Canada: The IP Year 2008 In Review: Trademarks (Part 2 of 3)

The IP Year In Review: Patents (Part 1)

The IP Year In Review: Copyrights (Part 3)

TABLE OF CONTENTS

KEY CANADIAN DEVELOPMENTS IN TRADEMARKS

See You In – Canadian Athletes Fund Corporation v. Canadian Olympic Committee. Canadian Athletes Fund Corporation v. Canadian Olympic Committee,¹ was an appeal and cross-appeal from a decision of the Federal Court granting to set aside the decision of the Registrar of Trade-marks ("Registrar") to publish three official marks of the Canadian Olympic Committee ("COC"). The official marks "See You in Torino", "See You in Beijing" and "See You in Vancouver" were published on October 13, 2005, and effectively terminated See You In – Canadian Athletes Fund Corporation ("SYI Fund") application to register these words as trade-marks. Although SYI Fund got the outcome it was looking for in the first instance, and the Registrar's decision to publish the marks was set aside, it still appealed the Order in its favour, while the COC cross-appealed the correctness of the judge's decision.

The lower court found that the COC had not "adopted and used" the marks as required by Section 9 of the Trade-marks Act (the "Act"), since no evidence of use was put before the Registrar. The letter from COC requesting publication of the marks simply asserted that such use had taken place. The Court found that the term "use" involves a public display of the marks in question. In this case, the mark had only been applied to pen and flashlight sets which the COC had ordered. It was not clear whether these sets had been received prior to the publication date and the evidence regarding distribution to the public was so equivocal that the Judge concluded that the COC had not established use.

It is now necessary for public authorities requesting publication of a Section 9 mark to produce evidence that they have adopted and used the mark prior to advertisement.

It is interesting to note that although SYI Fund got the decision it wanted and the Registrar's decision to publish the marks was set aside, it still appealed the Federal Court's decision. SYI Fund appealed because it had advanced another argument, namely that the COC was a licensee of the International Olympic Committee, which the judge had rejected. The Federal Court of Appeal, however, refused to grant SYI Fund's appeal, reasoning that a party who has obtained the relief it sought is not normally entitled to appeal the judge's reasons.

Fairmont Resort Properties Ltd. v. Fairmont Hotel Management, L.P.² Three trade-mark registrations, two companies with similar names and one person, not interested. Fairmont Hotel Management, L.P. (the "Hotel") is the owner of three trade-mark registrations which include the word FAIRMONT, for use with hotel services. Fairmont Resort Properties Ltd. (the "Resort") is a developer of timeshare properties near Fairmont Hot Springs in British Columbia. The Resort had moved to strike three trade-mark registrations in the name of the Hotel (the "Hotel Marks"), one day before the expiry of the five year period of registration of the Hotel Marks, at which point the marks would have become incontestable in the face of previous concurrent use.

In dismissing the application, the Court found that the Resort did not have standing as it was not a "person interested" under the Trade-marks Act (the "Act") in order to challenge the registration. In order to be considered a person interested, the party must be affected by the entry on the register or reasonably apprehend that it may be affected by any act or omission or contemplated act or omission under or contrary to the Act. The Resort acknowledged that it used the word FAIRMONT as a geographic indicator rather than as a trade-mark and that it had never applied for a trade-mark utilizing this element. No evidence was put forward to show that the Resort ever objected to the use by the Hotel or any other business of the word FAIRMONT, and it had not opposed the trade-mark applications for the Hotel Marks. Since the Resort had waited until only one day short of five years after registration to commence the proceeding, the Court found that the Resort had "simply not acted as if it perceives itself to be a person affected, or who reasonably apprehends that it may be affected, by the entry of the Hotel Marks on the register, or, indeed, by the use of "Fairmont", at least until quite recently, by any other business operating in the same geographical area."

The Court went on to say that if its decision is appealed and the judge's determination that the Resort is not a "person interested" is reversed, then in any event, the marks were not confusing at the date of registration with the unregistered marks of the Resort, the marks were distinctive of the services of the Hotel at the time the proceeding was commenced and the Hotel was entitled to secure registration of the marks.

Crocs Canada Inc. v. Holey Soles Holdings Ltd. In Crocs Canada Inc. v. Holey Soles Holdings Ltd.³, the defendant Holey Soles, brought a motion for summary judgment against the plaintiff Crocs, seeking dismissal of its claims for passing off under the Trade-marks Act and allegations of copyright infringement. The Court looked at two issues: (i) whether Crocs' claims in passing off under paragraph 7(b) and (c) of the Trade-marks Act were defeated by application of the doctrine of functionality; and (ii) whether Crocs was barred from claiming copyright rights by virtue of subsection 64(2) of the Copyright Act or could Crocs benefit from the exceptions in subsection 64(3).

