T-809-74
Pepsico Inc., and Pepsi-Cola Canada Ltd.
(Appellants)
v.
The Registrar of Trade Marks (Respondent)
Trial Division, Heald J.—Ottawa, June 27 and
July 3, 1975.
Trade marks—Appellants opposing trade mark applica-
tion—Respondent stating preliminary view that statement of
opposition raises no substantial issue and inviting appellants'
comments—Appellants declining to outline case—Registrar
deciding no substantial issue raised and rejecting opposition
under section 37(4)—Whether . Registrar's decision correct
interpretation of section 37(4)—Trade Marks Act, R.S.C.
1970, c. T-10, ss. 12(1), 37(2)(b), (c), (d), (4)—Federal Court
Rules 408(1) and 419(1)(a).
Appellants filed a statement of opposition to a trade mark
application. In his reply, respondent stated that he was of the
preliminary view that the statement raised no substantial issue,
and went on to state that while "subsection 37(4) does not
require the Registrar to give a proposed opponent any opportu
nity to comment before he rejects the opposition", he was
inviting appellants' comments to "avoid hardship or unfair
ness". Appellants maintained that under section 37(4) it was
not appropriate at that stage to evaluate evidence and argu
ment which an opponent would adduce, and déclined to outline
their case. Respondent decided that no substantial issue had
been raised, and rejected the opposition under section 37(4).
Appellant appealed.
Held, allowing the appeal, the Registrar wrongly exercised
his discretion under section 37(4). He equated the words
"substantial issue" with the words "substantial likelihood that
he would succeed", something quite different. In imposing the
test of "substantial likelihood", he was applying a much higher
standard than the "substantial issue" test under section 37(4).
Rule 419(1)(a), providing for the striking out of a pleading is
relevant here. In such a case, the Court has simply to decide
whether plaintiff has an "arguable case". This is the question to
which the Registrar should have addressed himself, as well.
Again, by analogy to the Rules, the Registrar was wrong in
requiring the opponents, at the preliminary stage, to outline
their evidence and argument. Pleadings, under Rule 408(1),
must allege only facts, not evidence. The Registrar, in imposing
such a requirement, was attempting to do what he is required
by section 37(8) to do at the hearing on all of the evidence.
While the Registrar should use section 37(4) to reject frivolous
oppositions, he is not entitled to use the section where an
opponent has demonstrated an arguable case.
Canadian Scl}enley v. Registrar of Trade Marks 15
C.P.R. (2d) 1, distinguished. Creaghan Estate. v. The
Queen [1972] F.C. 732, applied.
APPEAL.
COUNSEL:
J. Clark, Q. C., and D. Lack for appellants.
D. Friesen and F. 011ivier for respondent.
R. G. McClenahan, Q.C., and A. M. Butler
for Dr. Pepper.
SOLICITORS:
Ogilvy, Cope, Porteous, Hansard, Marler,
Montgomery & Renault, Montreal, for
appellants.
Deputy Attorney General of Canada for
respondent.
Gowling & Henderson, Ottawa, for Dr.
Pepper.
The following are the reasons for judgment
rendered in English by
HEALD J.: This is an appeal pursuant to section
56 of the Trade Marks Act, R.S.C. 1970, c. T-10,
from a decision of the Registrar of Trade Marks
dated January 22, 1974 wherein the said Registrar
rejected the opposition by the appellants to the
application of Dr. Pepper Company for registra
tion of the trade mark "PEPPER", application No.
364228.
The facts are as follows: An application for
registration of the alleged trade mark "PEPPER" in
association with a non-alcoholic, maltless beverage
sold as a soft drink and syrup for making same was
filed in the Trade Marks Office on behalf of Dr.
Pepper Company on May 7, 1973 and 'was adver
tised for opposition purposes in the Trade Marks
Journal of October 10, 1973.
