April 5, 2019
Below is a summary of the Federal Court's recent decision in Canada Bread Company v. Dr. Smood, 2019 FC 306.
Canada Bread Company (“Canada Bread”) appealed the decision of the Trade-marks Opposition Board (the “Board”), which rejected Canada Bread’s opposition to the registration of two trade-marks by the respondent, Dr. Smood ApS. One was a design mark and the other was a word mark: SMART FOOD FOR A GOOD MOOD. They were registered for food and beverage products, and the food service industry.
Canada Bread opposed these trade-marks on the grounds that it has owned and used the trade-mark SMART since 2006 in association with bakery products, such as bread, bagels, and buns. Canada Bread argued that confusion would ensue if the trade-mark applications were granted. The appeal only concerned the word mark, SMART FOOD FOR A GOOD MOOD.
The Board’s decision
The Board applied the test for confusion from Veuve Cliquot Ponsardin v. Boutiques Cliquot Ltee, 2006 SCC 23, which is “a matter of first impression in the mind of a casual consumer somewhat in a hurry” with “imperfect recollection”, and who does not “pause to give the matter any detailed consideration or scrutiny, nor to examine closely the similarities and differences between the marks”. The Board then proceeded to examine the surrounding circumstances to determine whether there would be confusion or not. Subsection 6(5) of the Trade-mark Act provides a non-exhaustive list of five factors to consider, which include: 1) the distinctiveness of the mark and the extent to which it has become known; 2) the length of time the mark has been used; 3) the nature of the goods, services, or business; 4) the nature of the trade; and 5) the degree of resemblance.
In its analysis, the Board started with the resemblance factor, which has been established to often have the greatest effect on the confusion analysis. The Board found the mark SMART FOOD FOR A GOOD MOOD to be more “different than alike” to SMART, as the phrase has a message of lifting one’s mood, which is different than the idea suggested by Canada Bread’s trade-mark.
The other four factors were found in favour of Canada Bread. The Board concluded SMART was distinct and had become known in Canada through promotion. Canada Bread had also been using the trade-mark for a long time and there was significant overlap between Canada Bread’s products and Dr. Smood ApS’s products.
The Board then considered the evidence from the respondent on the state of the register, which indicated that SMART was a common term in a search of active trade-marks registered in the food and beverage industry. The Board found that SMART’s commonality made it less worthy of protection.
Based on a consideration of these factors, the Board found the registration of SMART FOOD FOR A GOOD MOOD would not cause confusion with Canada Bread’s trade-mark.
A. The standard of review
The applicant submitted new evidence and argued for the application of the correctness standard.
The Federal Court explained that the correctness standard would only apply if the new evidence would have materially affected the Board’s decision. The Court referred to the Supreme Court of Canada’s decision in Mattel, Inc. v. 3894207 Canada Inc., 2006 SCC 22, which cautioned against using the opportunity to look at new evidence as an excuse to supplant a previous decision. The Court also stated that it is the quality, not the quantity of evidence that is determinative, as evidence that merely supplements or confirms earlier findings, or which pertains to facts before the material date, will not suffice for the application of the correctness standard.
The new evidence offered by the applicant included higher quality colour copies of some of the documentary evidence and evidence suggesting overlapping ideas between the two companies in the marketing of their products. The Court found this evidence would not have materially impacted the Board’s decision. Therefore, the appropriate standard of review was reasonableness.
B. Questions of law calling for a correctness standard
Canada Bread argued that the Board was wrong to conclude that the word “smart” connoted a “healthier choice” as it did so by referencing evidence from a previous trade-mark opposition decision also involving Canada Bread. Canada Bread argued that referencing the other case was an error in law, and that such errors require the appeal to apply a correctness standard.
The Court disagreed and responded by citing case law granting the Board discretion to use its own opinion and common sense in determining the likelihood of deception or confusion of trade-marks. The Court found that there was no indication that the Board based its decision on the evidence. Rather, it was merely stating that it reached the same conclusion as it did in another case that was also about Canada Bread’s trade-mark, SMART. With no error in law, the appropriate standard of review was reasonableness.
C. Reasonableness of the decision
Canada Bread argued that the use of the evidence on the state of the register for trade-marks was inappropriate.
The Court agreed that the evidence led by the respondent was problematic. The Court found it was unclear what inference could be drawn by looking at the register of trade-marks owned by third parties containing the term SMART without evidence of their use in the marketplace, including whether they are in use, were in use or the extent of their use. The number of registered trade-marks itself was not probative. The Court then found that it was not possible to predict what the Board’s decision would have been without this evidence, rendering the decision not intelligible on the reasonableness standard.
The Federal Court thus ultimately held that the matter of the alleged confusion between SMART and SMART FOOD FOR A GOOD MOOD should be returned to a differently constituted Board for a new determination.