Supreme Court of Canada renders landmark decisions on the famous BARBIE and VEUVE CLICQUOT trade-marks

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1 Supreme Court of Canada renders landmark decisions on the famous BARBIE and VEUVE CLICQUOT trade-marks By Mark MacNeil In the much-anticipated appeals to the Supreme Court of Canada concerning famous trade-marks, the Supreme Court unanimously dismissed the appeals in Mattel, Inc. v Canada Inc. 1 and Veuve Clicquot Ponsardin v. Boutiques Cliquot Ltée 2. In the Mattel decision, Mattel unsuccessfully argued that its BARBIE trade-mark for dolls is famous enough that consumers would likely make the mistaken inference that the small Montreal-based BARBIE s restaurant chain has something to do with the doll people 3. Mattel s appeal was dismissed and the registration of the BARBIE'S & DESIGN trade-mark in association with restaurant services was allowed. The Supreme Court concluded that the BARBIE trade-mark is not so well known as to transcend beyond the doll market. The Supreme Court used the distinctive red and white VIRGIN trade-mark as an example of a trade-mark that has transcended its product and service line, from records to airlines to insurance to superstores. Similarly, in the Veuve Clicquot decision, the appellant argued that the famous VEUVE CLICQUOT trade-mark transcended the champagne industry. Consequently, the appellant argued that the respondents CLIQUOT trade-mark registered in association with retail stores specializing in mid-priced women s clothing was infringing the famous VEUVE CLICQUOT trade-mark, and depreciating the goodwill attached to it. The Supreme Court found that there was no likelihood of confusion between the two trade-marks, and that the famousness of the VEUVE CLICQUOT trade-mark is just one of the surrounding circumstances in determining whether a likelihood of confusion exists or not. Mattel, Inc. v Canada Inc. In the Mattel decision, the Supreme Court of Canada dismissed Mattel s appeal to prevent the registration of BARBIE'S & DESIGN trade-mark in association with restaurant services. Mattel had argued unsuccessfully before the Trade-marks Opposition Board, the Federal Court and the Federal Court of Appeal that its BARBIE trade-mark is famous in Canada and worldwide, instantly evoking the image of the brand in the minds of Canadian consumers. Mattel argued that the BARBIE trade-mark can no longer be used in Canada on most consumer wares and services without the average consumer being led to infer the existence of a business connection with Mattel. The Supreme Court agreed with the Opposition Board decision, as confirmed by other 1 [2006] SCC 22 2 [2006] SCC 23 3 As described by Justice Binnie.

2 appellate courts, that although some trade-marks may have the effect of transcending product and service lines, Mattel s BARBIE s fame is limited to the sale of dolls and doll accessories, at this stage, its fame is not enough to bootstrap a broad zone of exclusivity covering most consumer wares and services 4. A Question of Confusion In determining whether there is a likelihood of confusion between the two trade-marks, the Supreme Court analyzed all of the surrounding circumstances, including the inherent distinctiveness of the trade-marks, the length of time the trade-marks were used, the nature of the wares, services or businesses, the nature of the trade, and the degree of resemblance between the two trade-marks. The Supreme Court stated that the fame of the BARBIE brand is a surrounding circumstance of importance, but is not a marketing trump card such that the other factors are thereby obliterated 5. Moreover, in some cases, some circumstances will carry greater weight than others, including the famous nature of Mattel s trade-mark. The Supreme Court found that there was no likelihood of confusion because of the great differences between the products and services of the two parties and the fact that the doll business and the restaurant business in this case appeal to a very different clientele. A Question of Evidence Mattel was unable to convince the Supreme Court since it failed to produce sufficient evidence to support its arguments. First, at the Opposition stage, although it is not legally required to do so, Mattel did not produce any evidence of instances of actual confusion between the two trade-marks, even though the marks had been co-existing in the marketplace for some time. When Mattel attempted to introduce survey evidence on appeal to the Federal Court, the Court found that Mattel s survey evidence had some blatant and determinative shortcomings that undermined its relevance considerably. The crux of the survey evidence was the following question: Do you believe that the company that makes Barbie dolls might have anything to do with this sign or logo? The Federal Court concluded that the survey evidence only served to show that the BARBIE trade-mark is famous, but could not be used to establish the existence of a likelihood of confusion. The Federal Court of Appeal weighed in as well stating that the survey evidence at best might establish a possibility of confusion, which is short of the threshold of a reasonable likelihood of confusion 6. One of the issues with the Supreme Court decision is that it loosely throws around the term famous, as if it had no meaning or consequence. The Supreme Court stated that 4 Mattel, Inc. v Canada Inc., [2006] SCC 22, at para Ibid, at para (2005), 329 N.R. 259, 2005 FCA 13, at para. 2.

