On April 4, 2022, the Federal Court of Canada (the Court) in Milano Pizza Ltd. v 6034799 Canada Inc., 2022 FC 425, granted the Defendants’ counterclaim in part, ordering the expungement of the Plaintiff’s trademark registration due to non-distinctiveness as a result of insufficient controlled licensing of the trademark.
The case involved a dispute between take out restaurants operating as MILANO PIZZERIA in Ottawa and surrounding areas, and the Plaintiff’s rights in the trademark MILANO PIZZERIA & Design (the Milano Design), that were contested by alleged former licensees (the Defendants). The Plaintiff brought an action for trademark infringement, passing off, and depreciation of goodwill, and the Defendants counterclaimed for expungement of the Milano Design by reason of non-distinctiveness, abandonment, and non-entitlement.
Based on the evidence, the Court concluded that the Defendants had met their onus of establishing that the Milano Design was not distinctive and, thus, invalid for two reasons.
First, the Plaintiff had not satisfied its onus to establish that it exercises sufficient control over the services performed (and goods sold) by its licensees, so as to benefit from the licensees’ use, advertisement or display of the Milano Design. The Court noted that the written licence agreements did not contain any right of inspection, and there was little evidence that the Plaintiff regularly inspected or approved products and menu items, and the Plaintiff failed to exercise control over the finished product, the pizza itself, and the speed at which or how food orders were filled. The Court held that the insufficient control exercised by the Plaintiff over the character or quality of the services, including the finished food products, notwithstanding oral or written licence agreements with most of the licensees, rendered the Milano Design non-distinctive, and thus, invalid.
Second, the Court held that the lengthy coexistence of a third-party restaurant PIZZERIA MILANO in Masson, Quebec also undermined the distinctiveness of the Milano Design.
Thus, the Court dismissed the Plaintiff’s claims, granted the Defendants’ counterclaim in part, holding that the Plaintiff’s Milano Design trademark registration was invalid for non-distinctiveness, and ordered the Registrar to expunge the registration. The Court also granted the Defendants lump sum costs.
Summary By: Michelle Noonan
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