remaining portion of the application were those alleging non-registrability, non-entitlement and non-distinctiveness, each of which turned on the issue of confusion between the ASIA MILES and AIR MILES marks. The Board’s application of the test for confusion and the factors prescribed by s.6(5) of the Act to be considered in determining confusion is described in greater detail later in these Reasons. In summary, the Board reasoned that Air Miles used its mark extensively and for a long period, that Cathay Pacific cannot claim any reputation for its mark in Canada, that there is considerable overlap in the services associated with the marks in issue, and that there is a fair degree of resemblance between them (although they are more different than alike). The Board concluded that at all material dates Cathay Pacific failed to establish, on a balance of probabilities, that there is no reasonable likelihood of confusion between the marks ASIA MILES and AIR MILES with respect to the services for which Cathay Pacific sought registration based on use and registration in Hong Kong. Accordingly, the Board found that Air Miles succeeded on the grounds of opposition based on confusion. The Board refused the ASIA MILES mark application in its entirety.
[12] The Board then found that the four other applications covered the same wares and services, with the same corresponding bases for registration, as the ASIA MILES mark application, and had the same pleadings, issues and evidential record, with material dates that were not significantly different. The Board therefore concluded that the same findings and reasoning applied and refused the other applications in their entirety as well.
C. Procedural History [13] The Federal Court heard Cathay Pacific’s appeal of the Board’s decision and, on June 11, 2014, released a decision allowing the appeal and setting aside the Board’s decision, returning the matter for redetermination by a differently constituted Board (see Cathay Pacific Airways Limited v Air Miles International Trading B.V., 2014 FC 549 ). The Federal Court reasoned that uncontradicted evidence before the Board showed that Cathay Pacific licenses CPLP to use the ASIA MILES mark and that there was sufficient evidence for the Board to conclude that Cathay Pacific had direct or indirect control of the character or quality of the mark’s use, such that CPLP’s use of the mark should have been credited to Cathay Pacific under s.50 of the Act. The Court further held that, but for the Board’s unreasonable conclusion on use, its analysis of confusion would have been different; the Board would have considered whether ASIA MILES had acquired distinctiveness in Canada and would have taken into account the fact that, notwithstanding years of parallel use of both marks in Canada, there was no evidence of any actual confusion between them.
[14] Cathay Pacific appealed the Court’s remedy, arguing that it was entitled to have the Court allow registration of the trade-marks. Air Miles cross appealed on the merits of the Court’s decision. In Air Miles International Trading B.V v Cathay Pacific Airways Limited, 2015 FCA 549, the Federal Court of Appeal allowed Air Miles’ cross appeal, holding that the Federal Court erred in not considering new evidence tendered by Cathay Pacific on the appeal pursuant to s 56 of the Act. The Court of Appeal also held that the Federal Court, while purporting to apply a reasonableness standard, instead applied a correctness standard to the Board’s decision. The Court of Appeal stated that there was no reason to believe that the Board’s decision was unreasonable, given the record which it had before it. Accordingly the matter was returned to the Federal Court for the present redetermination of Cathay Pacific’s appeal.
III. Issues [15] Cathay Pacific identifies the following issues to be addressed in this appeal:
A. What standard of review should be applied?
B. Did the Board err in considering the improperly pleaded s.30(a) ground of opposition, or in finding that the Respondent had met its initial burden of proof for this ground, or in applying an incorrect legal test to determine that the Applicant’s description of wares was overly broad?
C. Did the Board err in refusing the applications in respect of certain wares and services under s 30(b) of the Act based on a finding that use of the ASIA MILES Marks by the Applicant’s subsidiary was not licensed use accruing to the benefit of the Applicant pursuant to s.50 of the Act?
D. Did the Board err in refusing the applications in respect of certain wares and services under s.30(e) of the Act based on the assumption that the Applicant intended to use the ASIA MILES Marks through its subsidiary in such a manner that use would not accrue to the benefit of the Applicant?
