Canada: The Senate Of Canada's Child Health Protection Act Confuses Trademark Law With Marketing Activity

On September 27, 2016, The Honourable Senator Nancy Greene Raine tabled Bill S-228, An Act to amend the Food and Drugs Act (prohibiting food and beverage marketing directed at children).

Having received First and Second Reading the Bill was referred to the Standing Senate Committee on Social Affairs, Science and Technology (Standing Committee) on December 5, 2016. The Act carries the short title, Child Health Protection Act (CHPA).

This paper will review the origin of, and significant concerns with, a definition which appears in the CHPA, namely, "brand element", defined at Section 7.2(4)

as follows:

The paper also explores how the CHPA confuses trademarks with the marketing of goods and services under trademarks, thus, imperiling intellectual property rights defined within and granted under the Canadian Trade-marks Act (TMA).

Those concerns include:

• the usurping of the language and purpose of the TMA,
• a possible clash of definitions between the TMA and the Canadian Food and Drugs Act,
• the blurring of statutory trademark law with product marketing activity,

• the belief that trademark use can be circumscribed for only certain products and services without impacting use of the same,
• imposing age-based restrictions on who may view trademarks,
• lack of clarity between the CHPA and the comments of Senators as to whether the CHPA seeks to regulate just foods, or in addition beverages, as well as services carried out in places where children might reasonably be expected to be present,
• circumscribing how and where trademarks can be used in relation to food and possibly beverages and their labelling or packaging,
• circumscribing how and where trademarks can be used in association with certain services and/or in certain places,
• creating a category of trademark use related to food and possibly beverages and certain

services, and

• lack of awareness of the current Canadian trademark regime and its upcoming amendments passed into law, but not yet in force.

This paper makes no comment on what may be CHPA's core intent, that is, to assist families in making healthy food choices for their children. This paper is solely intended to draw awareness to the CHPA's hopefully unintended lack of harmony with Canadian trademark

law, governed by the TMA.

BACKGROUND INFORMATION

At the Parliament of Canada website, the Standing Committee describes itself as follows:

Under Canada's Parliamentary system, members of the House of Commons are elected, while members of the Senate are appointed. Senate Bills follow

a process akin to bills introduced in the House of Commons. That is, Senate bills can become the law of Canada.

RELATED AND TANGENTIAL PARLIAMENTARY ACTIVITIES

On October 19, 2015 a federal election brought about a change in the party having a mandate to form Parliament, hence, references to previous and current Parliaments.

Under the current Parliament, in November of 2015, upon her swearing-in, the Minister of Health received a mandate letter from the Prime Minister of Canada, directing her to, amongst other efforts:

"Promote public health by:

• introducing new restrictions on the commercial marketing of unhealthy food and beverages to children, similar to those now in place in Québec;
• bringing in tougher regulations to eliminate trans fats and to reduce salt in processed foods, similar to those in the United States; and
• improving food labels to give more information on added sugars and artificial dyes in processed foods.
• Work with the Minister of Indigenous and Northern Affairs to update and expand the Nutrition North program, in consultation with Northern communities."

Under the Parliament previous to the election, the Standing Committee held meetings between October 2014 and June 2015, taking testimony from multiple experts in the health, commerce, Aboriginal and

non-profit sectors, which led to publication of a report entitled "Obesity in Canada. A Whole-of-Society Approach for a Healthier Canada" in March of 2016.

The report sought comments from the Minister of Health to 21 recommendations. On August 5, 2016 the Minister of Health replied to the report by

way of a letter largely addressing existing government programs.

UNDERSTANDING THE DIFFERENCE BETWEEN TRADEMARKS AND BRANDS

1. The Words 'Trademarks' and 'Brands' are Not Interchangeable Terms for all Purposes

The protection of trademarks originates in the centuries-old creation of guild marks used by pre- industrial artisans to mark the creation of their goods. In most jurisdictions, including Canada, they are defined and governed by federal or national statute. Trademarks can enjoy common law rights.

