2016 FCA 60, 2016 FCA 60

[2017] 1 F.C.R. 413 A-569-14 2016 FCA 60 MC Imports Inc. ( Appellant ) v. AFOD Ltd. ( Respondent ) Indexed as: MC Imports Inc. v. AFOD Ltd. Federal Court of Appeal, Trudel, Scott and de Montigny JJ.A.—Ottawa, December 2, 2015 and February 23, 2016. Trade-marks — Appeal from Federal Court decision granting appellant’s motion for

summary trial but dismissing action for infringement of trade-mark LINGAYEN — Appellant seeking in particular order declaring that trade-mark at issue not shown to be either clearly descriptive or deceptively misdescriptive under Trade-marks Act, s. 12(1)(b), thus should not have been struck from Trade- marks register — Appellant importing, selling food products under trade-mark LINGAYEN, municipality in Philippines known for bagoong shrimp paste products — LINGAYEN trade-mark covering Filipino food products, food supplier, distributor services — Respondent, British Columbia company importing food products, including bagoong, from Philippines, other Asian countries into Canada — Federal Court agreeing with respondent that appellant’s trade-mark not registrable at time of registration since considered invalid because clearly descriptive of place of origin of wares in relation to which trade-mark used, contrary to Act, s. 12(1)(b) — Also finding that trade-mark not distinctive at time proceedings bringing validity of registration into question commenced, contrary to Act, ss. 2, 18(1)(b) — Main issues: what is appropriate legal test for whether trade-mark clearly descriptive or deceptively misdescriptive of place of origin under Act, s. 12(1)(b); whether Federal Court erring in fact or in application of law to facts in determining that trade- mark not registrable, invalid pursuant to Act, ss. 12(1)(b), 18(1)(a); whether Federal Court erring in concluding without supporting reasons that trade-mark invalid for lack of distinctiveness; whether Federal Court erring in finding that respondent not guilty of infringement; whether Federal Court erring in not addressing claim of passing off under Act, s. 7(b) — Correct legal approach under Act, s. 12(1)(

b) determined herein — Two cases illustrating parties’ respective positions examined: Conzorsio del Prosciutto di Parma v. Maple Leaf Meats Inc. ( Parma ) ; Sociedad Agricola Santa Teresa Ltd. v.

Vina Leyda Limitada (Leyda) — Under Parma approach, perception of ordinary consumer relevant to analysis whereas under Leyda approach, ordinary consumer’s perspective irrelevant — Leyda setting out right approach to follow — Parma, which appellant relying on, not proper jurisprudential authority to rely upon when facing clearly descriptive case — If trade-mark geographic name referring to actual place of origin of goods or services with which trade-mark associated, clearly descriptive of place of origin within meaning of Act, s. 12(1)(b), therefore not registrable — Concerning prior use, Act, s. 12(2) providing exception to s. 12(1)(b): despite being clearly descriptive or deceptively misdescriptive, trade-mark nonetheless registrable if becoming distinctive as of date of application due to use in Canada by applicant or applicant’s predecessor in title — As to trade-mark at issue’s validity, since word “Lingayen” referring only to municipality, trade-mark clearly describing place of origin of goods with which associated within meaning of Act, s. 12(1)(b); thus clearly descriptive of place of origin — Appellant’s evidence of prior use insufficient to meet burden of demonstrating acquiring distinctiveness at time of registration — Therefore, trade- mark’s registration invalid under Act, s. 18(1)(a); Federal Court not erring in conclusion thereon — While Federal Court should have addressed distinctiveness directly in reasons, given Court’s conclusion that registration invalid under Act, s. 18(1)(a), unnecessary to consider respondent’s alternate grounds of invalidity under s. 18(1)(

b) thereof — As to infringement, Federal Court arriving at clear conclusion, well supported by evidence of relevant product labels that message to public to distinguish respondent’s products through NAPAKSARAP trade-mark, that “Lingayen Style” only describing characteristic — Federal Court correctly framing conclusion respecting clear message to public through respondent’s use of words “Lingayen Style” — Although Federal Court not specifically considering allegation of passing off, based on record, could not have reached conclusion favourable to appellant — All of appellant’s arguments respecting passing off failing — Appeal dismissed.

This was an appeal from a Federal Court decision granting the appellant’s motion for

summary trial but dismissing its action for infringement of its trade-mark LINGAYEN. The appellant sought an order in particular declaring that its trade-mark was not shown to be either clearly descriptive or deceptively misdescriptive under paragraph 12(1)(

b) of the Trade-marks Act (the Act) and thus should not have been struck from the register. The appellant’s position was that its trade-mark LINGAYEN is distinctive in association with its wares. The appellant imports and sells food products under the trade-mark LINGAYEN, which is a municipality in the Philippines known for its bagoong shrimp paste products. The LINGAYEN trade-mark covers Filipino food products and food supplier and distributor services. The appellant was incorporated and its predecessor company was Meneses-Canso Bros Trading of Canada, a family-run business.

Both Meneses-Canso and the appellant have sold their products directly and through distributors. In 1975, the company began to use the mark LINGAYEN in Canada in association with the wares and there has been continuous use of the mark since that time. In 2000, Meneses- Canso filed a trade-mark application for LINGAYEN in Canada in association with its wares and services and the application was registered in 2003. In 2004, Meneses-Canso assigned the mark to various members of the Meneses family operating as a partnership.

Following the incorporation of the appellant, it became a licensee of the trade-mark LINGAYEN and imported and sold the food products under that mark. The partnership subsequently assigned the trade-mark to the appellant in 2011. The respondent is a British Columbia company importing food products, including bagoong, from the Philippines and other Asian countries into Canada and then selling them to grocery stores. In 2011, the respondent imported from the Philippines a shipment of bagoong products and the labels from these products were marked with the respondent’s trade-mark Napakasarap.

The labels also included the words “Lingayen Style” in smaller script immediately below the trade-mark. The respondent sold the inventory of some of the food products in the fall of 2011, which brought on the present litigation. The Federal Court agreed with the respondent that the appellant’s trade-mark was not registrable at the time of registration and was thus invalid because it was clearly descriptive of the place of origin of the wares in relation to which it was used, contrary to paragraph 12(1)

(

b) of the Act. It also found that the trade-mark was not distinctive at the time proceedings bringing the validity of the registration into question were commenced, contrary to

section 2 and paragraph 18(1)(

b) of the Act. Having regard to the definition of the ordinary consumer, the Federal Court noted a doctrinal divide alleged by the parties regarding the correct analytical approach when determining whether a mark is clearly descriptive or deceptively misdescriptive of the place of origin of the wares or services. The Federal Court declined to resolve this issue on the basis that it arrived at the same result by either approach.

Having concluded in particular that the wares did originate from Lingayen, it stated that Lingayen has a recognized connection to fish sauce products from the perspective of the average Canadian consumer of the wares in question. It concluded that the result was the same as if the perspective of the ordinary consumer was irrelevant. As for infringement, the Federal Court concluded that the respondent did not use the words “Lingayen Style” as a trade-mark but to indicate a characteristic of its bagoong products.