E. Did the Board err in refusing the applications based on ss.2, 12(1)(d) and 16 of the Act based on a finding that the Applicant had failed to establish that there is no reasonable likelihood of confusion between the Applicant’s ASIA MILES Marks and the Respondent’s mark AIR MILES?
IV. Analysis A. What standard of review should be applied? [16] The selection of the standard of review turns on the question whether the new evidence filed by Cathay Pacific on the appeal, as permitted by s.56(5) of the Act, would have materially affected the Board’s decision (see Molson Breweries, a Partnership v John Labatt Ltd. (2000), 5 C.P.R. (4th) 180 at para 29). This principle is not disputed by the parties. In this Court’s recent decision in Kabushiki Kaisha Mitsukan Group Honsha v. Sakura-Nakaya Alimentos Ltda., 2016 FC 20 [Kabushiki Kaisha], Justice LeBlanc identified that decisions of the Board are generally reviewable against the reasonableness standard but explained as follows at paragraph 18 the circumstances in which the introduction of new evidence may result in the application of the correctness standard:
[18] As contemplated by subsection 56(5) of the Act, the reasonableness standard of review may give way to the correctness standard where additional evidence is filed with the Court. In such instances, the Court may exercise any discretion vested in the Registrar and come to its own conclusion. However, as explained by Justice Yves de Montigny, now a judge of the Federal Court of Appeal, in Producteurs Laitiers du Canada, this will only occur where the fresh evidence is relevant insofar as it fills a gap or remedies deficiencies identified by the Registrar or substantially adds to what has already been submitted. On the other hand, where the fresh evidence is repetitive and does not enhance the probative value of the evidence already adduced, the standard of reasonableness will continue to apply (Producteurs Laitiers du Canada, at para 28; see also Molson Breweries v John Labatt Ltd, [2000] 3 FC 145 (CA), at para 51). [emphasis added]
[17] As there is no new evidence related to the ground of opposition under s.30(a) of the Act, the parties agree that the standard of reasonableness applies to the review of that ground. However, on the remaining grounds, Air Miles takes the position that the reasonableness standard again applies, while Cathay Pacific argues that the standard is correctness or, more accurately in its view, a review conducted as a hearing de novo on the extended record.
[18] Cathay Pacific’s position, that the correctness standard should more accurately be described as a review de novo, relies on the description by the Supreme Court of Canada, at paragraph 35 of Mattel, Inc. v 3894207 Canada Inc., 2006 SCC 22 [Mattel], of the requirement that the judge hearing the appeal proceed by way of a fresh hearing on an extended record. However, I note that, at paragraphs 46 to 47 of the recent decision in Eclectic Edge Inc. v Gildan Apparel (Canada) LP, 2015 FC 1332, Justice Gascon, relying on paragraphs 36 to 37 of Mattel, observed that the term trial “de novo” is not an accurate description of a s.56 appeal, as the Board remains entitled to a degree of deference because the reception and consideration of fresh evidence do not eliminate the Board’s expertise as a relevant consideration. Rather, a correctness standard of review should apply to findings of fact which are materially affected by the new evidence. Other findings of fact remain subject to a more deferential reasonableness standard, recognizing the particular expertise of the Board. I adopt Justice Gascon’s articulation of the applicable standard of review.
[19] Cathay Pacific has filed four new affidavits in this appeal, sworn by Stephen John Rackstraw, Sarra Gau, Wong Ngai Sang Ivor, and William Geraghty. Air Miles has also filed one new affidavit, sworn by John K. Chambers. I will address each of these affidavits, and whether each has an effect on the applicable standard of review, when addressing below the individual issues in this application.
B. Did the Board err in considering the improperly pleaded s.30(a) ground of opposition, or in finding that the Respondent had met its initial burden of proof for this ground, or in applying an incorrect legal test to determine that the Applicant’s description of wares was overly broad? [20] As noted above, the standard of review applicable to this issue is reasonableness.
