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Trademarks - Non-Entitlement. Sea Tow Services International, Inc. v. C-Tow Marine Assistance Ltd.
In Sea Tow Services International, Inc. v. C-Tow Marine Assistance Ltd. (Fed CA, 2026) the Federal Court of Appeal dismissed trademark appeals, these brought against "two decisions of the Federal Court, one decision addressing the substance of a trademark dispute .... and a second decision awarding costs in light of the Trademark Decision ....".
Here the court (primarily) considers s.18(1)(d) ['When registration invalid' - Non-entitlement ("applicant for registration was not the person entitled to secure the registration")] from a statutory interpretation context:[26] Section 3 and subsection 17(2) of the Act provide as follows:When deemed to be adopted
"Quand une marque de commerce est réputée adoptée"
3 A trademark is deemed to have been adopted by a person when that person or his predecessor in title commenced to use it in Canada or to make it known in Canada or, if that person or his predecessor had not previously so used it or made it known, when that person or his predecessor filed an application for its registration in Canada.
"3"" Une marque de commerce est réputée avoir été adoptée par une personne, lorsque cette personne ou son prédécesseur en titre a commencé à l’employer au Canada ou à l’y faire connaître, ou, si la personne ou le prédécesseur en question ne l’avait pas antérieurement ainsi employée ou fait connaître, lorsque l’un d’eux a produit une demande d’enregistrement de cette marque au Canada."
....
"[…]"
When registration incontestable
"Quand l’enregistrement est incontestable"
17 (2) In proceedings commenced after the expiration of five years from the date of registration of a trademark or from July 1, 1954, whichever is the later, no registration shall be expunged or amended or held invalid on the ground of the previous use or making known referred to in subsection (1), unless it is established that the person who adopted the registered trademark in Canada did so with knowledge of that previous use or making known.
"17(2) ""Dans des procédures ouvertes après l’expiration de cinq ans à compter de la date d’enregistrement d’une marque de commerce ou à compter du 1er juillet 1954, en prenant la date qui est postérieure à l’autre, aucun enregistrement ne peut être radié, modifié ou jugé invalide du fait de l’emploi ou révélation antérieure mentionnée au paragraphe (1), à moins qu’il ne soit établi que la personne qui a adopté au Canada la marque de commerce déposée l’a fait alors qu’elle était au courant de cet emploi ou révélation antérieure." ....
[31] Turning to section 17, subsection 17(2) limits the ability of an applicant to challenge a registered trademark if the applicant files its application for expungement more than five years after the date of registration. This is the situation facing C-Tow because Sea Tow obtained registration of the Sea Tow Marks on February 3, 2014, and C-Tow did not file the Application until April 21, 2022. As Sea Tow submits, subsection 17(2) affords a heightened level of protection to a registered trademark that survives unchallenged for five years but, as the Federal Court stated, the protection is not absolute. The subsection provides that the "“incontestability”" of the registered trademark can be defeated if "“it is established that the person who adopted the registered trademark in Canada did so with knowledge of that previous use or making known”" (my emphasis).
[32] It is, of course, these underlined words of subsection 17(2) that send the analysis to section 3 and the question of "“adoption”".
[33] Section 3 is an interpretive section. The section looks to the basis of entitlement of the trademark holder to determine the date of adoption of the trademark in question, whether registered or unregistered. Paraphrasing, a trademark is deemed to have been adopted when a person or their predecessor in title (a) begins to use the trademark in Canada, (b) begins to make it known in Canada, or (c) files, if the trademark has not been so used or made known, an application for its registration in Canada.
[34] The next step in the statutory interpretation exercise is to determine the basis on which Sea Tow applied for registration of the Sea Tow Marks. In other words, what was the basis of entitlement Sea Tow identified in its successful 2010 applications for registration?
[35] Sea Tow filed its 2010 applications in reliance on subsection 16(2) of the version of the Act in force between December 31, 2008 and December 30, 2013 (which I will refer to as the "“""Old Act”"):Marks registered and used abroad
Marques déposées et employées dans un autre pays
16 (2) Any applicant who has filed an application in accordance with section 30 for registration of a trade-mark that is registrable and that the applicant or the applicant’s predecessor in title has duly registered in or for the country of origin of the applicant and has used in association with wares or services is entitled, subject to section 38, to secure its registration in respect of the wares or services in association with which it is registered in that country and has been used, unless at the date of filing of the application in accordance with section 30 it was confusing with
16 (2) Tout requérant qui a produit une demande selon l’article 30 en vue de l’enregistrement d’une marque de commerce qui est enregistrable et que le requérant ou son prédécesseur en titre a dûment déposée dans son pays d’origine, ou pour son pays d’origine, et qu’il a employée en liaison avec des marchandises ou services, a droit, sous réserve de l’article 38, d’en obtenir l’enregistrement à l’égard des marchandises ou services en liaison avec lesquels elle est déposée dans ce pays et a été employée, à moins que, à la date de la production de la demande, en conformité avec l’article 30, elle n’ait créé de la confusion :
(a) a trade-mark that had been previously used in Canada or made known in Canada by any other person;
a) soit avec une marque de commerce antérieurement employée ou révélée au Canada par une autre personne;
(b) a trade-mark in respect of which an application for registration had been previously filed in Canada by any other person; or
b) soit avec une marque de commerce à l’égard de laquelle une demande d’enregistrement a été antérieurement produite au Canada par une autre personne;
(c) a trade-name that had been previously used in Canada by any other person.
