Canadian Federal Court of Appeal applies new standard of review in appeal of registrar

The Canadian Federal Court of Appeal (FCA) has released its decision in The Clorox Company of Canada, Ltd v Chloretec SEC (2020 FCA 76), its first opinion addressing important changes to the standard of review applicable to appeals of the registrar of trademarks. Observers were keen to obtain the court’s analysis, since the Supreme Court of Canada had recently modified the standard of review that is applicable to all administrative decisions in Canada (Minister of Citizenship and Immigration) v Vavilov (2019 SCC 65).

In applying Vavilov, Clorox confirms that the applicable standard of review for appeals of decisions in trademark opposition and non-use cancellation proceedings is the ‘general appellate standard of review’ unless new and material evidence is adduced on appeal. This means that:

• matters of law are reviewed on a ‘correctness’ standard;
• matters of fact or mixed fact and law will not be reversed absent a ‘palpable and overriding error’ by the registrar; and
• where new evidence and material evidence is adduced on appeal, the issue to which the evidence relates is reviewed on a de novo or ‘correctness’ basis.

In Vavilov, the Supreme Court held that the presumptive standard for review of administrative decisions is ‘reasonableness’, although this presumption can be rebutted in certain circumstances. For instance, the Supreme Court recognised that the presence of a statutory appeal mechanism signals the legislature’s intent that an appellate standard of review ought to apply – and there is a statutory appeal mechanism contained in the Trademarks Act applicable to registrar decisions.

Notably, earlier cases of the lower level Federal Court concerning the appeal of registrar decisions had generally afforded deference to all of the registrar’s decisions, unless fresh evidence on appeal was material to the decision. As a result, the Federal Court would not intervene if the registrar’s decision fell within a range of reasonable outcomes – for example, deference was afforded to the registrar’s interpretation of the Trademarks Act as the registrar was understood to have expertise over its enabling statute. Where fresh evidence, filed on appeal, would have materially affected the registrar’s decision, the Federal Court would review the issue to which the fresh evidence related on a de novo or correctness standard.

In Clorox, the FCA confirmed that Vavilov has little substantive effect on the latter issue. Where the court reviews a registrar decision in the context of fresh material evidence submitted on appeal, it will still, following earlier jurisprudence, consider the related issues on a correctness or de novo standard, since a litigant’s ability to file new evidence on appeal is a circumstance, recognised in Vavilov, that justifies rebutting the general presumption of reasonableness. The Federal Court’s determination of the materiality of evidence is a question of mixed fact and law; therefore in Clorox the FCA found that Vavilov has “no bearing” on the review of these decisions on appeal.

In contrast, where no new evidence is adduced on appeal (or where such evidence is not material), Vavilov “calls for a fresh start”. Previous case law applying a reasonableness standard in such a context is no longer binding, as Vavilov directs courts to give more weight to the legislature’s “institutional design choices”, like the statutory right to appeal set out in the Trademarks Act.

Therefore, Vavilov potentially raises the threshold for review for questions of fact and questions of mixed fact and law, from a “reasonableness” standard to a “palpable and overriding error” standard. At the same time, Vavilov arguably lowers the threshold for review for questions of law to a correctness standard, given the existence of a statutory appeal mechanism.

The FCA decision in Clorox accords with recent conclusions of the lower-level Federal Court concerning the application of Vavilov in trademark cases – namely Pentastar Transport Ltd v FCA US LLC (2020 FC 367) and Arterra Wines Canada, Inc v Diageo North America, Inc (2020 FC 508).

Comment

In short, the law with regard to the standard of review of appeal for registrar decisions in trademark opposition and non-use cancellation proceedings has changed in light of Vavilov.

Given the impact, appellants will likely attempt to characterise their grounds of appeal as alleging errors of law on the part of the registrar, or extricable errors of law in the registrar’s decisions on issues of mixed fact and law, in order to attract a correctness standard of review, thereby increasing the latitude of the reviewing court on appeal. Respondents, in contrast, will likely attempt to construe the grounds of appeal as implicating decisions of fact or mixed fact and law, in order to attract the more deferential standard of palpable and overriding error.

Interestingly, pending amendments to the Trademarks Act will require an appellant to obtain leave from the Federal Court prior to submitting fresh evidence in an appeal of a decision of the registrar, which could further influence the Federal Court’s understanding of the applicable standard of review post-Vavilov. In any event, while the landscape for appeals is changing, and it is clear that practitioners will continue to experience the effects of these changes on their practices for years to come.