Canada: IP Report Online @ Gowlings - March 2008

Last Updated: May 1 2008

Edited by Robert A. MacDonald and Frank Mulock

Trade Marks Report
  • Opposition Changes Aim to Speed Up Process

  • New Limits on Extensions to File Declarations of Use

  • SUNQUEST: The Imagery of Confusion

  • Le French Quarter Restaurant Keeps Its Name

  • Trade Marks (Relative Grounds) Order 2007

Official Marks Update

  • Trade-Marks Office Tightens Practice on Confirming Use of Official Marks

Domain Name News

  • Ontario Court Declines Jurisdiction Over UDRP Case

Copyright Developments

  • Bill C-59: Canada's New Anti-Piracy Law

  • Trivial Pursuit Saga Comes to an End

Advertising Law

  • New Organic Regulations to Come Into Force December 2008

  • Québec Resident Didn't Win Sweepstakes But Did Win Damages

Patent Case

  • Federal Court Addresses Pre-Patent-Grant Compensation and Royalty Calculation

Trade Marks Report

Opposition Changes Aim to Speed Up Process
By David Bryan

On October 1, 2007, changes to both opposition regulations and practice came into force, which are intended to speed up the opposition process by reducing the number of time extensions granted.

On the one hand, amendments to the regulations have modestly increased the initial periods granted to file a counterstatement (from one month to two months) and to file evidence (from one month to four months); on the other hand, the Opposition Board has simultaneously announced a new practice regarding time extensions, which is clearly intended to restrict the number of extensions that will be granted to complete any one stage of proceedings. In particular, the Board has announced that, bearing in mind the rights of third parties, it will no longer grant repeated consensual extensions of time merely on the basis of a bare statement that the parties are engaged in settlement negotiations. Rather, after one consensual extension has been granted on this basis, the Board intends to make any further extension dependent on a showing of "exceptional circumstances," which could include ongoing settlement negotiations, provided the Board is convinced that the parties are actively and diligently pursuing those negotiations. Mere consent will no longer automatically result in repeated extension grants.

These changes mean that parties will have to conduct settlement negotiations, and prepare opposition evidence, more quickly than has been common in the past.

For the full text of the Opposition Board Practice Notice see:

New Limits on Extensions to File Declarations of Use
By David Bryan

From September 2007, the Registrar has begun to curtail the number of extensions granted to complete a proposed use application by filing a declaration of use.

Previously, the Registrar has readily granted three years of extensions, after which the Registrar would begin calling for "significant and substantive" reasons for any further extensions; in practice, it has often been possible to obtain several additional years of time extensions.

The recent practice changes relate to extension requests filed after three years of extensions have already been granted. From September 2007, the Office has begun to routinely refuse such extension requests. It appears the Office intends to sharply curtail the granting of further extensions after three years have been granted. This change brings Canadian practice closer to current U.S. practice.

One way that applicants can respond to this limitation on the number of extensions available, and obtain further time to commence use, is to file a fresh application once the original application has received three years of time extensions. Provided the second application does not encounter prosecution or opposition difficulties, it too would receive an initial declaration deadline of three years after the filing date, and then three years of extensions; in all, a total of 12 years between the two applications in which to commence use.

SUNQUEST: The Imagery of Confusion
By Chris Pibus

In the middle of an unusually harsh winter, Canadians naturally start pining for the warmth and sunshine of more southerly vacation destinations. In this context, SUNQUEST is a uniquely Canadian brand, famous for identifying one of our leading purveyors of travel services. A recent Opposition Board decision, North American Leisure Group Inc. v. ETS Inc. (2007), 62 C.P.R. (4th) 313, provides new insight into the scope of protection that can be afforded to such a well-known mark, based on the imagery used in its advertising.

ETS Inc. applied to register SUNQUEST in association with tanning beds and related equipment. The application was amended to restrict the wares to "residential use" only, but was ultimately opposed on grounds of anticipated confusion with the identical SUNQUEST trade marks, registered in association with travel services.

At first glance, there appeared to be a significant (perhaps "gaping") divergence in the nature of the wares and services offered by the two parties. Tanning beds seemed to be a good example of a relatively high-priced appliance, for which the purchase decision would be a carefully considered choice, and thereby less likely to give rise to confusion on the part of consumers.

