New court decision on 'use it or lose it' provision

In Bereskin & Parr v Fairweather Ltd (2007 FCA 376, November 26 2007), the Federal Court of Appeal (FCA) has upheld a lower court decision that rejected an attempt to cancel the mark TARGET APPAREL under Section 45 of the Trademarks Act. Earlier in November the Federal Court also issued a decision on Section 45 in 88766 Canada Inc v Monte Carlo Restaurant Limited (for further details see "Gamble on evidence of use of MONTE CARLO leads to expungement").

In late 2001 Fairweather Ltd acquired the registration for TARGET APPAREL for a range of clothing items, as part of an acquisition of assets from a well-known Canadian clothing retailer that had become bankrupt. The date on which Fairweather's predecessor had last used the mark TARGET APPAREL was unknown.

About six months after the acquisition, cancellation proceedings were commenced by an undisclosed third party under the provisions of Section 45 of the Trademarks Act. This is a summary and expeditious proceeding that permits the cancellation of registrations that have not been used at any time during the three-year period preceding the commencement of the cancellation proceeding, unless the registered owner can establish that there were exceptional circumstances justifying non-use of the registered mark.

In the initial proceedings at the Trademarks Office, Fairweather filed evidence which outlined that it was delayed in commencing use of the mark in view of the numerous issues involved in acquiring the rights to the mark. It also indicated that it fully intended to recommence use of the mark in the near future. The hearing officer ruled that this evidence was insufficient to maintain the registration, as Fairweather had to establish that concrete steps were taken to commence using the mark during the short period of time between the acquisition of the mark and the commencement of the cancellation proceedings.

As permitted on appeal to the Federal Court, Fairweather filed additional evidence, including evidence of artwork for hang tags and labels for TARGET APPAREL clothing that had been created by its related and licensed sister company shortly before the commencement of the cancellation proceedings.

Primarily in view of this evidence, the trial judge held that Fairweather had established a serious intention to resume use of the mark TARGET APPAREL by taking this concrete step. The trial judge therefore maintained the registration, even though sales of TARGET APPAREL clothing did not actually occur until the year after the cancellation proceedings were commenced.

The FCA dismissed the appeal with costs. The FCA noted that Bereskin had raised no issue with the trial judge's expression of legal principles, nor did it question her findings of fact. Instead, Bereskin challenged the application of the law to the facts.

To succeed, the FCA held that Bereskin had to establish that the trial judge's application of the law to the undisputed facts disclosed either:

• a palpable and overriding error on a question of mixed fact and law; or
  
  
• a readily extricable error on a question of legal principle.

The FCA held that no such error on the part of the trial judge was demonstrated.

Mark Evans, Smart & Biggar/Fetherstonhaugh, Toronto