OTTAWA ATHLETIC CLUB INC D.B.A. THE OTTAWA ATHLETIC CLUB Applicant v. THE ATHLETIC CLUB GROUP INC. AND, 2014 FC 672

Date: 20140709 Docket: T-1396-11 Citation: 2014 FC 672 Ottawa, Ontario, July 9, 2014 PRESENT: The Honourable Mr. Justice Russell BETWEEN: OTTAWA ATHLETIC CLUB INC D.B.A. THE OTTAWA ATHLETIC CLUB Applicant and THE ATHLETIC CLUB GROUP INC. AND THE REGISTRAR OF TRADE-MARKS Respondents JUDGMENT AND REASONS INTRODUCTION [ 1 ] This is an application under s. 57 of the Trade-marks Act , RSC, 1985, c T-13 [Act] to strike a trade-mark from the register kept under s. 26 of the Act [Register], or in the alternative to amend the Register to narrow the scope of the registration.

The Applicant also requests a prohibition on any future use of the allegedly invalid trade-mark or its common law equivalent on the grounds that it offends ss. 10 and 11 of the Act. The trade-mark in question bears the registration number TMA633,422 and was registered on February 22, 2005 [Registration]. The Respondent, the Athletic Club Group Inc. [Athletic Club, or Respondent] is the registered owner. BACKGROUND [ 2 ] The Applicant, the Ottawa Athletic Club [OAC, or Applicant], has been operating a fitness facility in Ottawa since at least 1976 offering a range of athletic and fitness services.

It claims to have used the trade name and trade-mark “Ottawa Athletic Club” continuously since that time. [ 3 ] The Respondent, the Athletic Club (or its predecessors in title), established its first fitness facility in London, Ontario in 1997, and has since opened facilities in Amherstburg (1999), Brantford (2001), Guelph (2006), Kingsville (2001), Thunder Bay (2004), Waterloo (2011) and Ottawa, as well as a second facility in London (2000).

The Respondent opened its “Ottawa-Orleans” facility in November 2010, and its “Ottawa-Trainyards” facility in February 2011. [ 4 ] In July 2003, one of the Respondent’s current directors and shareholders, Alan Quesnel, applied to register the trade-mark in question, THE ATHLETIC CLUB & DESIGN [Athletic Club Trade-mark, or the Trade-mark], which appears as follows: [ 5 ] The registration was completed on February 22, 2005, with Mr. Quesnel as the initial Registrant. Title to the Trade-mark was later transferred to a partnership between Mr. Quesnel and Mr.

David Wu, another current director and shareholder of the Respondent, and was eventually transferred to the Respondent corporation, The Athletic Club Group Inc, on September 21, 2009, after being briefly held by related numbered companies. [ 6 ] The Respondent claims that it (and its predecessors in title) has used the Trade-mark in association with its services continuously since 1997.

The Trade-mark was registered in connection with the following services: Restaurant services; snack bar services; operation of a facility for fitness training and/or weight training; operation of a facility for aerobics; personal training services; conducting dance classes; operation of a retail store selling sporting goods, men's and women's clothing, health foods and health supplements; fitness assessment services; conducting exercise, fitness and aerobics classes; operation of a tanning facility. [ 7 ] The Registration includes the following disclaimer: “The right to the exclusive use of the words ATHLETIC CLUB is disclaimed apart from the trade-mark.” [ 8 ] The Applicant seeks to have the Trade-mark expunged on a number of grounds, including that it is confusing with the Applicant’s own trade name and trade-mark, which had been in use for 21 years when the Respondent began using the Athletic Club Trade-mark. [ 9 ] The Applicant has filed its own trade-mark application, for “OAC & design” [OAC Trade-mark], which the Respondent is

opposing.

It bears application number 1,421,086 and appears as follows: [10] The Applicant claims that the OAC Trade-mark has been used in relation to: The operation of a fitness club; conducting fitness classes; operation of a racquet club, namely tennis, squash and racquetball; andoperation of an aquatics facility since at least as early as 1983;Personal training services since at least as early as 1989;Operation of an indoor golf facility since at least as early as 1995;Operation of summer sports camps since at least as early as 1993. [11] Under s. 57 of the Act, the Federal Court has exclusive original jurisdiction to consider applications to strike or amend entriesin the Register.

Only a “person interested” can bring such an application, but this is a broad category that includes anyone who is orreasonably apprehends that they may be affected by the registration, and a de minimus threshold applies (see Omega Engineering, Inc vOmega SA, 2006 FC 1472 at para 11 [Omega Engineering]).

There is no dispute here that the Applicant is a “person interested” asdefined in the Act. [12] The Applicant seeks a declaration that the Athletic Club Trade-mark is invalid, an order under s. 57(1) of the Act striking (orin the alterative amending) the registration for the Athletic Club Trade-mark on the grounds that it does not accurately express or definethe existing rights of the registered owner, and an order pursuant to ss. 53.2, 10 and 11 of the Act that the Respondent be permanentlyprohibited from using, directly or via licence, the Athletic Club Trade-mark and its common law equivalent. [13] While framed as an application, an expungement proceeding under s. 57 of the Act is neither a judicial review nor an appeal,but rather an exercise of the Court’s original jurisdiction.

There is therefore no standard of review to be applied. The Court is to approachthe issues with a fresh mind: see Roger T. Hughes, Toni Polson Ashton & Neal Armstrong, Hughes on Trade Marks, 2nd ed (looseleaf,rel 35-8/2013) (Markham, LexisNexis Canada, 2005) at 817-18 [Hughes on Trade Marks]; CIBC World Markets Inc v Stenner FinancialServices Ltd, 2010 FC 397at para 18; General Motors of Canada v Décarie Motors Inc, (FCA), [2001] 1 FC 665(CA) at para 31; Emall.ca Inc (cob Cheaptickets.ca) v Cheap Tickets and Travel Inc, 2007 FC 243 at para 11, aff’d 2008 FCA 50[Cheaptickets].

ISSUES [14] The Applicant raises the following issues in this application: (

a) Is the Athletic Club Trade-mark invalid under s. 18(1)(

a) of the Act on the basis that: (

i) On the date of registration (February 22, 2005) the Trade-mark was clearly descriptive or deceptively misdescriptive in theEnglish language of the character or quality of the services in association with which the trade-mark was used, contrary to s. 12(1)(

b) ofthe Act; (ii) On the date of registration the Trade-mark was not distinctive as defined in s. 2 of the Act; (iii) On the date of registration the Trade-mark was the name in any language of any of the services in connection with which it wasused, contrary to s. 12(1)(

c) of the Act; or (iv) On the alleged date of first use and adoption (December 31, 1997) the Trade-mark designated the kind of services associated withit, contrary to s. 12(1)(

e) and ss. 10 and 11 of the Act? (

b) Is the Athletic Club Trade-mark invalid under s. 18(1)(

b) of the Act on the basis that: (

i) On the date of the Notice of Application in this matter (August 29, 2011) the Trade-mark was not distinctive, contrary to s. 2 ofthe Act? (

c) Is the Athletic Club Trade-mark invalid under s. 18(1) of the Act on the basis that: (

i) On the alleged date of first use (December 31, 1997), the Trade-mark was confusing with a previously used trade name / trade-mark (namely, the Ottawa Athletic Club), contrary to s. 16(1)(

a) and 16(1)(

c) of the Act? (

d) In the alternative, should the registration for the Athletic Club Trade-mark be amended by striking out some of the services listed;and (

e) Should the Respondent be permanently prohibited from using, directly or via licence, the Athletic Club Trade-mark and its commonlaw equivalent, pursuant to ss. 53.2, 10 and 11 of the Act?

