Executive Summary: Key Legal and Evidentiary Issues

• Whether the recent acquisition of a trademark qualifies as “special circumstances” excusing non-use under subsection 45(3) of the Trademarks Act.

• Validity and scope of the "New Owner Jurisprudence" in section 45 proceedings concerning trademark expungement.

• Legal significance of a purchase and sale agreement signed before, but closing after, a section 45 notice.

• Determination of the relevant period for assessing non-use and special circumstances.

• Admissibility and weight of new evidence introduced on appeal to the Federal Court.

• Whether a trademark should be expunged despite evidence of intent and preparation for future use.

Facts and outcome of the case

Background and procedural history

Centric Brands Holding LLC appealed a decision from the Federal Court that had upheld the expungement of its trademark, AVIREX, under section 45 of the Trademarks Act. The case originated when Stikeman Elliott LLP requested the Registrar of Trademarks to issue a section 45 notice regarding Centric's mark, challenging its use. The Registrar determined that there was insufficient evidence of use during the relevant three-year period and found no special circumstances to excuse the non-use, leading to expungement.

Centric appealed to the Federal Court, submitting new evidence concerning its acquisition of the mark and intentions to resume use. The Federal Court rejected the appeal, holding that since the acquisition of the mark closed after the section 45 notice was issued, Centric could not rely on the “new owner” jurisprudence. The Federal Court concluded that special circumstances did not exist during the relevant period and affirmed the expungement.

Issues on appeal to the Federal Court of Appeal

Centric brought a further appeal to the Federal Court of Appeal, challenging the Federal Court’s narrow interpretation of the New Owner Jurisprudence. The main legal question was whether a binding agreement to purchase a trademark, signed before a section 45 notice but closing afterward, could trigger the protections of that jurisprudence and constitute a special circumstance.

The appeal also raised questions about whether Centric had access to documents needed to justify the mark's use during the relevant period and whether its acquisition strategy and business structure impacted the outcome.

The court’s analysis

The court held that the Federal Court erred in law by applying a strict interpretation of the New Owner Jurisprudence. It found that the jurisprudence should not be limited only to cases where ownership closed before the section 45 notice. The court emphasized the summary and administrative nature of section 45 proceedings and the need to avoid overly technical outcomes.

It reasoned that the agreement signed in June 2018—prior to the October 2018 section 45 notice—should be treated as a sufficient basis to apply the new owner principle, especially given that the transaction was in good faith, and that the purchaser had limited access to the prior owner’s records. The court noted that Centric's inability to use the mark prior to closing explained the absence of use, and the short window of 3.5 months between agreement and notice supported the existence of special circumstances.

Outcome and remedies

The court allowed the appeal. It set aside both the Federal Court’s judgment and the original decision of the Registrar. The expungement of the AVIREX trademark was reversed, effectively restoring the registration in Centric’s name.

Centric was awarded its legal costs in both the Federal Court and the Federal Court of Appeal. No damages were awarded, as the case dealt solely with trademark registration status and not any monetary claims.