Vachon Bakery Inc. v. Racioppo

Vachon Bakery Inc. v. Racioppo
Court (s) Database
Federal Court Decisions
Date
2021-04-09
Neutral citation
2021 FC 308
File numbers
T-1762-17
Decision Content
Date: 20210409
Docket: T-1762-17
Citation: 2021 FC 308
Ottawa, Ontario, April 9, 2021
PRESENT: Mr. Justice McHaffie
BETWEEN:
BOULANGERIE VACHON INC. /
VACHON BAKERY INC. AND
CANADA BREAD COMPANY, LIMITED
Plaintiffs
and
SILVANO RACIOPPO,
NATURAL STUFF INC., AND
HOSTESS BREAD COMPANY, INC
Defendants
JUDGMENT AND REASONS
I. Overview
[1] At issue in this summary trial is whether the defendants’ use of the trademark HOSTESS on bread products contravened the registered trademark rights of Boulangerie Vachon Inc/Vachon Bakery Inc in the trademark HOSTESS, used and registered in association with cakes. I conclude that it did.
[2] Considering the factors relevant to the assessment of confusion—including notably the effectively identical marks, the similarity of the wares, and the way in which they are sold—I find the defendants’ use of HOSTESS in association with bread products would likely lead to the inference those products were sold by the owner of the registered HOSTESS trademark, Vachon Bakery. The defendants’ sale of bread products under the HOSTESS name from 2016 to 2019 therefore constituted infringement contrary to subsection 20(1) of the Trademarks Act, RSC 1985, c T-13. I also find the defendants’ use of the HOSTESS trademark amounted to passing off contrary to paragraph 7(b) and depreciation of the goodwill in Vachon Bakery’s registered trademark contrary to subsection 22(1) of the Trademarks Act.
[3] In reaching these conclusions, I reject the defendants’ arguments that the HOSTESS trademarks have been rendered non-distinctive; that the absence, and in one case removal, of “bread” from Vachon Bakery’s trademark registrations permits the defendants to use the HOSTESS mark on bread products; and that statements made by a representative of Saputo Bakery (the former name of Vachon Bakery) provide a defence to the asserted infringement. In my view, none of these arguments affects the validity or enforceability of the HOSTESS trademarks. I also conclude the defendants have not established they have enforceable rights to prevent the plaintiffs from selling bread under the HOSTESS trademark.
[4] I therefore grant in large part the plaintiffs’ motion for summary trial. I grant the declaratory and injunctive relief sought by the plaintiffs and award damages in the amount of $10,000. However, I conclude the plaintiffs have not established in the circumstances that the personal defendant, Silvano Racioppo, should be personally liable for the actions of the defendant companies.
[5] If the parties are unable to agree on costs, they may make submissions in accordance with the schedule provided at the conclusion of these reasons.
II. Issues
[6] The plaintiffs bring their motion for summary trial seeking judgment on the entirety of their claim. The defendants did not bring a separate motion for summary trial on the counterclaim, but in their memorandum of fact and law request declaratory relief and damages based on the issues raised in the counterclaim. This summary trial therefore raises the following five issues:
Is this a suitable case for summary trial in respect of the claim and/or counterclaim?
Have the plaintiffs established they are the owners of valid registered trademarks or, conversely, have the defendants established the trademarks are invalid?
Have the plaintiffs established a contravention of their trademark rights, and in particular, have they established that one or more of the defendants:
(1) infringed the registered trademarks of Vachon Bakery contrary to subsection 20(1) of the Trademarks Act;
(2) committed passing off contrary to paragraph 7(b) of the Trademarks Act; and/or
(3) depreciated the goodwill in the registered trademarks of Vachon Bakery contrary to subsection 22(1) of the Trademarks Act?
Have the defendants established a claim of passing off against the plaintiffs?
What remedies are appropriate?
III. Analysis
A. This is a Suitable Case for Summary Trial
[7] Rule 216 of the Federal Courts Rules, SOR/98-106, governs the conduct of summary trials. In particular, Rules 216(5)–(8) address when summary trial will be appropriate and the outcomes that may result. The Court is to dismiss the motion if the issues are “not suitable for summary trial,” or if “summary trial would not assist in the efficient resolution of the action”: Rule 216(5). Conversely, the Court may grant judgment in full or on a particular issue if satisfied there is “sufficient evidence for adjudication, regardless of the amounts involved, the complexities of the issues and the existence of conflicting evidence,” unless it would be unjust to do so: Rule 216(6).
