By Aviva Snitman
In the decision of Amer Sports Canada Inc. v. Adidas Canada Limited,[1] the Supreme Court of British Columbia granted Arc’teryx an interlocutory injunction, temporarily preventing Adidas from using the word “TERREX” in association with its retail stores until a decision is made at trial.
Arc’teryx is owned by Amer Sports Canada, which is a global group of sports and outdoor brands. Arc’teryx is a Canadian company that was founded in Vancouver in 1989 and is the owner of the registered trademark for ARC’TERYX, which grants the company exclusive use of the mark in association with various goods and services, including retail store services and online retailers across Canada.
In January 2023, Adidas Canada opened a new retail store at 2235 W. 4th Ave. in Kitsilano, Vancouver. The storefront banner includes the signature Adidas “performance bars” (pictured below), accompanied by the word “TERREX”. The name “Adidas” does not appear anywhere on the storefront banner. The store is located down the street from Arc’teryx’s Kitsilano flagship.
On February 13, 2023, Arc’teryx issued a Notice of Civil Claim against Adidas Canada in the Vancouver registry of the Supreme Court of British Columbia. Arc’teryx pleaded wrongful infringement by Adidas of the ARC’TERYX mark pursuant to s. 20 of the Trademarks Act (the “Act”).[2] Arc’teryx also claimed that Adidas’ use of the name “TERREX” in conjunction with the Adidas “performance bars” is a direct breach of s. 7(b) of the Act,[3] which prohibits direct public attention to goods, services or business in such a way as to cause confusion among consumers. Further, Arc’teryx alleged that Adidas breached s. 22 of the Act,[4] which prohibits the use of a trademark registered by another person in a manner that is likely to have the effect of depreciating the value of the goodwill attached to that trademark. Arc’teryx also pleaded that Adidas is liable for wrongful misappropriation of the goodwill and reputation of the Arc’teryx mark, in accordance with the common law tort of passing off. Finally, Arc’teryx alleged in its Notice of Civil Claim, that Adidas has wrongfully suggested an association between the two businesses, in contravention with s. 52(1) of the Competition Act.[5]
Arc’teryx applied for both interlocutory and permanent injunctions to prevent Adidas from using “TERREX” in any of its retail or online stores, including their store at 2235 W.
4th Ave. in Kitsilano. Arc’teryx also claimed damages against Adidas for wrongfully made profits, as well as exemplary and punitive damages and special costs.
Adidas filed its response to the application on April 13, 2023, stating that the application is bound to fail because Arc’teryx is “seeking to restrain legitimate competition”.[6]
On January 2, 2024, Arc’teryx was granted an interlocutory injunction, pending trial, restraining Adidas from using the name “TERREX” for its retail store, located at 2235 W. 4th Ave. in Kitsilano. In his analysis, Justice Kent applied the leading three-part test for interlocutory injunctions, referred to as the “RJR-MacDonald test”.[7] The applicant seeking an interlocutory injunction must establish three criteria:
1) that there is a serious issue to be tried;
2) the applicant will suffer irreparable harm, absent the injunction; and
3) the balance of convenience favors granting the injunction.
Justice Kent also referenced R v. C.B.C,[8] which states that in demonstrating that there is a serious issue to be tried, the applicant must prove that the application is neither frivolous nor vexatious.[9] However, in serious cases, the applicant must meet a higher threshold of demonstrating a strong prima facie case.[10] The higher threshold is triggered when the result of the interlocutory injunction would amount to a final determination of the action, the facts in issue are largely undisputed and there is a question of constitutional validity that presents itself as a simple question of law alone.[11] In such cases, the applicant must show that the case is of substantial merit and is very likely to succeed at trial.[12]
Justice Kent stated that Arc’teryx was required only to meet the minimum threshold of establishing that there was a serious issue to be tried, and it had. The court stated that “the similarity between the two [trademarks] and the potential for confusion is immediately obvious”.[13] Further, the court stated that Arc’teryx has shown that their company will suffer irreparable harm if the injunction is not granted, as use of the “TERREX” mark by Adidas will cause consumers to be diverted from the Arc’teryx store.[14] Furthermore, once the Arc’teryx brand loses its distinctiveness it would be impossible to regain.[15] Lastly, Justice Kent stated that the balance of convenience requirement was met and that it would be in the public interest to grant the interlocutory injunction.[16] Adidas had knowledge of the possible risks of infringing on Arc’teryx’s trademark and continued to act.