On November 9, 1973, within the delay of one
month from the date of' advertisement as pre
s cribed. by section 37 of the Trade Marks Act, the
appellants applied for an extension of time until
December 10, 1973, in which to file an opposition
to the aforesaid application and the respondent
granted this extension in a letter dated November
22, 1973.
On December 10, 1973, the appellants filed
their statement of opposition with the respondent.
The grounds of opposition as therein stated may be
summarized as follows:
(a) Based on section 37(2)(b) of the Trade
Marks Act
(i) the alleged trade mark "PEPPER" pursu
ant to section 12(1)(d) for use in association
with "a non-alcoholic, maltless beverage sold
as a soft drink and syrup for making same"
as, when used in association with such wares,
the said trade mark would be confusing within
the meaning of section 6 of the Act with a
number of registered trade marks of the
appellant, Pepsico Inc., which included the
trade marks: PEPSI-COLA; PEPSI-COLA and
Design; PEPSI; and PEPSI and Design.
(ii) pursuant to section 12(1)(a) the word
PEPPER particularly when used by a company
whose corporate name cdmprises the name
"DR. PEPPER" is primarily merely the name, or
the surname of an individual who is living or
has died within the last thirty years.
(iii) pursuant to section 12(1)(b) the word
"PEPPER" is clearly descriptive or deceptively
misdescriptive of the character or quality of
the wares in association with which the
alleged trade mark is sought to be registered.
(iv) pursuant to section 12(1)(c) and as an
alternative to paragraph (a)(ii) above, the
word "PEPPER" is the name of the type of
beverage in connection with which it is pro
posed to be used.
(b) Based on section 37(2)(c) of the Act, the
applicant is not entitled to registration of the
alleged trade mark "PEPPER" because pursuant
to section 16(3) the same is not a registrable
trade mark having regard to the provisions of
section 12(1)(a), (b), (c) and (d).
(c) Based on section 37(2)(c) of the Act, the
applicant is not the person entitled to registra
tion of the said mark as use of the word "PEP-
PER" in association with "a non-alcoholic, malt-
less beverage sold as a soft drink and syrup for
making same" would be confusing with the
trade name of the appellant "Pepsi-Cola of
Canada Ltd." which the said appellant had pre
viously used in Canada and which it continues to
use.
(d) Based on section 37(2)(d) of the Act, the
trade mark "PEPPER" when used in association
with "a non-alcoholic, maltless beverage sold as
a soft drink and syrup for making same" is not
distinctive nor is it adapted to distinguish within
the meaning of section 2 of the Trade Marks
Act, in that it is not capable of distinguishing
the said wares of the applicant from those of
others and particularly those of the appellants.
On December 28, 1973, appellants' agents
received a letter from the respondent dated
December 21, 1973 stating, inter adia:•
... that I am of the preliminary view that the statement of
opposition raises no substantial issue for decision. The purpose
of this letter is to give you an opportunity to show me, by
outlining in reasonable detail the evidence and argument that
you intend to adduce and advance, that there is a substantial
issue to be decided.
For your information, I should say that I consider the chances
of confusion occurring as a result of the concurrent use in the
same area of your client's trade mark and the trade mark
PEPPER for the same wares as being so remote that the allega
tions in the statement of opposition based on paragraph
37(2)(b) for paragraph 12(1)(d) raise no substantial issue.
With respect to paragraph 12(1)(b), I know of no way in which
the word PEPPER is clearly descriptive or deceptively misdescrip-
tive of the character or quality of the wares covered by the
application. With respect to paragraph 12(1)(c), the word
PEPPER is much better known as a condiment than as a surname
and, consequently, I can see no substantial issue in that allega
tion either.
If the allegations in the statement of opposition based on
paragraph 37(2)(b) raise no substantial issue, I can likewise see
no substantial issue in the allegations based on paragraph
37(2)(c) and (d).