The decision of the Opposition Board focussed instead on the well-known status of the SUNQUEST mark, and on a convergence in the advertising imagery used by both parties to promote their respective services and products. So the likelihood of confusion analysis ultimately turned on what is an "additional circumstance" under section 6(5) of the Trade-marks Act, which had been previously subjected to little judicial scrutiny.

The opponent's evidence of its advertising practices showed a long history of promoting travel packages through visual imagery associated with tropical landscapes, models in swimwear and the iconic palm tree/beach scene. Those same images consistently appeared in promotional materials used by the applicant to advertise its tanning beds and in third-party operated tanning salons.

The decision highlighted the common elements in the commercial materials used by both parties and ultimately found that the burden on the applicant to establish that its proposed mark was not confusingly similar to the senior SUNQUEST mark, was not discharged.

The scope of protection afforded to the SUNQUEST brand is on balance well-founded in that it is a reasonable reflection of the brand's status as a well-known mark and the huge advertising expenses which had been incurred over more than 15 years of use. The particular iconography of its advertising provided a clear nexus to the promotional efforts of the applicant. The decision emphasizes how important it is to provide a fulsome evidentiary record in opposition proceedings, so that the full promotional context that has been used to support apparently different products, may be fully appreciated in the confusion analysis.

Le French Quarter Restaurant Keeps Its Name
By Corrinne Lobe

In Procureur Général du Québec v. Le Quartier Français Inc. (27 June 2007), Gatineau 550-61-006339-069(C.Q.), a Gatineau restaurant, "Le French Quarter," was charged with displaying its name in English rather than French, but was acquitted on the grounds that the name represents the restaurant's cultural character. The restaurant is named for the New Orleans neighbourhood and serves Cajun food.

Under Bill 101, the Charter of the French Language, businesses in Québec must have outdoor signs that are predominantly in French. In March 2005, Québec's Office de la Langue Française laid charges against the restaurant, arguing that "Vieux Carré," the historic name for the New Orleans neighbourhood, would be more appropriate.

The restaurant used two exceptions to Bill 101 as defence: an English name is allowed if it represents the name of a town, neighbourhood or person, and the name is allowed if it is distinctive by its cultural character.

The Court rejected the first exception, but granted the second. Judge Christine Auger said the Court did not have to rule on whether Vieux Carré is a better name for the restaurant than French Quarter. Rather, the name designates a specific culture outside of Québec. French Quarter is representative of the translation of this French heritage, now part of common usage.

Trade Marks (Relative Grounds) Order 2007
By Caryn S. Narvey

The UK Intellectual Property Office has adopted new examination rules that came into force on October 1, 2007. Under the Trade Marks (Relative Grounds) Order 2007, trade mark applications will no longer be refused at Examination on the basis of earlier, confusingly similar marks. Marks that would normally have been cited as confusing under the old examination rules will now become "notification marks." The Order prompts the need for increased vigilance for owners of Community Trade Marks (CTMs) and International Registrations designating the European Community.

During the Examination process, searches for confusingly similar trade marks will still be conducted by the UK Intellectual Property Office and the results of the searches will be forwarded to the applicant by way of an examination report. The applicant must then decide on any future course of action. If the results confirm the existence of confusing marks, then the applicant can either continue with the application, restrict its goods and services so as not to overlap with the existing marks, or withdraw the application.

The applicant will have two months to respond to the examination report, with the ability to extend this time if sufficient grounds are shown. One such ground is the attempt to contact holders of the conflicting marks in order to actively seek consent. If the applicant does not respond to the examination report within the two month period, then the UK Intellectual Property Office will automatically publish the application.

Once the application is published in the Trade Marks Journal, the proprietors of the notification marks will be notified in order to be given the opportunity to oppose the application. Notifications will be provided to earlier holders (owners or representatives of owners) of U.K. national marks identified in the search and the holders of International Registrations that are specifically protected in the U.K. Holders of CTMs and International Registrations protected in the EU will only be notified if they have "opted-in" to receive notifications. There is an Official fee of £50 per mark to opt in for three years.

The holder of an earlier trade mark who objects to a new application has three months commencing at the date of publication to oppose the registration. No extensions will be granted. If the opponent is successful in the opposition proceeding, then the applicant will be exposed to costs. To launch an opposition there is a fee of £200. A licensee can intervene in opposition proceedings; no fee is required, but an intervener is exposed to costs if the opposition fails.