It did not use the words for the purpose of distinguishing its wares and therefore there could not have been infringement. The main issues were what was the appropriate legal test for whether a trade-mark is clearly descriptive or deceptively misdescriptive of place of origin under paragraph 12(1)(

b) of the Act; whether the Federal Court erred in fact or in its application of the law to the facts in determining that the trade-mark was not registrable and is invalid pursuant to paragraphs 12(1)(

b) and 18(1)(

a) of the Act; whether the Federal Court erred in concluding without supporting reasons that the trade-mark was invalid for lack of distinctiveness; whether the Federal Court erred in finding that the respondent was not guilty of infringement; and whether the Federal Court erred in not addressing the claim of passing-off under paragraph 7(

b) of the Act. Held , the appeal should be dismissed. Regarding the correct legal approach under paragraph 12(1)(

b) of the Act, the two cases illustrating the parties’ respective positions were Conzorsio del Prosciutto di Parma v. Maple Leaf Meats Inc. ( Parma ) and Sociedad Agricola Santa Teresa Ltd. v. Vina Leyda Limitada ( Leyda ). Under the Parma approach, the perception of the ordinary consumer is relevant to the analysis whereas under the Leyda approach, the ordinary consumer’s perspective is irrelevant. The appeal highlighted a need for guidance from the Court regarding the registrability of trade-marks that describe places of origin of wares and services. Paragraph 12(1)(

b) of the Act establishes that a trade- mark is not registrable if it is either clearly descriptive or deceptively misdescriptive in the English or French language, inter alia , of the character or quality of the goods or services in association with which it is used or proposed to be used or of their place of origin. The right approach to follow is Leyda . Parma (which the appellant relied on), with its general public approach, is not the proper jurisprudential authority to rely upon when facing a clearly descriptive case.

To determine whether a geographic name is unregistrable as a trade-mark because it is clearly descriptive of place of origin, one must: (1) determine that the trade-mark is a geographical name; (2) determine the place of origin of the wares or services and; (3) assess the trade-mark owner’s assertions of prior use, if any. Determining whether an impugned trade-mark is a geographic name may require resort to consumer perceptions where the name of a geographic place (name or location) also has other meanings. This nature of inquiry is only relevant when there are multiple meanings to the word in question.

When there are multiple meanings to the word in question, not all of which are geographic, it must then be determined which meaning predominates. Further, where such an inquiry is necessary, the relevant ordinary consumer from whose perspective this question ought to be considered is the ordinary consumer of the products or services with which the mark is associated, not the general public. Thus, in a clearly descriptive case, the resort to the perspective of the ordinary consumer is only meaningfully relevant when there is ambiguity as to whether the trade-mark actually refers to a place.

Once it is concluded that the trade-mark refers to a geographic location, the focus of the analysis becomes the origin of the wares or services. If the wares or services originate in the place referred to by the trade-mark, then the trade-mark is clearly descriptive of place of origin. There is no ambiguity when the trade-mark is the name of the place of origin that would invite further inquiry: referring to the place of origin by its name is the pinnacle of clarity.

However, if the trade-mark refers to a geographic place that is not the actual place of origin of the goods or services, then it cannot be clearly descriptive of place of origin. It is misdescriptive and further analysis is required to determine whether it is deceptively so. In sum, if a trade-mark is a geographic name that refers to the actual place of origin of the goods or services with which the trade-mark is associated, it is clearly descriptive of place of origin within the meaning of paragraph 12(1)(

b) of the Act and is therefore not registrable. With respect to prior use, subsection 12(2) of the Act provides an exception to paragraph 12(1)(b): despite being clearly descriptive or deceptively misdescriptive, a trade-mark is nonetheless registrable if it has become distinctive as of the date of application due to its use in Canada by the applicant or the applicant’s predecessor in title.

In a case where there has been no prior use of the trade-mark, there is clearly no resort to subsection 12(2) and the analysis stops once it has been determined that the trade-mark is clearly descriptive within the meaning of paragraph 12(1)(b). But in a prior-use case, it is open to the applicant to argue that through this prior use the trade-mark has developed distinctiveness such that it falls within the subsection 12(2) exception.

What must be demonstrated is that the trade-mark, while it may be descriptive, has acquired a dominant secondary or distinctive meaning in relation to the wares or services with which it is associated. To show this, evidence must be presented to demonstrate that from the perspective of the relevant public—that is, people who actually use the product or service in question—the trade-mark has become distinctive of that product or service.

It is clear that mere evidence of prior use will not satisfy the requirement under subsection 12(2) which requires both prior use and acquired distinctiveness as a result of that use. As to the validity of the trade-mark at issue, it has been established that the goods with which the LINGAYEN trade-mark is associated originate in Lingayen. Since there was no evidence suggesting that the ordinary meaning of the word “Lingayen” refers to anything but the municipality, the trade-mark clearly describes the place of origin of the goods with which it is associated within the meaning of paragraph 12(1)(

b) of the Act. The appellant did not raise subsection 12(2) or present arguments to the effect that its registration falls within the exception it sets out. The appellant’s evidence of prior use was not sufficient to meet the burden of demonstrating that it had acquired distinctiveness at the time of registration. It showed nothing more than the fact of its prior use and the speculation of one expert as to consumer perceptions, which was insufficient to meet its burden of proving that the trade-mark acquired distinctiveness in the minds of consumers.

Therefore, given the conclusion that the trade-mark was clearly descriptive of place of origin and that the appellant did not demonstrate that it acquired distinctiveness through prior use as of the date of applying for registration, the trade-mark’s registration was invalid under paragraph 18(1)(

a) and the Federal Court did not err in its conclusion. The Federal Court included in its order that the mark was invalid pursuant to paragraph 18(1)(

b) of the Act because it was not distinctive

at the time of registration, but it did not address or explain this conclusion in its reasons. While the Federal Court should have addresseddistinctiveness directly in its reasons, given the conclusion herein that the registration was invalid under paragraph 18(1)(

a) thereof, itwas unnecessary to consider the alternate grounds of invalidity originally submitted by the respondent under paragraph 18(1)(b). With respect to infringement, the Federal Court considered the manner in which the respondent used the words “Lingayen Style” on itspackaging and concluded that the respondent did not use the words “Lingayen Style” as a trade-mark to distinguish its product fromthose of other producers but rather to indicate a characteristic of its bagoong products. There could therefore be no infringement undersections 19 and 20 of the Act.

The Federal Court arrived at a clear conclusion, well supported by the evidence of the relevant productlabels that the message to the public was to distinguish the respondent’s products through its NAPAKSARAP trade-mark and that“Lingayen Style” described a characteristic. The Federal Court correctly framed its conclusion respecting the clear message to the publicthrough the respondent’s use of the words “Lingayen Style” and it was open thereto to determine this message through an analysis of theproduct labels. As for passing off, the Federal Court did not address the appellant’s claim under paragraph 7(

b) of the Act. Although the Federal Courtdid not specifically consider the allegation of passing off and should have, based on the record, it could not have reached a conclusionfavourable to the appellant. The appellant failed to demonstrate goodwill (reputation), one of three factors to be proven by a plaintiff toan action in infringement, regarding the distinctiveness of the product. The nearest to a demonstration of goodwill was the appellant’sevidence that it has been using the mark for almost 40 years and has had a much longer time to establish its reputation and awarenessamong consumers.

The test to establish the existence of goodwill requires more than that. The appellant also failed to establish thesecond factor, a misrepresentation leading to deception of the public. The appellant did not successfully argue that the Federal Courterred in concluding that there was no infringement and that there was thus no misrepresentation leading to deception. In conclusion, allof the appellant’s arguments with respect to passing off failed. STATUTES AND REGULATIONS CITED Trade-marks Act, R.S.C., 1985, c. T-13, ss. 2 “trade-mark”, 4(1), 7(b), 12, 18(1)(a),(b), 19, 20.

