Bacardi & Company Ltd. v. Havana Club Holdings S.A.

Bacardi & Company Ltd. v. Havana Club Holdings S.A. Court (s) Database Federal Court of Appeal Decisions Date 2004-06-08 Neutral citation 2004 FCA 220 File numbers A-447-03, A-448-03 Notes Digest Decision Content Date: 20040608 Dockets: A-447-03 A-448-03 Citation: 2004 FCA 220 CORAM: RICHARD C.J. NOËL J.A. NADON J.A. BETWEEN: BACARDI & COMPANY LIMITED Appellant and HAVANA CLUB HOLDING S.A. Respondent Heard at Ottawa, Ontario, on May 25, 2004. Judgment delivered at Ottawa, Ontario, on June 8, 2004. REASONS FOR JUDGMENT BY: RICHARD C.J. CONCURRED IN BY: NOËL J.A. NADON J.A. Date: 20040608 Dockets: A-447-03 A-448-03 Citation: 2004 FCA 220 CORAM: RICHARD C.J. NOËL J.A. NADON J.A. BETWEEN: BACARDI & COMPANY LIMITED Appellant and HAVANA CLUB HOLDINGS S.A. Respondent REASONS FOR JUDGMENT RICHARD C.J. Introduction [1] These appeals involve the Canadian Trade-mark Register, the use of a trade-mark in association with rum and the Castro regime. [2] The dispute between the parties arises out of the appellant's opposition to the respondent's registration of certain marks and designs used in association with rum, pursuant to subsection 15(1) of the Trade-marks Act, R.S.C. 1985, c. T-13 ("the Act"). The Registrar of Trade-marks ultimately rejected the appellant's opposition on all of the grounds it advanced. [3] There were two appeals before the Federal Court; one resulting from each decision of the Registrar. Both appeals were heard together in the Federal Court and in this Court. While Justice Martineau issued two sets of reasons (2003 FC 938, 2003 FC 939), he stated at paragraph 3 of the latter judgment: This case is basically identical to another appeal that was heard at the same time...and which was dismissed by this Court...The submissions, the evidence, the issues and the legal arguments are essentially the same in both cases ... [4] In oral argument before this Court, the appellant indicated that its only ground of opposition and of appeal was that relating to the interplay between paragraph 12(1)(b) and subsection 15(1) of the Act. Background [5] The facts leading to this dispute involve the following chain of historical events. [6] In 1934, Jose Arechabala S.A., a Cuban company, applied to the Canadian Registrar of Trade-marks for registration of its mark, "Havana Club", used in association with rum. The registration issued in July of that year. [7] However, the previously hospitable climate for doing business in Cuba became less sunny in1960, when the Castro regime came to power and nationalized the assets of various Cuban companies, including those of Jose Arechabala S.A. [8] In response to these events, lawyers acting on behalf of Jose Arechabala S.A. contacted the Canadian Registrar of Trade-marks in 1963 and requested that a change of title be recorded in the register to reflect the nationalization of their client's assets. The Registrar acceded to this request and entered the name "Jose Arechabala S.A. Nacionalizada" as the owner of the registered mark. [9] Cubaexport H.R.L. and the respondent, Havana Club, were the successive owners of the registered mark. [10] In 1998, the respondent applied to register several marks and designs based on use in Canada since at least 1990 by itself and its predecessors in title. The marks were potentially confusing with other marks used in the marketplace, such as Havana Club and Havana Club "Silver Dry". Accordingly, the respondent relied on subsection 15(1) of the Act, which allows for the registration of an otherwise confusing mark if all associated marks are owned by the same person. The section reads: 15.(1) Notwithstanding section 12 or 14, confusing trade-marks are registrable if the applicant is the owner of all such trade-marks, which shall be known as associated trade-marks. 15.(1) Nonobstant l'article 12 ou 14, les marques de commerce créant de la confusion sont enregistrables si le requérant est le propriétaire de toutes ces marques, appelées « marques de commerces liées » . [11] The appellant's position throughout has been that the registrar had no authority to amend the register in 1963 to substitute the name of the nationalized company, Jose Arechabala S.A. Nacionalizada, for Jose Arechabala S.A. According to the appellant, the respondent does not hold valid title to the mark registered in 1963 and cannot rely on it for the purposes of registering associated marks pursuant to subsection 15(1) of the Act. The Registrar's Decision [12] In support of its position regarding the invalidity of the 1963 amendment, the appellant alleged that the Cuban law expropriating and nationalizing assets in that country was of no effect in Canada. Therefore, Jose Arechabala S.A. remained the rightful owner of the Havana Club mark as registered in Canada. The name of the nationalized company was inappropriately substituted on the register such that none of the subsequent owners in the chain of title acquired any rights. [13] The Registrar was of the opinion that his predecessor had acted inappropriately in granting the 1963 request to amend the register. However, he also stated that, regardless of the fact that Cuban confiscatory laws lacked domestic effect, he had no power to correct errors in the register. [14] Furthermore, for the purposes of an opposition proceeding, the Registrar determined that he could not question the validity of a subsisting trade-mark. [15] The Registrar determined that, in order to obtain its desired result, the appellant ought to have applied to the