ottawa sign with aitken lee llc team

No Evidence of Use Puts Trademark Owner in Hot Water

APEC sold reverse osmosis drinking water filtration systems under the business name “APEC Water Systems” for over 20 years, making its first sale in Canada in 2005. APEC held US trademark registrations for “APEC Water” and applied to register the same trademark in Canada. APEC learned the trademark “APEC WATER” had already been registered by iSpring for use in association with, among other things, water filters and reverse osmosis water treatment systems.

On November 21, 2019, APEC applied under s. 57(1) of the Trademarks Act (the “Act”) to strike iSpring’s trademark, “APEC WATER”, from the register. A trademark registration is presumed valid, meaning that an expungement application will succeed only if the evidence establishes the trademark was not registrable at the relevant time. APEC relied on paragraphs 18(1)(b), (c), (d), and (e) of the Act and alleged that iSpring’s application contained a material misstatement.

iSpring was not entitled to register “APEC WATER” under s. 18(1)(d)

A trademark registration is invalid if the applicant was not the person entitled to secure registration. APEC provided evidence of its sales of “APEC WATER” trademarked products in Canada between 2005 and 2019, use of the “APEC WATER” trademark on its social media accounts, and approximately $500,000 USD per year over the past five years in marketing expenses. On this basis, Justice MacDonald concluded that APEC met its burden under s. 17(1) of the Act by showing that it had not abandoned the trademark as of the advertisement date of iSpring’s application. APEC’s evidence indicated that it had continuously used the trademark in Canada since 2005, long before iSpring’s claimed first use date in 2012.

Justice McDonald considered whether, as of the date of iSpring’s first use of its trademark in Canada, iSpring’s trademark was confusing with APEC’s trademark previously used or made known in Canada under s. 16 of the Act. Justice McDonald concluded there was a high likelihood of confusion because iSpring’s “APEC WATER” mark was identical to the mark used by APEC and the parties are competitors in the same water filtration business. Thus, iSpring was not entitled to secure the registration of “APEC WATER”.

“APEC WATER” was not distinctive of iSpring’s goods or services under s. 18(1)(b)

Distinctiveness, assessed as of the start date of expungement proceedings, is a question of fact with three requirements:

  1. The mark and the goods/services must be associated;
  2. The owner of the mark must use this association in manufacturing and selling its goods/services; and
  3. This association must enable the owner to distinguish its goods/services from those of others.

Justice McDonald held that “APEC WATER” was not distinctive of iSpring’s goods and services because the trademark was identical to APEC’s mark, covered the same goods and services, and there was no evidence that iSpring used the trademark as of the commencement of expungement proceedings.

iSpring abandoned “APEC WATER” under s. 18(1)(c)

A trademark registration may be struck as abandoned where it is no longer used in Canada and the owner demonstrates an intention to abandon the mark. An intention to abandon the mark may be inferred from the failure to use it for a long period. 

By its own evidence, iSpring admitted that it had not used the trademark after 2018. APEC took the position that there was no evidence that iSpring had used “APEC WATER” as a trademark in Canada at all. Due to credibility issues with the evidence of John Chen, CEO of iSpring, Justice McDonald preferred APEC’s uncontested affidavit evidence that:

  • iSpring’s website did not contain any references to the term “APEC”, aside from references to APEC’s own products;
  • iSpring’s Facebook account did not contain any references to the term “APEC”;
  • Sites for Canadian online retailers listed on iSpring’s website did not contain any references to the term “APEC” together with the term “iSpring”; and
  • Sites for ten Canadian retailers did not contain references to the term “APEC” together with the term “iSpring”.

Justice McDonald held that iSpring had not demonstrated use of “APEC WATER” and, as a result, iSpring had abandoned use of the trademark.

iSpring did not file its application for “APEC WATER” in bad faith under s. 18(1)(e)

A trademark registration is invalid if the application was filed in bad faith. APEC argued that iSpring appropriated its trademark in bad faith. While the lack of any evidence demonstrating iSpring’s use of the trademark called into question its motivation in registering the trademark, Justice McDonald was not satisfied that the evidence established bad faith. In particular, there was no evidence that iSpring was aware of APEC’s use of the trademark in Canada or that it intended to harm APEC’s business by registering the mark. Wilful blindness as to a party’s entitlement to make an application in the face of its competitor does not amount to bad faith.

iSpring’s stated date of first use in Canada was a material misstatement

A material misstatement in a trademark application renders the corresponding registration void from the outset. An allegation of material misstatement does not require the applicant to establish fraud or an intent to deceive.

Justice McDonald held that, in light of iSpring’s inability to offer any credible evidence of use in Canada, the claimed date of first use in iSpring’s application was false and constituted a material misstatement which rendered the registration void.

Justice McDonald declared iSpring’s “APEC WATER” registration invalid and ordered it expunged from the register of trademarks. APEC was entitled to costs, which the Court set at the all-inclusive amount of $7,000.

A copy of the decision is available here.