Sea Tow Services Secures Victory at Federal Court

In Sea Tow Services International, Inc. v Trademark Factory International Inc., 2021 FC 550, Sea Tow Services International, Inc. (“Sea Tow”) appealed a decision of the Registrar of Trademarks (“Registrar”) that amended Sea Tow’s registration and deleted certain services.

The Federal Court reviewed new material evidence provided by Sea Tow and agreed with the company that the Registrar had misapprehended and incorrectly deleted some of the services from the registration. The Court therefore allowed the appeal.

Background

Sea Tow’s registrations for the name and design SEA TOW were based solely on use and registration of trademarks in the United States for largely the same services. Trademark Factory International Inc. (“Trademark Factory”) sought to have the registrations cancelled due to the absence of use in Canada under section 45 of the Trademarks Act (the “Act”). The Registrar then issued section 45 notices in 2017 to Sea Tow, prompting the company to file an affidavit from its CEO (“2017 affidavit”) demonstrating the use of its trademarks in Canada in association with the services listed in the registrations during the relevant three-year period between February 2014 and February 2017.

A member of the Trademarks Opposition Board (the “Member”), who served as the Registrar’s delegate, reviewed the trademarks. The Member articulated the main issue as whether, at a minimum, the services in association with the trademarks were offered and available to be performed in Canada.

Based on the 2017 affidavit, the Member found that Sea Tow’s trademarks had been used in Canada during the relevant period but only for some of the services. Accordingly, the Member amended the statement of services . The Member was of the view that either there was no evidence demonstrating the use of the trademarks in association with a specific service or there was insufficient evidence to understand that the performance of that service was available in Canada.

As Sea Tow had a statutory right of appeal, it filed a second affidavit (“2020 affidavit”) from the CEO as new evidence.

Issues

1. What is the applicable standard of review?
2. Did the Member err in concluding that Sea Tow’s evidence did not demonstrate “use” of the trademarks in Canada during the relevant period, within the meaning of sections 4 and 45 of the Act , in association with the services that were amended and deleted from the registration?

Analysis

Applicable Standard of Review

Where there is a statutory right of appeal, the starting point is a consideration of whether any new evidence would have affected the Member’s decision materially. To be considered “material”, the new evidence has to be sufficiently substantial, significant, and of probative value. Subsection 56(5) of the Act allows for the Court to exercise any discretion vested in the Registrar if it finds that the new evidence is material. In other words, the Court has the power to substitute its own views.

In this case, the Court had to assess the nature, significance, probative value, and reliability of the 2020 affidavit.

The Court ruled that, while the 2020 affidavit was “somewhat supplementary or repetitive of” the 2017 affidavit, there was new evidence of other on-water assistance services that were sufficiently substantial, significant, and of probative value. The 2020 affidavit would have affected the Member’s decision materially, particularly with respect to some deleted services surrounding “diving and underwater salvage” and “delivery of fuel and other supplies by boat”.

Use of the Marks in Canada During the Relevant Period

The Court agreed with Sea Tow with regard to certain services that the Member had deleted from the registration. However, the Court rejected Sea Tow’s argument that the Member should have taken related and ancillary services into account in support of the “primary” relationship as the Act requires specificity in the statement of goods and services.

While there was some ambiguity within the 2017 affidavit on whether discounts were available to Canadian users, the Court ruled that any ambiguity or doubt with the evidence adduced in response to a section 45 notice must be resolved in the favour of the registered owner.

Lastly, the Court rejected Sea Tow’s argument that “spill and environmental clean-up” was a service offered to Canadians. The Court reviewed the membership agreement and noted that there were references to “national” response contracts and compliance with “state” mandated needs, which suggested that this provision was available in the U.S. only.

Conclusion

The Federal Court allowed the appeal and ruled that the registrations would be maintained, although it amended the registrations to remove certain services listed in Sea Tow’s statement of services.

Authors: Meghan King and Nisheet Karthikeyan, 2021 Summer Student-at-law