March 2, 2020
By Jonathan Colombo and Suzie Suliman
The Energizer companies (“Energizer”) manufacture and sell batteries in association with various trademarks that include the word ENERGIZER, and design marks that show a rabbit and/or bunny but do not include those words (collectively, the “Energizer Trademarks”). Energizer also owns a registration for the image of a bunny, as shown below:
The Gillette and Duracell companies (collectively “Duracell”) are competitors, who manufacture and sell DURACELL branded batteries.
The “Bunny Brand” battle began when Duracell placed stickers on the packaging for its AA and hearing aid batteries in Canada that claimed (in French and English) that Duracell’s batteries were up to 15% or up to 20% longer lasting than “the next leading competitive brand” and “the bunny brand”.
Energizer sued Duracell in the Federal Court of Canada, arguing that Duracell’s stickers and displays used Energizer’s Trademarks in a manner that was likely to depreciate the value of the goodwill attaching to the trademarks contrary to section 22(1) of the Trademarks Act (the “Act”). Section 22(1) is the Canadian equivalent to a U.S. claim for dilution.
In addition, Energizer argued that the Duracell stickers and displays made false statements tending to discredit Energizer’s batteries (contrary to paragraph 7(a) of the Act) and that were false in a material respect that would likely mislead the public as to the character, quality or performance of the goods (contrary to paragraph 7(d) of the Act). Other claims under the Competition Act were advanced.
After the case was set down for trial, Duracell moved for summary judgment dismissing Energizer’s claims related to Duracell’s use of (i) “the bunny brand” and (ii) “the next leading competitive brand”, and their French equivalents.
Federal Court Summary Judgment Decision
Before the Federal Court, Duracell argued that section 22(1) only applied to use of a registered trademark or a minor misspelling of a registered trademark – not to a different trademark. Duracell also argued that paragraphs 7(a) and (d) of the Act only apply to trademarks owned by the plaintiff – and neither “the bunny brand” nor “the next leading competitive brand” are trademarks owned by the plaintiff.
In reply, Energizer argued that Duracell’s interpretation was too narrow and the Federal Court agreed, holding as follows:
49. In summary and as explained below, on the interpretation of the subsection 22(1) issue, I agree with Energizer. In my view, the interpretation of subsection 22(1) advanced by Duracell is too narrow and does not respect the law determined by the Supreme Court of Canada in Veuve Clicquot Ponsardin v Boutiques Cliquot Ltée, 2006 SCC 23 [Veuve Clicquot]. While Duracell’s position might have been correct prior to Veuve Clicquot, that is no longer the case. In my respectful view, Veuve Clicquot materially changed the law on the interpretation of subsection 22(1). The change in the law was recently confirmed by the Federal Court of Appeal: Venngo Inc v Concierge Connection Inc, 2017 FCA 96, per Gleason JA [Venngo]. In my respectful view, subsection 22(1) construed as required by Veuve Clicquot prohibits Duracell’s use of the term “the bunny brand” even though it is not a registered trademark of Energizer. However, subsection 22(1) does not prohibit Duracell’s use of “the next leading competitive brand”.
Accordingly, the Federal Court dismissed Duracell’s motion for summary judgment regarding “the bunny brand” claim, but granted it with respect to “the next leading competitive brand” claim.
Both parties appealed.
Federal Court of Appeal Decision
The Court of Appeal defined the principal issue raised by Energizer’s appeal, and Duracell’s cross-appeal, as follows:
 While the parties raise a number of issues on the appeal and cross-appeal, in my view a single question is dispositive of the trademark issue: was Energizer properly informed of the case to be met on Duracell’s motion for summary judgment? Another way of stating this issue is: did the Federal Court err by deciding an issue not before it? The question raised with respect to the remedy issue is whether the Federal Court erred by determining that, as a matter of law, an accounting of profits does not lie for an alleged breach of subsection 52(1) of the Competition Act.
The Court of Appeal held that the lower Court erred in considering whether, as a matter of fact, the phrases at issue would be linked by consumers to the Energizer Trademarks, as this issue was not properly before it. According to the Court of Appeal,
 In my respectful view, after rejecting Duracell’s submission that subsection 22(1) of the Act applies only to registered trademarks and minor misspellings thereof and that paragraphs 7(a) and (d) of the Act apply only to registered trademarks, the Federal Court erred by going on to answer the factually suffused question of whether the phrases were sufficiently similar to the Energizer Trademarks “to evoke in a relevant universe of consumers a mental association of the two marks that is likely to depreciate the value of the goodwill” attached to the Energizer Trademarks (Veuve Clicquot Ponsardin v. Boutiques Cliquot Ltée, 2006 SCC 23,  1 S.C.R. 824, at paragraph 38).
The Court of Appeal stated that Duracell’s Notice of Motion defined the issue as whether section 22(1) of the Act required use of a registered trademark and whether paragraphs 7(a) and 7(d) of the Act applied given that the phrases were not Energizer Trademarks.
Put differently, Duracell’s Notice of Motion did not put in issue whether the phrases “the bunny brand” and “the next leading competitive brand” were, as a matter of fact, sufficiently similar to the Energizer Trademarks to evoke in consumers the necessary linkage between them. The fact that Duracell did not file any evidence dealing with consumer perception was consistent with this. In short, by deciding the issue, the Federal Court erred and deprived Energizer of the opportunity to make its case on the issue.
Accordingly, the Federal Court of Appeal granted Energizer’s appeal with respect to “the next leading competitive brand” claim, dismissed Duracell’s cross-appeal with respect to “the bunny brand” claim, and sent the case back to trial on these issues.
The Federal Court of Appeal did uphold the underlying decision with respect to the dismissal of Energizer’s claim for an accounting of profits arising from Duracell’s alleged false or misleading advertising under Section 52 of the Competition Act. According to the Court, the only remedy for a breach of Section 52 is compensation for loss, damages and costs, and not the defendant’s profits.
The Federal Court of Appeal decision leaves open the question of whether the scope of a depreciation of goodwill claim under section 22(1) of the Trademarks Act has been broadened following the decision of the Supreme Court of Canada in the Veuve Clicquot case, and in particular, whether such a claim can apply to a trademark that is not a registered trademark, or a misspelling of a registered mark, but in fact a different trademark which evokes a “mental association” or “linkage” with a registered trademark.
In addition, this decision highlights the importance of ensuring that when bringing a summary judgment motion, the moving party identifies in its Notice of Motion all of the legal issues for which summary judgment is requested, so that the responding party is given full knowledge of the case it has to meet.
Duracell has until April 19, 2020 to seek leave from the Supreme Court of Canada. Absent leave being requested, round three of the “Bunny Brand” battle – the trial – should then be scheduled.
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