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Aboriginal-owned coffee company sues Terrace and Kitasoo Band Council over ‘Spirit Bear’ trademark

Defendants accused of pressuring the company to sign a licensing deal “under duress”
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The Sprit Bear Coffee Co. (SBCC) is suing the City of Terrace and the Kitasoo Band Council, claiming it was nearly bankrupted, in part, due to the city and council’s invalid claim to the “Spirit Bear” trademark.

The company filed a notice of civil claim on January 2 in BC Supreme Court. According to the lawsuit, the defendants “misrepresented facts as to their legal and enforcement rights” over the Spirit Bear trademark, allegedly pressuring the company to sign a licensing deal “under duress.”

The company claims it’s “an Aboriginal-owned, small-scale artisanal coffee company” that produces several lines of coffee beans, using the Spirit Bear Coffee Co. name since 2006 in Alberta and since 2008 in British Columbia. But in February 2010, the defendants demanded the company stop using the Spirit Bear name unless it signed a licence agreement.

“At the time of the demand, SBCC’s position with their customers and suppliers was tenuous and SBCC feared that the City of Terrace and the Kitasoo Band Council’s threat of suit against its customers and suppliers would, regardless of their merits, suffice to induce its customers and suppliers to cease business with SBCC,” the claim states.

But in 2011 and 2012, the company was under “significant financial strain” partly due to the defendants’ trademark claims, and “having fallen victim as a result of self-dealing by a general manager of SBCC’s parent company.”

“SBCC only narrowly avoided bankruptcy through further investments from its principals (through mortgaging of their primary residences and obtaining secondary employment outside of SBCC),” the claim states.

In August 2012, the company claims, it caved to pressures and was “induced” to sign a trademark licensing deal with the defendants even though it knew “the unilaterally proposed royalty terms of the defendants’ agreement was [sic] unattainable and the agreement was generally untenable.”

Two years later, however, the Federal Court of Canada found the city and band council’s claims to the marks invalid for non-compliance with the Trade-marks Act. Days after the decision, SBCC applied to the Canadian Intellectual Property Office to trademark the “Spirit Bear Coffee Company” name. In June 2016, the mark was approved by an examiner and moved onto the advertisement stage, which provides a two-month window for anyone who may oppose the granting of a mark to file an objection.

“On or about September 20, 2016, the very last day of the two-months advertisement period, Kitasoo Band Council filed an opposition against SBCC’s soon to be granted intended mark on the basis of ... the then defunct License Agreement, the impugned mark of the Federal Court decision and a new mark that the Kitasoo Band Council had applied for,” the claim states. “As a result of the Kitasoo Band Council’s calculated opposition, SBCC became entrapped in the opposition and suffered and continues to suffer damages.”

The allegations have not been tested or proven in court and the band council and the city had not filed responses to the claim by press time.