Gamble on evidence of use of MONTE CARLO leads to expungement

In 88766 Canada Inc v Monte Carlo Restaurant Limited (2007 CF 1174, November 15 2007), the Federal Court has found that the registrar of trademarks acted unreasonably in maintaining a registration in proceedings to expunge the mark MONTE CARLO.

Section 45 of the Trademarks Act provides for summary proceedings before the registrar of trademarks to expunge a registration (or particular goods or services within a registration) for which no use can be demonstrated within the three-year period preceding the notice from the registrar. In some cases, a reasonable excuse for non-use may be relied upon to avoid expungement.

In this case, the registrar issued the Section 45 notice on February 10 2005 at the request of 88766 Canada Inc. In order to prove use of the mark, Monte Carlo Restaurant Limited filed affidavit evidence by Mr Galli. Galli attested to the alleged use of the mark over the preceding five years on a flyer which had been distributed to the public and on a photo which had been posted in restaurants. The flyer contained an offer which terminated on July 31 2005. Since the proceedings were summary, no cross-examination was allowed.

The registrar declined to expunge the registration in its entirety. She maintained the mark in association with certain goods ("pizza and spaghetti") and services ("operation of a restaurant, take-out and catering service"), but expunged it in association with "operation of a bar and banquet hall". Monte Carlo appealed to the Federal Court.

On appeal to the Federal Court from decisions of the registrar in Section 45 proceedings, the registrant is permitted to file additional evidence. The requesting party, on the other hand, is not entitled to file any evidence at any stage in such proceedings. In this case, Monte Carlo, having prevailed before the registrar, filed no new evidence on appeal. There may have been a strategic reason for this decision: now that the matter was in court, cross-examination on the new evidence would have been permitted as of right.

The decision to file additional evidence on appeal is important in terms of the standard of review of the registrar's decision. If the court finds that the new evidence and any information revealed during cross-examination might have had a material effect on the registrar's decision, the standard of review is the correctness of the registrar's decision. In effect, the court may review the evidence afresh and reach its own decision. Since no new evidence was filed on appeal in this case, the standard of review was whether the decision of the registrar was reasonable, even if the judge on appeal might have reached a different decision.

In this case, the court held that the decision of the registrar was so wrong as to be unreasonable. It based its decision on the following reasons:

• The only fact established by the affidavit was that flyers were distributed within the past five years, while the relevant period was the past three years.
  
  
• The photo which was allegedly posted in restaurants was not clearly stated to have been used during the relevant time period.
  
  
• Galli had to assert only that the flyer and photo were in use between February 10 2002 and February 10 2005. He did not do so.
  
  
• It was up to Monte Carlo to provide clear proof of use of the mark in association with the relevant goods and services during the appropriate period.
  
  
• It was unreasonable for the registrar to conclude that since the flyer contained an offer which ended on July 31 2005 (more than five months after the relevant three-year period), it must necessarily have been circulated during the relevant period.
  
  
• There was no evidence to support the theory that customers used the flyers during the transfer of property in the goods (eg, use of a mark on a menu for take-out food) even if the evidence might have supported use of the mark in association with services by reason of advertising.

Therefore, the vagueness of Monte Carlo's evidence on critical issues led to the expungement of the registration.

Gordon J Zimmerman, Borden Ladner Gervais LLP, Toronto