One of the issues considered in the Canadian Supreme Court’s decision on Masterpiece Inc. v. Alavida Lifestyles Inc., 2011 SCC 27, [2011] 2 S.C.R. 387  related to the non-overlapping geographical uses of the trade-marks in dispute.

Both Masterpiece Inc. (Masterpiece) and Alavida Lifestyles Inc. (Alavida)  were operators of retirement residences in different provinces of Canada.  Alavida applied to register the trade-mark MASTERPIECE LIVING in Canada on the basis of the proposed use in 2005.  The mark was registered in 2007 without an Opposition having been filed by Masterpiece.

In January 2006, Masterpiece applied to register MASTERPIECE , and in June 2006, it applied to register MASTERPIECE LIVING.  Both of Masterpiece applications were denied by the Registrar of Trade-Marks on the bases that these marks were confusing with Alavida’s trade-mark MASTERPIECE LIVING.

In January 2006, Masterpiece  filed in the Federal Court to expunge Alavida’s trade-mark registration on the basis that the registration was confusing with the unregistered trademark MASTERPIECE THE ART OF LIVING, as well as other masterpiece trademarks, which had been in use since 2001, prior to the filing date of Alavida’s trade-mark application and for MASTERPIECE LIVING.

Both the Federal Trial Court and the Federal Court of Appeal, contrary to the Registrar of Trademarks  decision, found that there was no likelihood of confusion as the marks of each of the parties were not being used in the same geographic location.

The Supreme Court considered the question “is  the location where a mark is used relevant when considering the likelihood of confusion between an applied for or registered trade-mark and a prior unregistered trade-mark or trade-name?”

Supreme Court said the following on this question.

” The Canadian trade-marks regime is national in scope.  The owner of a registered trade-mark, subject to a finding of invalidity, is entitled to the exclusive use of that mark in association with the wares or services to which it is connected throughout Canada. ”

The Court commented on Section 6 subsections (2), (3) and (4) of the Trade-marks Act.  Section 6(3) is referenced below and the underlined words considered by the Court.

6.  (3) The use of a trade-mark causes confusion with a trade-name if the use of both the trade-mark and trade-name in the same area would be likely to lead to the inference that the wares or services associated with the trade-mark and those associated with the business carried on under the trade-name are manufactured, sold, leased, hired or performed by the same person, whether or not the wares or services are of the same general class.

The court then went on to set out “that the test for confusion is based upon the hypothetical assumption that both trade-names and trade-marks are used “in the same area”, irrespective of whether this is actually the case. ”

The court concluded that “[I]in order for the owner of a registered trade-mark to have exclusive use of a trade-mark throughout Canada, there cannot be a likelihood of confusion with another trade-mark anywhere in the country.”  The court stated that section 16(3) of the Trade-Marks Act confirmed this conclusion.   Section 16(3) of the Trade-marks Act sets out:

16 (3)  Any applicant who has filed an application in accordance with section 30 for registration of a proposed trade-mark that is registrable is entitled, subject to sections 38 and 40, to secure its registration in respect of the wares or services specified in the application, unless at the date of filing of the application it was confusing with

• (a) a trade-mark that had been previously used in Canada or made known in Canada by any other person;
• (b) a trade-mark in respect of which an application for registration had been previously filed in Canada by any other person; or
• (c) a trade-name that had been previously used in Canada by any other person.

Based on this decision, a prior use of an unregistered trade-mark in a limited geographical area of the country can invalidate a trade-mark registration for a confusingly similar mark.