3 the relevant point about famous marks is that fame is capable of carrying the mark across product lines where lesser marks would be circumscribed to their traditional wares or services 7. In Mattel s defense, if the lower courts actually considered that the BARBIE trade-mark is a famous mark, then perhaps because it is famous, it transcends dolls and doll accessories. If a trade-mark does not have the power to transcend its current association with particular wares and services, then it is simply well-known in its field of business, and not famous in the legal sense of the word. Furthermore, if famous marks are capable of carrying the trade-mark across product lines, then wouldn t Mattel s survey evidence on the fame of the BARBIE trade-mark be relevant to establish that BARBIE transcends product lines as well? The Supreme Court was never faced with this issue since Mattel failed to apply to the Supreme Court to adduce the survey testimony as fresh evidence. A Question of Evidence Again In opposition proceedings, the onus remains with the applicant of the applied-for trademark to establish the there is no likelihood that its trade-mark is confusing with other registered trade-marks. However, the courts may very well consider an absence of any actual confusion as a surrounding circumstance as to whether there is a likelihood of confusion or not. Therefore, it is always best, if possible, to prove that there is actual confusion in the marketplace. The Supreme Court took note that Mattel failed to produce this type of evidence, and an adverse inference was drawn from the lack of such evidence. The Pink Panther Mystery is Resolved! This case is also significant since it overruled a previous Federal Court of Appeal decision, which allegedly misinterpreted the definition of confusion set out in section 6 of the Trade-marks Act. 8 In Pink Panther, the Federal Court of Appeal limited the scope of protection available to a famous mark to cases where there is a connection or similarity between the wares or services associated with the famous mark and the wares or services of the newcomer. Mattel argued that, in the case of a famous mark like BARBIE, the words in s. 6(2) whether or not the wares or services are of the same general class takes on added significance, and the Pink Panther decision laid undue weight on the similarity or differences of the wares and services. Mattel used the VIRGIN trade-marks as an example of how famous brands diversify and transcend product lines, from records to airlines to insurance to superstores. 7 Supra note 4, at para Pink Panther Beauty Corp. v. United Artists Corp., [1998] 3 F.C. 534

4 The Supreme Court overruled the Federal Court of Appeal in Pink Panther; I believe Linden J.A. misspoke to the extent he suggested that, for confusion to occur, there must be some resemblance or linkage to the wares in question, i.e. to the wares for which registration of a trade-mark is sought. Resemblance is clearly not a requirement under s. 6. On the contrary, the point of the legislative addition of the words whether or not the wares or services are of the same general class conveyed Parliament s intent that not only need there be no resemblance to the specific wares or services, but the wares or services marketed by the opponent under its mark and the wares or services marketed by the applicant under its applied-for mark need not even be of the same general class. 9 While BARBIE ain t no VIRGIN, the Supreme Court opened the door for other famous trade-marks to assert that their trade-marks instantly evoke a brand image, and thus transcend product lines and services. Veuve Clicquot Ponsardin v. Boutiques Cliquot Ltee The Supreme Court also released the companion decision Veuve Clicquot Ponsardin v. Boutiques Cliquot Ltee, dismissing Veuve Clicquot s trade-mark infringement action and depreciation of goodwill claim. Veuve Clicquot argued that that the famous VEUVE CLICQUOT trade-mark transcended the champagne industry, and as such, the respondents CLIQUOT trade-mark in association with mid-priced women s clothing was infringing the famous VEUVE CLICQUOT trade-mark. The Supreme Court reiterated its analysis in the BARBIE case, stating that fame is but only one factor which must be considered in the confusion analysis. It concluded that the famousness of the VEUVE CLICQUOT trade-mark is just one of the surrounding circumstances in determining whether a likelihood of confusion exists, and found that no confusion exists between the two marks. Finally, the Supreme Court held that there was no evidence that there had been a depreciation of the goodwill associated with the VEUVE CLICQUOT trade-mark. Unlike the BARBIE case, Justice Binnie appeared to have a greater appreciation of the famous nature of the VEUVE CLICQUOT trade-mark: within its wide circle of admirers, VEUVE CLICQUOT is undoubtedly famous and its trade-mark deserves wide protection not only from free-riders but from those who, without any intention of free-riding, nevertheless use in their own business distinguishing marks which create confusion or depreciate the value of the good will attaching to those of the Appellant Ibid, at para Veuve Clicquot Ponsardin v. Boutiques Cliquot Ltée. [2006] SCC 23, at para. 2.

