2011 FC 273 (March 9, 2011)
In TSA Stores, Inc. v. The Registrar of Trademarks, the Federal Court has overturned a decision of the Registrar of Trademarks, and held that a series of registrations for the SPORTS AUTHORITY retail sporting goods stores are in use in Canada, and are to be maintained, based solely upon information accessible by Canadians on a website based in the United States. TSA Stores was successfully represented by Mark Evans and Jayda Sutton from our Toronto Office.
TSA Stores is the second largest sporting goods retailer in the world, and operates approximately 400 stores in the United States. For some time, there were six SPORTS AUTHORITY stores in Canada, but these were closed in 2000.
TSA Stores owns four related Canadian trademark registrations containing the element SPORTS AUTHORITY in relation to retail sporting goods store services.
Section 45 cancellation proceedings were commenced in 2006 by a third party to expunge the registrations on the basis that they had not been used in Canada during the three year period prior to the commencement of the proceedings.
TSA Stores defended the cancellation proceedings even though it did not operate any bricks and mortar stores in Canada during the relevant period. Furthermore, while it operated a U.S.-based website that was accessed by hundreds of thousands of Canadians, the website did not permit goods to be purchased and shipped to Canada.
Instead, TSA Stores argued that retail store services were being performed and provided to Canadians, as the SPORTS AUTHORITY website provided a vast range of product information, as well the location of its stores in the United States, which are frequently visited by Canadians.
In a decision dated January 12, 2010, the Registrar of Trademarks did not decide whether the mere operation of the website was sufficient to constitute "use" in Canada. Rather, the Registrar ordered that all of the registrations were to be expunged on the basis that there was no clear evidence that the website was being operated by a licensee under the control of TSA Stores.
On appeal to the Federal Court, additional evidence was filed, and the Federal Court was satisfied that the website was being operated by a licensee that was under the control of TSA Stores.
As for the primary issue of whether the provision of website information was sufficient to constitute "use" of retail department store services in Canada, the Federal Court recognized that the word "services" is not defined within the Canadian Trademarks Act ("Act"), and is to be given a liberal interpretation.
Furthermore, the Federal Court recognized that the Act does not make a distinction between primary, incidental and ancillary services. As long as some members of the public, consumers or purchasers, receive a benefit from the activity, it qualifies as a service.
The Federal Court held that the vast range and depth of information available on the SPORTS AUTHORITY website was "akin to visiting a bricks and mortar store and benefitting from speaking with a knowledgeable salesperson."
The Federal Court also noted that the website's store locator function, whereby individuals could locate a store in the United States by inputting their location, including by means of their Canadian postal code, was also of benefit to Canadians.
Consequently, the Federal Court found that all of the marks were in use in Canada in connection with retail department store services, as ancillary store services were being provided by means of the website itself.
While the Federal Court has previously recognized that the operation of a bricks and mortar store in Canada is not required to establish "use" of store services in Canada, this is believed to be the first case in which this finding has been made in the absence of any purchases (whether online, mail order, or through a booking agent) while located in Canada.
This decision represents an important continuation of the Federal Court's expansive view as to what may constitute "use" of services in Canada.
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