Federal Court of Appeal Rules that Profit is Not Required to Establish Use in the “Normal Course of Trade”

On March 11, 2019, in Cosmetic Warriors Limited v Riches, McKenzie & Herbert LLP, 2019 FCA 48, the Federal Court of Appeal (FCA) allowed an appeal from a judgment of the Federal Court that struck Cosmetic Warriors Ltd’s trademark LUSH from the register.

In 2014, Riches, McKenzie & Herbert LLP initiated non-use cancellation proceedings against the LUSH registration under section 45 of the Trade-marks Act.  Cosmetic Warriors Ltd sold t-shirts and tank tops bearing the LUSH mark to employees to wear as part of their uniform and to give as gifts.  The Registrar maintained the registration for LUSH, finding that the sales constituted use of the trademark in the “normal course of trade”.

On appeal, the Federal Court reversed the Registrar’s decision and struck the trademark from the register, as previously reported in the E-TIPS® Newsletter here.  Justice Manson found the Registrar’s decision to be unreasonable based on the absence of profit and the promotional nature of the sales.

The FCA overturned the Federal Court’s decision, finding that a transfer of trademarked goods does not require actual profit to constitute a transfer in the “normal course of trade”.  In his reasons, Justice Laskin stated:

“A conclusion that actual profit is required would mean that such common business practices as selling last year’s trade-marked merchandise at a discount would never amount to use sufficient to maintain registration of a trade-mark. That could not have been the intention of Parliament.”

The FCA held that monetary profit can be a relevant circumstance, but is not a prerequisite for transfer in the “normal course of trade”.  The FCA allowed the appeal and the registration for LUSH was maintained.

Summary By: Michelle Noonan