[21] Section 30(a) of the Act requires an applicant for the registration of a trade-mark to file an application containing a statement in ordinary commercial terms of the specific wares or services in association with which the mark has been or is proposed to be used. Air Miles argued before the Board that Cathay Pacific’s application referred to a litany of wares and services, many of which are generic and overlap. Air Miles referred to terms like “cardboard” and “leaflets” and “provision of tourist information” as requiring more precise commercial terminology. Air Miles also argued that any use of the ASIA MILES Marks in association with the ASIA MILES loyalty reward program is not use in a trade-mark sense but rather is just for advertising and promoting the program.
[22] The Board accepted Air Miles’ position as it related to the wares referenced in Cathay Pacific’s application, finding that it was apparent on a fair reading of the evidence that the wares were incidental to and complement the services rather than being standalone wares. The Board agreed with Air Miles both that the marks were not used in a trade-mark sense for the wares and that the wares are stated overly broadly and therefore not in compliance with s.30(a).
[23] Cathay Pacific argues that s.38(3)(a) of the Act requires that a statement of opposition be set out in sufficient detail to enable the applicant to reply and that Air Miles’ statement of opposition did not meet this requirement as it failed to specify which wares and services it alleged were noncompliant with s.30(a). It also submits that Air Miles failed to properly plead the argument that the marks were not used in a trade-mark sense for the wares, this submission appearing for the first time in Air Miles’ written argument. Cathay Pacific further argues that Air Miles failed to meet its initial evidentiary burden to file sufficient admissible evidence or provide sufficient argument from which it can be concluded that the facts alleged to support the ground of opposition exist. On the substance of this issue, Cathay Pacific also takes the position that the Board erred by reaching its conclusion on the basis of use of the mark rather than the question of whether the wares and services were stated in ordinary commercial terms.
[24] I find the Board’s decision on this issue to be unreasonable, because it failed to address Cathay Pacific’s argument that this ground of opposition was insufficiently pleaded by Air Miles The Board’s decision on this ground turned largely on its acceptance of Air Miles’ argument that the ASIA MILES Marks were not used in a trade-mark sense for the wares, even though that argument had not been pleaded in the statement of opposition. In Pricewaterhouse Coopers LLP v Barrow National Cooperative Inc., 2013 TMOB 24, at paras 26-29, the Board dismissed the opponent’s ground of opposition under s.30(a) for being insufficiently pleaded, because it was vague and ambiguous and did not indicate which services allegedly offended s.30(a). Similarly, in the present case, Air Miles’ pleading on this issue was expressed in generic terms, and Air Miles did not raise the argument upon which the Board’s decision turned until it filed its written argument. As a result, Cathay Pacific was deprived of the opportunity to address this position through its evidence or written argument before the Board.
[25] Both the Board’s failure to consider Cathay Pacific’s argument that Air Miles’ pleading under s.30(a) was insufficient, and its decision to base its conclusion on this insufficiently pleaded ground of opposition, result in its decision on this ground being outside the range of acceptable outcomes. I conclude that the Board should have dismissed the ground of opposition under s.30(a) of the Act due to insufficient pleading, and I therefore dismiss this ground of opposition.
C. Did the Board err in refusing the applications in respect of certain wares and services under s.30(b) of the Act based on a finding that use of the ASIA MILES Marks by the Applicant’s subsidiary was not licensed use accruing to the benefit of the Applicant pursuant to s.50 of the Act? (1) New Evidence and Standard of Review [26] Before the Board, Cathay Pacific relied on the affidavit evidence of Grace Poon, identified as its Manager, Market Development, to establish its use of the ASIA MILES Marks in Canada under license to CPLP. Cathay Pacific submits that the new evidence in the affidavits of Mr. Wong, Ms. Gau and Mr. Rackstraw all provide evidence relevant to this ground of opposition.
[27] I have considered the affidavits of Mr. Wong and Ms. Gau and find that they add little to the evidence of Ms. Poon that was available to the Board.
