Chalk & Cheese: What’s the Connection?

Abstract:

With the decisions of the Supreme Court of Canada in 2006 regarding the trade-marks VEUVE CLICQUOT and BARBIE, the door has now been opened for the owners of famous trade-marks in Canada to assert claims based on depreciation of goodwill under s. 22 of the Trade-marks Act, with the suggestion that depreciation of goodwill is similar to dilution. The Supreme Court imposed a requirement that there be a connection or mental association between the famous mark and the wares or services of the junior user when proving depreciation of goodwill. The traditional test for showing likelihood of confusion also requires a mental association, such that the average consumer would be confused into thinking that the wares or services of one party are those of another party. The issue arises, however, as to whether the connection or mental association is the same regardless of whether one is proving confusion or depreciation of goodwill. The author argues that, due to the fundamentally different principles on which confusion and dilution are based, and assuming that depreciation of goodwill is now akin to a claim for trade-mark depreciation, any evidence of connection or mental association ought to be different depending on which cause of action one is asserting. Because a finding of confusion is antithetical to the existence of dilution, it is argued that a different kind of mental association must be made to prove confusion versus dilution. Further, it would appear that proving likelihood of confusion for a famous mark still requires compelling evidence of the mark’s “aura,” and there can be no presupposition that a famous mark automatically transcends different kinds of wares or services. Finally, it is noted that the Supreme Court espoused a four-part test to prove depreciation of goodwill, namely: (1) use by the plaintiff of its registered trade-mark; (2) significant goodwill attached to the plaintiff’s mark; (3) use of the plaintiff’s mark by the defendant in a manner likely to affect that goodwill; and

(4) likely depreciation of the value of that goodwill. Despite this four-part test, it appears on analysis of the Supreme Court’s reasons that the formation of a connection or mental association would fulfill the requirements of the first, third, and fourth elements, thus requiring the plaintiff to prove, essentially, only a connection or mental association, plus a significant goodwill.