Infringing via the Unspoken: Marlboro Appeal Increases Scope of Confusion for Trade-marks Infringement

In an eagerly anticipated decision, the Federal Court of Appeal has allowed in part Imperial Tobacco’s unique infringement lawsuit against Philip Morris in the Marlboro Canada Ltd. v. Philip Morris Products S.A. decision. This  lawsuit involved the first cigarette package in the world that bore no brand name, with the plaintiff claiming instead that the visual appearance and idea of the package evoked its registered trade-mark MARLBORO. This theory has now won out on appeal, and may increase the ability of registered trade-mark owners to target competitors evoking the idea of their brands without actually employing the key marks.

Background

The litigants in this case have been engaged in battle for many decades. The plaintiffs, Marlboro Canada Ltd. and Imperial Tobacco Ltd., have rights in the trade-mark MARLBORO in Canada dating to the 1920s. Their brand is not affiliated with the worldwide famous brand marketed by Philip Morris in the United States and many other countries. An image of the brand is shown here:

This has created an anomaly in an international marketplace where the fame of certain marks crosses borders easily. In an earlier battle between the parties, the Federal Court of Appeal held the distinctiveness of a mark registered in Canada could not be affected by the spill-over advertising of a party who does not use the mark in Canada. Thus, the attempt to expunge the lesser-known Canadian brand failed.

This led to a situation whereby Philip Morris was barred from entering the Canadian market with its most valuable brand. It created the Canada-only brands MATADOR and MAVERICK to evoke something of its traditional image, and used these brands with its iconic “Rooftop” packaging:

However, in 2006, Philip Morris took the unprecedented step of launching a product without a brand name. Rather, the wordless “Rooftop” design bore all the weight of communicating the brand image:

This development led the parties to clash again. Imperial Tobacco sued for infringement on the theory that the wordless design infringed its MARLBORO mark because it conveyed the idea of “MARLBORO”, and Philip Morris attacked the validity of the MARLBORO mark on the basis that it was no longer distinctive to the Canadian public. It also sued on the basis that Imperial Tobacco’s packaging infringed copyrights in Philip Morris’s U.S. Marlboro packages.

Decision Below

The decision below was dazzlingly complex and very important. The discussion below captures only a small part of this fascinating case.

In the result, neither Imperial Tobacco nor Philip Morris were successful as plaintiffs. While the evidence before Justice de Montigny was that a large proportion (nearly 4 in 10) of retailers, when asked for “Marlboro”, handed Rooftop cigarettes to their customers, or pointed to them, this did not result in a finding of trade-mark infringement against Philip Morris nor non-distinctiveness against Imperial Tobacco. Justice de Montigny cited four main reasons for these conclusions:

  1. The word “Marlboro” was never used on the packaging
  2. Although in a broad sense, the “Rooftop” package conveyed the idea of “Marlboro” to many Canadian consumers, the link between the design and the word was not inherent in the way a penguin icon would convey the word “penguin” to the mind
  3. If foreign spill-over advertising could not rob a Canadian brand of its distinctiveness, likewise it could not aid that Canadian brand in claiming that such spill-over created an infringing linkage in the minds of Canadians. This factor should be disregarded as irrelevant because the focus should be on the Canadian market alone
  4. Justice de Montigny found that the Rooftop design actually aided consumers in finding the correct source of the brand they wanted, thus reducing source confusion rather than accentuating it

Justice de Montigny also dismissed Philip Morris’s copyright claim on the basis that there was insufficient similarity between Imperial Tobacco’s packaging and Philip Morris’s packaging. While there were certain overlapping characteristics, including the colours used and the animals depicted, the packages could not be called a colourable imitations of Phillip Morris’s copyright. Additionally, he found on the evidence that there was no showing that the in-house designers at Imperial Tobacco had actually attempted to copy the Philip Morris package or any element of it.

Decision on Appeal

On appeal, the Federal Court of Appeal considered the appeals of both Imperial Tobacco and Philip Morris from the judgment below.

It dealt with Philip Morris’s appeal in short order, noting that its attack on the validity of Imperial Tobacco’s registration closely resembled the attack made in the 1980s. It considered that doctrines of res judicata, issue estoppel, cause of action estoppel and the rule against collateral attack were intended to guarantee parties finality absent the demonstration of special circumstances warranting the reopening of an issue. It upheld the trial judge’s view that this case was not substantially different from the one finally decided by the Federal Court of Appeal in 1987, and noted the trial judge’s finding that the legal policy and rationale adopted in the earlier Marlboro case were still relevant today. It also found that the trial judge’s findings on copyright infringement were unassailable.

Imperial Tobacco fared much better in the Federal Court of Appeal’s eyes. The heart of its case was that Justice de Montigny had erred by taking into account irrelevant factors in concluding that there would be no confusion in idea between the Rooftop design and the word mark MARLBORO. The Federal Court of Appeal accepted this argument, finding that Justice de Montigny had paid too much heed to past distinguishing factors (such as the blend of tobacco used) that did not answer the question of whether the Rooftop design could be used or marketed in a confusing manner in future.

But most importantly, the Federal Court of Appeal rejected Justice de Montigny’s finding that only “inherent” ideas could give rise to trade-mark confusion in the meaning of the Trade-marks Act. It reached back to the 1968 decision of the Supreme Court in Rowntree Company Limited v. Paulin Chambers Company Limited, which found that resemblance in ideas were not restricted to a resemblance between the dictionary meanings of different words. Extending this decision, the Federal Court of Appeal found that “other suggestions acquired through marketing or use in a particular way” could lead to an infringement. Here, the omission of the brand name on the Rooftop package led consumers to fill in the blanks. When they did, cues on the package such as “world famous imported blend” evoked the idea of Marlboro. Absent a contrasting brand name like MATADOR or MAVERICK, “Marlboro” naturally filled in the space. Thus, the actual front and sides of the Rooftop package did infringe Imperial Tobacco’s rights.

In the last phase of the appeal, the Federal Court of Appeal considered whether the trade-mark registrations of Philip Morris for its Rooftop Designs provided defences to infringement. It found that they did not because the designs did not contain the confusing cues carried in the actual packaging. In their simple design, they did not create confusion in the meaning of the Act. Thus, although the elements in the registrations were similar to the actual label, the extra elements added to the package brought it to the level of infringement.

Potential Implications

Although this case is in many respects anomalous in its facts, the legal issues it deals with have a tremendous impact on Canadian trade-marks law. It opens the door to creative argumentation of counsel on what ideas could give rise to confusion between different trade-marks. It thins out the ability of a registered trade-mark owner to treat a registration as an absolute defence to infringement. With very motivated litigants and powerful issues, it would not be surprising to see this case appealed to the Supreme Court. Given the number of issues raised that have an impact on all aspects of the trade-mark setting, if leave is granted, there will be many interested onlookers in this case.

Case Information

Marlboro Canada Ltd. v. Philip Morris Products S.A., 2012 FCA 201

Decision Date:  June 29 2012

appeal brand name cause of action estoppel claim copyright distinctiveness Federal Court of Appeal infringement issue estoppel packaging registration res judicata rights spill-over advertising trade-mark trade-mark infringement Trade-marks Act validity

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