PRESENT: The Honourable Madam Justice Tremblay-Lamer
BETWEEN:
(WINDSOR) LIMITED, CROSS-CANADA
AUTO BODY SUPPLY (WEST) LIMITED and
AT PAC WEST AUTO PARTS ENTERPRISE LTD.
-and-
A DIVISION OF HYUNDAI MOTOR AMERICA
REASONS FOR JUDGMENT AND JUDGMENT
INTRODUCTION
1. This application seeks to expunge, pursuant to section 57 of the Trade-marks Act, R.S.C. 1985, c. T-13 (the Act) from the Canadian Trade-mark Register the following five Canadian trade-mark registrations:
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Trade-Mark |
Registration No. |
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HD Design |
314,286 |
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HD & Hyundai Design |
315,465 |
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HMC Design |
346,818 |
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Hyundai |
302,619 |
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Sonata |
356,597 |
2. The applicants are re-sellers of automotive parts and accessories, including parts for Hyundai automobiles bearing the HYUNDAI trade-mark. The respondent is the registered owner of the five trade-marks at issue. The applicants are also defendants in an ongoing action in this Court for trade-mark infringement brought by the respondent (T-898-05).
3. The trade-marks at issue were originally owned and registered by Hyundai Motor Company, based in Seoul, Korea. The respondent, Hyundai Auto Canada (HAC), is a division of Hyundai Motor America, a California corporation. Hyundai Motor America is a wholly owned subsidiary of Hyundai Motor Company. HAC’s divisional head office is in Markham, Ontario.
4. Hyundai Motor Company does not export automobiles, parts and accessories for sale in Canada to entities other than HAC; HAC imports Hyundai automobiles and parts from Korea and the United States. All new vehicles are sold in Canada in association with the trade-mark HYUNDAI, while the Sonata model is sold in association with the trade-marks HYUNDAI and SONATA; all are sold exclusively through HAC’s network of franchised dealers in Canada. These dealers also have service departments that sell parts and accessories bearing HAC’s trade-marks.
5. On December 7, 1985, Hyundai Motor Company assigned three of the trade-marks, HYUNDAI (302,619), HD & HYUNDAI DESIGN (315,465) and HD DESIGN (314,286), to the respondent’s predecessor, Hyundai Auto Canada Inc. (HACI). These trade-marks were assigned from HACI to the respondent in December 1996, but were only registered with the Canadian Trade-Marks Office on August 24, 2004.
6. The two other trade-marks at issue in this application, SONATA (356,597) and HMC DESIGN (346,818), were assigned by Hyundai Motor Company to the respondent on September 23, 2004.
7. The applicants’ position in the present motion is essentially that the trade-marks are invalid on grounds that they are not, and were not, distinctive of HAC at the time that the Notice of Application was commenced, and that three of the trade-marks have been abandoned.
Issues
8. The issues raised in the present application are as follows:
i) Are the applicants “persons interested” in the trade-mark within the meaning of the Act?
ii) Are the trade-marks invalidity registered because they were not distinctive at the time this application was commenced?
(a) What is the effect, if any, of the delay between the assignments of the HYUNDAI, HD & DESIGN and HD & HYUNDAI DESIGN trade-marks and their registration?
(b) Did the SONATA and HMC DESIGN trade-marks actually distinguish the respondent’s wares from those of others, prior to their assignment in September 2004?
iii) Are the HD & DESIGN, HD & HYUNDAI DESIGN and HMC DESIGN trade-marks invalidly registered because they have been abandoned?
Analysis
1. Are the applicants “persons interested” in the trade-mark within the meaning of the Act?
9) Section 57(1) of the Act requires that only a "person interested" may bring an expungement proceeding. “Person interested” includes any person whose right may be restricted by a registration. In view of the infringement and passing off action being brought by the respondent against the applicants, the applicants are “persons interested” as they are affected by the registration.
2. Are the trade-marks invalidly registered because they were not distinctive at the time this application was commenced?
10) The Registrant benefits from a presumption that its trade-mark registration is valid (Nature’s Path Foods Inc. v. Quaker Oats Co. of Canada, [2001] F.C.J. No. 646 (QL) at para. 20; Mr. P's Mastertune Ignition Services Ltd. v. Tune Masters (1984), 82 C.P.R. (2d) 128 at 134 (F.C.T.D.)). The onus remains on the attacking party to show that the registration should be expunged (Golden Happiness Bakery Ltd. v. Goldstone Bakery & Restaurant Ltd. (1994), 76 F.T.R. 52 at para. 12). The relevant date for the purpose of considering expungement of the trade-marks based on allegations of non-distinctiveness and abandonment is the date of the application for expungement, i.e., June 8, 2005 (see for example Remo Imports Ltd. v. Jaguar Cars Ltd. (c.o.b. Jaguar Canada), 2006 FC 21, [2006] F.C.J. No. 47 (QL) at para. 321).
