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In a COVID-19 marketplace, Canadian based online retailers and high-end stores based outside of Canada could reap the rewards of an American dollar store’s trademark victory at the Federal Court.

The decision resulted in the dollar store’s trademark being restored to the register after a judge ruled it did not need to have a physical presence in Canada in order to demonstrate the use of the mark in connection with retail variety store services.

This decision could have major consequences in the COVID retail environment for online retailers and the luxury market. The decision is not merely for dollar stores and lower end retailers.  There are so many companies that now operate online. A bricks-and-mortar presence is no longer necessary as distribution can be made through Amazon and other delivery centres that are not accessible to the public.

The “DOLLAR GENERAL” decision recognizes the modern business context and is particularly applicable in the new COVID retail world.

Background on the Store

The dollar store in the matter operates a chain of shops across the U.S., and was initially granted protection in Canada for its name in 2010, but saw its mark expunged by the Registrar of Trademarks in 2017 after a rival challenged it to show use in Canada.

The store runs an e-commerce website that provides Canadians with an opportunity to review product pricing and availability. Canadian customers can make purchases but must have their items delivered to a U.S. address or use a third-party shipping agent to cross the border.

The online presence was not enough to convince the registrar, who found the limited shipping options and lack of physical presence meant the trademark was not in use here, because the applicant was not offering “retail variety store services” in Canada.

However, the company likened its website to a physical store, submitting screenshots that showed how customers can browse products and place them in their online shopping cart. In addition, it presented evidence that customers with a Canadian billing address had completed purchases on the site.

Appeal of the Registrar’s Decision

The judge ruled the registrar’s decision was wrong and unreasonable.

“To find that by use of a third party mode of delivery from the U.S. would, in-of-itself, result in non-use of retail services in Canada‎ ignores the commercial reality of the normal course of e-commerce trade and would frustrate trademark owners’ legitimate rights in Canada,” the judge wrote.

“Viewing the evidence as a whole, I find it is sufficient to show that the applicant used the mark in Canada in association with the services during the relevant period. The logical inference from the facts is that Canadians benefitted from use of the applicant’s website by using it as a substitute for visiting a brick-and-mortar store, as well as either purchasing products for delivery to a U.S. address for pick-up or to a trans-shipper for delivery in Canada.”

Significance of Decision

The decision is particularly significant for high-end brands whose reputation for quality persists in Canada, despite never actually conducting operations here. Certain luxury retailers from London and New York, for example, have built a following and have become known through international travel and numerous references in popular culture and film.

Name Searches a Priority

The decision highlights the need for start-ups and entrepreneurs looking for a suitable name for their new business to conduct an exhaustive name search not limited to the city or province a business is located in. Even a search limited to the borders of Canada is clearly not sufficient in light of this decision. Mills & Mills LLP recommends a robust full search that includes the CIPO, USPTO and WIPO registers, as well as common law sources to cover international operators to check that the name is available and not already taken.

In the days of bricks and mortar businesses, name searching was easier. Now, there are virtual enterprises all over the world and foreign bricks and mortar operations that could gain a presence and reputation in Canada due to the nature of the global marketplace.

Foreign Trademark Registration

While the ruling is particularly relevant to non-Canadian businesses operating in Canada, it should also spur domestic businesses who sell their wares abroad to think about registering trademarks in other countries.

If a Canadian based retailer has established American or European sales through an online portal, thought should be given to registering in those specific jurisdictions. With international shipping, trademark registration in the receiving country also serves to assist in the clearance of goods through customs. It is known that customs officials will routinely verify the USPTO register to determine whether the rightful owner of a mark is importing goods to the USA. Appropriate trademark registration can assist to clear goods through US and other international borders.

Mills & Mills LLP Trademark Services

Mills & Mills LLP trademark agents can file and prosecute registrations with the Canadian and US Trademark Offices and those offices under the Madrid Protocol, including China and the European Union. Contact Taras Kulish at Mills & Mills LLP to assist with your international trademark strategy.

Disclaimer

Mills & Mills LLP was not involved in the DOLLAR GENERAL matter. The comments in this blog are of a general nature.

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