Marlboro Canada Limited v. Philip Morris Products S.A.

Marlboro Canada Limited v. Philip Morris Products S.A.
Court (s) Database
Federal Court of Appeal Decisions
Date
2012-06-29
Neutral citation
2012 FCA 201
File numbers
A-463-10
Decision Content
Date: 20120629
Docket: A-463-10
Citation: 2012 FCA 201
CORAM: LÉTOURNEAU J.A.
PELLETIER J.A.
GAUTHIER J.A.
BETWEEN:
MARLBORO CANADA LIMITED and
IMPERIAL TOBACCO CANADA LIMITED
Appellants
and
PHILIP MORRIS PRODUCTS S.A. and
ROTHMANS, BENSON & HEDGES INC.
Respondents
Heard at Montréal, Quebec, on January 18, 2012.
Judgment delivered at Ottawa, Ontario, on June 29, 2012.
REASONS FOR JUDGMENT BY: GAUTHIER J.A.
CONCURRED IN BY: LÉTOURNEAU J.A.
PELLETIER J.A.
Date: 20120629
Docket: A-463-10
Citation: 2012 FCA 201
CORAM: LÉTOURNEAU J.A.
PELLETIER J.A.
GAUTHIER J.A.
BETWEEN:
MARLBORO CANADA LIMITED and
IMPERIAL TOBACCO CANADA LIMITED
Appellants
and
PHILIP MORRIS PRODUCTS S.A. and
ROTHMANS, BENSON & HEDGES INC.
Respondents
REASONS FOR JUDGMENT
GAUTHIER J.A.
[1] The parties are each appealing from various portions of the trial judge’s decision (reported as 2010 FC 1099) granting in part only the relief sought by Philip Morris Products S.A. and Rothmans, Benson & Hedges Inc. (collectively PM), and dismissing the claim of Marlboro Canada Limited and Imperial Tobacco Canada Limited (collectively ITL) for infringement of their registered Canadian trade-mark MARLBORO[1] (TMDA 55,988), as well as its request to strike out the registration of six of PM’s trade-marks relating to its ROOFTOP design marks.
[2] For the reasons that follow, I am of the view that ITL’s appeal from the dismissal of its trade-mark infringement counterclaim should be granted in respect of the unregistered label (front and side) of PM’s no-name cigarette package (see Schedule “A”). The appeal from the trial judge’s refusal to strike out PM’s registered trade-mark TMA 670,898 should be dismissed.
[3] PM’s cross-appeal in respect of:
a. The trial judge’s dismissal of its copyright infringement claim as well as for breach of the 1952 Agreement;
b. The trial judge’s ruling that ITL’s registration of MARLBORO is still valid;
c. The trial judge’s ruling that ITL was not estopped from challenging the registration of its various ROOFTOP design marks, particularly TMA 670,898;
should, in my view, also be dismissed.
BACKGROUND
[4] As will be explained in more detail, the trial judge had to address various issues relating to ITL’s and PM’s trade-marks, as well as a claim of copyright infringement of the Marlboro’s Red Roof Label with respect to ITL’s 1996, 2001 and 2007 cigarette packages, which are all reproduced at paragraph 309 and in Annex C of the trial judge’s reasons (Reasons).
[5] Most of the unique facts of this case are not disputed. They are described in detail in the Reasons, notably at paragraphs 8 to 65.
[6] Suffice it to say here that the parties have a long history with respect to the use of the trade-mark MARLBORO in Canada, which was sold by a predecessor in title of PM to a predecessor in title of ITL around 1930 and was then registered in Canada in 1932 under no. TMDA 55,988. It has since then been continuously used in Canada by ITL and its predecessors in title in association with cigarettes.
[7] Since the late 1950’s, PM has made various attempts to reacquire the MARLBORO trade-mark in Canada and put an end to ITL’s use of it. That said, on the one hand, it unsuccessfully initiated discussions to exchange it for one of its other marks or to buy it (from the scant evidence produced, it is unclear what exactly was offered). On the other hand, in 1981, it tried to register its Marlboro Red Roof Label and challenge the validity of ITL’s registration (TMDA 55,988) by instituting a proceeding under section 45 of the Trade-marks Act, R.S.C. T-10 (the “Act”) before the Registrar of Trade-Marks. It also filed an action before the Federal Court to strike ITL’s MARLBORO mark from the Registry on the basis that it lacked distinctiveness because of the fame of its own Marlboro marks registered in the United States and around the world, which fame was acquired decades after its predecessors in title assigned the MARLBORO mark to ITL’s predecessors in title in Canada. These efforts were also unsuccessful.
