Cancellation proceedings: the evidentiary threshold might be low, but there is still a threshold to be met

In cancellation proceedings under Section 45 of the Canadian Trademarks Act, it is well established that there is a low evidentiary threshold to be met in order to maintain the registration. However, in an unusual split decision (Alliance Laundry Systems LLC v Whirlpool Canada LP (2015 FCA 232)), the Federal Court of Appeal has issued a reminder that there is a threshold and it must be taken seriously.

Whirlpool owns the trademark SPEED QUEEN, registered in Canada for use in association with laundry washing machines and laundry dryers. At the request of Alliance, a Section 45 notice issued against the registration requiring proof of use within the period between October 5 2008 to October 5 2011. The evidence filed consisted of an affidavit from the general manager of the Canadian licensee attesting to the following:

1. a statement that the mark had been used in Canada in the normal course of trade within the three year period;
2. photographs showing the mark prominently displayed on the front of the appliances;
3. invoices for sales in December 2011 (ie, outside the material period) were provided as being representative of the way in which the mark was used on invoices within the material period; and
4. a statement that sales during the period 2001 to 2010 totalled $100,504.69 and a portion of those sales fell within the material period.

The Opposition Board was satisfied that the evidence showed use of the mark within the material period and maintained the registration. 

On appeal to the Federal Court (Alliance Laundry Systems LLC v Whirlpool Canada LP (2014 FC 1224)), the decision was maintained. The court noted the low evidentiary threshold that rests with the registrant in a Section 45 proceeding and concluded that the Opposition Board decision was reasonable and should be maintained. In doing so, the court noted that the evidence filed in support of the registration cannot be limited to bald assertions of use but that assertions of fact showing use are sufficient. The court concluded:

"[32] It appears from the hearing officer’s decision that she applied the correct principles, and her decision is justified, intelligible and transparent. Moreover, although the interpretation of the evidence is controversial, I am of the view that the outcome reached by the hearing officer falls within the range of acceptable outcomes defensible in fact and in law. In this case, even though the evidence was somewhat general and lacked specificity, the hearing officer’s findings have an evidentiary basis."

The court was satisfied that the assertions of fact contained in the affidavit, together with the photographs of the appliances themselves, was sufficient to support a finding of use within the material period:

"[36] There is no doubt in my mind that Mr English’s [the director/manager of Whirlpool] assertion is general and lacks specificity. It certainly could have been clearer and more explicit. However, the statement is not limited to a bare assertion of use. Rather, it asserts facts that show use, namely that the respondent has sold SPEED QUEEN washing and drying machines in Canada during the decade of 2001-2010, and that a certain portion of these sales occurred between October 2008 and October 2011. Considering the low evidentiary threshold required to show use and the fact that proof of a single sale is sufficient, I am of the view that Mr English’s assertion, viewed in light of the evidence as a whole, provided an evidentiary basis for the hearing officer’s finding." [emphasis added]

As an aside, it is worth noting that, on an appeal to the Federal Court, the registrant has the opportunity to file additional evidence to address any deficiencies in the evidence identified by the Opposition Board. Thus, even if the registrant is successful before the Opposition Board, it is still worthwhile to reassess the evidence, taking into account the grounds of appeal, to determine if additional evidence should be filed. There are various factors that need to be taken into account in making that determination, one of which is that any affidavit filed on the appeal is subject to cross-examination. In this case, the registrant chose not to file additional evidence.

The case continued on its way to the Federal Court of Appeal. A hearing was held on October 28 2015 and a decision was issued from the bench. Justice Nadon and Justice Trudel issued a short decision, overturning the decisions below, but providing no guidance as to what it saw as being the deficiencies in the evidence:

"[2] In my view, the appeal should be allowed. I am satisfied that the evidence of Mr English, the director/manager of Whirlpool Corporation, does not, even on a generous view of its contents, meet the low threshold of evidence required to show use of the trademark at issue in association with the respondent’s goods.

[3] To conclude that Mr English’s evidence was sufficient to show use within the meaning of Section 45 ... is, in my respectful view, unreasonable.

[4] Thus the judge below ought to have intervened. Her failure to do so constitutes a palpable and overriding error which justifies intervention on our part." [emphasis added]

We are left to speculate as to how the evidence did not meet the low threshold but, based on the arguments before the Federal Court, it seems likely that the Federal Court of Appeal wanted to see evidence establishing dates on which sales occurred during the material period (ie, invoices), or at least an indication of total sales during the material period.

That said, while Justices Nadon and Trudel ordered the registration expunged, Justice Scott could find no palpable and overriding error in the assessment of the evidence and would have maintained the registration.  Again, no details were provided.

The Federal Court of Appeal’s decision provides owners of Canadian trademark registrations with little guidance as to the type of evidence needed to support a registration in a cancellation proceeding; however, it does serve as a useful reminder that, while the evidentiary threshold may be low, there is still a threshold to be met and proof of a transaction within the material period by means of invoices would seem to be essential.

Robert A MacDonald, Gowlings, Ottawa