In Tucumcari Aero, Inc. v. Cassels, Brock & Blackwell LLP (2010 FC 267), Tucumcari Aero, Inc. (“Tucumcari”) appeals the Registrar of Trademarks’ (“Registrar”) expungment of its MOTO MIRROR Trade-mark Reg. No. 496,171 due to lack of control of character as required by section 50(1) of the Trade-Marks Act (“the Act“). While the Registrar was satisfied as to use with truck and automobile mirrors, it found Tucumcari’s affidavit ambiguous as to the control Tucumcari had maintained and ordered the mark expunged under section 45 of the Act.

On appeal Tucumcari submitted additional affidavit evidence confirming that Tucumcari’s exclusive licensee had sold its assets and sub-licensed the Moto Mirror mark to a second company with Tucumcari’s consent. This second company in turn entered into a supply agreement with a third company. The Federal Court found that while Tucumcari had supplied specific information, unavailable to the Registrar, describing its corporate and contractual relationships with its licensed suppliers, its control of the Motor Mirror mark was still at issue.

The Federal Court accepted that sublicensing of trademarks is permitted in Canada, noting “the reference to indirect control in ss. 50(1) of the Act”. However the Court also acknowledged “there appears to be little authority which discusses what is required to establish indirect control by a registrant over the quality of wares produced under sub-license”.

The Respondent argued sub-license agreements should explicitly be subject to the control of the original master licensing agreement executed by the registrant. The Court found that, while not as explicit as the contracts in previous cases Tucumcari’s licensing agreements established the control necessary to satisfy section 45 of the Act as they require the inspection and verification of the quality of the manufactured wares.

The Court found section 45 did not require “an express condition in the sub-licensing agreement that the registrant will continue to determine whether the quality of the wares produced has been maintained” so long as “there is a continuity of quality control that can be effectively maintained by the registrant under the chain of contracts.”