Businesses acquiring Canadian trademarks that may have fallen into disuse should take note: in Comité interprofessionnel du vin de champagne v. Coors Brewing Company, the Federal Court of Appeal confirmed that a new owner may not be required to justify non-use by a prior owner when defending against a summary expungement proceeding.

The appellants, two French champagne industry organizations, had argued that the owner must always justify non-use going back to the date the mark was last used. The Court rejected this position. Consistent with its ruling in a recent decision (Centric Brands Holding LLC v. Stikeman Elliott LLP), the Court held that in appropriate circumstances involving acquisition of a trademark, the new owner is not required to account for non-use pre-dating the acquisition. In other words, a purchaser of a dormant mark may only need to explain non-use from the date it acquired the mark, not from when the mark was last used by the prior owner.

On the facts, the Court upheld the lower court’s findings that there were special circumstances excusing the respondent’s non-use. Factors in favour of the respondent included that the period of non-use from the date of the acquisition was not long, that the non-use resulted from a large and complex acquisition, and that the use of the mark was subject to the approval of several provincial regulators.

However, it is important to note that acquisition alone is not sufficient to constitute special circumstances. The evidence must still satisfy the test for special circumstances. But for businesses acquiring Canadian trademarks, this decision confirms that it may be easier to justify non-use where the acquisition is recent and genuine plans for commercialization exist.

A copy of the decision is available here.