Date: 20040128
Citation: 2004 FC 136
BETWEEN:
CLARK O'NEILL INC.
Applicant
and
PHARMACOMMUNICATIONS GROUP INC.
and
THE REGISTRAR OF TRADE-MARKS
Respondents
[1] Clark O'Neill Inc. was established in the United States in the 1950s as a direct-mail marketing company. It expanded into the pharmaceutical sample distribution business in the 1980s and has been quite successful. In the United States it provides pharmaceutical companies with an inventory and delivery service, assists in marketing samples to doctors and when a request is received delivers the sample on the pharmaceutical company's behalf.
[2] In connection with the pharmaceutical side of its business it has used a trade-mark "SINGLE SOURCE SAMPLING, with a design that incorporates a red checkmark over a blue square". The trade-mark was registered in the United States in 1991 and based on that registration was accepted for registration as a trade-mark in Canada in 1993.
[3] The trade-mark has apparently been in continuous use in the United States, and perhaps elsewhere. However, in accordance with the Trade-marks Act, R.S. c. T-10, a trade-mark which has not been used in Canada runs the risk of being expunged. Section 45 of the Act provides that the Registrar of Trade-marks, may on his own initiative or shall, at least three years after the date of registration of a trade-mark, at the request of any person who pays the prescribed fee, require the registered owner to furnish an affidavit or a statutory declaration showing whether the trade-mark was in use at any time during the previous three years, and if not, the date when it was last so in use and the reason for the non-use. Where it appears to the Registrar that the trade-mark was not used in Canada during the relevant time and there have been no special circumstances excusing the absence of use, the registration of the trade-mark is liable to be expunged, or amended accordingly.
[4] The Registrar expunged Clark O'Neill's trade-mark for non-use. It has appealed to this Court pursuant to section 56 of the Act. Section 56(5) provides that new evidence may be adduced and that the Federal Court may exercise any discretion vested in the Registrar.
THE FACTS
[5] Clark O'Neill's first inclination to use its trade-mark in Canada was by means of establishing a Canadian subsidiary. However, it says it was unsuccessful in obtaining lists of physicians and could not operate the way it intended, which would involve mailing pharmaceutical samples from the United States into Canada, without first researching a number of issues.
[6] In 1997 it was approached by PharmaCommunications Group Inc., the respondent, with a view to establishing a joint venture which would include the launching of a sampling service business in Canada. PharmaCommunications then wrote to Health and Welfare Canada stating that it was proposing to offer a new service called Single Source Sampling which was operated in the United States by Clark O'Neill. Although solicitation of physicians would emanate from Canada, the samples would be shipped from a warehouse in the United States.
[7] It would appear that there were regulatory difficulties on the American side. Clark O'Neill was advised that Canadian pharmaceutical products could not be imported into the United States and then re-shipped back to Canada.
[8] Clark O'Neill says that PharmaCommunications continued to actively investigate the commencement of direct mail pharmaceutical sampling business to be promoted in Canada with the Single Source Sampling trade mark, but this contemplated joint venture ultimately came to an end when Clark O'Neill's parent company, IMS Health Inc., purchased another Canadian company, Walsh Canada, which operated a business similar to PharmaCommunications.
[9] Then, and the evidence is one-sided, as section 45 of the Act only permits evidence from the trade-mark owner, PharmaCommunications started its own direct-mail pharmaceutical sampling program business in Canada and has been using the name Direct Source Sampling, with design elements very close to Single Source Sampling.
[10] Clark O'Neill has taken action in the Ontario Supreme Court against PharmaCommunications for, amongst other things, trade-mark infringement and passing-off. Although neither party provided me with a copy of the pleadings, I was informed that that action is still proceeding. It is said that one of PharmaCommunications' tactics in defence was to pay the Registrar of Trade-marks the prescribed fee so as to have him enquire whether the Single Source Sampling trade-mark was being used in Canada.
[11] As aforesaid, the Registrar found that it had not been in use in Canada over the prescribed three-year period, that there were no special circumstances which excused its non-use and expunged the trade-mark.
ISSUES IN APPEAL
[12] The grounds of appeal are that:
a - the trade-mark had been in use in Canada;
b - in the alternative, there were special circumstances which excused the absence of use in Canada; and
c - the Registrar should have not acted at the instance of PharmaCommunications as it was in bad faith and owed fiduciary obligations to prevent Clark O'Neill from being deprived of its trade-mark rights.
TRADE-MARK USE IN CANADA
[13] The evidence before the Registrar was in the form of a detailed affidavit from Loftus Lucas, Clark O'Neill's general manager at the time, to which was appended a number of affidavits. In support of the appeal Nancy Maclean, the general manager for Canada of Synavant Inc. (which now owns Clark O'Neill Inc.'s business), added an affidavit to which was also appended a number of exhibits. Ms. Maclean was cross-examined which led to the filing of a further affidavit and other documentation.
