The Federal Court recently considered whether an adverse inference can be drawn against a registrant who fails to tender evidence in an appeal of a decision of the TMOB in a s. 45 proceeding as well as questions related to inferences that can be drawn from evidence tendered in support of maintaining a registration.
Takeaways:
- An adverse inference will not be available against a registrant that declines to tender new evidence on an appeal of a decision of the TMOB in a s. 45 proceeding if they have not contested factual deficiencies in the decision.
- A Hearing Officer is entitled to make inferences from the evidence. A Hearing Officer may rely on documentation in combination with explanations provided by the registrant to determine that a mark has been used within the meaning of ss. 2 and 4 of the Trademarks Act. Justice Fothergill highlighted that a registrant is required to establish a prima facie case, nothing more, in line with the robust body of jurisprudence that has made it clear that a registrant’s evidential burden is low in a s. 45 proceeding given its summary nature and purpose.
- While the Hearing Officer may make inferences from the evidence, the evidential burden on the registrant remains the same. In order to successfully overcome a challenge to a registration in a s. 45 proceeding, a registrant must show that mark was used in association with the registered goods and services during the relevant period by asserting facts supporting use, as opposed to merely asserting use.
Background:
The Respondent, Fenestrae BV, is a software development company based in the Netherlands and is the owner of the mark FENESTRAE. The FENESTRAE mark is mainly used by Fenestrae BV in association with its Faxination and Udocx platforms, described as “‘a secure digital business and document exchange platform’ offering ‘intelligent data capture and digitization of paper documents, fax and email attachments’” and “‘a cloud-based solution’ that ‘facilitates the conversion of business documents into smart digital files’”, respectively.
In response to the Registrar’s section 45 notice, Fenestrae BV tendered an affidavit from its Chief Financial Officer which contained, among other things:
- statements that Fenestrae BV licensed its mark to a wholly owned subsidiary based out of the United States, which provided global technical support for all Fenestrae products and was responsible for overseeing sales for the Americas;
- a statement that Fenestrae BV offered for sale and sold “FENESTRAE Computer Software Goods” in the normal course of trade, and advertised, performed, and sold “FENESTRAE Services” in Canada during the relevant period;
- definitions for “FENESTRAE Computer Software” and “FENESTRAE Services”, which included goods and services specified in the registration;
- a statement that many of Fenestrae BV’s customers are “institutional or government agencies” who contract services via an annual subscription;
- excerpts from user guides for the Faxination and Udocx platforms and promotional brochures pertaining to the Faxination platform and services, prominently displaying the mark;
- screen captures of four installation windows for Faxination software which displayed the mark in several places;
- a screen capture of Udocx software offered for sale by PC Canada, shown as “backordered”; and
- representative invoices, order documents and purchase orders.
The Hearing Officer noted that the affidavit did not correlate products referenced in the materials with specific registered goods, none of the invoices, order forms, and purchase orders clearly correlated with the registered goods, and that it was unclear whether a subscription provided customers with each of the Computer Software Goods. Notwithstanding these gaps, the Hearing Officer concluded that it was reasonable to infer that the referenced goods pertained, at least in part, to the Faxination platform considering the evidence as a whole. In particular, the Hearing Officer determined that since the Faxination platform was consistently described by the affiant, and in the exhibited materials, as one that offered data capture, digitization of documents, and management of incoming and outgoing fax communications, it included “at a minimum, computer facsimile software”.
The Hearing Officer was satisfied that Fenestrae BV had shown use of the mark in association with goods and services related to the Faxination platform within the meaning of ss. 4 and 45 of the Act, stating “although the evidence is not perfect, I am prepared to accept that – at minimum – the prominent display of the Mark on the exhibited software installation windows provides the requisite notice of association between the mark and the Faxination subscription referenced in the Nestlé invoice”. The remaining goods were deleted from the registration.
With respect to the Udocx platform, the Hearing Officer determined there was no such evidence of use, as none of the invoices pertained to Udocx, but accepted that the Udocx services were at least advertised and available to persons in Canada during the relevant period given that the affidavit contained a clear statement that the mark was displayed in the advertising and promotion of FENESTRAE Services, and the exhibited materials for Udocx prominently displayed the mark. The Hearing Officer concluded the mark was used in association with the Udocx services within the meaning of ss. 4 and 45 of the Act.
The Appeal
Finastra International appealed the decision, arguing the Hearing Officer made a palpable and overriding error in maintaining certain goods and services in the registration. Finastra International also argued that an adverse inference should be drawn against Fenestrae BV as it did not adduce new evidence before the Court on the appeal.
