Canada: IP Report Online - September 2004

Last Updated: September 28 2004

Edited by Robert A. MacDonald and Frank Mulock

Contents

COPYRIGHT DEVELOPMENTS

  • Supreme Court of Canada Renders Decision on Socan Tariff 22
  • Peer-to-Peer (P2P) Cases Encountering Difficulties

DOMAIN NAMES And The INTERNET

  • Online Pharmacy Loses zyban.ca
  • Real Estate Agent Loses Domain Names to Trade Mark Owner
  • Big Fines for Internet Defamation
  • Canadian Booksellers Association Abandons Amazon.ca Case

TRADEMARKS UPDATE

  • Veuve Clicquot Ponsardin v. Les Boutiques Cliquot Ltée
  • European Community to Join the Madrid System

ANNOUNCEMENT

  • Gowlings Recruits Another Rainmaker

COPYRIGHT DEVELOPMENTS

Supreme Court Of Canada Renders Decision On Socan Tariff 22

On June 30, 2004, the Supreme Court of Canada rendered its long awaited judgment concerning the copyright tariff proposed by the Society of Composers, Authors and Music Publishers of Canada (SOCAN) for the use of musical works on the Internet. The case deals with important issues relating to Internet usage, including the extent to which music forming part of Internet communications is protected under Canadian copyright legislation and the entities that can be held liable for the payment of royalties for such use.

The Court concluded that, generally, neither Internet access providers nor host server operators communicate or authorize the communication of musical works in Canada in violation of SOCAN's rights under the Copyright Act. The Act was said to shield from liability the activities of such Internet Service Providers (ISPs) when their activities are limited to providing the means for others to communicate by telecommunication. These activities include an ISP's use of a cache server. Caching was said to merely reflect the need to deliver faster and more economic service, something that should not give rise to copyright liability when undertaken only for such technical reasons. In the specific case of host server providers, the Court noted that it is impractical in the present state of the technology to require them to monitor the content posted on their servers to determine if they comply with copyright and other laws.

However, where an ISP also acts as a content provider or otherwise associates itself with the provision of content, it may become liable for effecting or authorizing the communication of music, depending on the particular circumstances at hand. ISPs could thus become liable for authorizing infringing communications if it can be shown that a certain relationship or degree of control exists between the ISP and the provider of the infringing material, or if the activities of the ISP cease to be "content neutral." For instance, if an ISP receives notice of infringing content on its systems and fails to remove the material, this could in some circumstances lead to a finding of authorization.

On the issue of cross-border transmissions, the Court (with the exception of LeBel J.) confirmed the appropriateness of the "substantial connection" test, by which the applicability of the Copyright Act to cross-border communications depends on whether there is a sufficient connection between Canada and the Internet communication in question. Relevant connecting factors include the location of the content provider, the host server, the intermediaries and the end user.

The Court's decision may also be seen as providing some guidance as to how the judiciary may deal with other Internet-related matters in the future, including distribution of child pornography, libel and other legal and regulatory issues involving the determination of Canadian jurisdiction and process in Canadian courts.

Read the decision at

http://www.lexum.umontreal.ca/csc-scc/en/rec/html/2004scc045.wpd.html

Peer-To-Peer (P2p) Cases Encountering Difficulties

Recent decisions in both Canada and the United States of America have refused to compel Internet service providers (ISPs) to release the names of subscribers alleged to be engaging in P2P file sharing under Internet pseudonyms.

The United States Court of Appeals for the District of Columbia Circuit in Recording Industry Association of America, Inc. v. Verizon Internet Services, Inc., 351 F.3d 1229 (2003), held that the subpoena provisions of the Digital Millennium Copyright Act, 17 U.S.C. § 512(h), do not authorize the issuance of a subpoena to an ISP acting solely as a conduit for communications where the content of those communications is determined by others (i.e. shared P2P files), as opposed to an ISP that stores potentially infringing material on its servers.

