Hearsay evidence rejected in expungement proceedings

Two decisions of the Canadian Trademarks Opposition Board on two related registered trademarks have illustrated the danger of relying on hearsay evidence in expungement proceedings on the grounds of non-use (September 23 2008).

Under Section 45 of the Canadian Trademarks Act, a requesting party may petition the registrar to call upon the owner of a registered trademark to prove use of its mark in Canada at some point during the past three years. Use in the normal course of trade, in association with each of the goods and services covered by the registration, must be shown. If the registrant fails to prove use or cannot put forward special circumstances excusing its non-use of the trademark, the registration will be subject to expungement.

The two cases at issue appeared to be part of a larger trademark battle between Mövenpick and Inter Management Services Ltd, a former licensee and franchise operator of Mövenpick. Mövenpick sought to protect its MARCHÉ marks and market-style restaurant concept.

Mövenpick’s first trademark, MARCHÉ, was registered in association with “the operation of a restaurant”. The second trademark, RESTAURANT MÖVENPICK MARCHÉ (and design) was registered in association with:

"hotel and restaurant services; consulting to hotels and restaurants"; and
"operation of restaurants; consulting to hotels and restaurants".

Section 45 expungement proceedings were likely initiated against both registrations on behalf of Inter Management by its law firm, the named requesting party. Mövenpick, in an attempt to prove use of the marks in Canada, submitted the following evidence:

an affidavit sworn by its legal counsel;
a photograph of a T-shirt bearing the mark RESTAURANT MÖVENPICK MARCHÉ;
a corporate annual information form; and
other third-party evidence, including:
- a news release from a licensee;
- extracts from the WayBack Machine archive of its website;
- web reviews of its restaurants; and
- various customer comments.

No evidence of use for hotel services or for consulting to hotels and restaurants was adduced, except for some vague statements of intention included in the text of a franchise agreement.

The Trademarks Opposition Board rejected the requesting party’s argument that Mövenpick was required to demonstrate control over the character and quality of the licensee’s services by producing a written licensing agreement or by other means of proving control over use of the mark.

However, the board rejected as hearsay the third-party evidence adduced by Mövenpick. It also decided that the remaining evidence:

was insufficient to establish use of the trademark MARCHÉ alone in association with the operation of a restaurant; and
did not support the uses of the RESTAURANT MÖVENPICK MARCHÉ mark for “hotel services” and “consulting to hotels and restaurants”.

Therefore, the requesting party’s Section 45 proceedings were predominantly successful, as only Mövenpick’s registration for RESTAURANT MÖVENPICK MARCHÉ in association with “restaurant services” survived the challenge. Mövenpick’s registration for MARCHÉ was expunged, together with the registration for RESTAURANT MÖVENPICK MARCHÉ in relation to “hotel services” and “consulting to hotels and restaurants” on the grounds of non-use.

Mövenpick may appeal both of these decisions to the Federal Court of Canada.

Gordon J Zimmerman and Daniel L Brinza, Borden Ladner Gervais LLP, Toronto

Hearsay evidence rejected in expungement proceedings

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