Official Journal of the International Trademark Association

Transcription

1 Official Journal of the International Trademark Association Veuve Clicquot Ponsardin v. Boutiques Cliquot Ltée: The Protection of Famous Trade-marks in Canada By Jacques A. Léger, Q.C. and Barry Gamache Veuve Clicquot Ponsardin v. Boutiques Cliquot Ltée: Celebrity Is Not Everything By Alexandre Ajami The Rebirth of Section 22 of Canada s Trade-marks Act as an Anti-Dilution Remedy By Kevin Sartorio and R. Scott Jolliffe The BARBIE Case: The Supreme Court of Canada Restates the Test for Trade-mark Confusion By Paul D. Blanchard, Lisa R. Vatch and Andrea P. Flewelling The BARBIE Case: Fame Is Not Everything By Sophie Picard and Christopher K. Assié Counterfeit Pharmaceuticals: A Worldwide Problem By Maria Nelson, Michelle Vizurraga and David Chang Ding You Are Now Free to Register That Sound By Kevin K. McCormick Dormant Trademarks in the European Union Swords of Damocles? By Verena von Bomhard Vol. 96 September-October, 2006 No. 5

2 1020 Vol. 96 TMR THE REBIRTH OF SECTION 22 OF CANADA S TRADE-MARKS ACT AS AN ANTI-DILUTION REMEDY By Kevin Sartorio and R. Scott Jolliffe I. INTRODUCTION With the enactment of the Trade-marks Act in 1953 (the Act ), Canadian law underwent a transformation designed to modernize and expand the ambit of protection afforded to trademarks. The intention was to create a legislative framework reflecting modern commercial realities in providing broader and more flexible protection for all marks, but particularly so for wellknown or famous marks. One important way in which these objectives were achieved was through the introduction of Subsection 22(1) of the Act, which provides: No person shall use a trade-mark registered by another person in a manner that is likely to have the effect of depreciating the value of the goodwill attaching thereto. Section 22 introduced a new and distinct right into Canadian trade-mark law. It is not concerned with confusion, either as to source or association. Instead, it provides an alternative or additional form of relief in situations of unfair competition that might not constitute grounds for an infringement or passing-off action, but that nevertheless are likely to have the prohibited effect of depreciating the value of the goodwill attaching to a registered mark. Section 22 was intended to be a flexible tool capable of addressing many different situations, yet it has received surprisingly little judicial attention since When considered, it has been interpreted restrictively and often inconsistently. As a result, Section 22 had come to be regarded as largely irrelevant Senior Associate, Gowling Lafleur Henderson LLP, Associate Member of the International Trademark Association. His practice extends to all areas of intellectual property litigation. Mr. Sartorio served as co-counsel to the International Trademark Association for its intervener submissions to the Supreme Court of Canada in the Veuve Clicquot decision. National Managing Partner, Gowling Lafleur Henderson LLP, Associate Member of the International Trademark Association. Over the past 30 years, he has acted as senior counsel on numerous landmark intellectual property cases in Canada. He is recognized as one of Canada s preeminent trial and appellate court lawyers in intellectual property and technology law. Mr. Jolliffe served as co-counsel to the International Trademark Association for its intervener submissions to the Supreme Court of Canada in the Veuve Clicquot decision.