[8] Both parties submit this is a suitable case for summary trial. I agree. There is sufficient evidence for adjudication of the issues. The parties each filed significant affidavit evidence and documentary exhibits. The plaintiffs filed affidavits from Heather Crees, Vice President, Marketing, of Vachon Bakery; Tania Goecke, Senior Director, Marketing, of Canada Bread Company, Limited; and Jacinta De Abreu, a Senior Litigation Law Clerk with counsel for the plaintiffs. The defendants filed affidavits from Silvano Racioppo, who is a defendant personally, is President and sole owner of Natural Stuff Inc, and was formerly President and owner of Hostess Bread Company Inc; and Ken Skellett, a business associate of Mr. Racioppo, the President of 2207831 Ontario Inc o/a Snack Sales Canada, and now owner of Hostess Bread.
[9] Ms. Crees, Ms. Goecke, Mr. Racioppo, and Mr. Skellett were each cross-examined on their affidavits. A transcript of Mr. Racioppo’s examination for discovery on behalf of the three defendants was also filed. On my review of this evidence, there are some minor factual disputes or discrepancies, but there are no material credibility or factual issues that require a trial to determine: Kwan Lam v Chanel S de RL, 2016 FCA 111 at paras 15–16.
[10] The issues are circumscribed and not of significant complexity. The amounts at stake are modest. In my view, it would not be unjust to decide the action on summary trial. To the contrary, summary trial on the materials presented by the parties would secure the just, most expeditious, and least expensive determination of this proceeding on the merits: Federal Courts Rules, Rules 3, 216; Driving Alternative Inc v Keyz Thankz Inc, 2014 FC 559 at paras 35–36.
[11] It is also relevant that this motion was almost two years in the making. The plaintiffs first indicated their intention to bring a motion for summary trial in early 2019. With a number of delays and active case management by Case Management Judge Aalto, steps to prepare the summary trial were completed in 2019 and 2020, leading to the hearing of this matter in December 2020. These efforts by the parties and the Court to move the matter to adjudication by summary trial weigh additionally in favour of deciding the matter now rather than further prolonging this action, which was commenced in November 2017.
[12] With respect to the counterclaim, as stated, the defendants did not bring a separate motion for summary trial. However, in their responding memorandum of fact and law, the defendants sought the declaratory relief and damages that are claimed in the counterclaim. The plaintiffs raised no procedural concern about the defendants seeking this relief as part of the summary trial. To the contrary, both parties indicated their understanding the summary trial was to be a hearing of all of the issues in the proceeding. Further, the central issues raised by the defendants, notably regarding the validity of the plaintiffs’ registered trademarks and the statements made by a representative of Saputo Bakery, are raised both by way of defence and as the basis for the counterclaim. As I must address these issues as part of the defendants’ defences, it would be inefficient not to address the counterclaims for relief that arise from them. In the circumstances, and with reference to Rules 3, 55, and 216, I am satisfied I can and should determine all issues in the proceeding, including the counterclaim.
B. The Plaintiffs are Owners of Valid Registered Trademarks
[13] The plaintiffs allege Hostess Bread’s sales of bread products in association with the trademark HOSTESS and the trade name Hostess Bread Company Inc violated their rights in three registered trademarks. The defendants argue these marks have lost distinctiveness owing to the presence of other traders using the trademark HOSTESS in the marketplace. The defendants also ask the Court to direct the Register of Trademarks to expunge the word rolls from one of the registrations on the basis of non-use.
[14] For the following reasons, I conclude Vachon Bakery’s trademark registrations are valid, and the defendants’ request for partial expungement is moot as a result of the Registrar’s recent decision issued pursuant to section 45 of the Trademarks Act.
(1) Vachon Bakery’s registered trademarks
[15] The plaintiffs rely on three trademarks registered in the name of Vachon Bakery. The first, TMDA37,702, is for the trademark HOSTESS as a word mark [the HOSTESS Word Mark]. It was registered in 1925 under the old Trade Mark and Design Act, RSC 1906, c 71. I note that as this trademark was on the register on September 1, 1932, subsection 27(2) of the Trademarks Act requires it to be treated as a “word mark” as defined in the Unfair Competition Act, RSC 1952, c 274. Word marks and design marks were defined separately under the Unfair Competition Act and had different provisions governing registrability. However, neither party suggested subsection 27(2) has any impact on the treatment of the HOSTESS Word Mark.
