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Lessons for brands: Delayed enforcement may mean denial of rights

Author(s): May Cheng

Mar 15, 2019

Recently the Federal Court of Appeal upheld yet another ruling that runs against a foreign brand owner in Sadhu Singh Hamdard Trust v. Navsun Holdings Ltd. 2019 FCA 10.

The facts of the case are in many ways more unsettling than prior cases involving knock-offs of famous brands, because the business of the parties is identical.

The plaintiff, Sadhu Singh Hamdard Trust (Trust), owns a famous daily Punjabi language newspaper in India called AJIT, which has been distributed in Canada since 1968. However, its subscribers in Canada peaked in the early 1990s with no more than 29 annual subscribers. Also in the early ’90s, the defendant, Navsun Holdings Ltd. (Navsun), started to distribute a weekly Punjabi language newspaper in Vancouver and Toronto that is also called AJIT. Navsun’s weekly version of AJIT developed a much stronger following, with up to 13,000 issues in circulation as of 2010, and between 14,000 to 38,000 visitors to its website monthly.

The year 2010 is the year that the Trust decided to file a trademark application to register AJIT for its daily newspaper, despite having been in use in Canada since 1968. The application was opposed by Navsun on the basis that the mark was not distinctive of the Trust, because of Navsun’s publication of the same name in Canada. This argument prevailed before the Opposition Board despite the fact that it was acknowledged that Punjabi readers in Canada likely associated the name AJIT with the major news publication in India.

The problem for the Trust is that Navsun had developed so much greater a readership in Canada that the Opposition Board held that this had negated the distinctiveness of the Trust’s AJIT mark. In other words, AJIT was now better known as Navsun’s publication in Canada.

The Trust pursued an appeal to the Federal Court of the Opposition Board ruling, but the case was not overturned despite the fact that the Trust filed 21 new affidavits. Most of this new evidence was directed at showing that AJITwas famous in India, and that Punjabi immigrants to Canada would likely initially identify the Trust as the source of the AJIT weekly publication of Navsun. In the appeal to the Federal Court, at 2018 FC 42, Justice Richard Southcott agreed with Navsun that the extensive use of AJIT with a weekly Punjabi newspaper by Navsun, even if it could be considered an infringing use of the Trust’s mark, did not change the fact that the AJIT mark lacked distinctiveness as the Trust’s mark because of Navsun’s more extensive use. Importantly, the court held that use of the mark AJIT in India had no relevance to the determination of distinctiveness in Canada.

On a further reconsideration before the Federal Court of Appeal, the panel of three judges rejected the various grounds of appeal since many of the findings of the courts below were based on facts.

The Court of Appeal then articulated anew some of the principles that the decision now supports, including: “Whether or not the appellant was the first to use the mark in Canada and whether or not the respondent’s subsequent use was infringing are of no consequence where, as here, the parties have used the mark concurrently for over a decade, and, in that time, the respondent has successfully acquired notoriety in the mark in Canada sufficient to negate the distinctiveness of the appellant’s mark. … The allegation of passing-off does not preclude a party from relying on the alleged infringing use to challenge distinctiveness.”

The Federal Court of Appeal also had strong words of advice for brand owners: “It is incumbent upon a trader to protect the distinctiveness of its mark, even in the face of infringing use”.

This warning was accompanied with a reference to the Supreme Court of Canada decision in Mattel Inc. v. 3894207 Canada Inc. 2006 SCC 22, which had denied the makers of the BARBIE doll the ability to shut down a Montreal restaurant called BARBIE’S, which the defendant claimed was a reference to “barbecue” rather than the famous doll.

This Supreme Court of Canada decision was also released on the same day as Veuve Clicquot Ponsardin v. Boutiques Cliquot Ltée 2006 SCC 23, which saw the famous champagne house denied the right to damages against a low-end clothing store for depreciating the goodwill of its famous drink, on the basis that the goods were as different as “chalk and cheese”.

There were other cases cited by the Trust to support the proposition that infringing use could not be relied upon to attack distinctiveness, including the decision in Miranda Aluminium Inc. v. Miranda Windows & Doors Inc. 2010 FCA 104, wherein a father tried to prevent his son from monopolizing the surname Miranda in association with the running of a competing business, based on his prior adoption and use. In that case, however, the use of the Miranda mark had been twice abandoned by the father, and it was held that the father’s later adoption of the mark was designed to confuse customers of his son’s business.

The difference with this case, according to the Federal Court, was that the use of Miranda by the father was not done to represent a distinct company but rather trade on the goodwill of his son’s established business.

The result in the AJIT dispute is instructive for foreign trademark owners, because it demonstrates that the Trust’s failure to protect its mark by not seeking registration and enforcement prior to 2010 led to the loss of distinctiveness of its brand in Canada, including its inability to prevail in a passing-off action as well, although that case has raged on following a reversal on appeal: see Sadhu Singh Hamdard Trust v. Navsun Holdings Ltd. 2016 FCA 69.

The courts also rejected the Trust’s assertion that there is a legal principle barring a party from relying on its own confusing use of a trademark to challenge another’s rights in the mark. The courts at each level essentially dismissed this argument since the question is not whether the mark is distinctive of the alleged infringer, but whether the infringing use has effectively destroyed the distinctiveness of the original mark owner. Famous brand owners, take note.

This article was originally published by The Lawyer’s Daily (www.thelawyersdaily.ca), part of LexisNexis Canada Inc.

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