CASES CITED APPLIED: Sociedad Agricola Santa Teresa Ltd. v. Vina Leyda Limitada, 2007 FC 1301, 63 C.P.R. (4th) 321; Housen v. Nikolaisen, 2002 SCC 33,[2002] 2 S.C.R. 235; Manitoba Fisheries Ltd. v. The Queen, (SCC), [1979] 1 S.C.R. 101, (1978), 88 D.L.R. (3d) 462;Veuve Clicquot Ponsardin v. Boutiques Cliquot Ltée, 2006 SCC 23, [2006] 1 S.C.R. 824. CONSIDERED: Conzorsio del Prosciutto di Parma v. Maple Leaf Meats Inc., (FC), [2001] 2 F.C. 536, (2001), 11 C.P.R. (4th) 48(T.D.), affd 2002 FCA 169, 18 C.P.R. (4th) 414; Ontario Teachers’ Pension Plan Board v.

Canada (Attorney General), 2012 FCA 60,342 D.L.R. (4th) 667; Eastman Photographic Materials Company Ltd. v. Comptroller-General of Patents, Designs and Trade Marks,[1898] A.C. 571 (H.L.); Atlantic Promotions Inc. v. Canada (Registrar of Trade Marks) (1984), 2 C.P.R. (3d) 183, [1984] F.C.J. No. 606(T.D.) (QL); Cliche v. Canada (Attorney General), 2012 FC 564, 103 C.P.R. (4th) 411; Molson Breweries v. John Labatt Ltd., (FCA), [2000] 3 F.C. 145, (2000), 5 C.P.R. (4th) 180 (C.A.). REFERRED TO: Cross-Canada Auto Body Supply (Windsor) Limited v.

Hyundai Auto Canada, 2007 FC 580, 60 C.P.R. (4th) 406; Boston PizzaInternational Inc. v. Boston market Corp., 2003 FC 892, 27 C.P.R. (4th) 52; ITV Technologies Inc. v. WIC Television Ltd., 2003 FC1056, 29 C.P.R. (4th) 182; Carling Breweries Ltd. v. Molson Companies Ltd., (FC), [1984] 2 F.C. 920, (1984), 1C.P.R. (3d) 191 (T.D.), affd (1988), 16 C.I.P.R. 157, 19 C.P.R. (3d) 129 (F.C.A.); Pepper King Ltd. v. Sunfresh Ltd., , 8 C.P.R. (4th) 485 (F.C.T.D.); Kirkbi AG v. Ritvik Holdings Inc., 2005 SCC 65, [2005] 3 S.C.R. 302; Cheung v. Targen EventProduction Ltd., 2010 FCA 255, 87 C.P.R. (4th) 287.

AUTHORS CITED Gill, Kelly. Fox on Canadian Law of Trade-marks and Unfair Competition, 4th ed. Loose-leaf. Toronto: Carswell, 2002. Hughes, Roger T. et al. Hughes on Trade Marks, 2nd ed. loose-leaf. Markham, Ont.: LexisNexis Canada, 2005. APPEAL from a Federal Court decision (2014 FC 1161, 127 C.P.R. (4th) 245) granting the appellant’s motion for

summary trial butdismissing its action for infringement of its trade-mark LINGAYEN. Appeal dismissed. APPEARANCES David R. Elliott for appellant. Georges Sourisseau, Layne Hellrung and Scott E. Foster for respondent. SOLICITORS OF RECORD Dentons Canada LLP, Ottawa, for appellant. Sourisseau & Co., Vancouver and Gowling Lafleur Henderson LLP, Ottawa, for respondent. The following are the reasons for judgment rendered in English by

Trudel J.A. : I. Overview [ 1 ] This appeal is about the validity of a trade-mark when that mark is a geographical location. [ 2 ] The appellant, MC Imports Inc., imports and sells food products under the trade-mark LINGAYEN (or mark). Lingayen is a municipality in the Philippines known for its bagoong shrimp paste products characterized by their distinct aroma and flavour. In the Federal Court, it commenced a motion for

summary trial relating to an alleged infringement of its trade-mark by the respondent AFOD Ltd. It also sought damages. By counter-claim, the respondent challenged the validity of the appellant’s trade-mark registration under the Trade-marks Act , R.S.C., 1985, c. T-13 (the Act). [ 3 ] A judge of the Federal Court (the Judge) granted the motion for

summary trial but dismissed the appellant’s action for infringement of its mark. The Judge agreed with the respondent that the appellant’s trade-mark was not registrable at the time of registration and was thus invalid, because it was clearly descriptive of the place of origin of the wares (the current Act uses the word “goods”) in relation to which it was used, contrary to paragraph 12(1) (

b) of the Act. Moreover, the Judge found that the trade-mark was not distinctive at the time proceedings bringing the validity of the registration into question were commenced, contrary to

section 2 and paragraph 18(1) (

b) of the Act. The Federal Court decision is cited as 2014 FC 1161 , 127 C.P.R. (4th) 245. [ 4 ] MC Imports Inc. appeals from that decision seeking an order declaring that its trade-mark has not been shown to be either clearly descriptive or deceptively misdescriptive under paragraph 12(1) (

b) of the Act . As a result, its mark should not have been struck from the register and, if already struck, should be reinstated. The appellant’s position is that its trade-mark LINGAYEN is distinctive in association with its wares. [ 5 ] For the reasons that follow, I am of the view that this appeal cannot succeed. As a result, I propose to dismiss it but for reasons that depart somewhat from those of the Judge. II.

Relevant Facts and Procedural Background [ 6 ] The Judge aptly summarized the relevant facts from paragraphs 1 through 9 of his reasons. [ 7 ] The LINGAYEN trade-mark covers Filipino food products such as fish/shrimp sauce, known as bagoong, fish/shrimp preserves, fish based, salted fish, soy sauce, and vinegar (the wares) and food supplier and distributor services (the services). [ 8 ] The appellant was incorporated in 2004. Meneses-Canso Bros Trading of Canada is the predecessor company to MC Imports Inc. Meneses-Canso was started as a family business in September 1975 by the father of Mr. Alfredo C.

Meneses III who is the principal of MC Imports Inc. [ 9 ] Since 1975, Meneses-Canso and now the appellant have sold their products directly and through distributors. In 1975, the company began to use the mark LINGAYEN in Canada in association with the wares, and since that time there has been continuous use of the mark. LINGAYEN products are available in small, medium and national grocery stores across the country.

The appellant has also advertised its products bearing the mark on the Internet since October 2004. [ 10 ] On February 15, 2000, Meneses-Canso filed a trade-mark application for LINGAYEN in Canada in association with its wares and services, under application number 1046868. The application was registered on August 27, 2003, under registration No. TMA588314. During that three-year delay, a prior trade-mark registration for LINGAYEN owned by an unrelated company was expunged on the basis of non-use. [ 11 ] In 2004, Meneses-Canso assigned the mark to various members of the Meneses family, operating as a partnership.

Following the incorporation of the appellant, it became a licensee of the trade-mark LINGAYEN and imported and sold the food products under that mark. The partnership subsequently assigned the trade-mark to MC Imports Inc. on October 21, 2011. [ 12 ] The respondent AFOD Ltd. is a company based in Delta, British Columbia. It imports food products, including bagoong, from the Philippines and other Asian countries into Canada and then sells them to grocery stores. Around May 2011, AFOD Ltd. imported from the Philippines a shipment of bagoong products.

As noted by the Judge, the imported products included 49 cases of bagoong alamang, a type of fish sauce, and 49 cases of bagoong guisado. The labels from these products were marked with the respondent’s trade- mark Napakasarap. The labels also included the words “Lingayen Style” in smaller script, immediately below the trade-mark. The labels appearing on the parties’ products are reproduced at Annex 1 to these reasons. [ 13 ] The respondent sold the inventory of bagoong guisado between September and November 2011. This event brought on the present litigation.

