Federal Court Of Appeal Of Canada Dismisses Milano Pizza’s Appeal On Trademark Infringement Action

On April 27, 2023, the Federal Court of Appeal of Canada (FCA) issued its decision in Milano Pizza Ltd. v 6034799 Canada Inc., 2023 FCA 85, dismissing the Appellants’ application for an order overturning a decision from the Federal Court (FC) which dismissed the Appellants’ action for trademark infringement, passing off and depreciation of goodwill.

The FC found that the Appellants’ registered design mark was invalid because it was not distinctive, as previously reported by E-TIPS® Newsletter here.  The FC determined that the Appellants failed to demonstrate sufficient control over its licensees for the licensees’ use of the mark to be deemed use by the trademark owner pursuant to subsection 50(1) of the Trademarks Act (the Act).

On appeal, the Appellants argued that the FC applied the incorrect legal test when determining whether the Appellants had control over their licensees by improperly requiring the trademark owner to have a specific manner or degree of control over their licensees.  The Appellants argued that they had control over their licensees through a requirement that licensees purchase the ingredients, pizza boxes and drinks from authorized distributors, and through the requirement that no other licence would be awarded or granted for a given geographical area without the licensee’s consent.

The FCA found no error of law or fact in the FC’s findings on this issue, emphasizing that control over the finished product or service was required to ensure the same quality across all licensees.  The FCA further stated that the Appellants’ argument was merely an assertion that the FC should take the trademark owner’s word that they assert control over the final product or service when determining the meaning of control in section 50 of the Act.

The Appellants also argued that the FC erred by improperly considering evidence of events before the relevant date in its analysis.  However, the FCA noted that the FC identified the correct relevant date and did not make a legal error.

Finally, the Appellants asserted that the FC made an error in principle when awarding costs because it did so when there was divided success and failed to consider the remedies sought by each party.  The FCA noted that an award for costs was highly discretionary, and that on such discretionary issues, the standard of review was palpable and overriding error.  The FCA did not find an error in the award of costs that met the standard, ultimately dismissing the appeal with costs.

Summary By: Sharan Johal