In Subway IP LLC v. Budway, Cannabis & Wellness Store, 2021 FC 583, the Federal Court of Canada (“FC”) found that the respondents infringed on the applicant’s registered trademark contrary to section 20 of the Trademarks Act.

The FC found that the use of the “BUDWAY” trademark amounted to the tort of passing off and depreciation of goodwill in the appellant’s trademark. As a result, the court granted the applicant, Subway, damages in the amount of $15,000 and an injunction against the respondents prohibiting them, among other things, from dealing in goods or services in association with the trademark or trade name “BUDWAY”.

What is Considered a Breach of Trademark Rights?

In the FC’s reasons for its decision, it advised generally that:

1. A trademark registration grants the owner the exclusive right to use the mark throughout Canada in respect of the goods and services in the registration;
2. The right to exclusive use is deemed infringed by the sale, distribution, or advertisement of goods or services in association with a confusing trademark; and
3. A trademark is confusing with another trademark if use of both in the same area “would be likely to lead to the inference that the goods or services associated with those trademarks are manufactured, sold, leased, hired or performed by the same person, whether or not the goods or services are of the same general class”.

When is a Trademark Confusingly Similar?

The FC opined that in determining whether a trademark is confusingly similar, a court must have regard to all of the surrounding circumstances including the following:

1. Inherent or acquired distinctiveness;
2. Length of time the trademarks have been in use;
3. The nature of the goods, services, business, and trade; and
4. The degree of resemblance between the trademarks.

The FC advised that the “test for confusion” to be applied is a matter of the” first impression in the mind of a casual consumer somewhat in a hurry” at a time when they have “no more than an imperfect recollection” of the registered trademark and without giving the matter “detailed consideration or scrutiny”.

What is Passing Off?

The FC advised that Paragraph 7(b) of the Trademarks Act codifies common law passing off “by prohibiting a trader from directing public attention to their goods, services, or business in a manner likely to cause confusion between them and the goods, services, or business of another”.

To establish passing off, one needs to show (1) the existence of good will (i.e. the applicant’s trademark must be distinctive and possess reputation), (2) deception of the public due to a misrepresentation by the respondent, (3) actual or potential damage to the applicant, and (4) ownership of a valid registered or unregistered trademark by the applicant.

In the subject case, in order to demonstrate damages, as required, the applicant relied on its “loss of control over the use and commercial impact” of its trademarks, which the FC advised has been recognized as sufficient “actual damage” under the above-noted test.

The FC’s Findings

The FC found that:

1. Degree of Resemblance: The “BUDWAY” trademark strongly resembles the applicants’ trademark (due to, for example, the similarities in pronunciation);
2. Distinctiveness: Any distinctiveness in the “BUDWAY” trademark “derives primarily from adopting the elements” seen in the applicant’s trademarks;
3. Length of Use: The applicant used its trademarks for many years while the respondents only used their trademarks for “a short period of perhaps a year”;
4. Nature of the Goods, Services, and Business: There is an “overlap between the goods” offered by the respondents and those identified in the registration of the applicant’s trademarks; and
5. Nature of the Trade: Both the applicants and the respondents offer “goods at a retail level with a similar size of store, offering foods for immediate purchase, including on a “take-out” basis”.

As a result, the FC found that the applicant established that the use of the respondents’ “BUDWAY” trademark constitutes use of the applicant’s trademark “in a manner likely to depreciate the goodwill attaching thereto, contrary to section 22 of the Trademarks Act”.

At Gilbertson Davis LLP, our lawyers can assist you in your trademark dispute whether you require assistance commencing a trademark infringement lawsuit or defending against one. Gilbertson Davis LLP lawyers have experience in proceedings involving Trademark Infringement, Copyright Infringement, Commercial Litigation, and Civil Litigation matters and can assist you in resolving your legal issues in a timely and cost-effective manner. Our mission is to provide creative, sensible, cost-effective, long-term resolutions to clients. Please contact Gilbertson Davis LLP to schedule a consultation.

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