Distinctiveness
11) The applicants allege the trade-marks are invalid as they did not distinguish the respondent’s products from the wares of others at any time up to the commencement of these proceedings.
12) They object to the distinctiveness of the trade-marks based on the change in ownership from the Hyundai Motor Company of Korea to the respondent and its predecessor, HACI. Specifically, although the assignment of the HYUNDAI, HD & DESIGN and HD & HYUNDAI DESIGN trade-marks was executed on December 7, 1985, it was not filed in the Canadian Trade-marks office until August 24, 2004, almost 20 years after its execution. Thus, there was no notice to the consuming public as to the change of ownership of the trade-marks affected by the assignment.
13) There is no evidence of license agreements between the respondent and dealers pertaining to the trade-marks, and this failure to ensure quality standards relating to their use by dealers in relation to wares and services led to their non-distinctiveness.
14) Until September 2004, when the SONATA trade-mark was assigned from the Hyundai Motor Company to HAC, the HYUNDAI and SONATA trade-marks were owned by different entities, despite the fact that they appeared together on products sold in Canada. There was no notice of this divided ownership to the public.
15) These failures to publicly advise the change of ownership in the trade-marks produced public confusion as to the source of the wares, in turn resulting in the non-distinctiveness of these trade-marks.
16) With regard to distinctiveness, paragraph 18(1)(b) of the Act provides as follows:
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When registration invalid 18. (1) The registration of a trade-mark is invalid if […] (b) the trade-mark is not distinctive at the time proceedings bringing the validity of the registration into question are commenced, […] |
Quand l’enregistrement est invalide 18. (1) L’enregistrement d’une marque de commerce est invalide dans les cas suivants: […] b) la marque de commerce n’est pas distinctive à l’époque où sont entamées les procédures contestant la validité de l’enregistrement; […] |
Section 2 of the Act defines the term “distinctive” as follows:
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Definitions 2. In this Act, […] "distinctive" , in relation to a trade-mark, means a trade-mark that actually distinguishes the wares or services in association with which it is used by its owner from the wares or services of others or is adapted so to distinguish them; |
Définitions 2. Les définitions qui suivent s’appliquent à la présente loi. […] «distinctive » Relativement à une marque de commerce, celle qui distingue véritablement les marchandises ou services en liaison avec lesquels elle est employée par son propriétaire, des marchandises ou services d’autres propriétaires, ou qui est adaptée à les distinguer ainsi. |
17) As recently cited by the Supreme Court in Mattel Inc. v. 3894207 Canada Inc., [2006] 1 S.C.R. 772 at paragraph 75, and originally stated by Justice Audette in Western Clock Co. v. Oris Watch Co., [1931] Ex. C.R. 64 at 67 (Can. Ex. Ct “[d]istinctiveness is of the very essence and is the cardinal requirement of a trade mark. Distinctiveness is a question of fact where the test is whether a clear message has been given to the public that the wares with which the trade-mark is associated and used are the wares of the trade-mark owner and not those of another party (Tommy Hilfiger Licensing Inc. v. Produits de Qualité I.M.D. Inc., [2005] F.C.J. No. 17 (QL) at para. 58 (T.D.); White Consolidated Industries, Inc. v. Beam of Canada Inc. (1991), 39 C.P.R. (3d) 94 (F.C.T.D.)).
18) Confusion in the context of distinctiveness relates to confusion as to the source of wares associated with trade-marks.
19) The applicants argue that the message conveyed by the trade-marks to the Canadian purchasing public is that the source of the goods associated with the trade-marks was the Hyundai Motor Company of Korea, the manufacturer, causing confusion.
20) The respondent submits that it is the exclusive “source” of the products in Canada, through its network of franchised dealers, and there is no confusion among the relevant public in this regard. The extensive reference to HAC and Hyundai Canada at the point of transfer to the consumer, at the franchised dealerships, in association with the products and the trade-marks clearly identifies it as the source. Further, it retains control over the dealers’ use of its trade-marks through licence agreements, and has engaged in extensive advertising to build the Hyundai brand throughout Canada and public recognition of HAC. With respect to the SONATA trade-mark, HAC took responsibility as the source of all products sold in Canada in association with it.