You will appreciate, of course, that subsection 37(4) does not
require the Registrar to give a proposed opponent any opportu
nity to comment before he rejects the opposition under, that
subsection. I am giving you this opportunity to comment in
order to avoid hardship or unfairness to the proposed opponent.
May I please have your comments within two weeks from the
date of this letter.
By letter dated January 3, 1974, the appellants
replied to the Registrar's letter of December 21,
1973 as follows:
I have today received your letter of December 21, 1973 in
which you state that you are of the preliminary view that the
statement of opposition filed by PepsiCo, Inc. and Pepsi-Cola
Canada Ltd. to the application of Dr. Pepper Company for
registration of the trade mark PEPPER raises no substantial issue
for decision.
You have invited us to show you, by outlining in reasonable
detail the evidence and argument that we intend to adduce and
advance, that there is a substantial issue to be decided. My
interpretation of Section 37(4) of the Trade Marks Act is that,
at this stage, you may consider whether f or not the opposition
raise a substantial issue for decision, but it is not appropriate at
this stage for you to evaluate the evidence and arguments which
may be adduced and advanced, for that would be to prejudge
the issues. The marginal title of Section 37(4) is "Frivolous
opposition" and although this title may not be an integral part
of the statute it nevertheless characterizes the type of opposi
tion which, in my submission, it was intended should be reject
ed at this stage. Opposition proceedings were introduced into
the statute in 1953, and the purpose of the enactment is set
forth a some length in the Report of the Trade Mark Law
Revision Committee, found in Fox on Trade Marks, Second
Edition, Vol. 2, at pp. 1172 and 1173. Dealing with the ground
of opposition that a trade mark is not distinctive in certain
cases, the Report stated in part:
The Registrar would be unable to determine such cases on
his initial consideration of the application because the rele
vant facts would not be before him, but he could decide them
at the opposition stage because the relevant facts would be
put before him by the opponent.
Obviously, such facts can only properly be put before the
Registrar after the pleadings (that is, the statement of opposi
tion and counter statement) have been completed and after the
evidence has been adduced by affidavit or otherwise. In my
submission, the Registrar does not have the prerogative, at this
stage, to consider whether the opponent will succeed, but
merely whether in fact there be a substantial issue for decision.
As an example of a case in which there would not be a
substantial issue, I have been reminded of one particular oppo
sition, of which this office had knowledge, which was based
upon copyright registration—obviously not a proper ground for
opposition.
You have indicated that you consider the chances of confu
sion between our clients' trade marks and the trade mark
PEPPER, for the same wares, as being remote. This in my
opinion is to prejudge the issue. As Dr. Fox stated at page 382
of his work on Trade Marks (Third Edition), in the context of
discussing confusion in general:
It is well established that it is not sufficient for a court to
look at two words, and then upon its own view, its own
impression, of such inherent possibilities, to reach its conclu
sion. The conclusion must depend upon the evidence that is
given before the court.
There have been many instances of differences of opinion in
the past between the Registrar of Trade Marks on the one hand
and the courts on the other and also between different courts,
as to whether two given marks be confusingly similar. As
examples I cite the case of SMARTIES and SMOOTHIES, held in
the final resort by the Supreme Court of Canada to be confus
ing. GOLD BAND and GOLDEN CIRCLET, for slightly different
wares (cigars and cigarettes) were also held by the Supreme
Court of Canada to be confusing. Even such apparently differ
ent marks as ovIN and ENOVID have been found by the Regis
trar and by the Exchequer Court of Canada to be confusing.
That being so, there is certainly a substantial issue for decision
regarding the possibility of confusion between PEPPER, PEPSI
and PEPSI-COLA. It is neither necessary nor appropriate, at this
stage, for the Registrar to be persuaded of the probability that
opponent will be successful.
