A decision from Associate Chief Justice Gagne provides a brilliant primer on how to deal with trademarks as part of a business deal.
The decision arose from a request to cancel the KIVA trademark, and the evidence of the purported use by the owner, Limoneira Company (“Limoneira”) following a merger between Limoneira and Associated Citrus Packers Inc. (“ACP”). The merger resulted in ACP, who was the original owner of the KIVA trademark, becoming a wholly owned subsidiary of Limoneira. Limonera asserted it became the owner of KIVA trademark through the merger.
Unfortunately, the merger did not properly document trademark ownership. As the Court found, the merger agreement was silent on trademark assignment or ownership.
When the KIVA trademark was challenged 10 years later, Limoneira asserted that it was the owner of the trademark, and that the trademark had been used in the past 3 years as required by law, but that finding was challenged on the appeal.
ACJ Gagne concluded that the affidavit evidence didn’t support the assertion. The merger agreement was silent on trademarks, and the affidavit didn’t provide evidence of another mechanism of transfer.
As a result, ACJ Gagne overturned the finding the trademark remained valid. The silver lining for Limoneira was that a redetermination was ordered—not a full cancellation.
Helpfully, ACJ Gagne summarized some law on how trademarks can and should be dealt with in similar situations, including by confirming that:
- A trademark assignment can be valid, even if it isn’t registered at CIPO;
- A nunc pro tunc license signed subsequent to the transaction date—even many years later—can correct the record; and
- If any materials are executed after the request to expunge a trademark is filed, the court may view those materials with skepticism.
IP is often amongst the most valuable assets of a company, particularly with consumer goods, and the importance is growing. An IP review should be a fundamental part of due diligence in any transaction.
Read the full decision here: https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/523857/1/document.do