SCC decision highlights the importance of obtaining a trademark registration to guard against claims of infringement and passing off

The Supreme Court of Canada has now put an end to a dispute between Wenger SA, Group III International Ltd and Holiday Group Inc (collectively, “Wenger”) and Travelway Group International Inc (“Travelway”) dating back to 2013.

Both Wenger, the Swiss company behind the “Swiss Army Knife”, and Travelway, a Canadian luggage distributor, owned Canadian trademark registrations for logos featuring a cross reminiscent of the Swiss flag, which they both used in association with luggage and bags.

At first instance, Wenger’s application alleging trademark infringement and passing off, and seeking expungement of Travelway’s registered trademarks, was dismissed by the Federal Court (2016 FC 347). As detailed in a previous IP Update, the Federal Court of Appeal subsequently allowed Wenger’s appeal, finding both infringement and passing off, and remanding the issues of expungement and damages to the Federal Court for further adjudication (2017 FCA 215). In 2019, the Federal Court granted a judgment expunging Travelway’s trademarks, but dismissing Wenger’s claim for damages (2019 FC 1104).

Wenger appealed, and the sole issue before the Federal Court of Appeal was whether Wenger was entitled to monetary compensation for Travelway’s pre-expungement use of its registered yet infringing trademarks (2020 FCA 210). The Court of Appeal held that Travelway was not liable for damages for infringement for the period in which its own trademark registrations were in effect. Absent fraud, wilful misrepresentation or bad faith, a registered trademark is presumed to be valid, and the owner thereof has the rights to its exclusive use in Canada and cannot be liable for use that falls within the scope of such rights.

The Federal Court of Appeal also confirmed that the same is true in relation to passing off; that is, registration is a complete defence to an action for passing off. However, as between the parties, the Court of Appeal had found that monetary compensation should be awarded for passing off since Travelway had not appealed the Court’s 2017 decision. The Court of Appeal gave effect to that earlier ruling and granted Wenger an accounting of profits. Notably, however, the Court of Appeal explicitly overruled its earlier judgment, holding that Travelway should not have been found liable for passing off and warning that the “2017 decision finding passing off should not be followed as authority in future cases”.

Last week, on September 29, 2021, the Supreme Court of Canada dismissed Travelway’s application for leave to appeal without reasons and with costs (docket No. 39576), thereby crystalizing the Federal Court of Appeal’s most recent decision.

This series of decisions in Group III International v Travelway Group International Ltd demonstrates the advantages of obtaining a trademark registration and serves as a reminder that, though trademarks are often perceived as swords, they may also be used as shields: a trademark registration is a complete defence against claims for infringement and passing off.