The Court dismissed both issues on the motion for summary judgment. With respect to the issue of passing off, the Court considered the recent Supreme Court of Canada decision in Kirkbi AG v. Ritvik Holdings Inc.,⁴ where trade-mark protection for the plaintiff's toy building blocks was denied on the ground that the alleged "distinguishing guise" was in fact, purely functional in nature. The Court distinguished this decision, stating that the decision did not exclude from protection any and every mark which displayed some functional features, but rather that it confirmed that trade-mark protection was not available for a mark or get up that was "purely" functional. He found that that while the similar circles and semi circles found on both the defendant's and plaintiff's clogs had a functional role, the question of whether or not the design and pattern of the plaintiff's clogs were primarily functional ought to be left to the trial judge.

With respect to the second issue, in order to benefit from the protection of subsection 64(3)(b) or (c) of the Copyright Act, the designs in question must be used as a trade-mark or for material suitable for making wearing apparel. The Court concluded that as Crocs' designs alone or in combination form its claimed distinctive trade dress, they therefore qualified as a trade-mark pursuant to the section 2 definition in the Trade-marks Act. Since shoes are clearly "wearing apparel" and the design was incorporated into the shoes, the Court held that the plaintiff had raised sufficient evidence that there was a serious issue to be tried as to whether or not Crocs could claim one of the exceptions in subsection 64(3) of the Copyright Act, and the application for summary judgment was dismissed on this basis.

Nova Scotian (Nee Scotch) Whisky. In April 2008, in Scotch Whisky Association v. Glenora Distillers International Ltd.,⁵ the Federal Court of Canada ruled against the Canadian makers of a single-malt whisky named Glen Breton.

Though Glen Breton looks, smells and tastes like scotch, and though it's distilled and matured in the Scottish tradition, it is made in Cape Breton, Nova Scotia. The parties did not dispute that the Glen Breton whisky could not be labelled as "Scotch", a term that since 1998 has been reserved as a geographic indication denoting spirits distilled and matured in Scotland. Rather, the present case arose after Glenora filed an application, to protect Glen Breton as a trade-mark.

The Federal Court did not agree with the Scotch Whisky Association that the proposed trade-mark deceptively described Glen Breton's place of origin and its character or quality. Although the word "glen" had first been used with reference to the narrow valleys of Scotland and Ireland, the court recognized that it now has equal application to regions around the world of similar geographic character. The Court also determined that casual consumers would not be confused by the positioning of the whisky on liquor store shelves, or on restaurant and bar drink lists.

Instead, the Federal Court determined that confusion arose over use of the word "glen", which it found to be recognized today as referring to whiskies from Scotland. The Court pointed to Glenfiddich and Glenlivet as scotch whiskies well-known to Canadian consumers. As a result, the Federal Court overturned the decision of the Trade-Marks Opposition Board. The name "Glen Breton" was found to be not registrable under section 12(1)(e) of the Trade-Marks Act because its adoption is prohibited by section 10, which forbids the adoption of trade-marks that have by ordinary commercial usage become recognized in Canada as designating the place of origin of any wares of the same general class.⁶

Counterfeiter Gets Its Day In Court (And Loses). Louis Vuitton originally brought a Federal Court action against two defendants, Lin and a business named K2 Fashions for the sale of counterfeit LOUIS VUITTON bags. Neither Lin nor K2 Fashions filed a defence to the Statement of Claim. In the action for default judgment by Louis Vuitton, the Federal Court was unimpressed with Lin's "dismissive attitude towards [the] proceeding" and towards the infringement of another's intellectual property rights. In Louis Vuitton Malletier S.A. v. Lin⁷, the Federal Court awarded Louis Vuitton a whopping $263,000 in damages, and issued a permanent injunction against the defendants, preventing any further sales of the counterfeit bags.

Shortly afterwards, Lin brought a motion seeking to have the default judgment set aside, arguing that she had merely leased the store to K2 Fashions, and denying that she had been served with the original Statement of Claim.

In Louis Vuitton Malletier S.A. v. Lin⁸, the motions judge questioned Lin's credibility and was not persuaded that she had a reasonable explanation for having failed to file a Statement of Defence. Instead, the motions judge seemed convinced that Lin was, in fact, associated with K2 Fashions and, moreover, that she may have exercised a position of some control over the business.

The motions judge therefore, refused to set aside the default judgment, refused to grant leave for Lin to file a Statement of Defence, and refused to stay the execution judgment against her. The motions judge also awarded additional costs in the motion, to Louis Vuitton according to the tariff. Hopefully this decision is a sign that the Federal Court is taking a tougher stance against counterfeit product sales.

