Nothing “palpable” in Pentastar dispute: trademark case confirms rules for statutory appeals
The Federal Court recently upheld the decision of the Registrar of Trademarks in a dispute over the registration and use of the PENTASTAR word mark in Canada, in Pentastar Transport Ltd. v. FCA US LLC, 2020 FC 367. In doing so, the Federal Court applied – in the intellectual property context – the new rules on standard of review set out by the Supreme Court of Canada in Canada (Minister of Citizenship & Immigration) v Vavilov, 2019 SCC 65 (“Vavilov”).
Trademark context and opposition
In 2005, Pentastar Transport (PT) registered PENTASTAR as a trademark for services in the oil and gas industry.
In 2009, FCA (formerly Chrysler Group) applied to register PENTASTAR as a trademark for proposed use in Canada with engines in passenger motor vehicles.
In 2012, PT commenced a trademark opposition proceeding under the former Trademarks Act, R.S.C. 1985, c. T-13 (i.e. before significant changes were made to the legislation in June 2019).
Specifically, PT opposed FCA’s trademark application on a fairly technical basis, namely, that FCA did not “intend to use” the PENTASTAR trademark in Canada in association with passenger motor vehicles. PT did not allege any confusion between the companies’ trademarks in the two different fields (i.e. oil and gas versus on the one hand, and car manufacturing on the other).
The opposition proceeding was ultimately decided in favour of FCA (as applicant). The Registrar found that PT (as opponent) had not met its initial evidentiary burden to support the grounds of opposition. Alternatively, the Registrar found that FCA (as applicant) had met its corresponding legal burden to show that it intended to use the PENTASTAR trademark. On the basis of this two-part inquiry, the opposition to the PENTASTAR trademark was dismissed.
Statutory appeal and standard of review
PT appealed the decision of the Registrar to the Federal Court under section 56 of the Trademarks Act (which grants a statutory right of appeal).
In the Pentastar case, the Federal Court reviewed the principles of appellate review as follows.
In Vavilov, the Supreme Court of Canada established that reasonableness is the presumptive standard of review for administrative decisions. However, this presumption is rebutted when the enabling statute – such as the Trademarks Act – provides for a statutory right of appeal. There, the appellate standard of review applies. This means that for questions of fact, inferences of fact, and questions of mixed fact and law raised in a statutory appeal, the standard of review is “palpable and overriding error.”
Applying this standard, and relying on Mahjoub v Canada (Citizenship and Immigration), 2017 FCA 157, the Federal Court noted that “palpable error” means:
- Adopting a “highly deferential” standard of review;
- Finding an error that is “obvious”;
- Finding an error that is “overriding”;
- Not “reweighing the evidence” and simply contemplating a different result;
- Not merely “pulling at the leaves and branches of a tree” and leaving the “tree standing”.
No palpable error by the Registrar
The Federal Court found that there was no palpable or overriding error in the Registrar’s decision and as such, dismissed the appeal by PT.
In reaching this conclusion, the Court reviewed at length the reasons and analysis of the Registrar, especially in the weighing of affidavit evidence and cross-examination testimony (i.e. the usual format for evidence to be tendered and tested in an opposition proceeding). The Court also refused to revisit findings of fact made by the Registrar in the opposition proceeding, including inferences to be drawn from promotional materials about intended use of the trademark. The Court found that there was no overriding error by the Registrar in any of the factual or mixed factual/legal assessments, in particular with regard to “proposed use” versus “actual use” of the subject trademark. In the end, the trademark “tree” of analysis was standing and FCA prevailed.
The takeaway
The standard of review for statutory appeals, post-Vavilov, is now confirmed in the intellectual property context. This means that for questions of fact or questions of mixed fact and law, a high level of deference will be given to decisions of the Registrar, for which there is a right of appeal under the Trademarks Act. Parties should therefore pay close attention to evidentiary matters in opposition proceedings, including the form, content, and purpose of any evidence which may (or may not) be scrutinized on appeal.
This article is provided for general information only. If you have any questions about the above, please contact a member of our Intellectual Property group.
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