[16] At the time this matter was heard, the HOSTESS Word Mark was registered for use in association with the goods Rolls, cakes and biscuits. As discussed in the next section, the goods rolls and biscuits were subsequently expunged from the registration by the Registrar of Trademarks.
[17] In addition to this recent expungement of rolls and biscuits, the HOSTESS Word Mark has undergone a number of changes over the years, both in ownership and in its list of goods. Materially for purposes of this motion, the registration was modified in 1980 to delete the goods bread after an expungement proceeding under what was then section 44 (now section 45) of the Trademarks Act. In 1994, the registration was amended to reflect the 1993 purchase of the mark by Vachon (then known as Culinar Inc) from George Weston Limited. The same company has owned the registration since then, although it has changed its name a number of times, including to Saputo Groupe Boulangerie inc/Saputo Bakery Group inc in 2001 after Saputo acquired Vachon; and to the current Boulangerie Vachon Inc/Vachon Bakery Inc in 2015 after Canada Bread acquired Saputo Bakery from Saputo. Vachon Bakery is a wholly owned subsidiary of Canada Bread.
[18] Vachon Bakery’s other two registrations, TMA388,644 and TMA457,357 respectively, are each for designs that incorporate the word HOSTESS, shown as follows:
TMA388,644 TMA457,357
[Description of inserted picture: Two designs are shown. On the left, appearing over the legend TMA388,644, the design consists of the word HOSTESS written with a capital H and the remaining letters in lower case. The word appears in an oval. A heart appears above the word intersecting the surrounding oval, such that the lower tip of the heart comes between the letter O and the letter S in the word. On the right, appearing over the legend TMA457,357, is a second design. The design is the same as that on the left, with the addition of a semicircular sunray design over top of the oval.]
[19] TMA388,644 [HOSTESS Heart Design] was registered in 1991 in association with the goods Snack cakes. TMA457,357 [HOSTESS Heart & Sun Design] was registered in 1996 in association with the goods Collations et desserts, nommément: gâteaux, tartes, biscuits, tartelettes, pâtisseries, danoises, muffins, beignes, petits-fours, gaufrettes, feuilletés [Vachon Bakery’s translation: Snacks and desserts, namely: cakes, pies, cookies, tartlets, pastries, danishes, muffins, donuts, petits fours, wafers, puff pastries].
[20] Vachon Bakery sells sweet baked goods under the HOSTESS trademark. Some of these bear additional trademarks, such as KING DONS and TWINKIES, while others are sold simply with the HOSTESS trademark and the product name, such as “CupCakes” or “Rainbow Chip Brownies.” The evidence of Ms. Crees and Ms. Goecke indicates that the HOSTESS trademark is represented on these products in the form of the HOSTESS Heart Design, although more recent packaging shows a variation of this design:
[Description of inserted picture: A design is shown in which the word HOSTESS is written with a capital H and the remaining letters in lower case. The word is written in a slight arc. It is surrounded by an oval. A heart appears above and between the letter O and the letter S and interrupts the oval.]
[21] Vachon Bakery has also applied more recently for registration of the trademark HOSTESS for use in association with the goods bread and sliced bread. That application, bearing Application No 1781357, was filed on May 9, 2016 based on proposed use in Canada. It appears to have been filed after the plaintiffs became aware of Natural Stuff’s first application to register the trademark HOSTESS, discussed further below, and shortly before the plaintiffs first wrote to Natural Stuff to put it on notice of Vachon Bakery’s rights and demand that Natural Stuff not use or register a HOSTESS trademark. This application has not proceeded to registration.
[22] Canada Bread started selling bread under the HOSTESS trademark in April 2017, originally in Western Canada. This launch was about a year after the defendants started selling bread under the HOSTESS name in March 2016. Canada Bread uses the HOSTESS trademarks under license from Vachon Bakery. Such use accrues to the benefit of Vachon Bakery pursuant to subsection 50(1) of the Trademarks Act. It is therefore Vachon Bakery, rather than Canada Bread, that owns the trademark rights and associated goodwill in the HOSTESS trademarks.
(2) Effect of the Registrar’s section 45 decision
[23] In 2017, at the request of the defendants, the Registrar issued a notice pursuant to section 45 of the Trademarks Act, requiring Vachon Bakery to furnish evidence of use of the trademark in the preceding three-year period. At the time of the hearing of this matter, that proceeding had not yet been heard.