It is notable that Adidas has a trademark registration in Canada for “TERREX” in association with athletic footwear and clothing. On October 31, 2022, Adidas applied to register the mark “TERREX” in association with athletic accessories and “retail services for clothing, footwear and bags”. This application is still in the formalized stage.[17] In his decision, Justice Kent stated that the injunction would only cover the Adidas store located at 2235 W. Ave., and the injunction would expire should Adidas’ trademark application for “TERREX” proceed to registration in Canada.[18] Any further assessments with regards to damages, special costs and restricting the further use of the TERREX name will be addressed at trial.
[1] 2024 BCSC 3.
[2] RSC 1985, c. T-13, s. 20.
[3] Ibid at s. 7(b).
[4] Ibid at s. 22.
[5] RSC 1985, c. C-34, s. 52(1).
[6] Supra note 1, at para 26.
[7] RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 SCR 311.
[8] 2018 SCC 5.
[9] Ibid at para 12.
[10] Ibid at para 17.
[11] Supra note 7 at pp 401-404.
[12] Ibid.
[13] Supra note 1 at para 36.
[14] Supra note 1, at para 49.
[15] Ibid at para 50.
[16] Ibid at para 70.
[17] Ibid at para 64.
[18] Ibid at para 76.
By Sabrina Salituro
In the recent decision of North Brewing Company Ltd. v. DLA Piper (Canada) LLP, 2023 FC 1188, the Federal Court clarifies the extent to which variations of a registered trademark will constitute use of the mark by the owner in cancellation proceedings pursuant to s.45 of the Trademarks Act.[1]
In this case, the Registrant, North Brewing Company Ltd., had a trademark registration for the word mark NORTH BREWING in association with the goods “Brewed alcoholic beverages, namely, beer, ale, lager, malt liquor; Promotional items, namely, beer glasses, mugs, bottle openers, key chains, clothing, namely, shirts, hats, jackets, and pants.”.[2]
Justice Fuhrer began her analysis on the issue of use with the leading and often cited test from Registrar of Trade Marks v CII Honeywell Bull, [1985] 1 FC 406 (“Honeywell”) to determine whether use of a modified version of a registered trademark constitutes use of the mark:
“The practical test to be applied in order to resolve a case of this nature is to compare the trade mark as it is registered with the trade mark as it is used and determine whether the differences between these two marks are so unimportant that an unaware purchaser would be likely to infer that both, in spite of their differences, identify goods having the same origin.”[3]
In her analysis, Justice Fuhrer divided the Honeywell test into two parts:
1. Whether the differences in the versions of the mark under consideration likely would deceive the public as to the origin of the applicable goods or services; and
2. If there is no possibility of deception to the public, whether the mark was used in such a way that it did not lose its identity and remained recognizable in spite of the differences between the form in which it was registered and the form in which it was used.[4]
While applying the second part of the test, Justice Fuhrer made reference to the Promafil Canada Ltée v Munsingwear Inc, 1992 CanLII 12831 (FCA), 44 CPR (3d) 59 decision where the Court also focused on “the preservation of dominant features” of the mark.[5]
