Aug 2018 Charity & NFP Law Update
On July 25, 2018, in Dollar General Corporation v 2900319 Canada Inc., the Federal Court considered the issue of “use” of a trademark in Canada in association with “retail variety store services” without a physical presence in Canada. This is an important issue for trademark registrants, including charities and not-for-profits, given that once a registration is three years old, any person can request that the registration be expunged (i.e., cancelled) for non-use. If an expungement proceeding is initiated, the trademark owner must furnish evidence of use of the trademark in association with each of the goods and services listed in the registration certificate in accordance with the definition of “use” provided in the Trademarks Act (“Act”). If the trademark has not been used in Canada during the relevant period or the requisite “special circumstances” are not presented to excuse the non-use, the Registrar can elect to expunge the registration or amend the registration (i.e., delete the specific goods and services that the trademark has not been used in association with). As a result, it is important for organizations, including charities and not-for-profits, to understand what constitutes “use” of a trademark in Canada.
In this case, the court overturned the decision of the Trademarks Opposition Board (“TMOB”) to expunge the DOLLAR GENERAL trademark registration. Dollar General Corporation (“Dollar General”) operates brick-and-mortar stores in the USA, but not in Canada. Although Canadian residents can access Dollar General’s website and make purchases online, the company does not ship directly to Canada. Instead, consumers in Canada must pay a fee to a third party to ship the goods to Canada. Based on these facts, the TMOB expunged the registration for non-use in Canada in association with “retail variety store services.”
In reversing the TMOB’s decision to expunge the mark, the court rejected the notion that goods must be shipped directly by the owner to customers in Canada to constitute use of the mark in Canada. In doing so, the court relied on the propositions that the definition of “services” in the Act requires a liberal and broad interpretation and that if members of the public receive a benefit from the activity, the activity is a service. While the court noted the evidence was not perfect, it held that the interactive nature of the website together with the benefit the website provided to Canadians were sufficient to establish “use” within the meaning of section 4 of the Act.
This decision provides some assurance to non-Canadian charities and not-for-profits who do not have a physical presence in Canada that having a website that Canadians can access and benefit from is likely sufficient to demonstrate the requisite evidence of use to maintain trademark registrations in Canada.
While this decision suggests that courts may take a broad interpretation of the definition of “use” in association with services, the court’s analysis indicates that the determination is subjective and each case will ultimately turn on its evidence. As such, charities and not-for-profits should be proactive in ensuring that trademark registrations can withstand non-use challenges. This includes ensuring that trademarks are used in accordance with the definition of use provided in the Act and maintaining adequate records of such use. Further, charities and not-for-profits should ensure that trademark registrations cover a broad range of services (e.g., primary, incidental and ancillary services) such that if an expungement proceeding is initiated, some of the services associated with the trademark may be maintained even if others are struck out for non-use. This approach will also avoid the necessity of a costly appeal to the Federal Court if the TMOB cancels a registration certificate for non-use. Lastly, legal counsel should be consulted to ensure that trademark registrations can therefore withstand such non-use challenges.