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In a recent Federal Court of Canada case, Toys “R” Us filed three separate claims against a cannabis dispensary for using the trademark and trade name Herbs “R” Us.

Toys “R” Us Files Trademark Claims Against Herbs “R” Us

Herbs “R” Us Wellness Society is a company operating a cannabis boutique and dispensary in Vancouver, British Columbia under the trademark and trade name HERBS R US.

Toys “R” Us, a toy, clothing, and baby product retailer,owns sixteen registered trademarks, including variations of its TOYS R US design, five other marks that include or consist of TOYS R US as a word mark; six other design and word marks for related “R” US marks (such as KIDS “R” US Design and GIFTSRUS), and a word mark for R US alone.

Toys “R” Us filed three trademark claims against Herbs “R” Us in the Federal Court of Canada, claiming: 

(1) infringement under section 20 of the Trademarks Act;

(2) passing off under subsection 7(b) of the Trademarks Act; and/or

(3) a likely depreciation of goodwill under section 22 of the Trademarks Act.

Herbs “R” Us did not respond to the application, so the case proceeded solely on the evidence filed by Toys “R” Us. 

Court Awards Damages to Toys “R” Us for Depreciation of Goodwill

On Toys “R” Us’ first claim, the court found that the HERBS R US design mark was similar to one of Toys “R” Us’ and therefore proceeded to a confusion analysis with respect to that mark.

The court explained that a confusion analysis considers “all the surrounding circumstances,” including:

(a) the inherent or acquired distinctiveness of the trademarks or trade names; 

(b) the length of time they have been in use; 

(c) the nature of the goods, services or business; 

(d) the nature of the trade; and 

(e) the degree of resemblance between them, including in appearance or sound or in the ideas suggested by them. 

In this case, the court concluded that:

“Despite the similarity of the trademarks and the other factors that favour Toys “R” Us, I conclude that the vast differences between the goods and services are such that there is no likelihood of confusion. I cannot agree with Toys “R” Us’ contention that resemblance between the marks is such that use of the HERBS R US design trademark “unquestionably would give the impression to consumers that Toys R Us has expanded its retail services into these other areas.” To the contrary, it strikes me as unlikely in the extreme that a Canadian consumer, even a casual one somewhat in a hurry with an imperfect recollection of the TOYS R US mark, would see the HERBS R US trademark and conclude that a well-known toy retailer had started branching out into storefront “dispensary” services or cannabis sales, either by itself or through a licensee.”

As a result, the court held that Toys “R” Us had not established that the HERBS R US mark was confusing with its mark and had therefore not established infringement s. 20 of the Trademarks Act

For related reasons, the court dismissed Toys “R” Us’ claim for passing off.

However, the court did find that Toys “R” Us had proved that Herbs “R” Us had used its mark, or a mark so closely akin to its mark, in a manner likely to have the effect of depreciating the goodwill in Toys “R” Us’ mark contrary to s. 22(1) of the Trademarks Act. The court came to this conclusion by examining the four elements required to prove such a claim, which have been set out in previous case law as follows:

  1. Was the claimant’s registered trademark used by the defendant in connection with wares and services?
  2. Was the claimant’s registered trademark sufficiently well-known to have significant goodwill attached to it?
  3. Was the claimant’s mark used in a manner likelyto have the effect on that goodwill?
  4. Was the likely effect to depreciate the value of its goodwill?

In the result, the court therefore dismissed Toys “R” Us’ claims for infringement and passing off, but allowed their claim for depreciation of goodwill. 

The court thus grantedan injunction prohibiting Herbs “R” Us from using the HERBS R US trademark and ordered delivery up or destruction of goods, packaging, labels and advertising material bearing the HERBS R US trademark in any form. In addition, it awarded damages in the amount of $15,000 arising from Herbs “R” Us’ violations of the Trademarks Act and costs in the amount of $15,000.

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