In the recent decision of BMG Canada Inc. v. John Doe, 2004 F.C. 488, the Honourable Mr. Justice Von Finckenstein of our Federal Court set out a five-part test for granting applications to identify John Does under Rule 238 of the Federal Court Rules, 1998. Applying this test, the judge (a) was not satisfied that a prima facie case had been made out by the applicants against the alleged wrong-doers; (b) was unable to determine that the ISPs at issue were the only practical sources for the identity of peer-to-peer users; and (c) found that privacy concerns evidenced in the case outweighed the applicants' interest in an Order for disclosure - which was therefore refused. An appeal has been taken from this decision.

Related Links:

Full Text of the Digital Millennium Copyright Act

http://decisions.fct-cf.gc.ca/fct/2004/2004fc488.shtml

http://pacer.cadc.uscourts.gov/docs/common/opinions/200312/03-7015a.pdf

DOMAIN NAMES and the INTERNET

Online Pharmacy Loses Zyban.Ca

In the first case of its kind in the dot-ca space, a Panel has ordered the transfer of an online pharmacy's domain name registration.

In Glaxo Group Limited v. Defining Presence Marketing Group (Manitoba), BCICAC, Case No. 00020, a case decided pursuant to the Canadian Internet Registration Authority's Dispute Resolution Policy (CDRP), the Registrant had registered the domain name zyban.ca, and was pointing it to a Web site advertising the online sale of pharmaceutical products, which included the Complainant's ZYBAN product, as well as competitor products.

The Panel made findings of bad faith registration on all three prongs of the CDRP. In concluding that the Registrant had registered the impugned domain name with the purpose of disrupting the business of the Complainant, who was a competitor of the Registrant, the Panel held (i) that the Registrant's Web site at zyban.ca offered educational and informational services in connection with the ZYBAN product, which rivaled the Complainant's offering provided at the zyban.com Web site, (ii) that the Registrant was selling pharmaceutical products of companies that were directly in competition with the Complainant, and (iii) that by using a domain name which was identical to the Complainant's mark, the Registrant was likely to confuse Internet users that zyban.ca would connect them to the Complainant's Web site, or that the Registrant's Web site was endorsed by, or affiliated with, the Complainant. Relying on the Registrant's offer to sell the domain name for $2,400.00 Cdn., which followed an understanding whereby the Registrant would assign the subject domain name in exchange for its out-of-pocket expenses (i.e., $24.00 Cdn.), the Panel concluded that the Registrant had acquired the domain name with the bad-faith intent of selling it for a profit. In its third finding of bad faith, the Panel held that the Registrant had engaged in a pattern of registering domain names to which it was not entitled, noting that the Registrant's extensive dot-ca domain name portfolio included at least 12 domain names that contained, or were composed of, third-party trade mrks.

In concluding that the Registrant did not have a legitimate interest in the domain name, the Panel concluded that even if the Registrant was selling the ZYBAN product, it was not entitled to register the ZYBAN trade mark as a domain name without the Complainant's consent, given that such use went beyond what was required to describe the goods and services offered by the Registrant.

Gowlings acted for the Complainant in this matter.

Read the decision at

http://www.cira.ca/en/cat_dpr_decisions.html

Real Estate Agent Loses Domain Names To Trade Mark Owner

A Panel has ordered 20 domain names registered by a real estate broker transferred to the trade mark owner.

In Sutton Group Financial Ltd. v. GeorgeGeorge.com o/a George Georgopoulos, WIPO, Case No. D2004-0335, a case decided pursuant to the Uniform Dispute Resolution Policy (UDRP), the Registrant, who worked as a real estate agent for one of the Complainant's franchisees, registered 20 domain names, including suttonagent.com and suttonusa.com, incorporating the well known SUTTON trade mark. In ordering the domain names transferred, the Panel held that the Registrant's status as a SUTTON salesperson did not confer upon it the right to register the impugned domain names, reasoning that the domain name registrations went far beyond what was required to advertise the sale of the Registrant's real estate services. This finding is consistent with the majority of UDRP cases, which have recognized a domain name registration as a trade mark owner's exclusive right, and that permitting such a registration would allow any distributor, wholesaler or retailer to monopolize a third party's trade mark as a domain name based upon the mere fact that it sells that party's products or services.

