Anita Gogia is an IPilogue Writer and a 2L JD Candidate at Osgoode Hall Law School.

On November 2, 2022, in the case of (“Bhagwani”), the Ontario Superior Court of Justice upheld trademark principles which state that an enforceable right does not exist on the mere filing of a trademark application absent use of the mark.

In Bhagwani, the divisional court an injunction prohibiting Bhagwani from using “Bombay Frankie” in any restaurant they operate. The motion judge had to 2788610 Ontario Inc. because it was the first to file a trademark application for “Bombay Frankies” despite not having yet used the mark. The divisional court reversed this decision and held that an applicant cannot sue for trademark infringement until the . If they are to sue for passing off when registration is pending, they cannot do so successfully unless the mark has developed goodwill.

2788610 Ontario Inc. applied to register the mark in October 2020 but that application had yet to be examined, approved, or advertised. It was in the process of developing a franchise system of restaurants but had not opened or advertised any restaurant or obtained any reputation associated with the mark. In contrast, Bhagwani had on various menu items and to register “Bombay Frankie” in 2021. They also opened two restaurants with the “Bombay Frankie” name.

In granting the injunction, the motion judge applied the :

• First, a serious issue to be tried is present. The issue is whether 2788610 Ontario Inc.’s entitlement to the trademark manifests on the application date or registration date. The judge accepted that this is a novel claim and to establish a “serious issue to be tried”.
• Second, the judge held that 2788610 Ontario Inc. would suffer irreparable harm that is not compensable without the injunction. The judge concluded that Bhagwani would have a significant advantage if they continued operation with the marks in issue on their restaurants.
• Third, the balance of convenience favoured the granting of an injunction.

The divisional court reviewed the motion judge's decision on a standard of correctness because it is an error in principle attributable to the application of an . The divisional court applied the test in accordance with established trademark principles:

• First, in finding a serious issue to be tried, the motion judge incorrectly concluded that 2788610 Ontario Inc. had a right to the marks by virtue of the trademark application or that its trademark would be registered (both errors of law). Per , a trademark must be registered to give rise to a cause of action. There is no certainty that 2788610 Ontario Inc.’s application will be granted. In considering a possibility of a passing off claim, the court upheld that to establish passing-off per , 2788610 Ontario Inc. must have shown existing goodwill. While 2788610 Ontario Inc. was engaged in start-up activities, those per the jurisprudence. In this analysis, the court notably recognized that goodwill could exist from the perspective of potential franchisees (but was not established on the facts of this case).
• Second, the court held that the motion judge made a by ruling that 2788610 Ontario Inc. would suffer irreparable harm without an injunction because the loss of goodwill , only established by clear evidence. The cause of action protects existing, not potential goodwill. The court cited , noting that confusion does not per se result in “irreparable harm not compensable in damages.” Irreparable harm is a high bar.
• Third, although the divisional court did not consider the balance of convenience, the court did note that such consideration may favour Bhagwani, who had to remove signs, website content, and social media accounts bearing the “Bombay Frankie” name.

The post The “Bombay Frankie” Confirms That First Mover’s Advantage Remains Without Enforceable Trademark Rights appeared first on IPOsgoode.

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Tianchu Gao is an IPilogue Writer and a 1L JD Candidate at Osgoode Hall Law School.

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If you see an alternative for your favoured product—with similar quality and even cheaper prices—in a grocery store, would you consider trying it?

is an effective marketing technique, in which a company’s product or service is compared to its competitor’s. Consumers are more willing to try out new things if they are assured that the new product is comparable or superior to those made by well-known brands. Companies sometimes enhance their credibility by including that supports the comparisons in their ads. This provides consumers with more information and allows small businesses to compete with mega corporations.

Despite these advantages, comparative advertising is a dangerous field to navigate from a legal perspective. Companies that include other companies’ trademarks or products in their own advertisements are subject to from the Trademarks Act, Copyright Act, Competition Act, tort law, and the Canadian Code of Advertising Standards.

In 2019, Quebec wine producer Société de Vin Internationale Ltée (“SVI”) faced a copyright and trademark infringement claim raised by its competitor, Constellation Brands U.S. Operations (“Constellation”). In the leaflet SVI designed to promote its new product ‘Apollo Découvertes’, images of wine bottles manufactured by Constellation, as well as its registered “MEIOMI” trademark, stand alongside images of SVI’S wines. Beside the images are statements that claim the SVI wines are comparable to those from Constellation in terms of taste. Constellation brought an action against SVI based on copyright and trademark infringements and wanted to recover lost profits as calculated from SVI’S Apollo Découvertes wine sales.

One of the provisions that governs the use of third-party trademarks from Trademark Act is section 22: “[n]o person shall use a trademark registered by another person in a manner that is likely to have the effect of depreciating the value of the goodwill attaching thereto.” The term “” encompasses all the intangible assets of a business. In the context of trademarks, it refers to the recognition and trust that consumers have with a particular brand.

This section, upon first look, may appear to be a catch-all prohibition of any use of competitor’s registered trademarks in a comparative ad. Yet, judicial interpretation of this section has effectively limited its applicability. Referencing the American Trademark Act (Lanham Act), the Supreme Court of Canada confined the use of section 22 to cases “in which the protectable interest is clear and the threat of interference is substantial” (, 2006 SCC 23). A review of the case law reveals that courts rarely prohibit the use of marks for goods or wares in comparative ads. In contrast, section 22 is more applicable to trademarks for . Therefore, it is unsurprising that both the trial and the courts denied Constellation’s claim for trademark and copyright infringements.

The result of the case indicates that the protection and benefits granted by the Trademark Act are not without limits. The use of a competitor’s trademark, “for the purpose of comparing the goods with the goods of the plaintiff [para 26],” does not necessarily amount to a trademark infringement.

