IP monitor - Confusion about confusion: unpacking the Wenger decision1

Author: Mark Davis Publication | February 2018

Doctrinal discipline in trademark cases is often sacrificed to expediency; the court knows infringement when it sees it. Unfortunately, this reactive approach often leads to analytical shortcuts, making it hard to reconcile conflicting decisions and even more difficult to predict future outcomes. The problem was exemplified in the Federal Court of Appeal’s recent decision in Wenger S.A. et al. v Travelway Group International Ltd., 2017 FCA 215 (Wenger). Although the court probably came to the right conclusion, certain portions of the reasons are inconsistent with many of the leading authorities. A more principled approach is required.

The facts

The facts in Wenger are not complicated. Wenger S.A. is a Swiss company that has been associated with the famous Swiss Army knife for over 100 years. Wenger and its licensees commenced an application for infringement of three trademarks Wenger had registered for use in association with luggage:

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Wenger claimed use of these marks since 2003.

Wenger’s competitor, Travelway, owned two trademark registrations for use in association with luggage:

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Travelway began using these marks in 2009.

In 2012, Travelway began modifying the Travelway marks; each modification brought them closer to the Wenger Cross Design.

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  • The cross shape became narrower and longer;

  • The shape of the triangular background was less pronounced;

  • The background was displayed in either red or black – the tone of red was similar to that frequently used in the Wenger cross mark;

  • The border of the triangle was modified to be less prominent, to have a uniform thickness and to be metallic;

  • The “S” was sometimes etched in metal in a manner that resulted in the “S” being difficult to see; and

  • The “S” was omitted altogether in the luggage zipper pulls.

Confusion

The court’s confusion analysis is confusing. Instead of analysing each use separately, the court gave an expansive scope to the Travelway Cross on Triangle Design and found that the Disappearing S Logo and the Missing S Logo were mere variants with the same dominant features. While Travelway conceded this was the case, presumably in an effort to shelter the variants under the protection of Travelway’s own registration, such an expansive interpretation was unnecessary and arguably goes too far. In consequence, confusion was assessed by comparing:

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This broad characterization of the scope of the Travelway Cross on Triangle Design was based on the Federal Court of Appeal’s understanding of the Supreme Court of Canada’s approach in Masterpiece.2 Masterpiece involved an application to expunge the trademark registration for MASTERPIECE LIVING on the basis that the registrant, Alavida, was not entitled to register its mark because, when the application was filed, it was confusing with trademarks that had previously been used or made known by Masterpiece Inc. The Supreme Court of Canada specifically considered the applicable test for assessing confusion between a proposed use trademark, MASTERPIECE LIVING, and existing, unregistered marks on a mark-by-mark basis.

In that context, the court held that a registration, when challenged, must be considered across its entire scope and without limiting it to the form in which the registered mark is actually used. Since the MASTERPIECE LIVING trademark was a “word mark,” the registration was found to permit Alavida to use the words “Masterpiece Living” in any size and with any style of lettering, color or design. In contrast, in Masterpiece,the rights in the unregistered trademarks were more narrowly assessed based on the manner in which they had actually been used. Applying analogous reasoning to this case, the Wenger Cross Design would have been given an expansive scope but the marks used by Travelway, at least for purposes of assessing infringement and passing off, would not.

The problem really stems from the order in which the court heard the arguments in Wenger. By focusing on infringement and passing off first, the court did not address Wegner’s request to expunge the Travelway Cross on Triangle Design and referred this matter back to the trial court. Doing so was, respectfully, an error. It ignores a long line of cases that have held that, “The use of a registered trademark is an absolute defence to an action in passing off where there is no significant difference between the mark as registered and the mark as used.”3 Extending this principle to an infringement action should not be controversial. Presumably, the issue was not raised with the court.

In the circumstances, given the court’s reasons, there is likely no room left to argue that the Travelway Cross on Triangle Design is valid. Accordingly, the inevitable result would appear to be the same. Nevertheless, the preferred route would have been for the court to first consider whether the Travelway Cross on Triangle Design, as registered, was confusing with the Wenger registrations and, if so, to expunge the Travelway marks. By first determining the validity of Travelway’s registered marks, the court could have then assessed infringement and passing off on a mark-by-mark basis. Using that approach, Wenger could have claimed infringement in respect of the marks being used by Travelway and also would have been free to claim damages for any use of those marks that occurred after the Travelway registrations were expunged.

Reference as to damages

On an entirely separate issue, the Federal Court of Appeal also sent the issue of damages back to the trial court and invited the trial court to consider whether damages should be assessed by way of a reference. Since BBM Canada v Research in Motion Limited, 2011 FCA 151, taking trademark enforcement proceedings by way of application has become an attractive procedure. One of the drawbacks is the difficulty a trademark owner has in establishing, without discovery, the extent of the defendant’s sales and profits. This impediment could be overcome if validity and infringement were established using an application and, once established, damages and profits could then be determined by reference.

A reference is a flexible procedure the court can use to determine an issue of fact. References are to be conducted using the simplest, least expensive and most expeditious procedure, which can include discovery. If trademark owners can obtain a permanent injunction restraining infringement on application, and then subsequently have damages or profits determined by reference, they may be able to enjoy the advantages of proceeding by application without compromising their ability to recover damages.

Footnotes

1 This article is based on a webinar presentation presented on behalf of the Intellectual Property Institute of Canada on January 23, 2018.

2 Masterpiece Inc. v Alavida Lifestyles Inc., 2011 SCC 27.

3 See Remo Imports Ltd. v Jaguar Cars Ltd., 2007 FCA 258 at para. 111 et seq. and the cases cited therein.


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