Canada: Untied Tied Up… United Airlines Takes Aim At Complaint Website (Part I)

Last Updated: August 25 2017
Article by Cynthia Rowden and Tamara Céline Winegust

Criticism or complaint websites, part of the contemporary consumer landscape, raise a host of concerns for trademarks and copyright owners as well as for users, especially where the look and feel of the website, marks, or other works of the criticized entity is heavily relied on to drive that criticism. A recent decision of the Federal Court of Canada, in United Airlines, Inc. v. Jeremy Cooperstock, (2017 FC 616, per Phelan, J.) deals with trademark and copyright claims in the context of a complaint website. The decision notably addressed, for the first time, the new Copyright Act provisions on the parody defence to copyright infringement, which will be discussed separately in a subsequent article. Of interest here is the Judge's decision regarding claims under the Trademarks Act. The Judge's clear findings of trademark infringement, passing off, and depreciation of goodwill were based on holdings that the Defendant offered a "service" through his complaint website, and was "using" a confusingly similar trademark, a marked departure from prior cases involving display of another entity's trademarks to effect similar criticism in the union context, reviewed below.

Some background: in 1997, following personal negative experiences with United Airlines, the Defendant registered and launched the website < untied.com>, described by the Judge as a "consumer criticism website where visitors can find information about the Plaintiff, submit complaints about the Plaintiff, and read complaints about the plaintiff dating back to 1998 in the database of complaints". In 2011, the Defendant added a logo to the website. It resembled a globe design employed by United Airlines but added a "frown" over the design. In 2012, the Defendant made further changes that tracked updates by United Airlines to its official website.

United demanded changes and the Defendant modified the website: the colouring of the "TI" in "UNTIED" and the "frown" changed to red from blue, and a disclaimer and pop-up dialog box with a disclaimer ("This is not the website of United Airlines") as well as text describing Untied as "an Evil Alliance Member" were added. In 2015, United Airlines again updated its website, and the Defendant created a "beta" site, described as closely resembling the United Airlines site. United Airlines sued.

The Defendant seems to have already been a thorn in the side of United Airlines. In an unrelated 2016 proceeding, United Airlines successfully sued the Defendant for providing employee contact information on its website, including for employees that had no customer services roles. On appeal, the Quebec Court of Appeal described the conduct as "harassing employees without anyone benefitting from the exercise" (2017 QCCA 44).

In the Federal Court action, United Airlines claimed trademark infringement, passing off, depreciation of goodwill, and copyright infringement. The Defendant represented himself, and alleged delay and abuse of process. The Court found for United Airlines on all counts, and dismissed the Defendant's delay and abuse of process claims. The appeal period has not ended, and the Defendant is crowd-funding to cover the appeal.

To contextualize the United Airline's Judge's comments and findings on the trademark claims, it is important to consider two prior cases involving trademarks displayed in criticism materials that, compared to United Airlines, came to the opposite findings on trademark services, use, confusion and depreciation.

The first is Michelin v. Canadian Auto Workers [1997] 2 FCR 306 (FCTD). This 1997 decision of Mr. J. Teitlebaum of the Federal Court dealt with the display of the MICHELIN trademark and mascot (aka Bibendum) on union literature distributed by the defendant Union as part of a union-organizing drive. The flyers displayed variations of the MICHELIN mark and representations of the Bibendum character, including one that showed workers "at risk from the menace of "Bibendum's" boot". Michelin sued for trademark and copyright infringement, and depreciation of goodwill. The trademark infringement claim was rejected and the judge found no trademark "use" by the Union — the Union did not associate its own services with the Plaintiff's marks, did not employ those marks to distinguish or identify the Union, and did not perform any commercial activity. The Judge specifically stated that "the net or meaning of "use" is designed so that not all users of trademarks belonging to another person are caught within the threads of the infringement provisions." Further, there was no "confusion" and there could be no mistake about the source, given the difference between the activities of the parties (manufacturing versus union organization). Turning to depreciation of goodwill (section 22 of the Trade-Marks Act), the Judge noted that "use" in that section requires "use as a trademark" as defined by section 4 of the Trade-marks Act, and that the Union was not "using" the Michelin marks when handing out leaflets, since that was not part of a commercial activity. Moreover, there could be no depreciation, since the activities of the Union were not shown to have impacted Michelin's position in the marketplace.