[8] In 1987, in Philip Morris Inc. v. Imperial Tobacco Ltd. (1987), 17 C.P.R. (3d) 289, 81 N.R. 28 (C.A.), leave to appeal to S.C.C. refused, 20674 (December 17, 1987) [Philip Morris (1987)], this Court finally dismissed PM’s contestation, stating that even if the owner of a trade-mark (a famous one in particular) registered outside of Canada had been given special rights by the Canadian legislator under the Act (such as the right to oppose the registration of a mark “made known” by it pursuant to section 5 of the Act and the right to register certain marks pursuant to section 17), the distinctiveness of a mark registered in Canada by a legitimate assignee such as ITL could not be affected by the unilateral actions (such as spill-over American advertising) of the assignor who does not use the mark in Canada.
[9] Between 1958 (date of the first registration of a ROOFTOP design mark by PM in Canada) and 2006 (date of the latest version of the ROOFTOP design mark registered by PM), PM never used its ROOFTOP design marks in Canada in association with an American blend cigarette. Canada being a special market where consumers up until now generally preferred the so-called “Virginia blend” cigarettes, PM used its various ROOFTOP design marks together with the word mark MATADOR (and to a very modest extent MAVERICK) in association with Virginia blend cigarettes.
[10] In 2006, a few days after the registration of its latest silver version of the ROOFTOP design mark (TMA 670,898), which for the first time, includes PM’s crest, PM launched a new product – an American blend cigarette in Canada, which was referred to at trial and before us as either the ROOFTOP brand or the no-name package. The get-up or label of this product is unique in that, for the very first time in the world, cigarettes were offered for sale in a package with no brand name (or no word mark). Also, the no-name package refers, for the first time in Canada, to the “WORLD FAMOUS IMPORTED BLEND” (on the side of the package). Otherwise, the label included the most popular design elements and tag line associated around the world with PM’s Marlboro trade-marks that it had used for several decades in Canada in association with its MATADOR brand. Like the Marlboro brand sold by PM outside of Canada, the new no-name cigarettes were offered in a red, silver and gold version (allegedly different strength of tobacco).
[11] Until shortly before the trial, PM was seeking a declaration that its registered “ROOFTOP Design Trade-mark”, as defined in paragraph 6 of its Further Amended Statement of Claim by reference to several registrations, did not infringe any of ITL’s trade-mark rights, as well as a declaration that the three latest versions of ITL’s MARLBORO packages (1996, 2001 and 2007) infringed its copyright in the Marlboro Red Roof label. One of PM’s defences to ITL’s counterclaim of infringement of its MARLBORO mark by the no-name packages (red, gold and silver version) was that the registration of PM’s various trade-marks used on the said packages excludes a finding of infringement.
[12] Thus, two weeks before trial, ITL amended its counter-claim to directly challenge the validity of the six ROOFTOP design marks of PM (Reasons, Annex “B”, reproduced as Schedule “B” hereto). PM amended its Statement of Claim to challenge the validity of ITL’s MARLBORO mark, once again on the basis that it was not distinctive.
[13] In his 163-page decision, the trial judge thoroughly analysed the evidence and made various findings as to its weight. The most relevant passages of the Reasons and the submissions of the parties will be reviewed in the course of my analysis.
THE ISSUES IN APPEAL
[14] ITL challenges all of the trial judge’s adverse conclusions relating to its infringement claim.
[15] In its memorandum, it submits that he made the following errors:
a. He failed to hold that, in the particular context of the sales of cigarettes in Canada, relevant consumers overwhelmingly call PM’s no-name product Marlboro at the time of purchase. Here, ITL essentially challenges the assessment and the weight given to the evidence.
b. He erred on the question of mixed fact and law of whether the use of the word mark MARLBORO by consumers at the time of purchase falls within the meaning of “in any other manner so associated with the wares” in section 4 of the Act.
c. He erred in law in failing to conclude that the use by consumers of the word mark MARLBORO constitutes use by PM, pursuant to sections 19 and 22 of the Act.
d. He erred in concluding that the various trade-marks registered by PM exclude a finding of infringement by failing to appreciate that it is the get-up or label (front and side) of the no-name package, an unregistered compilation of elements, that is said to create the confusion and not the use of the individual registered trade-marks.
e. He erred in law in applying an improper test to assess confusion, particularly considering extraneous factors and by misconstruing paragraph 6(5)(e) of the Act.
