Hyundai expungement action dismissed for the most part

In Cross-Canada Auto-Body v Hyundai Auto Canada, the Federal Court of Canada has dismissed for the most part an action seeking to expunge five marks used in relation to Hyundai vehicles.

Cross-Canada Auto Body Supply imports and sells parts for Hyundai automobiles. The packaging clearly includes the trademark HYUNDAI, in addition to four other trademarks which were assigned from Hyundai Motor Company of Korea to Hyundai Auto Canada (HAC). HAC sued Cross-Canada for trademark infringement and passing off in a separate proceeding. In the case at hand, Cross-Canada sought to expunge five Canadian trademark registrations that are the basis of the related proceeding.

The five trademarks had been assigned from the Hyundai Motor Company to HAC by an assignment executed in 1985, but the assignment was not registered until 2004. Because there was no notice to the consuming public as to the change of ownership of the trademarks, Cross-Canada alleged that the public would perceive Hyundai Motor Company as owner, and not HAC, thus rendering the marks non-distinctive and invalid. Cross-Canada also alleged a failure to ensure quality standards relating to use by Canadian dealers thus also rendering the marks non-distinctive. In Canada, the function and the purpose of a trademark is to indicate the source of the goods, and by definition, it must be and remain distinctive of a single source. Confusion in the context of distinctiveness relates to confusion as to the source of goods associated with trademarks.

Cross-Canada's evidence, by way of affidavits, consisted of essentially opinion evidence provided by four individuals employed by Cross-Canada's former law firm, and because of this the evidence was held not to be objective and of little weight. The only objective evidence relating to the issue of confusion was survey evidence which concluded that the purchasing public was not confused as to the source of the products. The public perception is generally that the dealer is responsible for selling and leasing, as well for addressing consumer issues, and therefore that HAC's dealers were viewed as the source.

In the present case, the court held that HAC and its predecessor have owned the trademarks since their assignment in 1985, even though this was not officially registered with the Canadian Trademarks Office until 2004. HAC had significant national advertising in the form of print media, television, internet and promotional materials available at dealerships and auto shows. HAC dealers are the exclusive source for new Hyundai vehicles and remain responsible for warranties, services and recalls. HAC exercises control over its dealers in their use of HAC's trademarks. Because of this, the challenge on the basis of non-distinctiveness failed.

With respect to the allegation of abandonment, Cross-Canada alleged that certain trademarks had not been used for at least 15 years. In order to establish abandonment, Cross-Canada had to prove two elements: (i) the mark was no longer in use in Canada, and (ii) HAC intended to abandon the mark. Non-use alone without proof of an intention to abandon is not sufficient. Maintaining the trademark registrations and renewals, together with the smallest use of a mark is evidence of an intention not to abandon the trademark.

Except for one mark, HAC provided evidence of sales. HAC had regularly renewed its registrations and this, together with minimal use, meant that the trademarks in issue had not been abandoned, with the exception of an HD (and design) trademark. In relation to this mark, HAC admitted that:

• it was not currently in use;
  
  
• although it had regularly renewed its registration, there has been no use of the mark for a long period of time; and
  
  
• there was no evidence of a plan to use it.

Accordingly, the court held that HAC had abandoned the HD (and design) mark and ordered it struck from the register.

The end result is that one mark was expunged for abandonment, and the other four marks remain on the register.

John Macera, Macera & Jarzyna - Moffat & Co, Ottawa