Judgments

[2001] 2 F.C. 15

A-622-99

Lexus Foods Inc. (Appellant) (Respondent)

v.

Toyota Jidosha Kabushiki Kaisha ata Toyota Motor Corporation (Respondent) (Applicant)

Indexed as: Toyota Jidosha Kabushiki Kaisha v. Lexus Foods Inc. (C.A.)

Court of Appeal, Strayer, Linden and Malone JJ.A.— Ottawa, November 7 and 20, 2000.

Trade-marks — Registration — Appeal from F.C.T.D. decision registration of “Lexus” for use in association with canned foods confusing with respondent’s mark “Lexus” used in association with automobiles — F.C.T.D. Judge according less weight to difference in nature of wares because: “Lexus” coined word; appellant chose name because symbolized quality; trade-mark deserving wider ambit of protection to preserve rising reputation — Appeal allowed — Must evaluate all relevant factors listed in Trade-marks Act, s. 6(5) giving appropriate weight to each — That type of goods dramatically different deserving considerable weight — Fame weighed with other factors — No obligation on Court to nurture upcoming trade-marks — Coined words used in trade-mark in relation to certain wares may be used in relation to other wares if no confusion — That name chosen because quality name relevant in infringement case but of little weight on issue of confusion — No mens rea doctrine in trade-marks field.

This was an appeal from a Trial Division decision ordering the Registrar to refuse to register the appellant’s mark “Lexus” for use in association with canned food and juices on the ground that it was confusing with the respondent’s trade-mark “Lexus” used in association with automobiles. Trade-marks Act, subsection 6(5) sets out the circumstances to be considered in determining whether trade-marks are confusing. The Trial Judge distinguished Pink Panther Beauty Corp. v. United Artists Corp., [1998] 3 F.C. 534 (C.A.) which outlined the proper approach to subsection 6(5), holding that less weight should be given to the difference in the nature of the wares because “Lexus” is a coined word, because the appellant knowingly chose the name because it was a “quality name”, and because a trade-mark enjoying the beginning of famousness deserves an even wider ambit of protection in order to preserve its rising reputation.

The issue was whether the use of “Lexus” in relation to canned food products would cause confusion with the respondent’s registered trade-mark “Lexus” used in connection with automobiles.

Held, the appeal should be allowed.

It is necessary to evaluate all of the relevant factors listed in subsection 6(5) in each case, and to make a determination which gives appropriate weight to each. A key factor herein was the striking difference in the wares. Trade-mark protection must be related to certain wares or services because confusion is less likely when the wares are markedly different, even when the mark is well-known. The use of the phrase “whether or not the wares are of the same general class” in subsections 6(2), 6(3) and 6(4) does not mean that the nature of the wares is irrelevant in determining confusion; it suggests that confusion may be generated with goods that are not in the “same general class”, but still have some resemblance or linkage to the wares in question. The type of goods being compared in order to determine if there might be confusion is still relevant, and where they are dramatically different, that must be given considerable weight, which the Trial Judge failed to do. The Trial Judge similarly ignored the nature of the trade being compared.

Notoriety of a mark is but one factor that must be weighed along with the rest of the factors. If the fame of a name could prevent any other use of it, the fundamental concept of granting a trade-mark in relation to certain wares would be rendered meaningless. There is no obligation on the Court to nurture up-and-coming trade-marks. The Court must take the facts as they exist on the issue of fame as at the date of its decision.

Similarly, that “Lexus” is a coined word cannot control the outcome. Coined words used in trade-marks in relation to certain wares may be used in relation to other wares if no confusion results. The legislative provisions are controlling, not the fact that a trade-mark owner has obtained registration of a new word.

That the appellants chose to use the word Lexus because it was a quality name may be a factor in an infringement claim, but it does not have much weight in the context of whether confusion was created by the use of the name. Whether there was confusion is not based on whether someone knew about the existence of the trade-mark. There is no doctrine of mens rea in the field of trade-marks.

