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Trademarks - 'Use'. Centric Brands Holding LLC v. Stikeman Elliott LLP
In Centric Brands Holding LLC v. Stikeman Elliott LLP (Fed CA, 2025) the Federal Court of Appeal allowed an appeal, this from an earlier dismissal of an appeal against "a decision of the Trademarks Opposition Board on behalf of the Registrar of Trademarks", that from an order expunging a trademark registration for lack of 'use'.
Here the court considers trademark doctrine regarding expungement for non-use, and the 'special circumstances' exception [Trademarks Act s.45]:[8] The Federal Court summarized the general principles applicable to section 45 of the Act, and the special circumstances exception to avoid expungement of a trademark registration for non-use. The Federal Court noted that section 45 was created as a summary procedure for the purpose of removing "“deadwood”" from the trademarks register. The Federal Court also noted the text of subsection 45(3), which contemplates expungement as a possible consequence of failing to demonstrate use of a trademark in the three years prior to issuance of a notice (the relevant period), and the availability of the special circumstances exception:Effect of non-use
Effet du non-usage
45(3) Where, by reason of the evidence furnished to the Registrar or the failure to furnish any evidence, it appears to the Registrar that a trademark, either with respect to all of the goods or services specified in the registration or with respect to any of those goods or services, was not used in Canada at any time during the three year period immediately preceding the date of the notice and that the absence of use has not been due to special circumstances that excuse the absence of use, the registration of the trademark is liable to be expunged or amended accordingly.
45(3) Lorsqu’il apparaît au registraire, en raison de la preuve qui lui est fournie ou du défaut de fournir une telle preuve, que la marque de commerce, soit à l’égard de la totalité des produits ou services spécifiés dans l’enregistrement, soit à l’égard de l’un de ces produits ou de l’un de ces services, n’a été employée au Canada à aucun moment au cours des trois ans précédant la date de l’avis et que le défaut d’emploi n’a pas été attribuable à des circonstances spéciales qui le justifient, l’enregistrement de cette marque de commerce est susceptible de radiation ou de modification en conséquence. [9] Citing Scott Paper Limited v. Smart & Biggar, 2008 FCA 129, [2008] F.C.J. No. 539 (Scott Paper), and Canada (Registrar of Trade Marks) v. Harris Knitting Mills Ltd., 1985 CanLII 6342, 4 C.P.R. (3d) 488 (F.C.A.) (Harris Knitting), the Federal Court noted the following principles surrounding special circumstances:The general rule is that absence of use of a trademark by the owner during the relevant period will be penalized by expungement, and the exception will apply only if the special circumstances are the reason for the non-use of the trademark (Scott Paper at paras. 21-22, Harris Knitting at para. 10);
Special circumstances are circumstances not found in most cases of absence of use of a trademark (Scott Paper at para. 22, Harris Knitting at para. 10); and
Factors to consider in determining whether special circumstances exist that excuse non-use include (i) the length of time during which the trademark has not been in use, (ii) whether the non-use was due to circumstances beyond the registered owner's control, and (iii) whether there was an intention to resume use of the mark in the near term (Harris Knitting at para. 11). ....
A. Legal Principles
[21] The principal aspects of the legal principles surrounding section 45 of the Act, and subsection 45(3) in particular, were described in the Federal Court’s Decision, and summarized in paragraphs 8 and 9 above.
[22] The parties do not dispute these principles except as follows. Stikeman notes that this Court in Scott Paper effectively removed the consideration of intention to resume use of the mark saying at paragraph 28 thereof:... [A] registrant's intention to resume use of a mark which has been absent from the marketplace, even when steps have been taken to actualize those plans, cannot amount to special circumstances which excuse the non-use of the trade-mark. The plans for future use do not explain the period of non-use and therefore, cannot amount to special circumstances ... [23] In my view, nothing in this case turns on this nuance.
[24] To these principles, I wish to add the following.
[25] There is no room for a dog-in-the-manger attitude on the part of registered owners who may wish to hold on to a registration notwithstanding that the trade mark is no longer in use at all or not in use with respect to some of the wares in respect of which the mark is registered: Plough (Canada) Limited v. Aerosol Fillers Inc., 1980 CanLII 2739, 53 C.P.R. (2d) 62 at para. 10 (F.C.A.). The watchword is "“use it or lose it”": Mattel, Inc. v. 3894207 Canada Inc., 2006 SCC 22, [2006] 1 S.C.R. 772 at para. 5.
[26] The burden of proof on the owner of a trademark subject to section 45 proceedings is not a heavy one, and such proceedings are summary and administrative in nature: Sport Maska Inc. v. Bauer Hockey Corp., 2016 FCA 44, [2016] 4 F.C.R. 3 at para. 55. It is not intended that there should be any trial of a contested issue of fact, but simply an opportunity for the registered owner to show, if it can, that its mark is in use or if not, why not: Berg Equipment Co. (Canada) Ltd. v. Meredith & Finlayson, 1991 CanLII 14352, 40 C.P.R. (3d) 409 at 412 (F.C.A.).
