2013 FC, 2013 FC 1041

Date: 20131015 Docket: T-1573-12 Citation: 2013 FC 1041 Toronto, Ontario, October 15, 2013 PRESENT: The Honourable Mr. Justice Campbell BETWEEN: INTERNATIONAL STARS S.A. Appellant and SIMON CHANG DESIGN INC.

Respondent REASONS FOR ORDER AND ORDER [ 1 ] The present Application is an appeal under subsection 56(1) of the Trade-marks Act , RSC 1985, c T-13 (the Act ) of the decision of the Registrar of Trade-marks’ delegate (the Registrar) dated June 5, 2012, in which the Registrar rejected the opposition of International Stars S.A. (International Stars) and allowed the registration of Canadian Trade-Mark Application No. 1, 302,619, filed by Simon Chang Design Inc..

Although duly notified, Simon Chang Design Inc. did not engage in the present appeal. [ 2 ] Simon Chang applied for registration of the trade-mark ZENERGY BY/POUR SIMON CHANG & Design (the Mark) in association with certain sports clothing. International Stars opposed the registration on the basis of evidence that it had used the trade- mark ENERGIE for similar wares.

A key feature of the Registrar’s decision was the rejection of International Stars’ argument that confusion exists between the Mark and its trade-mark. [ 3 ] The central focus in the present appeal is whether the Registrar’s findings with respect to International Stars’ grounds of opposition pursuant to s. 16 of the Act on the issues of distinctiveness and confusion are made in error of law or are unreasonable. I. The Test for Distinctiveness and Confusion [ 4 ] The Registrar correctly stated the test as follows: The test for confusion is one of first impression and imperfect recollection.

In applying the test for confusion, the Registrar must have regard to all the surrounding circumstances, including those specifically enumerated in section 6(5) of the Act , namely: (

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

b) the length of time each has 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 in appearance or sound or in the ideas suggested by them. These enumerated factors need not be attributed equal weight. [See, in general, Mattel, Inc v. 3894207 Canada Inc (2006), 2006 SCC 22 , 49 CPR (4TH) 321 (SCC), Veuve Cliquot Ponsardin v. Boutiques Cliquot Ltee (2006), 2006 SCC 23 , 49 CPR (4TH) 401 (SCC) and Masterpiece Inc v Alavida Lifestyles Inc (2011), 2011 SCC 27 , 92 CPR (4TH) 361 (SCC).] II.

The Application of the Test by the Registrar [5] In the Decision under appeal, the Registrar analysed each of the factors specifically enumerated in s. 6(5) of the Act, as wellas other surrounding circumstances. The key passages from the decision which are presently in contention are as follows: the inherent distinctiveness of the marks [18] Both parties' marks are inherently distinctive. However, the Opponent's mark consists solely of an ordinary dictionary word. Incontrast, the Mark comprises an invented word, ZENERGY, combined with the name of an individual and coloured design features.

Asa result, the Mark is inherently stronger than the Opponent's mark. the extent to which each mark has become known [19] A mark's distinctiveness may be increased through use and promotion. According to the affidavit of Mr. Wiltzer, sales ofENERGIE wares in Canada in the two years preceding the filing of the application were as follows: 2004 - $6.4 million; 2005 - $6.2million. The bulk of such sales was attributable to clothing. I note that Mr.

Wiltzer attests that Canadian sales have been continuous since1998 but that sales figures prior to 2004 are not available due to a policy of not retaining computerized sales after seven years. ENERGIEwares have been advertised through billboards, flyers, mailers and the like, with $96,000 being spent on advertising in Canada in 2004and 2005. [20] As the Applicant's application was filed based on proposed use, as of the material date the Mark had not become known to anyextent.

Thus the extent to which the marks had become known clearly favours the Opponent. the length of time the marks have been in use [21] As of the material date, the Opponent's mark had been in use for at least seven years, whereas the Mark had not yet been used. the nature of the wares, services, business and trade [22] The parties' wares overlap in that both parties sell clothing. The Opponent's wares are sold through ENERGIE retail stores aswell as other retail outlets.

The Applicant's wares have been sold since March 2009 through a licensee who in turn sells to customerssuch as Costco. the degree of resemblance between the marks [23] The marks should be assessed in their entirety but it is still acceptable to "focus on a particular feature of the mark that may havea determinative influence on the public's perception of it" [United Artists Corp v Pink Panther Beauty Corp (1998), (FCA), 80 CPR (3d) 247 (FCA) at 263].

Although the first component of a mark is often considered more important for the purpose ofdistinction, when a word is a common, descriptive or suggestive word, the significance of the first component decreases [see Conde NastPublications Inc v Union des Editions Modernes (1979), 46 CPR (2d) 183 (FCTD); Park Avenue Furniture Corp v Wickes/SimmonsBedding Ltd (1991), (FCA), 37 CPR (3d) 413 (FCA); Phantom Industries Inc v Sara Lee Corp (2000), (CA TMOB), 8 CPR (4th) 109 (TMOB)]. [24] The most dominant feature of the Mark is the invented word ZENERGY that appears first and in the largest font.

However, thedesigner's name, SIMON CHANG, and the coloured design features are also significant features of the Mark. There is someresemblance between the marks in sound, appearance and idea suggested, due to the common letters ENERGY / IE, but overall thedifferences between the marks serve to outweigh their similarities.

[…] conclusion [28] Having considered all of the surrounding circumstances, I find that, on a balance of probabilities, confusion is not likely betweenthe marks. Although the parties' wares and channels of trade overlap, or are related, and only the Opponent's mark has acquired areputation as of the material date, the differences between the marks suffice to make confusion unlikely.