The Trial Judge failed to give sufficient weight to the “gaping divergence” in the nature of the products in question. The registration of the trade-mark “Lexus” in connection with certain canned foods would not cause confusion with the use of the same mark in relation to automobiles.

STATUTES AND REGULATIONS JUDICIALLY CONSIDERED

Income Tax Act, R.S.C., 1985 (5th Supp.), c. 1.

Trade-marks Act, R.S.C., 1985, c. T-13, ss. 6(5), 19 (as am. by S.C. 1993, c. 15, s. 60).

CASES JUDICIALLY CONSIDERED

APPLIED:

Pink Panther Beauty Corp. v. United Artists Corp., [1998] 3 F.C. 534 (1998), 80 C.P.R. (3d) 247; 225 N.R. 82 (C.A.).

APPEAL from a Trial Division decision ordering the Registrar to refuse to register the appellant’s mark “Lexus” for use in association with canned foods and juices on the ground that it was confusing with the respondent’s trade-mark “Lexus” used in association with automobiles (Toyota Jidosha Kabushiki Kaisha (c.o.b. Toyota Motor Corp.) v. Lexus Foods Inc. (1999), 2 C.P.R. (4th) 62; 174 F.T.R. 277 (F.C.T.D.)). Appeal allowed.

APPEARANCES:

Adele J. Finlayson and Shawn L. C. Peers for appellant (respondent).

Ronald E. Dimock and Nicola M. Hunt for respondent (applicant).

SOLICITORS OF RECORD:

Macera & Jarzyna, Ottawa, for appellant (respondent).

Nicola M. Hunt, Ottawa, for respondent (applicant).

The following are the reasons for judgment rendered in English by

[1]        Linden J.A.: The issue in this case is whether the use of the name Lexus in relation to certain canned food products would cause confusion with the registered trade-mark “Lexus”, which is used by the respondent in connection with the automobile it manufactures. The Registrar of Trade-marks rejected the opposition of the respondent, but on appeal to the Trial Division of this Court that decision was set aside and the Registrar was ordered to refuse the appellant’s application [(1999), 2 C.P.R. (4th) 62 (F.C.T.D.)]. This decision has now been appealed to this Court.

[2]        Toyota Motor Corporation (the respondent) is the owner of the following trade-mark registrations:

(a) “Lexus” registration No. TMA 377,407 granted 21 December 1990 for use in association with “motor cars and parts and accessories therefor”;

(b) “Lexus” registration No. TMA 377,423 granted 21 December 1990 for use in association with the “repair and maintenance of automobiles; leasing or renting of automobiles; and providing financing to others for the purchase of automobiles”; and

(c) “Lexus & Design” registration No. TMA 412,246 granted 14 May 1993 for use in association with automobile parts and accessories and a wide variety of consumer goods.

[3]        On 27 April 1992, the appellant, Lexus Foods Inc., filed application No. 703,830 for registration of the trade-mark “Lexus” based upon proposed use of the mark in association with canned fruits, canned vegetables, fruit juices and vegetable juices. On February 10, 1993, the respondent filed a statement of opposition to the application. The Registrar of Trade-marks, in a seven-page decision, found that the respondent had failed to provide sufficient evidence to show it had a famous mark, or that there was any overlapping of trade channels, and concluded that there was “no reasonable likelihood of confusion” between the parties’ marks, as there was no connection between the goods and services of the appellant and those of the respondent. The respondent appealed to the Federal Court, Trial Division.