[16] ITL suggests that this Court can properly make the findings that the trial judge should have made pursuant to sections 19, 22 and 20 and thus, should allow the appeal and grant the judgment that should have been rendered in the first place. Finally, in the alternative, ITL challenges the trial judge’s conclusion that PM’s TMA 670,898 (silver version of the ROOFTOP Design registered in 2006) trade-mark registration is valid.
[17] In the cross-appeal, PM raises the following four issues:
a. In his assessment of the validity of the MARLBORO trade-mark, the trial judge failed to appreciate that a different set of circumstances and legal grounds (mixed fact and law) warrant a different conclusion from that reached by the Federal Court of Appeal in 1987.
b. With respect to the defence of estoppel, the trial judge misapplied the legal test to the facts of the case.
c. The trial judge applied the wrong test or approach in evaluating whether the ITL packages (1996, 2001 and 2007) infringed PM’s copyright in the Marlboro Red Roof Label.
d. The trial judge improperly conflated the legal test for copyright infringement with that applicable to a breach of the terms of the 1952 Agreement dealing with ITL’s use of labels created by PM. According to PM, something less than the substantial taking required for copyright infringement can amount to a breach of the said agreement. It should thus have been treated separately.
[18] I note with respect to this last question (paragraph 17 (iv), above) that it was not pursued at the hearing, as PM’s counsel could not explain on what basis the Federal Court would have had jurisdiction to adjudicate a breach of contract if, as argued, it involved something other than the infringement of copyright under the Copyright Act, R.S.C. 1985, c. C-42. Thus, I will not discuss it further in my reasons.
ANALYSIS
[19] The relevant legislative provisions are reproduced in Schedule “C” of these Reasons.
[20] The resolution of the first issue raised by PM in its cross-appeal can be determinative of ITL’s claim of infringement and would render the errors described in paragraph 15 above moot. Thus, like the trial judge, I will examine this issue before reviewing ITL’s arguments in the main appeal.
The validity of the MARLBORO trade-mark
[21] PM argues that the trial judge made two errors of law in reaching the conclusion that the MARLBORO mark was still valid:
i) He incorrectly interpreted the case law, in particular Philip Morris (1987) and thereafter wrongly applied it to the current situation, even though the non-distinctiveness of the mark in the present matter did not arise from events originating outside of the Canadian market and beyond the Canadian trade-mark owner’s control.
ii) He erroneously required proof of deceptive behaviour by ITL.
[22] I will first summarize the tenor of the arguments advanced by PM before the trial judge in respect of these issues so as to place his comments in the Reasons in their proper context.
[23] First, PM had clearly acknowledged that the trial judge was bound by this Court’s decision in Philip Morris (1987), unless he were to find that ITL had since then failed to take steps to create its own separate distinctiveness and goodwill and that it wrongfully used its packaging design and advertising campaigns to falsely align its product with the PM Marlboro brand used outside of Canada (Transcript of the Hearing, Appeal Book (AB), Volume 39, pages 10385-10386).
[24] Second at paragraph 19 of the Second Further Reply and Defence counter-claim, PM expressly refers to the “intentionally false message given to the Canadian public” by ITL.
[25] Also, PM submitted as follows in its Memorandum of Fact and Law before the Federal Court (AB, Volume 2, page 605, paragraphs 177 to 179):
[…] A common feature of both Crothers and Moore Dry Kiln was a finding of deception of the public by use of the foreign mark in Canada.
Justices Rouleau and MacGuigan distinguished both Crothers and Moore Dry Kiln decisions on the basis that there was no evidence at the time in 1980s that ITL was engaged in acts of deception.
The evidence before the Court now, some 25 years after (…) presents a very different set of factual circumstances (…) because the defendants have deceptively taken advantage of the lack of distinctiveness of their MARLBORO trade-mark in Canada, allowing Canadian smokers to associate the brand with the international Philip Morris MARLBORO product rather than creating their own goodwill and brand identity.