As stated in Beverley Bedding &Upholstery Co v Regal Bedding & Upholstery Ltd (1980), 47 CPR (2d) 145 (FCTD) at 149, affirmed 60 CPR (2d) 70: "Realisticallyappraised it is the degree of resemblance between trade marks in appearance, sound or in ideas suggested by them that is the most crucialfactor, in most instances, and is the dominant factor and other factors play a subservient role in the over-all surrounding circumstances." [Emphasis added] III.

Challenge to the Findings in Paragraph 18 of the Decision [6] At the hearing of the present Application an error was identified in the Registrar’s decision which was not raised byInternational Stars in written argument. While the Registrar found that both marks are inherently distinctive, I find that a fundamentalerror exists in the reasoning leading to the conclusion that the Mark is “inherently stronger”. ENERGIE does not consist “solely of anordinary dictionary word” as found by the Registrar.

As a result, I find that neither mark is inherently more distinctive than the other.This finding has an impact on the validity of the Registrar’s conclusions on difference between the marks. IV. Challenge to the Findings in Paragraphs 23, 24, and 28 of the Decision [7] International Stars argues that the Registrar used the wrong legal test when assessing resemblance between the marks. Asexpressed by the Registrar in the Decision, the test for confusion is based on first impression and imperfect recollection.

Thus, theRegistrar was required to apply the mind of the casual consumer somewhat in a hurry with imperfect recollection of the trade-marks,who does not pause to give the matter any detailed consideration or scrutiny, nor to examine closely the similarities and differencesbetween the marks [Veuve Clicquot Ponsardin Maison Fondee en 1772 v. Boutiques Cliquot Ltee, 2006 SCC 23 , 49 C.P.R. (4th) 401].

International Stars argues that instead of applying the first impression test, the Registrar erred by doing a side-by-sidecomparison of the marks that is contrary to law. [8] In stating the test for distinctiveness and confusion, the Registrar cited the decision in Masterpiece Inc v Alavida Lifestyles Inc (2011), 2011 SCC 27 , 92 CPR (4TH) 361 (SCC).

An important feature at paragraph 40 of Justice Rothstein’s decision is theconfirmation of the first impression test and a warning about an analytical pitfall to be avoided: At the outset of this confusion analysis, it is useful to bear in mind the test for confusion under the Trade-marks Act. In Veuve ClicquotPonsardin v.

Boutiques Cliquot Ltée, 2006 SCC 23, [2006] 1 S.C.R. 824, Binnie J. restated the traditional approach, at para. 20, in thefollowing words: The test to be applied is a matter of first impression in the mind of a casual consumer somewhat in a hurry who sees the [mark] at a timewhen he or she has no more than an imperfect recollection of the [prior] trade-marks, and does not pause to give the matter any detailedconsideration or scrutiny, nor to examine closely the similarities and differences between the marks. Binnie J. referred with approval to the words of Pigeon J. in Benson & Hedges (Canada) Ltd. v. St.

Regis Tobacco Corp., (SCC), [1969] S.C.R. 192, at p. 202, to contrast with what is not to be done -- a careful examination of competing marks or a side by sidecomparison. [9] In paragraph 23, the Registrar acknowledges that the issue is one of public perception, and therefore, was required todetermine that perception as one of first impression. With respect to ZENERGY, since it is not a common, descriptive or suggestiveword, the Registrar found that the Mark’s dominant feature is its “invented word”.

International Stars argues that, having made thisfinding, the Registrar should not have proceeded to further search the evidence in order to make the first impression determination. Thatis, on that evidence alone, the Registrar was required to decide whether confusion would exist. Indeed, the Registrar began to engage inthis process by reasonably finding that “there is some resemblance between the marks in sound, appearance, and idea suggested, due tothe common letters ENERGY/IE”, but went further to consider other “significant features” of the Mark, being the designers name, andcoloured design.

International Stars argues that by going further to consider such specific additional details, beyond what would give thefirst impression, the Registrar erred by conducting a side-by-side comparison. I agree with this argument.

[ 10 ] In my opinion, the Registrar’s conclusion expressed in paragraph 28 that “the differences between the marks suffice to make confusion unlikely” is the result of a side-by-side comparison and constitutes an error in law. Considering the evidence before the Registrar de novo , given what I consider to be a strong resemblance between the marks, and given that the other s. 6(5) factors do not point strongly against a likelihood of confusion, I find that, as a matter of first impression, confusion is likely.

ORDER THIS COURT ORDERS that for the reasons provided, I grant the present appeal, set aside the Registrar’s decision, and direct the Registrar to refuse Simon Chang Design Inc.’s Application. I make no order as to costs. “Douglas R. Campbell” Judge FEDERAL COURT SOLICITORS OF RECORD Docket: T-1573-12 STYLE OF CAUSE: INTERNATIONAL STARS S.A. v SIMON CHANG DESIGN INC. PLACE OF HEARING: Toronto, Ontario DATE OF HEARING: OCTOBER 9, 2013 REASONS FOR ORDER AND ORDER: CAMPBELL J. DATED: October 15, 2013 APPEARANCES : Michael Adams FOR THE APPLICANT No appearance FOR THE RESPONDENT SOLICITORS OF RECORD :

RICHES, McKENZIE & HERBERT LLP Toronto, Ontario FOR THE APPLICANT N/A FOR THE RESPONDENT