You have also questioned the allegation pursuant to Section
12(1)(b) that the word PEPPER is clearly descriptive or decep
tively misdescriptive of the character or quality of the wares
covered by the application. On the other hand, you refer to the
use of the word PEPPER as a condiment, which would support
the argument that the mark is either descriptive or misdescrip-
tive. We intend to adduce evidence at the appropriate time to
support our allegation under Section 12(1)(b).
You have also referred to Section 12(1)(c) (I believe you
meant 12(1)(a)) and the fact that PEPPER is much better known
as a condiment than as a surname. In my submission, this is a
matter for evidence and argument. The word "Coles" is an
example of a mark that was considered registrable by the
Exchequer Court of Canada having previously been held
unregistrable by the Registrar of Trade Marks whose decision
was finally upheld by the Supreme Court of Canada; the
decision turned upon the extent of the use of the word COLES as
a surname as opposed to the extent of its use in describing a
cabbage. In my respectful submission it is unwarranted in the
light of this jurisprudence, in particular, to assert at this stage
that there is no substantial issue raised by the allegation that
PEPPER is primarily merely a name or surname.
Concerning the allegation pursuant to Section 12(1)(c), evi
dence will be adduced at the appropriate time, if the Applicant
files a counter statement, to support this.
In summary, my reply to your letter is that the allegations in
the statement of opposition are serious and set forth substantial
grounds for opposing the application for registration of PEPPER.
It is not fair to the opponent that it should be required at this
stage to give an indication of the evidence it will adduce and
the arguments it will advance when the applicant has not yet
filed a counter statement. Having regard to Canadian jurispru
dence, it cannot be said that the opposition is frivolous, or that
it has no pôssible chance of succeeding on any or all of the
grounds raised. Under these circumstances, it is my view of the
law that the Registrar should recognize that several substantial
issues have been raised for decision and should permit , the
opposition to follow its natural course, even though he may not
be persuaded that the opposition will succeed on the merits. In
fact, the Registrar should not form an opinion as to the merits
of the opponent's position, until the counter statement has also
been filed and all the evidence has been put in and the
arguments of both parties have been submitted. The opposition
proceedings introduced in 1953 are subject to the adversary
system and a rejection of an opposition pursuant to Section
37(4) of the Trade Marks Act should only take place if the
opposition be obviously frivolous and doomed to failure. This
cannot be said of the present opposition, in view of the allega
tions made.
Under these circumstances I must decline your invitation to
outline any evidence or argument, which I feel is premature at
this time and could place the opponent at an unfair
disadvantage.
I await your final decision in this matter in order that we
may proceed either with the opposition proceedings or with an
appeal from your decision, depending upon what your decision
may be.
Under date of January 22, 1974, the respondent
replied as follows:
I acknowledge receipt of your letter dated January 3, 1974. I
am grateful to you for your analysis of the purpose of subsec
tion 37(4) of the Trade Marks Act, but disappointed that you
declined the opportunity to outline the evidence and argument
that you intend to put forward.
I cannot agree with your interpretation of subsection 37(4). On
your interpretation, the application of subsection 37(4) would
be limited to those cases where there was no basis in law for the
opposition period. You mentioned an opposition based on a
copyright registration. Other examples would be oppositions
based on section 7 or 22 of the Trade Marks Act.
With respect, you have put too narrow a construction on
subsection 37(4), an interpretation that,. if accepted, would
make it impossible for the Registrar to reject most frivolous
oppositions. Since assuming office three months ago, I have
read several hundred opposition files and I am satisfied that
many opponents have misconstrued the purpose of, or deliber
ately abused, opposition proceedings and that others in good
faith claim far too wide a scope of protection for their trade
marks. Whatever the reason, the result has been to delay for
months and sometimes years many applications that ought to
have proceeded directly to, allowance after advertisement in the
Trade Marks Journal.
My overworked predecessor did not apply subsection 37(4). I
intend to and, until the Courts tell me that I am wrong, I shall
apply it in all cases where I consider that the opposition does
not raise a substantial issue for decision.
