Dispute Over Secondary Mark Not a “Special Circumstance” to Excuse Non-use of Registered Mark
Jose Cuervo S.A. de C.V. v. Bacardi & Company Limited and The Registrar of Trade-marks, 2009 FC 1166 (Kelen, J.)

November 17, 2009

Andrea Pasztor and Chantal Bertosa for Jose Cuervo S.A. de C.V.
Monique Couture and Robert MacDonald for Bacardi & Company Limited
John H. Sims for The Registrar of Trade-marks

This was an appeal from a decision of the Registrar of Trade-Marks expunging the Appellant’s trade-mark CASTILLO for rum for non-use and failure to demonstrate that special circumstances exist to excuse the absence of use of the mark pursuant to Section 45 of the Trade-marks Act.

There was no issue in this case that the Appellant did not provide sufficient evidence to demonstrate use of the CASTILLO mark during the relevant period. The key question was whether the Applicant demonstrated that special circumstances exist which would excuse its non-use. The Appellant submitted that during the relevant period it had changed its global marketing strategy to use a secondary COHIBA mark belonging to the Appellant’s related company together with its CASTILLO mark into the label for rum. However, due to a dispute between the Appellant’s related company and a third party who owns the mark COHIBA for cigars, the Appellant was instructed by its related company to cease use of the COHIBA mark. As such, the CASTILLO label which bears both COHIBA and CASTILLO marks was not used in Canada during the relevant period.

The Registrar held that while the threat of a trade-mark infringement action might be a reasonable excuse for non-use, the Appellant’s decision in this case to “wait out the litigation” relating to a secondary mark for six years was a deliberate and voluntary decision not to use the CASTILLO mark. Further, the Registrar was of the view that there was insufficient evidence submitted by the Appellant demonstrating why the CASTILLO mark cannot be marketed by itself.

The Court found that it was reasonably open to the Registrar to conclude that there was insufficient evidence as to why the CASTILLO mark could be marketed without reference to the COHIBA mark that was subject to litigation. The Court held that the fact that the parties were related entities requires the Appellant to provide evidence to show why the Appellant was prevented from using the CASTILLO mark because of a threat of impending trademark litigation concerning a secondary mark. The Court held that it was also reasonably open to the Registrar to decide that a trade-mark dispute over a secondary mark does not constitute a special circumstance out of the Appellant’s control.

By: Charmane Sing, Borden Ladner Gervais LLP