A recent decision of the Federal Court provides a detailed review of the requirements of section 22 particularly when a distinguishing feature of a mark has been used in such a way as to trigger the application of the section.
The Facts
Duracell and Energizer are the leading battery brands in Canada. Duracell sold some of its batteries in packaging which contained comparative statements claiming that Duracell batteries were longer lasting than Energizer batteries.
Energizer brought an action in the Federal Court relating to labels containing statements made concerning ENERGIZER and ENERGIZER MAX brand products. Both ENERGIZER and ENERGIZER MAX are registered trademarks of Energizer. In addition, claims were made relating to similar statements made using the terms “the next leading competitive brand” and “the bunny brand” on packages of Duracell batteries.
The Motion for Summary Judgment
Duracell brought a motion for summary judgment to strike from the action the following claims:
- a) “up to 15% longer lasting vs. the next leading competitive brand*
*Next leading alkaline based on Nielsen sales data. AA size. Results vary by device and usage patterns.”
b) “Up to 20% LONGER LASTING vs. the bunny brand on size 10, 13 & 312.”
Energizer in its statement of claim primarily relied on section 22 of the Trademarks Act which provides that “no person shall use a trade-mark registered by another person in a manner that is likely to have the effect of depreciating the value of the goodwill attaching thereto”. The evidence was clear that Duracell used the terms “the next leading competitive brand” and “the bunny brand” to refer to Energizer but that neither term was the subject of a registered trademark. However, Energizer owned registrations of two design versions of its iconic ENERGIZER BUNNY design which were famous as a result of extensive use and sales in Canada.
Section 22
A claim under section 22 is conceptually quite different from a claim for infringement. In order to succeed with a claim under the section, the following elements must be shown:
(a) The plaintiff’s registered trademark or at least its distinguishing feature was used by the defendant in connection with goods or services.
(b) The plaintiff’s registered trademark is sufficiently well known to have significant goodwill attached to it.
(c) The plaintiff’s mark was used in a manner likely to have an effect on that goodwill (this is referred to as linkage). Linkage requires a mental association in the mind of a reasonable buyer between the two parties and the mark. The likelihood of such a linkage is a matter of evidence not speculation.
(d) The likely effect would be to depreciate the value of the goodwill (damage). Depreciation includes lowering the value of the goodwill as well as disparagement or tarnishing the trademark.
The judge was not asked to decide whether use of the terms in issue were “likely to have the effect of depreciating the value of the goodwill attaching” to these marks. The parties agreed the analysis was to proceed in the same manner whether or not there is depreciation. The primary issue on the motion was, even assuming depreciation, did subsection 22(1) apply.
The judge said that considering the ENERGIZER Bunny design marks and the fact that each is a famous mark, a somewhat-hurried consumer seeing the words “the bunny brand” in relation to batteries would make both a link with and a connection to the ENERGIZER Bunny design marks. Looking at the evidence as a whole, Duracell used “the bunny brand” to claim that Duracell’s batteries were longer lasting than Energizer batteries. In addition, Duracell, in using the term “the bunny brand”, made use of marks sufficiently similar to the ENERGIZER Bunny design marks to evoke in the relevant universe of consumers, namely those purchasing batteries, a mental association of the two marks. The distinguishing feature of the ENERGIZER Bunny design marks is the Energizer Bunny itself, which satisfies the above requirements. Finally, the somewhat-hurried consumer would certainly make a mental association be it unconsciously, subtly, or subliminally, between the words “the bunny brand” that Duracell used on its battery packages and the ENERGIZER Bunny design marks.
The judge was not persuaded that the term “the next leading competitive brand” would cause a mental association in the mind of a somewhat-hurried consumer with the ENERGIZER Bunny design marks.
As a result Energizer’s claim concerning “the next leading competitive brand” was struck but the claim relating to “the bunny brand” will proceed to trial.
Conclusion
The decision provides a detailed review of the requirements of subsection 22 and the matters relevant to determining when a distinguishing feature of a mark has been used by a defendant.
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These comments are of a general nature and not intended to provide legal advice as individual situations will differ and should be discussed with a lawyer.