SUBWAY vs. BUDWAY: Federal Court Sides with Sandwich Restaurants Against Cannabis Store

The Federal Court recently provided us with an excellent example of a company acting to curb use of a third-party trademark inspired from its own, in Subway IP LLC v. Budway, Cannabis & Wellness Store (2021 FC 583).

The facts at issue may have started by a couple of guys watching the sitcom How I Met Your Mother, and hatching a plan to open a store to sell cannabis-related products, the name of which would be a sort of play on words on a well-known restaurant chain and a word suggestive of pot selling. The unfortunate name they landed on was BUDWAY, which they then elected to present, graphically, using a logo they designed based on the very logo the SUBWAY chain uses. If you’re curious, the result was essentially the following, showing this “new” logo side-by-side with the original:

As we can all see (and as agreed by the court), the BUDWAY logo was more than likely purposely designed to imitate SUBWAY’s own, taking key features of that logo (including shape, font and arrows at the end of certain letters), even going so far as to use the green color often used throughout SUBWAY restaurants. In short, the defendant copied a third party’s name and logo, basically parodying it for their own purposes. Ah ha, funny.

Thought it may have been meant as a sort of joke, the Federal Court judge agreed with Subway restaurants that, at law, this was no laughing matter. Indeed, Subway managed to show how use of this “new” trademark was likely to cause confusion with their own trademark, constituted infringement, and how it was even likely to lead to the depreciation of the goodwill associated with the business tied to the SUBWAY trademark. The plaintiff managed to show evidence that BUDWAY store sold edibles, including cookies, which turns out to be problematic because of the presence of cookies in Subway trademark registrations. To boot, the evidence also showed that Budway created and used promotional materials showing a character in the form of a sandwich. Both these overlaps allowed the court to find sufficient commonalities and a resulting likelihood of confusion, etc.

Consequently, the court found infringement, passing off and a risk of depreciation of goodwill. Though the damages awarded were somewhat modest, all materials bearing the mark were confiscated, Budway also had to pay for costs, and the business is now enjoined from using the BUDWAY trademark.

In short, Subway managed a slam dunk, only failing to get punitive damages -something the court felt was not quite justified even under these circumstances. In the process, the court provides one with one more example of the fact that parody is NOT something Canadian trademark law allows. Trademark infringement remains infringement, even if the creator of the 2nd mark may have meant it as a tongue-in-cheek reference to another mark.

Eh, who knew: if you start a business, maybe it’s not the best idea to start by obviously copying a third party’s mark, including as to its name AND logo, and then compounding the problem by making references to the other party’s products in your promotional material, as plainly visible on social media. Whether your business is the same of the original trademark owner’s, or not, too clearly referencing another mark is ripe with risks.