Canada: The Latest Development in Intellectual Property Law - June 2004

• Supreme Court Rules on Canola Gene Patent

• Patent Claims to a "Kit" are not Listable on the Canadian Patent Register

• Russian Court Returns Google.ru to Google

• Gowlings Partner on New Government Task Force to Fight Spam

• Supreme Court of Canada Grants Leave to Appeal Functional Marks Decision in LEGO Case

• Russia: New Developments Affecting Trade Mark Office Operation

• Supreme Court of Canada Grants Leave to Unilever to Appeal Margarine Decision

• Gowlings Partners publish "Must Have" Book on Advertising and Marketing Law in Canada

PATENT DEVELOPMENTS

On May 21, 2004, the Supreme Court of Canada released its much anticipated decision, which was split 5-4, in the case of Monsanto Canada Inc. v. Schmeiser. This was a positive decision for the growing biotechnology industry in Canada, confirming that it is possible to obtain and enforce patents claiming a gene, methods for inserting the gene, and derived cell lines. One of the key issues before the Court was whether Saskatchewan farmer, Percy Schmeiser, infringed Monsanto's patent on a gene by growing canola plants containing the patented gene. While the Court did not specifically address the scope of protection for life forms, what the decision means is that, for all intents and purposes, claims to a gene or a cell provide protection in the resulting plant containing these genes and cells.

This decision marks the most recent statement coming from the Supreme Court of Canada regarding the patenting of biotechnological inventions. Prior to this decision, in December 2002, the Court ruled on the patentability of another biotechnological invention, a transgenic mouse, in the case of Harvard College v. Canada (Commissioner of Patents), generally referred to as the Harvard Mouse case. In a similarly 5-4 split in that case, the Court held that a mouse was not patentable because it is not a "manufacture" or "composition of matter" within the meaning of "invention" in s. 2 of the Patent Act.

BIOTECanada, an intervener to the proceedings, and represented by Gowlings, requested that the Court address the issue of whether the subject matter claimed within Monsanto's patent lies within or outside of the Patent Act, essentially asking the Court to reconsider what is meant by the term "composition of matter" that was considered in the Harvard Mouse case. Further, BIOTECanada asked the Court to comment on whether a canola plant could infringe a patent that claims genes and cells that make up the canola plant.

The following entities were also interveners before the Court: The Canadian Seed Trade Association; The Canadian Canola Growers Association; Ag-West Biotech Inc.; Attorney General of Ontario; Council of Canadians; Action Group on Erosion, Technology and Concentration; Sierra Club of Canada; National Farmers Union; Research Foundation for Science, Technology and Ecology; and International Centre for Technology Assessment.

For more information see:

www.gowlings.com/resources/enewsletters/pharmacapsules/Htmfiles/V3N071_20040521.html Gowlings Pharmacapsules - Special Report: "Supreme Court Ruled Today on Canola Gene Patent"

The decision may be found at:

http://www.lexum.umontreal.ca/

Patent Claims To A "Kit" Are Not Listable On The Canadian Patent Register

In Procter & Gamble Pharmaceuticals Canada Inc. v. Minister of Health, 2004 FC 204, a generic company served a Notice of Allegation alleging invalidity and non-infringement of a brand name company's patent that covered a treatment for osteoporosis. The patent at issue contained claims for the use of the medicine as well as claims to a kit. The generic alleged that both the use and kit claims were obvious.

The Federal Court held that the use claims were not obvious. However, the kit claims were held to be obvious as of the claim date, since contraceptive kits existed at that time, and there is no reason that a skilled person in the art would not apply the contraceptive teachings to osteoporosis. Even though the finding that the use claims were valid was determinative of the proceeding, the Court nevertheless went on to consider the issue of non-infringement of the kit claims.

As a preliminary issue, the Court considered whether the kit claims were eligible for listing on the patent register pursuant to the Patented Medicines (Notice of Compliance) Regulations. The Court held that the kit claims related to a system for administering the therapy and consequently should not be the subject of proceedings under the regulations.

Again, the Court nevertheless went on to consider whether the allegation of non-infringement of the kit claims was justified, and concluded that the kit claims would be infringed by the generic's product.

On the basis that the allegation of non-infringement due to invalidity was not justified, an Order for Prohibition was issued preventing the Minister from issuing a Notice of Compliance to the generic company.

