Depreciation of goodwill in trademark infringement cases is highly subjective, and alternative arguments to those of the court can be made in the case of Subway IP LLC v. Budway, Cannabis & Wellness Store.[1] This Federal Court case was one in which Subway claimed that Budway violated their trademark, directed business away from Subway towards Budway, and depreciated the goodwill of the Subway brand. The Federal Court of Canada held that Subway’s application was granted on all three points.
Budway was a cannabis store, whose logo very much resembled that of Subway, even down to the colours and lettering. Furthermore, their mascot was a sandwich filled with marijuana leaves, and had eyes and facial expressions that clearly indicated he was under the influence of marijuana.
What is most fascinating about this case, in my opinion, is the fact that the court ruled that the trademark infringement depreciated the goodwill of the Subway brand. S.22.(1) of the Trademarks Act[2] provides that “no person shall use a trademark registered by another person in a manner that is likely to have the effect of depreciating the value of the goodwill attaching thereto”. Subway contends that the goodwill of their brand was depreciated because 1) they have no control over Budway’s quality of products and 2) the nature of Budway’s products clashes with the healthy lifestyle that Subway promotes.[3] The court agreed on both points. I, however, do not agree that Budway’s trademark infringement depreciated the goodwill of the Subway brand. If I were to be walking around on the streets of Vancouver and saw the Budway sign, I would instantly try to find the nearest Subway for a sandwich. While it is true that Subway has no control over the quality of Budway’s products, isn’t it also true that any reasonable person who was displeased with Budway’s products would not transfer this feeling into displeasure with Subway? In “McCarthy on Trademark and Unfair Competition”, the authors suggest that “even the probability of dilution should be proven by evidence, not just by theoretical assumptions about what possibly could occur or might happen”.[4] Here, Subway has done nothing but assume theoretically that Budway’s infringement may harm their goodwill.
Lastly, a lifestyle of health and fitness is entirely subjective, and what it means to be healthy to one person is not the same as what it means to the next. I am not suggesting that the court erred in their finding, but rather that there are alternative points of view to consider in Budway’s defence. My opinion can be effectively summarised by one sentence: isn’t all publicity good publicity?
*please note the secondary source McCarthy quote was obtained from: https://nextcanada.westlaw.com/Document/I1540081b36a62e08e0440003ba0d6c6d/View/FullText.html?originationContext=typeAhead&transitionType=Default&contextData=(sc.Default)
[1] Subway IP LLC v. Budway, Cannabis & Wellness Store, 2021 FC 583. [Subway]
[2] Trademarks Act, R.S.C. 1985, c. T-13, s. 22.
[3] Subway, supra note 1 at para 43-45.
[4] J. T. McCarthy, McCarthy on Trademarks and Unfair Compettion, vol. 4 (4th ed. Loose-leaf 2005), – 24:67.1 at p.24-136.