[24] On March 22, 2021, the defendants advised the Court that on March 9, 2021 the Trademarks Opposition Board, on behalf of the Registrar of Trademarks, rendered its decision in respect of the section 45 proceeding: Natural Stuff Inc v Boulangerie Vachon Inc/Vachon Bakery Inc, 2021 TMOB 41. The Registrar maintained the registration for the goods cakes, while expunging the goods rolls and biscuits from the registration. Upon receipt of the Registrar’s decision, I invited the parties to make submissions on the impact of the decision, if any, on this motion.
[25] The plaintiffs argue the decision has no relevance to this summary trial, for a number of reasons. They state that their passing off claim is not based upon a trademark registration, so is unaffected by the decision. They also argue the relevant date for assessing confusion in an infringement action, including where a permanent injunction is sought, is typically the date of hearing, although this may depend on the allegations and the facts of the case: Alticor Inc v Nutravite Pharmaceuticals Inc, 2005 FCA 269 at paras 10–16. They maintain that at the time of the defendants’ actions the registration gave them the exclusive right to use the word HOSTESS in association with Rolls, cakes and biscuits, so that changes to the registration after that date, and indeed after the hearing, cannot affect their cause of action. They also underscore that in any case, their evidence and submissions at the summary trial were focused on the plaintiffs’ snack cake products, and not on the presence of rolls or biscuits in the registration.
[26] The defendants, for their part, argue the HOSTESS Word Mark should be recognized as having been maintained only in association with cakes and the plaintiffs should not be able to rely on the registration for rolls. They note the purpose of a section 45 proceeding is to remove “deadwood” from the register: Sport Maska Inc v Bauer Hockey Corp, 2016 FCA 44 at paras 56–59. They argue the Court should avoid a result that would be inconsistent with the Registrar’s conclusion that the HOSTESS Word Mark was such deadwood as it related to rolls. As for the date of the confusion assessment, the defendants underscore the conclusion in Alticor that using the date of hearing is not an unwavering rule: Alticor at para 16.
[27] I note that in discussing the relevant date as being the date of trial, Alticor appears to be considering primarily other dates prior to trial, rather than occurrences after trial: Alticor at paras 13–15. In my view, there may in some circumstances be aspects of a proceeding, including prospective remedies like a permanent injunction, that might be affected by a change in a registration subsequent to a hearing but before a decision is rendered.
[28] In this case, however, I conclude the summary trial motion is largely unaffected by the Registrar’s decision. The plaintiffs’ evidence and their primary arguments were all directed to Vachon Bakery’s registration and use of the HOSTESS Word Mark in association with cakes, and snack cakes in particular. While the plaintiffs placed passing reliance on the registration for rolls, their evidence of length of use, acquired distinctiveness, and nature of the trade all pertained to snack cakes. As set out below, I conclude the defendants’ use of HOSTESS in association with bread and buns is confusing with the HOSTESS Word Mark as registered in association with cakes, such that the presence of rolls on the registration is immaterial.
[29] The Registrar’s decision is relevant to one aspect of this summary trial. The defendants asked the Court on this motion to order the Registrar to delete the word rolls from the registration based on the plaintiffs’ lack of use. The plaintiffs opposed this request. Given the nature of the defendants’ arguments, they were in my view effectively asking this Court to direct an outcome in the ongoing section 45 proceeding. That is not the role of this Court; Parliament has given the mandate to make determinations under section 45, and to act in consequence, to the Registrar. In any event, however, the Registrar’s decision renders the defendants’ request moot, as it would be of no value for this Court to direct the Registrar to do something they have already done, even if it had the power to do so.
(3) The Vachon Bakery registrations are valid
[30] The defendants place significant reliance on the existence of other trademark registrations that consist of or contain the word HOSTESS for use in association with food products. They raise this “state of the register” evidence to undermine the distinctiveness of the Vachon Bakery trademarks. On this basis, they argue both that the Vachon Bakery trademarks are non-distinctive to the extent of being unenforceable and that the other HOSTESS marks are relevant as a factor in the confusion analysis.
[31] In my view, these are different but related issues. If a trademark is not distinctive at all, it is invalid and cannot be enforced: Trademarks Act, ss 2 (“distinctive”, “trademark”), 18(1)(b). If it is distinctive, the degree of its inherent or acquired distinctiveness is a factor for consideration in assessing confusion: Trademarks Act, s 6(5)(a). I will therefore address these two issues separately, addressing the argument of non-distinctiveness at this stage, and considering the impact of this evidence on the confusion analysis below.
