The low threshold of evidence required to show use of a trademark is not all that minimal according to the Federal Court of Appeal’s recent decision in Alliance Laundry Systems LLC v. Whirlpool Corporation LP.

Since there is no option to cross-examine affiants, affidavits in section 45 proceedings need to contain solid facts proving use during the material period, not bald assertions of use.

Evidence of use to satisfy a section 45 notice needs to be more than just:

  • showing pictures of the trademark on products,
  • alleging that there were sales during the material period, and
  • showing invoices of sales proving use two months after the material period.

To prove sales during the material period, Registrants need to produce invoices showing sales of products using the trademark that are dated during the material period. Put the trademark in the item details of the invoices, not just at the top of the invoice. For example, use:

Speed Queen top load washing machine, Model: AWNE92SP113TW01

Section 45 Request

Alliance Laundry Systems asked the Registrar of Trademarks to issue a Notice under section 45 of the Trade-marks Act to Whirlpool Corporation for the “SPEED QUEEN” trade-mark (registration No. UCA15837) registered in association with laundry washing machines and laundry dryers.

The Registrar issued the section 45 Notice on October 5, 2011. Whirlpool Corporation had to produce evidence of how it has used the trademark in Canada in the normal course of trade between October 5, 2008 to October 5, 2011 (the material period).

Whirlpool Corporation submitted its evidence of use through an affidavit of Mr. English. The evidence of use satisfied the Trade-marks Opposition Board, in its opinion 2013 TMOB 218, to show use of the trademark during the material period.

Mr. English’s affidavit stated that:

  • The Mark is and was used during the material period by being prominently displayed on the front of the appliances themselves. Representative photos showing how the Mark is displayed on SPEED QUEEN washers and dryers were attached as exhibit “B”;
  • SPEED QUEEN washers and dryers are and were sold during the material period by the respondent and its licensees in the normal course of trade to customers in Canada. A copy of an invoice dated December 20, 2011 from the Whirlpool Corporation to a retail customer in Canada for 108 washers bearing the Mark was attached as exhibit “C” and a copy of an invoice dated December 22, 2011 from the Whirlpool Corporation to the same retail customer in Canada for 108 dryers bearing the Mark was attached as exhibit “D”;
  • The Mark appears prominently in the center of each invoice and the description and model/part numbers correspond to sales of SPEED QUEEN washers and dryers in Canada. The current use of the Mark on invoices is representative of the nature of the use of the Mark on invoices issued during the material period;
  • Since acquiring the Mark, the Whirlpool Corporation has retained direct or indirect control of the character and quality of SPEED QUEEN washers and dryers marketed or sold by its licensees in association with the Mark;
  • Sales of SPEED QUEEN washers and dryers in Canada for the years 2001 to 2010 totalled $ 100,504.69;
  • While the overall volumes of sales of these wares declined briefly following the Whirlpool Corporation’s acquisition of the Maytag Corporation in 2006, Mr. English confirms that a portion of the above sales for SPEED QUEEN washers and dryers for the years 2001-2010 occurred directly during the material period.

Alliance Laundry Systems appealed to the Federal Court, docket T-606-14.

Alliance Laundry Systems’ arguments

[14]           The applicant argues that the reasonableness standard of review should be nuanced because the Hearing Officer committed an error in law by basing her finding of use on irrelevant material and on vague and ambiguous statements in Mr. English’s affidavit. The respondent did not meet its evidentiary threshold: there was insufficient evidence to support a finding of use.

[15]           The applicant acknowledges the evidentiary threshold is not very high, but it is still incumbent upon the respondent to show use, that is to say how, when and where the trade-mark has been used (citing Plough (Canada) Ltd v Aerosol Fillers Inc (1981), 53 CPR (2d) 62, [1981] 1 FC 679 (FCA)[Plough]. The applicant adds the evidence must show use during the relevant period (citing Boutiques Limité v Limco Investments (1998), 1998 CanLII 8416 (FCA), 84 CPR (3d) 164, [1998] FCJ No 1419 (FCA) [Boutiques Limité]; Uvex Toko Canada Ltd v Performance Apparel Corp (2004) 2004 FC 448 (CanLII), 31 CPR (4th) 270 at para 58, [2004] FCJ No 581 (FC)). The applicant insists that the respondent was required to adduce evidence establishing the dates on which the commercial transactions occurred in order for the Registrar, and the Court on appeal, to determine whether these transactions occurred during the relevant period.