[4]        The Trial Judge reversed that decision. While he observed that a Court should approach with caution any appeal from a decision of the Registrar, he explained that, since new evidence was adduced at trial,[1] the Court “enjoys greater latitude in relation to the Registrar’s decision”.[2] The Trial Judge relied on certain affidavits including that of Ruth Corbin, who conducted a survey to measure what comes to mind when adult Canadians hear the term “Lexus”, which indicated that six out of ten Canadian adults recognize the term as indicative of a car. He found that the results of the survey were sufficient to demonstrate that the “Lexus” trade-mark is famous or very well known. He then held, after his analysis of subsection 6(5) of the Trade-marks Act,[3] that the Registrar was wrong and that use of the mark “Lexus” by the appellant would cause confusion. I respectfully disagree.

Analysis

[5]        The main legislative provision that governs this appeal is subsection 6(5) of the Trade-marks Act which reads:

6. …

(5) In determining whether trade-marks or trade-names are confusing, the court or the Registrar, as the case may be, shall have regard to all the surrounding circumstances including

(a) the inherent distinctiveness of the trade-marks or trade-names and the extent to which they have become known;

(b) the length of time the trade-marks or trade-names have been in use;

(c) the nature of the wares, services or business;

(d) the nature of the trade; and

(e) the degree of resemblance between the trade-marks or trade-names in appearance or sound or in the ideas suggested by them.

[6]        The proper approach to this subsection was outlined by this Court in the Pink Panther case.[4] The Trial Judge [at paragraph 32], however, distinguished that case on the basis that “less weight should be accorded to the difference in the nature of the wares”, because “Lexus” was a “coined word”, because the appellant knowingly chose the name because it was a “quality name”, and because a trade-mark [at paragraph 29] “enjoying the beginning of famousness deserves an even wider ambit of protection in order to preserve th[e] rising reputation”. In doing so, in my respectful opinion, he erred for several reasons.

[7]        It is necessary to evaluate all of the relevant factors listed in subsection 6(5) in each case and to make a determination which gives appropriate weight to each of them. In this case, one of the key factors that was at play was the striking difference in the wares, a fact that the Registrar gave considerable weight. However, the Trial Judge did not think that paragraph 6(5)(c) was significant in the light of his view of the other factors. It must be recalled that trade-marks are always used and recognized in association with certain wares or services.[5] As it is pointed out in Pink Panther [at paragraph 42], “the registration of a trade-mark does not grant the registrant ownership of the words or images in that mark”. The protection granted must be related to certain wares or services, because confusion is less likely when the wares are markedly different, even when the mark is a well-known one. The use of the phrase “whether or not the wares or services are of the same general class” as used in subsections 6(2), 6(3) and 6(4) does not mean that the nature of the wares is irrelevant in determining confusion; they suggest only that confusion may be generated with goods that are not in the “same general class”, but still have some resemblance or linkage to the wares in question. The type of goods being compared in order to determine if there might be confusion is still relevant, and, where they are as dramatically different as cars and canned food, that must be given considerable weight, something the Trial Judge failed to do, but the Registrar properly did. This issue was foreshadowed in Pink Panther where the Court stated: “where one mark refers to household products and the other to automotive products, and they are distributed in different types of shops, there is less likelihood that consumers will mistake one mark for the other”.[6]

[8]        The Trial Judge similarly ignored the nature of the trade being compared, that is paragraph 6(5)(d). In this case, automobiles are sold by automobile dealers all over the world usually in special buildings used for that purpose. The canned goods in question were sold largely to institutional purchasers in the province of Quebec. It is hard to see that anyone about to buy some of the canned fruit juice of the appellant would even entertain the thought that the Japanese automobile manufacturers of “Lexus” was the source of this product. The survey evidence to the effect that the name “Lexus” was associated by the interviewees with an automobile does not establish that there was any confusion between the two products. It merely shows that many people knew about the fine car made by the respondent. It should be mentioned that the evidence discloses that there are many businesses, unrelated to automobiles, that use the name Lexus, such as Lexus Bath Mat, Lexus Cleaners, Lexus Computer Training, Lexus Realty and others. The Registrar was obviously of the view that the potential customers of “Lexus” canned food would not be confused as to the source of the product they were buying, as presumably customers of these other businesses would be able to determine quite easily that the source of the products being offered did not emanate from Toyota in Japan. The Registrar held that this was the case and I cannot see that he made any error in that regard.