STATUTORY PROVISIONS [ 15 ] The following provisions of the Act are applicable in these proceedings:

Definitions 2. In this Act , […] Définitions 2. Les définitions qui suivent s’appliquent à la présente loi. […] “confusing” “confusing”, when applied as an adjective to a trade-mark or trade-name, means a trade- mark or trade-name the use of which would cause confusion in the manner and circumstances described in

section 6; […] « créant de la confusion » « créant de la confusion » Relativement à une marque de commerce ou un nom commercial, s’entend au sens de l’article 6. […] “distinctive” “distinctive”, in relation to a trade-mark, means a trade-mark that actually distinguishes the wares or services in association with which it is used by its owner from the wares or services of others or is adapted so to distinguish them; […] « distinctive » « distinctive »

Relativement à une marque de commerce, celle qui distingue véritablement les marchandises ou services en liaison avec lesquels elle est employée par son propriétaire, des marchandises ou services d’autres propriétaires, ou qui est adaptée à les distinguer ainsi. […] “person interested” “person interested” includes any person who is affected or reasonably apprehends that he may be affected by any entry in the register, or by any act or omission or contemplated act or omission under or contrary to this Act , and includes the Attorney General of Canada; […] « personne intéressée » « personne intéressée »

Sont assimilés à une personne intéressée le procureur général du Canada et quiconque est atteint ou a des motifs valables d’appréhender qu’il sera atteint par une inscription dans le registre, ou par tout acte ou omission, ou tout acte ou omission projeté, sous le régime ou à l’encontre de la présente loi. […] “trade-mark” “trade-mark” means (

a) a mark that is used by a person for the purpose of distinguishing or so as to distinguish wares or services manufactured, sold, leased, hired or performed by him from those manufactured, sold, leased, hired or performed by others, (

b) a certification mark, (

c) a distinguishing guise, or (

d) a proposed trade-mark; […] « marque de commerce » Selon le cas :

a) marque employée par une personne pour distinguer, ou de façon à distinguer, les marchandises fabriquées, vendues, données à bail ou louées ou les services loués ou exécutés, par elle, des marchandises fabriquées, vendues, données à bail ou louées ou des services loués ou exécutés, par d’autres;

b) marque de certification;

c) signe distinctif;

d) marque de commerce projetée. […] “trade-name” “trade-name” means the name under which any business is carried on, whether or not it is the name of a corporation, a partnership or an individual; […] « nom commercial » « nom commercial » Nom sous lequel une entreprise est exercée, qu’il s’agisse ou non d’une personne morale, d’une société de personnes ou d’un particulier. […]

When deemed to be adopted 3. A trade-mark is deemed to have been adopted by a person when that person or his predecessor in title commenced to use it in Canada or to make it known in Canada or, if that person or his predecessor had not previously so used it or made it known, when that person or his predecessor filed an application for its registration in Canada. […] Quand une marque de commerce est réputée adoptée 3. Une marque de commerce est réputée avoir été adoptée par une personne, lorsque cette personne ou son prédécesseur en

titre a commencé à l’employer au Canada ou à l’y faire connaître, ou, si la personne ou le prédécesseur en question ne l’avait pas antérieurement ainsi employée ou fait connaître, lorsque l’un d’eux a produit une demande d’enregistrement de cette marque au Canada. […] When mark or name confusing 6.

(1) For the purposes of this Act , a trade- mark or trade-name is confusing with another trade-mark or trade-name if the use of the first mentioned trade-mark or trade-name would cause confusion with the last mentioned trade-mark or trade-name in the manner and circumstances described in this section. Quand une marque ou un nom crée de la confusion 6.

(1) Pour l’application de la présente loi, une marque de commerce ou un nom commercial crée de la confusion avec une autre marque de commerce ou un autre nom commercial si l’emploi de la marque de commerce ou du nom commercial en premier lieu mentionnés cause de la confusion avec la marque de commerce ou le nom commercial en dernier lieu mentionnés, de la manière et dans les circonstances décrites au présent article. Idem Idem

(2) The use of a trade-mark causes confusion with another trade-mark if the use of both trade-marks in the same area would be likely to lead to the inference that the wares or services associated with those trade-marks are manufactured, sold, leased, hired or performed by the same person, whether or not the wares or services are of the same general class.

(2) L’emploi d’une marque de commerce crée de la confusion avec une autre marque de commerce lorsque l’emploi des deux marques de commerce dans la même région serait susceptible de faire conclure que les marchandises liées à ces marques de commerce sont fabriquées, vendues, données à bail ou louées, ou que les services liés à ces marques sont loués ou exécutés, par la même personne, que ces marchandises ou ces services soient ou non de la même catégorie générale. Idem Idem

(3) The use of a trade-mark causes confusion with a trade-name if the use of both the trade- mark and trade-name in the same area would be likely to lead to the inference that the wares or services associated with the trade- mark and those associated with the business carried on under the trade-name are manufactured, sold, leased, hired or performed by the same person, whether or not the wares or services are of the same general class.

(3) L’emploi d’une marque de commerce crée de la confusion avec un nom commercial, lorsque l’emploi des deux dans la même région serait susceptible de faire conclure que les marchandises liées à cette marque et les marchandises liées à l’entreprise poursuivie sous ce nom sont fabriquées, vendues, données à bail ou louées, ou que les services liés à cette marque et les services liés à l’entreprise poursuivie sous ce nom sont loués ou exécutés, par la même personne, que ces marchandises ou services soient ou non de la même catégorie générale. Idem Idem

(4) The use of a trade-name causes confusion with a trade-mark if the use of both the trade- name and trade-mark in the same area would be likely to lead to the inference that the wares or services associated with the business carried on under the trade-name and those associated with the trade-mark are manufactured, sold, leased, hired or performed by the same person, whether or not the wares or services are of the same general class.

(4) L’emploi d’un nom commercial crée de la confusion avec une marque de commerce, lorsque l’emploi des deux dans la même région serait susceptible de faire conclure que les marchandises liées à l’entreprise poursuivie sous ce nom et les marchandises liées à cette marque sont fabriquées, vendues, données à bail ou louées, ou que les services liés à l’entreprise poursuivie sous ce nom et les services liés à cette marque sont loués ou exécutés, par la même personne, que ces marchandises ou services soient ou non de la même catégorie générale. What to be considered

(5) In determining whether trade-marks or trade-names are confusing, the court or the Registrar, as the case may be, shall have regard to all the surrounding circumstances including (

a) the inherent distinctiveness of the trade- marks or trade-names and the extent to which they have become known; (

b) the length of time the trade-marks or trade-names have been in use; (

c) the nature of the wares, services or business; (

d) the nature of the trade; and (

e) the degree of resemblance between the trade-marks or trade-names in appearance or sound or in the ideas suggested by them. […] Éléments d’appréciation

(5) En décidant si des marques de commerce ou des noms commerciaux créent de la confusion, le tribunal ou le registraire, selon le cas, tient compte de toutes les circonstances de l’espèce, y compris :

a) le caractère distinctif inhérent des marques de commerce ou noms commerciaux, et la mesure dans laquelle ils sont devenus connus;

b) la période pendant laquelle les marques de commerce ou noms commerciaux ont été en usage;

c) le genre de marchandises, services ou entreprises;

d) la nature du commerce;

e) le degré de ressemblance entre les marques de commerce ou les noms commerciaux dans la présentation ou le son, ou dans les idées qu’ils suggèrent. […] Further prohibitions 10.

Where any mark has by ordinary and bona fide commercial usage become recognized in Canada as designating the kind, quality, quantity, destination, value, place of origin or date of production of any wares or services, no person shall adopt it as a trade- mark in association with such wares or services or others of the same general class or use it in a way likely to mislead, nor shall any person so adopt or so use any mark so nearly resembling that mark as to be likely to be mistaken therefor. […] Autres interdictions 10.

Si une marque, en raison d’une pratique commerciale ordinaire et authentique, devient reconnue au Canada comme désignant le genre, la qualité, la quantité, la destination, la valeur, le lieu d’origine ou la date de production de marchandises ou services, nul ne peut l’adopter comme marque de commerce en liaison avec ces marchandises ou services ou autres de la même catégorie générale, ou l’employer d’une manière susceptible d’induire en erreur, et nul ne peut ainsi adopter ou employer une marque dont la ressemblance avec la marque en question est telle qu’on pourrait vraisemblablement les confondre. […] Further prohibitions 11.

No person shall use in connection with a business, as a trade-mark or otherwise, any mark adopted contrary to

section 9 or 10 of this Act or

section 13 or 14 of the Unfair Competition Act,

chapter 274 of the Revised Statutes of Canada, 1952. […] Autres interdictions 11. Nul ne peut employer relativement à une entreprise, comme marque de commerce ou autrement, une marque adoptée contrairement à l’article 9 ou 10 de la présente loi ou contrairement à l’

article 13 ou 14 de la Loi sur la concurrence déloyale,

chapitre 274 des Statuts revisés du Canada de 1952. […]

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; (

c) the name in any language of any of the wares or services in connection with which it is used or proposed to be used; […] (

e) a mark of which the adoption is prohibited by

section 9 or 10; […] Marque de commerce enregistrable 12.

(1) Sous réserve de l’

article 13 , une marque de commerce est enregistrable sauf dans l’un ou l’autre des cas suivants : […]

b) qu’elle soit sous forme graphique, écrite ou sonore, elle donne une description claire ou donne une description fausse et trompeuse, en langue française ou anglaise, de la nature ou de la qualité des marchandises ou services en liaison avec lesquels elle est employée, ou à l’égard desquels on projette de l’employer, ou des conditions de leur production, ou des personnes qui les produisent, ou du lieu d’origine de ces marchandises ou services;

c) elle est constituée du nom, dans une langue, de l’une des marchandises ou de l’un des services à l’égard desquels elle est employée, ou à l’égard desquels on projette de l’employer; […]

e) elle est une marque dont l’article 9 ou 10 interdit l’adoption; […] Idem 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. […]

(2) Une marque de commerce qui n’est pas enregistrable en raison de l’alinéa (1)

a) ou

b) peut être enregistrée si elle a été employée au Canada par le requérant ou son prédécesseur en

titre de façon à être devenue distinctive à la date de la production d’une demande d’enregistrement la concernant. […] Registration of marks used or made known in Canada 16.