21) It is the respondent’s view that the use by a domestic corporation of a trade-mark acquired from a foreign manufacturer indicates that the goods in question come from the domestic holder of the mark. Although the goods are not made by it, the reputation of the domestic entity is nevertheless reliant on the character of the goods it sells; a trade-mark can be a seller’s mark, such as in the present case, where the trade-marks distinguish wares and services used by HAC and its network of dealers. Finally, the trade-mark should come to the attention of the transferee in a direct way at the time of transfer, which is the critical point in time.
22) For its part, in advancing its position that there is confusion as to the source associated with the trade-marks, the applicant has produced affidavits indicating that vehicles sold at the respondent’s dealerships bear markings in the doorjambs and in the engine compartment they inspected, indicating that the source of the equipment is Hyundai Motor Company in Korea.
23) The problems with the affidavit evidence relied upon by the applicants, essentially opinion evidence provided by four individuals employed by the applicant’s former law firm, has been amply addressed by the Federal Court of Appeal in Cross-Canada Auto Body Supply (Windsor) Ltd. v. Hyundai Auto Canada, 2006 FCA 133, [2006] F.C.J. No. 539 (QL) at paragraph 4, where the Court stated:
(…) Opinion evidence is meant to be objective. The goal of objectivity is not furthered by having employees of the law firms give crucial opinion evidence. Such employees may be motivated by loyalty to their employer or fear or reprisal or lack of advancement in giving such opinions.
24) Further, the evidence clearly demonstrates that the affiants were specifically directed by the applicants’ former counsel to examine the doorjambs and engine compartments of vehicles at a Hyundai dealership in search of labels indicating the manufacturer.
25) I find this evidence deserves little, if any, weight, for its lack of objectivity. Moreover, it is too limited a sample to be representative of the relevant public’s perception of the source of the wares associated with the trade-marks in issue.
26) In my opinion, the only objective evidence relating to the issue of public confusion regarding the source of wares associated with the trade-marks is the survey evidence conducted by Dr. Heeler.
27) Dr. Heeler concludes that the purchasing public is not confused as to the source of the products associated with the trade-marks. The public perception is generally that the dealer is responsible for selling and leasing, as well for addressing consumer issues, and therefore that HAC’s dealers are viewed as the “source”.
28) The applicants challenge the methodology of Dr. Heeler’s survey and his conclusions relied upon by the respondent, with respect to admissibility and weight, and specifically with regard to the way it was conducted, the specific questions used and how they were framed.
29) I note that Dr. Heeler is a professor of marketing at the Schulich School of Business at York University, holds an MBA and PH.D in marketing and has 40 years experience in the design, execution and analysis of marketing surveys and research studies. He conducted the analysis and drew conclusions from the survey results.
30) I am not persuaded that the data upon which Dr. Heeler relied in drawing his conclusions was defective. The survey was implemented by a reputable and established marketing and public opinion company. I also find that the questions were not leading, and that the verbatim responses were provided to Dr. Heeler. Further, I am satisfied that the survey was a representative Canada-wide survey, as its tabulation was properly weighted to correspond to actual population distribution by age and sex within each region of Canada.
31) As held by the Court in McDonald’s v. Coffee Hut Stores Ltd. (1994), 55 C.P.R. (3d) 463 (F.C.T.D.) it is not the view of the "average person" that is relevant but rather, the view of the consumer. I am satisfied that the correct consumer was surveyed, as the survey was limited to individuals who were aware of the Hyundai brand, and likely to purchase the relevant wares, at the time that the expungement application was commenced.
32) The applicants have not convinced me that the submitted grounds are sufficient to undermine its reliability. After reviewing the survey at issue and its data, and also in light of the credentials and experience of Dr. Heeler, I am satisfied that this survey evidence relied upon by the respondent is relevant and reliable.
33) The applicant’s take the position that the present matter is virtually identical to the factual situation addressed in (Wilkinson Sword (Canada) Ltd. v. Juda (1966), 51 C.P.R. 55 (Ex. Ct.))., where a transfer of marks by a foreign parent company to its Canadian subsidiary, and sales in Canada by a third party of wares purchased abroad from the parent company, resulted in the non-distinctiveness of the trade-marks in question.
34) They also rely on the Supreme Court of Canada’s judgment in Breck’s Sporting Goods Co. v. Magder, [1976] 1 S.C.R. 527, in which Chief Justice Laskin described the duty of an assignee as follows:
It is not enough for the appellant to rely on its registration and on the fact that it has promoted, by assiduous cultivation of the market in Canada, the widespread sale of Mepps lures if it be the case that at the material date or dates, those wares, so marked by the French supplier, have not become identified with the appellant as its wares either as their manufacturer or seller.