[32] The defendants’ counterclaim alleges the Vachon Bakery trademarks are invalid under section 18 of the Trademarks Act as they are not distinctive or capable of distinguishing the plaintiffs’ goods from those of others. While not expressed in those terms on this motion, I take the defendants’ non-distinctiveness argument to effectively be an allegation of invalidity based on non-distinctiveness under paragraph 18(1)(b).
[33] That paragraph provides that a registration is invalid if it “is not distinctive at the time proceedings bringing the validity of the registration into question are commenced”: Trademarks Act, s 18(1)(b). This makes the relevant date for this assessment the date of the defendants’ counterclaim, January 12, 2018: Bodum USA, Inc v Meyer Housewares Canada Inc, 2012 FC 1450 at paras 19, 23, aff’d 2013 FCA 240. The onus lies on the party attacking a trademark registration to show it is not valid: Cheaptickets and Travel Inc v Emall.ca Inc, 2008 FCA 50 at para 12. Although registered trademarks benefit from a presumption of validity, it is “weakly worded” such that it adds little to the general onus resting on an attacking party: Bodum (FC) at para 20; Cheaptickets at para 12; Trademarks Act, s 19.
[34] The defendants’ non-distinctiveness argument rests on there being a number of other trademark registrations that consist of or contain the word HOSTESS. The defendants argue the presence of multiple traders using HOSTESS-related marks, and the plaintiffs’ failure to enforce their marks against these traders, means the HOSTESS mark does not and cannot serve to distinguish the goods of Vachon Bakery from those of other traders.
[35] The evidence presented by the defendants shows the following trademark registrations that include the word HOSTESS for use in association with food products:
a series of eleven HOSTESS and HOSTESS-formative trademark registrations owned by PepsiCo Canada ULC, c/o/b as Frito Lay Canada, for use in association with a variety of snack foods including potato chips. The earliest of these, for the word mark HOSTESS, was registered in 1930;
HOSTESS, registered by Maple Leaf Foods Inc in 1961 for use in association with Fresh and processed meat excluding mince meat, mince meat pies and tarts and meat pies. The exclusion of mince meat, mince meat pies and tarts and meat pies from the Maple Leaf Foods Inc mark appears to have been in light of a 1959 registration for HOSTESS that covers those goods, which is also owned by Vachon Bakery;
HOSTESS PACKAGE, registered in 1925 for packages containing soft drinks and owned by Canada Dry Mott’s Inc; and
THE HOSTESS SHOP, owned by Sears Canada Inc and registered in 1935 for use in association with Pickles, teas, jellies, marmalades, jams and sandwich spreads.
[36] This evidence shows that different HOSTESS-related trademarks can and do co-exist on the register in respect of different food products. However, it is in my view insufficient to show the HOSTESS trademarks are not distinctive of Vachon Bakery or that the registrations are invalid.
[37] As the defendants recognize, the various PepsiCo HOSTESS marks are related, such that there are ultimately four other traders with registrations for HOSTESS-formative marks for use in association with food. Two of the registrations contain other word elements that add points of distinction compared to Vachon Bakery’s HOSTESS trademark: HOSTESS PACKAGE and THE HOSTESS SHOP. None of the registrations is for food products particularly similar to the cakes and other pastries listed in the Vachon Bakery registrations. The presence of a few other traders with HOSTESS-formative marks on the register for other food products is far from sufficient to show that Vachon Bakery’s trademarks do not distinguish their products from those of others.
[38] Importantly, the defendants filed no evidence of any actual use of these other HOSTESS trademarks in Canada. While the presence of a large number of registrations may give some indication of the marketplace, use in the market cannot be assumed simply from a registration: McDowell v Laverana GmbH & Co KG, 2017 FC 327 at paras 41–46; Eclectic Edge Inc v Gildan Apparel (Canada) LP, 2015 FC 1332 at paras 82–84. Here, there was no evidence at all that any of the identified marks are in use, let alone that the use was of a nature that might render Vachon Bakery’s marks non-distinctive.
[39] The defendants also rely on a purported failure by Vachon Bakery to enforce its marks against these other traders. As they note, failure to protect a mark may result in a loss of distinctiveness: Mattel, Inc v 3894207 Canada Inc, 2006 SCC 22 at para 26; 8073902 Canada Inc v Vardy, 2019 FC 743 at para 67. This argument cannot succeed, for three reasons.
