Industria de Diseño Textil, S.A. v Sara Ghassai, 2024 TMOB 150 (CanLII)
Canadian Trademark Opposition Proceedings permit applicants to request the Opposition Board to issue an interlocutory ruling to strike all or any portion of the opponent's statement of opposition. Such requests must be made prior to the filing and serving of the counter statement.
In this case, Sarah Ghassai, the Applicant of Canadian trademark application no. 2168791 (the “Application”) for ZARIN HOME (the “Mark”) opposed by Industria de Diseño Textil, S.A. (the “Opponent”) sought an interlocutory ruling to strike the grounds of opposition involving bad faith, use or intention to use, non-distinctiveness and lawful use from the statement of opposition. The Applicant was successful in having certain grounds of opposition related to “bad faith” and “unlawful use” struck, while the Trademarks Opposition Board (the “Board”) declined to strike the other impugned grounds.
This decision is notable for an analysis of the principles relevant to sufficiently pleading in the context of various grounds of opposition.
The case also serves as a reminder to ensure that any statements of law or jurisprudence in submissions generated using AI are appropriately reviewed/vetted for accuracy before submission.
Background
Section 38(3)(a) of the Trademarks Act requires the grounds of opposition to be set out in sufficient detail so as to enable an applicant to reply. The Board explained that an insufficient ground of opposition would therefore be one that either alleges an improper ground or does not contain sufficient material facts to allow an applicant to reply. Assuming the truth of the allegations of fact in the statement of opposition, grounds of opposition that have no reasonable prospect of success when viewed in the context of the applicable law may be struck.
The applicant in an opposition proceeding may request an interlocutory ruling to strike all or any portion of the opponent's statement of opposition. The request must be made prior to the filing and serving of the counter statement. A request for an interlocutory ruling has no effect on the applicant's deadline for filing and serving its counter statement unless the applicant specifically requests an extension of time for doing so. The Registrar will generally grant the applicant a one-month extension of time from the date of the interlocutory ruling to file and serve its counter statement.
False Legal Citations
An initial notable point relates to the apparent use of generative AI in the Applicant’s submissions. The Board indicated that several cases cited by the Applicant in its submissions either “do not exist or do not appear to stand for the principles cited therein”. The Opponent apparently did not comment on the false citations, nor did it appear have incurred any cost or spent time addressing them. The Board noted that “whether accidental or deliberate, reliance on false citations is a serious matter” and should the citations have resulted from reliance on the use of generative AI, parties before the Board were reminded of “the importance of verifying the final work product prior to its submission to the Registrar”. While it does not appear that the Applicant or Opponent were prejudiced in this instance, the comments of the Board serve as an important reminder to practitioners who have begun using generative AI in the preparation of submissions before the Board or before the courts.
Pleadings based on Bad Faith
The Opponent plead various grounds pursuant to section 38(2)(a.1) of the Act alleging “bad faith” on the part of the Applicant.
The Board struck the “bad faith” grounds based on “knowledge” of the Opponent’s prior rights and lack of intent to use the mark stemming from the purported “defensive purposes” of the trademark filing. In reviewing the relevant jurisprudence, the Board noted that “bad faith” is defined as “breach of a legal, moral or even commercial obligation to a third party” and that “issues such as an intention to harm or disrupt the business of another may be relevant to an assessment of bad faith”.
In striking the “knowledge” ground, the Board noted that “mere awareness of the Opponent’s rights will not suffice as support for this ground of opposition” without additional material facts such as an intention to harm the Opponent’s business. The grounds related to the alleged “defensive purposes” were seen by the Board as resulting from an effort of the Applicant to protect its own interests rather than “a desire to harm or disrupt the Opponent”.
The Board declined to strike the remaining grounds primarily because ”bad faith” is a new ground of opposition, and while the pleadings may only have scarce factual underpinning, it was inappropriate to strike these grounds in the pleadings stage.
Pleadings based on Use or Intention to Use the Trademark
The Board declined to strike grounds of opposition raised pursuant to section 38(2)(e) of the Act related to the Applicant’s lack of use or intent to use the mark in question.
The Board noted that these grounds are adequately pleaded if the opponent provides sufficient detail as to how or why the Applicant could not or did not propose to use the subject trademark in Canada in association with the associated goods or services.
The pleadings were found not to be merely a recital of the relevant law since the pleadings included statements alleging that the Applicant had no expertise or interest in the fields into which the goods and services fall, and that it was an agent for third parties (and thus did not “use” the Mark).
Pleadings based on Non-Distinctiveness
The Board declined to strike grounds of opposition raised pursuant to section 38(2)(d) of the Act related to the non-distinctiveness of the Mark.
The Board noted that the allegation of non-distinctiveness of the Applicant’s Mark relative to the Opponent’s trademarks was sufficiently pleaded because the relevant trademarks of the Opponent were referenced with specificity in the Statement of Opposition.
Regarding the ground related to a lack of licensed use by certain entities, the Board noted that it is “incumbent on the Opponent to provide certainty regarding the identity of the entities engaged in non-licensed use”. The Board replaced the word “including” with “namely” in reference to the relevant entities in this pleading.
The final ground related to the “solely functional or merely decorative” nature of the trademark was preserved, and though the Board did speculate as to the availability of sufficient evidence to support this ground, it deferred any decision regarding the sufficiency of the pleading until all evidence was submitted.
Pleadings based on “Lawful Use”
Certain grounds relying essentially on an allegation that the parties’ trademarks or trade names are confusingly similar were struck as being duplicative of other grounds of opposition.
The Board declined to strike the “depreciation of goodwill” ground, noting that while the pleading may have stated the incorrect test, the pleadings overall disclosed material facts sufficient to support the ground. In particular, the alleged prior use of the Opponent’s registered trademarks and the Opponent’s allegations of a likelihood of confusion were considered to “imply the possible existence of a connection or linkage in the consumer’s mind and depreciation of goodwill”. The Board noted these material facts, if proven, would establish relevant elements of depreciation of goodwill.
Regarding the pleading relying on Section 7(b) of the Act (“Statutory Passing Off”), the Board noted that pleadings acceptable under this ground should comprise material facts, which, if proven, would establish the requisite elements of the ground, namely goodwill, misrepresentation creating confusion in the public and actual or potential damage to the party. The Board held that the pleading read in the context of the statement of opposition as a whole, is sufficiently particularized, and declined to strike this pleading.