With respect to the decision to maintain certain goods, Finastra International argued the Hearing Officer:
- improperly assumed the normal course of trade;
- made inferences that were not supported by the evidence; and
- wrongly accepted Fenestrae BV’s bald assertions of use.
With respect to the services that were maintained in the registration, Finastra International argued the Hearing Officer improperly accepted “ambiguous evidence” offered by Fenestrae BV and relied on an overly broad description of its Faxination and Udocx services to interpret the ambiguities in Fenestrae BV’s favour.
Adverse Inference
Justice Fothergill held that an adverse inference based on Fenestrae BV’s failure to file evidence in the appeal was not appropriate as Fenestrae BV was not appealing the decision of the TMOB or arguing that it contained factual deficiencies. While an adverse inference may be available against a trademark owner who neglects to adduce new evidence on its appeal of a ruling by the TMOB that the evidence tendered was insufficient, it is the moving party that bears the onus of demonstrating the Hearing Officer made a palpable and overriding error.
Normal Course of Trade
Finastra International argued the Hearing Officer simply accepted Fenestrae BV’s assertion that sales of goods were made in the normal course of trade, as the evidence provided no detailed information about volume or number of sales and failed to explain the normal course of trade for Fenestrae BV’s industry. Finastra International also argued that the invoices associated with Canadian addresses did not indicate shipping costs and there was no evidence the goods ever arrived in Canada.
Justice Fothergill declined to find the Hearing Officer made a palpable and overriding error in this regard, highlighting that the burden on the registrant is low and that a determination may be inferred from the evidence or established by a single sale in some circumstances.
Justice Fothergill held that it was open to the Hearing Officer to infer delivery from the invoices based upon the shipping addresses provided as there was no evidence to suggest that the transactions described in the supporting affidavit were not in the normal course of trade, were not genuine commercial transactions, or fell within the excluded categories of sales as described in JC Penney Co Inc v Gaberdine Clothing Co Inc, 2001 FCT 1333, such as token purchases.
Inferences from the Evidence
Finastra International argued the Hearing Officer improperly made several inferences with respect to the use of the mark in relation to the goods. Finastra International also argued that ambiguities in the evidence must be interpreted against the owner of a mark, relying on Diamont Elinor Inc v 88766 Canada Inc, 2010 FC 1184.
Justice Fothergill declined to find the Hearing Officer made a palpable and overriding error, finding the Hearing Officer’s inferences were based on a holistic assessment of the evidence, noting she accepted the affiant’s sworn statements regarding use. Justice Fothergill held that it was open to the Hearing Officer to infer that an exhibit containing invoices, order forms, and purchase orders for the product were related to the exhibit containing the screen captures of the software installation.
Claims of Use
With respect to Fenestrae BV’s claims of use, Finastra International argued that affidavits “must describe the use of the mark within the meaning of s. 4 of the Act and should not simply state the use of the mark”, citing Grapha-Holding AG v Illinois Tool Works Inc, 2008 FC 959.
Justice Fothergill declined to find the Hearing Officer made a palpable and overriding error on this point, noting she read the descriptions carefully, identified instances where the claimed goods did not correspond with those registered, and deleted goods where insufficient evidence of use was tendered.
Services
Finastra International argued the invoices and descriptions in the affidavit did not show the registered services were actually performed in Canada during the relevant period.
With respect to the Faxination services, Justice Fothergill declined to find the Hearing Officer made a palpable and overriding error, finding that it was open to the Hearing Officer to infer the Faxination services were performed in Canada during the relevant period, as the affiant specified that contracts with “‘institutional or government agencies’ who were ‘longstanding users’ were usually on an ‘annual subscription basis’” and provided invoices issued to these kinds of customers in the exhibits.
With respect to the Udocx services, Justice Fothergill held the Hearing Officer made a palpable and overriding error in accepting the bald assertion of use. While it was open to the Hearing Officer to find the Faxination services were performed in Canada during the relevant period due to the invoiced subscription for those services in evidence, such a determination was not available for the Udocx services. Justice Fothergill highlighted that “The question of whether services have been ‘performed’ is determined by whether ‘persons in Canada [have] derived a tangible benefit’ therefrom during the relevant period”, citing Miller Thompson LLP v Hilton Worldwide Holding LLP, 2020 FCA 134, and that such demonstrations must be made by way of assertions of facts showing use, rather than mere assertions. Evidence that merely establishes that services were advertised and available in Canada during the relevant period is insufficient. On this basis, Justice Fothergill struck additional services from the registration, but the registration remained extant with respect to certain goods and services.