The total sales revenue of those products was less than $3 500. [ 14 ] In the Federal Court, each party provided affidavit evidence. [ 15 ] For a better understanding of the Judge’s reasons, I immediately reproduce the relevant provisions of the legislation as it read in November, 2011, when the appellant commenced its action. The provisions relevant to the results of this appeal are substantially similar in the current text of the Act . III. Relevant legislation Trade-marks Act , R.S.C., 1985, c. T-13.

Definitions 2. In this Act ,

… “trade-mark” means (

a) a mark that is used by a person for the purpose of distinguishing or so as to distinguish goods or services manufactured, sold, leased, hired or performed by him from those manufactured, sold, leased, hired or performed by others, … When deemed to be used 4.

(1) A trade-mark is deemed to be used in association with wares if, at the time of the transfer of the property in or possession of the wares, in the normal course of trade, it is marked on the wares themselves or on the packages in which they are distributed or it is in any other manner so associated with the wares that notice of the association is then given to the person to whom the property or possession is transferred. … Prohibitions 7. No person shall … (

b) direct public attention to his wares, services or business in such a way as to cause or be likely to cause confusion in Canada, at the time he commenced so to direct attention to them, between his wares, services or business and the wares, services or business of another; … When trade-mark registrable 12.

(1) Subject to

section 13, a trade-mark is registrable if it is not … (

b) whether depicted, written or sounded, either clearly descriptive or deceptively misdescriptive in the English or French language of the character or quality of the wares or services in association with which it is used or proposed to be used or of the conditions of or the persons employed in their production or of their place of origin; … Idem

(2) A trade-mark that is not registrable by reason of paragraph (1)(

a) or (

b) is registrable if it has been so used in Canada by the applicant or his predecessor in title as to have become distinctive at the date of filing an application for its registration. … When registration invalid 18.

(1) The registration of a trade-mark is invalid if (

a) the trade-mark was not registrable at the date of registration; (

b) the trade-mark is not distinctive at the time proceedings bringing the validity of the registration into question are commenced, or … Rights conferred by registration 19. Subject to sections 21, 32 and 67, the registration of a trade-mark in respect of any wares or services, unless shown to be invalid, gives to the owner of the trade-mark the exclusive right to the use throughout Canada of the trade-mark in respect of those wares or services. Infringement 20.

(1) The right of the owner of a registered trade-mark to its exclusive use shall be deemed to be infringed by a person not entitled to its use under this Act who sells, distributes or advertises wares or services in association with a confusing trade-mark or trade-name, but no registration of a trade-mark prevents a person from making … (

b) any bona fide use, other than as a trade-mark, (

i) of the geographical name of his place of business, or

(ii) of any accurate description of the character or quality of his wares or services, in such a manner as is not likely to have the effect of depreciating the value of the goodwill attaching to the trade-mark. IV. The Federal Court decision [16] After having decided that the matter before him could appropriately be decided by

summary trial, the Judge turned his mind tothe question of whether the appellant’s claim for infringement should be dismissed under paragraph 12(1)(

b) of the Act because themark LINGAYEN is either clearly descriptive or deceptively misdescriptive; or because it is not distinctive as required by the definitionof the term trade-mark under

section 2 of the Act. Then, the Judge stated the “two subsidiary issues imbedded in this alternateformulation of the description/deceptive misdescription … (1) whether or not the perspective of ordinary consumers is relevant and (2)how the “ordinary consumer” is defined” (Judge’s reasons, at paragraph 18). [17] Having regard to the definition of the ordinary consumer, the Judge noted a doctrinal divide alleged by the parties with respect tothe correct analytical approach when determining whether a mark is clearly descriptive or deceptively misdescriptive of the place oforigin of the wares or services.

Specifically, this divide is over the role of the ordinary consumer’s perception of the mark. From onepoint of view, it is necessary to ask whether the ordinary consumer would recognize the mark as relating to the place of origin. The otherapproach would set aside the ordinary consumer’s recognition and understanding of the mark as irrelevant, asking only whether it clearlydescribes the actual place of origin of the wares or services. The two cases illustrating the parties’ respective position are Conzorsio delProsciutto di Parma v.

Maple Leaf Meats Inc., (FC), [2001] 2 F.C. 536 (T.D.) (Parma) and Sociedad Agricola SantaTeresa Ltd. v. Vina Leyda Limitada, 2007 FC 1301, 63 C.P.R. (4th) 321 (Leyda).

I shall discuss these two cases later but for now, I returnto the Federal Court’s decision. [18] Although the Judge indicated he was unconvinced that this divide truly exists in the jurisprudence (Judge’s reasons, at paragraph25), he declined to resolve it on the basis that he arrived at the same result by either approach (Judge’s reasons, at paragraph 19). [19] As a matter of fact, the Judge acknowledged that Lingayen is a geographical location, a city of about 100 000 people in thePhilippines, and that the appellant’s own website along with tourism and trade websites identify Lingayen as a source of bagoong. [20] He found, despite the appellant’s silence on the question, the wares did originate in Lingayen, on the basis of Meneses-Canso’sconcession before the United States Trademark Office (Judge’s reasons, at paragraph 27; appeal book, Vol. 2, Tab 45, page 541). [21] Therefore, the Judge found, taking the Leyda approach, that the ordinary consumer’s perspective is irrelevant, “the wares areclearly descriptive of this place of origin, and not registrable under [paragraph] 12(1)(b)” (Judge’s reasons, at paragraphs 26 and 28). [22] Then adopting the Parma approach and assuming that the perception of the ordinary consumer is relevant to the analysis, theJudge stated that the standard to find a trade-mark is clearly descriptive of place of origin is that it is “self-evident to a consumer, on‘immediate impression’, that the mark signals the origin of the ware” (emphasis in original) (Judge’s reasons, at paragraph 30). [23] As to the identity of the ordinary consumer, he considered a broad approach that would describe the general public but ultimatelydetermined that for the purposes of this status the “ordinary consumer” was better understood narrowly as the actual consumer of thegoods in question.

In this case, he accepted evidence that the average consumer of the goods refers to “Canadians of Filipino or SouthEast Asian origins” (Judge’s reasons, at paragraph 39). [24] Hence, having concluded that the wares do originate from Lingayen, and that the relevant consumer is of Filipino or South EastAsian origin, the Judge stated that Lingayen “has a generally recognized connection to fish sauce products from the perspective of theaverage Canadian consumer of the wares in question” (Judge’s reasons, at paragraph 42).

Therefore, the Judge concluded that the resultis the same as if the perspective of the ordinary consumer is irrelevant: the mark is clearly descriptive of the product’s place of origin andthe trade-mark’s registration is invalid because it was not registrable. [25] Despite finding that the mark was invalid, the Judge considered whether the appellant had made its claim of infringement. [26] He concluded that the respondent did not use the words “Lingayen Style” as a trade-mark but rather to indicate a characteristic ofits bagoong products.

It did not use the words for the purpose of distinguishing its wares and therefore there cannot have been infringement. Rather, the respondent’s products prominently featured the Napakasarap trade-mark including theTM symbol. The Judgedid not address the appellant’s claim under paragraph 7(

b) of the Act (passing off). V. Issues [27] To dispose of this appeal, I propose to answer the following questions: (

a) What is the appropriate standard of review? (

b) What is the appropriate legal test for whether a trade-mark is clearly descriptive or deceptively misdescriptive of place of originunder paragraph 12(1)(

b) of the Act? (

c) Did the Judge err in fact, or in his application of the law to the facts in determining that the trade-mark was not registrable and isinvalid pursuant to paragraphs 12(1)(

b) and 18(1)(

a) of the Act? (

d) Did the Judge err in concluding without supporting reasons, that the trade-mark was invalid for lack of distinctiveness? (

e) Did the Judge err in finding that the respondent was not guilty of infringement? (

f) Did the Judge err in not addressing the claim of passing off under paragraph 7(

b) of the Act?