Michelin succeeded on the copyright claim, and the Union was found to have made a substantial copy of Bibendum. Parody was not found to be a defence (the Copyright Act has since been amended to include specific parody provisions). The Judge also rejected the Union's constitutional argument of permissible expression under the Canadian Charter of Rights and Freedoms (Part 1 of the Constitution Act) (the "Charter"), and held the Charter cannot be interpreted to protect all forms of expression, and specifically does not permit the use of someone else's property to do so.

The second decision is BCAA et al. v. Office and Professional Employees' Int. Union et al., 2001 BCSC 156 (per Sigurdson J.). This case also involved claims of depreciation of goodwill, passing off, and copyright infringement arising from a union dispute — this time due to website activities. The defendants operated a series of changing websites criticizing the Plaintiff, the British Columbia regional association of the Canadian Automobile Association ("CAA"). For example, the Union registered the domain names < bccaonstrike.com> and and < bcaabacktowork.com>, and employed variations of those names as metatags. The homepage for the website announced "Greetings, BCAA is on strike" (the CAA logo and the BCAA name also appeared, but were removed from the website prior to the judgment; however, other names continued to be displayed). Addressing the latest version of the website, the Judge rejected the passing off claim, stating there was no possibility of confusion. Given the context of use, the additional words "on strike" or "back to work", and the lack of commercial competition, the Judge found, "The fact that the current internet site is not associated with the British Columbia Automobile Association is quickly apparent from looking at the site". Further, the Judge conceded that such use might be necessary (and would be acceptable) where the website operates as "a lawful vehicle during a strike or as a consumer criticism site". This interpretation was found consistent with the Charter, as it reasonably balanced intellectual property and expressions rights. In addressing the website disclaimer reading "Greetings, OPEIU is on strike against BCAA", the Judge agreed with a prior case that held the greater the risk of false impression, the more prominent the disclaimer must be. The depreciation of goodwill claim was also rejected. The Judge noted that a commercial use is required for section 22 to apply, and held that non-commercial provision of information alone is not a service under section 4 of the Trade-marks Act. The Union's provision of information on the website — which the Judge noted benefited the Union, rather than the public — was found to be such a non-commercial activity. Moreover, there was no actual "depreciation" since there was no attempt to attract business, and while the website might have impacted the impression of the BCAA as an employer, it did not reduce the reputation of BCAA in the marketplace.

As with Michelin, above, the copyright claim succeeded. The Judge specifically noted the similarities in the website look, layout, and how it operated.

For trademark owners, the take-away from those cases was that display of another's trademark in flyers, publicity material, or on a website, to criticize the trademark owner (rather than engage in a commercial or competitive activity) was not a "service" as defined by the Trade-marks Act, that the trademark would not be considered as "used" in such circumstances, and that under a normal confusion analysis, distinctions in the respective goods/services of the criticizer and criticized would negate a finding of trademark confusion, with the result that infringement and depreciation of goodwill would not apply to such displays.

This understanding is challenged by the United Airlines decision, since the Judge in that case did find the Defendant's criticism site offered a "service", that there was trademark "use", that such use was confusing and depreciating, and that damage was probable. The Judge's particular findings are discussed below.

1. The Defendant's website constituted "services" under the Trademarks Act: The Defendant admitted he provided services through the website, namely information, advice on legal rights, and publication of complaints, but argued those were not services as defined by the Trade-marks Act, since there was no commerce. The Judge rejected this position, stating that "services" needs to be given a broad definition. He concluded the definition is met if there is a benefit to the public, which he characterized as offering information and guidance in dealing with an airline and published complaints.

2. The Defendant "used" UNTIED as a trademark: The finding of "no use" in Michelin and BCAA turned on the fact that the unions were not displaying the plaintiffs' marks to indicate source or origin. In United Airlines, the Defendant made the same kind of "use" — i.e., to criticize, not to indicate "source". Of note, however, the United Airlines Judge did not focus on use of UNITED, but instead, how the Defendant used "UNTIED", concluding that because the evidence showed UNTIED was displayed in a manner similar to UNITED, this contributed to a finding that there was "use or display" of UNTIED in a trademark sense.

