Canada: Court Of Appeal States Obviousness Test Is "More Or Less Self-Evident" And Not "A Fair Expectation Of Success" (Intellectual Property Weekly Abstracts Bulletin — Week Of January 4, 2016)

Last Updated: January 8 2016
Article by Beverley Moore, Chantal Saunders and Adrian J. Howard

Most Read Contributor in Canada, September 2016

NOC Decisions

Court of Appeal states obviousness test is "more or less self-evident" and not "a fair expectation of success"
Eli Lilly Canada Inc. et al. v. Mylan Pharmaceuticals ULC et al., 2015 FCA 286
Drug: tadalafil

The Court of Appeal has dismissed the appeal of a dismissal of an application pursuant to the PM(NOC) Regulations that had found Mylan's allegations of invalidity to be justified.

The Court of Appeal held that the correct test for obviousness, and the test that ought to be applied by the Federal Court, is that articulated by the Supreme Court of Canada in Apotex Inc. v. Sanofi-Synthelabo Canada Inc., 2008 SCC 61, [2008] 3 S.C.R. 265, at paragraph 66: "For a finding that an invention was 'obvious to try', there must be evidence to convince a judge on a balance of probabilities that it was more or less self-evident to try to obtain the invention. Mere possibility that something might turn up is not enough."

Trademark Decisions

Federal Court upholds refusal of four applications for marks containing the word SECRET
Eclectic Edge Inc v. Gildan Apparel (Canada) LP, 2015 FC 1332

Eclectic Edge Inc. ("Eclectic") previously filed applications to register four trademarks containing the words "valentine" and "secret", based on proposed use in association with several goods in the nature of women's clothing, undergarments and lingerie. The respondent Gildan Apparel (Canada) LP ("Gildan"), through one of its predecessor entities, opposed the registration on the basis of reasonable likelihood of confusion with its own registered trademark SECRET and numerous other trademarks containing the word SECRET (the "SECRET Marks"). The Registrar of Trademarks refused Eclectic's four applications, and Eclectic appealed from those decisions.

One issue on appeal related to judicial comity. Eclectic claimed that judicial comity should lead the Court to follow the conclusions of Justice Manson in the recent Eclectic Edge Inc v Victoria's Secret Stores Brand Management, Inc, 2015 FC 453 decision involving Eclectic's VALENTINE SECRET Marks and the VICTORIA'S SECRET trademarks. Conversely, Gildan argued that the principle of judicial comity should instead convince the Court to echo the judicial findings of fact and law made by Justice Tremblay-Lamer in Cortefiel SA v Doris Inc, 2013 FC 1107, which related to the WOMEN'SECRET trademark and Gildan's SECRET Marks. The Court did not agree with either party on the issue of judicial comity because it held that comity only applies to determinations of law, and not to findings of facts where there is a different factual matrix or evidentiary basis between the two cases. The Court concluded that the current appeal involves a different issue, based on different facts, and opposing different parties, and assessed the current appeal based on the evidentiary record and arguments before him.

The Court was not persuaded the new evidence filed in the appeal would have materially affected the Registrar's decisions. Therefore, the Court applied the reasonableness standard of review and on that basis dismissed the appeal.

Appeal pursuant to section 56 granted and opposition granted
Home Hardware Stores Limited v. Benjamin Moore & Co., Limited, 2015 FC 1344

This is an appeal pursuant to section 56 of the Trade-marks Act in respect of a decision of the Trademarks Opposition Board (the "Board") to reject Home Hardware's opposition to the trademark applications filed by Benjamin Moore.

The Court considered the standard of review and in particular found that the new evidence submitted by Home Hardware would have materially affected the Board's findings. The Court agreed with the Board in dismissing the grounds of opposition under section 30(e) and (i) of the Trade-marks Act. The Court considered the likelihood of confusion in light of Home Hardware's new evidence and found that an ordinary consumer would likely be confused.

The Court set aside the Board's decision rejecting the opposition and the application was refused with costs to Home Hardware.

Copyright Decisions

Additional costs awarded to TekSavvy to produce names and addresses pursuant to Norwich order
Voltage Pictures LLC v. John Doe, 2015 FC 1364

TekSavvy has successfully appealed in part an earlier costs order relating to a motion to compel a non-party pursuant to Rule 238 (We previously summarized the motion during the week of February 25, 2014). TekSavvy was ordered to produce the names and addresses of subscribers associated with roughly 1140 Internet Protocol ("IP") addresses, which Voltage had identified as engaging in the infringement of their copyrights.

The original costs order assessed the reasonable legal costs, administrative costs and disbursements incurred by TekSavvy in complying with the production of the names and addresses. The original costs order provided that Voltage would pay TekSavvy its costs of $21,577.50 before TekSavvy would be required to release the requested information, and allocated no costs to the assessment itself or to the motion on the merits.

The Court held on appeal that there is nothing in the jurisprudence that suggests that an innocent party must be made whole, fully indemnified or compensated on a "but for" damage-like causation basis for any and all costs incurred in connection with a motion for a Norwich-type order. However, the Court noted that this is not to say that although indemnification of costs incurred in a Norwich-type order are normally limited to those incurred in the motion and in abiding with the order, that greater indemnification cannot be awarded for the consequential costs arising as a result of the motion.

