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08 March 2021
On 15 February 2021 the Federal Court of Appeal dismissed an appeal of the Federal Court's trial decision in Loblaws Inc v Columbia Insurance Company (2019 FC 961). Pampered Chef, a Berkshire Hathaway company and a world leader in premium kitchenware products, had previously successfully defended a claim brought by Canada's largest retailer, Loblaws, for:
The claim concerned Pampered Chef's use of a trademark that included the letters 'P' and 'C' (for further details please see "Pampered Chef succeeds in trademark infringement battle").
In the 1980s Loblaws launched its private label brand, President's Choice, and the companion brand PC in connection with food and grocery products. Over time, Loblaws's use of the PC mark expanded into a range of products and services, including:
Loblaws registered both the PC mark itself and a PC script logo (Figure 1) (together, the 'PC marks') for a wide range of goods and services, including kitchenware and houseware products.
Figure 1: PC script logo
Pampered Chef made and sold high-quality kitchen tools. It primarily used a direct sales model, through which its products were sold via in-home and online cooking and catalogue parties. Pampered Chef also sold its products through its own website, and its independent consultants promoted and sold its products online, including through social media and virtual cooking parties. In 2015 Pampered Chef updated its branding, adopting a family of marks that included the below logos.
Figure 2: long-form logo
Figures 3 and 4: short-form logos
At trial, Loblaws alleged that Pampered Chef's use of its short-form logos in connection with kitchenware products had infringed Loblaws's registered PC marks. Loblaws also argued that consumers who had never heard of Pampered Chef could first be exposed to its short-form logos without previously or simultaneously encountering its name or long-form logo, leading those consumers to think briefly that they were viewing a PC-branded product produced by Loblaws.
Justice Southcott found that Loblaws's PC marks and Pampered Chef's short-form logos bore some resemblance and were used in the course of selling similar goods to the same customers. Nevertheless, he ultimately found that confusion was unlikely for various reasons.
First, Pampered Chef sold its goods through a direct sales model, rather than through retail stores, and consumers would have known that Loblaws did not sell its goods through that channel.
Second, Pampered Chef deployed its short-form logos together with its corporate name, Pampered Chef, or its long-form logo, so that consumers would have known that they were looking at Pampered Chef products when encountering its short-form logos. Southcott also drew an adverse inference from the absence of evidence of actual marketplace confusion despite significant use of Pampered Chef's short-form logos.
Loblaws appealed Southcott's decision, arguing that he had committed four errors of law.
First, Loblaws argued that the trial judge had erred in finding that the degree of resemblance between the parties' marks was not particularly strong, due to visual differences between the marks. According to Loblaws, a finding that the competing marks were identical in sound should have sufficed to establish a strong degree of resemblance. The Court of Appeal disagreed: although the Trademarks Act states that resemblance is to be assessed in "appearance or sound or in the ideas suggested by [the marks]", it is clear that the word "or" is intended to be inclusive, and the trial judge was correct to consider the appearance of the marks in addition to their sound. It had therefore been open to the trial judge to find that the design element in the short-form logos diminished the resemblance between the marks.
Second, Loblaws argued that the trial judge had misapplied the 'nature of the trade' factor under the Trademarks Act because, in Loblaws's view, he had failed to consider the fact that both parties targeted the same class of customers. The Court of Appeal rejected this argument: the trial judge had fully considered the parties' customer bases in his analysis of the 'nature of the wares, services or business' factor and had found that the overlapping customer bases favoured Loblaws. Southcott had known of the issue and was not required to reiterate this analysis when considering the nature of the trade.
Third, Loblaws argued that it was inappropriate for the trial judge to have drawn an adverse inference from the absence of any evidence of actual marketplace confusion because no such evidence was readily available. In particular, Loblaws argued that the parties had coexisted in the marketplace for only two to three years and, in Loblaws's view, first-time customers would be unlikely to complain to Loblaws because they would ultimately realise that they were purchasing a Pampered Chef product by the time of purchase, even if they were initially confused.
The Court of Appeal rejected this argument and emphasised that there is no set period during which competing marks must coexist before an adverse inference may be drawn. While a measurable amount of time must pass before a negative inference may be drawn, the duration must be assessed in light of the circumstances of each case. Although the parties' marks had coexisted for only two to three years, Pampered Chef's evidence showed a high volume of sales during this period. It was open to the trial judge to infer that, if there was a likelihood of confusion, the intense exposure of the marks on social media would have given rise to some evidence of actual confusion, particularly given Loblaws's robust customer service department and trademark enforcement and monitoring programmes.
Finally, Loblaws argued that Southcott had placed too much emphasis on the difference between the parties' channels of trade and that it was a fundamental difference of which consumers would be aware. Loblaws further argued that some consumers would "not know anything about Pampered Chef", including the way in which it marketed its products. The Court of Appeal rejected this argument and found no error in Southcott's view that consumers were unlikely to be confused as the evidence showed that Pampered Chef's short-form logos were deployed together with its corporate name or long-form logo.
For further information on this topic please contact Noelle Engle-Hardy at Smart & Biggar by telephone (+1 416 593 5514) or email (email@example.com). The Smart & Biggar website can be accessed at www.smartbiggar.ca.
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