Federal Court for an amendment of the registration, pursuant to subsection 57(1) of the Act. Decision of the Federal Court [16] The appellant appealed the decision of the Registrar to the Federal Court, pursuant to section 56 of the Act. [17] Justice Martineau upheld the decision of the Registrar, finding his conclusions on his statutory authority both reasonable and correct in law. He stated that section 38 of the Act, dealing with opposition proceedings, conferred no authority upon the Registrar to amend the register. [18] The judge commented that the extra-territorial effect of Castro's nationalization and expropriation of Cuban assets was an area of the law beyond the ken of the Registrar. Such questions were best left for the judicial arena where all affected parties could make submissions. The Parties' Positions [19] The appellant urges this Court to find the reviewing judge in error based on his failure to consider the effect of the Registrar's error in 1963. While correcting errors in the register might be outside of his authority in an opposition proceeding, the appellant claims that the Registrar does have the statutory authority to inquire into ownership of a trade-mark. As the Registrar recognized that an error had occurred in 1963, it was unreasonable for him to allow the respondent to avail itself of subsection 15(1) of the Act, and similarly incorrect for the reviewing judge not to have intervened on account of this error. [20] The appellant also makes lengthy submissions on the effect of the Castro regime's expropriation law in Canada, arguing that Canadian courts will not enforce foreign confiscatory laws. [21] The respondent's submissions focus on the question of jurisdiction. Simply stated, the respondent's position is that the Registrar had no authority, in the context of an opposition proceeding, to make any changes to the trade-mark register. Subsection 57(1) of the Act confers sole jurisdiction to the Federal Court to strike out or modify entries on the register. [22] Further, the respondent argues that because the Registrar has no power to amend the register, Justice Martineau was correct to state that any commentary by the Registrar concerning the alleged error committed in 1963 has no bearing on the current proceedings. The Standard of Review [23] In the course of prior proceedings, the parties correctly identified the standard of review applicable to decisions within the Registrar's scope of jurisdiction as that of reasonableness simpliciter (Molson Breweries v. John Labatt Ltd., [2000] 3 F.C. 145 (C.A.)). The standard of review applicable to the reviewing judge's decision derives from Housen v. Nikolaisen, [2002] 2 S.C.R. 235, which dictates that errors of law are reviewable on the correctness standard whereas factual findings, inferences or conclusions attract the palpable and overriding error standard. The Issue [24] Notwithstanding the interesting historical backdrop of these proceedings, the issue is straightforward - the jurisdiction of the Registrar of Trade-Marks in this opposition proceeding. [25] The appellant sought to challenge the validity of the Havana Club registration in an opposition proceeding by disputing the ownership of the mark as entered on the register. The appellant characterizes inquiries into ownership as within the statutory domain of the Registrar. By disputing the validity of the ownership of the trade-mark as found on the register, the appellant claims it can prevent the respondent from relying on subsection 15(1) of the Act. [26] Clearly, the appellant is attempting to impugn an extant registration. By attacking the ownership of the mark, the appellant seeks to evacuate the 1963 registration of effect, which is tantamount to amending or striking out this registration. [27] The legislation and case law make it clear that the appellant cannot achieve this result in a section 38 opposition proceeding. Subsection 38(8) of the Act delineates the powers of the Registrar in such a proceeding: 38. (8) After considering the evidence and representations of the opponent and the applicant, the Registrar shall refuse the application or reject the opposition and notify the parties of the decision and the reasons for the decision. 38.(8) Après avoir examiné la preuve et les observations des parties, le registraire repousse la demande ou rejette l'opposition et notifie aux parties sa décision ainsi que ses motifs. [28] As was pointed out by Justice Martineau, the statutory options available to the Registrar in an opposition proceeding are tightly circumscribed. The Registrar has the authority to either refuse the application or reject the opposition but has no power to make any amendments to the register. [29] The narrow ambit of subsection 38(8) can be contrasted with subsection 57(1) of the Act, which reads as follows: 57. (1) The Federal Court has exclusive original jurisdiction, on the application of the Registrar or of any person interested, to order that any entry in the register be struck out or amended on the ground that at the date of the application the entry as it appears on the register does not accurately express or define the existing rights of the person appearing to be the registered owner of the mark. 57. (1) La Cour fédérale a une compétence initiale exclusive, sur demande du registraire ou de toute personne intéressée, pour ordonner qu'une inscription dans le registre soit biffée ou modifiée, parce que, à la date de cette demande, l'inscription figurant au registre n'exprime ou ne définit pas exactement