Canada: Passing Off and Trade-Mark Violations on the Internet

When can you refer to someone else’s trade name or trade-mark on a webpage and not run afoul of trade-mark infringement or passing off? The issues of passing off and trade-mark violations in relation to domain names and metatags on the Internet were recently considered in the decision of the British Columbia Supreme Court in British Columbia Automobile Assn. v. O.P.E.I.U., Local 378 (2001), 10 C.P.R. (4th) 423 (B.C.S.C.) ("BCAA v. O.P.E.I.U").

The plaintiffs in this case alleged trade-mark infringement and passing off with respect to three versions of the defendant’s website. The court determined that there was a passing off in relation to the defendant’s first website, but not the sec-ond and third websites, and that there was no depreciation of the plaintiff’s goodwill relating to the three websites. The case is thus useful in set-ting out the required elements to support a claim of passing off and trade-mark infringement in the context of websites.

The legal issues in BCAA v. O.P.E.I.U.arose in the context of a labour dispute between the Canadian Automobile Association (the "CAA"), its regional association, the British Columbia Automobile Association (the "plaintiff"), and the trade union representing certain of the plaintiff’s employees (the "Defendant").

The CAA and the plaintiff owned certain registered trade-marks and certification marks including BCAA, CAA, and the CAA logo. The plaintiff had the authority to use these trade-marks through a license agreement with the CAA.

In 1997, the BCAA developed a website which could be accessed under its domain names "bcaa.bc.ca," "bcaa.com," and "bcaa.org," which allowed people to apply for membership and subscribe for travel services to the BCAA.

In January 1999, certain of the plaintiff’s employees, represented by the defendant, began a lawful strike against the plaintiff.

In March 1999, the defendant established a web-site, accessed under its domain names "bcaaon-strike.com" and "picketline.com." The defendant posted three different website designs on its web-site from March 1999 until the present. In their action, the plaintiff alleged passing off and depreciation of goodwill in relation to all three of the defendant’s website designs.

Passing Off

The court noted in its decision that there are two broad categories of passing off; one in which par-ties are competitors engaged in a common field of activity, and the other in which a defendant creates a false impression that in some way its product or business is approved, authorized, or endorsed by the plaintiff. The court confirmed that it should measure passing off by considering:

  1. the existence of goodwill;
  2. deception of the public due to a misrepresentation; and
  3. actual or potential damage.

With respect to the first and second websites posted by the defendant, the court addressed the question as to whether the defendant misrepresented the relationship between the plaintiff and the defendant, and specifically whether the defendant misrepresented being affiliated with the plaintiff.

The first website design, used from March 1999 to April 1999, included the plaintiff’s website structure, colour scheme, layout, the placement of the CAA logo (although inverted), the placement of the words "BCAA ON-RAMP" (although the word "ON" was replaced with "OFF"), format metatags (which referred to the plaintiff by name and trade-mark), and the title "Greetings, BCAA is on strike."

The court felt that the first website demonstrated an intention on the part of the defendant to mislead individuals looking for the plaintiff’s website in order to get the public to read what appeared on its web-site. The court specifically noted the visual similarities between the plaintiff’s and the defendant’s websites , the fact that the initial metatags duplicated the plaintiff’s website metatags, and the confusion arising from the phrase "Greetings, BCAA is on strike." The court concluded that there would be confusion sufficient to constitute the tort of passing off and that the first website therefore violated the plaintiff’s intellectual property rights.

In response to complaints from plaintiff’s counsel, the defendant changed its first website on April 26, 1999 in the following manner:

  1. the CAA logo was removed;
  2. the acronym BCAA was changed from upper-case (as it appeared on the BCAA’s website) to lower case; and
  3. the message "Greetings, BCAA is on strike" was repositioned so that most of the wording was not seen on a standard screen.

The court determined that the changes made by the defendant to create its second website reduced the possibility of confusion, and concluded that the second site did not constitute passing off.

The plaintiff’s passing off claim in connection with the third website related only to the domain names, "bcaaonstrike.com" and "bcaabacktowork.com," the metatags, and whether the defendant’s use of the domain names and metatags constituted a passing off in this context.

The court concluded that the third website did not, and, because it still exists, does not constitute a passing off because:

  1. the domain name used by the defendant is not identical to the CAA’s trade-mark;
  2. it is clear from the design of the third website that it is not the plaintiff’s website;
  3. the defendant is not using a domain name identical to the plaintiff’s trade name, nor is it using identical metatags, as it had been earlier;
  4. the defendant’s third website is not competing commercially with the plaintiff, but is attempting to communicate its message to the public about an ongoing labour relations campaign;
  5. the use of the "BCAA" in the domain name, and the references that are currently made in the metatags, do not represent the website as that of the plaintiff’s or associated with the plaintiff, and there is no actual confusion that the third website is the property of the plaintiff; and
  6. a reasonable balance must be struck between the legitimate protection of a party’s intellectual property, and a citizen’s or a union’s right of expression, so that the common law is interpreted in a manner consistent with the Charter.

Significantly, a disclaimer added to the third web-site, combined with these other elements, led the court to conclude there was no reasonable possibility of confusion that there was an affiliation between the defendant’s website and the website of the plaintiff.

Depreciation of Goodwill

The plaintiff’s action included a claim for depreciation of the value of the goodwill in the plaintiff’s registered trade-mark, pursuant to Section 22 of the Trade-Marks Act, R.S.C. 1985,chapter T-13 (the "Act"), by the defendant’s use of the marks BCAA, CAA, and CAA logo in all of the defendant’s websites and metatags and in the use of the mark "BCAA" as part of the defendant’s domain names.

The court confirmed that, in order to succeed, the plaintiff must establish that:

  1. the plaintiff has a validly registered trade-mark;
  2. the defendant has used the registered trade-mark as "use" is defined in the Act (the plaintiff only alleged that the use of the trade-marks was in association with services, not goods); and
  3. such use is likely to have the effect of depreciating the goodwill attached to the registered trade-mark.

The court concluded that the defendant’s use of a trade-mark on a picket sign or on a website does not depreciate the goodwill associated with the plaintiff’s trade-mark; the defendant is entitled to express its position and speak freely provided it does not violate Section 22 of the Act. The court noted that to accept the argument that reference to an employer’s trade-mark to identify a union site depreciates the goodwill associated with that trade-mark would be a result that goes far beyond what Parliament intended by Section 22 of the Act.

Conclusion

This case illustrates the manner in which the courts appear to be dealing with domain names and metatags. Essentially, the courts are extending traditional trade-mark principles to address Internet issues. This case suggests that the use of trade-marks on the Internet, such as domain names and metatags, can give rise to a successful claim for passing off and/or depreciation of goodwill. However, it is clear that the domain names and metatags must be analyzed in the context in which they are being used.

Specifically, where the use of domain names and metatags is non-commercial, the courts will not likely interfere. However, where there is actual confusion, where the websites include visual similarities, identical domain names or metatags, where there is no disclaimer, and where the website is being used for commercial purposes, then the courts appear to be willing to intervene.

This article was originally published in The Lawyers Weekly on June 22, 2001.

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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