In Scott Paper v. Georgia-Pacific Consumer Products LP (2010 FC 478), the Federal Court of Canada (FC) set aside a decision from the Trade-Marks Opposition Board (TMOB) and reinstated applicant Scott Paper’s trade-mark application covering a daisy flower square pattern design for use with bathroom tissue.

Scott Paper had appealed under section 56 of the Trade-marks Act (the Act) against respondent Georgia-Pacific’s opposition on the grounds of confusion under 12(1)(d) and subsection 6(5), lack of entitlement under subsection 16(3) to register a confusing mark and lack of distinctiveness over the respondent’s own mark.

The TMOB had conducted a section 6(5) confusion analysis, including “other surrounding circumstances”, which included the state of the marketplace and the use of generally similar marks by third parties at the material time. This was the primary basis for the TMOB rejecting the 12(1)(d) opposition, as small differences between the marks were likely sufficient to avoid confusion. The TMOB also rejected the subsection 16(3) entitlement opposition, finding that since the respondent’s own mark was not visible to the consumer at the time of purchase there was no “use” under section 4 of the Act. As for the non-distinctiveness argument, the TMOB accepted that the respondents’ mark may have become known after its considerable sales and that the applicant had not provided evidence either that it had established its own reputation or that it was common for others to use similar designs at the material date. Thus, the TMOB found the applicant’s mark was not sufficiently different from the respondent’s to distinguish it and refused the application under paragraph 38(2)(d) of the Act.

The FC first determined the admissibility of new marketplace evidence filed by applicant Scott Paper to demonstrate common use and co-existence of similar designs on bathroom tissue as of the date of opposition, to support its distinctiveness argument. The FC accepted the applicant’s main marketplace evidence that consisted of an individual affiant’s personal knowledge regarding the sales of third party products during the relevant time period. The FC reasoned that affiants may depose fact within their personal knowledge under Rule 81 of the Federal Courts Rules.

With regards to the standard of review, the FC first held that the review was not a trial de novo because even though there was additional evidence submitted the record before the TMOB was also part of the evidence. Under section 56 of the Act a standard of review must be determined in accordance with Dunsmuir v. New Brunswick (2008 SCC 9). The FC adopted the approach in NPS Pharmaceuticals, Inc. v Biofarma, (2009 FC 172 at 37-46), requiring an inquiry into whether new evidence would have materially affected the TMOB’s decision. If answered affirmatively the standard of review is reasonableness, if answered negatively the standard of review is correctness. The FC cited Vivat Holdings Ltd v. Levi Strauss & Co. (2005 FC 707 at 27), which found that in order to affect the standard of review new evidence must be substantial and significant, holding that the only requirement at this stage is that the evidence is material. The FC determined that the marketplace evidence was material given the TMOB’s discussion of the topic. Therefore, the standard of review to assess whether the applicant’s mark was distinctive was held to be correctness.

In assessing the distinctiveness argument the FC noted the opponent must meet a threshold evidential burden and show that its own mark was known to some extent in Canada, and had a substantial, significant, or sufficient reputation. The FC held that the reputation requires that the opponent’s mark is known as an indicator of source, and not merely known. The applicant demonstrated that the trade-mark shown to consumers of the respondent’s bathroom tissue is Costco’s KIRKLAND SIGNATURE brand and that the respondent’s own wallpaper design is only apparent when the package is opened. On this basis, the FC held that the TMOB erred in concluding the respondent met its threshold burden since marks that are not seen or made known to the purchaser at the moment of sale are not deemed to be used under subsection 4(1). The FC reasoned that even though the respondent’s product had substantial sales, this was insufficient without evidence to conclude that Canadians would realize the respondent’s mark was an indicator of source when its packages were opened.

The FC allowed the applicant’s appeal, set aside the TMOB’s decision upholding the respondent’s non-distinctiveness ground of opposition and directed the Registrar of Trade-Marks to allow the application.