(1) Any applicant who has filed an application in accordance with

section 30 for registration of a trade-mark that is registrable and that he or his predecessor in title has used in Canada or made known in Canada in association with wares or services is entitled, subject to

section 38, to secure its registration in respect of those wares or services, unless at the date on which he or his predecessor in title first so used it or made it known it was confusing with (

a) a trade-mark that had been previously used in Canada or made known in Canada by any other person; (

b) a trade-mark in respect of which an application for registration had been previously filed in Canada by any other person; or (

c) a trade-name that had been previously used in Canada by any other person. […] Enregistrement des marques employées ou révélées au Canada 16.

(1) Tout requérant qui a produit une demande selon l’article 30 en vue de l’enregistrement d’une marque de commerce qui est enregistrable et que le requérant ou son prédécesseur en

titre a employée ou fait connaître au Canada en liaison avec des marchandises ou services, a droit, sous réserve de l’article 38, d’en obtenir l’enregistrement à l’égard de ces marchandises ou services, à moins que, à la date où le requérant ou son prédécesseur en

titre l’a en premier lieu ainsi employée ou révélée, elle n’ait créé de la confusion :

a) soit avec une marque de commerce antérieurement employée ou révélée au Canada par une autre personne;

b) soit avec une marque de commerce à l’égard de laquelle une demande d’enregistrement avait été antérieurement produite au Canada par une autre personne;

c) soit avec un nom commercial qui avait été antérieurement employé au Canada par une autre personne. […]

Effect of registration in relation to previous use, etc. 17.

(1) No application for registration of a trade-mark that has been advertised in accordance with

section 37 shall be refused and no registration of a trade-mark shall be expunged or amended or held invalid on the ground of any previous use or making known of a confusing trade-mark or trade-name by a person other than the applicant for that registration or his predecessor in title, except at the instance of that other person or his successor in title, and the burden lies on that other person or his successor to establish that he had not abandoned the confusing trade- mark or trade-name at the date of advertisement of the applicant’s application. Effet de l’enregistrement relativement à l’emploi antérieur, etc. 17.

(1) Aucune demande d’enregistrement d’une marque de commerce qui a été annoncée selon l’article 37 ne peut être refusée, et aucun enregistrement d’une marque de commerce ne peut être radié, modifié ou tenu pour invalide, du fait qu’une personne autre que l’auteur de la demande d’enregistrement ou son prédécesseur en

titre a antérieurement employé ou révélé une marque de commerce ou un nom commercial créant de la confusion, sauf à la demande de cette autre personne ou de son successeur en titre, et il incombe à cette autre personne ou à son successeur d’établir qu’il n’avait pas abandonné cette marque de commerce ou ce nom commercial créant de la confusion, à la date de l’annonce de la demande du requérant. When registration incontestable

(2) In proceedings commenced after the expiration of five years from the date of registration of a trade-mark or from July 1, 1954, whichever is the later, no registration shall be expunged or amended or held invalid on the ground of the previous use or making known referred to in subsection (1), unless it is established that the person who adopted the registered trade-mark in Canada did so with knowledge of that previous use or making known. Quand l’enregistrement est incontestable

(2) Dans des procédures ouvertes après l’expiration de cinq ans à compter de la date d’enregistrement d’une marque de commerce ou à compter du 1er juillet 1954, en prenant la date qui est postérieure à l’autre, aucun enregistrement ne peut être radié, modifié ou jugé invalide du fait de l’utilisation ou révélation antérieure mentionnée au paragraphe (1), à moins qu’il ne soit établi que la personne qui a adopté au Canada la marque de commerce déposée l’a fait alors qu’elle était au courant de cette utilisation ou révélation antérieure. 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 (

c) the trade-mark has been abandoned, and subject to

section 17, it is invalid if the applicant for registration was not the person entitled to secure the registration. Quand l’enregistrement est invalide 18.

(1) L’enregistrement d’une marque de commerce est invalide dans les cas suivants :

a) la marque de commerce n’était pas enregistrable à la date de l’enregistrement;

b) la marque de commerce n’est pas distinctive à l’époque où sont entamées les procédures contestant la validité de l’enregistrement;

c) la marque de commerce a été abandonnée.

Sous réserve de l’article 17, l’enregistrement est invalide si l’auteur de la demande n’était pas la personne ayant droit de l’obtenir. Exception

(2) No registration of a trade-mark that had been so used in Canada by the registrant or his predecessor in title as to have become distinctive at the date of registration shall be held invalid merely on the ground that evidence of the distinctiveness was not submitted to the competent authority or tribunal before the grant of the registration. […] Exception

(2) Nul enregistrement d’une marque de commerce qui était employée au Canada par l’inscrivant ou son prédécesseur en titre, au point d’être devenue distinctive à la date d’enregistrement, ne peut être considéré comme invalide pour la seule raison que la preuve de ce caractère distinctif n’a pas été soumise à l’autorité ou au tribunal compétent avant l’octroi de cet enregistrement. […]

Disclaimer 35. The Registrar may require an applicant for registration of a trade-mark to disclaim the right to the exclusive use apart from the trade-mark of such portion of the trade-mark as is not independently registrable, but the disclaimer does not prejudice or affect the applicant’s rights then existing or thereafter arising in the disclaimed matter, nor does the disclaimer prejudice or affect the applicant’s right to registration on a subsequent application if the disclaimed matter has then become distinctive of the applicant’s wares or services. […] Désistement 35.

Le registraire peut requérir celui qui demande l’enregistrement d’une marque de commerce de se désister du droit à l’usage exclusif, en dehors de la marque de commerce, de telle

partie de la marque qui n’est pas indépendamment enregistrable.

Ce désistement ne porte pas préjudice ou atteinte aux droits du requérant, existant alors ou prenant naissance par la suite, dans la matière qui fait l’objet du désistement, ni ne porte préjudice ou atteinte au droit que possède le requérant à l’enregistrement lors d’une demande subséquente si la matière faisant l’objet du désistement est alors devenue distinctive des marchandises ou services du requérant. […] Power of court to grant relief 53.2 Where a court is satisfied, on application of any interested person, that any act has been done contrary to this Act , the court may make any order that it considers appropriate in the circumstances, including an order providing for relief by way of injunction and the recovery of damages or profits and for the destruction, exportation or other disposition of any offending wares, packages, labels and advertising material and of any dies used in connection therewith. […] Pouvoir du tribunal d’accorder une réparation 53.2 Lorsqu’il est convaincu, sur demande de toute personne intéressée, qu’un acte a été accompli contrairement à la présente loi, le tribunal peut rendre les ordonnances qu’il juge indiquées, notamment pour réparation par voie d’injonction ou par recouvrement de dommages-intérêts ou de profits, pour l’imposition de dommages punitifs, ou encore pour la disposition par destruction, exportation ou autrement des marchandises, colis, étiquettes et matériel publicitaire contrevenant à la présente loi et de toutes matrices employées à leur égard. […] Jurisdiction of Federal Court 55.

The Federal Court has jurisdiction to entertain any action or proceeding for the enforcement of any of the provisions of this Act or of any right or remedy conferred or defined thereby. […] Juridiction de la Cour fédérale 55. La Cour fédérale peut connaître de toute action ou procédure en vue de l’application de la présente loi ou d’un droit ou recours conféré ou défini par celle-ci. […] Exclusive jurisdiction of Federal Court 57.

(1) The Federal Court has exclusive original jurisdiction, on the application of the Registrar or of any person interested, to order that any entry in the register be struck out or amended on the ground that at the date of the application the entry as it appears on the register does not accurately express or define the existing rights of the person appearing to be the registered owner of the mark. […] Juridiction exclusive de la Cour fédérale 57.

(1) La Cour fédérale a une compétence initiale exclusive, sur demande du registraire ou de toute personne intéressée, pour ordonner qu’une inscription dans le registre soit biffée ou modifiée, parce que, à la date de cette demande, l’inscription figurant au registre n’exprime ou ne définit pas exactement les droits existants de la personne paraissant être le propriétaire inscrit de la marque. […] ARGUMENT Applicant [ 16 ] The Applicant argues that the Athletic Club Trade-mark is invalid for essentially three reasons: it was not registrable on the date of registration, based on several alleged grounds (s.18(1)(a)); it was not distinctive at the time the present proceeding was commenced (s.18(1)(b)); and, at the time it was first used, it was confusing with a previously used trade-mark or trade name, such that the Respondent was not “the person entitled to secure the registration” (ss. 6, 16(1) and 18(1)).