3 Vol. 96 TMR 1021 and an ineffective remedy in the overall scheme of trade-mark protection in Canada. The situation has now changed. In 2006, the Supreme Court of Canada released its decision in Veuve Clicquot Ponsardin v. Boutiques Cliquot Ltée. 1 With Veuve Clicquot, the Supreme Court of Canada has breathed new life into Section 22, providing guidance that should pave the way for its more frequent application in future cases. This article begins with a brief review of the circumstances that led to the introduction of Section 22 into the Act in It then looks at some of the cases in which Section 22 had been interpreted so as to be of minimal scope and impact. The recent Veuve Clicquot case is then examined, beginning with a review of the decisions of the Federal Court and Federal Court of Appeal, and ending with a more detailed discussion of the Supreme Court of Canada s guidance in this area and a prospective view of considerations for brand owners seeking redress under Section 22. II. LAW REFORM AND THE INTRODUCTION OF SECTION 22 Modern trade-mark law has evolved since its creation in response to changing commercial realities. The law of trade-marks first rose to prominence in the mid-19th century in the context of the Industrial Revolution. During earlier times, consumers most often purchased goods directly from merchants and craftsmen and, to a great extent, manufacturing sources and reputations were known first hand. Under these conditions, marks of trade carried little economic significance. But manufacturing and distribution advances of the Industrial Revolution began to allow goods to be manufactured in one location and transported across greater distances for sale. In these circumstances, the public came to rely more heavily on marks and names placed on goods to make their purchasing decisions. 2 Principles of law developed premised on the concept of a trademark serving as a symbol of a good s source or origin. Early source theory principles offered only very limited protection to trade-marks. For example, offering protection only in relation to the class of goods and territorial areas in relation to which the mark was actually used SCC Frank I. Schechter, The Historical Foundations of the Law Relating to Trade-marks, 19-41, 129, 130 (1925) ( Historical Origins ). 3. Report of Trade Mark Law Revision Committee to the Secretary of State of Canada, 9, 24, 25 (1953) ( Committee Report ).

4 1022 Vol. 96 TMR As commercial activities and advertising expanded and diversified over time, the appropriateness of some of these principles were brought into question as being out of step with modern realities. Frank I. Schechter, an early advocate in the United States for trade-mark law reconsideration and reform, argued in 1927 in his seminal work The Rational Basis of Trademark Protection 4 that in the modern marketplace a trademark no longer functioned solely as an indicator of source. Rather, its value arose at least in part from its ability to act as a distinctive communicator of brand messages and thus an effective agent for the sale of goods. Schechter argued that trade-marks required protection from more than mere confusion as to source; they needed to be protected from what has subsequently become known as dilution : [p. 818]... To describe a trademark merely as a symbol of goodwill, without recognizing in it an agency for the actual creation of perpetuation of goodwill, ignores the most potent aspect of the nature of a trademark and that phase most in need of protection.... [p. 819]... today the trademark is not merely the symbol of goodwill but often the most effective agent for the creation of goodwill, imprinting upon the public mind an anonymous and impersonal guaranty of satisfaction, creating a desire for further satisfactions. The mark actually sells the goods. And, self-evidently, the more distinctive the mark, the more effective is its selling power. [p. 825]... The real injury in all such cases... is the gradual whittling away or dispersion of the identity and hold upon the public mind of the mark or name by its use on non-competing goods. The more distinctive or unique the mark, the deeper is its impress upon the public consciousness, and the greater its need for protection against vitiation or dissociation from the particular product in connection with which it has been used. [emphasis added] What must be understood is that each trade-mark competes for consumer attention with all other marks and messages in the marketplace. Any mark that manages to become a well-known and highly distinctive symbol of something particular becomes an effective selling agent for associated wares and services. In such circumstances, the mark is able to effectively cut through other competing messages and speak in a direct way to consumers. Such a mark is an asset of great value. However, the mark s distinctiveness is diminished when the same or similar marks are Harv. L. Rev. 813 (1927).

5 Vol. 96 TMR 1023 permitted to be used by others, even in association with completely unrelated wares or services. Over time, and with repeated unauthorized use in association with unrelated wares, the once highly distinctive mark would gradually cease to function in the same way in the public mind as an exclusive symbol relating to something particular. Schechter s ideas gained momentum in the United States. In 1947, Massachusetts became the first U.S. state to enact an antidilution statute, 5 and by the mid-1990s, many others had followed suit. Eventually, inconsistent application of state anti-dilution laws led to enactment in the U.S. of the Federal Trademark Dilution Act of 1995 ( FTDA ). 6 In the Committee Report of the House of Representatives concerning the FTDA, its purpose was described as follows: 7... The provision is intended to protect famous marks where the subsequent, unauthorized commercial use of such marks by others dilutes the distinctiveness of the mark.... Thus, for example, the use of DUPONT shoes, BUICK aspirin, and KODAK pianos would be actionable under this legislation.... Dilution does not rely upon... likelihood of confusion.... Rather, it applies when the unauthorized use of a famous mark reduces the public s perception that the mark signifies something unique, singular, or particular.... Schechter s ideas also made an impression in Canada. In 1947, around the time of the adoption of the Massachusetts statute, Canada s Secretary of State commissioned a Trade Mark Law Revision Committee to study Canada s trade-mark laws and report back on revisions that should be made to them. 8 The Committee was chaired by Dr. H.G. Fox and included other leading scholars and practitioners in the field at the time. After obtaining the views of organizations and individuals in Canada, the United States and the United Kingdom, the Committee presented its Report to Parliament in 1953, together with a draft statute. With very minor changes, Parliament enacted the Committee s proposed statute as the Trade-marks Act. 9 The new Act was designed to encourage the commercial exploitation of trade-mark rights and to widen the ambit of trade Mass. Acts, p. 300, ch Codified as Lanham Act, 15 U.S.C. 1125(c). 7. Committee Report of the House of Representatives, 104th Congress, H.R E. Gordon Gowling, The New Canadian Trade Marks Act (1954), 19 C.P.R. 57 (Sec. I) at Committee Report, at 3-5; Fox on Canadian Law of Trade-Marks and Unfair Competition 1-8 (4th ed. 2003).