With respect to the interpretation of subsection 37(4), you refer
in your letter to the marginal note as characterizing the type of
opposition that it was intended should be rejected under subsec
tion 37(4). I am sure that you are aware of the provision in the
Interpretation Act—section 13, I believe—that says that a
marginal note forms no part of the enactment in which it
appears. Nor is it proper to interpret subsection 37(4) by
reference to statements made in the Report of the Trade Mark
Law Revision Committee. Moreover, the quotation in your
letter from the Committee's Report relates to a situation quite
different from that with which we are confronted here.
Our task is, therefore, to interpret the words "substantial issue
for decision" without reference to either the marginal note or
the Committee's Report. If Parliament had intended that sub
section 37(4) apply only where, as a matter of law, rather than
fact, the opposition is almost certain to fail, more apt words
would surely have been used. For example, it could have been
worded that the Registrar may reject an opposition where he is
satisfied that it raises no lawful ground of opposition.
You submit that "the Registrar does not have the prerogative,
at this stage, to consider whether the opponent will succeed". I
agree with you that the Registrar does not have that preroga
tive. What he does have is the discretion to determine, at this
stage, whether the opposition raises a substantial issue for
decision. The argument that the Registrar cannot make such a
determination before he has seen the counter statement, evi
dence and arguments is a tempting one. However, it fails to
take into account that the Registrar, on the basis of his past
experience, has a good idea of the limits of what can be
established by evidence. He can gauge with reasonable accura
cy what is the best possible case that the opponent could put
forward and make a determination as to whether, if the oppo
nent put forward his best case, there would be a substantial
likelihood that he would succeed. If the conclusion is—as it is
my conclusion in this case—that there is no such substantial
likelihood, the Registrar should, in my view, reject the opposi
tion under subsection 37(4).
I am conscious of the perils and difficulties of attempting to
gauge, in a vacuum so to speak, the best case that the opponent
could conceivably make. That was among the things that I had
in mind in inviting you to outline for me the evidence and
argument that you intended to put forward. Since you have
declined that opportunity I must make my determination with
out the benefit of such an outline.
My determination is that the opposition does not raise a
substantial issue for decision and, accordingly, it is rejected
under subsection 37(4) of the Act.
This appeal is from said rejection under section
37(4) of the Act.
The Dr. Pepper Company applied to the Trial
Division of this Court for leave to intervene in this
appeal. That application was dismissed but on
appeal to the Federal Court of Appeal, [[1975]
F.C. 264] that Court, while dismissing 'the appeal
of the Dr. Pepper Company, held 'that said com
pany was a party to the appeal in spite of the fact
that its name did not appear in the style of cause,
that accordingly, there was no need for Dr. Pepper
Company to intervene in the appeal since, aside
from all technicalities, it must be considered as
being a party to the appeal. Subsequent to that
judgment of the Federal Court of Appeal, the Dr.
Pepper Company filed a reply in which it contests
the appeal and states inter alia:
3. Dr. Pepper Company denies that the Registrar of Trade
Marks erred or exceeded his powers in rejecting the appellant's
Notice of Opposition.
4. Dr. Pepper Company will assert that the Registrar's request,
for further information, which the appellant declined to supply,
arose from a lack of detail or particulars as to grounds of
opposition.
5. The Registrar of Trade Marks was not required to write the
letter of December 21, 1973 in which he expressed his prelim
inary view and that letter and subsequent developments, in view
of the fact that no further assistance was given to the Registrar,
by the Appellant, is and are irrelevant to a consideration of the
correctness of the Registrar's decision and of the exercise of the
discretion.
6. The Registrar of Trade Marks is persona designata under
Section 37(4) of the Trade Marks Act. The decision thereunder
was his to make and was properly made.