[27] The usual penalty for non-use in section 45 proceedings is expungement (Scott Paper at paras. 21-22, Harris Knitting at para. 10), and there is a threshold to meet before the exception for special circumstances applies. Special circumstances must be unusual, uncommon or exceptional: see Federal Court’s Decision at para. 37, citing John Labatt Ltd. v. The Cotton Club Bottling Co., 1976 CanLII 2645, 25 C.P.R. (2d) 115 at 123 (F.C.T.D.) (John Labatt).
[28] The issue of discretion is not entirely clear. Subsection 45(3) of the Act provides that a trademark registration is liable to be expunged or amended where there is non-use that is not excused by special circumstances. The use of the word "“liable”" instead of a more mandatory word like "“shall”" or "“must”" may suggest that expungement or amendment does not follow automatically from non-use that is not excused by special circumstances. On the other hand, this Court stated as follows in Harris Knitting at para. 10 (and again in Scott Paper at para. 21):[W]here it appears from the evidence furnished to the Registrar that the trade mark is not in use, the Registrar must order that the registration of the mark be expunged unless the evidence shows that the absence of use has been “due to special circumstances that excuse such absence of use”. (emphasis added)
[29] The use of the word "“must”" from this Court suggests that there is no discretion in the case of non-use of the trademark unless such non-use is excused by special circumstances. In my view, however, nothing in this case turns on the question of discretion. At paras 30-64 the court sequentially considers whether 'new owner' jurisprudence is valid, it's application on the case facts, and whether the TA s.45(3) 'special circumstances' exception applies.
. Centric Brands Holding LLC v. Stikeman Elliott LLP
In Centric Brands Holding LLC v. Stikeman Elliott LLP (Fed CA, 2025) the Federal Court of Appeal allowed an appeal, this from an earlier dismissal of an appeal against "a decision of the Trademarks Opposition Board on behalf of the Registrar of Trademarks", that from an order expunging a trademark registration for lack of 'use'.
Here the court illustrates statutory law - and both administrative and court procedures, regarding expungement of a trademark for non-use:[3] The Registrar’s Decision came after a request by the respondent, Stikeman Elliott LLP (Stikeman), that the Registrar give the then registered owner of the Mark notice under section 45 of the Act (the Notice) requiring it to furnish evidence demonstrating either (i) use of the Mark in Canada during the three-year period immediately before the notice with respect to each of the goods specified in the registration, or alternatively (ii) the date when the Mark was last used in Canada and the reason(s) for the absence of use since then. The Registrar issued the Notice on October 12, 2018.
[4] Centric responded with an affidavit indicating that it had acquired the Mark shortly after the date of the Notice, on October 29, 2018, and it was unable to provide invoices evidencing use of the Mark before the date of acquisition. The affidavit added that it had been its intention since acquisition to use the Mark, and that it had since done so. Centric argued that the ownership of the Mark had in fact been transferred prior to the date of the Notice by means of a Purchase and Sale Agreement dated June 27, 2018 between an affiliate of Centric and the previous owner of the Mark (the Agreement).
[5] After considering written submissions from Stikeman and from Centric, the Registrar concluded that the evidence was insufficient to demonstrate use of the Mark as contemplated in the Notice. The Registrar also concluded that the evidence was not sufficient to demonstrate that special circumstances existed to excuse non-use as contemplated in subsection 45(3) of the Act.
III. The Federal Court’s Decision
[6] On appeal of the Registrar’s Decision to the Federal Court pursuant to section 56 of the Act, Centric accepted that the evidence did not demonstrate use of the Mark as contemplated in subsection 45(3) of the Act and relied instead on an argument that special circumstances existed to excuse the non-use. Centric introduced new evidence, as it was entitled to do. The new evidence provided more details concerning the transaction that led to Centric’s acquisition of the Mark (the Transaction). The new evidence also described efforts by the previous owner prior to the acquisition, and by Centric thereafter, to use the Mark, and specifically listed the last date of use in Canada known by the previous owner as June 17, 2011 (see paragraphs 31 and 32 of the affidavit of Mia Dell’Osso-Caputo dated August 24, 2023).
[7] Pursuant to existing jurisprudence, the Federal Court applied a correctness standard of review to the appeal based on the materiality of the new evidence. The parties do not take issue with this approach.
