Canada: Faster, Cheaper Trade-mark Litigation?

Most trade-mark litigation in Canada is brought in the Federal Court, and arises in three contexts:

  1. Appeals from the Registrar of Trade-marks concerning the registrability, or continuing registrability, of a mark;
  2. Challenges to the validity of a registered trade-mark; and
  3. Proceedings for infringement, statutory passing-off and depreciation of goodwill wherein trade-mark rights are asserted against an alleged infringer.

In the first two kinds of trade-mark litigation, proceedings begin by notice of application. The Federal Courts Rules governing applications are geared to having the cases ready for hearing within 110 days of its filing. Applications are intended to be dealt with in a summary and expeditious manner.

With rare exceptions, the evidence in proceedings begun by application is limited to affidavit evidence and cross-examination upon those affidavits. Unlike actions, which are started by statement of claim, there is no obligation to produce relevant documents or submit to an examination for discovery. Counsel prepare their written arguments based on a paper record only. The applications judge decides the matter after an oral hearing without hearing from or seeing any live witnesses. The costs associated with an application are much less than those associated with proceedings commenced by statement of claim.

It has long been considered that the third type of litigation — proceedings for infringement, passing-off and depreciation of goodwill — must be proceeded with by way of action.

An action typically involves detailed pleadings, obligatory exchanges of relevant historical documents and a wide-ranging examination for discovery of the parties' representatives and any assignors of asserted rights, various interlocutory proceedings, and eventually, a trial involving viva voce testimony.

The Federal Courts Rules provide for aggressive case management to permit a hearing of an action at the earliest possible date. However, even the most aggressive case management will rarely permit an infringement case started by statement of claim to be heard in less than two years' time. Moreover, the costs associated with actions, in terms of legal fees, disbursements and lost executive time, are markedly higher as compared to proceedings begun by notice of application.

Parties would benefit if the more streamlined and less-costly application procedure was available in the context of allegations of infringement, passing-off and depreciation of goodwill.

A very recent decision of the Federal Court of Appeal has now confirmed that the application procedure is indeed available to trade-mark owners who wish to bring such proceedings in the Federal Court. Trade-mark owners may now commence proceedings for passing-off infringement or depreciation of goodwill by way of application, thereby significantly reducing the costs and delay in securing a final judgment on the merits.

The facts of the case were straightforward. The applicant, BBM Canada, is a not-for-profit, member-owned industry organization that provides broadcast measurements and consumer behaviour data to broadcasters, advertisers and agencies. It asserted its registered trade-mark, BBM, against Research in Motion Limited (RIM). The registration extended to the services BBM provided. RIM had commenced to use the identical trade-mark in association with its smartphone devices and communications services, in particular, its instant-messaging service called BlackBerry Messenger.

BBM Canada initiated proceedings for infringement, statutory passing-off and depreciation of goodwill by way of notice of application. RIM challenged the Federal Court's jurisdiction to proceed in this manner, arguing that the Trade-marks Act (Act) only permitted such causes of action to be proceeded with by way of action. The Federal Court agreed with RIM and struck out the proceedings. However, the Federal Court of Appeal reversed it, finding that there was nothing in the Act prohibiting BBM Canada from proceeding by way of notice of application. The Court noted, however, that an applicant's right to proceed by way of notice of application is subject to the respondent's right to ask the Court to convert the application into an action. The Court indicated that it would be prepared to entertain such a motion if there were genuine issues of credibility or that, on the particular facts of the case, an examination for discovery of the parties was necessary.

Whether such conversion motions will be readily granted by the Court when the respondent challenges an applicant's right to proceed by way of application is an open question. A review of Federal Court jurisprudence in other contexts reveals that the Court is generally reluctant to displace a party's choice of procedure without a clear demonstration of prejudice.

