8073902 Canada Inc. v Vardy, 2019 FC 743
Why Is This Case Important?
This case is an example of how a trademark can lose its legal protection due to widespread, uncontrolled third-party use. It clarifies the legal standards for distinctiveness under section 18(1)(b) of the Trademarks Act and the consequences of failing to enforce trademark rights. The decision also reinforces that licensing must include control over the quality and character of services to preserve distinctiveness under section 50(1). The ruling demonstrates that even a registered trademark may be expunged if it no longer distinguishes the owner’s services from those of others in the marketplace.
Summary
The Applicants, 8073902 Canada Inc. and Ice Cold Distributions Inc., operated alcohol delivery services under the name “DIAL-A-BOTTLE” in Ottawa and Toronto. They sought to expunge the trademark registration for “DIAL-A-BOTTLE” held by the Respondent, Glen Vardy, under section 57 of the Trademarks Act. They argued that the mark was invalid because it lacked distinctiveness at the time the application was filed in 2018 and was not registrable in 2009 due to its generic use in the industry.
The DIAL-A-BOTTLE name had been used by various businesses, and the evidence showed widespread, uncontrolled, and inconsistent use of the name dating back to the 1970s. Mr. Vardy acquired the registration in 2015, but neither he nor his predecessor had enforced the trademark prior to that. He claimed that most users were licensees or franchisees, but the Applicants and other users disputed this, asserting they operated independently and without control from Mr. Vardy.
Court Finding
The Federal Court found that the trademark had lost its distinctiveness by 2018 due to widespread use by unrelated businesses and lack of enforcement. The Court held that Mr. Vardy failed to control the quality and character of services offered by alleged licensees, as required under section 50(1). Although Mr. Vardy made some attempts to enforce the trademark after 2015, the Court held these efforts were too late and insufficient to restore distinctiveness. The Court concluded that the mark no longer functioned to distinguish Mr. Vardy’s services from others in the industry. As a result, the Registration was declared invalid and expunged.
Key Takeaway
A trademark must remain distinctive to retain legal protection. Confusion in the marketplace is strong evidence of lost distinctiveness, and the Court emphasized that actual confusion existed among customers and advertisers. Widespread, uncontrolled use—even by alleged licensees—can erode distinctiveness and lead to expungement under section 18(1)(b) of the Trademarks Act. Trademark owners must actively enforce their rights and maintain control over licensed use. Licensing requires real quality control, and merely claiming users as licensees is insufficient; without proof of control, third-party use counts against distinctiveness. This case underscores the importance of proper licensing practices and timely enforcement to preserve trademark validity.