6 1024 Vol. 96 TMR mark protection in Canada. 10 For example, the Committee rejected the view that trade-mark rights could be enjoyed only in relation to the specific wares for which the mark had been used or registered, stating in its Report: [p. 23]... There has long been a feeling throughout the commercial world that the ambit of protection accorded to trade marks was too narrow and restricted.... [p. 25]... Modern business has passed beyond the applicability of principles originally established over a century ago.... Goodwill built up in a trade mark... should invest the owner of the mark with a proprietary right in respect of which he is entitled to protection. The Committee also recommended the adoption of Section 22(1): No person shall use a trade-mark registered by another person in a manner that is likely to have the effect of depreciating the value of the goodwill attaching thereto. In describing the purpose of this section, the Committee stated in its Report: [p. 26]... A trade mark statute should be designed to protect fair trading and, in our view, anything that depreciates the value of the goodwill attaching to a trade mark should be prohibited. We have, therefore, made a positive provision to that effect in section 22. [emphasis added] Section 22 was described in the Report as applying in circumstances where a mark is used in a manner likely to bring it into contempt or disrepute in the public mind But it is clear that Section 22 was also intended for broader purposes, including those advocated by Frank Schechter. This was made clear in contemporaneous writings of Committee chair Dr. Fox 12 and Committee member Christopher Robinson, Q.C.: 13 Dr. Fox: [p. 506]... In addition, the 1953 statute [Section 22] imports an entirely new principle into trade mark law.... [p. 507]... the depreciation of the value of the goodwill attaching to the trade mark or, expressed in different terms, the dilution of the distinctiveness or unique character of the trade mark. This is quite different from the orthodox type of infringement Committee Report, at 9, 23-27, 38, 39; Christopher Robinson, Q.C. (Committee Member) The Canadian Trade Marks Act of 1954 A Review of Some of Its Features (1959), 32 C.P.R. 45 (Sec. I) at 51-53; John C. Osborne (Committee Member), New Canadian Trade Mark Law, 44 TMR 891, (1954). 11. Committee Report, at 26, The Canadian Law of Trade Marks and Unfair Competition, (2d ed. 1956). 13. Robinson, supra note 8, at 60.

