On May 25, 2011, the Supreme Court of Canada released its decision in Masterpiece Inc. v. Alavida Lifestyles Inc., in which it clarified the basic approach for assessing a likelihood of confusion between a registered and unregistered mark and provided confirmation that Canada’s trade-mark regime is based upon first-use.

Masterpiece Inc., a retirement residence operator, had used the trade-name “Masterpiece” and related unregistered trade-marks in Alberta since 2001.   In 2005, Alavida Lifestyles Inc., an Ontario company, applied to register the trade-mark MASTERPIECE LIVING in association with similar retirement residence services on the basis of Proposed Use in Canada.  Alavida’s MASTERPIECE LIVING application proceeded to registration  in 2007.   In 2006, Masterpiece Inc. filed applications to register the marks MASTERPIECE and MASTERPIECE LIVING, however these were denied on the basis of Alavida’s previously filed application.  Consequently, Masterpiece Inc. commenced proceedings to expunge Alavida’s MASTERPIECE registration based upon prior common law use of MASTERPIECE in Alberta.

Both the Federal Court – Trial Division and the Federal Court of Appeal denied Masterpiece Inc.’s application and upheld Alavida’s registration.   These courts found, among other things, that in the absence of any competitive use in the same geographic area there would be no likelihood of confusion.   In so doing, the lower Courts adopted an approach that grants exclusive rights to the first registrant of a trade-mark, as opposed to the first user of the mark.

In overturning the Court of Appeal decision, the Supreme Court made it clear that when examining the relationship between a proposed use trade‑mark and an existing unregistered trade‑mark, it is the use of a trade‑mark that confers priority of title and the exclusive right to the trade‑mark.  Moreover, the Court clarified that the test for confusion with a registered mark  “is based upon the hypothetical assumption that both trade-names and trade-marks are used ‘in the same area’, irrespective of whether this is actually the case.”   Hence, the geographic locale in which the unregistered mark is used does not play a role in assessing confusion with a registered mark. Given that registration confers the right to exclusive use of a mark across Canada, the registered mark cannot be confusing with any previously used trade-mark or trade-name.

The Supreme Court also clarified that the confusion test to be applied is one of “first impression”.   While factors such as the cost and nature of the goods and services may be relevant, the test to be applied is “a matter of first impression in the mind of a casual consumer somewhat in a hurry who sees the [registered]  mark at a time when he or she has no more than an imperfect recollection of the [prior unregistered] trade-mark, and does not pause to give the matter any detailed consideration or scrutiny, nor to examine closely the similarities and differences between the marks.”

Finally, the Supreme Court noted that the use of expert evidence should be approached with caution so that potentially distracting evidence does not complicate court proceedings.  Courts must “fulfill a gatekeeper role” and use their own common sense to determine whether the casual consumer in a hurry would be confused.

The Supreme Court concluded that Alavida’s registration for MASTERPIECE LIVING was invalid given that it was confusing with Masterpiece Inc.’s prior common law use of  the trade name and unregistered trade-mark “Masterpiece”, and therefore ordered that it be expunged from the Register of Trade-marks.

Take-Aways:

The decision of the Supreme Court of Canada is important for several reasons:

First, it confirms that when assessing confusion between registered and unregistered trade-marks, geographic locale is irrelevant because Canada’s trade-mark regime is national in scope.  The confusion test must be based on a hypothetical assumption that both trade names and trade-marks are used in the same geographic area, particularly since registration confers upon the owner the right to the exclusive use of the mark throughout Canada.

Second, the decision highlights that registration itself does not confer priority of title to a trade-mark, rather, use of a mark confers trade-mark rights.   The Court confirmed that Canada is a first-to-use and not a first-to-file jurisdiction.

Finally, the Court cautioned that costly expert evidence should not be irrelevant and potentially distracting to the court.

This summary was prepared with the assistance of Tanya Treciokas – Carleton University  – Master of Arts in Legal Studies

 

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