Use of a trademark in association with goods: What does that mean?


Persons seeking to register trademarks in Canada are always asked if the mark in question has been used in this country.  Oftentimes, what follows is a debate as to whether what the owner deems use meets the requirements of Canadian law.

Canada’s Trademarks Act defines “use” of a mark differently for goods and for services.  For goods, there must be a transfer of ownership or possession of the goods.  So far, so good.  The problem is that this transfer must occur “in the normal course of trade.” Those few words have tripped up owners.

In a recent decision of Canada’s Federal Court, the judge had to consider whether the sale of t-shirts to employees of a cosmetics store amounted to use of the mark with “clothing, namely, t-shirts” in the ordinary course of trade.

The t-shirts were emblazoned with the name of the store.  Their main purpose was to promote the store and, one would assume, the purchase of the store’s products by consumers.  The t-shirts were not sold to the public.

The mark’s owner had already been successful in defending the mark in association with t-shirts before a trademark office hearing officer. On appeal to the Federal Court, however, the owner lost the registration of the mark.

In the judge’s written rationale for the decision, he noted that the t-shirts were sold to the employees at cost for promotional purposes, namely to generate goodwill for the business of selling cosmetics, the owner’s primary business.  Given the absence of profit and since the owner was not in the business of selling clothing, the judge found that its sales of t-shirts were not in the “ordinary course of trade.”

The lesson here for potential trademark owners is that they must assess whether they have actually been using a mark “in the ordinary course of business,” selling goods under the trademark, for profit.  In the absence of these indicia of trade, the mark may not now be registerable in Canada.