7 Vol. 96 TMR 1025 [p. 508]... Where a well known trade mark is taken by another for use in association with wares... of a totally different class... the purchaser... will not be deceived.... But in the course of time, and with repeated use, the trade mark diminishes in value just as it diminishes in distinctiveness... if the same trade mark is permitted to be used in association with the thousand and one different classes of wares entering into modern commerce, that trade mark is no longer unique but becomes practically an every-day word in the language.... [p. 509]... In the United States as well as in continental Europe, the courts have been vigilant in protecting this dilution.... [emphasis added] Christopher Robinson, Q.C.: [p. 60]... A provision of this type is found in the legislation of certain states in the United States of America, e.g. Massachusetts.... It was included... in an attempt to deal with cases where a registered trade mark, with a very good and wide reputation, is used... in circumstances where... the public would be unlikely to assume that the wares or services of the other person originated with the trade mark owner.... The trade mark KODAK would be likely to be considerably less valuable to its owner if it were used by others in connection with a wide variety of other wares even if these were so unrelated to photographic equipment that nobody would think that they originated with the trade mark owner. [emphasis added] In addition to the U.S. and Canada, several other countries have also enacted laws that are intended to prohibit the use of trade-marks which take unfair advantage of, or are detrimental to, the distinctive character or reputation of another person s trade mark, including: Austria, 14 the Benelux, 15 Denmark, 16 Finland, 17 France, 18 Germany, 19 Greece, 20 Ireland, 21 Italy, 22 Spain, 23 Sweden 24 and the United Kingdom Austrian Trade Mark Protection Act, s. 10(2). 15. Uniform Benelux Law on Marks, art. 13(1)(c). 16. The Consolidate Trade Marks Act, s. 4(2). 17. Trademarks Act, art Article L713-5, adopted in 1991 in its Code de la Propriété Intellectuelle. 19. Law on the Protection of Trade Marks, art. 14(2)(3.). 20. Trademark Law No of September 16, 1994, arts. 18(3) and 4(1)(c). 21. Trade Marks Act, 1996, s. 14(3). 22. Trademarks Act, art. 1(c). 23. Law on Trademarks, art. 34(2)(c).

8 1026 Vol. 96 TMR III TO 2005 SECTION 22 INTERPRETED RESTRICTIVELY AND INCONSISTENTLY It is clear that Section 22 s original intentions quickly became obscured and lost. Section 22 was first considered at length in the 1968 comparative advertising case Clairol International Corp. v. Thomas Supply and Equipment Co., 26 a decision of Justice Thurlow. In Clairol, the plaintiff s mark had been used in comparative charts placed on the defendant s packaging for goods and also on promotional materials for the defendant s goods. In a highly technical decision, Justice Thurlow concluded that while the defendant s use of the plaintiff s mark was likely to depreciate the value of the goodwill attaching thereto, Section 22 was violated only by the defendant s use of the mark on product packaging and not on advertising for the products. 27 Justice Thurlow reached this result by interpreting the word use in Section 22 as requiring proof of technical trade-mark use as defined in Section 4 of the Act. 28 In essence, Section 4 deems a trade-mark to be used with services when it appears in advertising, but not when it appears in advertising for wares. A mark is only used with wares under Section 4 when it is placed on the goods or on packaging, or otherwise brought to the consumer s attention in association with the goods at point of sale or transfer. 29 In Clairol, the defendant s use of the plaintiff s mark on advertising materials was not considered use within the meaning of Section 4, but placing the plaintiff s mark on the defendant s packaging was considered such use. In applying this reasoning to Section 22, his Lordship does not appear to have had regard to the original Committee Report, which makes no mention of a Section 4 restriction being intended. On the contrary, the Committee Report makes it clear that Section 22 was intended to apply to anything that depreciates the value of goodwill attaching to a registered mark Trademark Act, art Implemented in 1994 as s. 10(3) of its Trade Marks Act 1994, 1994 c (1968), 55 C.P.R. 176 (Ex. Ch.). 27. Clairol, 55 C.P.R. at Id. 29. Section 4 provides: (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. (2) A trade-mark is deemed to be used in association with services if it is used or displayed in the performance or advertising of those services. 30. Committee Report, at 26.