les droits existants de la personne paraissant être le propriétaire inscrit de la marque. [30] This section grants the Federal Court sole and exclusive jurisdiction to alter the register, to the exclusion of all other courts and tribunals. As stated in Fox (Kelly Gill & R. Scott Jolliffe, eds., Fox on Canadian Law of Trade-Marks and Unfair Competition, 4th ed., looseleaf (Toronto: Carswell, 2003) at 2-28): ...the Federal Court has exclusive original jurisdiction in all cases of conflicting applications for registration of any trade-mark and in all cases where it is sought to have any entry in the register of trade-marks made, expunged, varied or rectified. [31] Clearly, this provision also applies to the Registrar. To allow the Registrar to effectively alter the register in the context of an opposition proceeding, as suggested by the appellant, deprives the Federal Court of its exclusive jurisdiction in this regard, contrary to the intention of Parliament. [32] Section 41 of the Act recites circumstances in which the Registrar may amend the register. None apply in this case. [33] To obtain its desired remedy, the appellant ought to have proceeded under subsection 57(1) of the Act. Indeed, counsel for the appellant acknowledged before this Court that his client could have resorted to this subsection. No explanation was offered to the Court as to why the appellant had not pursued this avenue, particularly when the underlying facts have been known to it for many years. [34] The procedure under subsection 57(1) of the Act is available to a broad range of persons. The subsection stipulates that "any person interested" may apply. Section 2 of the Act defines "person interested" expansively: "person interested" includes any person who is affected or reasonably apprehends that he may be affected by any entry in the register, or by any act or omission or contemplated act or omission under or contrary to this Act, and includes the Attorney General of Canada; « personne intéressée » Sont assimilés à une personne intéressée le procureur général du Canada et quiconque est atteint ou a des motifs valables d'appréhender qu'il sera atteint par une inscription dans le registre, ou par tout acte ou omission, ou tout acte ou omission projeté, sous le régime ou à l'encontre de la présente loi. [35] The subsection also provides that the Registrar, himself, can apply to the Federal Court at any time to have an entry on the register struck. [36] The comprehensiveness of this section affirms that it would have been the appropriate avenue for the appellant's complaint. [37] The appropriateness of proceeding by way of subsection 57(1) of the Act is further reinforced by the nature of the proceedings therein envisaged - a hearing before the court where all parties can give evidence and make submissions on potentially complex legal issues. [38] The current situation is analogous to that before Mr. Justice Cattanach in Sunshine Biscuits Inc. v. Corporate Foods Ltd. (1982), 61 C.P.R. (2d) 53 (F.C.T.D.). In that case, also in the context of an opposition proceeding, the applicant urged the Registrar to disregard the applicant's trade-mark. Cattanach J. refused, recognizing that the appellant was asking for a de facto expungement of an extant trade-mark. There, as here, the appropriate avenue for the appellants to pursue would have been expungement proceedings before the Federal Court. Regardless of how the request is framed, an opposition proceeding is not the appropriate forum for tacit or manifest amendments to the register. [39] I would note further in this regard that I cannot accept the appellant's unduly restrictive interpretation of the Sunshine Biscuits case. Although that case did not touch on subsection 15(1) of the Act, Justice Cattanach's determination (at page 62) that "the validity of the registered trade-mark cannot be raised in opposition proceedings" and that the proper recourse for the applicant was expungement proceeding is equally applicable in the present matter. [40] Before concluding, I will deal briefly with the arguments advanced by the appellant concerning the effect of foreign confiscatory laws in Canada. Without commenting on the correctness of this analysis, I note only that these arguments are aimed at impugning the validity of the trade-mark registration. However, the issue before this Court is the statutory jurisdiction of the Registrar and the limits of a section 38 opposition proceeding. Thus, no matter how fascinating, the conflict of laws analysis is of no import in the current context. Disposition [41] The reviewing judge was correct to uphold the decision of the Registrar. There is no basis on which to disturb the finding below and, accordingly, the appeals will be dismissed with costs to the respondent. "J. Richard" Chief Justice "I agree Marc Noël J.A." "I agree M. Nadon J.A." FEDERAL COURT OF APPEAL NAMES OF COUNSEL AND SOLICITORS OF RECORD DOCKETS: A-447-03 & A-448-03 APPEALS FROM DECISIONS OF MR. JUSTICE MARTINEAU DATED JULY 31, 2003 IN FILES T-465-02 (A-447-03) and T-1181-01 (A-448-03) STYLE OF CAUSE: BACARDI & COMPANY LIMITED v. HAVANA CLUB HOLDING S.A. PLACE OF HEARING: Ottawa, Ontario DATE OF HEARING: May 25, 2004 REASONS FOR JUDGMENT: Richard C.J. CONCURRED IN BY: Noël J.A. Nadon J.A. DATED: June 8, 2004 APPEARANCES: Mr. Robert MacDonald Ms. Monique Couture FOR THE APPELLANT Mr. Barry Gamache FOR THE RESPONDENT SOLICITORS OF RECORD: Gowling, Lafleur, Henderson LLP Ottawa, ON FOR THE APPELLANT Leger Robic Richard Montréal, QC FOR THE RESPONDENT