It is a fundamental principle of trademark law that no business should be able to prevent others from using apt language to accurately describe their goods and services. For this reason, clearly descriptive trademarks are typically not registrable in Canada (nor in many other countries) and it can be difficult to protect such marks. Despite this principle, brand owners frequently adopt trademarks which push the boundaries of descriptiveness. A recent Federal Court decision, Hidden Bench Vineyards & Winery Inc v Locust Lane Estate Winery Corp (2021 FC 156), is a cautionary tale on the limits of enforcing descriptive geographic names.
This case involved two wineries which operated on the same road in a small town in Ontario, Canada. The road, Locust Lane, was named after the locust trees that adorned the region. The plaintiff, Hidden Bench Vineyards & Winery Inc, had been selling wines from that location since 2003, some of which were labelled and promoted with the term 'Locust Lane' (eg, '2012 Locust Lane Pinot Noir' and 'Locust Lane Rosé'). The defendant, Locust Lane Estate Winery (LLEW) Corp, was founded in 2019 and used the name 'Locust Lane Estate Winery' to label and market its wines and related services. Hidden Bench claimed that it owned the unregistered trademark LOCUST LANE and that LLEW's use of the term 'Locust Lane' caused confusion with Hidden Bench's goods, services and business.
Since the term 'Locust Lane' arguably described the place of origin of Hidden Bench's wines, the two main questions at issue in this case were whether:
- Hidden Bench had a valid and enforceable trademark in the geographic name 'Locust Lane'; and
- LLEW had passed off its goods, services or business as those of Hidden Bench.
The court characterised the first question as a 'threshold issue' since a cause of action for statutory passing off in Canada requires the claimant to prove ownership of a valid trademark. LLEW argued that Hidden Bench did not own the trademark LOCUST LANE because it was not inherently distinctive (being clearly descriptive of the place of origin of the goods and services) and had not acquired any distinctiveness through use.
On that point, the court noted that a trademark need not be distinctive to be a valid trademark. The question of distinctiveness becomes relevant only when determining the degree of protection to which the mark is entitled. Rather, to be a valid trademark, it need only be used for the purpose of distinguishing goods and services from those of others (which includes the requirement to demonstrate trademark use in association with the goods and services). Based on this definition, the court found that Hidden Bench had met the threshold requirement.
The court then turned to the passing off analysis and the following three necessary components for that cause of action:
- the existence of reputation or goodwill;
- deception of the public due to a misrepresentation (ie, confusion); and
- actual or potential damage.
It was under the goodwill assessment that the court considered the inherent and acquired distinctiveness of Hidden Bench's LOCUST LANE trademarks.
On this point, Hidden Bench argued that the LOCUST LANE marks could not be considered to clearly describe the place of origin of its goods or services because the prohibition against developing trademark rights in geographic locations did not apply to the names of roads, particularly a little-known road such as Locust Lane. However, the court found that road names can be clearly descriptive of a place of origin. Further, consistent with recent Federal Court and Federal Court of Appeal decisions that limited the protection of geographical descriptive marks, the court held that it is irrelevant that the average consumer is unaware of the geographic significance of a place if the goods and services originate from that place. On that basis, the court found the LOCUST LANE marks to be clearly descriptive and to lack inherent distinctiveness.
Turning to whether Hidden Bench had established acquired distinctiveness (or secondary meaning) in the marks through use, the court noted that while the evidence showed that Hidden Bench had used at least some of the LOCUST LANE marks since 2005, sales during that time amounted to "only" $184,000 annually. 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 a passing off action must examine the context in which the marks are used. In that regard, the evidence showed that the LOCUST LANE marks were always displayed in association with the more prominent and distinctive mark HIDDEN BENCH. Additionally, the LOCUST LANE marks were displayed in a relatively diminished manner as they were always located on the lower half of the label, in a black font and surrounded by other information.
The court went on to state that it is a heavy onus for a claimant to prove that a descriptive word has acquired secondary meaning. When considering all of the evidence presented by Hidden Bench, the court found that it was insufficient to overcome such burden. Consequently, Hidden Bench was unable to establish the goodwill necessary to succeed in a claim of passing off. The case was therefore dismissed.
This decision is notable for two reasons. First, it is a reminder to brand owners of the perils of selecting a descriptive trademark. Such marks will be protectable in Canada only in exceptional cases where the owner has used the mark to such a great extent that the trademark significance transcends the descriptive meaning.
Second, this case underscores the benefits of securing registered trademark protection for secondary brands to limit the risk that a court will, as in this case, give the secondary brand little weight because of its appearance in connection with a more dominant house mark.