9 Vol. 96 TMR 1027 In the course of his reasoning, Justice Thurlow also applied a very restrictive interpretation to the phrase depreciate the value of the goodwill in Section 22:... it arises through reduction of the esteem in which the mark itself is held or through the direct persuasion and enticing of customers who could otherwise be expected to buy or continue to buy goods bearing the trade mark. It does not, however,... arise... from... loss of exclusive rights as a result of use by others In making these comments, Justice Thurlow largely reduced Section 22 to having application only in disputes concerning comparative or disparaging conduct. Even in the context of comparative advertising disputes, the approach to Section 22 in Clairol caused confusion for future courts. In one case, Madam Justice Reed of the Federal Court characterized as bizarre the result in Clairol that Section 22 provided broader rights in relation to marks used with services than marks used with wares. 32 In a subsequent case, the British Columbia Supreme Court could not be convinced that Clairol actually intended this distinction, inferring that the key issue under Section 22 was really whether the defendant was using the plaintiff s mark to stress similarities or differences between the parties wares only the former being considered prohibited by Section The situation became even more disheartening for brand owners contemplating an action under Section 22, in that various courts began to comment that Section 22 could not be invoked unless the defendant was using the identical mark as registered by the plaintiff. 34 In the result, Section 22 had been transformed from a remedy intended to prohibit any use of another s mark in a manner likely to depreciate its goodwill, to one that was applied only in comparative advertising or disparagement disputes, and only where a Section 4 use was established (unless perhaps the defendant was stressing similarities instead of differences) and only so long as the defendant was using the plaintiff s mark precisely as registered by the plaintiff. It is not surprising that Section 22 came to be regarded as largely irrelevant in the overall scheme of protection for trade C.P.R. at 200 (emphasis added). 32. Eye Masters Ltd. v. Ross King Holdings Ltd. (1992), 44 C.P.R. (3d) 459, 463 (F.C.T.D.). 33. Future Shop Ltd. v. A. & B. Sound Ltd. (1994), 55 C.P.R. (3d) 182, (B.C.S.C.). 34. See, e.g., S.C. Johnson & Son, Ltd. v. Marketing International Ltd. (1977), 32 C.P.R. (2d) 15, 30 (F.C.T.D.).

10 1028 Vol. 96 TMR marks in Canada. However, 2006 was an important and watershed year for this long since abandoned remedy. IV. THE VEUVE CLICQUOT CASE A. Proceedings in the Federal Courts Veuve Clicquot was an infringement action. The plaintiff was the owner of the well-known and registered trade-mark VEUVE CLICQUOT, which it had used for its very exclusive brand of champagne for over 100 years in Canada. For a much shorter period of time, the defendant had been operating a mid-range women s clothing boutique in Quebec under the names CLIQUOT and CLIQUOT UN MONDE À PART. The Veuve Clicquot company sued the clothing boutique for both confusion under Section 20 of the Act and for depreciation of goodwill under Section 22 of the Act. It is important to bear in mind that, in presenting its case under Section 22, the plaintiff attempted to fit its cause of action into the earlier cases, which seemed to require it to show that the defendant had done something to tarnish the plaintiff s brand. To do so, the plaintiff put forward an expert and witnesses to establish that: (1) the VEUVE CLICQUOT mark was elastic and capable of extending into other wares and services, including clothing; (2) consumers would infer that the defendant s nonluxury CLIQUOT stores were associated or affiliated with the luxury VEUVE CLICQUOT brand; and (3) this was likely to depreciate the plaintiff s luxury brand. 35 The plaintiff s case under Section 22 was directed towards establishing that consumers seeing the defendant s stores would believe that they were somehow authorized by the plaintiff company. In the Federal Court, the trial judge found that the champagne maker s mark VEUVE CLICQUOT was inherently distinctive, well-known in Canada from more than 100 years of use, and also unique in that there were no similar marks in use in Canada for other wares or services. The most distinctive element of the VEUVE CLICQUOT mark was held to be the element CLICQUOT. 36 In spite of these findings, her Ladyship dismissed the champagne maker s action under Section 22 for the following reasons: [94]... I have concluded that it is not likely that a consumer would believe that the plaintiff was affiliated with the defendants, or that the plaintiff had granted a third party a 35. Trial Decision, Veuve Clicquot (2003), 28 C.P.R. (4th) 520, Id. at

