Savour the Flavor of Victory: FLAVOR SAVER Decision Confirms Trade-Mark Use When Flyers Advertising Goods Are Used in Online Ordering

The Internet has changed how distributors and consumers purchase goods, and those who purchase goods for multi-level marketing from companies such as Tupperware are no exception. A recent decision Federal Court decision involving the manufacturer of Tupperware, Dart Industries Inc. v. Baker & McKenzie LLP, considered whether trade-mark use occurred when goods are purchased online using flyers. The Dart decision also provides important lessons on preparing trade-mark use evidence, especially from goods and services are purchased online.

Background

Dart owns Canadian trade-mark registration No. TMA145,567 FLAVOR SAVER for plastic household containers and lids. Baker& McKenzie initiated proceedings under section 45 of the Trade-marks Act to expunge – effectively, cancel – the registration for non-use.

Section 45 proceedings are a mechanism for removing unused trade-marks from the trade-mark registry, as trade-marks are maintained through use. Consequently, section 45 jurisprudence helps to define what is and is not considered trade-mark use – an important concept in acquiring and maintaining trade-mark rights in Canada.

Section 45 proceedings are initiated through the Canadian Intellectual Property Office (CIPO). The owner of a trade-mark registration which is subject to section 45 proceedings must prove that the mark was used during the three (3) year period prior to the commencement of the proceedings. CIPO’s Trade-marks Opposition Board (TMOB) decides section 45 proceedings. The TMOB’s decision can be appealed to the Federal Court of Canada, then the Federal Court of Appeal and ultimately the Supreme Court of Canada if leave to appeal is granted.

Before the TMOB, Dart filed evidence including two flyers displaying the FLAVOR SAVER trade-mark which were distributed to customers and potential customers during the relevant period. The evidence also showed that the sales of the FLAVOR SAVER containers were through catalogue sales in its home party sales programs.

Under the Trade-marks Act, advertising is not trade-mark use with goods. The mark must somehow be associated with the goods at the time of the transfer of the property or possession of the goods to the person taking ownership or possession. Based on Dart’s evidence, the TMOB found there was no use of the FLAVOR SAVER mark and expunged Dart’s registration – the mere distribution of flyers was insufficient to establish trade-mark use. The TMOB noted that notice of an association between a trade-mark and goods not bearing the mark could be established by way of catalogues and product literature. Trade-mark use, however, was only possible under such circumstances when the catalogues and literature were used in ordering and purchasing goods. The TMOB Hearing Officer indicated that he would have benefited from evidence providing further details regarding the conduct of the home parties and the manner in which transactions took place.

Dart’s Appeal to the Federal Court Hits The Bullseye

Dart appealed the TMOB decision to the Federal Court. Trade-mark owners appealing section 45 decisions to the Federal Court are automatically allowed to file new evidence on appeal. On appeal, Dart filed new evidence to address the evidentiary deficiencies identified by the Hearing Officer. Such evidence effectively allows the Court to reach its own conclusions about the case without deference to the TMOB.

Dart’s new evidence demonstrated that the Tupperware consultants used the flyer displaying the FLAVOR SAVER trade-marks to place orders for the plastic containers and lids online through a web-based ordering application. On the date of the publication of the flyer in question, over 100 orders were placed from Canada for the containers. The consultants paid for such orders with credit cards and took ownership of the containers. The flyer made the consultants aware of the goods and enabled them to order and purchase the goods online, by providing images of the containers together with the mark. The Court held that the consultants therefore used the flyer bearing the FLAVER SAVER mark when ordering and purchasing the goods. Therefore, the mark was used during the relevant period because it was associated with the goods at the time of transfer of the property of the goods to these consultants.

The Court’s decision follows an earlier trade-mark decision concerning ordering from product literature, Philip Morris Products SA v Marlboro Canada Limited, 2010 FC 1099 where at paragraph 236 that Court noted “… it has been held that leaflets, product literature, and pricing stickers bearing the trade-mark, as well as catalogues, can provide the required notice of association between the trade-mark and the goods to the purchaser when they are used in ordering and purchasing.”

Lessons to be Learned

Dart provides two important lessons on drafting evidence to demonstrate use in section 45 proceedings.

Firstly, Dart’s evidence filed before the TMOB did not adequately use of the trade-mark in association with the goods claimed in the FLAVOR SAVER registration. Sometimes the tight evidence deadlines in section 45 proceedings do not permit the trade-mark registration’s owner to gather complete evidence to demonstrate use. Under those circumstances, if the registration is important to the trade-mark owner, and if the trade-mark owner plans on appealing a negative TMOB decision, the trade-mark owner should take steps to address the gaps in its evidence as soon as possible in order to improve its chances of a win on appeal.

Secondly, the Court’s decision is instructive in how the Federal Court may view trade-mark use evidence in this era of changing purchase mechanisms for products and services. The Court noted:

Although in the era before online purchasing, [Dart] might have more direct proof of the flyer’s connection to ordering on the basis of the orders being placed using a form from a flyer or catalogue, there is no need to hold registrants to such a requirement in the face of emerging technologies. Here, the timing of the orders is sufficient to link the flyers to the online orders despite the separation of the two media of communication.