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Canada was the to legalize recreational cannabis. The came into force on October 17, 2018. Its stated purpose is to the health of young persons by restricting their access to cannabis, to protect young persons and others from inducements to use cannabis, and to deter illicit activities concerning cannabis by providing a legal supply of cannabis. While Canada’s since recreational pot was legalized, that the regulations governing the promotion of cannabis do not allow sufficient flexibility for companies to develop their brands in this emerging market due the strict provisions governing the promotion of cannabis.

The prohibitions in can potentially apply to any person or organization engaging in relevant activities, such as the promotion of cannabis, cannabis accessories and services related to cannabis. dictates that it is prohibited to promote cannabis or cannabis accessory or any service related to cannabis by communicating information about cannabis price or distribution; by doing so in a manner that there are reasonable grounds to believe could be appealing to young persons; by means of a testimonial or endorsement; by means of the depiction of a person, character or animal, whether real or fictional; or by presenting it or any of its brand elements in a manner that associates it or the brand element with, or evokes a positive or negative emotion about or image of, a way of life such as one that includes glamour, recreation, excitement, vitality, risk or daring.

The states it “prohibits any promotion, packaging and labelling of cannabis that could be appealing to young persons or encourage its consumption while allowing consumers to have access to information with which they can make informed decisions about the consumption of cannabis.” found that almost one-quarter of those surveyed did not know the cannabis brands they regularly use, demonstrating a lack of brand preference and, subsequently, a lack of awareness of the goodwill cannabis companies have built-in their brands.

Moreover, the may have some intellectual property implications since they may limit the registration of trademarks associated with brands. The companies have their cannabis products and accessories because of the restrictions on “appeal to youth” and “way of life.” For instance, some of the not being able to display animals or characters on the packages or using fluorescent fonts. Moreover, there can be permitted on the display panel. This leads to companies creating products and packages using marks that are , through colours, fonts, texture, scent, sound, and strain names, since they are not allowed to use creative names, slogans, or logos.

The Trademarks Act sets out in sections 2, 12(1)(c) and 12(1)(d) that a trademark is not registrable if it is clearly descriptive or generic. Distinctiveness impacts not only the registrability of a mark but also its once registered. Moreover, the amendments that came into force on June 17, 2019, , which may help with the . However, even if the company obtains the registered trademark, the marks can still be challenged if the owner does not use the mark as per . The strict regulatory framework relating to promotion, packaging and labelling might prevent the companies to “use” their trademarks on cannabis products. Cannabis companies will have to get really creative to come up with non-descriptive yet distinguishing trademarks which they can display on their cannabis products without violating the promotion regulations.

Legal cannabis is still a very novel market and industry, and the partnership between the government authorities and cannabis companies is crucial to the growth of the licit cannabis market, in doing so, eliminating the black market. Therefore, Health Canada should give clear guidance on what they deem to be appealing to minors for cannabis companies to come up with compliant trademarks and promoting their products. In the future, it will be very interesting to see how Canada is setting precedents as the .

Written by Elif Babaoglu, IPilogue Editor. Elif is also the Co-Director of Events of the Osgoode Privacy Law Society.

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The Trade-marks Act provides protection of trade-mark rights on a statutory level. Of particular interest in this Wal-Mart case is the notion of depreciation of good will. Section 22 of the Trade-marks Act provides that no person shall use a trade-mark registered by another person in a manner likely to have the effect of depreciating the value of the goodwill attached. According to Scott Jolliffe & Kelly Gill in Fox on Canadian Law of Trade-Marks and Unfair Competition, to depreciate the value of the goodwill means to reduce in some way the advantage of the reputation that may have been built up by years of honest work or gained by lavish expenditures of money, to which the association of the trade-mark with the goods or services largely contributed. For example, Louis Vuitton has been a designer and retailer of high-end luxury hand bags and fashion for more than a century. If the Louis Vuitton trade-mark was used in an unauthorized manner in conjunction with cheap t-shirts, then the goodwill of the Louis Vuitton brand is at risk of being depreciated.

It seems as though what Wal-Mart really is getting at is that the UFCW's use of the WALMART or WAL-MART trade-name is depreciating their brand's good will to some extent. It seems that what Wal-Mart is concerned with is that these negative comments by the UFCW on their website tarnishes their image. But here is the golden question: Does the Wal-Mart brand come with any good will to begin with? If the answer is yes, then perhaps such negative comments will indeed depreciate the good will of Wal-Mart's brand. If the answer is no, then Wal-Mart's much sought after injunction would - at least in this respect - be groundless. Good will cannot be depreciated where there is none. This brings me back in full circle to the beginning of my article. How do I - as a consumer - perceive Wal-Mart? Do I see them as a big and bad discount department store? And if so, then would it be reasonable to say that the negative comments on the website are just extensions of such an image and that no good will was depreciated because there was none in the first place? Or perhaps do I see Wal-Mart as the ultimate provider of affordable goods; the king of all department stores; a business concept so perfect and profitable that it is nearly recession proof? I'm not sure how I see Wal-Mart. How do you see Wal-Mart? What do you think?

Even if you or I had an answer, whether or not the UFCW's use of Wal-Mart's trade-names constitutes depreciation of good will is still precariously unclear. If Wal-Mart was seen by consumers��as a provider of affordable goods, does��this increase the amount of good will associated with the Wal-Mart��brand?��If Wal-Mart is seen by consumers as a big, bad discount department store, does this decrease the amount of good will associated with the��Wal-Mart brand?

All this is to say, that when it comes to trade-mark infringement and depreciation of good will in this case, there are no easy answers.

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