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Trademarks - Control [TA 50(1)]. Dragona Carpet Supplies Mississauga Inc. v. Dragona Carpet Supplies Ltd.
In Dragona Carpet Supplies Mississauga Inc. v. Dragona Carpet Supplies Ltd. (Fed CA, 2023) the Federal Court of Appeal considered (and dismissed) an appeal from a denied claim that sought: "a declaration that the respondents had passed off its trademark, contrary to both the common law and subsection 7(b) of the Trademarks Act, R.S.C., 1985, c. T-13 (Act), an injunction and damages".
In these quotes the court considered s.50(1) ['Licence to use trademark'] of the Trademarks Act:Control under subsection 50(1)
[32] I turn to the question of the requisite degree of control required by subsection 50(1), which is set out in full in Annex A at the end of these reasons.
[33] Subsection 50(1) requires not only a licence to use a mark (which could more fairly be equated with an acknowledgement of ownership), but also a demonstration of direct or indirect control over the character of the quality of goods or services associated with the mark. An acknowledgement of ownership is highly relevant to the issue of control. An acknowledgement may constitute evidence of an intention to abide by established standards associated with a mark; indeed, subsection 50(2) of the Act creates a rebuttable presumption of control upon giving public notice of ownership of a mark. That said, ownership is not dispositive of control. An acknowledgement of ownership is simply an acknowledgement of another’s legal rights, not an acknowledgement that one will conform to those rights.
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[39] Apart from this incident, it was open to the judge, on the basis of the evidence, to conclude that there was adequate control. Dragona Scarborough did not need to control every aspect of the appellant’s business operations in order to diligently monitor and control its use of the DRAGONA trademark, and it would have stepped in had it taken issue with how the appellant was using the mark (Respondents’ Memorandum of Fact and Law at paras. 75-76). In other circumstances lack of control in day-to-day business operations or lack of inspection rights are not fatal to a finding of control under subsection 50(1) (Corey Bessner Consulting Inc. v. Core Consultants Realty Inc., 2020 FC 224, 171 C.P.R. (4th) 355). But here there was some evidence, and importantly, a credible explanation as to why there was not more. Control is a heavily fact dependent determination and I see no reversible error in the trial judge’s decision.
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