Nissan v. BMW: ‘M’ wars heading to SCC?

October 24, 2007 by Julian Ho

After a see-saw battle at the Federal Court and Federal Court of Appeal, this trade-mark battle between the two automotive manufacturers may be coming to the Supreme Court of Canada. BMW has filed for an application for leave to appeal.

Facts

BMW has, for decades, used the letter ‘M’ in conjunction with various numbers to distinguish its high-end performance vehicles. In car enthusiast circles, the M3 and M5 are known to be the top models of the respective 3 and 5 series lines of BMW vehicles, which in addition to being luxury vehicles, offer enhanced performance characteristics and distinctive badging. To protect these brands, BMW has registered trade-marks for ‘M3’, ‘M5’ and ‘M & Design’. Additionally, in various advertisements and promotional products, BMW has used the marks ‘M’ and ‘M6’. Although they do not have any trade-mark registrations for these latter marks, they claim ownership over them as unregistered marks.

Nissan also has registered trade-marks using the letter ‘M’ and various numbers. They hold registrations for the marks ‘M45’ and ‘M35’, which are used with two series of vehicles in Nissan’s luxury line, Infiniti.

In January of 2005, Nissan began an advertising campaign containing the phrase ‘the M is coming’, which ultimately culminated in the addition of a ‘M6’ Sport Package option in their vehicle lineup. BMW felt that by doing this, Nissan was trying to capitalize on the investment that BMW has built up in the ‘M’ brand, so on Aug. 12, 2005, BMW commenced an action against Nissan.

Background

The original action claimed statutory passing off, infringement and depreciation of goodwill as per ss. 7(b), 20, and 22 respectively in the Trade-marks Act, R.S.C. 1985, c. T-13 (“Act”). For the infringement claim of registered trade-marks under s. 20, the trial judge found that the claim was not made out because there was no likelihood of confusion as to the sources of the wares among prospective purchasers. The trial judge also dismissed BMW’s depreciation of goodwill claim under s. 22 due to a lack of evidence that Nissan’s use is likely to depreciate the value of BMW’s goodwill in its registered trade-marks.

Nevertheless, BMW did succeed on the passing off claim in that the trial judge decided that Nissan did violate s. 7(b) with regards to the unregistered marks ‘M’ and ‘M6’.

Federal Court of Appeal

In a judgment dated July 12, 2007, the Federal Court of Appeal reversed the lower court’s ruling. They found that BMW’s use of the marks ‘M’ and ‘M6’ were insufficient to give them unregistered ownership over the marks, and that even if they were unregistered owners, one of the 3 elements of the passing off claim (damages) was not made out

With respect to use, at para. 25, Richard C.J. writes,

BMW’s use of the M mark was limited to advertisements and promotional type materials. Such use of a mark is not in itself sufficient to constitute ‘use’ under subsection 4(1) of the Act. For the use of a mark in advertisement and promotional material to be sufficiently associated with a ware to constitute use, the advertisements and promotional material would have to be given at the time of transfer of the property in or possession of the wares

The Federal Court of Appeal came to this conclusion despite the seemingly broad wording in latter part s. 4(1) of the Act, [italicized below]

4. (1) A trade-mark is deemed to be used in association with wares if, at the time of the transfer of the property in or possession of the wares, in the normal course of trade, it is marked on the wares themselves or on the packages in which they are distributed or it is in any other manner so associated with the wares that notice of the association is then given to the person to whom the property or possession is transferred.

Comment

This narrow construction of what constitutes ‘use’ effectively shuts out protection of unregistered trade-marks which are used in advertising, but aren’t affixed to the wares themselves, and for which the advertising is not transferred along with the wares. As this may include various slogans or catchphrases, many business owners will likely now obtain registration for a broader array of marks. This is because registered marks are prima facie evidence of ownership. Without such prima facie evidence, owners will need try to squeeze their unregistered marks into the above narrow definition of use as a precursor to trying to enforce their trade-mark rights.

It will be left to be seen whether the SCC will grant leave to appeal in this case to re-broaden the protection available to unregistered trade-marks. If they do not, this case will be the last word on this matter, and protection for unregistered marks under statutory passing off may be even more difficult to obtain than it was already.