Federal Trade Marks and Provincially Protected Terms

A common method of regulation is to restrict the use of a term or designation to those who have met certain requirements. There has been some uncertainty as to whether federal trade mark rules could be used to circumvent provincial restrictions on the use of terms and designation. The case of Royal Demaria Wines Co. Ltd. v Lieutenant Governor in Council, 2018 ONSC 7525, http://canlii.ca/t/hwn9n goes a long way to dispelling those concerns.

In that case the winery could not obtain approval for its wines, particularly its icewine, because it did not pass the taste test requirements of the provincial regulator. Under the provincial legislation, the term “icewine” was restricted to wines approved by the regulator. The winery obtained a federal trademark as “Canada’s Icewine Specialist” and sought a declaration that it could use that term to describe its products. The Court noted that the principle that federal law is paramount over inconsistent provincial law should be applied with restraint in the spirit of cooperative federalism. The fact that a federal law addressed a topic does not imply that a valid provincial law is excluded from the field. Obtaining a trade mark does not imply a right to use the term or designation when its use was prohibited by provincial law. The Court said:

Both the Act and the Trade-Marks Act have consumer protection purposes that are consistent and compatible with each other. The Act furthers the consumer protection purpose of the Trade-Marks Act by ensuring that when wine manufacturers use certain terms that are also subject to provincial regulation, they are meeting quality standards. This complements, rather than frustrates, the purpose of the federal legislation.

The laws were not inconsistent in the sense that the winery could comply with both of them at the same time.

The case also contains an interesting discussion of the validity of taste tests as a regulatory tool authorized by the enabling statute. The Court also upheld the termination of the winery’s membership with the regulator if it had no wine approved within an 18-month period.

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