[28] Mr. Wong is a Business Analytics Analyst in Cathay Pacific’s Customer Information System team. Cathay Pacific’s written submissions summarize Mr. Wong’s evidence as verifying the information in Ms. Poon’s affidavit relating to: (i) membership in the ASIA MILES Programme worldwide and in Canada; (ii) earning and redemption of ASIA MILES miles by Canadian members; and (iii) login traffic to the asiamiles.com website by Canadian members from 1999 to 2007. Cathay Pacific notes that Mr. Wong also provides updated figures for this information from 2008 to 2012. I agree with the Air Miles’ characterization of this affidavit, in comparison to that of Ms. Poon, as being “more of the same”, and I conclude that it would not have materially affected the Board’s decision.
[29] Similarly, Cathay Pacific refers to Ms. Gau’s affidavit as confirming certain evidence presented in Ms. Poon’s affidavit relating to advertising and promoting the ASIA MILES Programme in Canada. Ms. Gau is an employee of Cathay Pacific’s Vancouver, British Columbia office. She has worked there since 2004, and her duties include the promotion of the ASIA MILES Programme in Canada. Cathay Pacific’s written submissions describe Ms. Gau’s affidavit as explaining her personal direct involvement in developing and/or distributing the referenced advertising and promotional material in Canada since 2004, as well as her understanding that the same procedure was followed from 1999 to 2004, prior to her employment. A review of her affidavit confirms this description. Ms. Gau references various paragraphs in Ms. Poon’s affidavit, confirms their accuracy, and describes her involvement in the activities to which Ms. Poon had referred. Again, I find that this evidence does not add materially to the evidence of Ms. Poon which was before the Board and that it would not have materially affected the Board’s decision.
[30] Furthermore, the Board’s decision on the ground of opposition under s.30(b) of the Act turned on the issue of licensing of the ASIA MILES Marks, and the affidavits of Mr. Wong and Ms. Gau do not speak materially to this issue. However, I reach a different conclusion on the effect of the affidavit of Mr. Rackstraw, whose evidence relates directly, and in my view materially, to the issue of Cathay Pacific’s licensing of the ASIA MILES Marks to CPLP.
[31] The Board found Ms. Poon’s evidence inadequate to establish that CPLP had been using the ASIA MILES Marks under license in compliance with s.50 of the Act. Cathay Pacific now supplements this evidence with that of Mr. Rackstraw, its Manager, Member Services for Cathay Pacific’s loyalty programs including the ASIA MILES Programme. My determination that this new evidence would have materially affected the Board’s decision turns on considering the Board’s findings based on Ms. Poon’s evidence and, in that context, the additional significance of Mr. Rackstraw’s evidence.
[32] In its decision, the Board recited in full paragraph 6 of Ms. Poon’s affidavit, in which she deposed that Cathay Pacific licenses the ASIA MILES Marks to CPLP in respect of the wares and services applied for under the subject applications and that Cathay Pacific directly or indirectly controls the character or quality of the wares distributed and services provided by CPLP in association with these marks. Ms. Poon stated that one way in which Cathay Pacific exercises this control is that CPLP reports directly to Cathay Pacific’s Director of Sales and Marketing who oversees the operation of CPLP. The Board referred to admissions by Ms. Poon on cross examination that: (i) she is unaware of the existence of a written license agreement between Cathay Pacific and CPLP; and (ii) that she could not give details of the form of direct or indirect control exercised by Cathay Pacific over the wares and services provided by CPLP, other than the reporting to the Director of Sales and Marketing mentioned in her affidavit.
[33] The Board then referred to Air Miles’ arguments in support of its position that any purported use of the ASIA MILES reward program and associated ASIA MILES Marks in Canada resided with CPLP and did not accrue to Cathay Pacific under s.50 of the Act.
[34] At the beginning of its subsequent analysis, the Board noted that a trade-mark license agreement need not be in writing, as a verbal agreement may suffice to meet the requirements of s.50. However, the Board observed that the issues concerning licensed use by CPLP that arose at cross-examination might have been clarified by Cathay Pacific had it requested leave to file additional evidence and that it had elected not to do so. Having regard to the lack of specificity in Ms. Poon’s evidence, to her inability on cross-examination to speak to the terms of a license agreement, and to the exhibit material attached to her affidavit, the Board found that there were doubts that CPLP had been using the ASIA MILES Marks in Canada under license in compliance with s.50. After canvassing the evidential burden upon Air Miles, which the Board found had been met, and the legal onus upon Cathay Pacific, the Board found that the weight of the evidence did not support Cathay Pacific’s claim that use of the mark ASIA MILES in Canada accrued to its benefit.
