Brick-and-Mortar Hotel Not Necessary to Establish Use of Trademark in Association With “Hotel Services” in Canada

Brick-and-Mortar Hotel Not Necessary to Establish Use of Trademark in Association With “Hotel Services” in Canada

Hilton Worldwide Holding LLP v Miller Thomson, 2018 FC 895

The Federal Court (“FC”) confirms that a trademark associated with “hotel services” does not need to have a brick-and-mortar presence in Canada. This decision follows Justice Manson’s conclusion in the recent case Dollar General Corporation v 2900319 Canada Inc, 2018 FC 778 [Dollar General]. (PCK Reporter summary available here)

Justice Pentney of the FC allowed Hilton Worldwide Holding LLP’s (“Hilton”) appeal from the decision of the Registrar of Trade-marks (“the Registrar”), which directed that Hilton’s registration for the trademark “WALDORF-ASTORIA” (registration No. TMA337529) be expunged from the register. [1] The FC found that the Registrar failed to address relevant evidence [74] and erred on relying on decisions that were distinguishable from this case. [102]

Background

Hilton’s WALDORF-ASTORIA mark is registered for use in association with “hotel services” since 1988. At the request of Miller Thomson LLP, the Registrar issued a notice under section 45 of the Trade-marks Act on October 23, 2014 to Hilton. This notice required Hilton to demonstrate that its mark was in use within the three years preceding the notice, namely, between October 23, 2011 and October 23, 2014 (“the relevant period”). Alternatively, if Hilton could not present such evidence, it had to provide the date the mark was last in use and provide a reason for the absence of use since that date. [3-4]

The Registrar had to determine whether Hilton had demonstrated use of its mark in association with “hotel services” in Canada during the relevant period, and if not, whether Hilton demonstrated special circumstances as provided in subsection 45(3) of the Trade-marks Act. [58] To determine whether Hilton had established use of its mark within the relevant period, the Registrar relied on Stikeman Elliott LLP v Millennium & Copthorne International Limited, 2015 TMOB 231. The Registrar concluded that Hilton’s interactive website, registration service, discounts for customers who pre-paid for rooms, its reward points system for members of its loyalty program and the use and display of its mark on various communications to customers in Canada was not enough to establish use. The absence of a Waldorf-Astoria hotel in Canada was fatal to Hilton’s claim that it had used the mark for “hotel services” in Canada during the relevant period. [5] Hilton had argued that special circumstances existed; that there was an agreement to build a Waldorf-Astoria hotel in Montreal, but the plans fell through due to the economic downturn in 2008. The Registrar rejected this argument, indicating that case law had established this was not the type of special circumstance required under subsection 45(3) of the Trade-marks Act. [6]

“Hotel Services” Goes Beyond the Physical Presence of a Hotel

The FC had to determine whether Hilton established use of its mark in association with “hotel services”, despite the absence of a concrete hotel in Canada. [1] The FC found that the Registrar made several errors in this case, notably by failing to consider evidence on the ordinary understanding of the term “hotel services”, by failing to apply binding authority on the scope of services, by applying the current version of Trade-Marks Office Wares and Services Manual (“the Manual”) to interpret the meaning of a 1988 registration, and by failing to consider the words used in the registration itself. [73]

The FC notes that Hilton had provided an affidavit of Mr. Eriksen (Brands and Intellectual Property Counsel for Hilton Worldwide), which indicated that term “hotel services” in the hotel industry includes, but is not limited to, reservation services, booking and payment services and access to hotel rooms. The FC states that the Registrar erred in failing to address the only evidence on this point, adding that the onus on Hilton was not onerous. The FC found that an ordinary understanding of the term “hotel services” goes beyond the physical bricks and mortar hotel or hotel room. [74-76]

The FC criticized the Registrar’s conclusion that primary, incidental and ancillary services are not helpful in the scope of the term “services”. The FC specifies that the Registrar failed to consider and follow binding authority on the interpretation of the term services, such as TSA Stores, Inc v Registrar of Trade-Marks, 2011 FC 273, in which the FC stated that the word “services” should receive a liberal interpretation, as the Trade-marks Act makes no distinction between primary, incidental or ancillary services. [50, 77] The FC then commented that there is no obligation for a registered trademark owner to constantly update the registration to match the current wording in accordance with the Manual. Furthermore, it was an error to interpret the scope of a past registration to the current wording of the Manual, especially since it is only a guideline. [79]

Finally, the FC also remarked that the Registrar was asking the wrong question when concluding that it is contrary to common sense to associate the ability to make hotel reservations or bookings with the operation of a hotel. The question was to determine the scope of the term “hotel services”. The FC found that the term “naturally includes a series of related things”, including things that can be enjoyed only at the hotel, and some things that can be performed or enjoyed in Canada. [83-86] The FC concludes that “hotel services” in 1988 and during the relevant period would include registration services. [87-88] The FC states that the evidence provided that several benefits were available to people in Canada, and that many people in Canada took advantage of these benefits. [97]

In terms of Hilton’s “special circumstances” argument, the FC noted that the Registrar had not made an error in rejecting Hilton’s argument, noting that the Registrar relied on the relevant case law. [106] However, given its conclusion on the Registrar’s analysis on the scope of the term “hotel services”, the FC allowed Hilton’s appeal. [112]

Commentary

The FC confirms that there is no need to build a hotel in Canada to associate a trademark with “hotel services”. Each case will be evaluated on its own facts. This decision takes into consideration the changes in society that were brought with the Internet, such as the possibility to extend services in different countries. Justice Pentney also touches on the meaning the word “services”, confirming that the absence of a definition in the Trade-marks Act will grant it a liberal interpretation to include “primary, incidental or ancillary” services. In this decision, Justice Pentney follows the same principles established in Justice Manson’s recent decision in Dollar General, in which he found that foreign corporations do not need to have a physical store in Canada to establish use of their mark in association with “retail variety store services”.

CSP