For more information see:

For the full text of the Order see:

Official Marks Update

Trade-Marks Office Tightens Practice on Confirming Use of Official Marks
By Oksana Osadchuk

On August 22, 2007, the Trade-Marks Office issued a new practice notice on Official Marks. Whereas previously, an unsworn statement that the mark has been adopted and used was typically accepted, the Registrar will now require actual evidence of adoption and use of Official Marks.

The evidence adduced must demonstrate an element of public display. By way of example, online advertising of an Official Mark in connection with a service may be considered sufficient, even if the service is not yet available. However, internal use of a mark in correspondence, memoranda etc. would not be considered sufficient. Moreover, the mark must be used as a "mark," and not merely as a generic or descriptive expression.

Intriguingly, the practice notice also states that use of an Official Mark by a licensee is unacceptable, even though this point has not yet been settled in the case law. While it has been held that one cannot obtain protection in one's own name of an Official Mark licenced from a third party, the case law is divided on whether a licensor can obtain Official Mark protection for a mark used exclusively by licensees.

This change in Office practice will make Official Marks more difficult to obtain. Given the extraordinary protection afforded to Official Marks, however, additional attention on confirming entitlement to an Official Mark would seem warranted.

For full text of the Trade-marks Office Practice Notice see:

Domain Name News

Ontario Court Declines Jurisdiction Over UDRP Case
By Michelle Easton

Recently, in Zhan v. Pfizer Inc., 2007 CanLII 24109 (ON S.C.), the Ontario Superior Court declined to assume jurisdiction over an action brought by a domain name registrant seeking to challenge or "appeal" a decision in an administrative proceeding under the Uniform Domain Name Dispute Resolution Policy (UDRP) ordering the transfer of the disputed domain name to the defendants.

The plaintiff commenced the Ontario action shortly after receiving notice of the Panel's decision, effectively seeking a de novo review of the dispute. The defendants responded by bringing a motion for an order dismissing or permanently staying the action for want of personal or subject matter jurisdiction or, in the alternative, setting aside service of the statement of claim and permanently staying the action on the ground that Ontario is not a convenient forum for hearing the dispute.

In a decision which is the first of its kind in Canada, Madam Justice Harvison Young of the Ontario Superior Court granted an order permanently staying the action on the basis of the doctrine of forum non conveniens. No finding was made on the defendants' argument that the Court had neither personal nor subject matter jurisdiction in the action.

The Court found that in registering the domain name, the plaintiff in its registration agreement had expressly submitted to the UDRP and the UDRP Rules by which it is implemented. Pursuant to the UDRP Rules, a party initiating a complaint under the UDRP is required to expressly agree to submit, with respect to any challenges to a decision in the administrative proceeding cancelling or transferring the domain name, to the jurisdiction of the courts in at least one specified "Mutual Jurisdiction" as defined in the UDRP Rules.

The Court held that the application of the UDRP and the defendants' selection of Denver, Colorado, as the Mutual Jurisdiction in the complaint were, in essence, a forum selection clause that ought to be given deference by Canadian courts unless there exists strong reason not to.

Gowling Lafleur Henderson LLP acted for the defendants, Pfizer Inc. and Pfizer Products Inc.

For the full text of the decision see:

Copyright Developments

Bill C-59: Canada's New Anti-Piracy Law
By Daniel Cole

The federal government recently introduced Bill C-59: An Act to amend the Criminal Code (unauthorized recording of a movie), which received Royal Assent and came into force on June 22, 2007. The Bill addresses the illegal recording of movies in movie theatres, and to this end creates two new offences under the Code:

  • Personal Use Recording - the recording of a movie in a movie theatre without the consent of the theatre's manager is punishable by up to two years in prison (subsection 432(1) of the Code); and

  • Commercial Use Recording - the recording of a movie in a movie theatre without the consent of the theatre's manager for the purpose of selling, renting or other commercial distribution of a copy of the recording is punishable by up to five years in prison (subsection 432(2) of the Code).

Interestingly, the provisions refer to the consent of the theatre manager and not that of the copyright holder, which is unusual given that it is the holder of copyright in a film (and not the theatre manager) who typically has the right to authorize any reproduction. This is also the case in the United States under the Family Entertainment and Copyright Act of 2005.

