Supreme Court of Canada: Trademark confusion test

The Supreme Court of Canada decision in the case of Masterpiece Inc. v. Alavida Lifestyles Inc.  provides a recent precedential review of the law around trademark confusion.

Parties to this trademark dispute were in the retirement living industry.  Masterpiece Inc. used several unregistered trademarks including “Masterpiece the Art of Living”.  Alavida, located in Ontario, sought to register the trademark “Masterpiece Living” in December 2005 on a proposed use basis.  Masterpiece Inc. started using and sought to register the marks “Masterpiece Living” and “Masterpiece” in parallel to Alavida, based on filings in 2006.  Alavida’s application eventually registered, and Masterpiece Inc. sought to expunge the registration.

Summary and impact:

Masterpiece Inc.’s previous unregistered use of MASTERPIECE THE ART OF LIVING as a trademark was sufficiently similar to, and earlier than, Alavida’s subsequent MASTERPIECE LIVING registration to cause potential consumer confusion in Canada and on this basis Alavida was found to not be entitled to registration.

The Court provides thoughtful consideration of the detailed application of many of the factors in the confusion test set out in the Trademarks Act.

This decision reinforces for businesses and trademark applicants or rights holders the importance of conducting common law and unregistered trademark clearance as a part of the clearance process in selecting and adopting new trademarks.  Use of unregistered marks in any region of Canada is relevant to the registrability of a subsequent applicant.  Also of interest in this case is the fact that cost is minimized as a discounting factor in a confusion analysis as the marks in question become more similar.

Detail:

In the Federal Court Trial and Appeal divisions, the expungement attempt by Masterpiece Inc. was refused.

In an assessment of trademark priority and infringement, consumer confusion is the key test – section 6 of the Trademarks Actforms the basis for the law in this area.  Overall the test is whether or not as a matter of first impression, a consumer would be likely to confuse the source of particular products and services – in this case would a casual consumer in passing recollection be likely to think that retirement services of Alavida and Masterpiece Inc. came from the same or a similar source.  If such confusion is likely, then infringement is likely to be found.

One of the issues considered by the Court was whether or not the geographic location of use of the conflicting marks is relevant in considering likelihood of confusion.  Does the fact that these parties were using their respective marks in Alberta and Ontario, with significant geographic separation, lessen the likelihood of confusion?  In the context of a registered trademark, the Court held that the location of use in Canada is not relevant and there cannot be confusion anywhere in the country.

On the issue of comparison of the trademarks in question, the Court held that there is a strong resemblance between Masterpiece Inc.’s unregistered “Masterpiece the Art of Living” and Alaveda’s “Masterpiece Living” trademark, based on the presence of the same predominant element, the word MASTERPIECE.  Masterpiece Inc., even though their earlier use was unregistered, is afforded chronological priority in the confusion test since it is the use (ie. 2001 vs. 2006) of the trademark which crystallizes a trademark owners position rather than the registration of the mark.

Alavida argued a lessened likelihood of confusion on the basis of the sophistication and cost of the purchase of their services – the fact that retirement living services are carefully considered and of high cost, in their position, was a factor tilting against a finding of confusion which would support expungement of their registration.  The Court held that cost of the goods or services is unlikely to support negation of confusion where a strong resemblance between the trademarks or the other factors on the confusion test under section 6 of the Act are in play.

Rothstein J.’s decision reviews and applies the law on trademark confusion in an informative and succinct way and in the application of the section 6 “first impression” confusion test, the commentary on test for resemblance and other of the section 6 confusion factors is of legal interest and import.