[14] The trade-mark in question was to be used in association with "services" as opposed to "wares". Section 4(2) of the Act provides that:
|
A trade-mark is deemed to be used in association with services if it is used or displayed in the performance or advertising of those services. |
Une marque de commerce est réputée employée en liaison avec des services si elle est employée ou montrée dans l'exécution ou l'annonce de ces services. |
[15] Clark O'Neill asserted before the Registrar that it advertised its trade-mark in various medical journals, which although published in the United States had a Canadian readership. This "spill-over" advertising constituted use. Canadian physicians and pharmaceutical executives were also said to be exposed to the trade-mark by attending various conferences at which Clark O'Neill participated. Mr. Lucas' affidavit is vague, and lacks precision as to when advertisements were placed in various American journals. It must be kept in mind that the period in question is the three-year period preceding the Registrar's notice to Clark O'Neill to show use of the trade-mark in Canada, that is to say, the three years ending May 27, 1999. Ms. Maclean was only able to establish through her cross-examination that there was one advertisement in a Canadian journal at some point in the year 2000.
[16] In any event one cannot simply advertise. There must be an underlying service. In this case there was no service, and the Registrar was correct in holding that the trade-mark had not been used in Canada (see Porter v. Don the Beachcomber, [1966] Ex.C.R. 982 and Cornerstone Securities Canada Inc. v. Registrar of Trade-marks, et al (1994), 58 C.P.R. (3d) 417).
SPECIAL CIRCUMSTANCES
[17] The special circumstances advanced by Clark O'Neill which excuse non-use fall into two broad categories; the regulatory framework in Canada and the United States, and the corporate reorganizations it underwent. Although its relationship with the respondent, PharmaCommunications Group, is also said to be a special circumstance, it is more convenient to treat those allegations separately.
[18] The case law on whether there are special circumstances which justify non-use sets out a threefold test. The length of time the trade-mark has not been used must be considered. The second test is whether the non-use was beyond the control of the registered owner, and the third is whether there is a serious intention to shortly resume use, or in this case, to use the trade-mark in Canada (Registrar of Trade Marks v. Harris Knitting Mills Ltd. (1985), 60 N.R. 380, 4 C.P.R. (3d) 488 (F.C.A.), Ridout & Maybe v. Sealy Canada Ltd. (1999), 171 FTR 79, 87 C.P.R. (3d) 307, and NTD Apparel Inc. v. Ryan, 2003 FCT 780.)
[19] To turn first to the regulatory framework, there is nothing to suggest any significant changes in the laws in either the United States or Canada during the three years in question, or indeed at any time before or since. The regulations simply did not facilitate an American distribution centre for warehousing and shipping Canadian pharmaceutical samples to Canadian doctors.
[20] Nor do I think that Clark O'Neill's corporate history excuses non-use. On the contrary, the reason for non-use appears to be voluntary. The cases cited by Clark O'Neill are distinguishable.
[21] In broad terms, and as aforesaid, Clark O'Neill's discussions with PharmaCommunications came to an end when Clark O'Neill's parent company, IMS Health Inc., purchased Walsh Canada which was in the same line of business as PharmaCommunications. This ultimately led to the establishment of Synavant Inc.
[22] I see nothing corporately which justifies non-use of the Single Source Sampling trade-mark.
[23] In 88766 Canada Inc. v. George Weston Ltd. (1987), 15 C.P.R. (3d) 260, George Weston Ltd. did not use the trade-mark CrackerBread over a period of 11 months from the date it purchased the trade-mark from General Mills. Its excuse was that it did not want to confuse the name with some of General Foods' existing inventory and because it was involved with negotiations with another company to produce a product bearing the trade-mark. On those facts there had been no abandonment of use and some of the circumstances were beyond its control, such as the manufacturing and distribution system of another company.
[24] George Weston Ltd. v. Sterling and Affiliates (1984), 3 C.P.R. (3d) 527, is a case in which a corporate reorganization did constitute a special circumstance. The former registered users were not using the trade-mark because their registration had been voluntarily cancelled and the new designated user could not use it because its own registration was still pending. As Joyal J. said at page 531:
Where by reason of intercorporate reorganizations, it is required that a change be made in registered users, formal requirements and the dynamics of the trade create a flux which at times cannot be avoided. On the one side, user cancellations are registered forthwith. On the other side, user applications are held pending for months. Should there be current inventories of packaged goods under the name of former users, these are not to be thrown away. In the case at bar, the mechanics of the changeover might well see on store shelves some Ruffles cookies manufactured and sold by McCormick's side by side with the Ruffles cookies manufactured and sold by Interbake Foods.
There is absolutely no evidence that the Single Source Sampling trade-mark would have been used in Canada had it not been for corporate reorganizations.
SERIOUS INTENTION TO USE
[25] Although there is some indication of intended use, it appears to me Clark O'Neill is merely going through the motions in an attempt to avoid the expungement of its trade-mark, rather than showing any serious intent of actual use.