(My emphasis)
c) soit avec un nom commercial antérieurement employé au Canada par une autre personne.
(Non souligné dans l’original) ....
[39] The Federal Court considered the importance of Sea Tow’s reliance on subsection 16(2) of the Old Act to the correct interpretation of section 3 in the Trademark Decision:[154] Furthermore, in relation to confusion with a mark that had previously been used in Canada or made known in Canada by any other person (as contemplated by paragraph 16(2)(a)), the assessment under subsection 16(2) is to be conducted as of the date of filing of that application. In my view, it would introduce an unwarranted inconsistency in the legislation if, in contrast, the examination under subsection 17(2) of the trademark owner’s knowledge of the previous use or making known, as of the date of its application for registration, was potentially to be performed as of the date of filing of a different application. Concern about such inconsistency is enhanced by the fact that, as in the case at hand, the services in relation to which the different applications were filed may not be identical. [40] The Federal Court did not err in assessing subsection 16(2) of the Old Act and the basis for registration claimed by Sea Tow in its 2010 applications in the course of its interpretation of section 3. The Court correctly referred to paragraph 18(1)(d) ("“the applicant for registration was not the person entitled to secure the registration”") and section 17 of the Act and subsection 16(2) of the Old Act in paragraph 152, to then conclude:[153] As such, it is section 16 pursuant to which Sea Tow potentially loses its entitlement. Subsection 16(2) uses both the phrase “an application” and the phrase “the application”, but it is clear from the language of that subsection that both phrases reference the application leading to the particular registration entitlement to (sic) which is under consideration. This detracts from Sea Tow’s arguments that the language “an application” in section 3 is intended to potentially contemplate one of multiple applications. [41] I find no error in the Federal Court’s analysis in this regard.
....
[43] Section 3 refers to deemed adoption of a trademark when "“an application for its registration”" is filed. In my view, the correct interpretation of the full phrase does not turn on the word "“an”". If an earlier application for registration of a trademark has been abandoned and a subsequent application for registration of that trademark results in "“its”" registration, the text of section 3 links the trademark embodied in the application to the registration at issue. This connection is reinforced by the French version of the provision, which uses "“""cette marque”" ("“that mark”"). I find, therefore, that the text of section 3 does not support Sea Tow’s submission that its 2002 applications properly form the deemed date of adoption of the Sea Tow Marks for purposes of subsection 17(2) and an application for expungement of the Sea Tow Registrations based on paragraph 18(1)(d).
[44] The context of the Federal Court’s consideration of section 3 provides the same answer. Subsection 17(2) protects long-standing registrations unless the applicant for registration had knowledge of prior use in Canada of a confusing mark. The protection is inexorably tied to the registration and the registration is grounded on a specific application. It follows that the applicant’s knowledge for purposes of subsection 17(2) must be assessed as of the date of the specific application for registration.
[45] Finally, a purposive assessment of section 3, consistent with that undertaken by the Federal Court, confirms this interpretation. In this case, section 3 must be read in the context of subsection 57(1), paragraph 18(1)(d) and subsection 17(2) of the Act and with section 30 and subsection 16(2) of the Old Act. These provisions operate together to balance C-Tow’s challenge to the Sea Tow Registrations against the protection and qualifications of subsection 17(2). Section 3 enables a trademark holder to secure priority through a filing date despite no prior use of the trademark in Canada. Section 16 of the Old Act tests that priority against earlier users and subsection 17(2) restricts subsequent challenges to the registration of the trademark by requiring proof of knowledge of use of a confusing trademark when those rights crystallized: that is, the date of application for registration. Sea Tow has provided no persuasive basis for its argument that section 3 permits the holder of a registered trademark to rely on a prior abandoned application for registration of a trademark to shield any subsequent registration maturing in respect of the same mark.
[46] Sea Tow also argues that the Federal Court erred in failing to consider section 21 of the Act in interpreting section 3 and subsection 17(2) but I do not agree.