Prior to the enactment of this new anti-piracy law, the illegal recording of movies in theatres was addressed by the Copyright Act. Under this Act, however, only those recordings made for commercial purposes would lead to criminal charges. This, of course, led to difficulty securing a court conviction, as prosecutors were left with the difficult, if not impossible, task of proving that the alleged pirate intended to make a copy for commercial distribution.

One of the primary objectives of the new legislation is to prevent the distribution of pirated copies of movies that premiere in North America months before they are set to be released elsewhere in the world. The issue, of course, is one of money. In fact, Hollywood claims to be losing approximately $6-billion each year from piracy, half of which is attributable to camcorder recordings. But what is Canada's role in all of this? Statistics on the illegal recording of movies in Canada are contradictory at best. That said, the figures quoted by the government suggest that 20 per cent to 25 per cent of the illegal copies in circulation come from Canada, with about 70 per cent of these being from Montréal.

Opponents of the new law argue that there is little reason to believe that it will have any discernable impact on the illegal recording of movies in theatres in Canada. Moreover, they suggest that the current Canadian law can achieve the same goals as these reforms.

For the full text of the Act see:

Trivial Pursuit Saga Comes to an End
By Isabel Raasch

Over 10 years after it was initially filed, the lawsuit launched by David Wall of Cape Breton, Nova Scotia, against Horn Abbott Limited and Christopher Haney, the marketers of the Trivial Pursuit game, has come to an end. In the suit, Mr. Wall claimed that he, and not Mr. Haney, had been the original creator of the Trivial Pursuit game. Mr. Wall alleged that, while hitchhiking with a friend in 1979, he had been picked up by Mr. Haney and had disclosed to him the idea for a board game based on trivia. According to Mr. Wall, this idea and disclosure amounted to a "virtual creation" of the Trivial Pursuit game, which had been stolen by Mr. Haney when he subsequently marketed the game. After reviewing the evidence, the Supreme Court of Nova Scotia concluded that the evidence of the 1979 encounter was "so marked with inconsistencies and contradictions as not to be credible" and therefore ruled against Mr. Wall on June 25, 2007.

Much of the trial evidence related not to the alleged hitchhiking or game idea disclosure, but to whether any of the parties had been seen in Cape Breton and whether Mr. Wall had disclosed his idea to third parties. In the end, no such third parties came forward, and no conclusive evidence that Mr. Haney had indeed picked up Mr. Wall in 1979 was presented. Instead, the majority of the evidence consisted of "rumours and gossip," which the Court found unhelpful. Consequently, the Court held that Mr. Wall failed to meet his burden of proving that the "virtual creation" of Trivial Pursuit occurred during the alleged 1979 encounter.

For the full text of the decision see:

Advertising Law

New Organic Regulations to Come Into Force December 2008
By William Darling

On December 21, 2006, the Canadian Health Food Association's Organic Products Regulations were published in the Canada Gazette with the aim of creating a comprehensive regime to bring consistency to the marketing of organic foods in Canada. The objective of the Regulations is to adopt a single Canadian standard, the "Canada Organic / Biologique Canada" logo, for organic foods, based on certification by existing accreditation bodies that meet prescribed criteria.

The two-fold purpose of the program is to protect domestic consumers against deceptive and misleading labelling practices, and to bring Canada's organic products regime in line with the agricultural requirements of its major trading partners in the U.S., Japan and the EU.

The Regulations will come into force on December 21, 2008, with the exception of section 3, which came into force immediately. Therefore, there is a two-year transition period for stakeholders to come into compliance with the Regulations. Section 3 identifies the Canada Organic / Biologique Canada logo and the designations "Canada Organic" and "Biologique Canada" as agricultural product legends. During the transition period, persons wishing to use the legends must apply to the Canadian Food Inspection Agency for a license to do so.

The Regulations are limited to agricultural products in respect of which organic claims are made. Non-agricultural products (e.g. cosmetics, textiles) are not covered by the Regulations. Multi-ingredient agricultural products must be composed at least 95 per cent of organic products in order to qualify for certification. Unless suspended or cancelled, certification will remain in effect for a period of one year from the date on which it was granted.

Only those products certified in accordance with the Regulations will be allowed to bear the Canada Organic / Biologique Canada logo. Further, only certified agricultural products can be sold as "organic" in inter-provincial or international trade. However, products sold in intra-provincial trade are not subject to the federal Regulations, and thus confusion may arise where products from outside the country or province are sold alongside local organic products.