[35] In this appeal, Cathay Pacific has filed Mr. Rackstraw’s affidavit to provide additional evidence as to the relationship between Cathay Pacific and CPLP (which it notes has been called Asia Miles Limited since 2011), the license that Cathay Pacific says exists between them, and the control it exercises over the character and quality of the wares and services. In its written submissions, Cathay Pacific refers to Mr. Rackstraw’s affidavit and cross-examination as establishing the following points:
A. Mr. Rackstraw has worked for Cathay Pacific as the Manager, Member Services for its loyalty programs since 1999;
B. CPLP is a wholly-owned subsidiary of Cathay Pacific, which was expressly set up to manage and operate Cathay Pacific’s ASIA MILES Programme;
C. There is a written agreement effective since at least February 1, 1999 between Cathay Pacific and CPLP governing the management and operation of the ASIA MILES Programme. Under the agreement, Cathay Pacific provides a license to CPLP to use the ASIA MILES Marks and Cathay Pacific controls the type and quality of wares and services provided by CPLP in association with the ASIA MILES Marks;
D. The written license agreement was not produced as it is confidential;
E. Cathay Pacific in practice directly controls virtually all activity by CPLP. CPLP has no employees and is staffed entirely by employees of Cathay Pacific. CPLP is operated out of Cathay Pacific’s Hong Kong office, and Cathay Pacific manages the treasury function of CPLP, provides CPLP with use of its overhead and administrative support systems, its customer loyalty-related systems, and its IT support;
F. CPLP’s Board of Directors is entirely composed of employees of Cathay Pacific, and there are weekly management meetings held by a director of Cathay Pacific at which the General Manager of CPLP can raise issues concerning the ASIA MILES Programme;
G. Cathay Pacific owns the domain name asiamiles.com, which is where the website for the ASIA MILES Programme is hosted.
[36] Section 50(1) of the Act, upon which Cathay Pacific relies to establish use accruing to its benefit, provides as follows:
50. (1) For the purposes of this Act, if an entity is licensed by or with the authority of the owner of a trade-mark to use the trade-mark in a country and the owner has, under the licence, direct or indirect control of the character or quality of the wares or services, then the use, advertisement or display of the trade-mark in that country as or in a trade-mark, trade-name or otherwise by that entity has, and is deemed always to have had, the same effect as such a use, advertisement or display of the trade-mark in that country by the owner.
50. (1) Pour l’application de la présente loi, si une licence d’emploi d’une marque de commerce est octroyée, pour un pays, à une entité par le propriétaire de la marque, ou avec son autorisation, et que celui-ci, aux termes de la licence, contrôle, directement ou indirectement, les caractéristiques ou la qualité des marchandises et services, l’emploi, la publicité ou l’exposition de la marque, dans ce pays, par cette entité comme marque de commerce, nom commercial — ou partie de ceux-ci — ou autrement ont le même effet et sont réputés avoir toujours eu le même effet que s’il s’agissait de ceux du propriétaire.
[37] Cathay Pacific further relies upon jurisprudence of this Court which speaks to methods of demonstrating the control contemplated by s.50(1). As stated by Justice Kelen at paragraph 84 of Empresa Cubana Del Tabaco Trading v. Shapiro Cohen, 2011 FC 102 [Empresa Cubana]:
[84] There are three main methods by which registered owners of trade-marks can demonstrate the control required to benefit from the deeming provision in section 50(1) of the Act:
1. they can clearly swear to the fact that they exert the requisite control: see, for example, Mantha & Associés/Associates v. Central Transport Inc. (1995), 64 C.P.R. (3d) 354 (Fed. C.A.), at paragraph 3;
2. they can provide evidence that demonstrates that they exert the requisite control: see, for example, Eclipse International Fashions Canada Inc. v. Shapiro Cohen, 2005 FCA 64, at paragraphs 3-6; or
3. they can provide a copy of a license agreement that explicitly provides for the requisite control.