Trade-mark confusing with a previously used trade-mark or trade name [ 17 ] The Applicant argues that the Athletic Club Trade-mark is, and was at the time of its first use, confusing with the OAC’s long-established trade name and Trade-mark, and is therefore invalid pursuant to s. 18(1) of the Act . [ 18 ] Subsection 18(1) states that a trade-mark is invalid “if the applicant for registration was not the person entitled to secure the registration.” The Applicant says a trade-mark applicant is not entitled to register a trade-mark (or to retain their registration when subsequently challenged) if, on the date they first used it, the trade-mark was confusing with either a trade-mark (s.16(1)(a)) or a trade name (s. 16(1)(c)) previously used in Canada by any other person. [ 19 ] The Applicant argues that the OAC has made continuous and widespread use of the trade name / trade-mark “Ottawa Athletic Club” to advertise its services since 1976, including through signage, community sponsorships, program guides, promotional items, radio advertisements, yellow pages, trades shows, websites and more.

This precedes the Respondent’s use of the Athletic Club Trade-mark by 21 years. The OAC is a landmark in the sports and fitness industry and enjoys an excellent reputation. [ 20 ] The Applicant says there is ample evidence that the Athletic Club Trade-mark is confusing with the OAC trade name and trade-mark, and argues the following with respect to the criteria for confusion set out in s. 6(5) of the Act : (

a) inherent distinctiveness of the trade-marks or trade-names and the extent to which they have become known: the Athletic Club Trade-mark is clearly descriptive and therefore not distinctive, while the OAC operated and used its trade-mark / trade name for 21 years before the Respondent began using its Trade-mark; (

b) the length of time the trade-marks or trade-names have been in use: see above; (

c) the nature of the wares, services or business: the parties’ respective trade-marks are used in association with the same services; (

d) the nature of the trade: the trade-marks are used in the same trade; and (

e) the degree of resemblance between the trade-marks or trade-names in appearance or sound or in the ideas suggested by them: the words used in the parties’ trade-marks are almost identical – they sound alike and the ideas suggested by them are the same. [ 21 ] The Applicant sites a number of examples of actual confusion, including: • Members of the public calling the OAC believing that it and the Respondent are one and the same, or expressing surprise that they are two different companies; • Members of the public calling the OAC or tweeting on their Twitter accounts with respect to promotions or activities of the Respondent; • Members of the public mistakenly sending job applications to the OAC for positions advertised by the Respondent; • Mistaken delivery of fitness equipment intended for the Respondent to the OAC; • A call from a college professor to the OAC to complain of the treatment received by two of his students in interviews, when in fact these interviews were conducted by the Respondent; • A technician arriving at OAC to perform work on athletic machinery that was in fact located at the Athletic Club; • The United Way sending a marketing proposal to the OAC intended for the Respondent, with the latter’s Trade-mark located on the cover page; and • Google search results for “Ottawa Athletic Club” demonstrating that the second organic result is for The Athletic Club. [ 22 ] In addition, the Applicant says the Respondent has promoted its services using a billboard with the same stock photograph used on the OAC’s website for approximately two years, and launched a Facebook page titled “The Athletic Club in Ottawa” a year after the OAC launched its own page, titled “Ottawa Athletic Club.” The Applicant says the OAC did not receive inquiries from persons trying to reach other athletic clubs, or applying for jobs at other athletic clubs, prior to the Respondent advertising in Ottawa. [ 23 ] The Applicant acknowledges that, pursuant to s. 17(2) of the Act , it can only seek to invalidate the Respondent’s Trade-mark based on confusion with its own trade-mark or trade name if the Respondent had actual knowledge of the Applicant’s previous use of the allegedly confusing trade-mark or trade name prior to its own adoption of the Trade-mark.

This is because the Applicant brought this proceeding to expunge the Respondent’s Trade-mark more then five years after the latter was registered. However, the Applicant says that actual knowledge is established by: 1) the presence of a NUANS corporate name search in the incorporating documents of the Respondent’s predecessor company (and now subsidiary), signed by Alan Quesnel and David Wu and dated June 25, 1997, which lists the Ottawa Athletic Club; and 2) the failure of the Respondent’s affiant, Mr. Chuck Kelly, to provide satisfactory responses regarding whether Mr. Quesnel and Mr.

Wu knew of this search at the time they signed those incorporating documents. [ 24 ] The Applicant says this Court made an interlocutory order confirming that solicitor-client privilege was waived with respect to the communication of the NUANS search to the Athletic Club, its principles or shareholders by the lawyer who handled the incorporation. Despite this, the Applicant alleges, and despite questions being put and undertakings made during further cross- examination, Mr. Kelly refused to provide files or solicitor reporting letters that would clarify the point, to make appropriate inquiries of Mr.

Quesnel, Mr.Wu or the incorporating lawyer, or to conduct appropriate searches of corporate records. The Respondent also refused to make Mr. Quesnel or Mr. Wu available for cross-examination, despite the fact that these two founders of the Athletic Club have the most knowledge of the origins of the Athletic Club Trade-mark and trade name.

[25] As a result of these alleged failures of the Respondent to properly respond to relevant inquiries on cross-examination, theApplicant argues that the Court should draw an adverse inference and find that the Respondent had actual knowledge of the Applicant’suse of its trade name and trade-mark at least as early as June 1997.

It is well established, the Applicant argues, that an adverse inferencecan be drawn if, without reasonable explanation, a party fails to adduce evidence available to it that could have resolved the issue:Milliken & Co v Interface Flooring Systems (Canada) Inc, (FC), [1998] 3 FC 103 at para 26 [Milliken]. In the presentcase, the OAC has no ability to obtain the reporting letter or invoices relating to the incorporation of the London Athletic Club Inc.except from the Respondent.

The documents or information are exclusively within the knowledge of the Respondent, and in suchcircumstances, where the Respondent refuses to produce such evidence, the Court will infer that the facts are adverse to theRespondent’s interest: Hoffman-La Roche Ltd v Apotex Inc (1983), (ON SC), 145 DLR (3d) 270 (Ont SC) at para 25[Hoffman]. Trade-mark not registrable at the date of registration [26] The Applicant asserts on a number of grounds that the Athletic Club Trade-mark was not registrable at the date of itsregistration, which is February 22, 2005, and is therefore invalid pursuant to s. 18(1)(

a) of the Act. Trade-mark clearly descriptive of services [27] First, the Applicant notes that under s. 12(1)(

b) of the Act, a trade-mark is not registrable if it is “whether depicted, written orsounded, either clearly descriptive or deceptively misdescriptive in the English or French language of the character or quality of thewares or services in association with which it is used or proposed to be used….” The Applicant says this provision aims to prevent tradersfrom obtaining a monopoly over words that belong “in the public stock of commonplace words that should remain available to all tradersin describing their wares or services”: Ontario Teachers Pension Plan Board v Canada (Attorney General), 2012 FCA 60 at para 37[Ontario Teachers]. [28] The Applicant submits that whether a trade-mark is clearly descriptive is a question of first impression from the point of viewof the average purchaser of those wares or services: Wool Bureau of Canada Ltd v Canada (Registrar of Trade Marks) (1978), 40 CPR(2d) 25, [1978] FCJ No 307 at paras 7, 11 (FCTD) [Wool Bureau]; Mitel Corporation v Canada (Registrar of Trade Marks) (1984), 79CPR (2d) 202 at para 7 (FCTD) [Mitel].

It is not appropriate to carefully and critically analyze the words to determine if they havealternative implications; rather, the proper approach is “to ascertain what those words in the context in which they are used wouldrepresent to the public”: Riverside Paper Corp v First Base Inc, [1999] FCJ No 1291 at para 10 (FCTD) [Riverside Paper], quoting JohnLabatt Ltd v Carling Breweries Ltd (1974), 18 CPR (2d) 15.

The word “clearly” in the phrase “clearly descriptive” is to be interpreted as“easy to understand, sufficient or plain” rather than “accurately” (Drackett Co of Canada Ltd v American Home Products Corp, [1968] 2Ex CR 89 at para 21; Evert-Fresh Corp v Green Bag Pty Ltd, 2011 TMOB 236 at para 18 [Green Bag]) and descriptiveness isconsidered in the context of the wares and services with which the trade-mark is used or proposed to be used: Mitel, above, at para 18. [29] Moreover, the Applicant argues that clearly descriptive words are to be interpreted as such notwithstanding any disclaimers orany special fonts used to display the words: Atlantic Promotions Inc v Canada (Registrar of Trade Marks) (1984), 2 CPR (3d) 183(FCTD) at 194; Agropur Cooperative v Parmalat SPA, 2011 TMOB 30 at para 40 [Parmalat].

