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03 September 2014
In 2005 Cathay Pacific Airways filed an application to register the Asia Miles design mark (and four other associated marks) with the Canadian Intellectual Property Office. That application took quite some time to work its way through the system and ended up before the Canadian Trademarks Opposition Board (TMOB), which refused to register the five trademarks. The mark was opposed by Air Miles International Trading BV, a consumer loyalty programme which offers, among other things, flight rewards for consumers who collect its air miles.
Cathay Pacific's Asia Miles design mark
The Air Miles design mark
Cathay appealed the TMOB's decision to the Federal Court of Canada. In order for the Federal Court to overturn the decision, it had to find that the TMOB's conclusions on use and confusion were unreasonable.
On the issue of use, the TMOB had concerns that Cathay Pacific did not actually exert control over the mark (and therefore could not register it) because it was owned by a separate corporation, Cathay Pacific Loyalty Programs Limited (CPLP). CPLP was a wholly owned subsidiary of Cathay Pacific Airways. On this point, the TMOB found that the licence agreement between Cathay Pacific and CPLP was unclear as to Cathay Pacific's rights regarding use of the mark.
The Federal Court did not accept the TMOB's analysis on this point. Rather, it found that the TMOB had erred in failing to credit Cathay Pacific with the use of the mark in Canada, which had been ongoing since 1999 through its licence with CPLP.
In support of this finding, the court noted that Cathay Pacific oversaw CPLP's operations. It noted, for example, that CPLP reported directly to Cathay Pacific's director of sales and marketing.
In addition, the evidence before the TMOB showed that Asia Miles had approximately 6,000 members in Canada in 1999, and by 2007 this number had increased to 250,000. Also, before Canadian Airlines' demise in 2000, passengers on that airline were eligible to earn Asia Miles. The court also noted that Canadian passengers had redeemed more than 1 billion Asia Miles. Moreover, the associated marks had been used extensively in Canada on application forms, newsletters, brochures, websites and membership cards. Cathay Pacific submitted evidence that it had spent several million dollars promoting the Asia Miles mark.
The Federal Court held that even though the licensing arrangements were not as precise as they could have been – in fact, no written licensing agreement was produced at all – there was sufficient evidence for the TMOB to conclude that Cathay Pacific had "direct or indirect control of the character or quality" of the mark's use such that the use of it was properly credited to the airline.
The second issue considered by the court dealt with whether there could be confusion between the two marks in the marketplace. On this point, the court looked at four factors that were considered by the TMOB, as prescribed by Section 6(5) of the Trademarks Act (RSC 1985, c T-13):
The first factor that was analysed by the TMOB was whether either of the marks had acquired an air of distinctiveness. The TMOB found that both marks had low inherent distinctiveness, as each comprised common words that are used in association with loyalty programmes. The TMOB noted that because Cathay Pacific had failed to show what the Asia Miles mark had accrued to its benefit (as it was owned by CPLP), it could not have acquired any distinctiveness. On the other hand, the TMOB found that Air Miles had acquired this trait through extensive use in Canada. Accordingly, this factor was found to be in favour of Air Miles.
The second factor was the issue of how long the marks had been in use. The TMOB found that this factor favoured Air Miles, which had been using its mark since 1992 – 13 years before registration of the Asia Miles mark was sought.
The third factor was also resolved in favour of Air Miles, given that the products being offered were "essentially the same kind of reward program, in essentially the same way".
The last factor, which the Supreme Court has accepted is often the most significant, was the degree of resemblance in the marks. On this point, the TMOB found that the first word of a mark is usually more important that the rest – and here they differ, even though both are "merely common, descriptive terms making them less significant". Notwithstanding, the TMOB held that the marks were more different than alike; as a result, this factor favoured Cathay Pacific, but "only to a limited extent".
The court then had to decide what to make of the finding on confusion. In the end, it held that the unreasonable finding on use (ie, that Cathay did not prove that it had used the Asia Mile mark because it was owned by CPLP) had coloured the analysis on confusion. For example, the court noted that if the TMOB had properly determined the issue of use, it would have:
The court held that because the conclusion on use was flawed in a manner that affected the conclusion on confusion, the appeal had to be allowed with costs.
The court ordered that another panel of the TMOB reconsider Cathay Pacific's application to register its mark (Cathay Pacific Airways Limited v Air Miles International Trading BV 2014 FC 549).
For further information on this topic please contact Carlos P Martins at Bersenas Jacobsen Chouest Thomson Blackburn LLP by telephone (+1 416 982 3800), fax (+1 416 982 3801) or email (firstname.lastname@example.org). The Bersenas Jacobsen Chouest Thomson Blackburn website can be accessed at www.lexcanada.com.
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