VI. Position of the parties and analysis [ 28 ] As the title of this

section suggests, I will deal with the relevant submissions of the parties as I go along examining in turn each issue. A. The standard of review [ 29 ] MC Imports Inc. argues that all issues should be reviewed on a standard of correctness. [ 30 ] Determining the correct legal approach to paragraph 12(1) (

b) of the Act is a question of law attracting review on a standard of correctness.

The Judge’s findings of fact in relation to that question, although ordinarily reviewed on a lower standard, should be reviewed for correctness on this case as it was related to the proper test under paragraph 12(1) (b). [ 31 ] The appellant also proposes correctness review on the order invalidating the trade-mark for lack of distinctiveness, because the Judge offered no reasons that would attract deference. [ 32 ] Finally, the Judge’s decision to dismiss the infringement claim was a question of mixed fact and law that may be reviewed on a standard of correctness on the basis of paragraph 27 of Housen v.

Nikolaisen , 2002 SCC 33 , [2002] 2 S.C.R. 235 ( Housen ), which teaches that questions of mixed fact and law can actually be errors of pure law when a judge applies the wrong law by misapprehending the proper test to be applied. [ 33 ] I agree with the appellant, as does the respondent, that the question of the legal test under paragraph 12(1) (

b) of the Act is a question of law reviewed for correctness. However, issues of validity, distinctiveness and infringement are questions of mixed fact and law. Absent palpable and overriding errors, our Court will not disturb the Federal Court’s findings. B. The legal test under paragraph 12(1) (

b) of the Act . [ 34 ] The parties’ submissions with respect to the correct legal approach amount to a Parma v. Leyda contest. [ 35 ] Indeed, the appellant relies on Parma and contends that the correct analytical approach mandates consideration of whether the ordinary consumer perceives the trade-mark LINGAYEN to relate to the wares’ place of origin. The appellant invites the Court to note that Leyda , which holds that the perspective of the ordinary consumer is irrelevant, has been strongly criticized in academic commentary.

More particularly, the appellant cites Fox on Canadian Law of Trade-marks and Unfair Competition , 4th ed. (Toronto: Carswell, 2002), at pages 5-44 and 5-45 where it is argued that “[f]or the public to be misled …, they must be aware of the geographical significance of the trade-mark”.

As a result, Leyda incorrectly held that “[paragraph] 12(1)( b ), at least as far as ‘place of origin’ is concerned, is not dependent on the knowledge, or lack thereof, of the average Canadian consumer. ” ( Leyda , at paragraph 9). [ 36 ] The appellant further argues that the within appeal is factually distinct because unlike Leyda where the mark has not been in use prior to the application, the LINGAYEN mark has been in continuous use in Canada since 1975. The situation of MC Imports Inc. resembles that of Parma , a case of prior use, where the perceptions of the “general public in Canada” were considered.

Thus, the appropriate test is whether the ordinary Canadian consumer recognizes the mark as a geographical “place of origin” and makes the connection between that place of origin and the wares or services in question. It relies on the reasons in Ontario Teachers ’ Pension Plan Board v. Canada (Attorney General) , 2012 FCA 60 , 342 D.L.R. (4th) 667 ( Teachers ), for the test under paragraph 12(1) (

b) and proposes that the perspective of ordinary consumer is “key” to the determination. [ 37 ] As a matter of fact, the appellant states that Canadian consumers in general are not aware of Lingayen or that the wares are from Lingayen. It is a relatively small city in the Philippines; Filipino Canadians represent a small part of the national population and fish products from the Philippines are only a small portion of Canadian imports.

On consideration of this evidence, it submits there is no basis to conclude that the ordinary consumer would recognize the mark as descriptive of the origin of the wares in question. [ 38 ] For the respondent, Leyda was the proper jurisprudential authority to follow because it is a case about whether the trade-mark is “clearly descriptive of place of origin”, contrary to Parma that deals with the deceptively misdescriptive branch of paragraph 12(1) (

b) of the Act . [ 39 ] In any event, it is not essential to make a definite choice between Leyda and Parma if our Court agrees with the Judge’s reasoning and ultimate conclusion. This Court could, as the Federal Court did, omit to choose between the two proposed tests under paragraph 12(1) (

b) of the Act given the Judge’s conclusion that both approaches lead to the same result. The respondent opines that Parma and Leyda are actually reconcilable tests: “they are differentiated on the mischief that they seek to prevent”, either misleading the public or monopolizing a descriptive word to the exclusion of other traders (respondent’s memorandum of fact and law, at paragraphs 53–55). [ 40 ] I believe that this appeal highlights a need for guidance from this Court with respect to the registrability of trade-marks that describe places of origin of wares and services. [ 41 ] Paragraph 12(1) (

b) of the Act establishes that a trade-mark is not registrable if it is “either clearly descriptive or deceptively misdescriptive in the English or French language of the character or quality of the goods or services in association with which it is used or proposed to be used … or of their place of origin”. [ 42 ] The

interpretation of this provision with respect to the character or quality of goods is well established. This Court described the test in paragraph 29 of Teachers : It is trite law that the proper test for a determination of whether a trade-mark is clearly descriptive is one of first impression in the mind of a normal or reasonable person. If such a person is unclear or uncertain as to the significance of the trade-mark in relation to the wares or services or if the trade-mark is suggestive of a meaning other than one describing the wares or services, then the word is not clearly

descriptive. One should not arrive at a determination of the issue by critically analyzing the words of the trade-mark, but rather byattempting to ascertain the immediate impression created by the trade-mark in association with the wares or services with which it is usedor proposed to be used. [43] The purpose of the rule against clearly descriptive trade-marks is also well established. The Court in Teachers endorsed thefollowing words of the Privy Council (Eastman Photographic Materials Company Ltd. v.

Comptroller-General of Patents, Designs andTrade Marks, [1898] A.C. 571 (H.L.), at page 580, quoted in Teachers, at paragraph 35): If, then, the use of every word in the language was to be permitted as a trade-mark, it was surely essential to prevent its use as a trade-mark where such use would deprive the rest of the community of the right which they possessed to employ that word for the purpose ofdescribing the character or quality of goods. [44] Whether describing the character or quality of goods or their place of origin, the same rationale applies: maintaining a monopolyover the use of words to describe their origin is to unduly deprive potential competitors of the opportunity to so describe their own goods(see Hughes on Trade Marks, 2nd ed. loose-leaf (Markham, Ont.: LexisNexis Canada, 2005), at paragraph 31; Fox on Canadian Law ofTrade-marks and Unfair Competition, 4th ed. loose-leaf (Toronto: Carswell, 2002), at page 5-44). [45] Unlike the test whether the mark is clearly descriptive of the goods’ quality or character, the test in the context of place of originis not clear in the jurisprudence, and there is no authority binding on this Court.

As a result, the Judge and the parties focussed on Parmaand Leyda. It is now useful to discuss these cases at length and to look at their subsequent treatment with respect to the analysis ofparagraph 12(1)(

b) of the Act. I start with Parma relied upon by the appellant. [46] In Parma, the trade-mark PARMA [registration No. TMA179637] used in association with various meat products, and inparticular prosciutto, was challenged as deceptively misdescriptive of place of origin by a group of producers of prosciutto located inParma, Italy.

This issue was deceptive misdescription as opposed to clear description because the goods associated with the PARMAtrade-mark were not actually produced in Parma. [47] The Federal Court adopted the test stated by Cattanach J. of the Federal Court of Canada (Trial Division) in Atlantic PromotionsInc. v.