35) The function and the purpose of a trade-mark is to indicate the source of the goods, and by definition, it must be and remain distinctive of a single source (Tommy Hilfiger, above, at para. 52; Havana House Cigar & Tobacco Merchants Ltd. v. Skyway Cigar Store (1998), 81 C.P.R. (3d) 203, 147 F.T.R. 54 (F.C.T.D.) at para. 63, varied on other grounds, (1998), 147 F.T.R. 54, [1999] F.C.J. No. 1749 (QL) (F.C.A.).
36) In the present case, the respondent and its predecessor have owned the trade marks since their assignment in 1985, even though this was not officially registered with the Canadian Trade-marks office until much later. HAC and its predecessor HACI had a significant period of time to build up the goodwill from the time of this assignment until the time of the present application for expungement. This factually distinguishes the present matter from both Wilkinson Sword, above, and Breck’s, above, as relied upon by the applicants.
37) The evidence establishes that HAC has spent more that 220 million dollars on national advertising from 2000 to July 2005, in the form of print media, television, internet and promotional materials available at dealerships, direct mailings and auto shows. Further, all of HAC brochures and “Service Passports” provided to purchasers direct the reader to HAC website. This website indicates at the bottom of each webpage that copyright is held by HAC.
38) The respondent filed evidence of these “Service Passports” for various Hyundai vehicles for the years 1997 through 2005, which are given to all purchasers of these automobiles. They refer specifically to the respondent in relation to the warranty policies, as well as a secondary recourse in the event of consumer disputes, after the dealer. They also specify that owner information may be registered with HAC. The 2005 version refers to HAC in relation to a Roadside Assistance Program, and clearly indicates that the respondent provides and regulates this service.
39) This kind of situation factually distinguishes the present case from other cases where products at issue can have many different sellers in the market. HAC dealers are the exclusive source for new Hyundai vehicles and remain responsible for warranties, services and recalls. HAC exercises control over its dealers in their use of HAC’s trade-marks. There is no evidence that any mention of Hyundai Motor Company or Korea in relation to Hyundai automobile other than the vehicle’s door joint or engine compartment, which are not visible to the public during regular vehicle operations.
40) Further, and as stated above, Dr. Heeler concludes that there is a high awareness that the entity for purchasing or leasing a Hyundai automobile is the dealer and similarly that the entity responsible for problems with a purchased or leased Hyundai automobile is the dealer. I am persuaded that the relevant public believes that the dealer is the party responsible for Hyundai wares.
41) It is well established that to have an effective assignment, the trade-mark must be distinctive and subsequent use must not deceive or confuse the public as to the source of those goods (Wilkinson Sword, above).
42) While there was a significant delay in registering the assignment of the trade-marks, I am not persuaded that there is sufficient reliable evidence that this delay has caused public confusion with regard to the source among the relevant public likely to purchase the goods in question (McDonald’s,above). I am satisfied that the evidence demonstrates that the respondent, through its network of franchised dealerships bound by licensing agreements with HAC and its extensive advertising, is the uninterrupted face to the public, whom the public holds responsible for its products, and is therefore is the proper “source” for the purposes of the present matter.
43) In this case, the source of the products associated with the trade-marks has not changed. In my view, and in light of all of the circumstances in the present matter, it follows that any reputation acquired by these products as coming from a particular source has not been called into question by the failure to register the assignment of the related trade-marks to the respondent until relatively recently.
44) In light of the above, I am not satisfied that the applicant has established confusion as to the source in the present matter, and thus their challenge on the basis of non-distinctiveness fails.
2. Are the trade-marks invalidly registered because they have been abandoned?
45) The applicants argue that three of the trade-marks have been abandoned and that accordingly their registration is invalid under paragraph 18(1)(c) of the Act, which provides as follows:
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When registration invalid 18. (1) The registration of a trade-mark is invalid if (…) (c) the trade-mark has been abandoned, (…) |
Quand l’enregistrement est invalide 18. (1) L’enregistrement d’une marque de commerce est invalide dans les cas suivants: […] c) la marque de commerce a été abandonnée. […] |
46) Specifically, the applicants argue that the trade-marks HD DESIGN (314,286), HD & HYUNDAI DESIGN (315,465) and HMC DESIGN (346,818) have not been used for at least 15 years in association with the wares for which they are registered.
