Federal Court clarifies circumstances in which costs may be recovered

On April 4, 2019, in Iscada Inc. v. Aventum IP Law LLP[1], the Federal Court (the “Court”), set aside an order that expunged the registration of a mark used by Iscada Inc. (the “Applicant”). The Court refused to order costs against Aventum IP Law LLP (the “Respondent”).

Background

On March 23, 2018, the Registrar of Trade-marks (the “Registrar”) sent notice to the Applicant, requesting that it produce evidence of its use of the mark in question in Canada in association with the relevant goods and services during the period between March 23, 2015 and March 23, 2018 (the “Relevant Period”). The notification was never received by the Applicant and no evidence was produced.

As a result of not producing the requested evidence, in a decision dated August 1, 2018, the Registrar held that the Applicant’s mark in question should be expunged pursuant to subsection 45(4) of the Trade-marks Act.[2]

On September 28, 2018, the Applicant appealed to the Court, seeking an order to set aside the decision of the Registrar.

The Applicant served its affidavit in support of the appeal on the Respondent. The Respondent then confirmed in writing that it did not intend to file evidence, it would not be participating in any further proceeding, and it would not take a position on the current matters.

Federal Court Decision

On appeal, the Applicant was easily able to demonstrate use of the relevant mark in question during the Relevant Period. It was clear that the only reason this evidence was not furnished after the initial request was because the Applicant never received the notice.

The Court stated:

The evidence filed by the Applicant is more than sufficient to enable the Court to conclude that there has been use of the Mark in Canada on the part of the Applicant in the normal course of business during the Relevant Period in association with all of the Goods and Services. [para 14]

In seeking costs, the Applicant relied on an earlier Federal Court decision [Hi-Star][3] where costs were awarded to the applicant, despite the fact that the respondent did not oppose the application.

The Court acknowledged that it may award costs in situations of non-opposition. However, the Court distinguished the present facts from Hi-Star on the basis that, in Hi-Star, the applicant undertook significant work before the respondent signaled that it would not be opposing the appeal. Given that the Respondent withdrew its opposition immediately upon being served, the Court held that no costs should be awarded.

Implications

Costs may only be awarded where an applicant can demonstrate that costs were incurred as a result of the respondent’s conduct. The Court’s decision indicates that an applicant is unlikely to be awarded costs where the respondent immediately withdraws its involvement in an appeal, before the applicant has undertaken significant work or incurred any cost.

[1] 2019 FC 406.

[2] RSC 1985 c. T-13.

[3] Hi-Star Franchise Systems, Inc. v. Stemp & Company, 2019 FC 222.

Authors: Jordan Scopa, Jaclyn Tilak and Daniel Seidman