The Court found that use of the mark NORTH BREWING COMPANY constituted use of the mark NORTH BREWING as the word COMPANY is an “inconsequential or minor addition, with the domination feature, i.e. the words North Brewing, maintained”.[6] The Court also found that the variation of the mark in the logo NORTH BREWING CO. or NORTH BREWING COMPANY with images of glasses of beer – as depicted below – still maintained the mark NORTH BREWING which appears “prominently as the first or dominant element”.[7] Justice Fuhrer noted that the “depiction of partially filled and filled glasses of a yellow beverage (such as beer) are a descriptive addition to the Mark in association with brewed alcoholic beverages” and that the “the transfer of possession of the ordered beer in glassware such as these examples to customers” are in the “ordinary course of trade”.[8]
Notably, Justice Fuhrer mentioned that if there was evidence of third party brewed alcoholic beverages being sold, she may have found the contrary.[9]
In terms of the composite logos used by the Registrant on cans for brewed alcoholic beverages and invoices for beer glasses, shirts and hats – depicted below – Justice Fuhrer found that words NORTH BREWING are no longer the dominant feature of the marks, rather they are subsumed in these logos, the dominant features of which are the word NORTH in an oval superimposed on a substantial stylized compass or star design”.[10]
Similarly, evidence of a shirt displaying the image of a unicorn with the words NORTH BREWING COMPANY superimposed on a cloud beneath the unicorn design was not considered to be use of the mark NORTH BREWING, as the words NORTH BREWING were not the dominant feature of the composite mark.[11]
Ultimately, Justice Fuhrer found that the Registrant submitted evidence of sufficient use of the mark, including variations of the mark, in association with some of the goods in the registration during the relevant period.[12] The registration was maintained in part, in association the goods “ brewed alcoholic beverages, namely, beer, ale, lager; and promotional items, namely, mugs, bottle openers, key chains, clothing, namely, hats” and the goods “malt beverages, beer glasses, shirts, pants, and jackets” were deleted from the registration.
[1] North Brewing Company Ltd. v. DLA Piper (Canada) LLP, 2023 FC 1188 [“North Brewing”], at para 1 [2] North Brewing, at para. 5 [3] Registrar of Trade Marks v CII Honeywell Bull, 1985 CanLII 5537 (FCA), [1985] 1 FC 406, at para. 409 [4] North Brewing, at paras. 38-39 [5] Promafil Canada Ltée v Munsingwear Inc, 1992 CanLII 12831 (FCA), 44 CPR (3d) 59 at paras. 70-71 [6] North Brewing, at para. 51 [7] North Brewing, at para. 57 [8] North Brewing, at para. 53 [9] Ibid. [10] North Brewing, at paras. 59-60 [11] North Brewing, at para. 63 [12] North Brewing, at para. 45-46
By Shany Raitsin
In the recent Energizer Brands, LLC v. Gilette Company[1] decision, the Federal Court ruled that Duracell’s use of Energizer’s registered trademarks ENERGIZER and ENERGIZER MAX (the “Energizer Trademarks”) in comparative advertising on its sticker labels depreciated the goodwill in Energizer’s registered trademarks.[2]
While the Court accepted the assertion that “…comparative advertising helps consumers make better choices…”,[3] it also reiterated the limits placed on comparative advertising through s. 22 of the Trademarks Act[4] which stipulates that no one can use a registered trademark of another in a way likely to depreciate the value of the goodwill attached to the mark.
Ultimately, the court found that the claims made in Duracell’s comparative advertising campaign were truthful and not misleading, but that their findings were used to the detriment of Energizer’s goodwill.
The deadline for the parties to appeal this decision is in September 2023.