[40] First, as indicated, there is no evidence the trademark owners have used the trademarks in question. There is therefore no evidentiary basis to fault Vachon Bakery for failing to enforce its marks to prevent such use. Second, even if there were evidence of use, section 19 of the Trademarks Act grants the owners of the registrations the right to use their marks. That right would provide a defence to any claim by Vachon Bakery of either infringement or passing off: Philip Morris Products SA v Marlboro Canada Limited, 2010 FC 1099 at paras 183, 207–210; Remo Imports Ltd v Jaguar Cars Limited, 2007 FCA 258 at paras 110–113. Third, even if Vachon Bakery did not enforce its marks against certain traders, this is not alone enough to show a loss of distinctiveness. The ongoing and unenforced use of the mark must be such that consumers were no longer able, at the date of the challenge, to distinguish between Vachon Bakery’s products and those of others using HOSTESS marks. There is no evidence this is the case. In essence, the defendants ask the Court to conclude Vachon Bakery’s marks have lost distinctiveness simply because it has not enforced them against four other traders who have not been shown to be using their marks, and who would have the statutory right to do so if they were. In my view, there is no basis to reach such a conclusion.
[41] As the plaintiffs point out, the present situation is very different from the Vardy case the defendants rely on. There, the evidence showed widespread unregistered and unlicensed use by many businesses of the trademark DIAL-A-BOTTLE, with insufficient enforcement by the registered trademark owner, causing confusion in the market: Vardy at paras 57–63. There is no equivalent evidence in this case. To the contrary, the only evidence of use in the marketplace is that of the plaintiffs and the defendants.
[42] I therefore conclude the defendants have not met their onus to show Vachon Bakery’s HOSTESS marks have lost distinctiveness such that they are invalid or otherwise cannot be enforced. As indicated, I will consider whether the state of the register evidence affects the confusion analysis when I address that issue below.
C. The Plaintiffs Have Established a Violation of their Trademark Rights
[43] The plaintiffs allege the defendants have infringed their registered trademarks, committed passing off, and depreciated the goodwill in their registered trademarks. As each of these allegations is based on the same actions of the defendants, I will summarize the defendants’ conduct at issue before turning to the relevant causes of action and applicable provisions of the Trademarks Act.
[44] Natural Stuff is a food distributor that has sold and distributed various food products, including snack products, in Canada and the United States since 1994. Mr. Racioppo is the President of Natural Stuff. Beginning in about 2010, Mr. Racioppo and Natural Stuff started to work collaboratively with Ken Skellett and his food distribution company, Snack Sales Canada. Mr. Racioppo and Mr. Skellett, in their affidavits filed on this motion, each describe the arrangement as an “informal joint venture” although the parties never entered into a written agreement.
[45] Prior to 2012, an American company known as Hostess Brands, Inc owned certain rights to the HOSTESS trademark in the United States. There was not a great deal of detailed evidence with respect to these American rights, but defendants’ counsel described them in terms that suggested a parallel to those then owned by Saputo Bakery in Canada. Natural Stuff and/or Snack Sales Canada imported into Canada some products produced by Hostess Brands, Inc, such as ZINGERS and DOLLY MADISON snack cakes.
[46] In 2012, Hostess Brands, Inc declared bankruptcy. This appears to have prompted Mr. Skellett to explore opportunities involving the HOSTESS trademark. He contacted the President and Chief Operating Officer of Saputo Bakery, Lionel Ettedgui in October or November 2012. After some telephone calls, Mr. Skellett and Mr. Racioppo met with Mr. Ettedgui in November 2012. That meeting included discussion of the possibility of producing bread under the HOSTESS brand. Mr. Ettedgui said Saputo Bakery was not, and was not interested in, selling bread under the HOSTESS name. He was also not certain Saputo had the right to sell bread but would look into it.
[47] After the meeting, Mr. Skellett exchanged emails with Mr. Ettedgui in November and December 2012. While the initial emails did not refer to bread, on December 11, 2012 Mr. Skellett asked Mr. Ettedgui, among other items, if he would “be opposed to a licensing agreement for Hostess brand for bread and rolls.” Mr. Ettedgui responded the following day, stating in response to this issue “I don’t think we own the brand for this category of products. I’ll check again with legal department but I think that the brand is owned by Weston for bread.” The day after, Mr. Ettedgui wrote again to Mr. Skellett based on feedback from Saputo Bakery’s legal department, saying “Regarding Hostess brand, we only owned the brand for snack-cake so we can’t give a licence for other categories.”