The decision may be found at:

http://decisions.fct-cf.gc.ca/fct/2004/2004fc204.html

Google Inc., a key player in the world e-market, approached Gowlings' Moscow litigation department with a request to regain its rights to the domain name www.google.ru, which was initially registered in the name of a famous Russian cybersquatter and then transferred to a limited liability company, "Google.Ru", established and solely owned by the same individual. The cybersquatter placed elements of the Google-designed search engine and similar informational content on the Google.Ru Web site, thus making the site look very much like a Russian version of the original Web site at www.google.com.

On August 6, 2003, Google's claim was filed with the Moscow City Arbitration Court. Internet-related disputes are not yet widespread in Russia. As a result, the proper format and the required substance of the evidence in support of the arguments are still not quite clear. Gowlings undertook considerable efforts to collect and ensure proper evidence, including the special procedure of notary certification of the infringing Web site. On October 22, 2003, the Moscow City Arbitration Court considered the case on the merits and rendered a decision in favour of Google Inc. The court found trade mark infringement and ordered the defendant to cease and desist from use of the GOOGLE trade mark in the domain name. The court also ruled that registration of www.google.ru was an act of unfair competition.

Russian courts had already ruled in favour of trade name or trade mark owners in cybersquatting disputes. However, most of these cases took place before the 2003 amendments to the Russian Federation Law on Trade Marks, Service Marks and Appellations of Origin. In light of the newly adopted amendments, the courts are to scrutinize whether the use of the Web site of the defendant is connected to commercialization of the same goods or services as those covered by the relevant trade mark registrations.

The defendant appealed the decision of the Moscow City Arbitration Court to the court of appeals. Gowlings argued and proved the senior rights of Google Inc., not only to the trade mark, but also to the firm name. On January 14, 2004, the court of appeals upheld the decision of the first instance court, accepting Gowlings' arguments and proof on the similarity of services. The defendant further appealed to the cassation court, which suspended enforcement of the lower court decision pending the consideration of the cassation appeal. On February 27, 2004, the Federal Arbitration Court upheld the two prior decisions. On March 4, 2003, Gowlings enforced the decision. The Registrar in the .ru zone cancelled www.google.ru and enabled Google Inc. to register it in its name.

Unlike the majority of cases tried by the Russian arbitration courts, the Google case was resolved and enforced within six months.

Google Inc.'s litigation counsel was Marina Drel with Viacheslav Kliukin, Dmitry Semenov and Pavel Arievich, all of Gowlings.

Industry Minister Lucienne Robillard has announced the creation of a ministerial task force to combat unsolicited commercial e-mail, or "spam." The plan includes a series of initiatives by government, industry, marketers and consumers to identify measures for reducing and controlling junk e-mail.

The new Spam Task Force will oversee the implementation of a six-point action plan involving the use of existing laws and regulatory measures; the identification of legislative or regulatory gaps; the improvement of industry practices; the use of technology to validate legitimate communications; the enhancement of consumer education and awareness; and the promotion of an international framework.

The Task Force members include Gowlings partner Roger Tassé, who brings his expertise in telecommunications and broadcasting, the Internet and electronic commerce, and federal administrative and constitutional law to the project.

Industry Canada will meet with key stakeholders this fall to review progress on the initiatives. The Task Force will present its findings to the Minister of Industry the following spring.

For a detailed backgrounder on the action plan and biographical information on the Spam Task Force members see:

www.gowlings.com/govbrief/Htmfiles/bulletin/BulletinGowGovBriefing.html

On April 29, 2004, the Supreme Court of Canada granted Kirkbi AG leave to appeal the recent decision of the Federal Court of Appeal in Kirkbi AG v. Ritvik Holdings Inc. At issue is whether the owner of a trade mark should be unable to obtain relief for passing off on the basis of the "functionality doctrine," a judicial interpretation of the Trade-marks Act that limits the rights that can exist in merely functional marks.

Kirkbi, a Swiss corporation, has sold LEGO blocks in Canada since the early 1960s. Kirkbi sought to protect the particular appearance of its LEGO blocks — specifically, the arrangement of cylinders on the top of each block that enables the blocks to snap together (the so-called LEGO Indicia) — on the basis of a common law right in a distinguishing guise. The LEGO Indicia were also the subject of an expired Canadian patent, but had never been registered as a distinguishing guise under the Trade-marks Act.

At trial, Kirkbi alleged that Ritvik Holdings Inc., now operating as Mega Bloks Inc., directed attention to its blocks so as to cause confusion between its wares — MICRO MEGA BLOKS — and LEGO blocks. In order to succeed, Kirkbi needed to show that it had a valid trade mark, albeit a common law one, in its LEGO Indicia. The trial judge dismissed this argument, and the action, relying on what has come to be known as the functionality doctrine, an analysis developed over a long line of cases to the effect that a distinguishing guise that is merely functional is not capable of acting as a trade mark.