The Regulations impose specific labelling requirements on "organic" products, in addition to the requirements already applicable under the Food and Drugs Act and Consumer Packaging and Labelling Act. Specifically, the label must contain the name and accreditation number of the certification body that certified the product, and where the product contains more than one agricultural ingredient, the percentage of each that is "organic."

For the full text of the regulations see:

Québec Resident Didn't Win Sweepstakes But Did Win Damages
By Corrinne Lobe

The Québec Superior Court has awarded a francophone consumer $101,000 in moral and punitive damages for misleading advertising in a subscription offer from TIME magazine. The complainant, Mr. Richard, received a mail notice with the headline "Our Sweepstakes results are now final: Mr. Jean Marc Richard has won a cash prize of $833,337.00!" He said he did not notice the fine print above the headline that read, "If you have and return the Grand Prize winning entry in time and correctly answer a skill-testing question, we will officially announce that&." Mr. Richard returned the envelope's forms and purchased a two-year subscription to TIME magazine to receive his prize. When he did not receive the prize and learned by telephone that the person who signed the promotional mailing, "Elizabeth Matthews," was fictional, he brought an action against TIME Inc. and TIME Consumer Marketing Inc. for the grand prize that he thought he had won.

The action in contract was dismissed, thus Mr. Richard was not awarded the $1.2 million that would represent the grand prize he did not win. However, the Québec Superior Court found that the creation of a fictional director of sweepstakes violated Québec's consumer protection laws and that the advertising was misleading. The Court also held the advertising contravened the letter and spirit of the Charter of the French Language because the brochure was commercial advertising entirely in English. The Honourable Cohen J.S.C. stated that the advertisement would have created confusion for a francophone reader whose first language was not English.

Moral damages of $1000 were awarded for the embarrassment and loss of sleep the complainant suffered. In addition, punitive damages of $100,000 were awarded because of TIME's "patrimonial situation" and the revenues it received for this type of solicitation.

For the full text of the decision, Richard v. Time Inc. et al. (2007 QCCS 390), see:

Patent Case

Federal Court Addresses Pre-Patent-Grant Compensation and Royalty Calculation
By Michael Crichton

On May 14, 2007, in Jay-Lor International Inc. et al. v. Penta Farm Systems Ltd. et al. (2007 FC 358), the Federal Court of Canada published a rare decision that addresses the issue of appropriate compensation for patentees during the pre-grant phase of a patent.

For the first time, compensation for a successful patentee was calculated pursuant to section 55(2) of the Patent Act. Section 55(2) provides that a person is liable to pay "reasonable compensation . . . for any damage sustained by the patentee" during the laid open (i.e. publication) period of the patent. In contrast, section 55(1) of the Patent Act, which deals with post-grant compensation, provides that "[a] person who infringes a patent is liable . . . for all damage sustained by the patentee." The Court concluded that Parliament could have provided for the same assessment of damages in section 55(2) as it did in section 55(1), but it did not do so. Accordingly, the Court equated "reasonable compensation" to a "reasonable royalty."

In determining an appropriate reasonable royalty rate, the Court adopted the long-standing principle that such a royalty is that which the infringer would have had to pay if, instead of infringing the patent in suit, the infringer had come to be licensed under the patent. The test is what rate would result from hypothetical negotiations between a willing licensor and a willing licensee. The Court considered three methodologies, namely, the AlliedSignal (Canadian case law) approach, the analytical approach and the anticipated profits approach. Ultimately, the methodology that would lead to the best "judicial estimation" of a reasonable royalty was the anticipated profits approach.

The anticipated profits approach essentially involves first, estimating the level of profits that would be made upon the sale of the patented product and second, determining what portion of those anticipated profits should be paid to the patentee. The first step involves the Court determining what the anticipated net profit margin of the defendant would be upon the sale of the patented invention. Next, in order to determine what portion of those anticipated profits ought to be paid to the patentee, the long-standing rule of thumb range of 25 per cent to 33.3 per cent was accepted by the Court as being an appropriate starting point in this regard. Factors such as whether the plaintiffs and defendants were direct competitors, whether the product was in demand, and whether the licensee's business was otherwise being displaced, assisted the Court in deciding the specific portion of those anticipated profits that ought to be paid to the patentee.

Gowling Lafleur Henderson LLP was counsel for the successful plaintiffs.

For the full text of the decision see:

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