[16]           The applicant argues that the evidence adduced by the respondent was insufficient to support a finding of use.

[17]           First, the applicant submits that the pictures of the wares bearing the Mark are not in themselves sufficient to show use because they do not evidence a transaction in the normal course of trade. Likewise, the invoices are also insufficient to show use because the Mark is not displayed prominently on them, and therefore, they do not constitute an adequate notice of association between the Mark and the wares. Moreover, there is no evidence that these invoices accompanied the wares at the time of transfer.

[18]           Second, the applicant argues that there is insufficient evidence to establish use during the relevant period. The applicant submits that Mr. English’s affidavit contains bald assertions of use instead of facts showing use, and the mere statement asserting a portion of sales over a 10 year period occurred during the three year relevant period lacks detail and specificity. The applicant insists the respondent should have provided figures of sales and/or invoices dated during the relevant period. The applicant insists that the respondent should also have explained why it could not lead its best evidence of use or, at the very least, better evidence to corroborate its bald and general assertions of use. The applicant further insists that Mr. English did not provide any information on a single Canadian customer. The applicant also notes that Mr. English provided sales figures are for a 10 year period, and most of the time covered by said decade is not included in the relevant period. Further, Mr. English stated that the overall volume of sales of the wares declined briefly after the respondent acquired the Maytag Corporation in 2006. Therefore, Mr. English’s statement that a portion of the sales occurred during the relevant period, absent any supporting information or material, should not have been given any weight.

[19]           The applicant argues that, considering the deficiency of Mr. English’s affidavit, it was unreasonable to find that the respondent had established use during the relevant period in the absence of invoices from the relevant period. In the applicant’s view, it was inappropriate for the Hearing Officer to rely on Lewis Thomson & Sons Ltd v Rogers, Bereskin & Parr (1988) 21 CPR (3d) 483,[1988] FCJ No 660 (FCTD) to confirm that invoices from the period are not required because in that case, the Court found that no invoices were required because the affidavit itself provided enough detail to establish use. Furthermore, it was unreasonable to infer use during the relevant period from invoices dated months after the relevant period and conclude that they establish a continuity of sales. The applicant argues that the evidence as a whole points to a “token sale” after the relevant period. The applicant insists that the Hearing Officer seems to have been impressed by the dollar value of one sale to one customer which occurred after the relevant period. In sum, in the applicant’s view, these invoices are of no assistance in assessing whether the Mark was used during the relevant period, and it was unreasonable to infer that they suggest a continuity of sales.

In Madam Justice Bédard’s opinion, she also thought that it was enough evidence of use, such that it was not unreasonable for the TMOB hearing officer to find that there was use during the material period.

Alternatively, she may have ignored Whirlpool’s lack of candor on the basis that Whirlpool didn’t intend to abandon the trademark. Madam Justice Bédard wrote:

[37]           With respect to the invoices, they certainly do not establish use during the relevant period. Nonetheless, I consider that in light of Mr. English’s assertion of sales during the relevant period, I find it was not unreasonable for the Hearing Officer to conclude that the sale of 108 washing machines and dryers which occurred 11 weeks after the end of the relevant period represented a continuity of use, and that the invoices could corroborate Mr. English’s assertions.

[38]           I find that the comments made by Justice Kelen in Jose Cuervo SA de CV v Bacardi & Co Ltd,2009 FC 1166 (CanLII) at para 55, [2009] FCJ No 1469, can be transposed to the situation that prevails in this case:

55        On a reasonableness standard, it might have been reasonably open for the Registrar to find that the instructions from the appellant’s related company, Tequila Cuevro [sic], not to use the trade-mark in Canada pending the trade-mark dispute with Cubatabaco, was a “special circumstance” which excuses the non-use. However, the Registrar did not come to that conclusion and came to the opposite conclusion which was reasonably open to the Registrar. As the reasonableness standard implies, the Court must be deferential to the Registrar’s decision if that decision was reasonably open to the Registrar. It does not matter what the Court’s decision would have been in the same circumstances. The Court is legally obliged to defer to the Registrar within the reasonableness spectrum.