11 Vol. 96 TMR 1029 licence allowing it to use the distinctive part of its mark in association with the operation of a women s clothing store. Although confusion is not the test laid down in Section 22, I consider that it is still necessary for there to be an association between the two marks. In other words, a consumer has to be able to make a connection between the parties in order for there to be depreciation of the goodwill attaching to the trademark.... [96]... In my view a consumer who saw the word Cliquot used in the defendants stores would not make any link or connection to the plaintiff. Consequently, there will be no association between the Clicquot luxury mark and the defendants non-luxury wares. The Federal Court of Appeal affirmed the trial decision and added that it would also have upheld the dismissal of the action under Section 22 on the grounds that the defendant had not used the plaintiff s mark as registered by the plaintiff. 37 B. The Supreme Court of Canada The champagne house was granted leave to appeal to the Supreme Court of Canada, but elected to focus its appeal solely on its case for infringement under Section 20 of the Act (based on confusion as to source) and not to advance its case under Section 22 of the Act. An application for leave to intervene was granted to the International Trademark Association (INTA), who requested leave to address the Court on the issue of Section 22. Although Section 22 had not been raised by the appellant or the respondent, INTA noted that it had been pleaded in the statement of claim and litigated by the parties in the lower courts. While INTA took no position on the facts or the ultimate outcome of the case, it was concerned to advise the Court regarding the manner in which Section 22 had been misunderstood in the past, and to explain how Section 22 could be applied in the context of a dispute involving a famous brand like VEUVE CLICQUOT. In a decision written for the Supreme Court of Canada by Justice Binnie, the Court provided the following key points of guidance concerning Section 22: 38 (a) Section 22 has four elements. Firstly, that a claimant s registered trade-mark was used by the defendant in connection with wares or services whether or not such wares and services are competitive with those of the 37. Federal Court of Appeal Decision, Veuve Clicquot (2004), 35 C.P.R. (4th) Veuve Clicquot, 2006 SCC, at paras

12 1030 Vol. 96 TMR claimant. Secondly, that the claimant s registered trademark is sufficiently well known to have significant goodwill attached to it. Section 22 does not require the mark to be well known or famous... but a defendant cannot depreciate the value of the goodwill that does not exist. Thirdly, the claimant s mark was used in a manner likely to have an effect on that goodwill (i.e. linkage) and fourthly that the likely effect would be to depreciate the value of its goodwill (i.e. damage). 39 (b) The requirements of Section 22 must be interpreted in light of its remedial purposes. 40 (c) As to the first factor, there is no requirement that the plaintiff prove that the defendant is using the identical mark as registered by the plaintiff. If the casual observer would recognize the mark used by the defendant as the mark of the plaintiff then that will suffice. 41 (d) As to the second factor, fame is not a requirement under Section 22, but goodwill must exist in the plaintiff s mark. 42 (e) As to the third factor ( linkage ), the plaintiff must establish that a reasonable consumer is likely to think of the plaintiff s trade-mark in his or her own mind, even subtly or subliminally, when encountering the defendant s mark or activities. There cannot be any impact on the plaintiff s mark unless consumers, upon seeing defendant s mark, would (even unconsciously) think of the plaintiff s mark. 43 (f) As to the fourth factor, the word depreciate is used in its ordinary dictionary meaning of lower the value of as well as to disparage, belittle, underrate. Section 22 encompasses both the concepts of tarnishment and blurring discussed in U.S. law, although Section 22 may ultimately not be restricted only to those forms of depreciation. (g) A key finding of fact by the trial judge was that a consumer who saw the word Cliquot used in the defendants stores would not make any link or connection to the plaintiff s mark. Without any such a mental link 39. Id. at para Id. at para Id. 42. Id. at para Id. at para. 49.

13 Vol. 96 TMR 1031 (conscious or even unconscious) there could be no depreciation of the plaintiff s mark. 44 C. A Prospective View While this particular case was decided against the famous brand owner, Section 22 finally has received a purposeful interpretation and been recognized as an effective remedy capable of addressing a number of different situations, including those relating to the concepts of blurring and tarnishment. As the Supreme Court noted in Veuve Clicquot, Section 22 has received surprisingly little judicial attention since it was enacted in 1953 and Canadian courts have not yet had an opportunity to explore the limits of this remedy or the type of proof that is required to succeed in a depreciation claim. 45 However, the Supreme Court of Canada indicated that U.S. case law on trade-mark dilution provides useful elucidation of the relevant concepts in this area. 46 U.S. law speaks of dilution in terms of the reduction of the capacity of a famous mark to identify the goods of its owner, not the loss of goodwill. Nevertheless, the notions of blurring of a brand s image or the positive associations evoked by a trade-mark, or the whittling away of its power to distinguish the products of the owner and attract customers, are as relevant to a depreciation claim as they are to a dilution claim. 47 It remains an open question as to whether or not the use of the registered mark referred to in Section 22 must be use as defined in Section 4 of the Act. The limitation of Section 4 use was not in issue in Veuve Clicquot because no one contested that the defendant clothing boutique was using the mark CLIQUOT. However, there should be no doubt that a trade-mark could be used in a manner other than as defined in Section 4 of the Act to depreciate the value of the goodwill attached to it. Interpreted in light of its remedial purpose, as directed by the Supreme Court of Canada, Section 22 should not be limited only to those activities deemed to be technical uses under Section 4. It is clear from the Committee Report that Section 22 was intended to be capable of addressing anything likely to have the prohibited effect of depreciating the value of goodwill attaching to a mark. 48 The existence of confusion arising from the defendant s use of the plaintiff s mark is not relevant under Section 22. Nor does it 44. Id. at paras. 49, Id. at paras. 46, Id. at para Id. 48. Committee Report, supra note 11, at 26.

