Registrar of Trade-marks Ordered to Reinstate Registration on Evidence that Excused Non-Use
Cobalt Brands, LLC v. Gowling Lafleur Henderson LLP, 2010 FC 260 (Martineau, J.)

March 5, 2010

Peter Kappel, for the Appellant, Cobalt Brands, LLC (“Cobalt”)
No appearance for the Respondent, Gowling Lafleur Henderson LLP

This was an appeal by Cobalt to set aside the Registrar’s decision to expunge the registration for USQUAEBACH and design (the “Mark”). The registration is currently owned by Cobalt, but was previously owned by Twelve Stone Flagons Ltd. (“Twelve Stone”), Van Caem International, BV (“Van Caem”) and Van Caem’s Belgian subsidiary.

The expungement proceeding was initiated by Gowling Lafleur Henderson LLP. Cobalt and its Canadian representatives allegedly never received the Registrar’s notice for the proceeding. The registration was subsequently expunged as a result of Cobalt’s failure to submit evidence of use.

On appeal, Cobalt filed four affidavits as evidence, which showed a series of unfortunate events that led to the disuse of the Mark during the relevant period. After the death of major shareholders of Twelve Stone in 2003, the production and sales of products associated with the Mark were suspended, and all global rights and interests in the Mark were assigned by court order to Van Caem, a Dutch liquor company and creditor of Twelve Stone. Van Caem then assigned all of its rights in the Mark to its Belgian subsidiary. But as a result of the death of Van Caem’s principal owner in late 2003, Van Caem and its subsidiaries were forced to liquidate. Cobalt purchased the Mark and was subsequently recorded by the Registrar as the registered owner in May 2007. However, due to a lien on the trade-mark file, Cobalt only gained uninhibited control over the use of the Mark in September 2007. Since then, Cobalt has taken steps to resume the production and distribution of products bearing the Mark in Canada.

Justice Martineau held that on appeal under Section 56(5) of the Trade-marks Act, an appellant may adduce evidence before the Federal Court despite having adduced none before the Registrar, and the standard of review of the Registrar’s decision in that situation is correctness. Martineau J. also held that, in determining what constitutes “special circumstances” that excuse the non-use of a trade-mark, the court should consider the duration of the absence of use, the likelihood of its continuation, and the extent to which the absence of use is due solely to a deliberate decision on the part of the registered owner or to factors outside his or her control. Based on the evidence filed, Martineau J. concluded that the troubled history of ownership of the Mark and the regulatory schemes of the liquor industry which impeded Cobalt’s efforts to resume use of the Mark constituted special circumstances that excused Cobalt’s non-use of the Mark.

The appeal was allowed. The registration for the Mark was reinstated.

By: Hung Nguyen, Deeth Williams Wall LLP