Official Mark Status Not a Defence in Trademark Infringement Action

Official Mark Status Not a Defence in Trademark Infringement Action

Quality Program Services Inc v Canada, 2018 FC 971

In this decision, Justice Southcott of the Federal Court (“FC”) confirms that official marks do not insulate the government from claims under the Trade-Marks Act (the “Act”). The FC found that Her Majesty the Queen in Right of Ontario as represented by the Minister of Energy’s (“Ontario”) mark “emPOWERme” was confusing with Quality Program Services’s (“QPS”) mark “EMPOWER ME”. [4]

Background

QPS has been using its mark “EMPOWER ME” since April 2013 in association with energy awareness. The mark was registered in July 2014 (Registration no TMA882733). [1, 7] Ontario launched a website in November 2013 named “emPOWERme”, to educate Ontario’s electricity payers about the system and energy conservation. [1, 8] QPS started an action in October 2016, claiming that Ontario was infringing its mark. [10] In response to the action, Ontario requested in December 2016 that the Registrar of Trade-marks (“Registrar”) give public notice of Ontario’s adoption and use of “emPOWERme” as an official mark of the Government of Ontario under s. 9(1)(n)(iii) of the Act. The Registrar gave notice in January 2018. Ontario claims that the status of “emPOWERme” as an official mark “affords complete defence to QPS’s claims”. [2, 11]

Official Mark Status Does Not Immunize Ontario Against Infringement Claims

The main issues before the FC were whether the official mark status of Ontario’s mark afforded Ontario protection against QPS’s claims and whether Ontario’s mark infringed QPS’s mark. [12]

The FC disagreed with Ontario’s argument that s. 9(1)(n)(iii) of the Act immunizes Ontario against any claims from the use of its mark. The FC agreed with QPS, noting that s. 9(1)(n)(iii) provides certain protections, but the language of that section and the jurisprudence does not support Ontario’s stance. [16] The provision reads as a prohibition against adopting a mark resembling an official mark – it does not read as preventing the public from claiming trademark infringement against the official mark: “There is nothing in the language of the section which eliminates rights already conferred upon the owner of a registered trade-mark.” [18, 29]

The FC adds that other provisions of the Act support QPS’s position, which claim that no “person” shall carry out activities of infringement, passing-off or that will depreciate the goodwill of a trademark (see ss. 20(1), 7(b) and 22 of the Act). The FC then explains that s. 2 of the Act defines “person” as including “any lawful trade union and any lawful association engaged in trade or business or the promotion thereof, and the administrative authority of any country, state, province, municipality or other organized administrative area” [30] Having found that s. 9(1)(n)(iii) of the Act does not immunize Ontario from QPS’s claims, the FC then considered whether Ontario infringed QPS’s mark. [34]

The FC reminds that the test for confusion explained in Masterpiece Inc v Alavida Lifestyles Inc, 2011 SCC 27, is 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 recollect of the prior mark, and does not pause to give the matter any detailed consideration or scrutiny, nor to examine closely the similarities and differences between the marks. [49]

The FC found there is a high degree of resemblance between the marks; they are virtually the same, having only differences in capitalization and spacing. These differences are “significantly outweighed by the phonetic and visual similarities between the marks”. [50] The FC also found that QPS’s mark has limited inherent distinctiveness because it is composed of “ordinary dictionary words”. However, the mark acquired distinctiveness because of its use in association with the Empower Me Program since 2012. [51] The FC noted that QPS’s and Ontario’s marks have been used for a similar amount of time, but QPS was the first to use its mark. [52] The nature of services and nature of trade also favoured QPS, since both parties’ markets are for the energy-consuming public. [53] While Ontario uses its mark solely on a government website as an educational tool, QPS’s mark also appeared on websites of its sponsors, which included city governments websites in British Columbia. [54] The FC therefore concluded that QPS met the test for confusion, and that Ontario infringed QPS’s mark, contrary to s. 20 of the Act. [54]

QPS had argued that it should receive $25,000 per year that Ontario infringed it mark in damages; asking for a total of $50,000 because “the public has been exposed to Ontario’s infringing mark”, which had a commercial consequence on QPS’s mark as “its separation from government is of vital importance to its business model”. [71] Ontario countered that QPS’s argument was flawed, since its business model relies on sponsorships including those of local governments. Ontario referred to Maxwell Realty Inc v Omax Realty Ltd, 2016 FC 1122 [Maxwell] and Teavana Corporation v Teayama Inc, 2014 FC 372 [Teavana] in which the FC awarded damages in the amount of $10,000 “as compensatory damages reflecting the infringement of a plaintiff’s legal rights without proof of actual quantum.”[72] The FC found that QPS was entitled to damages, but also agreed with Ontario’s contention that there was a lack of evidence quantifying actual damage. Justice Southcott therefore followed the approach in Maxwell and Teavana and awarded $10,000 in damages to QPS. [73-74]

Commentary

This decision brings some clarity to trademark owners’ rights and to the interpretation of s. 9 of the Act, finding that it does not offer an immunity to governments in infringement actions. It also interesting to note that in this decision, the FC cited Cable Control Systems Inc v Electrical Safety Authority, 2012 FC 1272, which held that parties having prior use of an official mark may continue to use their mark in association with the wares and services used at the time that the official mark is given public notice. The FC noted in obiter that Ontario’s official mark status would not have precluded QPS from continuing use of its mark. [19]

This is yet another decision in a line of cases narrowing the protection that s. 9 of the Act. For instance, in Canada Post Corp v United States Postal Service, 2005 FC 1630 (decision affirmed in appeal) the FC relied on the Federal Court of Appeal’s (“FCA”) decision, Architects v Assn of Architectural Technologists of Ontario, 2002 FCA 218, stating that to be entitled to claim the benefit of subparagraph 9(1)(n)(iii) of the Act, the public authority must be subject to governmental control within Canada. Afterwards, in See You In-Canadian Athletes Fund Corp v Canadian Olympic Committee, 2007 FC 406 (decision affirmed in appeal), the FC indicated that to benefit from the protection of s. 9, the requesting public authority must demonstrate the mark’s adoption and use. Trademark owners and many in the trademark profession believe official marks should be circumscribed, as they afford public bodies unjustifiable advantages. and Bill C-86’s amendment to the Act to allow trademark owners to challenge official marks, along with the changes in the interpretation of s. 9 of the Act in the last decade have somewhat limited the scope of protection s. 9 affords, but this provision still affords broad powers to public authorities.

For further information on the protection of their marks, trademark owners should contact a PCK trademark agent or IP lawyer.

Due care