Licensee has no legal entitlement to official marks, court rules

In Canadian Rehabilitation Council for the Disabled v Rehabilitation Foundation for the Disabled, the Federal Court of Canada has addressed the issue of entitlement to official marks where both parties involved are public authorities. Specifically, the case addresses this issue in the context of a licensing arrangement between the parties.

In Canada, official mark status is conferred under Section 9 of the Trademarks Act. In accordance with Section 9(1)(n)(iii), those who qualify as a 'public authority' may own official marks. Public authorities are afforded protection of official marks that extends beyond typical trademark protection, in that the owner's exclusivity is not limited to specific goods and services. Generally, the exhaustive protection afforded to official marks has been problematic to those applicants seeking to register "any mark consisting of, or so nearly resembling as to be likely to be mistaken for" an official mark. There are however, additional issues of entitlement that arise under Section 9.

In the case at hand, the Canadian Rehabilitation Council for the Disabled, also known as Easter Seals/March of Dimes National Council (National Council), and the Rehabilitation Foundation for the Disabled, also known as Ontario March of Dimes (Ontario Foundation) - a licensee of the National Council - were in dispute over use of the mark MARCH OF DIMES and some variants, including ONTARIO MARCH OF DIMES. The Trademark Registry gave public notice of the use and adoption of the marks by the Ontario Foundation in 2001. The National Council applied to the Federal Court for a review of this decision on the basis that the Ontario Foundation's use was executed under licence. The National Council argued that as a licensee, the Ontario Foundation had no legal entitlement to these marks, as its ability to employ them was derived under contract.

The National Council submitted evidence confirming the existence of a long-term licensing arrangement with the Ontario Foundation. Upon review of this evidence, the court held that the Ontario Foundation's use under licence did not constitute the requisite "use and adoption". Accordingly, it granted the National Council's application for judicial review and quashed the registrar's decision to issue public notices. In its argument, the Ontario Foundation had emphasized its entitlement to the mark ONTARIO MARCH OF DIMES, indicating that the National Council had in fact never registered this mark. The court, however, decided not to distinguish this trademark from the MARCH OF DIMES mark, on the basis that the former mark was simply a variation of the latter, thus derived from the licensing arrangement.

The Ontario Foundation also attempted to argue that licensed use of an official mark does not inure to the benefit of the licensor. The court did not consider this argument. However, the court noted that acceptance of the Ontario Foundation's argument would carry significant consequences. Specifically, it would mean that public authorities holding official marks could potentially jeopardize their entitlement to these marks by entering into licensing arrangements with other public authorities. Such a licensee would be free to obtain its own public notices and benefit from the corresponding remedies under the Trademarks Act based solely on rights obtained under that arrangement.

Jennifer Galeano, Gowling Lafleur Henderson LLP, Ottawa