Federal Court of Appeal rummages for the truth in Swiss luggage trademarks decision

Federal Court of Appeal rummages for the truth in Swiss luggage trademarks decision

Group III International Ltd v Travelway Group International Ltd, 2017 FCA 215

Nipping confusingly similar trademarks at the bud, via timely utilization of trademark opposition proceedings, could help avoid later (and lengthier) infringement trials at court.

In this decision, the Federal Court of Appeal (“FCA”) found that trademarks owned by Travelway Group International Ltd. (“Travelway”) were confusingly similar to, and passing off on, trademarks owned and exclusively licensed by Wenger S.A, [4] Group III International Ltd. [5] and Holiday Group Inc. [6] (collectively, “Wenger”). The FCA’s finding reversed a previous decision of the Federal Court (“FC”), which had held that the marks were not infringing, on the basis that a likelihood of confusion could not be established. [1]

Background

Wenger is the name behind the well-known Swiss army knife. [3] In Canada, it owns the following three marks which are depicted on luggage and bags (“the Wenger marks”). [4]

The Wenger marks

The Wenger marks began being used throughout Canada in 2003, often advertised under the SWISSGEAR brand, and were registered between 2007 and 2012. [7] In 2009, Travelway registered the following marks, also for use on luggage (“the Travelway marks”). [11]

The Travelway marks

By 2012, however, the Travelway marks had begun morphing to resemble the Wenger marks in ways that included the cross shape becoming narrower and longer, the shape of the triangle becoming less pronounced, the colours becoming much like those used frequently with the Wenger marks, the border of the triangle becoming more uniform, and the centre “S” either being etched in a way that made it hard to see, or being omitted altogether on zippers. [13] The final two variations of the centre “S” were considered by the FC as being separate, unregistered marks (“the Unregistered marks”).

At the FC level, it was concluded that “from the perspective of the average consumer somewhat in a hurry, the Travelway marks as used on its luggage and bags are not likely to confuse the consumer and to lead him to conclude that those luggage and bags are manufactured or sold by the same entity as the Wenger luggage and bags.” [17] This conclusion applied to both the Travelway marks and the Unregistered marks. [18]

Issues

The issues raised in this appeal were as follows:

  1. Did the FC err in concluding that there was no likelihood of confusion?
  2. Did the FC err in concluding that there was no passing off?
  3. If the FC did err, what would the appropriate relief be? [22]

Analysis

The FCA dealt with each of the three issues in turn.

Travelway marks Confusingly Similar to Wenger marks

Whether the Travelway marks were confusing with the Wenger marks was the central issue in this appeal, [25] and the confusion analysis was carried out on a mark-by-mark basis. [29] Subsection 6(5) of the Trade-marks Act states that courts “shall have regard to all the surrounding circumstances,” which include inherent and acquired distinctiveness of the marks, length of time in use, nature of the goods, nature of the trade and degree of resemblance. [28]

Wenger argued that the FC had made a reviewable error by not considering all surrounding circumstances outlined in subsection 6(5), [31] and that the FC had made a reviewable error in treating the Unregistered marks as separate. [32] The FCA agreed with both arguments. [33]

At the FC, all parties had agreed that that Unregistered marks were merely variants of the registered Travelway marks, but the FC had nonetheless treated them as separate, unregistered marks. [38] This was found by the FCA to have been a reviewable error made by the FCA. [42]

In reviewing subsection 6(5), the FCA found the Travelway “triangle” mark to be so strikingly similar to the Wenger “square” mark that the other factors would need to be heavily in Travelway’s favour in order to find no likelihood of confusion between them. [48] The analysis of the surrounding circumstances also led to a finding of public confusion. [49] Similarly, the FCA found a likelihood of confusion with respect to the Travelway “cross” mark. [65] These conclusions were extended to the remaining two Wenger marks as well. [67]

The FCA concluded that, as a result of palpable and overriding errors by the FC and in light of the findings with regard to confusion, each of the Travelway marks was confusing with each of the Wenger marks. [68]

Passing Off Established
In determining if passing off had occurred, the FCA began by turning to subsection 7(b) of the Trade-Marks Act, which codifies the tort of passing off. [69] The elements for establishing passing off stem from Kirkbi AG v Ritvik Holdings Inc, 2005 SCC 65 and are comprised of:

  1. The existence of goodwill associated with the distinctiveness of the product,
  2. misrepresentation by the respondent creating confusion, and
  3. actual or potential damage to the appellants. [71]

With regards to goodwill, it was found that the FC had made a palpable and overriding error in finding an insufficient level of goodwill [78] and in concluding that the goodwill element had not been established. [79] The FCA was also of the view that the evidence clearly established that there had been misrepresentation. [82] The Travelway marks had always been similar to the Wenger marks, but these similarities grew as the Travelway marks evolved to look even more like the Wenger marks. [82] This was exacerbated by Travelway’s use of phrases like “SWISS TRAVEL PRODUCTS,” which would further confuse the public. [82] Finally, the FCA found that the similarity of the wares would mean they would be sold largely through the same retailers, thereby suggesting that Wenger would have experienced a loss of sales as a result of the misrepresentation. [84]

The FCA concluded that Wenger had established passing off, contrary to subsection 7(b) of the Trade-Marks Act. [86]

Relief Granted

The appeal was allowed and the judgment of the FC was set aside. [87] Wenger was granted its requested declaration of infringement, [89] and a permanent injunction applying to the Travelway marks used in association with any wares listed for the Wenger marks. [91] Additionally, Travelway was ordered [93] “to destroy or deliver up all wares, packages, labels and advertising materials” marked with the Travelway marks. [92] The issue of expungement of the Travelway marks was referred to the FC to decide after further submissions could be heard. [96] The quantum of damages was also referred to the FC for determination, [97] but the FCA awarded Wenger its costs for both the FC and FCA decisions. [99]

Commentary

The underlying message in this decision is the importance for rightsholders of monitoring the approvals of potentially confusingly similar trademarks. Once a trademark is approved by an examiner, it is advertised in the Canadian Intellectual Property Office (“CIPO”) Trade-marks Journal. The journal is published on a weekly basis and showcases the trademarks that have recently been approved by CIPO. Parties who believe that newly approved trademarks may be encroaching on their IP interests can then bring trademark opposition proceedings.

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