While the public often uses the words 'brand' and 'trademark' interchangeably, the word "brand" is a relatively modern term that comes from the world of marketing, not law. The TMA does not include the word "brand", by definition or otherwise. The word 'brand' has no formal meaning in trademark law.

Generally the word 'brand' is used to denote a trademark that has achieved some type of public recognition due to marketing. The 'brand' may or may not be registered as a trademark.

If rights in a brand are to be established before a court that requires proof of sales and advertising demonstrating that the brand has become known to relevant consumers, and not merely the furnishing of a certificate of registration of the trademark that forms the brand.

Brands are not bound by national or jurisdictional boundaries. A clothing brand can be internationally renowned. If enforcement of trademark rights in the brand must be undertaken, however, that will occur on a national jurisdictional basis.

Accordingly, trademarks and brands are aligned, but for legal purposes are not interchangeable words or concepts.

2.The TMA v. the Marketing Concept of 'Brand'

Extreme care must be taken to avoid a clash of terminology, or definitions, between the Food and Drugs Act and the TMA.

The CHPA makes no mention of the TMA, which defines and governs trademark rights in Canada, and also defines trade names for the purpose of assessing their possible confusion with trademarks.

The CHPA also makes no mention of amendments

to the TMA passed into law in 2014, although not yet in force.

Section 2 of the TMA currently defines trade-marks and trade names as follows:

trade-mark means

• a mark that is used by a person for the purpose of distinguishing or so as to distinguish goods or services manufactured, sold, leased, hired or performed by him from those manufactured, sold, leased, hired or performed by others,
• a certification mark,
• a distinguishing guise, or
• a proposed trade-mark; (marque de commerce)

trade-name means the name under which any business is carried on, whether or not it is the name of a corporation, a partnership or an individual; (nom commercial )

Returning to the CHPA Section 7.2(4) definition of "brand element", it should be noted that the TMA does not currently define any of the following terms set out in Section 7.2(4).

• brand element
• brand name
• logo
• graphic arrangement
• design or slogan
• "reasonably associated"

The word "design" has a longstanding and internationally-known meaning in trademark law as referencing a trademark composed in whole or in part of non-word or numeral elements. For example,

JOEJOE would be said to be a "word mark", where as

*JOE*JOE* would be said to be a "design mark". The presence of the word 'design' in the phrase 'design mark' signals that the mark contains elements other than mere words or numbers.

The Canadian Intellectual Property Office (CIPO) and the Federal and Supreme Courts of Canada, which have jurisdiction over the TMA, save for certain common law matters, all use the word "design" in trademark matters as a reference to trademarks comprised of design elements, with or without accompanying words or numbers.

The current definition of "label" in the Food and Drugs Act includes "word or mark". If the Food and Drugs Act is amended to contort the definition of trademark from that within the TMA (and also as to be amended) consideration must be given to whether the impact of the definition of 'label' within the Food and Drugs Act will change. Without expert consideration, there is no way to know.

3. Upcoming Amendments to the TMA

Significant amendments to the TMA passed into law in 2014 and are expected to come into force in 2019. Once the amendments are in place, Section 2 of the TMA will be amended to:

• add a definition of 'sign' and extend that definition to a "combination of signs"
• change the definition of 'certification mark'
• change the definition of 'proposed trademark'
• recognize and defined 'proposed use' certification marks
• repeal the definition of 'distinguishing guise'

All of these upcoming amendments could come into conflict with the CPHA definition of "brand element" because they hinge on the concept of "sign", a European concept new to Canadian trademark law.

The definition of "sign" in the upcoming amendments is:

COMMENTS IN SUPPORT OF CHPA BY CANADIAN SENATORS

Senator Greene Raine's comments at Second Reading included the following:

There is nothing 'simple' about this legislation from a trademark law perspective.

