Federal Court Narrows Energizer’s Claims against Duracell

The Federal Court of Canada (the “Court”) recently released a pleadings decision in Energizer Brands, LLC and Energizer Canada Inc. v. The Gillette Company, Duracell Canada, Inc., Duracell U.S. Operations Inc., and Procter & Gamble Inc., 2018 FC 1003.

Duracell sought to strike certain allegations from Energizer’s Claim. In particular, Duracell sought to strike allegations arising from the fact that it used the terms “the bunny brand” and “the next leading competitive brand” on labels attached to packages of its batteries, allegedly in reference to Energizer. Energizer was seeking damages from Duracell in relation to the use of these two terms under subsections 22(1), 7(a), and 7(d) of the Trade-marks Act.

The Court granted Duracell’s motion in part, focusing on the threshold issue of whether subsections 22(1), 7(a), and 7(d) of the Trade-marks Act could apply to the pleaded facts. The Court held that the use of the term “the bunny brand” may offend these sections and did not strike pleadings referring to “the bunny brand”. The Court found that use of the term “the next leading competitive brand” did not offend these sections and decided to strike pleadings related to use of this term.

Subsection 22(1) of the Trade-marks Act

Section 22(1) of the Trade-marks Act states that no person shall use a trade-mark registered by another person in a manner that is likely to have the effect of depreciating the value of the goodwill attaching to that mark.

In Veuve Clicquot Ponsardin v Boutiques Cliquot Ltee, 2006 SCC 23 (“Veuve Clicquot”), the Supreme Court of Canada ("Supreme Court") held that a party need only show that another party has made use of marks sufficiently similar to its own to evoke in a relevant universe of consumers a mental association of the two marks that is likely to depreciate the value of the goodwill attaching to the mark. It noted that misspellings or use of only part of a mark may be enough to trigger protection under subsection 22(1) and that the relevant consumer is the “somewhat-hurried consumer”

The Court followed Veuve Clicquot and held that subsection 22(1) prohibited Duracell from using the term “the bunny brand” even though the term is not a registered trademark. The Court found that this term clearly referred to Energizer, and that a “somewhat-hurried consumer” would likely associate the term with Energizer, not Duracell

The Court held that subsection 22(1) did not prohibit Duracell’s use of “the next leading competitive brand”. The Court was not persuaded that use of this term would cause consumers to make the same mental association with Energizer.

Subsections 7(a) and 7(d) of the Trade-marks Act

Subsections 7(a) and 7(d) of the Trade-marks Act state that no person shall make a false or misleading statement tending to discredit the business, goods or services of a competitor, or make use, in association with goods or services, of any description that is false in a material respect and likely to mislead the public as to the character, quality, quantity or composition; the geographical origin; or the mode of the manufacture, production or performance of the goods or services.

The Court noted that, to engage section 7, a party must establish the existence of intellectual property such as a trademark, registered or unregistered.

The Court held that, although not a registered mark, the term “the bunny brand” was nourished by sufficient trademark or intellectual property interests to benefit from the protection and application of both subsections 7(a) and 7(d). Accordingly, it dismissed Duracell’s motion to strike those parts of Energizer’s pleading

The Court held that the term “the next leading competitive brand” was not afforded protection under section 7 and struck references to subsections 7(a) and 7(d) in relation to this phrase from Energizer’s claim.

Authors: Larissa Fulop and Abid Khalid