The Federal Court (per Southcott J.) allowed C-Tow’s application to have Sea Tow’s registered trademarks struck from the Trademarks Register (the “Register”), on the basis that C-Tow’s use of its marks predated Sea Tow’s adoption of the Sea Tow Marks, and that Sea Tow knew of the C-Tow Marks at the time of Sea Tow’s Registration of its marks.
Sea Tow Services International, Inc. v. C-Tow Marine Assistance Ltd., 2025 FC 27
Background
Sea Tow Services International, Inc. (“Sea Tow”) is a New York corporation that offers membership-based on-water services including towing, fuel delivery, and repairs. Sea Tow owns two Canadian trademark registrations (the “Sea Tow Marks” and the “Registrations”).
C-Tow Marine Assistance Ltd. (“C-Tow”) is a Canadian company based out of British Columbia that provides similar services. It has pending applications for a word and design mark, C-TOW and C-TOW & DESIGN respectively (“C-Tow Marks”), which it asserts have been used in Canada since 1984.
Sea Tow initially applied for the registration of its Sea Tow Marks in December, 2002. The applications were allowed in 2007, on condition that Sea Tow file a declaration of use for its marks, which never occurred. These applications were deemed abandoned on September 29, 2010. Just prior to this, on September 9, 2010, Sea Tow filed fresh applications for the Sea Tow Marks. The Sea Tow Marks were registered on February 3, 2014.
Procedural History
On April 21, 2022, C-Tow filed a Notice of Application (the “Application”) contesting the Registrations’ validity, and seeking that they be struck. Sea Tow filed a Statement of Claim in response on April 28, 2022, alleging that C-Tow had infringed its trademark rights (the “Action”). Upon receiving C-Tow’s Statement of Defence and Counterclaim, Sea Tow sought summary judgment of infringement (the “Motion”). C-Tow agreed that the issues raised warranted summary judgment, but argued they should be decided in C-Tow’s favour. The Application and Motion were ordered to be heard together on July 9 and 10, 2024.
C-Tow’s Application asserted three grounds of invalidity. C-Tow bears the burden of rebutting the presumed validity of the registered trademarks by establishing at least one asserted ground of invalidity:
A. “Sea Tow was not the person entitled to secure the registration of the Sea Tow Marks (relying on paragraph 18(1)(d) of the Act);
B. Sea Tow filed the application for registration of the Sea Tow Marks in bad faith (relying on paragraph 18(1)(e) of the Act); and
C. The Sea Tow Marks were not distinctive at the time the Application was commenced (relying on paragraph 18(1)(b) of the Act).”
Because C-Tow commenced the Application over 5 years after the date of the Registrations, C-Tow can only succeed under the first ground of invalidity if Sea Tow adopted the Sea Tow Marks in Canada while having knowledge of the C-Tow Marks in Canada.
Issues
The Court narrowed the issues in the Application and the Motion independently. Only the primary issues before the Court on the Application are summarized here, as the analysis on the Application was essentially dispositive of the issues before the Court in the Motion.
A. “Did C-Tow’s use of the C-Tow Marks predate Sea Tow’s adoption of the Sea Tow Marks?
B. If so, did Sea Tow adopt the Sea Tow Marks with knowledge of C-Tow’s previous use of the C-Tow Marks?
C. Were Sea Tow’s applications for the Registrations filed in bad faith?
D. As of the date of commencement of the Application, were the Sea Tow Marks distinctive of Sea Tow’s services?”
For the Application, issues A and B are discussed at length, given that the Court’s finding on issue B was dispositive of the entire Application. Issues C and D are summarized very briefly.
Analysis
Issue A. Did C-Tow’s use of the C-Tow Marks predate Sea Tow’s adoption of the Sea Tow Marks?
As a first step, the Court had to establish that the C-Tow Marks were in use either by C-Tow or its predecessors for the period alleged, which in this case, went as far back as 1985. After a lengthy analysis summarizing and addressing evidence by several witnesses that we have not addressed here for brevity, the Court affirmed this finding.
The Court next had to consider the timing of Sea Tow’s adoption of the Sea Tow Marks to compare that against the timing of the C-Tow Marks’ adoption.
First, Sea Tow sought to establish that its marks were used or made known in Canada. Sea Tow adduced evidence that it had been active in advertising since 1985, that its website was accessible by Canadians, and that its advertisements appear in Canadian publications. This did not prove to be convincing for the Court, which found it to be insufficient to establish that the Sea Tow Marks were known in Canada.
