Little Brown Box Pizza, LLC v. DJB (Little Brown Box)1 was a recent appeal of a decision made by the Canadian Registrar of Trademarks (the Registrar) pursuant to Section 56 of Canada’s Trademarks Act [Appeal]. In the underlying decision, the Registrar expunged the registration of the trademark PIEOLOGY, registration number TMA929431.2
PIEOLOGY is owned by Little Brown Pizza Box, LLC (the Trademark Owner) and was registered in association with the following services:
- Pizza parlors; Restaurant services; Restaurant services featuring pizza, salads, side dishes and desserts; Restaurant services, including sit-down service of food and take-out restaurant services; Restaurant services, namely, providing of food and beverages for consumption on and off the premises.
- Restaurant services; restaurant services, namely, providing of food and beverages for consumption on and off the premises.
Pursuant to Section 45 of the Trademarks Act [Registrar may request evidence of use], at the respondent’s request, the Registrar issued a notice that required the Trademark Owner to establish that it had used the trademark PIEOLOGY in Canada with each of its registered services in the three-year period preceding the notice (the Applicable Period) or in the alternative, to establish that there were special circumstances that would excuse non-use.
Per its evidence, the Trademark Owner began its business in 2011 as a single-location pizza restaurant in California and grew to an international chain serving the Trademark Owner’s “famous build-your-own pizzas alongside salads, side dishes and desserts in sit-down dining environments and through take-out services.”3
The Trademark Owner asserted that although it was not operating PIEOLOGY-branded restaurants in Canada during the Applicable Period, it had established that it had advertised ancillary restaurant services in association with the PIEOLOGY trademark in Canada and to Canadians and that it was willing and able to perform those ancillary restaurant services in Canada during the Applicable Period.4 More specifically, the Trademark Owner understood that it had used the PIEOLOGY trademark in association with ancillary restaurant services in Canada during the Applicable Period in two ways: (1) by advertising its ancillary restaurant services to restaurant franchisees using a brochure that had been distributed to potential Canadian franchisees and via an online portal for receiving franchise applications; and (2) by providing ancillary restaurant services to consumers via the PIEOLOGY website and a downloadable PIEOLOGY mobile application.5
The Court considered whether: (1) the Trademark Owner used PIEOLOGY in association with restaurant services during the Applicable Period; and (2) the Trademark Owner demonstrated special circumstances excusing non-use with any of the remaining registered services.
Use in association with restaurant services
The Court affirmed that the use of a trademark with a primary service may be supported through incidental and ancillary services. It set out that “services” should be liberally construed and that restaurant services do not necessarily require the operation of a restaurant in Canada, but that each case is context-specific. However, the Court found that mere advertising of services in Canada does not constitute use in association with services and that use in association with services requires that the services must be effectively offered to Canadians or performed in Canada.6
The Court noted that the Trademark Owner’s franchise brochure listed things like “leadership training, safety audits, and operations manuals and videos” and accordingly found that restaurant services did not capture “operational support” when considered from the public and owner’s perspective. The Court emphasized that the Trademark Owner’s evidence did not explain why services that would enable franchisees to operate restaurant locations would be captured within the ordinary commercial understanding of the registered term “restaurant services”.7
The Court accordingly found that the Trademark Owner had not established that it was willing and able to perform the services described in the brochure during the Applicable Period because it did not offer the listed services to members of the Canadian public generally or to potential franchisees who expressed interest in opening a PIEOLOGY restaurant location.8 Although the Trademark Owner sought franchisees to open a PIEOLOGY restaurant location in Canada during the Applicable Period, the Court found that there were no Canadian franchisees during the Applicable Period and no members of the Canadian public were in a position to receive a material benefit from the support services described in the franchise brochure.9
The Court further determined that there was no chain of distribution during the Applicable Period for the services in question as they would only be offered and provided to franchisees while their franchise agreements were in place, and no franchise agreements were in place.10
Similarly, the Court noted that the portal accessible via the PIEOLOGY website during the Applicable Period did not advertise ancillary restaurant services that were available to be performed in Canada. More specifically, the Court noted that the online portal simply provided an avenue to submit a franchise inquiry form and permitted the downloading of a brochure. An associated webpage displayed the PIEOLOGY trademark and described benefits of a PIEOLOGY franchise, such as “support”. The Court accordingly found that a downloadable brochure which described operational support for franchisees, did not constitute use of the PIEOLOGY trademark in association with ancillary restaurant services in accordance with Section 4(2) of the Trademarks Act [When deemed to be used].11
However, the Court noted that both the PIEOLOGY website and application permitted consumers to look up restaurant locations (in the US), review the relevant menu, pre-plan customized pizzas, save favourite pizzas for future ordering and receive news about product offerings.12 This level of interactivity with consumers located in Canada was sufficient to show that a benefit was received even though no product could be ordered from the website.13 Furthermore, the Court noted that the Trademark Owner had taken steps to expand PIEOLOGY restaurants into Canada and to build the PIEOLOGY brand through social media.14
The Court accordingly found that the Trademark Owner had established that it had used the PIEOLOGY trademark in association with restaurant services in Canada during the Applicable Period.