[26] Although there had been no advertising in Canadian journals at relevant times, there was an advertisement after the Registrar gave notice. Clark O'Neill (Synavant) obtained an establishment license from Health Canada, but again after the fact, in December 2000. It also made leasehold improvements, which were an issue. However, all that involved was the supply and installation of a chain link fence and gates about mid-December 1999. There had been discussions and business plans in the first half of 1999. Consideration was given to a direct-mail pharmaceutical drug sample program in the United Kingdom in association with the trade-mark, and in the first half of 2001 it conducted a customer survey and physician opinion survey in Canada.
[27] On December 20, 2001 Ms. Maclean swore "I have no hesitation in stating that Synavant continues to intend to expand its use of the Single Source Sampling and Design trade-mark in Canada and has always intended to do so." However, there is still no evidence that it is using its trade-mark here, and I find that at no time were there special circumstances which excused the non-use.
PHARMACOMMUNICATIONS GROUP INC.'S ALLEGED BAD FAITH
[28] Clark O'Neill claims that its relationship with PharmaCommunications was such that the Registrar should not have expunged the trade-mark because, when all is said and done, its request was made in bad faith. Given that the Registrar could have initiated an inquiry on his own initiative I doubt the soundness of the argument, but nevertheless have given it consideration.
[29] It is said that, at the very least, PharmaCommunications owed Clark O'Neill a fiduciary duty, and its request to the Registrar under section 45 of the Act was in breach thereof.
[30] PharmaCommunications points out, on the other hand, that proceedings under section 45 of the Act are rather summary in nature and that the only party permitted to adduce any evidence was Clark O'Neill itself. The purpose of the section is to clear out dead wood in the Registry.
[31] There may well be cases in which the behaviour of the requesting party is relevant and constitutes a special circumstance which excuses non-use of a trade-mark. However, this is not one of those cases.
[32] Although counsel for Clark O'Neill cited a number of cases they are, in my opinion, distinguishable, and not simply on the basis that some of them were applications under section 57 of the Act to strike out or amend an entry in the Register on the grounds that it did not accurately express or define the existing rights of the person appearing to be the registered owner of the mark. Under such applications both parties are permitted to adduce evidence.
[33] Clark O'Neill relies upon Citrus Growers Association Ltd., et al v. William D. Branson Ltd. (1990), 36 C.P.R. (3d) 434, and cases referred to therein, which have applied fiduciary obligations so as to prevent the rightful owner of a foreign trade-mark from being deprived of his rights by a party trying to usurp those rights in Canada.
[34] In most of the cases cited by Clark O'Neill there was an underpinning agency relationship between the parties. In Citrus Growers Association, supra, the applicants were moving to expunge a registration made by Branson. It was found that Branson acted as the applicant's importing agent and that the registration of the trade-mark rightfully belonged to the applicants. The importer/agent was in breach of his fiduciary obligations by registering the trade-mark owned by a foreign principal under his own name and for his own benefit.
[35] However, in this case, even at Clark O'Neill's unilateral showing, at most PharmaCommunications is a jilted business suitor who was never under any obligation to use the Single Source Sampling trade-mark. It is alleged that it has used a disturbingly similar unregistered trade-mark and for this has been sued in the Ontario Supreme Court. However, it has done nothing to prevent Clark O'Neill from using its trade-mark in Canada.
[36] I hold that the Registrar was correct, and that the new material before the Court in the form of the affidavit of Nancy Maclean and matters flowing therefrom do not really add to the case. Consequently it is not necessary for me to consider whether the standard of review ought to remain reasonableness simpliciter (Garbo Group Inc. v. Harriet Brown & Co., et al. (1999), 3 C.P.R. (4th) 224 at 235, per Evans J., (as he then was)) or whether I should come to my own conclusion as to the correctness of the decision in light of the new evidence presented (Molson Breweries, a Partnership v. John Labatt Ltd. (2000), 5 C.P.R. (4th) 180 (F.C.A.)).
[37] In conclusion, both based on the evidence before the Registrar, and before me, I find that Clark O'Neill did not use its trade-mark Single Source Sampling in Canada from May 27, 1996 to May 27, 1999, that there were no special circumstances which excused its non-use and that its appeal from the decision expunging its trade-mark shall be dismissed, with costs.
[38] There are no circumstances which justify the taxation of costs on a solicitor-client basis. I direct costs be taxed in accordance with the maximum unit values under Column III of Tariff B.
"Sean Harrington"
JUDGE
Ottawa, Ontario
January 28, 2004
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-2061-01
STYLE OF CAUSE: CLARK O'NEILL INC.
and
PHARMACOMMUNICATIONS GROUP INC. and THE REGISTRAR OF TRADE-MARKS
PLACE OF HEARING: TORONTO, ONTARIO
DATE OF HEARING: JANUARY 6, 2004
REASONS FOR ORDER : HARRINGTON J.
DATED: JANUARY 28, 2004
APPEARANCES:
May Cheng
Sean Grayson FOR APPLICANT
Paul Bigioni FOR RESPONDENT, PharmaCommunications Group Inc.
SOLICITORS OF RECORD:
Fasken Martineau DuMoulin LLP
Toronto, Ontario FOR APPLICANT
Bigioni, Barristers & Solicitors
Markham, Ontario FOR RESPONDENT, PharmaCommunications Group Inc.