Where the trade-mark in question is acomposite mark (one containing words and alleged design features), the mark will not be registrable pursuant to s. 12(1)(

b) of the Actwhere the mark, when sounded, contains word elements that are clearly descriptive and are also the dominant feature of the mark: BestCanadian Motor Inns Ltd v Best Western International, Inc, 2004 FC 135 [Best Western]; Green Bag, above, at paras 21-22; 674802 BCLtd (cob Amanda Enterprises) v Encorp Pacific (Canada), 2011 TMOB 180 at paras 15-26 [Encorp Pacific]; Ogopogo Media Inc v BCJobs Online Inc, 2011 TMOB 127 at paras 12-20 [Ogopogo]; Parmalat, above, at paras 35-43; Fast Fence Inc v Yellow Fence RentalsInc, 2010 TMOB 96; Central City U-Lock Ltd v JCM Professional Mini-Storage Management Ltd (2009), (CATMOB), 80 CPR (4th) 467 (TMOB) at paras 18-24; Worldwide Diamond Trademarks Ltd v Canadian Jewellers Assn, 2010 FC 309 atparas 17-21 [Canadian Jewellers]; Canadian Tire Corp v Exxon Mobil Corp (2009), (CA TMOB), 80 CPR (4th) 407(TMOB) at paras 6-10; Canadian Council of Professional Engineers v Canada Society for Professional Engineers (1996), 66 CPR (3d)563 (TMOB) at para 11 [Professional Engineers]; Burns Foods

(1985) Ltd v Superior Livestock of Canada, Inc (1996), 67 CPR (3d) 413(TMOB); Arthur v Auto Mart Magazine Ltd (1995), 66 CPR (3d) 117. [30] In this case, the Respondent disclaimed the words “athletic club” in the Athletic Club Trade-mark, and in doing so, theApplicant argues, has acknowledged that these words are clearly descriptive of the character or quality of the Respondent’s services, arethe name of the services themselves, or are otherwise common to the trade: Insurance Co of Prince Edward Island v Prince EdwardIsland Mutual Insurance Co (1999), (CA TMOB), 2 CPR (4th) 103 (TMOB) at paras 6, 10 [PEI Mutual]; Ogopogo,above, at para 13; Professional Engineers, above, at para 11. [31] The Applicant argues that the clearly descriptive term “The Athletic Club” is the dominant feature of the mark.

As evidence ofthis, the Applicant notes that both Athletic Club affiants quickly and without hesitation replied “The Athletic Club” when asked to soundthe Trade-mark in cross-examination. There is nothing distinctive about the design element of the mark – a black oval with a black linedoval surrounding the perimeter. There is also nothing memorable about the script in which the text is written, and consumers would notidentify the mark by such script: Parmalat, above, at para 40.

Oval shapes are frequently used to enclose words, the Applicant says, andthe British Columbia Court of Appeal has affirmed that it would be untenable to suggest that merely enclosing words in a borderconferred the right to prevent anyone else from doing so forever: see Westfair Foods Ltd v Jim Pattison Industries Ltd, (BC SC), 1989 CarswellBC 689 at para 20, 59 DLR (4th) 46 (BCSC) [Westfair Foods], aff’d (1990) (BC CA), 68DLR (4th) 481 (BCCA). [32] The Applicant says the current case is similar to the Encorp Pacific case, cited above, where the Trade-marks OppositionBoard found that given the relative size and simplicity of the design element of the mark – shown below – it did not stimulate visualinterest.

The dominant feature of the mark was therefore the words “Bottle Depot,” which were clearly descriptive of recycling services. Applyingthe clearly descriptive test set out in Best Western, above, the Board found that the trade-mark as a whole and as a matter of immediateimpression was clearly descriptive, when sounded, of the associated services. [33] Referring to Riverside Paper, above, the Applicant argues that the words “the athletic club,” considered in context, are clearlydescriptive of the service in association with which the Athletic Club Trade-mark is and has been used.

An ordinary consumer, whenviewing the Athletic Club Trade-mark as a whole, would readily attribute to it a common meaning that relates to the services listed inconnection with the Trade-mark. The Applicant supports this view with reference to dictionary

definitions of “athletic” and “club.” TheApplicant also points to statements by the Respondent’s affiants during cross-examination which show, in the Applicant’s view, that theprinciple idea being conveyed by the Trade-mark is “a place of fitness,” and that the term “athletic club” is used generically to refer to “aplace to exercise” or a facility offering the types of services offered by the Respondent and the Applicant. These include fitness training,weight training, aerobics, fitness assessments, personal training, conducting exercise, dance classes, etc.

The Applicant says an affiantfor the Respondent acknowledged that the use of these descriptive words helps to generate online traffic to the Respondent’s website. Trade-mark is the name of the services [34] In addition to being descriptive of the services offered by the Respondent, the Applicant argues that the Athletic Club Trade-mark is the name in English of the services (or some of the services) in connection with which it is used. Section 12(1)(

c) of the Actstates that such a mark is not registrable, and it is therefore invalid pursuant to s. 18(1)(a). [35] The Applicant notes that the record before the Court contains examples of numerous parties using the words “athletic club” todescribe the services offered by the Respondent.

In the Applicant’s view, this shows that at least in respect of certain services offered bythe Respondent (namely, operation of a facility for fitness training and/or weight training, operation of a facility for aerobics, personaltraining services, fitness assessment services, and conducting exercise, fitness and aerobics classes), the term “athletic club” is the nameof the services. [36] Where the word portion of a composite mark is the dominant feature, the mark may be capable of contravening section12(1)(

c) of the Act: Canadian Bankers Association v Northwest Bancorporation (1979), 50 CPR (2d) 113 (TMOB) at paras 12, 15[Banco]; Brûlerie Des Monts Inc c 3002462 Canada Inc (1997), (CF), 132 FTR 150, 75 CPR (3d) 445 (FCTD).Furthermore, to contravene s. 12(1)(c), a trade-mark is not required to be primarily the name in any language of any of the services, butsimply the name in any language of any of the services: Banco, above; Saputo Dairy Products Canada GP v Grande Cheese Co, 2011TMOB 177 at para 30. The evidentiary burden under this

section can be met by adducing copies of referenced works in which the markcan be shown to have a definition: David Oppenheimer Co, LLC v Imagine IP, LLC, 2011 TMOB 84. Trade-mark is a prohibited mark under s. 10 [37] The Applicant also argues that the Respondent adopted the Athletic Club Trade-mark in contravention of s. 10 of the Act.This means that it was unregistrable according to s. 12(1)(

e) and the registration is invalid under s. 18(1)(a). [38] The Applicant says that on December 31, 1997, when the Respondent adopted the Athletic Club Trade-mark, that mark had“by ordinary and bona fide commercial usage become recognized as designating” a kind of services. As such, s. 10 prohibits any personfrom adopting it (or a mark closely resembling it) as a trade mark in association with such services or others of the same general class, orusing it in a way likely to mislead.

The Applicant argues that a word that is already in ordinary commercial use in association withservices should be open for use by any party, and is not available for adoption as a trade-mark.

If it can be established that a trade-markis or resembles such a word, it follows that it not registrable, invalid and not distinctive: United Artists Records Inc v Soundtrack Limited(1977), 36 CPR (2d) 278 (TMOB) [United Artists]; Benson & Hedges (Canada) Ltd v Empresa Cubana Del Tabaco (1975), 23 CPR (2d)274 [Empresa Cubana]; Bank of Montreal v Merrill Lynch & Co Inc (1997), 84 CPR (3d) 262 (TMOB) [Merrill Lynch]. [39] The Applicant points to numerous newspaper articles, yellow page directories, judicial decisions in Canada, descriptions byfitness facilities of their activities, and the testimony of the Respondent’s affiants on cross-examination as demonstrating that, by 1997,the use of the words “athletic club” had by ordinary and bona fide commercial usage come to designate the kind of services offered bythe Respondent.

As such, the adoption of these words as a trade-mark was prohibited by s. 10. This evidence, the Applicant says, alsoreinforces the arguments above that the trade-mark is clearly descriptive of the services contrary to s. 12(1)(

b) and is the name of theservices contrary to s. 12(1)(c). Trade-mark not distinctive [40] The Applicant further argues that the Athletic Club Trade-mark is not distinctive (and was not distinctive on the date it wasregistered), and is thus invalid under both s. 18(1)(

b) and the combination of ss. 18(1)(

a) and 18(2) of the Act. [41] The Applicant notes that according to the definition of “distinctive” set out in s. 2 of the Act, a distinctive trade-mark is onethat actually distinguishes the wares or services in association with which it is used by its owner from the wares or services of others, oris adapted so as to distinguish them.

