Test for confusion must be applied when consumer first encounters mark

In Reynolds Presto Products Inc v PRS Mediterranean Ltd (2013 FCA 119), the Federal Court of Appeal has set aside a judgment of the Federal Court and ordered that the trademark NEOWEB be struck out.

PRS Mediterranean Ltd is the owner of the registered trademark NEOWEB used in association with a system for erosion control or ground stabilisation, consisting of three-dimensional polymeric webs that can be filled with sand, gravel or other material. Reynolds Presto Products Inc, the owner of the registered trademark GEOWEB, registered for essentially the same goods, commenced a cancellation proceeding under Section 57 of the Trademarks Act. PRS was a former licensee of Reynolds to use the GEOWEB trademark.

Section 6(5) of the Trademarks Act sets out the criteria to consider for a confusion analysis. The trial judge did not find the trademarks to be confusing. However, in his analysis, he considered it safe to eliminate Subsections 6(5)(b), (c) and (d), namely the length of time of use of the marks, the nature of the goods and the nature of the trade. After quoting from the Masterpiece decision ([2011 SCC 27]), he stated that the test for confusion, in this case, is to be found in the surrounding circumstances, including Subsections 6(5)(a) and 6(5)(e). The surrounding circumstances he considered were:

• misleading marketing practices on the part of PRS; 
• actual confusion;
• treatment of the trademarks in other jurisdictions;
• family of marks; and
• the opinion of the trademarks examiner in an office action that was overcome through argument.

The trial judge concluded that the use of the GEOWEB and NEOWEB trademarks in Canada would not likely lead to the inference that the goods associated with the marks were manufactured or sold by the same person.

On appeal to the Court of Appeal, the court held that both the nature of the goods and the nature of the trade assist in determining whether two trademarks are confusing, and should have been considered by the trial judge. Both companies are engaged in the same goods, business and trade. While the Court of Appeal could send the matter back to the Federal Court, it decided to conduct its own analysis, with deference to the findings of fact of the judge where no any palpable and overriding error was made.

Citing Masterpiece, the court stated that the test to be applied is a matter of first impression in the mind of a casual consumer somewhat in a hurry who sees the mark, at a time when he or she has no more than an imperfect recollection of the prior mark, and does not pause to give the matter any detailed consideration or scrutiny, nor to examine closely the similarities and differences between the marks. What is not to be done is a careful examination of competing marks or a side-by-side comparison.

The test for confusion is to be applied when a consumer first encounters a trademark. Importantly, this 'initial interest' test is independent of how expensive the goods may be.

In this case, the burden was on Reynolds to establish that it is more likely than not that a consumer, who has imperfect recollection of the GEOWEB mark, and first encounters the NEOWEB trademark, would be confused and erroneously assume that the NEOWEB goods were being sold by or associated with Reynolds. Even though the cellular confinement systems are expensive items with only a limited market, the test is still one of first impression.

The Court of Appeal then went through all of the factors in Section 6(5) of the act. The two trademarks should not be analysed syllable by syllable, but rather as a whole, in order to determine whether NEOWEB, in association with its goods, so resembled GEOWEB, in association with its goods, in the same market, as to be likely to cause confusion for the consumer with the imperfect recollection of the GEOWEB mark. Only the first letter is different and, as a whole, each consists of a Greek prefix with the same suffix. The two sound similar and the use of 'neo' as a prefix could suggest that NEOWEB is simply a newer version of GEOWEB.

One other surrounding circumstance was the marketing by PRS which identified NEOWEB as formerly GEOWEB. The court rejected this circumstance, stating that confusion is determined based on the trademark, not on the additional words included in any advertising material.

The court also held that since, out of 31 other jurisdictions, the registration of the two trademarks was allowed in three and successfully opposed in 13 jurisdictions with no explanation for what happened in the other 15 jurisdictions, then this is a surrounding circumstance that should be considered.

The only other surrounding circumstance was that a senior trademarks examiner issued a report to PRS indicating that the NEOWEB trademark was confusing with the previously registered GEOWEB trademark. Following submissions made by PRS, the registration of the trademark NEOWEB was allowed. While this circumstance favoured PRS, it did not strongly favour them.

As a result, the appeal was allowed with costs, and the registration of the trademark NEOWEB (No TMA 780,538) was struck out.

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