Second, Sea Tow sought to establish that it was operating in Canadian waters. Although Sea Tow established it had licensees and franchisees operating in Canadian waters frequented with Canadian boaters, the Court ultimately found that Sea Tow had not established the use of the Sea Tow Marks in connection with services provided in Canada. All the franchisees were located in US ports, boats seldom landed in Canadian ports, and the documentary evidence pointing to the Great Lakes refers to it as a region under the jurisdiction of the US Coast Guard only.
Third, Sea Tow tendered evidence demonstrating use of its marks in Canada, including evidence of its Canadian licensees having established an outpost in Leamington, Ontario in 1987. The Court found that there was enough evidence to show the franchise was operational at the time, but also found that Sea Tow had later abandoned the use of its marks.
Fourth, Sea Tow attempted to demonstrate use of its marks in Canada by tendering evidence from some of its Canadian members that they were regularly sent newsletters, renewal packages, and membership packages by Sea Tow. The Court found that while members who required assistance in Canada didn’t directly receive assistance from Sea Tow, they were reimbursed by Sea Tow for the services they were eligible for under their memberships, even if that service was provided by C-Tow operating in Canada. The Court held this ultimately represents a service offered by Sea Tow in Canada, but these services were performed between 2020 and 2022, well after C-Tow’s date of first use.
Finally, and most importantly in this matter, Sea Tow argued that its adoption of its marks in Canada occurred no later than 2002 when it filed its original applications to register the Sea Tow Marks, while C-Tow argued that the date of Sea Tow’s second applications (that ultimately became the Registrations) is the date upon which their adoption is to be determined. The facts were not contested between the parties. Rather, the question was one of legal interpretation: whether Sea Tow could rely on the date of applications that were subsequently abandoned under section 3 of the Trademarks Act.
Sea Tow argued that the wording of section 3 refers to when a person or predecessor filed “an” application for registration in Canada, and not “the” application for registration. Sea Tow therefore argued there could be several applications for registration of a mark in Canada, and it is entitled to rely on its earlier and unsuccessful one. C-Tow’s position was that it is absurd to allow Sea Tow to rely on earlier applications that they abandoned for failing to demonstrate the requisite use, and that this is inconsistent with the concept of abandonment of an application wherein all rights to a mark are lost.
The Court ultimately held that C-Tow’s submissions were more compelling. The Court found that in the case at hand, the date when Sea Tow filed its applications that ultimately resulted in the Registrations for registration, namely September 9, 2010, was the correct date. As an additional point, the Court also noted the abandonment of the Sea Tow Marks after the Leamington franchise opened and closed, and the lengthy period of subsequent disuse in Canada.
Based on the foregoing, the Court found that Sea Tow’s date of adoption was September 9, 2010, meaning the use of the C-Tow Marks predated the adoption of the Sea Tow Marks.
Issue B. – If so, did Sea Tow adopt the Sea Tow Marks with knowledge of C-Tow’s previous use of the C-Tow Marks?
Having concluded that C-Tow’s use of its marks predated the adoption of the Sea Tow Marks, the Court turned to determining whether, as of September 9, 2010, Sea Tow had knowledge of the C-Tow Marks. C-Tow’s evidence included a letter from 1992, and records of phone calls between the parties in 2006 regarding rescuing a Sea Tow member in Canadian waters. Taken together, the Court found that the evidence showed that Sea Tow knew of the C-Tow Marks prior to Sea Tow’s 2010 adoption of the Sea Tow Marks.
Because Sea Tow was aware of the C-Tow Marks, Sea Tow was not a person entitled to secure the Registrations of the Sea Tow Marks. The Registrations were therefore invalid based on paragraphs 18(1)(b) and (d) of the Trademarks Act. C-Tow was therefore entitled to a declaration that the Registrations were invalid, and an order pursuant to section 57 of the Trademarks Act to strike the Registrations from the Register.
The remaining grounds of invalidity C-Tow alleged were outlined by the Court but were not actually necessary given the Court’s finding that Sea Tow was not entitled to secure its Registrations.
They are therefore only briefly summarized here.
With regards to Issue C., whether Sea Tow’s applications for the Registrations were filed in bad faith, the Court found C-Tow’s arguments to be unconvincing. Sea Tow had been in business in the United States using its marks for decades, and while their limited presence in Canada was insufficient to demonstrate the validity of their Registrations, it was sufficient to preclude a finding of bad faith.
With regards to issue D., the distinctiveness of the marks at issue, the Court disposed of this in a single paragraph on the basis that the “fact that confusion is not in dispute is perhaps obvious”. The parties in this case agreed their marks are confusing despite Sea Tow arguing there is some nuance based on the marks having clearly distinct visual appearances.
Conclusion
Sea Tow’s Registrations were ordered struck from the Register, and C-Tow was granted summary judgment on the motion. Sea Tow has 30 days from the date of judgment to appeal to the Federal Court of Appeal as of right.