It may be that Whirlpool was reluctant to admit to the TMOB that it had not actually used the trademark during the material period, based on Jose Cuervo SA’s experience before the TMOB.

However, litigants owe a duty of candor to the TMOB. On appeal from Madam Justice Bédard’s judgment, the FCA had to take a harder look at the evidence that Whirlpool presented to the TMOB.

The Federal court of appeal cancels Speed Queen trademark registration, after ruling that Whirlpool’s evidence of use was not enough.

Alliance Laundry Systems LLC v. Whirlpool Corporation LP, 2015 FCA 232

 

REASONS FOR JUDGMENT

(Delivered from the Bench at Montréal, Quebec, on October 28, 2015).

NADON J.A.

[1]               Before us is an appeal of a decision of Madam Justice Bédard of the Federal Court dated December 17, 2014 (amended on January 15, 2015)(2014 FC 1224) upholding a decision of the Registrar of Trade-marks (2013 TMOB 218) dated December 18, 2013 which confirmed the registration of the respondent’s trade-mark at issue in association with the respondent’s goods.

[2]               In my view, the appeal should be allowed. I am satisfied that the evidence of Mr. English, the Director/Manager of Whirlpool Corporation, does not, even on a generous view of its contents, meet the low threshold of evidence required to show use of the trade-mark at issue in association with the respondent’s goods.

[3]               To conclude that Mr. English’s evidence was sufficient to show use within the meaning of section 45 of the Trade-marks Act, R.S.C., 1985, c. T-13 is, in my respectful view, unreasonable.

[4]               Thus the Judge below ought to have intervened. Her failure to do so constitutes a palpable and overriding error which justifies intervention on our part.

[5]               I would therefore allow the appeal with costs, I would set aside the judgment of the Federal Court and rendering the judgment which ought to have been rendered, I would allow the appellant’s appeal from the decision of the Registrar and I would modify that decision by expunging Registration Number UCA15837 for the trade-mark SPEED QUEEN in association with the respondent’s goods. Finally, I would direct the Registrar to modify the register accordingly.

“M. Nadon”

J.A.

“I agree.

Johanne Trudel”

SCOTT J.A. (Dissenting Reasons)

[6]               Essentially for the reasons given by the Federal Court, I would dismiss the appeal with costs.

[7]               Considering that the case law is clearly to the effect that the burden of a registrant under section 45 of the Trade-Marks Act to prove use of its mark is not a heavy burden, I have not been persuaded that Madam Justice Bédard made a palpable and overriding error in her assessment of the evidence or that she erred in law in concluding that the decision of the Registrar of Trade-marks upholding the registration of the respondent’s trade-marks at issue “SPEED QUEEN” in association with laundry washing machines and laundry dryers was reasonable.

“André F. J. Scott”

J.A.

 

 

FEDERAL COURT OF APPEAL

Docket: A-24-15, 2015 FCA 232

David Michaels

David Michaels, J.D., B.Eng., CHRM is a legal blogger (and a trained attorney) who holds certificates in Canadian Trademark Law (2012) and Canadian Patent Law (1996) from McGill University. He has worked in the area of trademark law in Canada since 1995 and in the USA since 1993. David is a brand consultant, a writer, an eCommerce entrepreneur, and an aeronautical engineer. http://ca.linkedin.com/in/davidtmichaels/ Warning & Disclaimer: The pages, articles and comments on trademarkpro.ca do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the author's notes of the current state of trademark law and should not be attributed as opinions of the author, his employer, clients or the sponsors of trademarkpro.ca. The author does not warrant that these notes are up-to-date. Trademark law is constantly changing and it varies between jurisdictions and even within jurisdictions. This website should not be relied upon.

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