It's less than two weeks until Christmas and if you
have yet to hang your lights outside, you may be in the
doghouse. Excuses are few at this point, so there's no harm in
trying a longshot – you haven't strung the lights up
because, well, it may be design infringement!
Canadian Tire is suing Wal-Mart for design
infringement1 over Wal-Mart's sale in Canada of
holiday lights with a spring-operated clip that can attach to a
gutter, shingles, tree branch and the like. Canadian Tire is
not claiming to own the general concept of a spring-operated
clip-on light, just its own proprietary design. A drawing from the
registered design is below, along with a photo of the corresponding
product in action, from the Canadian Tire (Noma brand) package:
Canadian Tire also raised trademark and competition law issues
that won't be discussed here. The Wal-Mart product could be
potentially infringing if it has taken the Canadian Tire registered
design or a design not substantially differing from it. You be the
judge. Here is the registered design and the Wal-Mart product as
alleged in the Canadian Tire Statement of Claim:
No defence has been filed yet (Wal-Mart defence is due December
19). The case will certainly not be tried in court before the
holidays are over, and most IP cases settle before trial. The
Wal-Mart product could not be found on its web site, so it's
unknown at this point if sales are continuing or if the product was
pulled. If the allegations of design infringement are proven in
court, Canadian Tire could potentially get a court order for
damages or an accounting of profits. There could also be a
permanent injunction, requirement for delivery up of infringing
clips, and an award of legal costs. It has also been
suggested in the media that Canadian Tire could benefit from
the publicity of this case.
What is the value of the IP developed by Canadian Tire?
Let's have "the shelf" do the talking. A package of
75 of the proprietary Canadian Tire clips have a regular price of
$14.99. There are also two brands of old school, non-spring
loaded clips that sell in a package of 100 for $9.99. That is
a 50 per cent price premium for fewer clips, which sounds good even
though there would be a higher cost to manufacture the
spring-loaded clips. So irrespective of the merits of this case (no
opinion is being given here), this product is a good example of the
potential power of an innovative design to improve profit margins.
Of course, you also have to be able to sell at the improved profit
margins to fully capture the advantage. The 75-pack was recently
on clearance at a local Canadian Tire for $7.43. There is no
way to know if Canadian Tire already sold a significant number of
clips at the regular price and are just clearing out the
remainder, or if consumers were reluctant to buy at the higher
price point such that sales lagged. One thing for certain is that
commercializing and enforcing IP to extract value is never
straightforward, but is always interesting.
1 Canadian Tire Corporation, Limited v Wal-Mart Canada
Corp., Tomson Merchandise Co. Ltd., and Everstar Merchandise Co.
Ltd. (Federal Court of Canada file no. T-1926-15) re Canadian
industrial design no. 158920.
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.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
The Federal Court dismissed a motion by Apotex seeking particulars from Allergan's pleading relating to the prior art, inventive concept, promised utility and sound prediction of utility of the patents at issue.
Last year we saw the Canadian Courts release trademark decisions that granted a rare interlocutory injunction, issued jailed sentences for failure to comply with injunctive relief, grappled with trademark and internet issues...
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).