This legislation will do far more than "simply" prohibit marketers from "bypassing parents" where marketing of foods and beverages is concerned. This legislation will muddle marketing practices with federal trademark law and force amendments to the TMA, about which there has been no public consultation or expert testimony in the area of IP law.

Importantly the definition of "trademark" which was only just changed by legislation passed into law in 2014, which is expected to come into force in 2019, will be forced to undergo further redefinition.

The CHPA would impact every aspect of Canadian trademark law, including recognition, registration and licensing of trademarks as well as enforcement and maintenance of trademark rights and registrations.

The CHPA is silent on common law rights in trademarks and so must be presumed to impact rights in Canadian trademarks which exist not by way of registration under the TMA, but by way of use at common law in Canada.

Three additional Canadian Senators rose to speak about CHPA at Second Reading. In their statements, none of the Senators referenced intellectual property law, in specific the trademark law provisions in the CHPA.

On October 25, 2016 Senator Art Eggleton stated:

These comments give concern.

CHPA is without grounding in Canadian trademark law. It is not specific in its scope. Instead it blurs marketing strategies with trademark law and invents terminology not recognized under Canadian trademark law. It imposes restrictions on the physical presence of trademarks and the age of people who may view them. It is uncertain as to what goods or services will be impacted.

Further, inventing new forms of trademarks and then restricting where those trademarks appear is utterly contrary to the TMA. The marketing of trademarks is being confused with trademark rights. This imperils the TMA and the rights granted thereby.

On November 2, 2016 the Honourable Paul E. McIntyre stated:

On November 3, 2016 the Honourable Chantal Petitclerc stated:

It isn't clear from these statements whether the Senators recognize that trademark law and regulations exist, and that laws and lawful commercial practices related to marketing may abut trademark law, but are not interchangeable with trademark law, in Canada.

If passed into law, the CHPA will amend Canada's Food and Drugs Act. The purpose of that Act is described at Wikipedia, redacted, as follows:

The aims of the CHPA would appear better met by addressing Canadian laws that speak to advertising and marketing rather than trademarks.

MULTIPLE PROBLEMS WITH THE CHPA CONCEPT OF "BRAND ELEMENT"

1. The invention of "brand element" as a legal concept is problematic on its own. It has no precedent, either at common law, or within the current or historic Canadian trademark regulatory regime. The concept confuses trademark law with marketing intent.

Canadian trademark law, both at statute and before the courts, formally recognizes advertising and promotion as the vehicles by which consumers gain familiarity with trademarks. Of necessity, the TMA does not impose forms or means of advertising or promotion or channels of trade.

To amend the Food and Drugs Act to impose restrictions on how and where trademarks can be used will severely impact the ability of trademark owners to protect and enforce their trademark rights. It is not possible to curtail use of a trademark in association with a selection of goods and services without confusing and compromising trademark rights.

As just one aspect of the impact of rights enjoyed in a trademark, consideration can be given to Section 22 of the TMA which defines "depreciation of goodwill" in registered Canadian trademarks, and redress therefor, as below:

Allied with the concept of goodwill in registered trademarks, Canadian trademark jurisprudence recognizes the concept of "reputation", that is, that trademarks, whether registered or established at common law only, can enjoy traits valued at law, acquired through their promotion.

CHPA risks traversing the statutory concept of goodwill as well as the juridical concept of reputation. This is not the role of Health Canada or the purpose of the Food and Drugs Act.

2. CHPA lists some terms that have specific legal meaning and some terms that have colloquial meaning.

Health Canada, which administers the Food and Drugs Act, has experience is separating out trademark law from drug product names.

As examples:

• Health Canada recognizes the import of "big and tall lettering", whereby medications bearing similar trademarks can be depicted in a combination of upper and lower cases letters to highlight differences between the trademarks, thus, helping to avoid mischoice of medication by a clinician or pharmacist. These depictions are for health and safety purposes only and do not impact the rights of inherent or acquired distinctiveness in the underlying trademarks.
• While Health Canada has a mandated role in approving pharmaceutical names

(trademarks), that approval does not mean that the approved name is registrable as a trademark before CIPO. The two approval processes are completely different.

