Republic of Cyprus (Commerce and Industry) v. International Cheese Council of Canada
July 27, 2011

2011 FCA 201 (June 13, 2011)

Overview

In Canada, a mark that distinguishes wares or services that are of a defined standard with respect to their character, quality or origin can be protected by way of a certification mark. On the other hand, section 10 of the Canadian Trademarks Act also prohibits the registration and use as a trademark of marks that have become recognized in Canada, through ordinary and bona fide commercial usage, as designating the kind, quality or place of origin of any wares or services. The potential conflict is obvious: when will a mark be considered to have become recognized as designating the very product it aims to protect such that protection is no longer available? CHEDDAR, which is likely recognized by most Canadians as a hard, orange cheese and unlikely to be remembered as having originated in the 12th century in the English village of Cheddar, is a good example of this interaction. It is not often that Canadian courts have had the opportunity to examine this question.

Recently, this opportunity presented itself1. The Registrar of Trademarks, the Federal Court and the Federal Court of Appeal all agreed that an aggregate of marks, some of which resemble the mark HALLOUMI, had become recognized in Canada as designating a kind or quality of cheese, contrary to section 10 of the Trademarks Act. The Ministry of Commerce and Industry of the Republic of Cyprus was therefore denied the certification mark which it sought to protect HALLOUMI cheese, which originates from Cyprus and is made according to a defined standard. Interestingly, a particularity of HALLOUMI cheese is that it does not melt when cooked.


Abstract

The Federal Court of Appeal rejected all grounds of appeal raised by the appellant and confirmed the decisions of the Federal Court and the Registrar of Trademarks ("Registrar") allowing a local dairy producer's opposition to the application to register the certification mark HALLOUMI on the ground that marks (so nearly resembling HALLOUMI as to be likely to be mistaken for it) had by ordinary and bona fide commercial usage become recognized in Canada as designating a kind or quality of cheese, contrary to section 10 of the Trademarks Act ("Act"). In the first opposition based upon this provision to be allowed by the Court of Appeal, sales of cheese bearing names other than HALLOUMI (namely: CLIC HALLOOM, HALLOOM, DORÉ-MI, LE BÉDOUIN HALOUMI and PHOENICIA HALLOOM) over a span of eight years were considered sufficient to make HALLOUMI a prohibited mark, such that registration and use of the same as a trademark is now forbidden.


Case summary

Facts. After securing certification mark status in the U.K. and the U.S. for the HALLOUMI mark, the Ministry of Commerce and Industry of the Republic of Cyprus ("appellant") sought the same protection in Canada for the Cypriot cheese made in accordance with defined standards. The Canadian application was based on prior use in Canada since October 19, 1995.

The application was published for opposition on November 28, 2001, and was eventually opposed on various grounds by one Canadian dairy producer and two Canadian dairy producer associations.

Several affidavits were filed by the parties and all witnesses were cross-examined. On April 29, 2009, the Registrar maintained three grounds of opposition and thus refused the application. In particular, it found that the adoption of HALLOUMI as a trademark was prohibited pursuant to sections 38(2)(b), 12(1)(e) and 10 of the Act because it had, by ordinary and bona fide commercial usage, become recognized in Canada as designating a kind or quality of cheese. The evidence, which was considered sufficient by the Registrar to meet a less onerous "initial" burden of proof in opposition proceedings, was that between 1995 and 2003, one producer sold $1.5 million worth of cheese under the name HALLOOM, and that between November 2002 and January 2003, 14 pieces of cheese from five different producers were sold in packaging bearing the terms CLIC HALLOOM, HALLOOM, DORÉ-MI, LE BÉDOUIN HALOUMI and PHOENICIA HALLOOM.

On appeal to the Federal Court, Mr. Justice de Montigny rejected all grounds of opposition, except for that based on the section 10 prohibition. In so doing, the Court rejected on technical grounds the appellant's argument that the relevant date for this ground of opposition ought to be the date of adoption and not the date of the Registrar's decision, and mentioned in obiter that, in any event, it was bound by a Court of Appeal precedent to the contrary. On the merits, the Court confirmed the Registrar's decision that the evidence adduced by the opponent was sufficient to demonstrate ordinary and bona fide commercial usage such that the word HALLOUMI had become recognized in Canada as designating a kind or quality of cheese.

On appeal to the Federal Court of Appeal, the appellant argued that the Court had (1) applied the wrong standard of review to the Registrar's assessment of the opponent's burden of proof, (2) erred in interpreting section 10 of the Act and concluding that the evidence adduced by the opponent was sufficient, (3) erred in holding that the appellant was barred from arguing that the material date was the date of adoption, and (4) erred in holding that the material date to determine the registrability of a mark pursuant to section 10 of the Act is the date of the Registrar's decision.

Analysis. Mr. Justice Mainville for the Court of Appeal rejected all of the arguments raised by the appellant.

On the burden of proof issue, the Court of Appeal deferred to the Registrar and the Court.

The Court of Appeal refused to comment on the issue of the material date, upholding the technical grounds upon which the Federal Court's rejection of this argument was based. The Court of Appeal did however mention that the fact that section 10 of the Act provides that the commercial usage must be bona fide is a "complete answer" to the appellant's argument that using the date of the Registrar's decision as the material date could provide unscrupulous Canadian producers with an incentive to further and exonerate their unfair trading on the cachet of foreign geographical indications.

The Court of Appeal also dismissed the appellant's arguments on the interpretation of section 10 of the Act and did not address the overlap between certification marks and the section 10 prohibition, holding that in its view, the Registrar had not committed determinative errors with regard to the scope of the requisite evidence and ultimately holding that it considered the same to be sufficient.


Conclusion

The appeal was dismissed with costs and the application to register HALLOUMI as a certification mark was thus rejected. The appellant has until September 12, 2011, to seek leave to appeal to the Supreme Court.

Daniel S. Drapeau and Jean-Sébastien Dupont, Montreal

1Republic of Cyprus (Commerce and Industry) v. International Cheese Council of Canada, 2011 FCA 201, aff'g 2010 FC 719, aff'g (2008), 70 C.P.R. (4th) 430 (T.M.O.B.)



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