This requires that three conditions be met: 1) that a mark and a product or service be associated; 2)that the “owner” of the mark uses this association in selling his product or service; and 3) that this association enables the owner of themark to distinguish his product or service from that of others: Nature’s Path Foods Inc v Quaker Oats Co of Canada (2001), 2001 FCT

366 , 204 FTR 102, 2001 CarswellNat 784 at para 46 (FCTD); Bodum USA, Inc v Meyer Housewares Canada Inc, 2012 FC1450 at para 117 [Bodum USA]. [42] Here, the Applicant says, there are two relevant dates to consider with respect to the distinctiveness of the Athletic ClubTrade-mark. If the trade-mark was not distinctive on either date, it is invalid. First, through the combination of ss. 18(1)(

a) and 18(2) ofthe Act, the trade-mark is invalid if it was not distinctive at the date of its registration. Second, under s. 18(1)(b), the trade-mark isinvalid if it was not distinctive as of the filing date of the Notice of Application in the present proceeding (August 29, 2011). TheApplicant submits that the trade-mark was not distinctive on either of these dates. [43] The Applicant argues that where a trade-mark is clearly descriptive of the character or quality of the wares or services inassociation with which it is used, it is prima facie not distinctive.

It is significantly more difficult to claim distinctiveness for descriptivewords than coined words: Riverside Paper, above, at para 13; Bodum USA, above, at para 136. The distinctiveness of a composite markcan be tested by “sounding” the words if the design element is not dominant: Canadian Jewellers Assn v Worldwide DiamondTrademarks Ltd, 2010 FCA 326 at para 2.

As noted above, the Applicant argues that the dominant feature of the Athletic Club Trade-mark is the words “Athletic Club” and not the design elements. [44] A trade-mark that is commonly used by other third parties cannot be distinctive of a single source, the Applicant says, and atrade-mark that is used as a common name of goods or services loses its distinctiveness. The burden of proving secondary meaning (oracquired distinctiveness) increases in direct ratio to the commonality of usage as a description of a service, and the onus of proving suchsecondary meaning is a heavy one.

Where the words are purely descriptive and in common use it is difficult to conceive a case wherethey could acquire a secondary meaning: Canada (Registrar of Trade Marks) v GA Hardie & Co, (SCC), [1949] SCR483, 1949 CarswellNat 8 at para 42. [45] The Applicant says the evidence reveals that well before 1997, and continuing today, the words “athletic club” were and areused extensively in Canada.

They are in fact so commonly used that all potential arguments by the Respondent regarding secondarymeaning must fail. [46] The evidence with respect to the alleged use or advertising of the Athletic Club Trade-mark before the registration date isextremely scarce, and that evidence of use or advertising after that date is irrelevant to the application of ss. 18(1)(

a) and 18(2) of theAct, the Applicant argues. In other words, if the Athletic Club Trade-mark was not distinctive as of the registration date, it is invalidregardless of any evidence about subsequently acquired secondary meaning.

The Applicant also argues that any evidence regarding useor advertising of the Trade-mark after February 22, 2005 is irrelevant with respect to whether the Trade-mark was clearly descriptive ofthe services (s. 12(1)(b)) or the name of the services (s. 12(1)(c)), and that therefore “the vast majority of the evidence filed by theRespondent is not relevant.” [47] Furthermore, the Respondent did not file any survey evidence or consumer affidavits to support a finding that the Trade-markhad acquired any secondary meaning or distinctiveness as of the registration date, or as of the date of the commencement of the currentapplication. [48] The Applicant also argues that the Respondent does not consistently use the words “the athletic club” enclosed in a black ovalon the interior and exterior signage at its facilities or on its website, which undermines the Respondent’s claim to acquireddistinctiveness.

Respondent [49] The Respondent argues that the Applicant has not met its burden on any ground, and that the registration of the Athletic ClubTrade-mark should be maintained. [50] The Applicant bears the onus in expungement proceedings to prove that the Respondent’s Trade-mark is invalid, and if theApplicant does not meet this onus the registration should be maintained: Boston Pizza International Inc v Boston Chicken Inc (2001),2001 FCT 1024 , 211 FTR 106, 15 CPR (4th) 345 (FCTD) at para 64 [Boston Pizza TD], var’d on other grounds by 2003 FCA120 [Boston Pizza FCA].

Distinctiveness of the Trade-mark [51] The Respondent argues that a lack of distinctiveness as of the date of registration is not a proper ground for invalidating theTrade-mark, contrary to the Applicant’s argument based on ss.18(1)(

a) and 18(2) of the Act. The Court has previously considered asimilar argument and did not agree that lack of distinctiveness at the time of registration was a proper ground for invalidating a trade-mark under s. 18(1)(a).

Rather, the Court is confined to considering, under s.18(1)(b), whether the mark was distinctive when theexpungement proceedings were commenced: Fibergrid Inc v Precisioneering Ltd (1991), 35 CPR (3d) 221 at 229-230 (FCTD).Accordingly, the relevant date for assessing distinctiveness in this proceeding is August 29, 2011, and all evidence filed by theRespondent regarding the period before this date is relevant. [52] The Respondent notes that under the definition of “distinctive” in s. 2, distinctiveness can be either acquired or inherent:McCallum Industries Ltd v HJ Heinz Co Australia Ltd, 2011 FC 1216 at para 34.

If the Athletic Club Trade-mark actually distinguishes(acquired distinctiveness) or is adapted to distinguish (inherent distinctiveness), the Trade-mark is distinctive and must be maintained:Boston Pizza FCA, above, at paras 5-6. A registered trade-mark is presumed valid until the contrary is proven: Boston Pizza FCA, above,at para 16.

Furthermore, the mark “must be considered in its entirety and as a matter of first impression” and should not be separated intocomponent parts: Molson Breweries v John Labatt Ltd, (FCA), [2000] 3 FC 145 at para 83 (FCA). [53] The Respondent notes that a trade-mark is “adapted to distinguish” when it is inherently distinctive: Boston Pizza FCA,above, at para 6. The Athletic Club Trade-mark is a design mark that includes original design elements, the Respondent says, and a

trade-mark that incorporates an original design element is inherently distinctive: Fairmont Resort Properties Ltd v Fairmont HotelManagement, LP, 2008 FC 876 at para 85. [54] The Athletic Club Trade-mark is made up of two ellipses, one inside the other, which give the effect of creating a light ellipsein between that further emphasizes the Trade-mark. Inside the smaller dark ellipse are the words “The Athletic Club” in a light colour,written in specific script and unique lettering that further distinguish the Trade-mark.

It is the Applicant’s onus to demonstrate that theRespondent’s Trade-mark is not inherently distinctive, and the Applicant has not done so. The only example provided by the Applicantof another trade-mark using an oval shape in association with services similar to the Respondent’s is another mark owned by theRespondent (the Total Fitness mark).

This supports the position that oval shapes in association with the Respondent’s services aredistinctive of the Respondent. [55] In addition to being inherently distinctive (which is sufficient to maintain the registration), the Respondent argues that theTrade-mark has also acquired distinctiveness through use in Canada: Boston Pizza FCA, above, at paras 3, 13. The distinctiveness of atrade-mark can be enhanced by promotion: In-Touch Network Systems Inc v 01 Communique Laboratory Inc (2007), (CA TMOB), 63 CPR (4th) 224 at 229, [2007] TMOB No 111 at para 26 (TMOB) [In-Touch].

The Respondent argues that it hasconducted extensive promotion of the Athletic Club Trade-mark such that it has acquired distinctiveness, including prominent displaysinside and outside its facilities and millions of dollars in advertising, direct mail to homes, door hangers, and promotional materials.

TheRespondent attests that it spent over $1.7 million advertising its services in association with the Trade-mark from August 1, 2010 to July31, 2011 alone. [56] The Respondent reiterates that it does not bear the onus in expungement proceedings, and argues that the Applicant has notprovided any argument that the Athletic Club Trade-mark has not acquired distinctiveness as of the relevant date, which is the date ofcommencement of the present proceedings.

Even if considered at the date of registration, the Respondent argues, the Applicant has notdemonstrated that the Respondent’s Trade-mark had not acquired distinctiveness. Effect of disclaimer [57] The Respondent argues that the Applicant’s position – that the disclaimer of the words “athletic club” should have no effecton the expungement proceedings because the mark is clearly descriptive – would render s. 35 of the Act inoperative, and this cannot bethe intention of Parliament.

Section 35 permits the owner to disclaim the right to the exclusive use of the portion of a trade-mark thatmay not be independently registrable. The Respondent’s disclaimer of the words “athletic club” indicates that it was filing to register thedistinctive shape of the ovals and the distinctive lettering, not necessarily the words inside. The registered mark would then preventothers from using similar ovals with the distinctive lettering inside, irrespective of the words.