Special circumstances excusing non-use of the remaining registered services
The Court then considered whether there was any special circumstance which excused the non-use of the PIEOLOGY trademark in association with the following registered services:
- Pizza parlors; Restaurant services featuring pizza, salads, side dishes and desserts; Restaurant services, including sit-down service of food and take-out restaurant services; Restaurant services, namely, providing of food and beverages for consumption on and off the premises.
- Restaurant services, namely, providing of food and beverages for consumption on and off the premises;
The Remaining Services
The Court explicitly took into consideration the length of non-use, whether the reasons for non-use were beyond the Trademark Owner’s control and whether the Trademark Owner had a serious intention to resume use shortly.15 The Trademark Owner’s circumstances were distinguished from a prior decision of the Registrar, where it was determined that the recent acquisition of a trademark in conjunction with the steps required to recruit and sign a new franchisee to bring the trademark back into use in Canada were excusable special circumstances.16
More specifically, in Little Brown Box, the Court determined that the following did not amount to excusable special circumstances: (1) the Trademark Owner’s need to find local suppliers; (2) the Trademark Owner’s preference for contracting with larger franchisees who can operate multiple locations being a hurdle to opening locations outside of its home jurisdiction; (3) the COVID-19 pandemic (which only accounted for five months of the three-year Applicable Period).17
The Court noted that: (1) the seven-year period of non-use by the Trademark Owner was significant; (2) Trademark Owner had a stated intention to open a franchise in Canada as soon as possible but there was no evidence that use would commence shortly; and (3) Trademark Owner did not provide any evidence that it was in negotiations for a Canadian franchise or had even identified a promising franchisee candidate.18
The Court granted the appeal, which maintained the PIEOLOGY registration with respect to restaurant services, but maintained the expungement with respect to the Remaining Services.19
Takeaways for franchisors
- The robust protections afforded to an owner of a registered trademark in Canada impose a corresponding burden on the trademark owner to actually use the trademark in relation to the goods and services associated with the registered trademark.
- Use in association with services requires that the services be effectively offered to Canadians or performed in Canada. Mere advertising of services in Canada will not constitute use in association with services.
- Services are liberally construed. For example, restaurant services do not necessarily require the operation of a restaurant in Canada ? each case is decided on its own facts. However, advertising a support service (e.g. operational support), when there are no Canadian franchisees and the support services do not provide a material benefit to any members of the Canadian public, will not amount to use in association with restaurant services.
- A level of interactivity between a trademark owner’s website or mobile application and consumers located in Canada may be sufficient to show that a benefit was received by Canadians, even when the actual offering is not located or otherwise available in Canada, if the owner is taking steps to expand its offering into Canada and building its brand through social media.
- Being highly selective with respect to sourcing supplies, equipment and franchisees may work to a trademark owner’s detriment when considering non-use of a trademark and whether an excusable special circumstance exists with respect to the non-use.
If you have any questions about franchising (as a franchisor or franchisee) or trademarks, please reach out to the authors, Jaclin Cassios or Harsh Sisodia or any member of Dentons’ Corporate or Intellectual Property groups.
