The Scope of the Term “Services” in Association with a Trademark Revisited by the Federal Court

The Scope of the Term “Services” in Association with a Trademark Revisited by the Federal Court

Dollar General Corporation v 2900319 Canada Inc, 2018 FC 778

In this decision, the Federal Court (“FC”) confirms 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”.

The FC overturned the Registrar of Trade-marks’ (“the Registrar”) decision to expunge Dollar General Corporation’s (“DGC”) trademark DOLLAR GENERAL from the registry. [1,9] The FC found that Canadians could use DGC’s website as a substitute for visiting a brick-and-mortar store, and that DGC had demonstrated use of its mark in Canada. Finding that the Registrar’s decision was “clearly wrong and unreasonable”, the FC allowed DGC’s appeal. [31-32]

Background

DGC registered its DOLLAR GENERAL trademark (registration No. TMA785040) in December 2010 for use in association with “retail variety store services”. [2] DGC operates retail stores in the United States of America (“USA”) and operates an e-commerce website on which Canadians may purchase their products, and have them delivered either somewhere in the USA, or have them delivered in Canada through a third-party shipping agent. [3] Pursuant to a request by 2900319 Canada Inc, the Registrar issued a notice to DGC under section 45 of the Trade-marks Act, requesting evidence of the use of its mark during the preceding three years, namely, between October 21, 2011 and October 21, 2014 (“the relevant period”). [4] DGC presented evidence and written submissions to the Registrar and was present at the hearing. 2900319 Canada Inc presented written submissions but was not present at the hearing before the Registrar. [5]

The Registrar concluded that DGC had failed to demonstrate use of its DOLLAR GENERAL mark within the relevant period and issued a decision to expunge DGC’s trademark. The Registrar did not find that DGC was offering “retail variety store services” because the Canadian customer could only obtain their purchase by either traveling to the USA or through the services of a third-party shipper. In other words, when there is no brick-and-mortar store, “retail store services” depends on whether the company makes deliveries in Canada. [6-7, 21]

The Registrar Relied on the Wrong Case Law to Expunge the Trademark

The main issue in this case was to determine whether DGC had demonstrated use of its mark DOLLAR GENERAL during the relevant period. [10] The FC first refers to subsection 4(2) of the Trade-marks Act, which states that a “trade-mark is deemed to be used in association with services if it is used or displayed in the performance or advertising of those services.” UNICAST SA v South Asian Broadcasting Corporation Inc2014 FC 295 [Unicast] has specified that to establish use, the services must be offered to Canadians or performed in Canada. [13] Saks & Co v Canada (Registrar of Trade Marks), [1989] FCJ No 2824 (TD) (WL) and TSA Stores, Inc v Registrar of Trade-Marks2011 FC 273 [TSA Stores] are decisions in which the FC found that “retail store services” could be performed without the presence of a brick-and-mortar store in Canada. [14] In TSA Stores, the FC concluded that the word “services” should be interpreted liberally as it is not defined in the Trade-marks Act. Moreover, the Trade-marks Act makes no distinction between primary, incidental or ancillary services. Consequently, “as long as some members of the public, consumers or purchasers, receive a benefit from the activity, it is a service”. [18]

The FC found that the Registrar wrongfully relied on the FC’s decision in Unicast, because in that case, the Registrar was addressing a much broader issue, and because it is distinguishable from this case. In Unicast, the FC was analyzing the terms “broadcasting undertaking” and “carried on in whole or in part within Canada” according to the Broadcasting Act and relevant case law. [22-23] The Court indicated that if the Registrar had “appropriately applied” the relevant case law, such as TSA Stores, the Registrar should have found that DGC does offer retail store services in Canada. [24] The evidence provided my DGC showed that visiting the DGC website is “akin to visiting a bricks-and-mortar store”: Canadian costumers can view products through various categories, have access to detailed information on the product, create a “shopping list” or in a “cart” to buy products. Moreover, the evidence demonstrated that it is easy for Canadians to purchase products from DGC. [25-26] The FC adds that section 45 of the Trade-marks Act does not impose a heavy burden on the registrant: it only requires that the evidence show a prima facie “use” of the trademark within the meaning of section 4 of the Trade-marks Act. [30] The FC allowed the appeal and set aside the Registrar’s decision. [32]

Commentary

In this decision, the FC confirms that there is no need for a brick-and-mortar store to establish use of a trademark in Canada. Rather, trademark holders must demonstrate that that the services offered in association with the mark are available in Canada. This decision reflects the growing changes in society brought by the Internet. As the FC indicated in the decision, “[t]o find that by use of a third-party mode of delivery from the US would, in-of-itself, result in non-use of retail services in Canada‎ ignores the commercial reality of the normal course of e-commerce trade and would frustrate trademark owners’ legitimate rights in Canada.” [28]

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