In support of the appeal, counsel for Dr. Pepper
and counsel for the respondent urged upon me my
decision in Canadian Schenley v. Registrar'. Par
ticular reference was made to my statement at
page 9 thereof that, even if I did not agree with the
Registrar's determination under section 37(4) of
the Act, I would not be entitled to substitute my
view for that of the Registrar unless it were estab
lished that he had proceeded on some wrong prin
ciple or that he had failed to exercise his discretion
judicially. In that case, I was not prepared to make
such a finding. However, in the case at bar, I am
of the opinion that the Registrar has proceeded on
a wrong principle in exercising his discretion under
section 37(4) of the Act. In his letter of December
21, 1973 to the appellants' agents, the Registrar
requested an "outline in reasonable detail" of the
"evidence and argument that you intend to adduce
and advance, that there is a substantial issue to be
decided". Again, in his letter of January 22, 1974,
he makes reference to an "outline of the evidence
and argument" on at least two occasions. Further
more, it is clear from said letter of January 22,
1974, that in interpreting the words "substantial
issue" in section 37(4), the Registrar equates these
words with the words "substantial likelihood that
he would succeed". In my view, "substantial likeli
hood of success" is something quite different from
"a substantial issue for decision". "Likelihood" is
defined in the Shorter Oxford English Dictionary
as a "probability" or a "promise of success". Thus,
1 15 C.P.R. (2d) 1.
in imposing the test of "substantial likelihood", the
Registrar was imposing a much higher test than
the one stated in section 37(4) i.e., "substantial
issue".
I agree with appellants' counsel in her submis
sion that the jurisprudence of this Court under
Rule 419(1)(a) providing for the striking out of a
pleading on the ground that it discloses no reason
able cause of action hay relevance to the words
"substantial issue for decision" as used in section
37(4) of the Trade Marks Act. The practice in this
Court under Rule 419(1)(a) was concisely stated
by Pratte J. in the case of Creaghan Estate v. The
Queen?, where he said at page 736:
But when a motion is made before this Court under Rule
419(1)(a), the Court merely has to decide whether the plaintiff,
assuming all the facts alleged in the statement of claim to be
true, has an arguable case.
I thus have the view that, in considering whether
the opponent has raised a substantial issue for
decision, the Registrar should have addressed him
self to the question as to whether, assuming the
truth of all allegations of facts in the statement of
opposition, the opponent has an arguable case. In
making the test which the opponent has to meet,
the higher one of probability or likelihood of suc
cess, the Registrar has clearly misdirected himself
and acted on a wrong principle.
I am also of the opinion that the Registrar was
wrong in requiring the opponent, at the prelim
inary stage contemplated by section 37(4), to fur
nish to him the evidence and argument. Again, I
refer, by analogy, to the Federal Court Rules.
Rule 408(1) requires that every pleading must
contain a precise statement of the material facts
on which the party pleading relies (emphasis is
mine).
In other words, a proper pleading alleges the
material facts but not the evidence which the party
intends to adduce to establish those facts. It seems
to me that in imposing such a requirement under
section 37(4), the Registrar, is, in effect, attempt
2 [1972] F.C. 732.
ing to do under section 37(4) what he is required
by section 37(8) to do at the hearing on all of the
evidence. In imposing this requirement, the Regis
trar has, once again, in my view, acted on a wrong
principle.
I have carefully considered the statement of
opposition and while it might be argued that it is
largely a restatement of the various applicable
sections of the Trade Marks Act, there are a
number of allegations of material facts, which, if
proven at the hearing, might result in the appellant
succeeding in its opposition.
I am, generally speaking, in sympathy with the
view of the Registrar, expressed in the correspond
ence quoted supra, that he should use section
37(4) of the Act to reject frivolous oppositions and
thus eliminate delays of many months and years
on applications in his office. However, he is not, in
my view, entitled to use section 37(4) in circum
stances where the opponent has demonstrated an
arguable case.
For the foregoing reasons, the appeal is allowed
and the Registrar's decision under section 37(4) of
the Act is set aside.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.