[47] Section 21 is premised on a registered trademark holder being entitled to the protection of subsection 17(2). The section begins with the words, "“[i]f, in any proceedings respecting a registered trademark the registration of which is entitled to the protection of subsection 17(2), …”".
[48] The provision presupposes the application of subsection 17(2) in the particular case. If that protection is operative, section 21 permits the prior user of a confusing trademark to continue if that use is not contrary to the public interest. I find that section 21 is not necessary to the correct interpretation of section 3 and subsection 17(2) in the context of an application for expungement in reliance on paragraph 18(1)(d) of the Act. The section simply provides for an equitable balancing of the heightened subsection 17(2) protection afforded a registered trademark and the existence of limited common law rights based on prior use in certain circumstances.
....
[53] In interpreting section 3, the Federal Court considered the text of the section and the absence of any reference to abandonment of a mark. The Court also considered the cases submitted by C-Tow but found that the jurisprudence did not directly establish whether abandonment must implicitly be considered in interpreting section 3: EAB Tool Company Inc. v. Norske Tools Ltd., 2017 FC 898 at para. 34, Philip Morris Inc. v. Imperial Tobacco Ltd. (No.1), 17 C.P.R. (3d) 289, 1987 CanLII 9840 (FCA), leave to appeal to SCC refused, 20674 (28 January 1988), and Marineland Inc. v. Marine Wonderland & Animal Park Ltd., [1974] 2 F.C. 558, 1974 CanLII 2559 (FCTD) (Marineland). However, the Federal Court accepted C-Tow’s argument that the jurisprudence cited and the provisions of the Act supporting the jurisprudence "“are representative of the fact that the Act creates what is fundamentally a use-based regime”": Trademark Decision at para. 167. The Court continued:[167] … This conclusion is consistent with my analysis and conclusion on the first aspect of the interpretation of section 3. Just as it is inconsistent with the purpose of the Act to conclude that it affords rights based on an abandoned application that does not necessarily reflect any use of the relevant mark, it is inconsistent with such purpose to conclude that the Act affords rights based on use that has been abandoned. [54] With respect to Parliament’s use of the words "“commenced to use it in Canada”" in section 3, the Federal Court stated that it was not inconsistent with the language of the provision to read the word "“commenced”" to connote the beginning of a use of a mark that has continued: Trademark Decision at para. 168. The Court then concluded this part of its analysis by finding that Sea Tow had abandoned its use in Canada of the Sea Tow Marks after the demise of the Leamington franchise: Trademark Decision at para. 169. This finding was based on the Federal Court’s detailed consideration of Sea Tow’s evidence of use in Canada in paragraphs 116–138 of the Trademark Decision.
[55] I find no error of law in the Federal Court’s interpretation of section 3 in this regard.
[56] Sea Tow maintains its argument that there is no reference to abandonment in section 3 and that the Federal Court’s interpretation of "“commenced to use”" to include continued use is inconsistent with the Act when read as a whole. Sea Tow asserts that, had Parliament wished to include a requirement of continued use, or non-abandonment, in section 3, it would have done so explicitly.
[57] Sea Tow refers to subsection 16(5) of the Old Act and the phrase "“if the confusing trade-mark or trade-name was abandoned”" in the context of the right to secure registration of a trademark, and to paragraph 18(1)(c) of the Act. Paragraph 18(1)(c) provides that the registration of a trademark is invalid if "“the trademark has been abandoned”".
[58] Sea Tow argues that the Federal Court’s reading-in of non-abandonment to section 3 is redundant in light of paragraph 18(1)(c) and notes that C-Tow chose not to advance abandonment in its section 57 application.
[59] I do not find Sea Tow’s argument persuasive. The question of abandonment for purposes of paragraph 18(1)(c) is assessed as of the date of the section 57 expungement application, in this case April 21, 2022, while expungement in reliance on paragraph 18(1)(d) is assessed as of the date of application for registration, in this case September 9, 2010. In the present case, the evidence established use by Sea Tow of the Sea Tow Marks in Canada at least as far back as 2014, meaning that an application for expungement in 2022 based on paragraph 18(1)(c) would necessarily have failed. I acknowledge that the interpretation of section 3 would not change depending on whether the underlying expungement application relied on paragraph 18(1)(c) or 18(1)(d) but, as the facts of this case demonstrate, the evaluation of abandonment in the context of section 3 to determine incontestability pursuant to subsection 17(2) does not render either section 3 or paragraph 18(1)(c) redundant.
[60] In my view, the Federal Court’s interpretation of section 3 is consistent with the text of the provision and the words "“commenced to use”", and with the context and purpose of the Act, which as the Court stated, fundamentally creates a use-based regime. I agree with the Federal Court’s conclusion that it would be inconsistent with such a regime to conclude that the Act, and subsection 17(2) specifically, affords rights based on use of a trademark that has been abandoned.
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