[26] It is not disputed that in Philip Morris (1987), although the dates at which the distinctiveness of the MARLBORO mark in Canada was to be assessed were different, a fundamental question before this Court was clearly whether the MARLBORO mark of ITL, the lawful assignee of the said mark for Canada, had lost its distinctiveness due to the fact that PM’s Marlboro was, as the number one selling cigarette brand in the world, known even in Canada despite being used solely outside of Canada. The Federal Court had accepted that Canadian consumers knew of PM’s foreign mark because of the spill-over effect of PM’s American advertising and had acknowledged the fact that Canadians were exposed to it when abroad (Philip Morris Inc. v. Imperial Tobacco Ltd. et al. (1985), 7 C.P.R. (3d) 254 (F.C.), at paragraph 90, in fine).
[27] Indeed, PM had then presented even stronger expert evidence than in the present case, for its survey was more extensive. This is not surprising, considering that this aspect of the present proceeding was, as mentioned, added at the very last minute and the parties did not file additional evidence after the amendment.
[28] At the time, the relevant provisions of the Act were essentially the same and this Court had the opportunity to consider the case law cited by PM (Crothers Co. Ltd. v. Williamson Canada Co., [1925] 2 D.L.R. 844 [Crothers] and Moore Dry Kiln Co. of Canada Ltd. v. U.S. Natural Resources Inc. (1976), 30 C.P.R. (2d) 40 [Moore Dry Kiln]) in the present case.
[29] The purpose of the doctrines of res judicata, issue estoppel, cause of action estoppel and the rule against collateral attack is to ensure the finality of decisions (Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, [2001] 2 S.C.R. 460, at paragraphs 18 to 24).Generally and in the absence of special circumstances, a party is not allowed to come to court to re-litigate a matter especially if it raises facts that could have been raised in the earlier litigation such as ITL’s Project Ranch, dating from the 1970s.
[30] In my view, the trial judge had a clear understanding of the basis on which this Court ruled in Philip Morris (1987) and of the above-mentioned principles. He also had a clear understanding of the basis on which PM argued that this Court’s prior decision should be distinguished (Reasons, paragraph 299).
[31] The trial judge was not satisfied that PM had established the factual basis upon which it argued that the case before him was quite different from the one finally decided by this Court in 1987 (Reasons, paragraphs 303-304).
[32] In that respect, the trial judge stated that the evidence on ITL’s so-called 2009 “Alternative Product Guide” was mixed, unclear and far from conclusive (Reasons, paragraph 306). Then, he found (as discussed in more detail in the Reasons when dealing with copyright infringement) that ITL’s cigarette packages were not mere imitations or copies of PM’s American Marlboro package (Reasons, paragraph 307). The trial judge expressly noted that ITL used a red maple leaf and the word “Canadian” to differentiate its product from the American product, and that but for the word MARLBORO, there could be no confusion between ITL’s packages and PM’s international package.
[33] In respect of ITL’s marketing strategy, the trial judge wrote that, contrary to PM’s allegations, ITL has “consistently striven to differentiate [its] products from that of [PM].” (Reasons, paragraph 305).
[34] These findings were open to the trial judge on the whole of the evidence and PM has not established any palpable or overriding error.
[35] Moreover, even though, in my view, PM had not raised any valid ground that could call for the exercise of his residual discretion, the trial judge re-examined the issue already decided in Philip Morris (1987). He concluded at paragraph 300 of his Reasons that the legal policy and rationale adopted therein were still relevant today, and that “the words of the Federal Court of Appeal apply with equal force as they did at the time”.
[36] Turning to the second alleged error, I am not persuaded that the trial judge misunderstood Crothers and Moore Dry Kiln. In my view, when he refers to “deceptive behaviour”, he simply does so in order to deal with PM’s argument that ITL’s behaviour was indeed deceptive. I agree with ITL that it is disingenuous for PM to argue before us that the trial judge’s response to its very arguments evidences a misunderstanding of the law.
[37] In view of the foregoing, the trial judge was bound to dismiss PM’s attack on the validity of the MARLBORO mark. There is no reviewable error in his conclusion that ITL’s MARLBORO word-mark is still valid.
ITL’s Appeal
1. Consumers’ use of the word Marlboro
[38] Except for the argument that one of the trial judge’s comments at paragraph 289 of his Reasons is not supported by any evidence, ITL appears to be challenging the weight given to the evidence presented as to what was going on at the time of purchase of the parties’ products. In the absence of a palpable and overriding error, this Court ought not to intervene in such factual matters.