[38] Cathay Pacific argues that Ms. Poon’s affidavit meets the first criterion in Empresa Cubana and that Mr. Rackstraw’s affidavit meets both the first and second criteria. It also argues that, as noted during the cross-examination of Mr. Rackstraw, although the written license is confidential, Cathay Pacific was prepared to consider production of relevant portions of the license subject to an appropriate protective order, but that Air Miles elected not to pursue this point.
[39] Air Miles’ position is that Mr. Rackstraw’s affidavit does not have probative value additional to that of the evidence that was before the Board. It also takes issue with Cathay Pacific’s reliance on Empresa Cubana, arguing that decision involved an expungement proceeding under s.45 of the Act, in which the evidentiary standard for establishing use is lower than in an opposition proceeding (see Tint King of California Inc. v. Canada (Registrar of Trade-Marks), 2006 FC 1440). In response, Cathay Pacific relies on Kabushiki Kaisha, which it notes involved an appeal from an opposition proceeding. At paragraphs 25 to 27 of Kabushiki Kaisha, Justice LeBlanc recited and relied on paragraph 84 of Empresa Cubana to conclude that affidavit evidence swearing to the exercise of quality control was sufficient to infer the existence of a verbal license agreement.
[40] I agree with Air Miles’ position that the authorities upon which Cathay Pacific relies are distinguishable from the present case. Section 45 proceedings involve a simple and expeditious method of removing from the register trade-marks that have fallen into disuse, described as having the purpose of cleaning up “dead wood” on the register and therefore involving a relatively low evidentiary threshold (see Uvex Toko Canada Ltd. v. Performance Apparel Corp., 2004 FC 448). This is to be contrasted with an opposition proceeding, where applicants for trade-mark registration must establish their case on a balance of probabilities (Thymes, LLC v Reitmans Canada Limited, 2013 FC 127, at para 17; John Labbatt Ltd v Molson Co, [1990] FCJ No 533, 30 CPR (3d) 293, aff’d [1992] FCJ No 525, 42 CPR (3d) 495 (FCA).
[41] Kabushiki Kaisha, while involving an opposition proceeding, is distinguishable in that it applied Empresa Cubana in the context of the initial evidentiary burden upon the party opposing a trade-mark registration. The Court was required to assess whether the opponent had met this initial evidentiary burden to adduce sufficient admissible evidence from which it could reasonably be concluded that the facts alleged to support its ground of opposition existed. In that case, the Court found that an affidavit swearing to the handling of quality control fell under the first category of the Empresa Cubana methods and was sufficient to satisfy the evidentiary burden. Given this context, I am not prepared to treat Kabushiki Kaisha as authority to extend the application of Empresa Cubana to a proceeding which involves satisfaction of the legal onus to meet the requirements of s.50(1) of the Act.
[42] Notwithstanding this analysis of the jurisprudence, the evidence necessary to satisfy s.50(1) will undoubtedly vary from case to case, and the issue presently under consideration involves a determination of the particular impact of Mr. Rackstraw’s evidence. My conclusion is that this evidence does add sufficient material content to that which was available from Ms. Poon to have had an impact on the Board’s decision.
[43] Each of Ms. Poon and Mr. Rackstraw has sworn to the existence of a license and to Cathay Pacific controlling the character, type or quality of the wares and services provided in association with the ASIA MILES Marks. With respect to licensing, the most significant difference in their evidence is that Mr. Rackstraw states that the license is contained in a written agreement, while Ms. Poon was unaware whether there was a written license agreement. The Board expressly noted in its decision that a license agreement need not be in writing and that a verbal agreement may meet the requirements of s.50(1). Nevertheless, the significant improvement in Cathay Pacific’s evidence that I draw from Mr. Rackstraw’s affidavit is the fact that his evidence, that the license is in written form, provides a credible basis for his assertion that the license exists. Ms. Poon’s evidence provided no such basis, which I read as contributing to the Board’s doubt as to Cathay Pacific’s claim that CPLP had been using the ASIA MILES Marks in Canada under license.
