HYUNDAI expungement case clears final legal hurdle

In Cross-Canada Auto Body Supply (Windsor) Limited v Hyundai Auto Canada (Case 32634, September 18 2008), the Supreme Court has decided not to hear an appeal from the Federal Court of Appeal's ruling in expungement proceedings concerning a number of HYUNDAI trademarks.
The Federal Court of Appeal had found no reason to interfere with the judgment of the applications judge, who had partially allowed the proceedings and ordered that one of the marks - the figurative mark HD - be struck from the Trademarks Register. The maintenance of the other four marks on the register - including the trademark HYUNDAI - was the subject of the appeal.
The proceedings were started in 2005 by a group of automobile parts resellers which sold parts for Hyundai cars, among others. The resellers challenged the validity of Hyundai Auto Canada's registrations for five HYUNDAI trademarks and filed an application seeking to expunge the marks from the register. They alleged that the trademark registrations were invalid because the source of the goods was Hyundai Motor Company, the Korean automobile manufacturer. Therefore, the resellers argued that:
  • there could be no distinctiveness in the marks;
  • there was a likelihood of confusion in the marketplace; and
  • three of the HYUNDAI marks had been abandoned.
An issue in this case was whether the assignment from the Korean entity to the Canadian entity in the mid-1980s had damaged the distinctiveness of the marks. The Federal Court of Appeal was persuaded that the relevant public believed that the dealer (part of the Canadian entity's licensed franchise network) was the party responsible for Hyundai products. While there was a significant delay in registering the assignment of the trademarks, the court was not persuaded that this delay caused public confusion.
The court stated that the applications judge had committed no palpable or overriding error in concluding that the trademarks were distinctive of Hyundai Canada and were not abandoned (for further details please see "Irreparable harm must be demonstrated in injunction cases").
By dismissing the leave application, the Supreme Court chose not to interfere with the underlying finding of the applications judge that while certain internal corporate arrangements may change, there is no problem of identity of source as long as the uninterrupted face to the public (whom the public holds responsible for the trademarked products) does not change, notwithstanding a failure to register the assignment of the trademarks.
However, this ruling does not necessarily bring the litigation between the parties to a conclusion: the resellers are also defendants in an ongoing action for trademark infringement brought by Hyundai Auto Canada (T-898-05).
Yuri Chumak, Cameron MacKendrick LLP, Toronto

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