Publications
June 2018
PFD | Intellectual property

Trademark: Marking it on a product does not demonstrate use

By Josée Tourangeau Lawyer

In the recent decision in Riches, McKenzie & Herbert LLP v. Cosmetic Warriors Limited1, the Federal Court expunged the LUSH registration for t-shirts despite the fact that the owner of the trademark was able to provide evidence of sales of LUSH-branded apparel.

For this decision, it is important to refer to the first paragraph of section 4 of the Trade-marks Act (the "Act"), which stipulates: "A trade-mark is deemed to be used in association with goods if, at the time of the transfer of the property in or possession of the goods, in the normal course of trade, it is marked on the goods themselves or on the packages in which they are distributed or it is in any other manner so associated with the goods that notice of the association is then given to the person to whom the property or possession is transferred." In addition, section 4, paragraph 3 presumes the use of the trademark when goods are exported from Canada.

Background

The defendant, which is chiefly active in the cosmetics industry, had to demonstrate the use of its LUSH trademark in association with t-shirts in a cancellation proceeding for non-use of the trademark.

The defendant provided evidence that it used its trademark in North America through Lush Canada. Indeed, the defendant operates over 200 retail outlets across North America, including 46 in Canada. The evidence was primarily based on the sale of t-shirts with the LUSH brand to the licensed user's employees. The t-shirts were part of the employees' uniforms.

Employees could purchase the apparel for themselves or for friends and family members as gifts. The defendant alleged $1 200 in sales in Canada and $2 900 in the United States. Employees purchased the items at cost price. The evidence also revealed that the t-shirts were sold to support environmental campaigns.

Federal Court decision

The Federal Court overturned the decision by the Registrar, which had deemed the evidence sufficient to maintain the trademark. The Court affirmed that selling the t-shirts at cost to the defendant's employees solely for promotional purposes, without seeking any profit, and in the context in which the defendant is not a clothing company, did not constitute evidence of use of the trademark in the normal course of trade.

The Court also concluded that the sale of t-shirts in the United States did not meet the requirements of section 4(3) of the Act. While the provision does not require sales in the course of trade, a party that does not meet the requirements of section 4(1) of the Act cannot avoid the requirements of the Act by simply shipping a product to another country. Section 4(3) of the Act aims to protect Canadian businesses that only sell abroad.

The defendant's LUSH registration for clothing was thus expunged from the register.

As a final point, it is best to avoid drawing firm conclusions when determining whether a trademark is actually used in association with products.

 

[1] 2018 CF 63