[39] Although PM could not point to any evidence that would indeed support the trial judge’s comment that “point of sale materials (lighters, match cases, ashtray, shelf talkers, bin row inserts, etc) and retail items emphasized “Rooftop”, with reference to the word […]” (Reasons, paragraph 289), I am not persuaded that this would constitute an overriding error which calls for this Court’s intervention. The trial judge’s other comments in that paragraph were open to him on the evidence and he was discussing efforts made by PM to reduce the likelihood of confusion among retailers.
[40] Upon close examination of the Reasons, I cannot agree that the trial judge did not properly understand the differences between PM’s approach with retailers and its strategy vis-à-vis consumers.
[41] Contrary to what was argued by ITL, the trial judge did not fail to make a finding in respect of consumers’ use of the word Marlboro. He specifically states at paragraph 282 of his Reasons:
[282] […] I am prepared to accept that there is a significant degree of confusion [as to] how to refer to the no-name product, especially among consumers. A large number of respondents seem to associate the Plaintiffs’ product to the international PM Marlboro, for a variety of reasons, although more commonly in the case of the consumers than the retailers. […]
[42] I cannot agree either that it is clear that the trial judge made contradictory findings. In that respect, ITL referred the Court to the following extract from paragraph 232: “the evidence does not entirely support the Defendants’ claim that a large number of Canadians are familiar to the Philip Morris international Marlboro brand and associate the no-name product to that brand because of their shared features (…).”[My emphasis]. To be fair, this sentence should be read in its entirety as the trial judge adds “as we shall see, when examining the infringement claim based on section 20 of the Act”. When it is read as a whole and in context, I understand the trial judge to be saying two things. First, that not all the evidence presented during the trial supports ITL’s position. Second that in the end, after weighing the evidence, he was satisfied that there was enough to make the finding described in paragraph 282 above.
[43] Although, this could have been expressed more clearly in paragraph 232, this ambiguity does not, in my view, call for a reassessment by this Court of the weight to be given to the various testimonies pertaining to this issue (consumers, retailers, sales representatives, etc.).
2. Use pursuant to sections 19 and 22 of the Act
[44] ITL argues that the trial judge unduly relied on the Federal Court’s decision in Playboy Enterprises Inc. v. Germain (1987), 16 C.P.R. (3d) 517 (F.C.) [Playboy] and unnecessarily limited the wide language of section 4 of the Act. This section provides that a mark is used if it is “in any other manner so associated with the wares at the time of the transfer of property”. According to ITL, the trial judge erred by requiring that the trade-mark be visually displayed in some way (Reasons, paragraph 237).
[45] Whatever the meaning of section 4, it is clear from the language of sections 4, 19 and 22 that, to be relevant, the mark must be used by the person who wishes to distinguish its wares.
[46] This means that ITL had to establish that PM used the word Marlboro in association with its no-name package at the time of the transfer of property to the said retailers or that the retailers were acting on behalf of PM when they referred to PM’s product as Marlboro.
[47] As mentioned earlier, at paragraph 232 of the Reasons, the trial judge found that:
[232] […] the evidence shows not only that the Plaintiffs [PM] never display the name “Marlboro” in association with the Rooftop products, let alone mark it on the wares, but that they have instructed retailers not to call their no-name product “Marlboro”. In addition to the launch letter sent to all retailers and Mr. Guile’s evidence on this point, the Defendants’ own retailer witness, Mr. Hajjali, testified as to the Plaintiffs’ sales representatives having told him that the brand was called “Rooftop” and not to use the term “Marlboro”.
[48] None of the above findings has been challenged. In any event, I am satisfied that they reveal no palpable and overriding error. Indeed, having carefully reviewed the evidence, it would have been difficult for the trial judge to conclude that there was sufficient evidence to establish that the retailers were indeed authorized by PM to use the word Marlboro in association with PM’s no-name package.
[49] That alone fully justifies the trial judge’s conclusion at paragraph 239 that since “the Plaintiffs (PM) have not used the MARLBORO word-mark of the Defendants, they cannot be held to have infringed either section 19 or section 22, since “use” is a precondition for the application of both of these provisions.”
[50] There is no need to say anything further in respect of section 4, except that the decision in Playboy was based on a very specific set of facts and the general question raised by ITL has not directly been addressed previously by this Court. It is also relevant to the use of non-traditional marks (sound, smell, etc.), which is a topical issue around the world. It should thus be left for another day and a more appropriate case. Obviously, nothing herein should be understood as an endorsement of any of the trial judge’s comments on this issue.