[8] The Federal Court summarized the general principles applicable to section 45 of the Act, and the special circumstances exception to avoid expungement of a trademark registration for non-use. The Federal Court noted that section 45 was created as a summary procedure for the purpose of removing "“deadwood”" from the trademarks register. The Federal Court also noted the text of subsection 45(3), which contemplates expungement as a possible consequence of failing to demonstrate use of a trademark in the three years prior to issuance of a notice (the relevant period), and the availability of the special circumstances exception:Effect of non-use
Effet du non-usage
45(3) Where, by reason of the evidence furnished to the Registrar or the failure to furnish any evidence, it appears to the Registrar that a trademark, either with respect to all of the goods or services specified in the registration or with respect to any of those goods or services, was not used in Canada at any time during the three year period immediately preceding the date of the notice and that the absence of use has not been due to special circumstances that excuse the absence of use, the registration of the trademark is liable to be expunged or amended accordingly.
45(3) Lorsqu’il apparaît au registraire, en raison de la preuve qui lui est fournie ou du défaut de fournir une telle preuve, que la marque de commerce, soit à l’égard de la totalité des produits ou services spécifiés dans l’enregistrement, soit à l’égard de l’un de ces produits ou de l’un de ces services, n’a été employée au Canada à aucun moment au cours des trois ans précédant la date de l’avis et que le défaut d’emploi n’a pas été attribuable à des circonstances spéciales qui le justifient, l’enregistrement de cette marque de commerce est susceptible de radiation ou de modification en conséquence. . Milano Pizza Ltd. v. 6034799 Canada Inc.
In Milano Pizza Ltd. v. 6034799 Canada Inc. (Fed CA, 2023) the Federal Court of Appeal considered the issue of 'control' as it bears on trademark use adequate to establish trademark validity:[3] The appellants argue that the Federal Court applied an incorrect legal test when assessing whether the appellants had control over their licensees within the meaning of subsection 50(1) of the TMA. Both the appellants and respondents agree that determining the correct legal test is a question of law, reviewable on a correctness standard: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235 [Housen]. The appellants argue that the Judge improperly required trademark owners to have a specific manner or degree of control over their licensees, whereas it is for the trademark owner to determine the appropriate manner and extent of control over the character or quality of the goods or services. The appellants argue that they had control over their licensees through a requirement that licensees purchase their ingredients, pizza boxes and drinks from authorized distributors (the purchasing requirement) and through a requirement that no other licence would be awarded or granted for a given geographical area without the licensee’s consent (the territory requirement): see Decision at para. 17.
....
[6] Control over the finished product or service is therefore required to ensure the same quality across all licensees: see Decision at paras. 91-93, 99-101, Tommy Hilfiger Licensing Inc. v. Produits de Qualité I.M.D. Inc., 2005 FC 10 at para. 81, Empresa Cubana Del Tabaco Trading v. Shapiro Cohen, 2011 FC 102 at paras. 86-90, aff’d Cohen v. Empressa Cubana Del Tabaco, 2011 FCA 340. In the case at bar, the Judge determined that Milano’s control was insufficient. Contrary to the appellants’ submission, the Judge was not dictating how or in what manner the trademark owner needed to exercise control, but simply found, on the facts of this case, that control did not exist at all. This is clearly not an error of law. Indeed, it would make a mockery of subsection 50(1) if any type or degree of control was acceptable. . Miller Thomson LLP v. Hilton Worldwide Holding LLP
In Miller Thomson LLP v. Hilton Worldwide Holding LLP (Fed CA, 2020) the Federal Court of Appeal discussed the importance of 'use' in trademark law:[6] Unlike other forms of intellectual property, use of a trademark is essential, and is fundamental to trademark rights: HomeAway.com, Inc. v. Hrdlicka, 2012 FC 1467, [2012] F.C.J. No. 1665 at paras. 11–12. As the Supreme Court of Canada noted in Mattel, Inc. v. 3894207 Canada Inc., 2006 SCC 22, [2006] 1 S.C.R. 772 at para. 5, "“in trade-marks the watchword is ‘use it or lose it’”". Indeed, the statutory definition of "“trademark”" in section 2 of the Act is "“a sign or combination of signs that is used or proposed to be used by a person for the purpose of distinguishing or so as to distinguish their goods or services from those of others […]”" [emphasis added].
[7] In accordance with subsection 4(2) of the Act, a trademark will be deemed to be used in association with services "“if it is used or displayed in the performance or advertising of those services”". That said, the mere advertising of services in Canada will not constitute use in Canada in association with a service. Some aspect of the services must be performed or delivered in Canada: Porter v. Don the Beachcomber, [1966] Ex.C.R 982, 48 C.P.R. 280 at para. 17; Marineland Inc. v. Marine Wonderland and Animal Park Ltd., [1974] 2 FC 558.
[8] While foreign trademark owners can register their marks in Canada and thereby enjoy the benefits of exclusivity, maintenance of a registration depends on the use of the mark in Canada.
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