Reality Check: Federal Court Rejects Bridgestone’s Hypothetical Channels of Trade Argument in Confusion Analysis

Reality Check: Federal Court Rejects Bridgestone’s Hypothetical Channels of Trade Argument in Confusion Analysis

The Federal Court recently dismissed an appeal from the Trade-marks Opposition Board regarding confusion between trade-marks for Bridgestone's motor tires and Campagnolo's specialty bike accessories. What made this case especially interesting were the comments on arguments regarding "hypothetical channels of trade".

High-end bicycle part and accessory manufacturer Campagnolo filed an application for the proposed use of the word mark “POTENZA” in association with bicycle parts and accessories. Notwithstanding the exclusion of “tires, brakes, wheels, rims and spokes” from the listing of wares in the application, and the fact that Bridgestone does not sell bicycle products in Canada, Bridgestone filed an opposition against the application. Bridgestone based its opposition on s. 12(1)(d) of the Trade-marks Act - confusion with its own registered mark “POTENZA”, which is used in association with tires, tubes, and wheels, as well as the mark “POTENZA RE92” used in association with tires and inner tubes.

The Federal Court reviewed the board’s findings on the factors outlined in s. 6(5)  and noted that per Masterpiece Inc v Alavida Lifestyles Inc, other factors gain significance once the appraiser finds the marks identical or very similar. Although many of the factors did weigh in favour of Bridgestone’s opposition, due to the resemblance of the marks, the two central factors to the outcome were the nature of the wares and the nature of the trade.

On appeal to the Federal Court, Bridgestone submitted that it would be hard to imagine wares being more similar than in this instance (motor tires and bicycle accessories) and that confusion was likely because Bridgestone’s wares potentially may sell through the same channels of trade as Campagnolo’s. Bridgestone’s opposition was premised on the position that although Campagnolo’s current market is high-end specialty stores, in the future they might create a less expensive line and/or sell their products in box stores alongside Bridgestone’s products. Bridgestone submitted that the Registrar should have looked at hypothetical channels of trade that may be used in the future.

In this case, the specific exclusion of “tires, brakes, spokes, rims and wheels” likely saved the mark from a finding of confusion. In Mr Submarine Ltd v Amandista Investments Ltd (1987), 19 CPR (3d) 3 (FCA), the Federal Court of Appeal remarked that the test for confusion must have regard for “whether confusion would be likely if the appellant were to operate in that area in any way open to it using its trade mark in association with” the respondent’s wares or services. This specific exclusion of Bridgestone’s wares means that it is not open, nor will it ever be open, to Campagnolo to use its mark in association with those wares if the registration were successful.

In addition, the Court held that the Registrar was correct to only consider the predictable and usual channels of trade rather than simply any hypothetical channel imagined by Bridgestone, following the Federal Court of Appeal’s decision in Movenpick Holdings AG v Exxon Mobil Corp. In that case the Court approved a statement from the TMOB in McDonalds Corp v Coffee Hut Stores Ltd that, “the parties’ respective statements of services must be read with a view to determining the probable type of business or trade intended by the parties rather than all possible trades that might be encompassed by the wording.” Though a confusion analysis will look at any area open to use of the mark, the court restrains the analysis to the realm of probable trade. In this case, though the scenarios posited by Bridgestone were deemed as possible, they were not considered probable. The mark’s relevant trade must be grounded in realistic possibilities in order for this factor to point towards a finding of confusion.

While at first glance this appears to be a reasonable constraint on the scope of analysis, I think that this subjective inquiry could cause problems for the court in the future. In this case, the court dealt with the straightforward example of a registration application that excluded the wares covered by a pre-existing mark which it would have allegedly been confused with. Moreover, the court determined that consumers of Campagnolo products would be sophisticated and likely to know the difference between Campagnolo and Bridgestone wares - even if Bridgestone did start to sell bicycle tires and Campagnolo sold their wares in box stores alongside Bridgestone products. However, it is likely that further clarification on how one determines the demarcation point between possible and hypothetical channels of trade will be required. For example, the quality of phone cameras today can rival some professional cameras, and are often offered in the same channels of trade. Would a court have considered an SLR camera and a cellphone to be probable to enter the same channels of trade even ten years ago?  Hypothetical versus probable is not only a subjective determination, but may ignore the nature of innovation in a number of contexts.

Allison McLean is an IPilogue Editor and a JD Candidate at Osgoode Hall Law School.