Gowlings acted for the Complainant in this matter.

Read the decision at

http://arbiter.wipo.int/domains/decisions/html/2004/d2004-0335.html.

Big Fines For Internet Defamation

The Ontario Court of Appeal has overturned a lower court decision involving Internet libel in the Barrick Gold Corporation v. Jorge Lopehandia and Chile Mineral Fields Canada Ltd. case. The issues on appeal were what damages (general and punitive) should be awarded in Internet defamation cases and whether injunctive relief should be granted in such circumstances. In 2001, Mr. Lopehandia asserted a claim against one of Barrick's mining properties in Chile. Barrick insisted that the grievance was unfounded. Following Barrick's refusal to settle the complaint, Mr. Lopehandia embarked upon what the Court agreed was a systematic, extensive and vicious campaign of libel over an extraordinarily lengthy period with the express purpose and intent of embarrassing Barrick and injuring its reputation. The campaign was conducted over the Internet and involved the posting of hundreds of false and defamatory statements concerning Barrick on various Web sites.

The Court of Appeal increased the trial judge's award by quintupling the general damages award to $75,000 and adding $50,000 in punitive damages. The Court also permanently restrained the defendant from disseminating, posting on the Internet or publishing in any manner whatsoever any defamatory statements concerning Barrick. Barrick was also awarded its costs for the appeal.

The Court held that "Internet defamation is distinguished from its less pervasive cousins, in terms of its potential to damage the reputation of individuals and corporations...especially its interactive nature, its potential for being taken at face value, and its absolute and immediate worldwide ubiquity and accessibility."

Read the decision at

http://www.ontariocourts.on.ca/decisions/2004/june/barrickC39837.htm

Canadian Booksellers Association Abandons Amazon.Ca Case

The Canadian Booksellers Association (CBA) and Indigo Books & Music have dropped their longstanding litigation challenging the entry of Amazon.ca into the Canadian market. Although the case was scheduled for trial in May 2004, it was dropped because of the large financial burden such proceedings would impose. In 2002, the federal government let Amazon.ca open for business in Canada despite legislation designed to protect the country's book industry from cross-border competition. The CBA and Indigo applied to the Federal Court for judicial review seeking an order that would declare Amazon.com subject to the Investment Canada Act. If such a case were successful, it might mean that Amazon would have to close up shop in Canada.

After a review of the Amazon.ca Web site, the federal government held that it did not have jurisdiction over the American Internet retailer. In order for the Investment Canada Act to apply to an investment by a non-Canadian, the investment must involve the establishment of a new Canadian business or the acquisition of control over an existing Canadian business. Although Amazon.ca had hired Canada Post to work for it, this was merely a contractual relationship, and not a business acquisition.

TRADE MARKS UPDATE

Veuve Clicquot Ponsardin V. Les Boutiques Cliquot Ltée

On April 22, 2004, in Veuve Clicquot Ponsardin v. Les Boutiques Cliquot Ltée, 2004 FCA 164, the Federal Court of Appeal upheld the trial judge's decision to dismiss the plaintiff's claims for trade mark infringement, depreciation of goodwill and passing off.

In November 1998, Veuve Clicquot Ponsardin, Maison Fondée en 1772 (Veuve Clicquot) began an action for trade mark infringement, depreciation of goodwill and passing off against Les Boutiques Cliquots Ltée, Mademoiselle Charmante Inc. and 3017320 Canada Inc. (the Defendants), and sought the expungement of the trade marks CLIQUOT and CLIQUOT "UN MONDE À PART". The Defendants use the said trade marks in connection with the retailing of women's clothing and accessories. Veuve Clicquot's activities with respect to the VEUVE CLICQUOT trade mark and other trade marks involving the word CLICQUOT relate to alcoholic beverages, in particular champagne.