Canada (Registrar of Trade Marks) (1984), 2 C.P.R. (3d) 183 (at page 186): In my view the proper test to be applied to the determination as to whether a trade mark in its entirety is deceptively misdescriptive mustbe whether the general public in Canada would be misled into the belief that the product with which the trade mark is associated had itsorigin in the place of a geographic name in the trade mark. [48] As a result of this test, it was determined that because ordinary consumers in Canada at the relevant time were not generallyaware of Parma as a region in Italy or of its association with meat products, the public would not likely be misled into believing that thegoods sold in association with the trade-mark had their origin in Parma.

The trade-mark was thus not deceptively misdescriptive.

TheFederal Court of Appeal upheld the Federal Court’s decision without reasons of its own, stating general agreement with the FederalCourt’s reasons (2002 FCA 169, 18 C.P.R. (4th) 414). [49] As mentioned before, the appellant relies on Parma to support its view that its trade-mark is not clearly descriptive: the generalpublic in Canada, understood in its broadest sense, does not associate its wares and services with the municipality of Lingayen. [50] For the appellant, it matters little that, unlike the present case, Parma addresses the deceptively misdescriptive part of paragraph12(1)(b).

What matters most is that, contrary to Parma and to the present case, Leyda is a first-use case. That is Leyda was about aproposed trade-mark that had never been used in Canada by the applicant, while in Parma the trade-mark had been in continuous useprior to registration. [51] This brings me to Leyda, in which the Federal Court considered the proposed trade-mark LEYDA for use in association withwine. The wine in question was produced in Leyda, a region in Chile. The Court rejected the proposition that for the mark to be clearlydescriptive the average consumer must perceive that the wine was produced in Leyda.

It stated its approach as follows (at paragraph 9): Those “far away places with strange sounding names” may call some more than others, but [paragraph] 12(1)(b), at least as far as “placeof origin” is concerned, is not dependent on the knowledge, or lack thereof, of the average Canadian consumer. The Registrar rightlypointed out that there was no real evidence before him as to the state of mind of such a person. Would he or she be one who reads thewine magazines referred to by those who opposed the application, or one whose knowledge is limited to red, white, rosé or bubbly?

Overthe past several years, a great many wines have been introduced to the market from “new world” countries such as Chile, Argentina,Australia and New Zealand. Other countries may follow suit. Although decided in a different context, the decision of the Supreme Courtin Home Juice Co. v. Orange Maison Ltée, (SCC), [1970] S.C.R. 942, 16 D.L.R. (3d) 740, can be relied upon for theproposition that a shrewd trader should not be permitted to monopolize the name of a foreign wine district in Canada by registering it as atrade-mark. [52] In my view, this is the right approach.

Parma, with its general public approach is not the proper jurisprudential authority to relyupon when facing a clearly descriptive case. In any event, although Parma does not engage in the distinction between clearly descriptiveand deceptively misdescriptive, it certainly does not reject it. [53] As mentioned, Parma takes its source in Atlantic Promotions, also a deceptively misdescriptive case.

It is of interest, however, tonote a passage from that case not referred to in Parma or by the parties, where Cattanach J. stated a general approach to geographicnames (Atlantic Promotions, at page 195): A geographical word is usually regarded as being clearly descriptive or deceptively misdescriptive of the place of origin and because ofthat any person in a particular locality is at liberty to apply the place or origin to his wares unless perchance the word has becomedistinctive of one person’s wares.

The words used in para. 12(1)(

b) of the Trade Marks Act are “place of origin”. Thus if a geographical name is attached to wares there made it is “clearly descriptive of the origin”. If the wares are not made there then the word is misdescriptive and mayhap deceptively so depending on the circumstances. [Emphasis added.] [ 54 ] Cattanach J. emphasized that, where a word has a geographic meaning but it also has others, that the ordinary meaning as it would be understood by ordinary people should be the meaning attributed to the term. The trade-mark at issue was MILAN SHOWERGEL.

The Court determined that although “Milan” can refer to a man’s name as well as the name of a city in Italy, it would ordinarily be understood to refer to the city. On that basis, the mark was deceptively misdescriptive ( Atlantic Promotions , at pages 195– 197). [ 55 ] On my reading, Atlantic Promotions stands for a distinction between clearly descriptive and deceptively misdescriptive cases in that consumer perception is only relevant in deceptively misdescriptive type cases.

The analysis of consumer perception is not immediately helpful for a case where it is alleged that a geographic place name would be perceived not as having another meaning, but as a coined word because the ordinary consumer is ignorant of the place. [ 56 ] How, then, does one determine whether a geographic name is unregistrable as a trade-mark because it is clearly descriptive of place of origin? First, by determining that the trade-mark is a geographical name; second, by determining the place of origin of the wares or services; and third by assessing the trade-mark owner’s assertions of prior use, if any. (

a) whether the impugned trade-mark is a geographic name [ 57 ] This may require resort to consumer perceptions where, as in Atlantic Promotions , the name of a geographic place (name or location) also has other meanings. For example, “Sandwich” is the name of a number of towns in the United States and the United Kingdom, but it is also a word referring to a common food item.

Cattanach J. considered this question in Atlantic Promotions , stating that the primary meaning of the word to a person of “ordinary education and intelligence” (at page 196) dictates its meaning. [ 58 ] I agree with this approach, but would caution that this first step does not mean that names of places not widely known to Canadians fall somehow outside the ambit of paragraph 12(1)(b)’s prohibition of clearly descriptive trade-marks. This nature of inquiry is only relevant when there are multiple meanings to the word in question, not all of which are geographic.

It must then be determined which meaning predominates.

If, going back to my example, proper evidence establishes that the primary meaning of “Sandwich” does not refer to a geographic place, then such a trade-mark cannot be clearly descriptive or deceptively misdescriptive of place of origin. [ 59 ] Further, where such an inquiry is necessary, the relevant ordinary consumer from whose perspective this question ought to be considered is the ordinary consumer of the products or services with which the mark is associated. [ 60 ] Despite the approach stated in Parma that the ordinary consumer is the general public in Canada, the weight of authorities support the Judge’s approach when assessing the validity of the registration on a test where “clear description and deceptive misdescription pivot on the perceptions held by ordinary consumers are engaged” (Judge’s reasons, at paragraph 29).

The Judge relied on reference to “the average retailer, consumer or user of the type of wares or services the mark is associated with” ( Cliche v. Canada (Attorney General) , 2012 FC 564 , 103 C.P.R. (4th) 411, at paragraph 22 ) and to the endorsement in another case of a survey focussed not on the general public but on consumers who were aware of the relevant brand and likely to purchase the wares in question, for the purposes of determining distinctiveness in an expungement proceeding ( Cross-Canada Auto Body Supply (Windsor) Limited v.

Hyundai Auto Canada , 2007 FC 580 , 60 C.P.R. (4th) 406, at paragraph 31 ). [ 61 ] I note that even authorities citing Parma have tended not to adopt the view that the “general public” is the relevant consumer perspective, referring instead to the ordinary consumer of the wares or services with which the trade-mark is used ( Boston Pizza International Inc. v. Boston market Corp. , 2003 FC 892 , 27 C.P.R. (4th) 52, at paragraph 36 ; ITV Technologies Inc. v.

WIC Television Ltd ., 2003 FC 1056 , 29 C.P.R. (4th) 182, at paragraph 71 ). [ 62 ] As I mentioned above, the appellants rely heavily on academic commentary endorsing Parma and rejecting Leyda . I find this commentary unpersuasive. In particular, the authors fail to engage in any distinction between clearly descriptive and deceptively misdescriptive cases, and simply assert that Leyda was wrongly decided.

