Water company keeps its cool in H2O dispute

In 417934 Alberta Ltd v H2O Co Beverages Ltd, the Federal Court of Canada has granted the plaintiff's summary judgment application restraining the defendant from using H2O Co and H2O Co Water Company as its trade names on the basis that they are confusingly similar to the plaintiff's registered trademark H2O COOL.

417934 Alberta Ltd registered the mark H2O COOL in November 2000 in conjunction with the installation, servicing and maintenance of bottled water coolers and drinking water purification systems. The labels affixed to the bottles display the H2O COOL mark as two separate words: 'H2O' appears in small script inside a circle and the word 'cool' is in bold type on a separate line.

H2O Co Beverages Ltd, who is also in the business of installing bottled water coolers and drinking water purification systems, commenced operations in July 2001 in British Columbia under the names H2O Co and H2O Co Water Company. Its label displays the name H2O Co in regular type and Water Company underneath in smaller script. A picture of mountain peaks also appears at the top of the label and the '2' in H2O is underlined.

The issues before the court were whether (i) the case fell under Section 19 or 20 of the Canadian Trademarks Act, and (ii) the mark and names were confusingly similar.

To fall under Section 19 of the act, the party bringing the action must establish use by another party of the exact same mark on the same goods and services covered by the trademark registration. In this case, Alberta argued that if H2O Co uses a virtually identical mark, Alberta need only show a lack of authorization to establish infringement. The court rejected this argument and held that as the names are not identical to the mark, this is a case of deemed infringement falling under Section 20 of the act. That section requires the court to consider whether H2O Co's use of the trade names is likely to cause confusion with the mark under Section 6(5) of the act.

Alberta submitted that the mark, which combines the formula H2O for water, with the adjective 'cool', is inherently distinctive.

The court considered evidence regarding inherent distinctiveness and the extent to which the mark and trade names have been made known in Canada. The only admissible evidence of confusion was found in the affidavit of Ron Chan, the chief operating officer of Four Seasons Food Ltd in Vancouver. Chan stated in a letter to Alberta in August 2003 that:

"I regret to inform you that our company has recently put a similar system in place. But to my dismay, I have just recently realized that we had installed another company's product thinking that it was your company…We had called H2O Co instead of H2O COOL; we thought it was the same company."

Neither the mark nor the names were found to be inherently distinctive as H2O, which is the prominent feature of both the mark and the names, is a synonym for water.

The court then considered the degree of resemblance in appearance, sound or the ideas suggested by the mark and the names. In assessing the degree of resemblance, Justice Simpson noted:

"In my view, when they are pronounced properly, the mark and the names do not sound the same. I agree that, in the names, 'Co' rhymes with the '2O' [element] to produce a distinctive sound which is not at all like the sound of the word 'cool'. However, this finding is not determinative because it is my conclusion that the 'H2O' [element], in its entirety, is the significant sound. From the point of view of appearance, the 'H2O' [element] also stands out and, in my view, it overwhelms the other words in the names and the mark. Accordingly, although the mark and the names do not sound alike when pronounced in full, as a matter of first impression, they do look alike and sound alike. Because of the dominance of the 'H2O' [element], I have concluded that the names and the mark are confusingly similar."

The court also held that the differences in presentation were not material in light of the overwhelming impact of the 'H2O' element. Therefore, the conflicting case law on the issue of whether get-up is relevant in an infringement action did not preclude summary judgment in this case.

Taryn Burnett, Gowling Lafleur Henderson LLP, Calgary