It is a fundamental principle of trademark law that no business should be able to prevent third parties from using appropriate language to accurately describe their products and services. For this reason, clearly descriptive trademarks are generally not registrable in Canada (or in many other countries) and it can be very difficult to protect such marks. Despite this principle, brand owners frequently adopt brands that push the boundaries of descriptiveness. The recent Federal Court decision, Hidden Bench Vineyards & Winery Inc v Locust Lane Estate Winery Corp, 2021 FC 156, is a warning about the limitations of the application of descriptive geographic names.
This case involved two wineries operating on the same route in a small town in Ontario, Canada. The road, “Locust Lane”, was named after the locusts that adorn the area. The plaintiff, Hidden Bench Vineyards & Winery Inc. (Hidden Bench), had been selling wines from this location since 2003, some of which were labeled and promoted with the term “Locust Lane”, such as “2012 Locust Lane Pinot Noir” and “Locust Lane” Pink”. The defendant, Locust Lane Estate Winery Corp, (LLEW), was founded in 2019 and used the name “Locust Lane Estate Winery” to label and market its wines and related services. Hidden Bench has claimed to be the owner of the registered trademark LOCUST LANE and that LLEW’s use of the term “Locust Lane” has confused the products, services and activities of Hidden Bench.
Since the term ‘Locust Lane’ arguably describes the place of origin of the Hidden Bench wines, the two main issues at issue in this case were:
- Did Hidden Bench have a valid and enforceable trade-mark in the geographic name “Locust Lane”; and
- Has LLEW portrayed its products, services or activities as those of Hidden Bench?
The Court characterized the first question as a “threshold issue” since a cause of action for statutory fraud in Canada requires the plaintiff to prove ownership of a valid trademark. LLEW argued that Hidden Bench did not own the ‘Locust Lane’ mark because it was not inherently distinctive (being clearly descriptive of the place of origin of the goods and services) and had not acquired character. distinctive in use.
On this point, the Court noted that a mark does not need to be “distinctive” to be a valid mark. The issue of distinctiveness only becomes relevant in determining the degree of protection to which the mark is entitled. On the contrary, to be a valid mark, it must only be used for the purpose of distinguishing the goods and services from those of others (which includes the obligation to demonstrate the “use” of the mark in association with the products and services). On the basis of this definition, the Court concluded that Hidden Bench had satisfied the threshold requirement.
The Court then turned to the forgery analysis and the three elements necessary for this cause of action:
(a) the existence of a reputation or a clientele;
(b) deception of the public by reason of a misrepresentation (ie confusion); and
(c) actual or potential damage.
It was as part of the goodwill assessment that the Court considered the inherent and acquired distinctiveness of the LOCUST LANE trademarks of Hidden Bench.
On this point, Hidden Bench argued that the LOCUST LANE trademarks cannot be considered to clearly describe the place of origin of its products or services because the prohibition on developing trademark rights in geographic locations does not apply. to the names of roads, in particular a little. road known as Locust Lane. However, the Court held that the road names can be clearly descriptive of a place of origin. Further, consistent with recent Federal Court and Federal Court of Appeal decisions which limited the protection of descriptive geographic marks, the Court concluded that it was irrelevant that the average consumer was not aware of geographic significance if the products and services actually originate from that location. On that basis, the General Court considered that the LOCUST LANE marks were clearly descriptive and devoid of inherent distinctive character.
Turning to the question of whether Hidden Bench had established acquired distinctiveness (or secondary meaning) in trademarks through use, the Court noted that if the evidence showed that Hidden Bench had used at least some of the LOCUST LANE trademarks since 2005, sales during this period were “only” $ 184,000.00 per year. In the Court’s view, this volume did not significantly assist Hidden Bench in establishing acquired distinctiveness.
The Court noted that an assessment of goodwill in an infringement action must consider the context in which the marks are used. In this regard, the evidence showed that the LOCUST LANE marks were always displayed in association with the most visible and distinctive mark HIDDEN BENCH. In addition, LOCUST LANE marks were displayed relatively reduced as they were always displayed on the lower half of the label, in black font and surrounded by other information.
The Court went on to say that the onus rests heavily on the plaintiff to prove that a descriptive word has acquired a secondary meaning. In reviewing all of the evidence presented by Hidden Bench, the Court concluded that it was not enough to overcome this burden. As a result, Hidden Bench was unable to establish the goodwill necessary to succeed in a fraud claim. The case was therefore closed.
This decision is remarkable for two reasons. First, it is a reminder to brand owners of the dangers of choosing a descriptive brand. These marks can only be protected in Canada in exceptional cases where the owner has used the mark to such an extent that the importance of the mark transcends the descriptive sense.
Second, this case highlights the advantages of ensuring trademark protection for secondary marks in order to limit the risk that a court, as in the present case, gives little weight to the secondary mark because of its appearance in relation. with a more dominant house brand.