This month we are continuing the discussion about infringement. There is an additional statutory right to claims under sections 19 and 20 available to the owner of a registered trademark. Section 22 states that no person shall use a trademark registered by any person in a manner likely to have the effect of depreciating the value of the goodwill attached to the trademark.
This statutory cause of action is subject to a discretionary power of the court to decline to order the recovery of damages or profits and permit the defendant to continue to sell goods marked with the trademark in issue in its possession or under its control when notice was given to it that the owner of the registered trademark complained of the “use” of the trademark.
For the section “goodwill” consists of reputation and connection built up by years of work or gained through significant expenditure of money and which is identified with the goods or services distributed by the owner in association with the trademark.
The value of the goodwill attached to a registered mark may be depreciated if the following occur:
(a) the esteem in which the goods or services are held is reduced,
(b) direct persuasion and enticing of customers who would otherwise be expected to buy or continue to buy goods bearing the trademark,
(c) disparagement of the mark, or
(d) the dilution of the distinctiveness or unique characteristics of a mark.
These circumstances are not exhaustive, as the courts have not yet considered the limits of the application of the section.
A mental association of the two marks does not necessarily give rise to a likelihood of depreciation. There must be evidence of a “likelihood” of depreciation. This is a matter of evidence, not speculation. If the parties carry on business in unrelated fields, there may be no depreciation of goodwill.
Because the section refers to “use” its application is limited to a use which a person makes, in association with goods or services within the meaning of section 4 of another’s registered trademark, in such a manner as to depreciate the value of the goodwill attaching thereto.
The difference between the requirements for use in association with goods and services can lead to surprising results. For example, in a leading case it was found that the reproduction of the plaintiff’s trademark on the defendant’s packages was used within the meaning of section 22 but that the reproduction on the defendant’s brochures was not.
Section 22 does not require the plaintiff to show that use of both marks in the same geographic area would likely lead to confusion. However, it requires the plaintiff to show that the defendant has used a mark sufficiently similar to the plaintiff’s mark to evoke in the relevant universe of consumers a mental association of the marks likely to depreciate the value of the goodwill attached to the plaintiff’s mark. The test is the likelihood of depreciating the value of the goodwill attached to a trademark.
If you have questions, please contact me at mckeown@gsnh.com
John McKeown
Goldman Sloan Nash & Haber LLP
480 University Avenue, Suite 1700
Toronto, Ontario MSG 1V2
Direct Line: +1 (416) 597-3371
Fax: +1 (416) 597-3370
These comments are of a general nature and not intended to provide legal advice as individual situations will differ and should be discussed with a lawyer.