In a split decision, the Federal Court of Appeal upheld the trial judgment, citing the public policy objective behind prohibiting functional aspects being treated as trade marks. Such treatment could essentially constitute the granting of a perpetual patent in the guise of a trade mark right. Further, the Court confirmed that the functionality doctrine applies to unregistered marks, as well as to registered marks. In the former case, such as this one, the functionality doctrine prevents a trader from asserting trade mark rights in a purely functional feature. In the latter case, the functionality doctrine can provide a basis for the expungement of a registration on the basis of pure functionality. A date for the hearing has not yet been set.

On March 5, 2004, the Russian Trade Mark Office issued amendments to the Regulations on Declaration of Well Known Marks (Regulations) to comply with the Amended Trade Mark Law (Law) adopted back in December 2002. The Regulations describe the procedures for obtaining the status of a Well Known Mark in Russia.

As prescribed by the Law, the Regulations now state that in addition to trade marks that are legally protected in the Russian Federation, any means of individualization that has been intensively used and has become well known in Russia could be declared a Well Known Mark. The owner of a Well Known Mark may exercise his or her exclusive rights in association with goods and services beyond those for which the mark was originally registered, provided that the use of the identical or confusingly similar mark by a third party causes the consumer to associate the third party's mark with the owner of the Well Known Mark and affects the owner's legal rights.

The amended Regulations indicate that evidence of intensive use of a mark worldwide, and particularly in Russia, has to be provided when filing for a Declaration of Well Known Status. If the trade mark was registered in the Russian Federation before its Well Known Status was obtained, the information on the Well Known Status will be recorded in both the Russian Trade Mark Register and in the Well Known Mark Register. By analogy, in case of full or partial cancellation of Well Known Mark status, the relevant information will be entered in both the Trade Mark Register and the Well Know Mark Register.

Russian Trade Mark Office Change of Status

The Russian Trade Mark Office has lost its status as an independent federal governmental body, as the result of recent federal government reform. By the Act of the President of the Russian Federation Number 314, dated March 9, 2004, the Russian Trade Mark Office has been converted into the Federal Service for Intellectual Property, Patents and Trade Marks within the Russian Federation Ministry of Education and Science. As such, it will no longer be in a position to adopt legal acts in the area related to industrial and intellectual property. In another significant change, Mr. A. Korchaguin, who has been the director of the Russian Trade Mark Office for about 10 years, was replaced by Mr. B. Simonov. Mr. Simonov comes to head the Russian Trade Mark Office from the Ministry of Industry, Science and Technology.

The Supreme Court of Canada granted leave to Unilever Canada Inc. to appeal from a Québec Court of Appeal decision that confirmed the validity of a Québec law prohibiting the sale and distribution of yellow-coloured margarine in Québec.

Unilever had argued in the Court of Appeal that the law is unreasonable, outside of provincial jurisdiction and contrary to the principles of Canadian federalism. Unilever also asserted that the law is invalidated or abrogated by Québec's adoption of the North American Free Trade Agreement (NAFTA), the Agreement on Internal Trade (AIT) and the Agreement Establishing the World Trade Organization (WTO). In addition, Unilever challenged the law as being contrary to free expression under the Canadian Charter and Québec Charter.

The Supreme Court will examine all of the issues raised by Unilever before the Québec Court of Appeal, and is expected to hear the case in 2005.

For the story behind the case, see Ron Doerings' articles in Food in Canada magazine:

"Margarine Mayhem"

"The Legalization of Margarine (Part II)"

Gowlings partners Brenda Pritchard and Susan Vogt recently published their much anticipated guide to the Canadian advertising industry, entitled Advertising and Marketing Law in Canada. The 300-page resource provides a valuable framework for those navigating the increasingly regulated advertising industry in Canada. It offers a comprehensive overview of the law, as well as institutional codes with respect to common advertising and marketing practices.

Topics covered in the book include price and credit advertising; contests and promotions; advertising to children; packaging and labelling; intellectual property; misappropriation of personality; competition law; privacy law; channels of marketing communications; and advertising agency service and talent agreements.

In addition to addressing applicable federal and provincial laws, the book also highlights practice principles in various industries, such as the food, automobile, drug, natural health product and tobacco industries.

The book is expected to be a big hit with North American advertising industry types, particularly in the United States, with companies that do business in Canada.

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.