3. Section 20 of the Act – Confusion
[51] ITL’s main arguments are that:
a. the trial judge erred in law in applying the test set out in subsection 6(5) of the Act by relying on extraneous factors and focusing on its actual use of its word-mark as opposed to its rights under the registration;
b. the trial judge erred in law when he narrowly construed paragraph 6(5)(e) of the Act as applying only to the resemblance between marks in the ideas inherently suggested by them, thereby imposing a limitation not found in the Act.
[52] ITL also submits that the essence of the trial judge’s conclusion under section 20 is found in this passage of paragraph 291 of his Reasons:
[291] […] While some consumers do refer to the no-name product of the Plaintiffs as “Marlboro”, there is no confusion as to the source of the Plaintiffs’ product. The “Marlboro” to which they refer to is the American PM Marlboro brand, and not to the ITL Canadian Marlboro. Indeed, there is no evidence that Canadian consumers mistakenly believe that the Defendants are the source of the Plaintiffs’ no-name product. Since section 20 of the Act seeks to prevent source confusion and not name confusion, that provision is not engaged in the present instance. […]
[53] ITL argues that, in reaching such conclusion, the trial judge failed to apply his mind to “reverse confusion”, that is, customers of the senior mark mistakenly associating its source with the source of the junior mark (Reasons paragraph 248). He also did not appreciate that if PM’s no-name package continues to be referred to by a significant number of consumers as Marlboro, this will jeopardize the distinctiveness of its MARLBORO mark because two different products sold on the Canadian market, emanating from two different and non-associated sources, will be called Marlboro by Canadian consumers.
[54] A few months after the trial judge’s decision, the Supreme Court of Canada in Masterpiece Inc. v. Alavida Lifestyles Inc., 2011 SCC 27, [2011] 2 S.C.R. 387 [Masterpiece Inc.] had an opportunity to review how one should apply the test set out in section 6 of the Act to determine if a trade-mark would likely cause confusion with another trade-mark.
[55] Justice Marshall Rothstein, writing for the Court made it very clear that, when considering the degree of resemblance between marks, the approach differed depending on whether they were registered or not.
[56] For unregistered marks, a court should only consider the manner in which they have actually been used. However, for registered marks, a court must consider the trade-mark registration according to its terms to reflect the entire scope of the rights granted under the latter.
[57] According to Justice Rothstein, the problem with an analysis which takes into account the actual use by the owner of a registered trade-mark is that nothing prevents such owner from changing how and for what he uses it, so long as this change is within the ambit of the registration. Thus, he concludes at paragraph 59:
[59] For this reason, it was incorrect in law to limit consideration to Alavida’s post-application use of its trade-mark to find a reduced likelihood of confusion. Actual use is not irrelevant, but it should not be considered to the exclusion of potential uses within the registration. For example, a subsequent use that is within the scope of a registration, and is the same or very similar to an existing mark will show how that registered mark may be used in a way that is confusing with an existing mark.
[My emphasis]
[58] Finally, in Masterpiece Inc., Justice Rothstein noted that when confusion is alleged in respect of several different marks, the Court should make an individual comparison in respect of each rather than make an analysis based on a composite of all the marks (paragraphs 43 to 48).
[59] Before turning to what the trial judge did in this case, it is worth noting a few other general principles that may be relevant here:
A mark symbolises a linkage between a product and its source. When assessing the likelihood of confusion, the focus is on such mental link in the head of the mythical consumer (Mattel, Inc. v. 3894207 Canada Inc., 2006 SCC 22, [2006] 1 S.C.R. 772 [Mattel]). The full factual context including the factors set out in subsection 6(5) of the Act must be considered. It is not relevant that consumers are “unlikely to make choices based on first impressions”. It is an error to discount the likelihood of confusion by considering what actions the consumer might take after encountering the mark in the market place (Masterpiece Inc., paragraphs 71, 73 and 74).
Confusion as to the source (no need for it to be precisely identified) will arise if the public (mythical consumer) would likely infer that the source of the two products (senior mark or junior mark) is the same (this includes in appropriate circumstances associated sources such as licensor and licensee).