3. The Defendant's UNTIED use was confusing with UNITED: The Judge reviewed the traditional confusion factors (inherent distinctiveness, length of use, nature of services and trade and resemblance between the marks (as in s. 6(5) of the Trademarks Act) and focused his analysis on the nature of the services, channels of trade and similarities between the marks. Considering the services, while operation of an airline and a complaints site may seem, at first blush, to be unrelated, the Judge concluded the customer care services provided by United Airlines' and the Defendant's complaint website overlapped and travelled in the same trade channels because both broadly dealt with "pre-flight and post flight customer service" and were provided over the internet. Resemblance of the marks also favoured United Airlines. UNITED and UNTIED are visually and aurally similar, and the logos used by each party were similar as well (it probably did not help that the Defendant admitted that he "transformed" elements of the Plaintiff's logo when designing his own, merely adding a "frown" to the plaintiff's globe design).

4. Evidence of actual confusion was persuasive: One piece of evidence that seemed particularly important (and was referred to in several places in the decision) came from a travel agent, who was, in the Judge's words, clearly confused. This witness submitted a complaint to the Defendant's website thinking that it was the United Airlines site, and believed that the response she received from the Defendant was from United Airlines. That an experienced travel agent would make such as mistake seems surprising, but the Judge described her as a credible and convincing witness (it does not appear the witness was asked how, or why, she typed in "untied" instead of "united" when searching for the United Airlines website). The Judge also found a likelihood of confusion was suggested by additional evidence of complaints posted to the Defendant's website and that were apparently followed by demands for action. The judgment referred to a "number" of such postings (the exact number is not stated). While the Defendant agreed these showed customers were confused, he suggested that such persons must have been "cognitively challenged ... to believe they were actually complaining to the airline".

5. The Disclaimer had minimal impact: The impact of the Defendant's disclaimer was minimized – partly since there was already evidence of consumer confusion, but also since there was evidence a pop-up box containing the disclaimer did not always function and could be disabled, and because the disclaimer was not always easily visible.

6. The Defendant's activities amounted to passing off: Unsurprisingly, the Judge found United Airlines' UNITED marks had considerable goodwill. He also found that the Defendant's activities involved misrepresentations causing confusion. The Judge specifically found that the Defendant misled visitors to his website as to the nature of the site, again relied on evidence from the confused travel agent, and held the Defendant's "frowning" logo was not enough to distinguish it from United Airlines' "globe" design and thereby remove the likelihood of confusion. Actual or potential damage was also found. It is, however, not clear from the judgement what facts supported this finding, and the Judge merely listed different types of potential damage argued by the Plaintiff (i.e. the link between the likelihood of confusion and the probability of damages, depreciation of goodwill, the "barrier" between United and its customers created by the Defendant's website, the Plaintiff's lost opportunity to rectify consumer complaints, and the "tarnishment" of the Plaintiff's brand) before concluding the evidence established damage. Of concern with respect to the finding that damage can be caused by "tarnishing" a brand, is that because the Defendant's website was designed to criticize United Airlines, the finding raises a risk that a criticism site might always be found to "tarnish" the subject of the criticism — a thought that should concern owners of other criticism sites.

