In the case of Lexus Foods Inc. v. Toyota Motor Corporation, the Federal Court of Appeal allowed Lexus Foods' appeal and reinstated the Registrar's decision accepting registration of the trademark LEXUS in relation to canned foods.

Lexus Foods had filed an application for the trademark LEXUS in respect of canned foods on the basis of proposed use in Canada which was opposed by Toyota Motor Corporation based on their registration in respect of the trademark LEXUS covering automobiles and parts thereof.

The opposition by Toyota was dismissed by the Opposition Board and Toyota appealed the decision to the Trial Division of the Court of Canada which allowed Toyota's Appeal on the ground that the trademark LEXUS was a famous mark and that there was a likelihood of confusion between the trademark LEXUS for automobiles and the identical mark in respect of food products. The Court directed the Registrar to refuse Lexus Foods application for the trademark LEXUS.

Lexus Foods appealed the lower Court's decision to the Court of Appeal which reviewed Section 6(5) of the Trade-marks Act setting forth the factors to be considered in deciding the issue of confusion between trademarks. This provision of the law states that, in considering whether trademarks are confusingly similar, the Court or the Registrar shall have regard to all the surrounding circumstances, including the nature of the goods, services or business and the nature of the trade concerned. The Court of Appeal indicated that in this case one of the key factors was the striking differences between the respective goods which had been given considerable weight by the Registrar. On the other hand, the Trial Judge gave considerably less weight to the difference in the nature of the goods and more to the fame of the LEXUS mark owned by Toyota.

The Court of Appeal was of the view that, in order to determine whether there was confusion between the trademarks, the type of goods being compared was relevant and that, since this factor was specifically provided for in Section 6(5), it must be given consideration; the Trial Judge had failed to do so.

The Court of Appeal allowed Lexus Foods' appeal and permitted registration of the trademark LEXUS in connection with canned food, in view of the distinct differences between the respective parties' goods.