Once again, I disagree. [ 63 ] In brief, in a clearly descriptive case, the resort I describe to the perspective of the ordinary consumer (as defined at paragraph 59, above) is only meaningfully relevant when there is ambiguity whether the trade-mark actually refers to a place. [ 64 ] Once it is concluded that the trade-mark refers to a geographic location, the focus of the analysis becomes the origin of the wares or services. (

b) whether the wares or services originate from the geographic location used as the trade-mark [ 65 ] If the wares or services originate in the place referred to by the trade-mark, then the trade-mark is clearly descriptive of place of origin. There is no ambiguity when the trade-mark is the name of the place of origin that would invite further inquiry: referring to the place of origin by its name is the pinnacle of clarity. This is why the perspective of the ordinary consumer of the wares or services is unnecessary.

As stated earlier, when filing an application for registration of a trade-mark referring to a geographical place, an applicant should not be allowed to benefit from the consumer’s lack of knowledge in geography.

Let it be clear that it is irrelevant at this stage whether a trade-mark that uses a geographic name has become distinctive of the product or service with which it is associated: this is a different inquiry discussed below at paragraph 69 and following. [ 66 ] On the other hand, if the trade-mark refers to a geographic place that is not the actual place of origin of the goods or services, then it cannot be clearly descriptive of place of origin. It is misdescriptive, and further analysis is required to determine whether it is deceptively so (see Atlantic Promotions , at page 195).

As this is a clearly descriptive case, it is unnecessary to set out the analytical approach under the deceptively misdescriptive branch of paragraph 12(1) (

b) of the Act in relation to place of origin.

[67] In sum, if a trade-mark is a geographic name that refers to the actual place of origin of the goods or services with which the trade-mark is associated, it is clearly descriptive of place of origin within the meaning of paragraph 12(1)(

b) of the Act, and is therefore notregistrable. [68] This approach is consistent with the authorities and with the purposes of prohibiting registration of geographically descriptivetrade-marks. It should remain open to all producers of goods and services to describe the origin of what they are selling, even if theordinary consumer might not be previously familiar with that place. (

c) whether the trade-mark’s prior use is relevant [69] A determination that the trade-mark is clearly descriptive of place of origin is not, however, necessarily a complete answer toregistrability under

section 12 of the Act.

It is at this stage in the analysis that the issue, emphasized by the appellant, of a trade-mark’sprior use becomes relevant. [70] Subsection 12(2) of the Act provides an exception to paragraph 12(1)(b): despite being clearly descriptive or deceptivelymisdescriptive, a trade-mark is nonetheless registrable if it has become distinctive, as of the date of application, due to its use in Canadaby the applicant or the applicant’s predecessor in title. [71] Counsel for the appellant argued at the hearing of this appeal that it is impossible for a trade-mark to be simultaneouslydescriptive and distinctive, and that because its trademark was distinctive, it could not be descriptive. [72] The interaction of paragraph 12(1)(

b) and subsection 12(2) of the Act clearly dictate otherwise: a descriptive trade-mark maybecome distinctive despite its descriptiveness through use. If it has become distinctive by the date of application, through use in Canadaby the applicant, it is registrable despite being descriptive. This does not mean that it has ceased to be descriptive and it does notundermine the analysis under paragraph 12(1)(b) (see Molson Breweries v.

John Labatt Ltd., (FCA), [2000] 3 F.C.145 (C.A.), at paragraph 32). [73] In a case where there has been no prior use of the trade-mark, there is clearly no resort to subsection 12(2) and the analysis stopsonce it has been determined that the trade-mark is clearly descriptive within the meaning of paragraph 12(1)(b). In a prior-use case,however, it is open to the applicant to argue that through this prior use the trade-mark has developed distinctiveness such that it fallswithin the subsection 12(2) exception. [74] It is also at this stage that consumer perceptions become highly relevant.

The burden is on the registrant to prove that its trade-mark had acquired distinctiveness due to use in Canada at the time of registration.

While normally, the burden is on the party challengingan otherwise valid trade-mark to demonstrate that it lacks distinctiveness, the trade-mark holder or applicant must positively demonstratethat it falls within the words of subsection 12(2) when the trade-mark is clearly descriptive or deceptively misdescriptive within themeaning of paragraph 12(1)(b). [75] This Court has held that what must be demonstrated is that the trade-mark “although it may be descriptive, has acquired adominant secondary or distinctive meaning in relation to the wares or services” with which it is associated (Molson, at paragraph 54). [76] How does one demonstrate that a mark has acquired such a dominant secondary meaning?

Evidence must be presented todemonstrate that from the perspective of the relevant public—that is, people who actually use the product or service in question—thetrade-mark has become distinctive of that product or service (Carling Breweries Ltd. v. Molson Companies Ltd., (FC),[1984] 2 F.C. 920 (T.D.), at page 930; affirmed (1988), 16 C.I.P.R. 157 (F.C.A.)). It is clear that mere evidence of prior use will notsatisfy the requirement under subsection 12(2), which requires both prior use and acquired distinctiveness as a result of that use. C.

Did the Judge err in determining that the mark was not registrable and is invalid pursuant to paragraphs 12(1)(

b) and 18(1)(a)of the Act? [77] Applying the above analytical approach to this appeal, the result is straightforward. [78] It has been established that Lingayen is a municipality in the Philippines and that the goods with which the LINGAYEN trade-mark is associated originate in Lingayen. No evidence has been presented to suggest that the ordinary meaning of the word “Lingayen”refers to anything but the municipality. It follows that the trade-mark clearly describes the place of origin of the goods with which it isassociated, within the meaning of paragraph 12(1)(

b) of the Act. [79] The appellant did not raise subsection 12(2) or present arguments to the effect that its registration falls within the exception itsets out. However, I understand the appellant’s argument on distinctiveness, in particular its contention that if the trade-mark isdistinctive it cannot be descriptive, to implicitly raise this argument. [80] The appellant’s evidence of prior use is not sufficient to meet the burden of demonstrating that it had acquired distinctiveness atthe time of registration.

The appellant provided evidence that its product had been continuously sold since 1975 in association with theLINGAYEN trademark, and it provided an expert affidavit contending that because of this the trade-mark had “likely” acquireddistinctiveness in the minds of consumers. [81] Effectively, the appellant has shown nothing more than the fact of its prior use and the speculation of one expert as to consumerperceptions.

This is insufficient to meet its burden of proving that the trade-mark acquired distinctiveness in the minds of consumers. [82] Given my conclusion that the trade-mark is clearly descriptive of place of origin, and that the appellant has not demonstrated thatit acquired distinctiveness through prior use as of the date it applied for registration, the trade-mark’s registration is invalid underparagraph 18(1)(a). The Judge did not err in his conclusion. D. Did the Judge err in concluding that the trade-mark was invalid for lack of distinctiveness?

[83] The appellant correctly notes that the Judge included in his order that the mark was invalid pursuant to paragraph 18(1)(b)because it was not distinctive at the time of registration, but he did not address or explain this conclusion in his reasons. [84] While I note the Judge ought to have addressed distinctiveness directly in his reasons, in light of my above conclusion that theregistration is invalid under paragraph 18(1)(a), it is unnecessary to consider the alternate grounds of invalidity originally submitted bythe respondent under paragraph 18(1)(b). E.

Infringement and Passing Off [85] In the Federal Court, by way of a notice of cross-motion, the appellant sought damages for trade-mark infringement and passingoff. In that vein, it alleged that the respondent “was using the word LINGAYEN in such a way as to cause or be likely to cause confusionin Canada as between its own wares, business and services” and those of the appellant. Thus, the appellant had suffered or was likely tosuffer damages while the respondent had made an unlawful profit from the sale of the 49 cases of bagoong guisado (see notice of cross-motion, appeal book, Vol.