7. The Defendant's activities amounted to depreciation of goodwill: The Judge listed the Supreme Court of Canada's requirements for a section 22 claim from Veuve Clicquot Ponsardin v. Boutiques Cliquot Ltee, 2006 SCC 23, as (1) use of a mark (2) that has goodwill (3) such that use is likely to affect goodwill (or, create a causal link) (4) in a way likely to depreciate it. The Judge found that both "use" and "goodwill" were already established in the context of the other trademark claims, without addressing whether the word "use" in section 22 means anything different from "use" in the infringement or passing off context. To show an association between the Defendant's use and the UNITED marks, the Judge referred to confusion (the travel agent, again) and the Defendant's stated intent to identify United Airlines as the object of his criticism. Finally, the Judge found the Defendant's activities were likely to depreciate the UNITED marks in multiple ways, including because the Defendant's imposition of the "frown" over United Airline's globe design "disparaged" them, and the Defendant's website was "crude" and "unprofessional". Of note, the Judge rejected the Defendant's argument (successfully made by the union in BCAA) that any depreciation caused would be to the Plaintiff's business reputation (not prohibited by section 22) rather than its marks (which is prohibited). As if to cover all "depreciation" bases, the Judge also noted that some cases have found depreciation can occur from loss of distinctiveness, and noted the similarity between the parties' marks meant confused consumers might, out of "anger, frustration or ... mistaken belief", stop looking for the Plaintiff's customer service website, which, in turn, could damage United Airlines.

The depreciation of goodwill analysis in United Airlines is noteworthy for two reasons. First, the Judge did not explain his finding on "use" under section 22, but rather relied on his analysis of "use" made as part of the infringement and passing off claims. This is contrary to Clairol International Corp. v. Thomas Supply & Equipment Co. [1968] 2 Ex CR 552, the foundational section 22 case, which suggested that the purpose of "use" is different as between sections 19/20 (the infringement provisions) and section 22. While for both causes of action, the mark in question must be "used" within the meaning of "use" in section 4 of the Trade-marks Act, for an infringement claim, such "use" must be to indicate source, while for depreciation claims, such "use" must be one that depreciates. Under section 4, marks covering services, like the UNITED mark, are "used" when displayed or advertised in the performance of services. While the Judge in BCAA found the union offered no "services" through the critique website due to its non-commercial nature, the Judge in United Airlines found the Defendant had offered services. This analysis raises the potential for a successful depreciation of goodwill challenge against all complaints sites, since they would be expected to display the trademarks of the complained-about company.

Second, the text of section 22 specifies that it applies to use of "a trade-mark registered by another person". There are now several cases where section 22 claims have been advanced against similar marks, as opposed to the identical registered mark. The Judge in United Airlines did not explain how "use" was found under section 22, so it is not clear whether he relied on the display of UNITED (the Plaintiff's registered mark), or UNTIED (the Defendant's unregistered mark), although he did comment on the Defendant's use of UNTIED, and not UNITED, to find depreciation.

Implications

The decision offers hope to companies disturbed by complaint sites, and is problematic for the operators of such sites, given the Judge's findings on "use", "services", and "damage. The finding that criticism sites perform a "service" even without commercial activity, and that there is "use" of the target company's marks when the display is not to indicate source, is a departure from earlier jurisprudence on infringement, passing off, and depreciation of goodwill. More interesting are the findings of confusion based on the similarity between consumer relations services and customer complaints and the identical natures of trade given internet activities. Since every business has some element of customer care, and virtually everyone operates on the internet (the Supreme Court this summer in Douez v. Facebook Inc., 2017 SCC 33, recognized that "having the choice to remain "offline" may not be a real choice in the Internet area"), those factors would always favour a plaintiff challenging a complaint site on infringement grounds.

Perhaps the easiest way to distinguish this decision from Michelin and BCAA is that in United Airlines, there was evidence of actual consumer confusion, and given the numerous references to such actual confusion in the decision, that fact seems to have swayed the Judge on the infringement and passing off claims. While the Defendant could have taken steps to reduce the likelihood of confusion, the ease with which the section 22 factors were met leaves open the possibility of a successful depreciation of goodwill claim based on the mere display of a brand on a complaint website. Going forward, at the very least, operators of criticism sites need to be cautious in choosing domain names that might inadvertently draw visitors (e.g., by a simple typing mistake, which might have been at play in United Airlines), and ensure visitors to the site are left with no doubt as to where they are, or with whom they are dealing. A clear disclaimer that is always apparent and leaves no doubt as to the site's activities is recommended.

The Judge's findings on copyright will be reviewed in a second report — but a teaser — it's not parody unless it's funny (but not too funny, because that's not fair either)!

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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Authors
Cynthia Rowden
Tamara Céline Winegust
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