One speaks to public safety (prevention of confusion between trademarks in the selection of drugs), while the other speaks to the commercial marketplace (distinguishing one manufacturer's product from a competitor's product through the association of the respective trademarks to the competing products).

Health Canada cannot be set up as a competing agency to CIPO. CIPO is contained within an entirely different ministry namely, Science, Innovation and Economic Development Canada.

Health Canada rightfully protects the health and safety of consumers but the expertise in the administration of the TMA lies with CIPO. Commercial traders, artists, innovators and the non-profit sector cannot be expected to expend time and money to assess their trademark rights before two agencies, CIPO and Health Canada.

While inadvisable, if for some reason the Food and Drugs Act is to be amended to introduce trademark law therein, that law must be stated in that Act to be subservient to the TMA, for all purposes including those that impact the recognition, registrability, licensing, maintenance and enforcement of Canadian trademarks, including at common law. There must be right of appeal to the Federal and Supreme Courts of Canada, as well as provincial courts where common law rights are under challenge.

3. The idea of lodging the CHPA phrase, concept and definition of "brand element" into the Food and Drugs Act without regard to the TMA should be rejected for the following reasons:

• the concept and its definition significantly conflict with the TMA, which governs trademark law in Canada
• trademarks and brands are not interchangeable for TMA purposes
• the association of a trademark with a product or service is a legal concept, not a marketing concept
• a "brand" and the action of "branding" are marketing concepts
• the CHPA definition of 'brand element'

is quixotic because it overlooks amendments to the TMA passed into law in 2014 and expected to come into force in 2019,

and further

• gives no regard for marks adopted for use as trademarks on the basis of their proposed use in Canada
• overlooks Traditional Knowledge and Traditional Cultural Expressions arising in Canadian Aboriginal culture
• overlooks the growing import of Geographical Indications
• overlooks certification marks
• overlooks colours and shapes as applied to trademarks

• overlooks public authority marks, as defined in Section 9(1)(n)(iii) of the TMA
• overlooks Newfoundland trademark registrations transferred onto the Canadian Register of Trademarks under the Newfoundland Act of 1949
• overlooks the impact of classification of goods and services under the Nice Classification system now voluntarily

offered by CIPO but which will be required by law under the TMA amendments passed into law in 2014

• overlooks amendments to the TMA that will be imposed by the passage of the Trans- Pacific Partnership Agreement (TPP) if that Agreement is passed into law, including protection for collective marks
• overlooks decades of jurisprudence interpreting the TMA and its predecessor Acts, the Unfair Competition Act of 1932 and the Trade Mark and Design Act of 1868
• overlooks what are colloquially known as "non-traditional marks", that is marks consisting of such matter as taste, sound, scent or texture
• does not recognize the Federal and Supreme Courts as having primary jurisdiction over trademarks
• does not recognize that domestic Canadian trademark rights can give rise to international rights that may be curtailed based on restrictions as to how and where trademarks can be used

In short, CHPA is not in line with the Canadian trademark law regime. The requirements of CHPA already significantly conflict with the existing definition of "trademark" in Canada and that will only worsen as the TMA amendments come into force and possible additional amendments arise under TPP.

