In a decision by Pallotta J., the Federal Court allowed an appeal of the Registrar’s decision to expunge a trademark registration owned by The Little Brown Box Pizza, LLC (“Owner”), but amended it by deleting several services, as the Owner had not shown any use or special circumstances that excused their non-use.
The Little Brown Box Pizza, LLC v. DJB, 2024 FC 1592
Background
TMA929431 was issued on February 19, 2016, for PIEOLOGY (the “Mark”), which was filed based on the registration of the Mark in the United States. It covers the use of the Mark in association with several services, including:
“(1) Pizza parlors; Restaurant services; Restaurant services featuring pizza, salads, side dishes and desserts; Restaurant services, including sit-down service of food and take-out restaurant services; Restaurant services, namely, providing of food and beverages for consumption on and off the premises.
(2) Restaurant services; restaurant services, namely, providing of food and beverages for consumption on and off the premises.”
At the Respondent’s request, pursuant to the summary procedure for expunging registrations for non-use outlined in section 45 of the Trademarks Act, RSC, 1985, c T-13 (the “Trademarks Act”) the Registrar of Trademarks (the “Registrar”) issued a notice on July 28, 2020 requiring the Owner to show it had used the Mark in Canada in association with each of the registered services during the relevant three-year period prior to the date of the notice. In the alternative, the Owner had the opportunity to show special circumstances that would have excused non-use of the Mark.
The Registrar was not satisfied that the Owner’s original evidence demonstrated use within the meaning of Sections 4(2) and 45 of the Trademarks Act. Although the Owner operated restaurants in the USA, it did not do so in Canada. The Owner tried to show that Canadians were aware of, and accessed the Owner’s services, through its website, etc. The Registrar found, however, that there was no evidence that anyone in Canada actually accessed the Owner’s website, nor that the Owner had demonstrated it was able to offer the services to Canadians. The Owner’s argument that its attempts at franchising its restaurants in Canada were ancillary and incidental to offering “restaurant services” was also denied by the Registrar.
Questions in the Case at Bar
New evidence was filed on appeal, from the Owner’s CFO (“Ostaszewicz Affidavit”). The Court was asked to consider this new evidence, assess whether it was “material” and, if it was, to conduct a de novo appeal.
Materiality of New Evidence
The Court agreed that the Ostaszewicz Affidavit provided material new evidence that remedied some deficiencies in the Owner’s original evidence. The Court found that its inclusion would have clarified the record for the Registrar and could have influenced the Registrar’s findings in deciding whether the Mark had been used in association with restaurant services in Canada during the relevant period. The Court, therefore, conducted a de novo review.
Analysis – Was the Mark Used During the Relevant Period?
The first question the Court addressed was whether the Mark was used during the relevant period in association with restaurant services. The Owner submitted that, although it was not operating restaurants in Canada during the relevant period, it was advertising ancillary restaurant services in association with the Mark to Canadians. It also asserted it was ready and able to perform those ancillary services. The Owner contended that the Registrar had interpreted “restaurant services” too narrowly, in requiring the provision of food and beverages.
While the Court accepted that a liberal construction of “restaurant services” was acceptable, it maintained that each case is to be decided on its facts. The Court found that the advertising material offered by the Owner (including brochures on the Owner’s offerings and requirements for franchisees) did not fall within the scope of “restaurant services”. Further, the mere advertisement of services in Canada in association with services does not constitute “use” in association with those services. Exploring sites for potential operations does not constitute providing a service.
The Ostaszewicz Affidavit did, however, provide evidence that the Mark was used in association with ancillary restaurant services during the relevant period. Specifically, Canadian accessed the Owner’s website, and downloaded the Owner’s app during the relevant period. This level of “interactivity” between the offerings of the Owner’s restaurants and Canadian consumers was deemed satisfactory to establish that the Owner’s online advertising during the relevant period was intended to target Canadians.
Given the low burden imposed by section 45 of the Trademarks Act, the Court found that, despite some lack of clarity in the Owner’s evidence, the Mark had been used in association with restaurant services in the relevant period.
Analysis – Were There Special Circumstances Excusing Non-use of the Mark?
The Owner conceded that the lack of brick-and-mortar outposts in Canada would lead to a finding of non-use. Despite this concession, the Owner asserted that there were special circumstances to excuse this non-use.
The test for the existence of special circumstances is two-fold: first the Owner must establish there were special circumstances that explain why the Mark was not used, and second, was the absence of use excused in light of the duration of non-use, whether that was within the Owner’s control, and whether the Owner had intended to resume use shortly.
The Owner argued that the circumstances outlined in the Ostaszewicz Affidavit should, taken together, constitute special ones. Those circumstances included “challenges involved in expanding internationally into Canada, the failed negotiations with potential franchisees, and the pandemic’s negative impact on the restaurant industry and franchisees’ willingness to open a restaurant during a public health crisis.” This, in addition to the Owner being a start-up when the Mark was registered and that a short time had passed before the section 45 request was sent, was the basis of the Owner’s arguments that special circumstances justified the Mark’s non-use.
The Court did not accept the Owner’s position. The Court found that there was no evidence that the Owner had ever signed a Canadian franchise agreement or was still in the process of negotiating one as of the date of the Ostaszewicz Affidavit. There was also nothing about the challenges faced by the Owner in their attempts to franchise that set them apart from others in the same industry. The Court also noted that the Owner had opened locations in other countries (Spain and Mexico) when it failed to do so in Canada. The pandemic accounted only for a mere five months of the three-year relevant period, so did not persuade the Court that it had a relevant impact. Negotiations with franchises also take around a year to complete – the period of non-use, however, was more than seven years.
Conclusions
The Court allowed the Owner’s appeal insofar that the registration was maintained for restaurant services. However, the Owner had not shown special circumstances to excuse the non-use of the Mark in association with the remaining registered services. As a result, the registration was ordered to be amended to delete the remaining services.