The Court found no likelihood of confusion in the consumers' minds between the marks, most notably in view of the significant difference between the wares of the parties and in view of its finding that the distribution of promotional fashion items bearing the mark VEUVE CLICQUOT, such as jackets and scarves, did not evidence an intention to enter the women's fashion industry. In particular, targeting women as one market does not support Veuve Clicquot's allegation that the trade mark is extended to this industry. The Court rejected the plaintiff's argument based on the elasticity of famous trade marks in the luxury field. It found that Veuve Clicquot had failed to establish a connection between the parties' activities and that the mere speculation as to diversification could not form the basis of an expansion of trade mark rights beyond existing operations and the class of products with which it is being used. Consequently, the Court held that there was no trade mark infringement.

As the trial judge found no risk of confusion between the trade marks at issue, no connection between the parties, and no goodwill attached to Veuve Clicquot's marks in the women's fashion industry, he rejected the claims of depreciation of goodwill and passing off. Finally, the Court refused to expunge the Defendants' trade marks.

The Federal Court of Appeal's confirmation of the trial judge's decision suggests that holders of famous trade marks may not rely solely on the notoriety of their trade marks in order to prevent competitors using similar marks from entering industries into which they have no concrete plan to diversify.

European Community To Join The Madrid System

The system of international registration of marks is governed by two treaties: the Madrid Agreement Concerning the International Registration of Marks, which dates from 1891, and the Protocol Relating to the Madrid Agreement, which was adopted in 1989, entered into force on December 1, 1995, and came into operation on April 1, 1996. Together, these treaties comprise the so-called Madrid System set up by the World Intellectual Property Organization (WIPO). The European Union's Community Trade Mark (CTM) system will join the system for international registration of trade marks on October 1, 2004, when the European Community's (EC) accession to the Madrid Protocol comes into effect.

The CTM system is a unique system set up by the EC, whereby trade mark owners may benefit from a unified system of protection throughout the 25 member states of the EC as a result of a single application filed with the Office for Harmonization in the Internal Market (Trade Marks and Designs) (OHIM). The Madrid Protocol, to which Canada is not a party, is an international instrument for trade mark registration, whereby an applicant from a member state may file a single application and seek protection for the mark in any other member countries designated in the application. The Madrid Protocol allows for the trade mark offices of individual members to examine the application, and if the application is accepted, protection of the international registration extends to that country.

With the addition of the EC to the jurisdictions covered by the Madrid Protocol, the number of parties to the Protocol rises to 66. The linking of the CTM system and the Madrid international system for registration opens new possibilities for co-operation in the international community. It will allow for EC applicants to file for international registration simultaneously with their CTM applications. Similarly, applicants from countries that are members to the Protocol may designate the EC in their applications for international registration. This will enable applicants under the Protocol to cover the entire EC with a single designation.

Related Links:

Madrid Agreement Concerning the International Registration of Marks

Protocol Relating to the Madrid Agreement

ANNOUNCEMENT

Gowlings Recruits Another Rainmaker

Gowlings has recruited former federal finance minister Donald Mazankowski as a senior adviser, operating from the Firm's Calgary location.

Mr. Mazankowski will provide counsel to Gowlings clients on a variety of government and business-related issues and solidify the Firm's presence in the health care, finance, transportation, agriculture and energy sectors.

Mr. Mazankowski's commission as Gowlings adviser is further evidence of the Firm's commitment to offer its clients a full range of legal and non-legal services across a broad range of industries. Gowlings has been actively recruiting notable Canadian icons from a variety of market sectors, including former chief justice of the Ontario superior court the Hon. Patrick LeSage, economist Don McCutchan, government relations guru Sean Moore and former RCMP commissioner Norman Inkster-to name a few.

For further details of Mr. Mazankowski's move to Gowlings, please see the Globe's Report on Business cover story or see the news release:

http://www.gowlings.com/resources/pdfs/Mazankowski.pdf

http://www.gowlings.com/resources/pdfs/NewsRelease_DonaldMazankowski.pdf.

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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