October 9, 2018
The Federal Court of Canada recently released its decision in Tokai of Canada Ltd. v. The Kingsford Products Company, LLC. In the ruling, Justice Manson upheld the decision of Canada’s Registrar of Trademarks to deny Tokai’s application for trademark registration on the basis of opposition from the holder of a similar trademark. The case has the potential to offer guidance for future trademark applications and litigants on the questions of evidence and standard of review.
The dispute began in December 2013, when the multinational lighter manufacturer Tokai Global filed an application to register the trademark “King” for use in Canada in association with butane products. Sixteen months later, in March 2015, Kingsford Products Company filed a Statement of Opposition to the application. Kingsford is the owner of a number of Canadian registered trademarks on the phrases “Kingsford” and “Kingsford Charcoal Briquets” used in relation to various barbecue goods including charcoal, lighters, wood chips, smokers, and grills.
Kingsford’s Statement of Opposition included arguments on five discrete grounds of opposition, under the Trade-marks Act (“the Act”), each based in some way on Kingsford’s central allegation that the registration of Tokai’s KING trademark would be likely to cause confusion in the market.
After an oral hearing before the Trademarks Opposition Board in July 2017, the Registrar denied Tokai’s application. Tokai subsequently appealed the Registrar’s decision to the Federal Court under section 56 of the Act.
The Registrar denied Tokai’s “King” application solely on the basis of Kingsford’s argument under paragraph 12(1)(d) of the Act that “King” is “confusing with a registered trademark” (that is, “Kingsford”) and therefore ineligible for registration. Accordingly, only the paragraph 12(1)(d) argument was before the Federal Court on appeal.
On appeal from the Registrar’s decision, Manson J. of the Federal Court first addressed the question of standard of review. Generally, courts apply a deferential “reasonableness” standard of review when considering the Registrar’s decisions on appeal. However, if a party brings new evidence which would have materially affected the Registrar’s decision, courts will apply greater scrutiny to the decision using a “correctness” standard of review.
Kingsford, opposing the appeal, had filed fresh evidence as permitted by subsection 56(5) of the Act. The evidence showed, among other things, that Tokai had used the “King” mark in Canada since 2010 and had made revenue of approximately $500,000 from products bearing the mark. However, Manson J. decided that this additional evidence would not have made a difference to the Registrar’s decision. As a result, the court used a “reasonableness” standard in reviewing the Registrar’s decision.
Manson J. then turned to the core issue on appeal: the likelihood of confusion between the “King” and “Kingsford” marks under paragraph 12(1)(d) of the Act, which would determine whether Tokai was eligible to register its mark.
Under the definition contained in the Act, trademark use causes “confusion” if the use of both marks in the same market area would be likely to lead to the assumption that the goods are manufactured or sold by the same person or company, regardless of whether the goods are of the same class (i.e. barbecue products).
In a previous case, Masterpiece Inc. v. Alavida Lifestyles Inc., the Supreme Court of Canada established that courts should approach this inquiry from the perspective of a “casual consumer somewhat in a hurry who sees the [mark] . . . and does not pause to give the matter any detailed consideration.”
Further, the Act sets out a non-exhaustive list of five factors for deciding whether two trademarks are confusing, including the inherent distinctiveness of the trademarks, the nature of the goods and the trade, and the degree of resemblance of the trade-marks and the ideas each communicates. The application of these factors was the primary issue on appeal:
On distinctiveness, Tokai argued that the word “King” is an inherently weak trademark because it is a common dictionary word, and pointed out that Kingsford failed to introduce any evidence that it had built an enhanced reputation based on the extension of the word to “Kingsford.” However, the court found that both “King” and “Kingsford” possess some inherent distinctiveness, as they are both arbitrary and do not actually describe or suggest the goods associated with the marks. Manson J. held that the Registrar was reasonable in deciding that this factor did not weigh in either party’s favour.
On the nature of the goods and the trade, Tokai argued that it was unlikely that a consumer seeking to purchase butane would think that “King” products were associated with Kingsford’s barbecue products. Contrary to this, Manson J. found that Tokai had in fact used the “King” trademark in relation to barbecue lighters, including at retail stores selling barbecue products, and therefore that this factor weighed towards a finding of confusion.
On degree of resemblance, Tokai argued that, even though the “King” trademark was identical to the first and dominant portion of the “Kingsford” mark, a comparatively small difference such as the addition of another syllable was sufficient to distinguish the two marks because “King” was a common word. Manson J. rejected this argument, holding that the significance of the word “King” appearing in both marks weighed towards a finding of confusion, and in particular because “King” is not a word usually associated with barbecues or lighters. In deciding this point, Manson J. accepted the principle that courts should not dissect trademarks into component parts when comparing them to assess resemblance.
In light of the five statutory factors for assessing the likelihood of confusion, the court decided that the Registrar was reasonable in deciding that “King” was likely to be confused with “Kingsford,” and dismissed Tokai’s appeal.
Implications for Canadian trademark litigants
The Federal Court’s decision in this matter provides a cautionary example to future trademark applicants and litigants. The parties in this case were either unable or unwilling to bring sufficient evidence for the court to make an informed decision on a number of points. For example, the court did not definitively rule on the question of how long each party had been using its respective trademark – potentially a helpful consideration in determining the likelihood of confusion under the Act – because neither party filed any evidence on their actual uses of the trademarks with products on the market.
Further, this case re-affirms that parties seeking the stricter “correctness” standard of review on appeal from a decision of the Registrar must meet the additional burden of demonstrating that their fresh evidence would actually have made a material difference in the Registrar’s decision. It is not sufficient to simply adduce new evidence and claim that the Registrar’s decision should be scrutinized more closely on that basis.
As a result of the Federal Court’s ruling, the decision of the Registrar to deny trademark protection to Tokai’s “King” mark remains untouched. Tokai has a right of appeal to the Federal Court of Appeal.
Parties seeking trademark protection or contemplating trademark litigation should continue to monitor this case. For more information, please contact Amalia Berg or Richard Naiberg of the Goodmans IP Team.
Author: Wes Dutcher-Walls