5 In fact, the Supreme Court then goes on to state that the evidence is clear that VEUVE CLIQUOT carries an aura of luxury which may extend outside the wine and champagne business. However, once again, the Supreme Court focused on the differences between the wares, and the fact that the evidence did not support the argument that the aura surrounding the VEUVE CLICQUOT trade-mark extended to mid-priced women s clothing. The Supreme Court went so far as to say that luxury champagne and midpriced women s wear are as different as chalk and cheese 11. A Question of Evidence Yet Again As in the Mattel decision, courts will always consider an absence of any instances of actual confusion as a surrounding circumstance as to whether there is a likelihood of confusion or not. The Supreme Court underlined that Veuve Clicquot did not present any evidence of actual confusion. While it is unnecessary to lead evidence of actual confusion, without it, proof of a likelihood of confusion and depreciation of goodwill is left to the expert witnesses. To its demise, Veuve Clicquot failed to produce any expert evidence that sufficiently suggested a likelihood of confusion between the two trade-marks. Similar to the Mattel decision, Veuve Clicquot s expert evidence demonstrated that the VEUVE CLICQUOT trade-mark only lends itself to an expansion beyond the champagne industry, and at best, only speculated on the possibility of confusion. Depreciation of Goodwill The Supreme Court also dismissed Veuve Clicquot's argument that, contrary to section 22 of the Trade-marks Act, the respondent s use of its trade-mark had depreciated the goodwill attached to the VEUVE CLICQUOT trade-mark. Under section 22 of the Act, there is no requirement to prove that the use of both trademarks would lead to confusion. Veuve Clicquot needed only to demonstrate that the respondent s use of a sufficiently similar trade-mark to the VEUVE CLICQUOT trademark evokes a mental association between the two marks in a relevant universe of consumers, which is likely to depreciate the value of the goodwill attached to the VEUVE CLICQUOT trade-mark. Under section 22 of the Act, Veuve Clicquot had the burden to establish that (1) the VEUVE CLICQUOT trade-mark or a confusing mark was used by the defendant in connection with wares or services; that VEUVE CLICQUOT (2) is sufficiently well known to have significant goodwill attached to it; (3) that VEUVE CLICQUOT was used by the defendant in a manner that is likely to have an effect on that goodwill attached to the VEUVE CLICQUOT trade-mark; and (4) that the likely effect would be to depreciate the value of its goodwill. On the first part of the test, the Supreme Court agreed with the trial judge when she concluded that 11 Ibid, at para. 31

6 although the use of a misspelled Cliquot would be sufficient for a casual observer to associate CLIQUOT with VEUVE CLICQUOT, a consumer who saw the word Cliquot used in the respondents stores would not make any link or connection to the VEUVE CLIQUOT trade-mark. Although the appellant was able to establish that considerable goodwill is attached to the VEUVE CLICQUOT trade-mark, which extends beyond wine and champagne, it did not provide any evidence that a consumer who saw the word Cliquot used in the respondents retail stores would make a mental link or connection to the champagne maker. If the somewhat-hurried consumer does not associate what is displayed in the respondents retail stores with the mark of the famous champagne maker, then there is no depreciation of goodwill attached to the VEUVE CLICQUOT trade-mark. It is not enough to simply establish that a trade-mark is famous, one must establish the boundaries of such fame. The Supreme Court used the example of the famous BUCKLEY S trade-mark to demonstrate that some famous marks, due to the nature of the products associated with the famous marks, do not extend well to certain expanded product lines and services. In the case of the BUCKLEY s trade-mark, its brand image is famous for horribly tasting cough syrup, but no trader would want to make such an association with restaurant services. Similarly, the aura of luxury associated with the VEUVE CLICQUOT trade-marks may extend to other luxury products, but no consumer would make the mental association between VEUVE CLICQUOT and mid-priced women s clothing. Future of Famous Marks The Supreme Court of Canada has left the door open for other owners of famous trademarks to assert the famous nature of their trade-marks. In a trade-mark infringement action, the plaintiff must prove a likelihood of confusion. Although the famous nature of the trade-mark is a surrounding circumstance of importance 12, proving famousness alone is at best proving a possibility of confusion, and not evidence of a likelihood of confusion. Moreover, a court will always consider all of the surrounding circumstances, including the differences between the wares and services associated with the trademarks in question, given the role and function of trade-marks, it will generally be an important consideration. 13 When protecting a famous trade-mark, it should be evident to all concerned that the mark is famous. Although evidence is necessary to establish that a trade-mark is famous, this should be the least of counsel s concerns. Under a depreciation of goodwill claim, one must establish the elusive mental association between the famous mark and the wares and services associated with the defendant s use of the mark in question. 12 Supra, note 4 at para Supra, note 4 at para. 71

7 Again, the evidence has to support a likelihood of depreciation, likelihood is a matter of evidence not speculation. 14 The Mattel and Veuve Clicquot decisions are good examples of the plaintiff s relying too much on the famousness of their trade-marks, at the expense of establishing confusion and depreciation. Fame, a relative, limited notion indeed. 14 Supra, note 10 at para. 60.

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