Steps taken to avoid confusion are irrelevant in the context of an infringement action pursuant to section 20 of the Act (David Vaver, Intellectual Property Law: Copyright, Patents, Trade‑marks, 2nd ed. (Toronto: Irwin Law, 2011) [Vaver] at page 533, Pink Panther Beauty Corp. v. United Artists Corp., [1998] 3 F.C. 534 (C.A.).
Proof of actual confusion or the absence of such confusion over a long period of time is a very weighty factor that must be considered as part of the surrounding circumstances pursuant to subsection 6(5) of the Act (Mr. Submarine Ltd. v. Amandista Investments Ltd., (1987) 19 C.P.R. (3d) 3, [1988] 3 F.C. 91 (C.A.) [Mr. Submarine], at paragraph 34, Mattel, at paragraph 55).
[60] The determination of whether a likelihood of confusion exists is a fact-finding exercise and this Court will defer to the trial judge’s findings unless his assessment was based on an error of law or constituted a palpable and overriding error of fact (Masterpiece Inc., paragraph 102).
[61] As in Masterpiece Inc., where the Supreme Court of Canada reversed the decision of the trial judge for errors of law in the interpretation and application of the confusion analysis, I am of the view that, in this case, the trial judge erred in his interpretation of the confusion test and in its application to the facts by:
· Reducing the likelihood of confusion on the basis of the fact that ITL’s MARLBORO cigarettes are made with a Virginia blend, whereas the no-name package product is an American blend (Reasons, paragraph 287).
· Reducing the likelihood of confusion based on the fact that presently ITL distributed its cigarettes differently than PM (Reasons, paragraph 286).
· Considering the efforts made by PM to reduce the likelihood of confusion as relevant (Reasons, paragraph 289) including by focusing on PM’s marketing emphasis on the key distinguishing feature of its product – the American blend.
· Considering that any initial confusion would be diminished as a result of the interaction between the consumers and retailers. In effect, in his view, the retailers would elicit clarification from the consumer as to the product he/she seeks (PM’s product comes in three flavours while ITL’s comes in one), making it unlikely that a consumer would, through confusion, actually purchase a different brand of cigarette than the one he/she intended to (Reasons, paragraph 287).
[62] It is not clear if the trial judge analysed each design mark individually or as a composite (6 different ROOFTOP design marks were registered) in his subsection 6(5) analysis. To be fair, he did not have the benefit of Masterpiece Inc.. In our case, the problem is compounded by the fact that the trial judge accepted PM’s argument that the presence of the many elements that do not appear in each registered versions of these design marks did not have a material effect on the dominant features and the distinctiveness of the registered ROOFTOP design marks. Thus, he considered the get-up of the no-name package as a whole as an illustration of the use of the registered ROOFTOP design marks (Reasons, paragraphs 198-203).
[63] ITL’s MARLBORO trade-mark is registered for use with cigarettes. It is not restricted to any particular blend or flavour. There is also nothing preventing ITL or PM from distributing their product differently, especially considering that PM has sales representatives visiting the retailers regularly, even if not as often as ITL sales representatives.
[64] There is no doubt in my mind that the above-mentioned errors in the interpretation and application of the test had a material impact on the trial judge’s conclusion that there was no likelihood of confusion.
[65] In similar circumstances, in Masterpiece Inc. (at paragraph 103) the Supreme Court of Canada stated that the interest of justice would be served by an appellate court deciding the matter and proceeded to make its own analysis pursuant to subsection 6(5) of the Act.
[66] In the present case, the trial judge gave little weight to most of the evidence presented by either side with respect to confusion. This includes the evidence of lay witnesses as well as expert evidence based on surveys, which he found generally flawed. He stated precisely what could be made of the survey evidence.
[67] I shall thus proceed to compare ITL’s registered word-mark MARLBORO with each version (red, gold and silver) of PM’s no-name get-up as proposed by ITL. This combination of elements on the package (the whole label including the sides of the package) is used to distinguish PM’s wares from those of others offered on the Canadian market and as such, falls within the definition of a trade-mark in section 2 of the Act.
[68] As mentioned, PM takes the position that its no-name package is simply one illustration of the many ways in which it can use its registered marks particularly its ROOFTOP design marks. I will address this question later where it will be of more importance, that is, in assessing PM’s defences based on its registrations and on estoppel.
