Earlier this month, Subway scored a legal victory in a trademark infringement claim against Budway Cannabis Store who didn’t bother showing up at trial (blame it on the “bud”, I guess).
The court based its analysis on a previous ruling Toys R Us v. Herbs R Us, 2020 FC 682 flowing from very similar facts.
The fact that “budway” is not itself a word means that it would tend to be read in a manner to connote the common word “subway.” (at para. 20)The two logos displayed in this post are distinguishable from one another by one single element, a cannabis plant. Is it enough to avoid likelihood of confusion?
Along with injunctive relief, the Federal Court awarded Subway $45 000 in damages and $25 000 costs, but no punitive.
The resemblance in the logos is such that they look nearly identical. it clearly goes beyond feigned lack of originality or pure coincidence. This is 100% infringement. It is clearly intentional, but there is no evidence it was done in full knowledge of the alleged harmful consequences on Subway’s goodwill. The Whiten criteria are not made out. In the intellectual property sphere, punitive damages have been awarded in cases of “outrageous” or “highly reprehensible” conduct, or conduct that constitutes a “callous disregard for the rights of the Plaintiff or for injunctions granted by the court”.
the existence of a goodwill is reinforced by the respondents conduct in taking advantage of that goodwill” (para.32)“ Goodwill attaching to a trademark is the benefit to the trademark owner arising from the “reputation and connection” identified with the goods in association with the mark (Veuve Clicquot at paras 50–52). As the Federal Court of Appeal noted in Sandhu Singh, the purpose of the goodwill assessment is different for depreciation of goodwill than it is for passing off, although the factors considered for each may overlap. Relevant factors for assessing goodwill for purposes of section 22 include fame, degree of recognition, volume of sales, depth of market penetration, extent and duration of advertising and publicity, geographic reach, inherent or acquired distinctiveness, channels of trade, and the extent to which the mark is identified with a particular quality (Veuve Clicquot at para 54).”
I think that Budway should’ve appeared at trial to fight the goodwill depreciation argument. Despite the obvious linkage, connection, or mental association likely to have an effect on goodwill, it doesn’t mean that goodwill depreciation happened, and if it did, it doesn’t mean that it stands in causal connection with Budway.
First of all, we are in a pandemic, it is reasonable to infer that every major fast food chain’s goodwill has been affected in a negative way. Under the circumstances, it is kind of convenient for Subway to blame trademark dilution on Budway. Cannabis dispensaries have been declared essential by Public Health because of the therapeutic value they bring to society. In contrast, pushing non organic, unhealthy, and otherwise toxic food that puts people at heightened risk of thrombosis (among many other things), contradicts the public’s notion of a “healthy and active” lifestyle during a covid pandemic. Second, even if there was any direct impact on Subway’s goodwill, that impact is more likely to have been beneficial rather than detrimental, given that the Budway logo keeps generating strong social media engagement in a manner that indicates the respondent has little control over its dissemination.
The minute I saw the Budway logo, it made me think of an Andy Warhol artwork. It could be displayed in a museum as pop art / parody of fast food and consumption of processed food and a symbol against climate change (which is directly linked to meat processing).
The artistic value of trademark infringement is never relevant, Andy Warhol has lost cases too. Being a “good person” (one that doesn’t destroy the planet) is not a carte blanche to infringe, but in this world you cannot both care about the planet and defend Subway in the same sentence. This is maybe one of the very limited circumstances that I would side with an infringer.
The point is that goodwill is an intangible that keeps changing. Proving dilution is complex and outside of a contradictory process it remains pure speculation.
In spite of the injunction, the Budway logo continues to maintain a strong online presence and is displayed on several e-commerce fronts in many variations of the same logo as of right now. Welcome to Canada!