The Senate should also be aware that Traditional Knowledge, Traditional Cultural Expressions, and Geographical Indications are under increasing study by the Government of Canada as developing areas of intellectual property protection, largely in the context of trademark law. These are not accounted

ADDITIONAL CURIOSITIES IN THE CHPA WHICH IMPACT TRADEMARK LAW

Along with uncertainty as to what goods and whether services are said to be impacted by definition of "brand element", the CHPA requires attention to understand the impact of the following under trademark law:

• What is a "display" or "depiction" of "a food or its label or package" "or of a brand element in association with a sponsorship". See Section 7.2(3). The explanation given is uncertain from an IP perspective where goods and services must be defined in ordinary commercial terms as required by the TMA.
• What constitutes "sports equipment" and "other durable goods or materials" and what is intended by "supplied by the sponsor" and "in support of the event or activity", as contemplated in Section 7.2(3)(a).
• What constitutes "a permanent facility" and how can it be determined to be "intended primarily for children" under Section 7.2(3)(b). Merely saying "such as a school or daycare centre" is wholly inadequate.
• Will reference to "testimonials" and "endorsements" in Section 7.4(1) possibly conflict with certification mark protection under the TMA?
• How can "depiction" as defined in Section 7.4(2) not conflict with trademark rights as defined under the TMA? Section 9 of the TMA prohibits certain marks such as those which improperly invoke royal or governmental patronage, or may be scandalous or falsely suggest a connection to a living individual. Would Section 9 have to be amended to accommodate the CHPA definition of "depiction" which reads "For the purposes ofsubsection (1), the depiction of a person, character or animal, whether real or fictional, is considered to be a testimonial or an endorsement".
• The Prohibitions under CPHA includes sales promotions including games, lotteries or contests. What is meant by "games" or a "contest"? Can children lawfully participate in "lotteries"? What about sports teams that routinely donate game tickets to adults for contests that raise funds for children's sports. Who is intended to be caught by this prohibition? Why impose the restriction on "games"? Does this mean sports? Are the arts exempt? Trademark owners must be specific in defining services for the purpose of trademark registration and enforcement of rights before the courts.
• Section 7.6, which imposes restrictions on labelling, must be assessed in detail as to how it may compromise trademark rights as defined in the TMA. As worded it severely compromises the rights of those who own trademarks used in association with foods. Given the uncertainty of the language in the CHPA and comments by Senators it may also compromise those who sell beverages and offer services.
• What constitutes a "public health authority" or "a person acting in collaboration with a public health authority" and what constitutes "educational purposes" under Section 7.6 is not defined. This could impact the structure of trademark licenses and enforcement strategies.
• Section 5 of the General Provisions of the CHPA allows for amendments to Section 30(1) of the Food and Drugs Act, by way of regulation, and not amendment to that Act itself in respect of labelling and packaging. This sets up another potential point of conflict with the TMA.
• Who will advise trademark owners and intellectual property law practitioners before relevant changes to the Regulations for the Food and Drugs Act occur? As time passes, would it even occur to Health Canada to consult trademark owners and intellectual property law practitioners before making changes to the regulations that could dramatically impact rights in place under the TMA. Will there be a means of consultation?

SUMMARY

Whatever the public health intentions of CHPA, it treads without warning or understood purpose into the sphere of Canadian trademark law, which is governed by the TMA. It does not reflect an understanding of the current trademark law regime, its amendments already passed into law and reasonable aspirations in the area of Traditional Knowledge and Geographical Indications.

The CHPA may compromise the ability of Canadian and foreign trademark owners to protect their rights in Canada, including as against counterfeiters, and also to take advantage of international rights under the Paris Convention for the Protection of Industry Property and the Madrid Protocol, the latter of which will be accessible to Canadians under the TMA amendments once they come into law.

The CHPA should not be allowed to advance to law without significant public consultation. At minimum, any reference to any subject matter which falls under the jurisdiction of the TMA must reflect the pre-eminence of that Act.

The Senate should consult CIPO as well as the Intellectual Property Policy Directorate of the Ministry of Innovation, Science and Economic Development Canada. The Canadian intellectual property law practice is composed of lawyers and trademark agents who can provide considerable insight into the Canadian trademark regulatory regime.

Finally, trademark owners themselves should be allowed to provide their insights into how their rights may be impaired under the CPHA.

About BLG

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.