Federal Court of Appeal considers Federal Court's role in appeal from Opposition Board's decision

Canada

On an appeal from the Opposition Board, the parties may file additional evidence and the Federal Court must assess the additional evidence to determine what impact, if any, it would have had on the board decision. But what happens when the Federal Court fails to assess the additional evidence? The Federal Court of Appeal dealt with exactly that issue in Cathay Pacific Airways Limited v Air Miles International Trading BV (2015 FCA 253). The Federal Court of Appeal tried to get inside the mind of the lower court judge and commented:

"The question which the Federal Court no doubt asked itself was 'Why do I need to consider the fresh evidence if it is possible for me to decide the case in favour of the appellant on the original record on the standard of review most favourable to the respondent? In such a case, is the appellant’s fresh evidence not surplus to requirements?'"

The Federal Court of Appeal concluded that “what may be surplus to requirements for one party may be critical to the outcome for the other” and remitted the case back to the Federal Court for further consideration.

On September 9 2005 Cathay Pacific applied to register the trademark ASIA MILES in association with a range of goods and services including a loyalty programme (Application No 1,271,320). The application was successfully opposed by Air Miles (2012 TMOB 80). A key issue before the board was whether or not Cathay Pacific could rely on use of its mark in Canada by a licensee. The board said “no”:

"Of course, a trademark license agreement need not be in writing as a verbal agreement may suffice to meet the requirements of Section 50(1) of the Trademarks Act. Nevertheless, the above issues concerning licensed use by CPLP which arose at cross-examination might have been clarified by the applicant had it requested leave to file additional evidence... The applicant elected not to do so. Having regard to the lack of specificity in Ms Poon’s affidavit evidence, to Ms Poon’s inability at cross-examination to speak to the terms of a license agreement, and to the exhibit material attached to Ms Poon’s affidavit, I find that there are doubts concerning the applicant’s claim that CPLP has been using the ASIA MILES marks in Canada under license in compliance with Section 50... The legal onus therefore falls on the applicant to establish that it has in fact used the applied for mark ASIA MILES in Canada. In this regard, I find that the weight of the evidence does not support the applicant’s claim that use of the mark ASIA MILES in Canada accrues to the benefit of the applicant."

Cathay Pacific appealed the decision and put in new evidence on the appeal to address the deficiencies highlighted by the board. However, on the appeal, the Federal Court did not consider the new evidence.  Rather, the Federal Court held that the board’s decision was unreasonable on the evidence before it and ordered the board to reconsider the application (2014 FC 549). The Federal Court noted:

"There was sufficient evidence, therefore, for the board to conclude that Cathay Pacific had 'direct or indirect control of the character or quality' of the mark’s use such that CPLP’s use of the mark should have been credited to Cathay Pacific..."

On that basis, the Federal Court concluded:

"The board unreasonably found that Cathay Pacific could not be credited for the use of its ASIA MILES trademark by its subsidiary CPLP. In turn, the board’s analysis of the issue of potential confusion with the AIR MILES mark was flawed because it took no account of the use of that mark in Canada. Accordingly, I must allow this appeal, with costs, and order another panel of the board to reconsider Cathay Pacific’s application to register its mark."

Neither party was satisfied with this result. Air Miles appealed on the merits of the decision and Cathay Pacific appealed on the basis that there was no need to remit the matter to the board – a rare decision that left both parties dissatisfied. And so the matter went on to the Federal Court of Appeal. It overturned the lower court and ordered the matter to be reheard by a different judge.

The Federal Court of Appeal found two key errors with the decision of the lower court.

The first error was in not considering the additional evidence. The lower court was required to consider the additional evidence and then determine whether it should decide the appeal by way of a fresh hearing on the extended record (essentially a trial de novo) or by way of review of the board’s decision based on the record before the board.

The second error was in concluding that the board’s decision was unreasonable. There was no reason, on the record before the lower court, to hold that the decision of the board was unreasonable – the decision fell within the range of acceptable and defensible outcomes having regard to the facts and the law. The Federal Court of Appeal concluded that the lower court’s review of the board’s decision was flawed.

Having overturned the lower court’s decision, the Federal Court of Appeal did not have before it an assessment of the additional evidence and so returned the case to the lower court (but to a different judge) to have the evidence assessed.

Given the outcome, the Federal Court of Appeal did not have to consider the decision of the Federal Court to send the case back the to the board for rehearing – a rather unusual remedy in opposition proceedings and one which would have had significant ramifications if allowed to stand. However, the Federal Court of Appeal noted a comment made by the Supreme Court of Canada that the legislative intent of the Trademarks Act is that, on an appeal from the board, there should be a full reconsideration “not only of the legal points but also of issues of fact and mixed fact and law, including the likelihood of confusion” (Mattel Inc v 3894207 Canada Inc (2006 SCC 22) at 35). That would seem to suggest that the Federal Court should not remit matters back to the board.

So, while the case does not speak to general concepts of trademark law, it does provide some insight into some of the technical issues of Canadian opposition proceedings.

Robert A MacDonald, Gowlings, Ottawa

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