March 17, 2016 By: Adam M. Tracey
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Not every possible name can be registered as a trademark in Canada. As a matter of public policy, it makes sense that we do not want to extend proprietary, commercial rights to descriptive words that should properly be available for the public’s general use.

By way of an illustrative example, one can imagine the chaos that would ensue in the marketplace and the legal world if the Canadian Trademarks Office was to grant a registration for the word “JUICY” to an orange grower. To prevent this from occurring, the Canadian Trade-marks Act prohibits the registration of both “clearly descriptive” and “deceptively misdescriptive” trademarks.

Specifically, a trademark is unregistrable if it is clearly descriptive or deceptively misdescriptive of:

a)      the character or quality of the goods or services with which it is associated

b)      the conditions of production of the goods or services

c)      the persons employed in the production of the goods or services, or

d)     the place of origin of the goods or services.

With respect to the question of place of origin of the goods or services, trademarks such as “Quebecois” and “Costa Rican”, which are both associated with maple syrup, would both likely be unregistrable, as the former clearly describes where the goods are from while the latter deceptively misdescribes where the goods are from.

Maple syrup is a relatively common product in Canada, so this assessment is at least somewhat intelligible for the average Canadian. The determination becomes much more difficult when the product or the place it comes from is not particularly well-known in Canada. An enthusiast (and therefore a likely consumer) would know information about an obscure product that the average consumer simply would not be aware of. By whose knowledge and perspective should we determine whether a trademark is clearly descriptive (or misdecriptive) of its origin?

The Federal Court of Appeal recently decided to provide some welcome guidance with respect to the proper test to apply in determining whether a trademark is clearly descriptive of the place of origin of the goods or services it is associated with.

In MC Imports Inc. v. AFOD Ltd., the court examined the validity of a trademark for “Lingayen”, which was registered in connection with food products (including a specific bagoong shrimp paste) used in Filipino cuisine.

The lower court had previously found that Lingayen is unarguably the name of a municipality in the Philippines and that, as the goods with which the LINGAYEN trade-mark were associated with originate in Lingayen, the trademark was invalid pursuant to s.12(b) of the Trade-marks Act, and should therefore be expunged from the Trademarks Register.

In upholding the Federal Court’s previous decision, the Court of Appeal drew some distinctions with the lower court’s reasoning.

Specifically, the appellant argued that the Court should follow the test set out in Conzorsio Del Prosciutto Di Parma v. Maple Leaf Meats Inc. (“Parma”), where consideration of whether the ordinary consumer perceives that the trade-mark in question would relate to the goods’ place of origin.

In contrast, the respondent argued that the appropriate jurisprudence to reply upon is Sociedad Agricola Santa Teresa Ltd. v. Vina Leyda Limitada (“Leyda”), which holds that the perspective of the ordinary consumer is irrelevant as “[paragraph] 12(1)(b), at least as far as "place of origin" is concerned, is not dependent on the knowledge, or lack thereof, of the average Canadian consumer”.

The Court of Appeal distinguished Parma as being a case directed to whether the trademark in question was deceptively misdescriptive, while Leyda focussed on the question of clear descriptiveness. Given that the question in front of the Court dealt with whether the trademark “Lingayen” was clearly descriptive of the place of origin of the appellant’s goods, Leyda was deemed the appropriate authority to rely upon. This decision indicated that perhaps the Parma test was, in the very least, only applicable in situations where the misdescriptiveness was under consideration – a question that will surely be examined in future jurisprudence.

Given that it was a relatively straightforward determination that the goods were from an actual place called Lingayen, the court found that the trademark was clearly descriptive and was therefore invalid, as it contravened s.12(1)(b) of the Trade-marks Act.

As a final note of interest, not only did the appellant lose its registered rights in the trademark “Lingayen”, but the parties were required to litigate the matter all the way to the Federal Court of Appeal, resulting in a very important yet nuanced distinction in Canadian trademark law – all because the respondent was initially sued for selling $3500 worth of allegedly infringing goods!

This perhaps serves as a cautionary tale to trademark owners that all business risks must be fully evaluated at the outset, as litigation can open a Pandora’s Box of potentially unfavourable results.

This content is not intended to provide legal advice or opinion as neither can be given without reference to specific events and situations. © 2017 Nelligan O’Brien Payne LLP.