[48] Nothing further appears to have been done about selling bread under the HOSTESS brand until about a year later. In November or December, 2013, Mr. Skellett contacted representatives of Hostess Brands, LLC, which had acquired the US rights to HOSTESS out of the bankruptcy of Hostess Brands, Inc. The relevant upshot of these discussions was that Hostess Brands, LLC advised Mr. Skellett it had no rights to the HOSTESS trademark in Canada.
[49] On December 22, 2014, four days after Canada Bread’s acquisition of Saputo Bakery was announced and reported in various Canadian news media, Natural Stuff applied for registration of the trademark HOSTESS, Application No 1,708,488, for use in association with the goods bread, bread rolls, and bagels and the services wholesale distribution of bread, bread rolls and bagels. Mr. Racioppo’s evidence was that he was not aware of the acquisition at the time of the application, and that he had commenced the process of preparing the application earlier in 2014. I agree with the plaintiffs that the timing of the application seems remarkably coincidental. However, I need not decide whether Natural Stuff’s application was triggered by reports of the acquisition, as Natural Stuff’s knowledge or intent at the time of the application is ultimately not relevant to the issues on this summary trial.
[50] Natural Stuff’s application remains pending. During the course of examination, a number of office actions were issued opining that the mark applied for was confusing with the previously registered HOSTESS Word Mark. To overcome these objections, Natural Stuff revised the application to remove bread rolls from the list of goods and services, and later revised the statement of goods and services to (i) bread, namely: sliced and unsliced loaves of bread, bread rolls and bread buns, and (ii) bagels and associated wholesale distribution services. However, the examiner’s objections remained. The most recent examiner’s report, dated August 11, 2017, focused on the presence of rolls in the HOSTESS Word Mark in particular.
[51] On February 3, 2016, Mr. Racioppo incorporated Hostess Bread. His evidence was that the original intention was for Hostess Bread to source bread products for sale under the HOSTESS trademark, which would then be sold to Natural Stuff for distribution. Ultimately, however, a sole supplier was identified, and Natural Stuff began selling bread under the HOSTESS name in March 2016.
[52] The HOSTESS bread sold by Natural Stuff displays the HOSTESS name in the following design:
[Description of inserted picture: A design is shown in which the word HOSTESS is represented in script with a capital H and the remaining letters in lower case. A small maple leaf appears above and between the letter E and the letter S. The whole word appears on an angle tilting upward to the right, and against a shaded wavy rectangular banner background.]
[53] Natural Stuff filed a further application for registration of this HOSTESS Design (Application No 1,784,614) on May 30, 2016, for use in association with the goods (i) bread, namely: sliced and unsliced loaves of bread, bread rolls and bread buns (ii) and bagels and the services wholesale distribution of (i) bread, namely: sliced and unsliced loaves of bread, bread rolls and bread buns and (ii) bagels. These are the same goods and services in Natural Stuff’s revised application for the HOSTESS trademark. As with Natural Stuff’s other application, the examiner has issued office actions citing potential confusion with the HOSTESS Word Mark. Again, the most recent examiner’s report, dated July 18, 2018, focused in particular on the presence of rolls in the HOSTESS Word Mark.
[54] Examination of both of Natural Stuff’s applications was effectively suspended pending the section 45 proceeding. As noted above, the section 45 proceeding recently resulted in the expungement of rolls and biscuits from the HOSTESS Word Mark, subject to any appeal therefrom. The Court has no further information on the prosecution of Natural Stuff’s applications subsequent to this decision.
[55] Natural Stuff and Hostess Bread sold bread and buns under the HOSTESS trademark between March 2016 and approximately May 2019, when they ceased selling bread products under the HOSTESS mark pending this Court’s determination. The vast majority of these sales were by Natural Stuff. These sales were primarily to convenience stores and pharmacies in Ontario, New Brunswick, Nova Scotia and Prince Edward Island. The defendants now sell bread under a different trademark, SOFT AND FRESH, with the company name being set out on packaging as “HBCI.”