[69] Starting with paragraph 6(5)(a), like the trial judge, I find that these marks have inherent distinctiveness. The trial judge also stated that they were both well known, but did not explain on what basis he had come to that conclusion, other than stating that there was no evidence to the contrary. At the hearing, PM did not direct this Court to any specific evidence in response to ITL’s comment that there was no evidentiary basis for such finding in respect of the Canadian market, especially in respect of its own MARLBORO.
[70] Even though in this case this will ultimately be of no moment, I prefer to regard these marks as known rather than well-known marks. Although ITL’s product has only a small fraction of the Canadian cigarette market (PM’s MATADOR had even a smaller fraction), ITL has been using its registered MARLBORO mark for more than 80 years. PM has used most of the elements of the get-up of the no-name package in Canada for a long time (some, like the red version of the ROOFTOP design, since 1958) with the word mark (brand name) MATADOR. However, the particular package label under review, which adds unregistered elements and includes no brand name, has only been on the market since July 2006 (a few months before the institution of the present proceedings). The silver version of the ROOFTOP design was also not used prior to 2006 (paragraph 6(5)(b)).
[71] The marks are used with the same wares (cigarettes) and in the same trade (paragraphs 6(5)(c) & (d)).
[72] Turning to paragraph 6(5)(e), there is no resemblance in appearance between those marks. As mentioned, the trial judge did not consider under that paragraph the fact that a number of consumers did refer to the no-name packages as Marlboro because, in his view, to consider such idea would be an unwarranted extension of the breadth of paragraph 6(5)(e). He stated that the expression “ideas suggested” should be restricted to those ideas that are inherent to the nature of the trade-marks in question (for example, the design of a penguin giving the idea of a penguin) (Reasons, at paragraph 290).
[73] If the examples used by the trial judge in paragraph 290 and in paragraph 249 of his Reasons (the word Panda evoking the same idea as a design mark depicting that animal) were meant to restrict the ambit of paragraph 6(5)(e) to ideas suggested by the literal and common meaning of a word or design, I cannot agree with this interpretation.
[74] In Rowntree Co. v. Paulin Chambers Co., [1968] S.C.R. 134, the Registrar had refused to register “SMOOTHIES” because of a likelihood of confusion with “SMARTIES”. He considered a resemblance in the ideas suggested because the expressions were slang terms meaning ‘smart aleck’ or a ‘smooth operator’. The Exchequer Court of Canada reversed the decision because the dictionary meaning of those words was entirely dissimilar. The Supreme Court of Canada allowed the appeal and confirmed that the registration should be refused. Justice Ritchie noted:
[…] the essential question to be determined is whether the use of the word SMOOTHIES by the respondent would be likely to lead to the inference that the wares associated with that word and those associated with the registered trade marks of the appellant were produced or marketed by the same company and I do not think that this necessarily involves a resemblance between the dictionary meaning of the word used in the trade mark applied for and those used in the registered trade marks. It is enough, in my view, if the words used in the registered and unregistered trade marks are likely to suggest the idea that the wares with which they are associated were produced or marketed by the same person. This is the approach which appears to me to have been adopted by the Registrar of Trade Marks.
[75] Certainly, the dictionary meaning or common meaning and the technical meaning of a word or design are the most common suggestions considered when comparing marks, but I see no reason to ignore other suggestions acquired through marketing or use in a particular way. I will explain that with the following example: The word “yogi” is registered as a mark in association with children’s toys and a third party wishes to use a design mark for the same wares showing the thus-named famous cartoon bear with the cap and the short tie. Should the Registrar or the Court ignore the resemblance in the idea suggested simply because the word “yogi” is generally understood and defined in dictionaries such as the Canadian Oxford as a person proficient in the practice of yoga?
[76] Keeping in mind the need to adopt a purposive and contextual interpretation of paragraph 6(5)(e), I cannot see how such resemblance could be ignored. That being said, obviously when one invokes a resemblance based on something out of the ordinary, evidence will be required to satisfy the Court that the particular association or suggestion does indeed exist as a matter of fact before it is considered in the analysis under paragraph 6(5)(e).
[77] Even if I am in error and paragraph 6(5)(e) calls for a more restrictive construction, resemblance in unusual ideas suggested by any one of the marks once established would have to be considered as part of the surrounding circumstances (opening words of subsection 6(5)). Either way, it cannot be ignored.
[78] Be that as it may, in the special circumstances of this case, I prefer to consider the confusion as to the name of the product sold in the no-name package as part of the surrounding circumstances (opening words of subsection 6(5)) because of the particularities of the cigarette retail mark