[9]        The Trial Judge’s reliance on the finding that the “Lexus” mark was either famous or becoming so led him to be overly protective of it. While the notoriety of a mark may well be a significant factor to consider, as is the length of time it has been used, factors in paragraphs 6(5)(a) and (b), it is not controlling. Famousness alone does not protect a trade-mark absolutely. It is merely a factor that must be weighed in connection with all the rest of the factors. If the fame of a name could prevent any other use of it, the fundamental concept of a trade-mark being granted in relation to certain wares would be rendered meaningless. Moreover, as for there being any obligation on the Court to nurture up-and-coming trade-marks “to preserve [their] rising reputation”, as implied in the reasons of the Trial Judge, that is not supportable. The Court must take the facts as they exist on the issue of fame as at the time of its decision. As the Court said in Pink Panther[7] in relation to that trade-mark:

To find that such a connection [between beauty products and movies] was sufficient in this case would effectively extend protection to every field of endeavour imaginable. There would be no area that Hollywood’s marketing machine would not control. Just because they are well known, the whole world is not barred forever from using words found in the title of a Hollywood film to market unrelated goods.

[…]

No matter how famous a mark is it cannot be used to create a connection that does not exist.

The same can be said about the well-known names of automobiles.

[10]      Another matter on which the Trial Judge seemed to have placed great weight was the fact that the word Lexus was a “coined word”. While that may well be a factor worth considering in deciding whether there might be confusion, it cannot control the outcome of the case. Ordinary words used in trade-marks in relation to certain wares can be used in relation to other wares if there is no confusion in the circumstances. Similarly, coined words may also be so used as long as no confusion results. The legislative provisions are controlling, not the fact that a trade-mark owner has obtained registration of a new word coined by it.

[11]      The last factor relied on by the Trial Judge to distinguish Pink Panther was the fact that the appellant chose to use the word Lexus because it was a quality name. In my view, while this may be a factor to consider in an infringement claim, particularly in relation to the amount of damages to be awarded, it cannot have much, if any, weight in the context of dealing with whether there was confusion created by the use of the name. Suppose someone manufactured an automobile and called it the Lexus, without any knowledge that a trade-mark containing the same word had already been registered. Could that be a defence to an infringement action or a reason for holding that there is no confusion? I do not think so. There is confusion or there is no confusion. The decision cannot be based on whether someone knew about the existence of the trade-mark or not. There is no doctrine of mens rea in the field of trade-marks. In fact, just as a business can plan to avoid tax in the context of the Income Tax Act,[8] one can plan to avoid trade-mark infringement in the commercial world. There is no bar that I am aware of in seeking legal advice as to the scope of protection that a particular trade-mark might be entitled to before using the words or similar ones in connection with a totally different product or service.

[12]      In conclusion, taking into account all the factors listed in subsection 6(5), I am of the view that the Trial Judge erred and that the Registrar was correct when he decided that the appellant met the onus of proof resting on it and allowed the registration of the trade-mark “Lexus” in connection with certain canned foods. I agree that that would not cause confusion with the use of the same mark in relation to automobiles, servicing automobiles and the other related products protected by the trade-marks owned by the respondent. The Trial Judge failed to give sufficient weight to the “gaping divergence”[9] in the nature of the products in question. While he said ”less weight”[10] should be awarded this factor, he appears to have given it virtually no weight at all, in contravention of the principle articulated in Pink Panther in this regard.

[13]      The appeal will, therefore, be allowed with costs throughout. The decision of the Trial Judge will be set aside and the decision of the Registrar of Trade-marks will be restored, allowing the registration of the mark “Lexus” in connection with the canned foods of the appellant.

Strayer J.A.: I agree.

Malone J.A.: I agree.

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