47) As the party asserting abandonment, the burden of proof is on the applicants to demonstrate that the respondent has abandoned its marks (Gordon A. MacEachern Ltd. v. National Rubber Co., [1964] Ex. C.R. 135, 41 C.P.R. 149; Jean Patou Inc. v. Luxo Laboratories Ltd., [1998] 158 F.T.R. 16, F.C.J. No. 1910 (QL) at para. 32 (T.D.)).
48) In order to establish abandonment of a mark, the applicants must prove two elements: the mark is no longer in use in Canada, and an intention to abandon the mark (J.A. & M. Cote Ltee v. B.F. Goodrich Co. (1949), 14 C.P.R. 33 at 58 (Ex. Ct.); Promafil Canada Ltée v. Munsingwear Inc. (1992), 44 C.P.R. (3d) 59 at 64 (F.C.A.)). The abandonment of a trade-mark is a question of fact to be decided in view of the particular circumstances of each case; non-use is not sufficient to establish abandonment, though an intention to abandon can be inferred from a long period of non-use (Tommy Hilfiger, above, at para. 45; Omega Engineering, Inc. v. Omega SA, 2006 FC 1472, [2006] F.C.J. No. 1855 (QL) at para. 43.).
49) Maintaining the trade-marks’ registration and renewals are evidence of an intention not to abandon the trade-mark (Philip Morris Inc. v. Imperial Tobacco Ltd. (No. 1) (1987), 17 C.P.R. (3d) 289 at para. 31 (F.C.A.)), and a respondent can successfully oppose a claim of abandonment by demonstrating the smallest use of the trade-mark (Omega, above, at para. 42).
The HMC DESIGN trade-mark (#346,818)
50) The affidavit of Arthur Bode, sworn September 7, 2005, states at paragraph 12 that the respondent has continued to sell bumper covers, fan belts, and bumper energy absorbers in association with the HMC DESIGN trade-mark. The respondent has also provided photographs to demonstrate its continued use of this trade-mark.
51) Based on this evidence, I accept that the HMC DESIGN trade-mark is still in use in Canada, that there is no intention to abandon it, and conclude that the respondent has therefore not abandoned it.
The HD & HYUNDAI DESIGN trade-mark (#315,465)
52) The evidence indicates that the HD & HYUNDAI DESIGN trade-mark is currently used on bin boxes in which the respondent stores parts at its warehouse. The respondent argues that it has not made a deliberate decision to abandon the trade-mark, and has regularly renewed its registration. I find that maintaining the trade-mark’s registration and renewals are evidence of an intention not to abandon the trade-mark, and that its use on bin boxes meets the low threshold of demonstrating the “smallest use”; this trade-mark has not been abandoned.
The HD DESIGN trade-mark (#314,286)
53) The respondent admits that the HD DESIGN trade-mark is not currently used, but submits that it has made no deliberate decision to abandon it and has regularly renewed its registration. It is uncontested that there has been no use of this trade-mark for a long period of time, if any, and there is no evidence of a plan to use it. I am satisfied that the respondent has abandoned the HD DESIGN trade-mark, and consequently that it should be struck from the Canadian Trade-mark Register.
54) For the reasons above, the HD DESIGN trade-mark (#314,286) is ordered to be struck from the Canadian Trade-mark Register, and the remainder of the application is dismissed with costs awarded to the respondent.
JUDGMENT
The HD DESIGN trade-mark (#314,286) is ordered to be struck from the Canadian Trade-mark Register, and the remainder of the application is dismissed with costs awarded to the respondent.
“Danièle Tremblay-Lamer”
FEDERAL COURT
SOLICITORS OF RECORD
DOCKET: T-1005-06
STYLE OF CAUSE:
CROSS-CANADA AUTO BODY SUPPLY (WINDSOR) LIMITED,
CROSS-CANADA AUTO BODY SUPPLY (WEST) LIMITED and
AT PAC WEST AUTO PARTS ENTERPRISE LTD.
Applicants
-and-
HYUNDAI AUTO CANADA, A DIVISION OF HYUNDAI MOTOR AMERICA
Respondent
PLACE OF HEARING: Montreal, Quebec
DATE OF HEARING: April 24, 2007
REASONS FOR JUDGMENT: TREMBLAY-LAMER J.
APPEARANCES:
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François M. Grenier |
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H. Scott Fairley Jeffrey Brown |
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SOLICITORS OF RECORD:
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François M. Grenier Leger Robic Richard, LLP Centre CDP Capital 1001 Victoria Square – Bloc E 8th Floor, Montreal Quebec H2Z 2B7 |
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H. Scott Fairley Jeffrey Brown THEALL GROUP LLP Barristers and Solicitors 4 King Street West, Suite 1410 Toronto ON M5H 1B6
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