The appeal of the costs order was allowed in part and awarded TekSavvy an additional amount of $11,822.50 in costs. This included further costs in the amount of $4,322.50 for the "second check/QA verification" task and legal costs of $7,500 on the motion itself.

Rules of procedural fairness breached by refusal to allow Netflix to be heard on new provisions in tariff
Netflix, Inc. v. Society of Composers, Authors and Music Publishers of Canada, 2015 FCA 289

This was an application for judicial review of a decision by the Copyright Board (the "Board") of a tariff of royalties for audiovisual webcasts (the "Tariff") for 2007 to 2013. Netflix's challenge related specifically to the establishment of a monthly minimum fee for free trials of subscription services. The Court of Appeal found that the process by which the Board certified the Tariff was not procedurally fair and allowed the application on this basis.

The Society of Composers, Authors and Music Publishers of Canada ("SOCAN") filed annual statements of the royalties that it proposed to collect for audiovisual works from 2007 to 2013, and in 2011, the Board indicated that it would consider certifying the Tariff. There were Objectors to the proposed Tariff, which did not include Netflix. A Settlement was reached between SOCAN and the Objectors. As part of this Settlement, the Tariff was amended to include, among other things, a minimum monthly fee for free trials. The Court of Appeal noted that none of the Objectors offer subscriptions and therefore free trials.

Netflix took a number of steps to address the minimum monthly fees for free trials, and ultimately brought this application. The Court of Appeal held that Netflix had the right to be heard with respect to these royalties even though it was not involved in the initial process. In particular, the Court of Appeal found that "[a]lthough Netflix itself did not have this right, the industry affected by the provision at issue enjoyed that right and therefore should have the opportunity to be heard and put its case forward." The Court of Appeal considered that the interests of an industry are a relevant factor to be taken into consideration in determining whether there has been a breach of the duty of procedural fairness. The Court of Appeal also noted section 67.1 of the Copyright Act, and the right for affected parties to be heard, which cannot be denied when a certified tariff includes subject matter that was not publicly advertised. The Court of Appeal also reviewed the framework in the Board's decision in Re:Sound 5.

The Court of Appeal set aside the Board's decision with respect to royalties on free trials and returned the matter to a different panel of the Board for redetermination.

Trademark and Copyright Decisions

Ontario Superior Court refuses to stay a defamation action pending the outcome of a copyright, trademark and competition action proceeding in the Federal Court
Canadian Standards Association v P.S. Knight Co. Ltd., 2015 ONSC 7980

The Ontario Superior Court has declined to stay a defamation action pending the outcome of a copyright, trademark and competition action proceeding in the Federal Court.

Canadian Standards Association ("CSA") commenced an action in the Federal Court in 2012, suing Gordon Knight and his corporation P.S. Knight Co. Ltd. for copyright infringement and for breach of s. 7(a) of the Trade-marks Act, and s. 52 of the Competition Act.

In this action in the Superior Court of Justice, CSA sues Mr. Knight and his corporation for defamation.

After the action for copyright infringement in the Federal Court was commenced, Mr. Knight and his corporation began to operate a website under the name "RestoreCSA," which, among other things, discussed the copyright litigation in the Federal Court between CSA and Mr. Knight and his corporation. The CSA alleges that the commentary was false and defamatory. In 2013, CSA then issued an Amended Statement of Claim alleging that Mr. Knight and his corporation were knowingly or recklessly making false and misleading statements that tended to discredit the wares, services or business of CSA contrary to s. 7(a) of the Trade-marks Act and were knowingly or recklessly making false and misleading representations to the public contrary to s.52 of the Competition Act.

On April 23, 2015, CSA commenced a defamation action in the Ontario court against P.S. Knight Co. Ltd. and Mr. Knight with respect to the alleged to be defamatory statements posted on the RestoreCSA website and in Restore CSA Issues Summary Re: Canadian Standards Association, a publication.

Knight sought to have the defamation action dismissed or permanently stayed or in the alternative temporarily stayed until the conclusion of the Federal Court action. 

The Superior Court held that there is no unfairness in having the proceedings proceed in tandem. The defamation action has different substantive elements and different remedies available to CSA assuming it were successful. Rather than staying the Ontario proceeding, the Court found that the Ontario proceedings should just be fairly managed to continue to make progress in tandem with the further advanced Federal Court proceedings.

Default judgment awarded in respect of trademark and copyright rights
Re/max, LLC v. PM Branding Corp., T-155-15

The Plaintiff brought a motion in writing for default judgment against the Defendant. The Court issued a Judgment, making a number of findings in respect of the Plaintiff's trademarks and copyright. The Defendant was ordered, inter alia, to pay damages in the amount of $159,000 for its breaches of the Plaintiff's trademark rights, $40,000 as statutory damages for its breaches of the Plaintiff's copyright rights, as well as punitive and exemplary damages, costs determined as a lump sum and post-judgment interest.

Other Industry News

Health Canada has published a Guidance Document — Ethnic Factors in the Acceptability of Foreign Clinical Data ICH Topic E5(R1).

Health Canada has published a Questions and Answers Document — Structure and Content of Clinical Study Reports — ICH Topic E3 Q&A(R1).

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