Appeal allowed in part based on additional evidence

Canada
In The Friendly Stranger Corporation v Avalon Sunsplash Ltd (2010 FC 180, February 18 2010), the Federal Court has allowed, in part, an appeal against a decision of the Trademarks Opposition Board in which the latter had refused to register three marks containing the words 'Cannabis Culture Shop'.

In 1994 The Friendly Stranger Corporation opened a store in Toronto, the Friendly Stranger Cannabis Culture Shop, selling products related to hemp and marijuana. In 1998 Avalon Sunsplash Ltd started to publish a bi-monthly magazine called Cannabis Culture

The two businesses had a mellow co-existence for many years. The Friendly Stranger shop advertised its services in the Cannabis Culture magazine, and the magazine was distributed in the Friendly Stranger shop. However, the relationship soured when Friendly Stranger applied to register three trademarks, namely CANNABIS CULTURE SHOP in block letters and in script, and a design mark containing the words 'The Friendly Stranger Cannabis Culture Shop'.

Avalon opposed the applications in 2004 on the basis that the marks could not be distinctive of the Friendly Stranger. The Opposition Board rejected the applications on the basis that the distinctiveness of Avalon’s mark was sufficient to negate the distinctiveness of the marks applied for. The board also noted that the “appearance of both parties’ marks in the same magazine may have led the public to assume that one party approved, licensed or was sponsored by the other.”

Friendly Stranger appealed the decision to the Federal Court and, as it was entitled to do, filed fresh evidence on the appeal. The fresh evidence tipped the balance in favour of Friendly Stranger, at least insofar as the design mark was concerned.

On an appeal to the Federal Court, either party may file evidence additional to that which was before the board. Where the additional evidence would have materially affected the board's decision, the court may come to its own conclusion as to whether the decision was correct. Otherwise, it must review the decision on the basis of whether it was reasonable.

The additional evidence filed by Friendly Stranger would not have materially affected the board's decision on the CANNABIS CULTURE marks and, therefore, the appeal was rejected with respect to those marks. However, the court determined that the new evidence would have materially affected the decision with respect to the design mark. The court determined that the new evidence tipped the balance of probabilities in favour of Friendly Stranger and allowed the appeal insofar as the design mark was concerned.

The additional evidence provided the court with “quantivative evidence that indicates the applicant is a business on the rise under the name the Friendly Stranger Cannabis Culture Shop”. It also demonstrated “the effect of the large and unique font that promotes the words 'Friendly Stranger' over the smaller and more conventional font used for the words 'Cannabis Culture Shop'". The court also noted that the markets for the two business were very different - one being located in Toronto and the other in Vancouver. However, while the businesses were physically located in different cities, the court did not address the comment made by the board that the “appearance of both parties’ marks in the same magazine may have led the public to assume that one party approved, licensed or was sponsored by the other.” 

While the new evidence tipped the balance in favour of Friendly Stranger, it appears to have been a very fine balance.

Robert A MacDonald, Gowling Lafleur Henderson LLP, Ottawa

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