I, Tab 4, at page 35 and ff.). (

a) Infringement [86] MC Imports Inc. submits that the Judge erred in his conclusion that even if the registration was valid, the respondent did notinfringe its trade-mark. Particularly, it argues that the Judge erred in his determination that the respondent did not use the word“Lingayen” as a trade-mark by relying on the respondent’s intention rather than the public’s actual perception. [87] Given my conclusion that the mark’s registration is invalid, it is not necessary to address infringement under sections 19 and 20of the Act.

The analysis for infringement, however, is helpful to contextualize passing off, which I discuss below. [88] The Judge considered the manner in which the respondent used the words “Lingayen Style” on its packaging, noting that thesewords were used in lesser script, below the respondent’s NAPAKASARAP trade-mark, which was identified with a ™ symbol, unlike“Lingayen Style”. [89] He concluded that the respondent did not use the words “Lingayen Style” as a trade-mark to distinguish its product from those ofother producers, but in order to indicate a characteristic of its bagoong products.

There could therefore be no infringement under sections19 and 20 of the Act. This requirement of use as a trade-mark derives from the definition of “trade-mark” in

section 2 of the Act, andfrom the text of

section 20. [90] I agree.

The Judge arrived at a clear conclusion, well supported by the evidence of the relevant product labels, that the message tothe public was to distinguish the respondent’s products through its NAPAKASARAP trade-mark and that “Lingayen Style” described acharacteristic—that is, that the respondent’s bagoong was in the style of bagoong from Lingayen (Judge’s reasons, at paragraph 46). [91] The Judge correctly framed his conclusion in respect of the clear message to the public through the respondent’s use of the words“Lingayen Style”, and it was open to him to determine this message through an analysis of the product labels: Pepper King Ltd. v.Sunfresh Ltd., , 8 C.P.R. (4th) 485 (F.C.T.D.), at paragraph 54. (

b) Passing Off [92] The Judge’s reasons address infringement under sections 19 and 20, but do not address the appellant’s claim under paragraph7(

b) of the Act. For ease of reference, I reproduce it again: Prohibitions 7. No person shall … (

b) direct public attention to his wares, services or business in such a way as to cause or be likely to cause confusion in Canada, at thetime he commenced so to direct attention to them, between his wares, services or business and the wares, services or business of another; [93] The appellant argues that the Judge erred in failing to determine whether confusion existed between its trade-mark and that of therespondent. [94] In its view, the inherent distinctiveness of the word LINGAYEN, its continuous use by the appellant since 1975, the similarity ofthe parties’ business and the resemblance between LINGAYEN and Lingayen Style are all factors pointing to confusion, or at least “ahigh likelihood of confusion”.

As a result, the Judge had no choice but to find infringement. [95] Although the Judge did not specifically turn his mind to the allegation of passing off and should have, I fail to see how on thisrecord he could have reached a conclusion favorable to the appellant. [96] It is trite law that an allegation of passing off requires the analysis of three factors to be proven by the plaintiff to an action ininfringement (here the appellant) (Kirkbi AG v. Ritvik Holdings Inc., 2005 SCC 65, [2005] 3 S.C.R. 302, and Cheung v. Targen EventProduction Ltd., 2010 FCA 255, 87 C.P.R. (4th) 287): (

a) the existence of reputation (often referred to as goodwill) acquired in the appellant’s goods, name, mark etc. …; (

b) a misrepresentation made by the defendant to the action (here the respondent) which leads to confusion or likelihood of confusion;from which ensue; (

c) damages to the appellant.

[97] Nowhere in its memorandum of fact and law does the appellant discuss the factor of reputation. On the other hand, therespondent argues that the allegation of passing off must fail on this factor alone. [98] It writes, at paragraph 97 of its memorandum of fact and law that the respondent began selling its “Lingayen Style” products inSeptember 2011, that is before the appellant acquired the mark by way of assignment. Moreover, the evidence shows that the assignmentof the LINGAYEN registration and mark to the appellant specifically excluded the goodwill associated with the mark.

As a result, theclaim for passing off fails. [99] I find this argument unconvincing. The value of a trade-mark is generally based on the particular trade-mark’s earning power. Inother words, the value of a trade-mark lies in the goodwill associated with that trade-mark. One can easily imagine tax reasons whyMeneses-Canso sold, assigned and transferred all of its rights, title and interest in the mark, and the registration to the appellant to theexclusion of the goodwill.

Presumably it was to the appellant’s advantage to ensure that the entirety of consideration for the transfer ofthe trade-mark is attributed to that property and not to goodwill in the trade-mark. This does not mean that the trade-mark has somehowbeen stripped of its goodwill within the meaning contemplated in this analysis, which looks to the reputation and earning power of thetrade-mark. [100] In any event, having examined the record, I conclude that the appellant has failed to demonstrate goodwill in respect of thedistinctiveness of the product.

The nearest to a demonstration of goodwill is the appellant’s evidence that it has been using the mark foralmost 40 years and has “had a much longer time to establish its reputation and awareness among consumers” (appellant’s memorandumof fact and law, at paragraph 91). [101] In my view, the test to establish the existence of goodwill requires more than that. The following definition of “goodwill” adoptedby the Supreme Court of Canada in Manitoba Fisheries Ltd. v. The Queen, (SCC), [1979] 1 S.C.R. 101, at page 108(cited in Veuve Clicquot Ponsardin v.

Boutiques Cliquot Ltée, 2006 SCC 23, [2006] 1 S.C.R. 824, at paragraph 50) is apposite: ….In Manitoba Fisheries Ltd. v. The Queen, (SCC), [1979] 1 S.C.R. 101, at p. 108, this Court adopted the followingdefinition of “goodwill”: “Goodwill” is a word sometimes used to indicate a ready formed connection of customers whose custom is of value because it is likely tocontinue. But in its commercial sense the word may connote much more than this. It is, as Lord Macnaghten observed in Inland RevenueCommissioners v.

Muller & Co.’s Margarine Ltd., [1901] A.C. 217, 224, “the attractive force which brings in custom,” and it may reside,not only in trade connections, but in many other quarters, such as particular premises, long experience in some specialised sphere, or thegood repute associated with a name or mark. It is something generated by effort that adds to the value of the business. [Emphasisadded.][*] (Quoting Lord MacDermott L.C.J. in Ulster Transport Authority v.

James Brown and Sons Ltd., [1953] N.I. 79, at pp. 109-10) [102] Having put this argument to rest, I move on to the second factor: the alleged misrepresentation made by the respondent. [103] In my view, the appellant’s argument cannot succeed. It has failed to establish a misrepresentation leading to deception of thepublic. [104] At paragraphs 45 and 46 of his reasons, the Judge found that the words “Lingayen Style”, appearing in lesser-script on the label,were not used as a trade-mark but rather as a characteristic of the bagoong products.

This finding led to his conclusion that there was noinfringement. [105] The appellant has not persuaded me that the Judge erred in concluding that there was no infringement, hence no misrepresentationleading to deception. [106] I need not say more about the appellant’s arguments with respect to passing off. They all fail. VII. Proposed Disposition [107] As a result, I would dismiss this appeal with costs. Scott J.A.: I agree. de Montigny J.A.: I agree. ANNEX A (appeal book, Vol. 1, Tab. 16, at page 208)

Image (appeal book, Vol. 3, Tab. 48, at page 561)

Image [*] Editor’s note: Emphasis added by Binnie J. in Veuve Clicquot .