Court rules Vancouver dispensary “Budway” violated Subway franchise trademark

| David Brown

A federal court has found that an unlicensed cannabis store in Vancouver infringed the registered trademarks of the Subway franchise.

This is the second such case from a large chain filing such a suit against an unlicensed Vancouver dispensary, the first in 2020 between Toys R Us and a retailer calling themselves Buds R Us.

A judge recently ruled that the illicit retailer, Budway, located at A-1024 Clark Drive, Vancouver, BC, is liable for a total of $15,000 in damages and costs of $25,000. Representatives for Budway did not respond to the court in the case, or to a request for comment by StratCann before press time.

Representatives from Subway brought forward the application to prevent the dispensary from using the following “BUDWAY” trademark in association with a “cannabis & wellness store”. The court ruled Budway must destroy all their branding and signage.

Court records show Subway’s evidence was set out primarily in two affidavits from a trademark and advertising attorney working for a sister company of Subway. Subway has been made aware of the violation of their IP in 2020 via a post on the social media site Reddit. They also referenced social media posts from the company’s Instagram page as evidence.  

Court records also reference a post on their Instagram account showing a cartoon “submarine sandwich filled with cannabis leaves, with what are apparently bloodshot and half-opened eyes. This mascot appears in the video clip, smoking what is presumably a joint, with the legend ‘It’s the way, bud’ appearing below it.”

From Budway’s Instagram page

The judge in the case ruled that there was a degree of resemblance in both the Budway logo and how it was presented, compared to the trademarked and registered Subway brand and logo. Although the word “subway” is a common word, the fact the logo uses several similar design elements used by the Subway franchise showed a level of undeniable distinctiveness.

Subway’s representative also argued that the company’s registration for one of its trademarks in association with “cookies” sold at the Subway chain does not limit the contents of those cookies and would even cover cookies containing cannabis.

They also pointed out that this overlap in goods distinguishes its case from a similar case of trademark infringement with another unlicensed Vancouver dispensary Herbs “R” Us, brought on by the Toys R Us chain in 2020. The judge in that case sided with Toys R Us. The difference, argued Subway’s representative, was that in addition to the trademark violation of the similar logo, the Budway business selling foods that Subway also offered (cookies) was an overlap in similar products. The judge also agreed. 

Subway did not argue that they have lost sales or otherwise suffered direct financial harm. Instead, they rely on the loss of control over the use and commercial impact of their marks, and that Subway suffered a “likely depreciation of its goodwill”. The judge agreed here, as well.

From the ruling:

“Based on the foregoing factors, I am satisfied that Subway has shown there is a reasonable likelihood of confusion between the respondents’ BUDWAY trademark and each of the (trademarked Subway logos). As in Herbs “R” Us, the context makes it perfectly clear that the respondents have adopted their mark by deliberately drawing on the famous mark of the applicant. Unlike in that case, given the goods and services set out in the applicant’s registration, I conclude that there is a likelihood of infringement”.

Subway sought damages of $25,000 against the owner of Budway in order to “send a message of deterrence to the cannabis industry about the importance of respecting trademark rights”, again referencing the 2020 case with Toys R Us and the Buds R Us dispensary. The Judge disagreed here, saying this was too broad, and ruled a $15,000 compensation.

Subway also sought punitive damages of $20,000, but the judge felt this was not appropriate. Ther sandwich chain sought an additional $30,000 in compensation for costs associated with the case. The judge stated they did not provide evidence for these costs, settling on awarding $25,000.

The court ruled Budway, Cannabis & Wellness Store and its owner William Matovu, must destroy “under oath any signage, goods, packages, labels and advertising material in its possession, power or control that bear the BUDWAY trademark or any other trademark that is or would be contrary to this judgment, in accordance with section 53.2 of the Trademarks Act.”. They were also ordered to pay $15,000 in damages and $25,000 in court fees. 

The case had also originally sought damages from another unlicenced retailer, Atlantic Compassion Club Society, but because the store no longer exists, this application was dismissed.

Mars Wrigley, one of the world’s leading manufacturers of chocolate, gum, and candy recently announced they would taking legal action against cannabis companies in the US and Canada that are using the company’s brands and products, as well.