Trademark registration is complete defence against passing-off action

In the case of Molson Canada v Oland Breweries, the Ontario Court of Appeal has dismissed Molson's passing-off action, ruling that Oland's use of its registered trademark OLAND EXPORT constitutes a complete defence against such an action. The court noted that pursuant to relevant case law, the owner of a registered mark has the exclusive right to use it throughout the country until such time as it is shown to be invalid.

Molson has brewed and sold beer, including one called 'Export', in Ontario since 1955. It had attempted to register 'Export' as a trademark over the years, but was unsuccessful because of the resistance of Oland, which has been using the trademark OLAND EXPORT in association with beer since 1951 and which obtained registration for the mark and design in 1972.

When Oland introduced its beer into Ontario in March 1996, Molson brought an action claiming (i) that Oland's marketing of its beer in Ontario was causing or was likely to cause confusion with Molson's beer sold under the EXPORT common law trademark, and (ii) that Oland was passing off its wares in Ontario as those of Molson.

Oland submitted that it had a complete defence to Molson's action because (i) the Trademarks Act provides that a trademark owner has the exclusive right to use its registered mark throughout Canada, and (ii) Molson had never attacked the validity of the registration.

The Ontario Superior Court dismissed Molson's passing-off action with costs. However, it rejected Oland's defence stating that a trademark owner is granted the right to use a registered mark only if that use will not cause confusion or deception. Thus, registration alone does not amount to a complete defence to a passing-off action.

On appeal, the Ontario Court of Appeal affirmed the trial court's dismissal of Molson's action. However, it agreed with Oland's contention that the trial court made a fundamental error by failing to conclude that Oland's trademark registration was a complete defence to Molson's passing-off action. According to the relevant Canadian case law, the holder of a registered trademark has the exclusive right to use it throughout the country until such time as the mark is shown to be invalid. Therefore, the appellate court concluded that Oland was entitled to use its mark throughout Canada in association with its beer. The only recourse for a competitor who takes exception to that use is to attack the validity of the registration.