Padcon Ltd v Gowling Lafleur Henderson LLP, 2015 FC 943
The Federal Court (“FC”) reviewed the test for deviation of a trade-mark and had Shoeless Joe’s trade-mark expunged after the trade-mark owner Padcon Ltd. (“Padcon”) was challenged to demonstrate its use of the trade-mark “THE OUTRIGGER STEAKHOUSE AND BAR” in association with restaurant, bar and pub services, for which it was registered. [1]
Padcon had licensed the use of the trade-mark to be used by the Shoeless Joe’s Sports Grill chain of restaurants, [9] but the only evidence of use that Padcon submitted was restaurant menus that showed the term “OUTRIGGER” being used in association with particular menu items, such as the “Outrigger Salad” and the “Outrigger ® Seafood Topper”. [10]
“OUTRIGGER” trade-mark expunged
The Registrar granted Gowlings’ section 45 challenge for two reasons. [53] First, the term “OUTRIGGER” was not being used in associating with the broader restaurant services, but rather was only used in conjunction with individual menu items. [16] Second, only the “OUTRIGGER” term was being used, not the entirety of the mark “THE OUTRIGGER STEAKHOUSE AND BAR”. [16] This deviation of the use of the mark as registered to the use of simply “OUTRIGGER” on individual menu items was a substantial difference. [22]
The New Evidence was not Material
Padcon filed an affidavit including new evidence which consisted of another Shoeless Joe’s menu and a poster for a contest, each of which included the term “OUTRIGGER” in association with another menu item. Padcon asked the FC to consider the new evidence de novo pursuant to section 56 of the Trade-marks Act. [23, 26] The FC reviewed the law on the submission of fresh evidence under section 56:
… where additional evidence is adduced on appeal and this evidence would have materially affected the Registrar’s decision, this Court must conduct ade novo review and determine whether use has been established.
If the evidence would not have materially affected the Registrar’s decision, the Court will review the Registrar’s decision on a standard of reasonableness, based on the evidence that was before the Registrar. [32]
The FC found the new evidence to be nothing but more of the same kind of evidence that had already been submitted. [54] The new evidence does not show the trade-mark used in association with the restaurant services in a broader sense. It only shows the use of the term “OUTRIGGER” in association with the same menu item on both the menu and the poster. [60] Since such repetitive evidence would not have materially affected the Registrar’s decision, the FC did not need to conduct a de novo review of all the evidence. [62]
The Registrar’s Decision was Reasonable
Turning to a review of the Registrar’s decision based on the initial evidence, the FC found the Registrar’s decision to be reasonable.
As mentioned above, based on Padcon’s limited use of the term “OUTRIGGER” only in association with particular menu items, it was reasonable for the Registrar to conclude that the mark was not being used in association with restaurant services as a whole. [86]
Also as mentioned above, based on Padcon’s use of only the term “OUTRIGGER” instead of the entirety of “THE OUTRIGGER STEAKHOUSE AND BAR”, it was reasonable for the Registrar to find that the mark deviated and was therefore not being used as registered. [91]
Padcon argued that the test for deviation applied by the Registrar was the wrong test. It argued that the test established in Canada v Compagnie Internationale pour l’Informatique CII Honeywell Bull [Honeywell], [1985] 1 FC 406, was modified by the Court of Appeal after Promafil Canada Ltée v Munsingwear, Inc, [1992] FCJ No 611 [Promafil]. [93] It argued that the Honeywell test, which looked to whether the dominant features of the mark were retained, was modified into a test for “continuing commercial impression”. [93] Under this test, Padcon argued, the use of the term “OUTRIGGER” on its own gave the same commercial impression as the use of the trade-mark in its entirety, so the mark has therefore not deviated. [74] Padcon argued that its case was analogous to the penguin trade-mark that was at issue in the Promafil case, where the size of the penguin changed, but its dominant features remained the same. [75]
In Padcon’s case, it shed the superfluous and descriptive words “STEAKHOUSE AND BAR” but retained the only dominant feature, “OUTRIGGER”.
The FC did not agree with this analogy, however, and did not agree that Promafil changed the law toward a test of continuing commercial impression. [98] Firstly, the analogy with the penguin in the Promafil case could not work because the new penguin actually retained all of the distinctive features of the registered mark, whereas dropping the words “STEAKHOUSE AND BAR” made for a “wholly different” trade-mark. [107-108] The fact that the words are descriptive (and were even disclaimed for being descriptive in the registration) does not change the fact that failing to use all the words can be a deviating use of the trade-mark. [108-109]
Secondly, although the Court of Appeal in Promafil may have considering the “commercial impression” of the mark as an additional or alternative way to consider the variations in the mark, it did not go so far as to change the Canadian test. [99] Moreover, in this case, there was no commercial impression to be continued, since there was never a restaurant called “THE OUTRIGGER STEAKHOUSE AND BAR”, nor is there any evidence that the trade-mark was ever used in its entirety in the first place. [104-105, 113]
Given all the above considerations, the FC went on to state that even if the evidence would have materially affected the Registrar’s decision, it would have reached the same conclusion, namely that Padcon could not demonstrate the use of the mark as registered. [111]
Commentary
This case shows the risks associated with not properly maintaining your trade-mark rights. Your trade-mark can be a powerful tool to help build your brand in the eyes of the consumer, but if you do not use your trade-mark to distinguish yourself then you risk having it expunged. In this case, “OUTRIGGER” was being used to distinguish individual menu items at a restaurant, but “THE OUTRIGGER STEAKHOUSE AND BAR” was never used to distinguish the restaurant services themselves, and was therefore expunged.
The lesson is that if you want to maintain a registered trade-mark, use all of its dominant features when you use it. If you want to use just a subset of your trade-mark, consider making a separate trade-mark registration.