The “first word” – Federal Court addresses the importance of a trademark’s first component

The Federal Court’s (the “Court”) judgment in Industria De Diseno Textil, S.A. v. Zara Natural Stones Inc. (2019 FC 1082) refers to two separate decisions of the Trade-marks Opposition Board (the “Board”) relating to trademark applications filed by Zara Natural Stones Inc. (“Natural Stones”).

The Court allowed Industria De Diseno Textil, S.A.’s (“Industria”) appeal and remitted the case back to the Board for a new determination. In doing so, the Court recognized the importance of the “first component” of a trademark in analyzing the degree of resemblance between marks, regardless of whether a trademark application related to a visual design or to a specific word. Further, the Court emphasized that the Board’s decisions relating to similar marks must be “intelligible” when considered against one another.

The Board’s Design Mark Decision

In 2011, Natural Stones filed a trademark application to register a logo design entitled “ZARA NATURAL STONES & Design” (the “Design Mark”), based on proposed use in Canada in association with paving blocks, stones and tiles. At the time, Industria already held a number of registered trademarks that included the word “ZARA”, including one trademark, “ZARA HOME”, which covered wares that included “floor coverings, namely: floor planks, pavement, tiles”. Industria filed a statement of opposition to Natural Stones’ application under section 38 of the Trademarks Act (the “Act”), pleading, among other things, that the similarities between the Design Mark and Industria’s trademarks gave rise to a likelihood of confusion.

The Board rejected Industria’s opposition to the Design Mark. To determine the likelihood of confusion, the Board applied the factors from section 6(5) of the Act, which require the decision-maker to have regard for all of the surrounding circumstances including, among other things, the degree of resemblance between the marks. The Board found that the “degree of resemblance” factor was especially important and favoured Natural Stones, because:

“the marks differ visually, orally, and in ideas suggested by them… and [the Design Mark was] suggestive of the Wares, while [Industria’s] trade-mark ZARA HOME is suggestive of the environment where [Industria’s] wares could be used”.

As a result, the Board rejected Industria’s opposition and found that the Design Mark would not cause confusion with Industria’s yet-to-be-registered trade-mark.

Industria appealed the Board’s decision to the Federal Court.

The Board’s Word Mark Decision

The Federal Court’s eventual decision in this case cannot be understood without reference to a parallel matter between the same parties over a similar issue.

In 2012, Natural Stones filed an application to register a trademark consisting of the word “ZARA” (the “Word Mark”), based on use in Canada and in association with the same wares covered by its application for registration of the Design Mark. Industria again filed a statement of opposition against this application.

When applying the factors from section 6(5) of the Act, the Board made all the same findings as it had with regard to the Design Mark, except with respect to the “degree of resemblance” factor. For that factor, the Board stated:

“The dominant portion of the trade-mark ZARA HOME is the first component ZARA. It has often been said that the first component of a trade-mark is often the most important one [see Conde Nast Publications Inc v Union des Editions Modernes (1979), 46 CPR (2d) 183 (FCTD)]; [the Word Mark] is identical to the dominant and first portion of [Industria’s] trade-mark ZARA HOME. This important factor favours [Industria].”

Consequently, the Board concluded that Natural Stones’ ZARA Word Mark resembled Industria’s trade-mark ZARA HOME and would likely cause confusion.

The Federal Court’s Decision

Though the Federal Court was only considering the Board’s decision regarding the Design Mark, the Court found it relevant to consider the Board’s decision regarding the Word Mark in its analysis. The two decisions involved the same parties, similar time periods, and related marks. In both situations, the Board was analyzing the resemblance between marks where the first word, or the only word, was “ZARA”. However, despite these similarities across the two cases, the Board had come to opposing conclusions.

The Court noted that, in Masterpiece Inc v Alavida Lifestyles Inc (2011 SCC 27), the Supreme Court of Canada held that, when assessing the resemblance of two marks, the first word is an important element of the analysis. With that in mind, the Court found that, given the Board’s reasoning in the Design Mark decision, it was “impossible to conclude” that the Board had considered that element in its analysis of the likelihood of confusion between the Design Mark and ZARA HOME.

The Court held that the Board’s differential treatment of the importance of the first word “ZARA” in its two decisions caused a breakdown in the rationality of the impugned decision, placing it outside the range of reasonable outcomes which were defensible in light of the facts and the law. As such, Industria’s appeal was allowed and the matter was remitted to the Board for a new determination.

Authors: Jaclyn Tilak and Duncan Lurie