14 1032 Vol. 96 TMR matter whether the defendant s products or services are competitive. The Supreme Court of Canada has also made it clear that the identical mark need not be used to support a cause of action under Section 22. For example, it is no defense that the mark might be differently spelled. But more importantly, the purchasing public may have come to regard something less than the whole of the plaintiff s registered trade-mark as being its distinguishing feature, the use of which could constitute use of the registered mark in a manner likely to depreciate the value of its attaching goodwill. 49 The plaintiff s registered mark must be sufficiently known to have significant goodwill attached to it to prevail under Section 22. In determining the existence of goodwill capable of depreciation, the Supreme Court of Canada has stated that the following may be taken into account: 50 (a) the degree of recognition of the mark within the relevant universe of consumers; (b) the volume of sales and the depth of market penetration of products associated with the claimant s mark; (c) the extent and duration of advertising and publicity accorded the claimant s mark; (d) the geographic reach of the mark; (e) its degree of inherent or acquired distinctiveness; (f) whether products associated with the claimant s mark are confined to a narrow or specialized channel of trade, or move in multiple channels; and (g) the extent to which the mark is identified with a particular quality. Fame in and of itself does not lead to the conclusion that a defendant s conduct is likely to have the effect of depreciating the value of the famous mark s goodwill. As the Supreme Court of Canada has said: Given the variable content and market power of famous marks, no such generalization is possible. 51 As an example, a mark such as APPLE may be famous in relation to computers and related matters, but it is possible that consumers seeing the word apple on completely unrelated goods may or may not mentally connect it to the brand of computers. Apple is a common word in the English language and, though famous for computers, is not unique across the entire spectrum of trade. In these circumstances, the court will probably require direct 49. Veuve Clicquot, 2006 SCC, at para Id. at para Id. at para. 61.

15 Vol. 96 TMR 1033 evidence, likely obtained through survey results, as opposed to circumstantial evidence as to the likely consumer mental association. On the other hand, in circumstances involving a mark that is particularly distinctive, if not unique, that is associated substantially exclusively with the plaintiff and/or its products, direct proof of mental association should rarely be required when the defendant is using an identical mark. For example, in the instance of the trade-mark NASDAQ, a question would arise as to whether the defendant s use would trigger a conscious or unconscious linkage or connection to this brand only where a defendant is using a mark that is somewhat different. In order to succeed under Section 22, the plaintiff also must be in a position to establish that the defendant s mark has been used in a manner likely to have an adverse effect on the plaintiff s goodwill. Whether the plaintiff s claim depends on tarnishment or blurring, if the public does not at least have the plaintiff s mark called to mind when seeing the defendant s mark or activities, consciously or unconsciously, then there can be no adverse impact on the plaintiff s brand. The Supreme Court of Canada has referred to this as establishing a likelihood that consumers will draw a link between the plaintiff s mark and the defendant s use. It must be shown that the somewhat-hurried consumer would associate the defendant s mark or actions with the plaintiff s mark. 52 It is also important to recognize that the mere existence of a mental association between the defendant s mark and the plaintiff or its mark will not necessarily give rise to a likelihood of depreciation under Section In order to succeed under Section 22, the plaintiff must prove that the likely effect or impact resulting from the defendant s use would be to depreciate the value of the goodwill attaching to the plaintiff s mark. While the scope of protection under Section 22 is not yet defined, brand owners seeking redress for dilution under Section 22 may now feel confident that there are more salient remedies available following the decision in Veuve Clicquot. 52. Id. at para Id. at para. 43.