Cannabis dispensary Budway must pay $40K after Subway sues over trademark

No one ever accused Budway cannabis dispensary of being subtle.

The Vancouver store's logo features light and dark green letters with arrows on them set against an oval background a nod to the Subwaysandwich chain that a Federal Court judge has foundtoo overt.

Budway's mascot isa seemingly stoned, joint-smoking, marijuana-filledsubmarine sandwich whosemotto reads:"It's the way, bud."

But Justice Nicholas McHaffie says there's nowayBudway can continueinfringing on Subway's trademark.

The decision is a primer ontrademark law and a reminder that a friendly homage to a well known brand can lead into dangerous legal territory.

The judge ordered Budway's owner to pay the chain $40,000 this week and to destroy any signs, goods, packages and labels marked with the cannabis dispensary'snot-so-distinctive logo.

Although there was no evidence the tiny companyactually ate into Subway'sannual $1.8billion Cdnsales in this country, McHaffie foundBudwayhad effectively triedto borrow on Subway'sreputation to sell its products.

His analysis of the case began with the resemblance between the two logos.

"In each case, the word element of the mark is similar, with the similarities in letters and pronunciation between SUBWAY and BUDWAY being self-evident," McHaffie wrote.

"The fact that 'budway'is not itself a word means that it would tend to be read in a manner to connote the common word 'subway.'"

'Both parties offer foodstuffs and edible products'

McHaffie is the same judge who ordered the Herbs "R" Us Wellness Society to pay $30,000 to Toys "R" Us Canada last year after a similar challenge.

In that case, McHaffie found that Herbs "R" Us was using the trademark in a way that might depreciate goodwill attached to the toy retailer.

But he said in that decision that there wasn't much chance of consumers mixing the two companies up becauseToys "R" Us was "associated with product lines that are light years away from the products being sold" by Herbs "R"Us.

Not so with Budway, whose promotions include 10 per cent off edibles on "Munchie Mondays."

"As Subway notes, although 'their ingredients may differ, both parties offer foodstuffs and edible products to their consumers,'" McHaffie wrote.

"I also agree with Subway that the respondents' use of a submarine sandwich mascot and references to 'munchies' draws the goods into closer comparison."

Champagne and women's wear

Canada's Trademarks Act gives the owner of a trademark exclusive rights.

Infringement happens when someone else sells, distributes or advertises a product with a trademark that's confusing in that it creates the impression the goods and services are associated with the owner of the other, exclusive trademark.

According to the decision, the test for confusion is the "first impression in the mind of a casual consumer somewhat in a hurry."

Battles over trademark have gone all the way up to the Supreme Court of Canada. In 2006, French champagne maker Veuve Clicquotchallenged a Quebec women's clothing store called Boutiques Cliquot.

Canada's top court ruled against the champagne maker.

"The difference between the appellant's luxury champagne and the respondents' midpriced women's wear is significant," the court found.

"While some trademarks transcend the wares, services and businesses with which they were originally associated, no witness in this case suggested that the VEUVECLICQUOT mark would be associated by ordinary consumers with midpriced women's clothing."

McHaffie found that Budway, on the other hand, was doing its best to link its products with Subway.

Exhibit A: thatmascot.

"It is clear from [Budway's]use of the subway sandwich mascot that such a linkage was intended and considered desirable," the judge wrote.

McHaffie said Budway threatened the goodwill Subway's trademark had earned through its association with a"healthy and active" lifestyle.

Subway's lawyer said the situation was only made worse by the"somewhat downmarket exterior appearance" of Budway's physical location.

The man identified as Budway's owner did not respond to the lawsuit. He also didn't return a request for comment.