Piece of Cake! Vachon Wins HOSTESS Infringement Lawsuit for Bread

The Federal Court recently rendered a decision that seems worth discussing as a to a trademark infringement matter involving the (relatively) well known Québec bakery Vachon. The decision at issue, Boulangerie Vachon Inc. v. Racioppo (2021 FC 308) centers primarily on a matter of trademark confusion between a business known for its cakes, pies and the like, and a new comer on the Canadian market that elected to go with the HOSTESS trademark to sell bread, knowing Vachon owned the mark for other types of products.

The piece of litigation at issue started when the owner of the defendant corporations was given the impression that Vachon (and its predecessor in title), notwithstanding owning the HOSTESS trademark in Canada, wasn’t interested in bread products. Seeing this, the defendant started selling bread in Canada, which it did from 2016-2017 to 2019, only to realize too late that Vachon had in fact started to sell bread before his business did. See where this is headed?

Yup, you read this right: someone saw the mark and who it belonged to and decided that since Vachon didn’t (then) sell bread, it was fair game to do so through his own company. After all, there’s no link between bread and cakes right? Yeah, completely different things. I’m guessing this guy did not obtain advice from counsel (or an agent) before making his decision.

The case is a pretty good example of good infringement proceedings, in a case where the marks are essentially the same (notwithstanding different logos) and the goods are definitely in the same area, including by being sold in the same types of stores, generally in proximity on store shelves. Not too surprisingly, the judges ends-up siding with Vachon and agreeing that, under circumstances such as these, confusion is more than likely. Yeah, HOSTESS for bread vs. HOSTESS for cakes, cookies, muffins, etc. Who could have foreseen this coming?

One thing that seems worth mentioning as this judgment, is the court agreeing that not only was this a case of infringement but also one of goodwill depreciation, under Section 22 of the Trademarks Act. As you may know, though this is often tried by plaintiffs, it is not something Canadian courts have traditionally been too fond of granting. This time, however, the Federal Court judge agreed that use of the HOSTESS trademark on bread products from a source other than VACHON did not just infringe the rights of the mark owner but that it also depreciated the value and the distinctive character of the original mark. This is encouraging for mark owners in Canada.

That said, I should point out the end result is a little lackluster, as the Federal Court awards an injunction (of course) and… $10,000 in nominal damages. Given the fairly limited scope of the infringing activities (something like $70,000 in sales, and profits around $5,000), the court felt this was reasonable amount, under the circumstances.

Finally, one other point is somewhat unusual with this case, with the plaintiff attempting to obtain that the companies’ principal be personally held liable, something Canadian courts are often reluctant to do. Not too surprisingly, the judge held this case did not justify finding Mr. Racioppo personally liable. Though Vachon tried to argue the individual was clearly to blame for his recklessness (we knew of VACHON’s trademark full well), in the end the court elected to consider the principal’s behavior did not necessarily reach the level of culpable behavior that would justify holding him liable. For the court, one could look at this fact-pattern as a simple case of an ordinary course business decision that wasn’t entirely devoid of rational basis, if not for Mr. Racioppo’s mistaken belief that a competitor not making a specific type of product (i.e. bread) made it fair game for him and his business.

So, the lesson here, I guess, is that you shouldn’t assume that the listing of products and services in a registration are all there is to it. Sure, looking at the register is useful, but one should always remember that confusion takes much more than just the product listing into consideration.