(1) Infringement under subsection 20(1) of the Trademarks Act
[56] Section 19 of the Trademarks Act provides that registration of a trademark gives the owner the exclusive right to the use throughout Canada of the trademark in respect of the goods or services listed in the registration. The defendants apparently concluded at some point in the 2012 to 2016 time frame that since Vachon Bakery’s registrations for the HOSTESS Word Mark and design marks did not list bread, Vachon Bakery did not have the exclusive right to sell bread in association with the HOSTESS trademark, and the defendants were therefore entitled to do so. This impression seems to have been informed by Mr. Ettedgui’s statement that “we only owned the brand for snack-cake so we can’t give a licence for other categories”; by the advice from Hostess Brands, LLC that it owned no rights to HOSTESS in Canada; and by the defendants’ review of the trademarks register, which showed the registrations discussed above for HOSTESS-related trademarks owned by different parties for food products, none of which included bread.
[57] However, there may be infringement even where a defendant sells a good not expressly listed in a registration, even if those goods are not in the same general class. Paragraph 20(1)(a) of the Trademarks Act provides that the exclusive right granted by section 19 is deemed infringed by anyone who sells, distributes or advertises goods or services in association with a confusing trademark or trade name. A trademark or trade name is “confusing” with another trademark if the use of both in the same area “would be likely to lead to the inference that the goods or services associated with [them] are manufactured, sold, leased, hired or performed by the same person, whether or not the goods and services are of the same general class or appear in the same class of the Nice Classification”: Trademarks Act, ss 2 (“confusing”), 6(1), (2), (4). This determination is made with regard to “all the surrounding circumstances” including in particular the list of circumstances set out in subsection 6(5) of the Trademarks Act:
What to be considered
Éléments d’appréciation
(5) In determining whether trademarks or trade names are confusing, the court or the Registrar, as the case may be, shall have regard to all the surrounding circumstances including
(5) En décidant si des marques de commerce ou des noms commerciaux créent de la confusion, le tribunal ou le registraire, selon le cas, tient compte de toutes les circonstances de l’espèce, y compris :
(a) the inherent distinctiveness of the trademarks or trade names and the extent to which they have become known;
a) le caractère distinctif inhérent des marques de commerce ou noms commerciaux, et la mesure dans laquelle ils sont devenus connus;
(b) the length of time the trademarks or trade names have been in use;
b) la période pendant laquelle les marques de commerce ou noms commerciaux ont été en usage;
(c) the nature of the goods, services or business;
c) le genre de produits, services ou entreprises;
(d) the nature of the trade; and
d) la nature du commerce;
(e) the degree of resemblance between the trademarks or trade names, including in appearance or sound or in the ideas suggested by them.
e) le degré de ressemblance entre les marques de commerce ou les noms commerciaux, notamment dans la présentation ou le son, ou dans les idées qu’ils suggèrent.
[58] The weight to be given to each of these factors will depend on the circumstances of a particular case and they may not be given equal weight: Mattel at paras 54, 73; Veuve Clicquot Ponsardin v Boutiques Cliquot Ltée, 2006 SCC 23 at para 21. In the recognized formulation, the question of confusion is assessed as “a matter of first impression in the mind of a casual consumer somewhat in a hurry who sees the [mark], at a time when he or she has no more than an imperfect recollection of the [prior] trade-marks, and does not pause to give the matter any detailed consideration or scrutiny, nor to examine closely the similarities and differences between the marks”: Veuve Clicquot at para 20; Masterpiece Inc v Alavida Lifestyles Inc, 2011 SCC 27 at para 40. If such a person is likely to be confused, that is, consider that the defendants’ HOSTESS bread is sourced from Vachon Bakery as the owner of its HOSTESS registered trademarks, then there is infringement: Masterpiece at para 41.
[59] The plaintiffs assert each of the HOSTESS Word Mark, the HOSTESS Heart Design, and the HOSTESS Heart & Sun Design. However, they focused their submissions on the HOSTESS Word Mark. In my view, the confusion analysis with respect to the HOSTESS Word Mark is decisive. Neither the design elements of the HOSTESS Heart Design and HOSTESS Heart & Sun Design, nor the differences in the statements of goods, improve the plaintiffs’ infringement case compared to the HOSTESS Word Mark. I will therefore address the analysis to that mark in particular: Masterpiece at para 61.
[60] As discussed above, at the time of the defendants’ sale of bread products, and at the time of the hearing, the HOSTESS Word Mark registration listed not only cakes but also rolls and biscuits. The plaintiffs argued in passing that the similarity between rolls and the defendants’ bread prod