Federal Court of Canada Grants Caterpillar’s Appeal, Refuses Puma’s Trademark Application for procat

On September 22, 2021, the Federal Court of Canada (FC) issued its decision in Caterpillar Inc. v Puma SE, 2021 FC 974, granting an appeal from a decision of the Trademarks Opposition Board (TMOB), in which the TMOB rejected Caterpillar’s opposition to Puma’s application for the trademark procat.

In 2017, the TMOB dismissed Caterpillar’s opposition, holding that Caterpillar had not met its evidential burden, because Caterpillar did not have the requisite control to benefit from its licensees’ use of Caterpillar’s registered CAT trademarks (2017 TMOB 114).  Section 50(1) of the Trademarks Act provides that the use of a trademark by a licensee is deemed use of the mark by the owner, where the owner has, under licence, direct or indirect control of the character or quality of the licensed goods or services.

On appeal, both parties filed new evidence which the FC held to be material, thus triggering a de novo or correctness review of the TMOB decision.  The FC concluded that the TMOB made palpable and overriding errors in assessing whether the licensed use of the CAT trademarks in Canada by Caterpillar’s licensees enured to its benefit. 

The FC noted that the trademark owner can meet the test of sufficient control under Section 50(1) one of three possible ways: (i) the owner can attest that it exerts the requisite control (i.e. directly or indirectly); (ii) the owner can provide evidence demonstrating that it does so; or (iii) the owner can provide a copy of the licence agreement that explicitly provides for direct or indirect control of the character or quality of the licensed goods.  In this case, the FC held that Caterpillar had satisfied the first method before the TMOB, and that Caterpillar’s new evidence satisfied the second and third possible ways of meeting the test.

The FC then went on to conduct a confusion analysis, finding that there was a likelihood of confusion between the parties’ trademarks.  When considering the degree of resemblance between the marks, the FC concluded that the TMOB had committed, at the very least, a palpable and overriding error when it held that while Caterpillar’s mark suggests the idea of a feline animal, Puma’s mark is a coined word without any apparent meaning.  Justice Fuhrer held that both marks suggest the idea of a feline animal, and that “cat” is the more dominant element of the trademark procat in light of the suggestive or laudatory connotation of the element “pro”.

The FC allowed Caterpillar’s appeal, set aside the decision of the TMOB, and refused Puma’s procat application.

Summary By: Michelle Noonan