Making Room For the Internet: Bricks and Mortar Business Not Required for Canadian Trademarks

In Hilton Worldwide Holding LLP v. Miller Thomson the Federal Court pushed forward what constitutes “use” of a trademark in today’s on-line world.

Hilton owned the trademark “Waldorf-Astoria” in association with “hotel services” but did not have a “bricks and mortar” hotel under that name in Canada. A trademark is “use it or lose it”. In the absence of use in Canada, a registered mark can be expunged. Hilton was thus required to demonstrate use of its “Waldorf Astoria” mark in Canada in association with “hotel services”.

Following its previous decisions in M Hotel, Bellagio Limousines v. Mirage Resorts, and Blue Diamond, the Registrar expunged the mark for non use. Hilton then appealed to the Federal Court, and as permitted by subsection 56(5) of the Trademarks Act,  adduced new evidence describing the operation of Hilton’s reservation system in Canada.

Since there was no Waldorf-Astoria hotel in Canada, the main issue was what constitutes “hotel services”. The Court affirmed that the concept of “services” is to be liberally interpreted. The Trademarks Act should be interpreted in a manner which best gives effect to its purpose and objectives, which includes evolving alongside developments in the on-line delivery of services. The Court found that “the scope of services delivered on-line has expanded greatly, and the meaning of ‘hotel services’ must adapt to reflect the fact that an ordinary customer would expect to be able to book a hotel room on-line today, either directly or through the intermediary of a service dedicated to travel arrangements”.

Justice Pentney, overturning the decision of the Registrar, held that a physical hotel in Canada is not necessary. While the “primary” service of providing a hotel room occurred outside Canada, the provision of “incidental or ancillary” services, such as on-line reservation and booking services, can constitute use of a trademark in Canada provided Canadians receive a meaningful benefit from the activity.

The Court found that people in Canada could take a meaningful benefit from the delivery of Hiltons’ hotel services through the on-line reservation service and, in particular, the provision of discounts for pre-payment and of rewards points (which could be redeemed at other Hilton properties in Canada). The trademark was displayed on the Hilton website, and in e-mails and booking confirmations. The Court found that Hilton had established use of its trademark in Canada during the relevant period and ordered the trademark registration to be maintained on the register.

This case represents an evolution in the law with the Court showing an increased willingness to maintain trademarks in relation to services provided by non-Canadian companies that do not physically operate within Canada.

A copy of the decision can be found here.