This, the Respondent says, is the purposeof its disclaimer. [58] The Best Western case cited above relied upon by the Applicant involved a disclaimer of individual words, not the entirephrase, and can therefore be distinguished, the Respondent argues. Here, it is the phrase “athletic club” that has been disclaimed, and theApplicant has not shown that the design elements of the Trade-mark are not distinctive. The disclaimer should therefore be consideredwhen assessing the Trade-mark in terms of descriptiveness as well as other grounds of invalidity alleged by the Applicant under ss. 10,11 and 12 of the Act.

Trade-mark registrable Trade-mark not clearly descriptive [59] The Respondent argues that the Trade-mark is not clearly descriptive of the character or quality of the wares or servicesassociated with it and was therefore not unregistrable pursuant to s. 12(1)(b). [60] The test for whether a trade-mark is clearly descriptive is one of first impression in the mind of a normal or reasonable person.The word “character” in the phrase “character or quality of the wares or services” has been defined by case law to mean a feature, trait orcharacteristic belonging to the wares or services.

Thus, to be clearly descriptive, the mark must describe an intrinsic characteristic orquality of the wares or services: Ontario Teachers, above. [61] First, the Respondent disclaimed the words “athletic club.” Such a disclaimer allows the registration of a trade-mark providedthat, apart from the unregistrable words, there remains a distinctive feature that would make the mark as a whole distinctive: LakeOntario Cement Ltd v Canada (Registrar of Trade Marks) (1976), 31 CPR (2d) 103 at 109-110, [1976] FCJ No 1104 at para 17 (FCTD).The design portions of the Respondent’s Athletic Club Trade-mark are distinctive, and the Trade-mark should be assessed withoutconsidering the disclaimed portion.

Taking this approach, the non-disclaimed portion of the Trade-mark is not clearly descriptive of thecharacter or quality of the Respondent’s services. [62] However, even if the words of the Trade-mark are assessed themselves, the Trade-mark is still not descriptive of the characteror quality of the services, the Respondent argues. Character and quality are not just another name for the services. They refer to wordsthat are descriptive of wares or services (such as blue wares, tasty wares, fresh-made wares), not all words that may be associated with aservice. If Parliament had intended a more expansive

interpretation it would not have included the words “character or quality.” [63] If the Court takes a more liberal

interpretation of s. 12(1)(b), then at the very least certain of the Respondent’s services (suchas restaurant and snack bar services and retail operations) are not clearly described by the words “the athletic club,” and the Court isempowered under s. 57 to amend the registration: Omega Engineering, above, at paras 16 and 30-32. Furthermore, while the words “theathletic club” may suggest a relationship between other services offered by the Respondent, the types of services being offered are notclear or obvious from these words.

Such words could connote any number of services such as tennis, squash or racquet ball, or groupssuch as a running or rowing club. If the Trade-mark is suggestive of a meaning other than one describing the services, then the words arenot clearly descriptive.

[64] The Respondent says that the intention of s. 12(1)(

b) cannot be to prevent parties from using the words “athletic club” intrade-marks. If the Court were to find that these words are “clearly descriptive,” then the effect would be that other marks using suchwords, such as the Applicant’s, would be descriptive and unregistrable as well. This, they argue, cannot be the intended result of s.12(1)(b).

Trade-mark is distinctive [65] Should the Court take the position that the words “athletic club” are clearly descriptive of the character or quality of theRespondent’s services, then the Respondent argues that the Trade-mark had become distinctive through use by the Respondent by thetime the application for the trade-mark registration was filed (July 29, 2003), and that this saves the registration by virtue of s. 12(2) ofthe Act.

The Respondent says that the Athletic Club Trade-mark was prominently displayed inside and outside its facilities that operatedprior to that date (Brantford, London-North and London-South), and that advertising was conducted in the areas of these facilities on a“full coverage” basis starting in 1997, in advance of the opening of each of the above-named facilities. This means that the Respondentattempted to reach every house in Brantford and London with advertising that used the Trade-mark in association with its services.

TheRespondent says the evidence it has presented on this point is the “tip of the iceberg” and more could have been presented if it had moretime to prepare. Trade-mark is not the name of the wares or services [66] The Respondent argues that the Trade-mark is not the name in any language of the wares or services in connection with whichit is used, and was therefore not unregistrable pursuant to s.12(1)(c). The test under s. 12(1)(

c) is narrower than the test for descriptiveterms under s.12(1)(b). The mark as a whole must clearly be the name of the services, based on the immediate and first impression of theeveryday user of those services: ITV Technologies, Inc v WIC Television Ltd, 2003 FC 1056 at paras 81-87 [ITV Technologies].

Unlikeunder s. 12(1)(b), there is no sound requirement under s. 12(1)(c), which means that the mark as a whole needs to be considered,including the design elements: Jordan & Ste-Michelle Cellars Ltd v Alwar SpA, [1980] TMOB No 81 at paras 14-17, 63 CPR (2d) 235 at239 (TMOB) [Alwar]. [67] The Respondent argues that the mark is a design, and the design elements are clearly not the name in any language of any ofthe Respondent’s services.

Furthermore, the word portion of the Trade-mark on its own is not clearly the name of any of its services: theservices being provided are not “the athletic club.” They are restaurant services, snack bar services, the operation of a facility for fitnesstraining and so on, as identified above: ITV Technologies, above, at para 86.

The words “athletic club” are capable of representingvarious things, including groups of athletes such as a running or rowing club, and it follows that the mark cannot be the name of theservices: ITV Technologies, above, at para 85. [68] Furthermore, the words “athletic club” have been disclaimed by the Respondent, which renders inoperative the Applicant’sobjections based on s. 12(1)(c): Calona Wines Ltd v Canada (Registrar of Trade Marks), (FC), [1978] 1 FC 591 (TD)at para 3. Otherwise, there would be no rationale for the disclaimer provision.

Trade-mark is not a prohibited mark [69] The Respondent also rejects the Applicant’s argument that the Trade-mark is a prohibited mark under s. 10 of the Act. [70] To succeed with this argument, the Applicant must show that by 1997 the Athletic Club Trade-mark had, by ordinary andbona fide commercial usage, become recognized in Canada as designating the kind, quality, quantity, destination, value, place or originor date or production of any wares or services. The Respondent argues that the Applicant must also show that it is the entire mark,including the design elements, that is so prohibited.

A segment of a mark is not a “mark” under s. 10, as trade-marks are not to bedissected into their component parts: Scotch Whisky Assn v Glenora Distillers International Ltd, 2009 FCA 16 at paras 23-24 [GlenoraDistillers]. [71] The Respondent says that the only argument really advanced by the Applicant under s. 10 is that the Trade-mark had becomerecognized as a “kind” of service, which is synonymous with “type” (Cyprus (Commerce and Industry) v International Cheese Councilof Canada, 2011 FCA 201 at para 29 [Cyprus]).

The Respondent argues that neither the words “The Athletic Club” on their own nor themark as a whole designates a kind or type of service. [72] Furthermore, the Respondent reiterates its argument that the words “athletic” and “club” have been disclaimed, and that thedisclaimed portion of the mark should not be considered in the s. 10 context or else there would be no rationale for s. 35 of the Act:Jordan & Ste-Michelle Cellars Ltd / Les Caves Jordan & Ste-Michelle Ltee v Andres Wines Ltd, 1985 CarswellNat 562, 6 CIPR 49 atpara 9 (FCTD) [Jordan & Ste-Michelle (FC)].

The Respondent argues that s. 35 provides some relief from the provisions of s. 10, andtherefore permits “Athletic Club” to be part of the Respondent’s Trade-mark.

As shown by the disclaimer, the Respondent has notsought to prevent other traders from using marks that include the words “athletic club”; rather, it is the Applicant who seeks to enforce amonopoly on the words “athletic club.” [73] The Respondent says that it cannot be the intention of s. 10 to prohibit marks that contain the words “athletic club.” Theprovision states that “no person” shall adopt a prohibited mark as a trade-mark, which means that the Applicant’s success in the currentapplication would jeopardize the trade-marks of many other traders using the words “athletic club,” including the Applicant itself.

