Beer is a quintessential part of the Canadian identity. Back in the 1980s, the touque-wearing brothers, Bob and Doug McKenzie, kicked back brewskies while discussing issues of Canadian interest on “Great White North” (a clip is available here). And in the early 2000’s Joe patriotically extolled the virtues of Canada—and its beer—in his “I am Canadian” rant for Molson Canadian (the rant is available here).  Canadians can be quite particular about which beers they will drink, and which they won’t touch with a ten-foot hockey stick. In short, they are very well informed consumers. That is why Justice Michael L. Phelan of the Federal Court of Canada held that relevant consumers were unlikely to be confused as to the origin of two beer brands: Red Horse and Black Horse.

On February 14^th, 2013, Justice Phelan issued his ruling in San Miguel Brewing Int’l Ltd. v. Molson Canada, 2013 FC 156 (full text of decision available here). The case involved two brewing companies battling over whether a newcomer to the market could gain national trademark protection for their brand of beer.

RED HORSE was the newcomer (the “junior” mark) in this race between horses. It sought to overturn an opposition proceeding that blocked the registration of its mark at the Canadian Intellectual Property Office’s (CIPO) Trade-marks Opposition Board level (note – the role of the CIPO Trademark Opposition Board in granting or refusing trademark registration is nearly identical to that of the United States Patent and Trademark Office).  The RED HORSE brand is owned by a Philippines Corporation—San Miguel Brewing International, Ltd.—who filed an application with CIPO in 2005to protect the name RED HORSE MALT LIQUOR & Horse Head Design in association with beer, ale, pilsner, stout, bock, and malt beverages. Alternatively, the BLACK HORSE trademark is owned by beer conglomerate MolsonCoors’s Canadian Branch (Molson Canada) who has held that mark since it was granted by Newfoundland trade-mark officers in 1922. The primary market for BLACK HORSE ale is the Canadian Province of Newfoundland & Labrador, on the Atlantic Cost. RED HORSE brand ale has thus far only been sold in British Colombia and Alberta, on the Pacific coast and western side of Canada.

At the opposition level, the Trade-marks Opposition Board examined the word marks for a likelihood of confusion under sections 6 and 12 of the Trademarks Act, RSC 1985, c. T-13 (it was requested to ignore the design marks). Section 12(1)(d) provides that any mark that is “confusing with a registered trade-mark” is not registerable. A mark is “confusing” when its use in the same area as another mark would be “likely to lead [a consumer] to the inference that the wares or services associated with [both marks] are manufactured [or] sold … by the same person.” Section 6(5) sets out the elements of confusion: (a) inherent distinctiveness and the extent to which the marks have become known; (b) length of time of use; (c) nature of the wares, services, or business of each mark; (d) nature of the trade; and (e) degree of resemblance between the marks in appearance, sound, or in the ideas suggested by them.

The Board examined all five elements, emphasizing the “degree of resemblance” between the marks. It focused in on both brands’ use of the word HORSE and concluded that RED HORSE was confusing because both marks are dominated by the word HORSE, since other companies use the word RED in association with beer, and since the design features of each mark do not outweigh the significance of the words. Furthermore, because BLACK HORSE has been in use since 1922—as opposed to RED HORSE’s 2005 date—, because distinctiveness between the marks is only created by the design, because the channels of trade—liquor stores—is identical, because selling the wares at opposite sides of the country was immaterial to the inquiry, and because BLACK HORSE is well known in Newfoundland, the senior (older) mark—BLACK HORSE—could block registration of the junior (younger) mark.

Justice Phelan overturned the Board’s judgment on appeal to the Federal Court of Canada. The Justice berated the Board for only examining a segment of the mark (the words), since Supreme Court of Canada jurisprudence requires courts to look at “the mark as a whole” rather than discreet portions of the mark. Moreover, he found that the Board failed to consider the proper consumer—the starting point for any trademark confusion analysis. Specifically, courts are supposed to consider whether confusion would occur in the mind of an “ordinary harried purchaser,” whom the court owes a “certain amount of credit for their intelligence and knowledge.”

In this case, the Justice determined the relevant consumer was an “ordinary beer consumer.” In understanding the mind-frame of such a consumer, the judge observed that “the ordinary beer drinker is sensitive to the names of beers and to what they know and like,” and would thus be more sensitive to differences in names, brands, products, labels, etc. Importantly, the relevant group of consumers did not include a “non-beer drinking life partner who is asked to pick up the beer,” even though such a person could conceivably be asked to distinguish between beer brands and labels before making a purchase.

In determining whether the ordinary beer consumer would likely be confused when encountering RED HORSE and BLACK HORSE, Justice Phelan immediately observed that the different labels on the two beverages “is sufficient to dispel any notion of confusion,” since RED HORSE brand features a red horseshoe and profile of a horse’s head, while BLACK HORSE features the silhouette of an entire equine. Nevertheless, since both parties disclaimed the arguments involved the design marks, the judge went on to consider whether the word mark, on its own, was confusing.

The Justice held it was not. He focused on the fact that BLACK HORSE beer is sold alongside brands called DARK HORSE and CHEVAL BLANC (“Cheval” is French for “Horse”), owned by other companies, without evidence of confusion. He further found that Molson—who instigated the proceedings—failed to bring any evidence showing actual confusion in the marketplace between their brand and San Miguel’s. Last, he placed especially strong emphasis on policy: by focusing on the word HORSE, the Board’s decision effectively gave Molson a monopoly over the use of that word joined with any color when used in association with beer. Should he let the Board’s decision stand, Justice Phelan would have endorsed such an unreasonable monopoly.

And it would have been. Canadians—like many other peoples—can be quite particular about their beer. Like other brands, they are acutely aware of which tastes they like and which tastes they want to avoid, like a three-week old poutine. Justice Phelan’s decision rightly focused on the relevant consumer and properly considered the wider implication of allowing one company to claim an effective monopoly over a word in a particular national market.

As Justice Phelan rightly observed: “this is a case about beer and a case of beer is a serious matter.”

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