[44] In reaching its conclusion on this issue, the Board also referred to Ms. Poon’s inability to speak to the terms of a license agreement in cross-examination. While neither Mr. Rackstraw’s affidavit nor his cross-examination provides any detailed information as to the terms of the license agreement, he does state that under the license Cathay Pacific controls the type and quality of the wares and services provided in association with the ASIA MILES Marks worldwide, including Canada. This is again an improvement on Ms. Poon’s evidence, which failed to address at all the requirement of s.50(1) that the control of the character or quality of the wares or services must be under the license.
[45] I also find that Mr. Rackstraw’s affidavit has improved significantly the evidence as to the control exercised by Cathay Pacific over the wares and services provided by CPLP. The Board remarked on Ms. Poon’s inability to give details of the form of control other than CPLP reporting to Cathay Pacific’s Director of Sales and Marketing. Mr. Rackstraw’s evidence still focuses significantly on this reporting relationship as the means of control. However, it provides much more detail on this relationship, explaining that the most senior position in CPLP is its Director & General Manager, who reports directly to CPLP’s Board of Directors, which is itself comprised entirely of Cathay Pacific management employees, including the Director of Sales and Marketing.
[46] Mr. Rackstraw also explains that weekly management meetings are held by Cathay Pacific’s Director of Sales and Marketing and attended by all the General Managers reporting to him, certain senior staff, CPLP’s Director & General Manager and Mr. Rackstraw himself. During these meetings, any significant issues related to the operation of the ASIA MILES Programme in association with the ASIA MILES Marks are raised and discussed. Mr. Rackstraw gives an example from early 2012 of implementing a new reservation system requiring budget approval, which was obtained from Cathay Pacific’s Director of Sales and Marketing, for the hiring of additional call centre agents to maintain target call centre times.
[47] I find that this substantial increase in detail, as to how Cathay Pacific exercises control over the wares and services provided by CPLP through the relationship with Cathay Pacific’s Director of Sales and Marketing, as well as of the fact that CPLP’s Board of Directors is comprised entirely of Cathay Pacific management employee, would have materially affected the Board’s decision. I disagree with Air Miles’ position that this evidence has nothing to do with control of the quality of any wares or services offered by CPLP on behalf of Cathay Pacific. In particular, the weekly management meetings relate to the operation of the ASIA MILES Programme, and the example of implementing a new reservation system and hiring additional call centre agents to maintain target call answer times represents an example of controlling the quality of the relevant services, which are principally the provision of a loyalty reward program.
[48] I find that the evidence of Mr. Rackstraw would have materially affected the Board’s decision on the use of the ASIA MILES Marks by Cathay Pacific under license to CPLP and that the standard of correctness therefore applies to my consideration of this aspect of the Board’s decision.
(2) Finding on Ground of Opposition under Section 30(b) of the Act [49] With the benefit of the new evidence, applying the correctness standard and the above analysis of that evidence, I disagree with the Board’s conclusion on this issue and find that Cathay Pacific has met the requirements of s.50(1) of the Act, having established that the use of the ASIA MILES Marks in Canada by CPLP accrues to Cathay Pacific’s benefit.
[50] However, the analysis of this ground of opposition, and Cathay Pacific’s use of the ASIA MILES Marks in Canada, does not end with the licensing analysis. Independent of the licensing question, Air Miles also takes issue with the proposition that the advertising and operation of the ASIA MILES Programme in Canada by CPLP constitutes use for purposes of the Act.
[51] Cathay Pacific argues that the Board accepted Ms. Poon’s evidence on the use of the marks in Canada, that the Board implicitly found that the required use by CPLP had been established, and that Air Miles’ success under s.30(b) turned strictly on the licensing point. The Board’s summary of Ms. Poon’s evidence includes the following:
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