TheRespondent argues that the United Artists decision by the Trade Mark Opposition Board, cited by the Applicant, has not been followedand imports wording such as “should be open for use by any party” that are not found in the Act itself. Furthermore, as noted above, theRespondent’s Trade-mark does not prevent others from using the words “athletic club” in relation to their services. The ground of confusion with a previously used trade-mark or trade name is not available [74] The Respondent says the allegation that the Athletic Club Trade-mark is confusing with the Applicant’s previously used

trade-mark or trade name is not applicable here by virtue of s. 17 of the Act. The relevant portion of s. 18(1) expressly states that it is“subject to

section 17.” Subsection 17(2) states that a trade-mark registration cannot be expunged or amended based on an applicationalleging previous use of a confusing trade-mark or trade name that is brought more than five years after the registration, “unless it isestablished that the person who adopted the registered trade-mark in Canada did so with knowledge of that previous use or makingknown.” The Respondent says the Applicant has not established that the Respondent’s predecessors in title adopted the Trade-mark withknowledge of the Applicant’s previous use of its trade-mark or trade name, and the Applicant is therefore unable to rely on the ground ofconfusion as a basis for invalidating the Trade-mark under s. 18(1). [75] The Respondent argues that none of the Applicant’s affidavits or documentary exhibits contains any evidence that AlanQuesnel adopted the Respondent’s Trade-mark with knowledge of the Applicant’s trade-mark or trade name.

Moreover, the Applicant’sargument that the Court should draw a negative inference on this point should be rejected, since the Respondent has respondedappropriately to all relevant questions posed by the Applicant in cross-examination. [76] The Respondent says it has clearly stated, through a sworn affidavit of Chuck Kelly dated January 21, 2012, that Mr. Quesnelwas not aware of the Applicant’s trade-marks or trade name before he adopted the Respondent’s Trade-mark. The NUANS searchreferred to by the Applicant was produced for the first time in the cross-examination of Chuck Kelly.

It has not been properly filed asevidence and was entered for identification purposes only. After giving an “under advisement” to verify whether the NUANS search wasthe original, Chuck Kelly responded that “[n]one of Alan Quesnel, David Wu, Chuck Kelly or any officers or directors of theRespondent… received a copy of or reviewed the NUANS search at the time of incorporation or before they or their companies beganusing the trade-mark THE ATHLETIC CLUB AND DESIGN,” and that the Respondent was unable to verify if the NUANS searchshown for identification during the cross-examination was the original. Mr.

Kelly further stated in this response that “Alan Quesnel andDavid Wu signed the Articles of Incorporation on the advice from their lawyer at the time when signing a variety of other documents.The NUANS Search was never brought to their attention.” [77] The Respondent says this should have concluded the matter but the Applicant then brought a motion requesting, inter alia, avariety of declarations, leave to issue a subpoena (to the incorporating lawyer), an order authorizing cross-examination of a non-party(the incorporating lawyer), and further answers from Chuck Kelly.

The Court denied the majority of these requests but confirmed therehad been a limited waiver of privilege resulting from the Respondent’s previous answers. The waiver extended “only to the issue ofwhether or not the NUANS search was communicated to the corporation or its principles or shareholders,” and the Court permitted thecross-examination of Mr. Kelly to continue. The Respondent says that in the subsequent cross-examination of Mr. Kelly the Applicantengaged in a fishing expedition in an attempt to find evidence establishing that Mr.

Quesnel adopted the Trade-mark with knowledge ofthe Applicant, its trade-marks or trade name, but no such evidence was located. In response to questions taken under advisement Mr.Kelly stated that “[t]he NUANS Search referred to in the Order of August 10, 2012, was not communicated to the corporation or itsprinciples or shareholders.” On this basis, the Respondent argues that it has responded to all relevant questions posed by the Applicant,and therefore no negative inference can or should be drawn.

There is sworn evidence that is directly contrary to the requested negativeinference, and no evidence to support that inference. The Respondent argues that it is not required to conduct research for the Applicantas requested in the remainder of the questions taken under advisement during the second cross-examination of Chuck Kelly. [78] Should the Court conclude that the Applicant has established that Mr. Quesnel was aware of the Applicant’s trade-mark ortrade name before adopting the Athletic Club Trade-mark, the Respondent requests leave to file additional evidence on point.

The Trade-mark is not in any case confusing with the Applicant’s trade-mark or trade name [79] The Respondent argues that, even if prior knowledge of the Applicant’s trade-mark or trade name were established, theRespondent’s Athletic Club Trade-mark is not confusing based on the criteria set out in s. 6(5) of the Act. [80] The Respondent says the Applicant must establish a likelihood of confusion rather than a mere possibility: Remo Imports Ltdv Jaguar Cars Ltd, 2007 FCA 258 at para 38.

The most important factor among those listed in s. 6(5) is, the Respondent argues, thedegree of resemblance between the marks: Masterpiece Inc v Alavida Lifestyles Inc, 2011 SCC 27 at para 49. The Respondent’s Trade-mark is made up of distinctive design elements that are in no way similar to the Applicant’s trade name or trade-mark. [81] Moreover, even if the words in the Trade-mark are sounded, the Respondent argues, there is no likelihood of confusion.

Thefirst word or first syllable in the trade-mark is by far the most important for the purpose of distinction (Park Avenue Furniture Corp vWickes/Simmons Bedding Ltd (1991), (FCA), 37 CPR (3d) 413 [Park Avenue] (FCA), and the first word of theApplicant’s trade-mark / trade name is “Ottawa,” which does not appear in the Respondent’s Trade-mark. [82] Furthermore, when a number of traders are using identical words such as “athletic club,” minor differences can permit theparties to distinguish the trade-marks between each other: Kellogg Salada Canada Inc v Canada (Registrar of Trade Marks), (FCA), [1992] 3 FC 442 at para 14, 43 CPR (3d) 349 (FCA).

Here, the evidence indicates that many traders are usingmarks that include the words “athletic club,” so individuals have become accustomed to making fine distinctions between marks basedon minor differences.

The nature of the trade also lessens the likelihood of confusion, the Respondent says, because customers mustattend at either facility to use the services. [83] With respect to the examples of actual confusion cited by the Applicant, the Respondent says that none of the individualsallegedly confused were made available for cross-examination, and there are a variety of possible reasons for the confusion that may notrelate to confusion of trade-marks.

Furthermore, even if the examples submitted are accepted as evidence of confusion, they are so few innumber compared to the size of the Ottawa population as to be insignificant. [84] Finally, the Respondent argues that it is well established that marks that contain descriptive words are not inherentlydistinctive and are therefore afforded only a minimal degree of protection by the Court. Where a party adopts a descriptive name, it mustaccept that a certain amount of confusion may arise: PEI Mutual, above.

While the Applicant appears to be seeking a monopoly over thewords “athletic club,” the Court must balance the rights of the Applicant and the public with those of the Respondent to compete freelyin the marketplace. Were it to find confusion in this case, the Court would in effect be granting the Applicant a trade-mark monopoly

with respect to the words “athletic club” in association with its services, and the breadth of such a monopoly is unreasonable: PEI Mutual , above, at para 47; San Miguel Brewing International Ltd v Molson Canada 2005 , 2013 FC 156 at para 40 . ANALYSIS Introduction [ 85 ] The Applicant seeks to have the Athletic Club Trade-mark struck from the Register and to prohibit the Respondent from ever using the Athletic Club Trade-mark or its common law equivalent.

This application has been motivated by what the Applicant characterizes as the “tremendous confusion” that has occurred, to the detriment of the Applicant’s business, as a result of the Respondent entering the athletic and fitness services market in Ottawa using the Athletic Club Trade-mark. [ 86 ] The Applicant says it has no problem with the Athletic Club using a trade-mark that contains the words “athletic club,” but contends that the Athletic Club must distinguish itself in some way that does not result in confusion with, and disruption to, the Applicant’s business.

For example, there is apparently an entity doing business in Ottawa as the Ottawa Aboriginal Athletic Club, and this name, says the Applicant, is sufficiently distinctive not to cause problems for the OAC.

The Applicant says the problem with the Athletic Club Trade-mark is that it is dominated by the common and generic words “The Athletic Club” and lacks sufficient distinctiveness to avoid the confusion that has occurred, and that will continue to occur, if the Respondent is allowed to continue doing business in Ottawa using the Trade-mark. [ 87 ] The Respondent says that it does not claim the words “The Athletic Club” as a trade-mark, and the Trade-mark design it uses is sufficiently distinctive to avoid confusion.

It claims that any confusion that has occurred is not significant and is only to be expected in a market where businesses need to indicate to the public that they are offering athletic and fitness services. [ 88 ] The Applicant’s objections to the Athletic Club Trade-mark are based upon a number of grounds and the parties agree that success on any single ground will suffice to justify striking the Trade-mark from the Register, or at least narrowing the registration by striking out some of the services listed for the Athletic Club Trade-mark.

By contrast, the permanent injunction the Applicant seeks on the Respondent’s continued use of the Trade-mark will only be appropriate if the Applicant succeeds in demonstrating that that Trade- mark is a prohibited mark under ss. 10 and 11 of the Act . I will address each of the grounds in turn. Confusion – Previous Use [ 89 ] It is not disputed that the the Respondent

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