In its reasons, the Federal Court of Appeal referred to an obscure decision of the Federal Court, decided in 2008, wherein the Court, on application, dismissed the applicant's statutory passing-off claim. In that case, none of the respondent, the Federal Court or the Federal Court of Appeal, raised any issue of jurisdiction to deal with the passing-off claim by way of application. A review of the timelines in the latter case reveals that, despite a four-month lapse in activity by the applicant during the proceeding, the proceeding was heard and decided within 19 months of filing the notice of application. The costs awarded in favour of the successful respondent was slightly less than $5,000. While the award of assessed costs does not reflect the actual costs incurred, it is a strong indication that the costs were indeed substantially less than they would have been had the matter proceeded by way of action.

It remains to be seen whether trade-mark owners will routinely opt for the more summary and less-expensive notice of application process, rather than proceed by way of action. Parties who choose to proceed by way of notice of application are not entitled to conduct a wide-ranging examination for discovery of the opposite party. Thus, to the extent a trade-mark owner needs to make out all or part of its case through admissions or documentary evidence from the alleged infringer, the preferred mode of procedure will remain the traditional action. However, if the issues of infringement are relatively straightforward, and the trade-mark owner is able to marshal the necessary evidence without the need for discovery or production of documents from the respondent, the choice of procedure now afforded by the Federal Court of Appeal decision is a welcome development.

European Commission broker Memorandum of Understanding on Online Anti-Counterfeiting

A ground-breaking memorandum brings together rights holders and online trading platforms, and paves the way for co-operation to combat the online counterfeit issue that costs businesses and the wider economy millions of dollars every year.

Following a long and intense period of negotiation over some two years, conducted under the direction and auspices of DG Internal Market in the European Commission, and as a leading initiative of The European Observatory on Counterfeiting & Piracy, a Memorandum of Understanding (MoU) has been agreed and signed between rights holders and internet trading platforms on the sale of counterfeit goods over the Internet. The signing took place at a formal ceremony in Brussels on May 4, 2011.

A long running source of considerable friction between brand owners and Internet trading platforms, and the subject of a number of high profile but inconclusive law suits on both sides of the Atlantic, the MoU is a 12-month pilot to build trust and co-operation with Internet trading platforms dealing with hard goods and has the objective of removing counterfeits from their sites without the need for litigation. It is important to note that the issues related to the sale of counterfeit goods over the Internet are quite distinct from illegal peer-to-peer file sharing, or piracy, of copyright protected works over the Internet and is beyond the scope of this MoU. That has been the subject of a separate stakeholder dialogue as noted in link to the Commission's website (see below).

Stakeholders' dialogues aim to promote a high-standard IP culture, which is regarded as a vital cornerstone of the modern knowledge-based society. By improving mutual understanding by participants of their respective positions and, by identifying areas of common interests, stakeholders are encouraged to exchange information and benchmark the possible ways of action, while, at the same time, take into account other interests, in particular those of Internet users. Voluntary agreements can also be more easily extended beyond the European Union and become a foundation for best practice in the fight against counterfeiting and piracy at a global level.

It is the first document, anywhere in the world, to unequivocally state that Internet trading platforms must take proactive and preventative measures to stem the tide of counterfeits available over the Internet, and must work in conjunction with the rights holders to do so. It sets out a series of joint principles including effective and practical measures to prevent offers of counterfeit goods being listed on Internet trading platforms. It strikes a fair balance between the somewhat polarized interests of both sides in this debate and has the potential to improve online protection for brand owners and consumers alike. Parties can opt out at any time and, at the end of the 12-month pilot, the MoU will be optionally renewed with the agreement of any or all, or indeed new parties, at that time if the trial has been successful. It currently has 33 signatories including brand owners, trading platforms and both national and international trade associations with an interest in this issue (although it is not binding on individual members of such associations unless they have chosen to sign individually).

This agreement represents a significant milestone in the fight against counterfeits on the Internet and demonstrates that voluntary arrangements can, in certain circumstances, provide flexibility to adapt quickly to technological developments and potentially deliver efficient and pragmatic solutions - the proof however will be seen in 12 months time when the trial period is over and the enthusiasm to renew or extend the agreement is measured.

The full text of the MoU can be found together with the European Commission's commentary on it at:

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.

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