The Federal Court has expunged Milano Pizza Ltd’s Canadian Trademark Registration TMA571,114 for MILANO PIZZERIA & Design:
Milano Lost Control of Its Mark and Infringement Claim
First, the Plaintiff had failed to maintain “control of the character or quality of the goods or services in association with which the trademark is used, advertised or displayed” by its licensees, such that the licensee’s use could be deemed to be use by the Plaintiff under subsection 50(1) of the Trademarks Act.
Since 1996, the Plaintiff’s owner sold dozens of Milano Pizzeria locations in and around Ottawa to independent operators (including the Defendants’ predecessors) and licensed the Milano Design Mark. Licenses were not always in writing, and only one mentioned the Milano Design Mark specifically. The Plaintiff argued that the only “essential terms” of the licenses were an agreement by licensees to purchase branded ingredients and pizza boxes from a designated supplier and the assigned territory.
The Court held that while neither “desired autonomy”, nor “lack of control [over] day-to-day business operations is […] fatal to the existence of a section 50 license,” this case was distinguishable from others because the licenses did not include quality control terms or a right of inspection, and because the Plaintiff neither inspected, nor approved menu items (with a single exception). Rather, each Milano Pizzeria operated as a separate restaurant, having its own décor, advertising, staffing, uniforms, training, menu offerings, pricing, food preparation, and even recipes. The Plaintiff’s control over the branded ingredients and pizza boxes was not sufficient to demonstrate control over the pizzas or business operations.
Second, the parties’ lengthy co-existence with a PIZZERIA MILANO restaurant in Masson, Quebec undermined the distinctiveness that the Milano Design Mark might otherwise have enjoyed. The reversal of words, and the fact that Masson is closer to Ottawa than several Milano Pizzeria locations, did not affect this finding.
The Court further found the Milano Design Mark was inherently weak, noting that during its prosecution the Plaintiff had disclaimed the word PIZZERIA and had admitted that “MILANO” is commonly used in association with restaurants and cafés. Justice Fuhrer also noted that the incorporation of a slice of pizza in the Milano Design Mark was descriptive of the restaurant’s services.
For the same reasons, the Plaintiff was found not to have rights in several alleged unregistered marks. As a result, the Plaintiff’s claims for infringement, passing off, and depreciation of goodwill were dismissed.
Section 7 Counterclaims Dismissed
The Court dismissed the Defendants’ counterclaims under section 7 of the Trademarks Act, principally because they failed to establish rights in any registered or unregistered mark. Regarding the Milano Design Mark, the co-existence of close to forty independent operators meant that the use of that mark did not enure to the Defendants’ benefit. With respect to an alleged MILANO BAXTER mark associated with the Defendants’ restaurant location, the Defendants failed to present any evidence of the use of this mark in association with goods and services from that location.
Even if the Defendants had established rights in a mark, the Court determined the Plaintiff’s use did not meet the criteria for any of the prohibited activities under section 7 of the Trademarks Act.
Damages not determined
Having expunged the Milano Design Mark and found that the parties had not established rights in any other mark, the Court determined that issue of damages was moot. Justice Fuhrer noted that the issue of the Defendants’ damages for their removal from the milanopizza.ca website was a contractual issue and therefore not “under a sphere of valid federal jurisdiction vested in the Federal Court”.
A copy of the decision can be found here.