Test for the Depreciation of Goodwill
The leading Supreme Court of Canada decision of Veuve Clicquot Ponsardin v. Boutiques Cliquot Ltée[5], outlines a four-part test for depreciation of goodwill: (1) the defendant has used the claimant’s registered trademark with goods or services, regardless whether they are competitive, with those of the claimant; (2) the claimant’s registered trademark is sufficiently well known to have a significant degree of goodwill attached to it, although there is no requirement hat the trademark be well known or famous; (3) the defendant’s use of the trademark was likely to have an effect on that goodwill (in other words, there was a linkage); and (4) the likely effect is to depreciate or cause damage to the value of the goodwill.[6]
The Average Hurried Consumer in the Marketplace
The concept of the “average hurried consumer” was also explored in this decision, with added emphasis on the fact that consumers typically only take seconds to absorb information on product packaging.[7] However, when analyzing Duracell’s comparative advertising practices and their effect on consumers, Justice Fuhrer duly pointed out that the parties did not furnish any evidence that could have potentially provided evidence of consumer reactions in the marketplace to the sticker campaign in question.[8] The absence of this evidence made it more difficult for the Court to ascertain the effect on goodwill of the Energizer brand.[9] As a consequence of the absence of this evidence, the Court was left to its “…own common sense as a potential buyer of the goods”.[10]
The Court also made an important distinction that the average hurried consumer should not be interpreted as a “moron in a hurry”, or completely naïve – deeming that consumers are more than capable of spotting a disclaimer on a product that explains something to the effect of: “results vary by device”.[11]
A Battery Battle
The sticker in question used on DURACELL AA batteries stated its product is “Up to 20% LONGER LASTING vs. the bunny brand on size 10, 13 and 312” – see depiction below.
The Court recognized that the “bunny brand” in this case was colloquially recognized to mean the Energizer brand, as the Energizer Bunny is a prominent and well-known mascot to the brand.[12] Interestingly though, the Court still sided with Duracell in verifying that its “15%” or “up to 20%” claims were not in fact false or misleading, according to the applicable testing that was provided as evidence in the case.[13]
Ultimately, the Court determined that Energizer failed to meet the third part of the four-part test, in failing to establish a link between the use of the impugned phrase and an effect on the goodwill of the brand.[14] While the “bunny brand” is well known, the Court determined that it required the consumer to take an “extra mental step” to connect the phrase to the Energizer brand.[15] The Court found that “there is a lack of evidence in the form of primary data, such as a survey, to assist the Court in determining how the average hurried consumer … would have reacted to the [sticker]”.[16]
Notably, the Court found that the evidence submitted did establish that sticker campaign endeavoured to increase Duracell’s market share (when it was already the market leader), at the expense of the next leading competitor, Energizer.[17] While there was no direct evidence that the sticker campaign disrupted Energizer’s historical capture of the market, the Court concluded that Duracell’s sticker campaign was “bandying about” with Energizer’s registered trademarks to the likely detriment of the goodwill attaching to them.
Decision
The Court granted Energizer a permanent injunction restraining Duracell from using the Energizer Trademarks and some of its stickers on battery packages, as well as damages amounting to $179,000. The Court did not award Energizer punitive damages, or accounting profits. In its conclusion, the Court noted that despite Duracell having contravened s. 22 of the Trademarks Act, it did not make any false or misleading representations or statements.
[1] Energizer Brands, LLC v. Gillette Company, 2023 FC 804 (“Energizer”) [2] Ibid., at para. 270 [3]Energizer, at para. 86, citing Petline Insurance Company v. Trupanion Brokers Ontario Inc., 2019 FC 1450 at para. 9 [4] Trademarks Act, (R.S.C., 1985, c. T-13), s.22 [5] Veuve Clicquot Ponsardin v Boutiques Clicquot Ltée, 2006 SCC 26 (”Veuve Clicquot") [6] Veuve Clicquot, at para. 46 [7] Energizer, atpara. 99 [8] Ibid., at para. 116 [9] Ibid., at para. 117 [10] Ibid., at para. 122 [11] Ibid., at para. 211 [12] Ibid., at para. 206 [13] Ibid., at paras. 206 and 214 [14] Ibid., at para. 240 [15] Ibid. [16] Ibid., at para. 156 [17] Ibid., at para. 244