No case For Confusion: CMAC Mortgages Ltd./ Ontario Mortgage Action Centre Ltd. v. Canadian Mortgage Expert Centres Ltd. In January 2008, Canadian Mortgage Expert Centres Ltd. successfully defended a motion for an interlocutory injunction brought by Ontario Mortgage Action Centre Ltd., and CMAC Mortgages Ltd., due to alleged confusing similarity between OMAC, CMAC and CMEC, when used with mortgage brokerage services.⁹ The owners of the OMAC and CMAC marks were seeking to restrain the use of the acronym CMEC by Canadian Mortgage Expert Centres Ltd., in association with its mortgage brokerage business in Ontario and had at the same time filed an action against them alleging trade-mark infringement and passing-off of the marks CMAC and OMAC contrary to sections 7 and 20 of the Trade-marks Act.

The Court dismissed the injunction application with respect to the marks CMAC and CMEC, holding that the plaintiffs had failed to demonstrate that there was even a serious issue to be tried in respect of trade-mark infringement and passing-off with respect to these two marks due to the fact the marks were not in use in the same province. The Court held that although the plaintiffs had incorporated the business CMAC Mortgages Inc. in Ontario, they had never carried on business under that name or used the trade-mark CMAC in Ontario. In fact the only evidence of use of the CMAC mark by the plaintiffs was in Alberta. Since the marks were not present in the same marketplace, the Court found no likelihood of confusion between these two marks.

The Court found that the plaintiffs had met the low threshold for a serious issue to be tried with respect to the likelihood of confusion as between the marks OMAC and CMEC for the two businesses operating in Ontario. However, the Court noted that OMAC's case was weak in terms of confusion, both likelihood and actual, due to the lack of similarity between the corporate names of OMAC and CMEC, the fact that the logos were different, and that the marks themselves (acronyms) were inherently weak.

The Court would not grant an injunction in any event, on the basis that the plaintiffs had not led sufficient evidence to establish loss of goodwill, in order to make out irreparable harm. The Court held that the evidence led by the plaintiffs was in many instances was speculative. The Court also found that the defendants would suffer the greater harm from the granting of an injunction.

The Court ordered costs in favour of the defendants, payable forthwith and taxed at the upper number of units of column IV. This case is a cautionary tale for mark owners that seek to assert common-law marks used in one province against another company that adopts or uses a confusingly similar mark in another part of the country. Further, it is risky to bring an action for infringement based on having prior rights, when it turns out that the defendants were the first to use the mark.

KEY CANADIAN DEVELOPMENTS IN DOMAIN NAMES AND THE INTERNET

Identifying The Anonymous Defendant. Internet service providers ("ISPs") are often called upon by plaintiffs to disclose the identities of subscribers who have allegedly violated intellectual property rights. Two recent Ontario cases highlight the privacy issues that often exist in such situations: R. v. Ward,¹⁰ and R. v. Kwok.¹¹ While Ward and Kwok are criminal law cases, these decisions are potentially significant for all situations in which a party seeks to identify an anonymous Internet user for the purpose of bringing a claim against them. Such claims are common in trade-mark, copyright, confidential information and defamation cases. Ward and Kwok emphasize the importance of looking to the language of the ISP policy or subscriber agreement in determining whether a reasonable expectation of privacy exists in the information sought.

In the past, Canadian courts have sought to balance the interests of the plaintiff, the anonymous defendant and the ISP in deciding whether to order the ISP to disclose the identity of the allegedly-infringing internet user. See BMG Canada Inc. v. Doe.¹²

Ward and Kwok address the issue of whether individuals have a reasonable expectation of privacy in relation to information held by their ISPs, such as their name and address. In Kwok, no evidence was led about the ISP's subscriber agreement. The individual was held to have a reasonable expectation that his name and address would not be disclosed by his ISP without a warrant. In Ward, the Court held that the individual's "subjective expectation [of privacy] was not objectively reasonable having regard to all contextual factors and the totality of the circumstances." The ISP's subscriber agreement permitted disclosures of the kind that took place in this case, thereby negating any objectively reasonable expectation of privacy.

New WHOIS Policy For .ca Domain Names. In June 2008, the Canadian Internet Registration Authority ("CIRA") implemented a new policy for its online WHOIS search tool used to look up information about domain names and domain name holders on the dot-ca Registry database.¹³ The new policy is designed to balance individuals' privacy rights against, among other things, the needs of intellectual property rights holders to obtain information about the owners of infringing domain names and websites.

Information typically provided through an online WHOIS search includes the registrant's name, address, phone number, e-mail address and administrative and technical contact information. This information is important for intellectual property owners interested in contacting domain registrants particularly for the purpose of pursuing trade-mark enforcement actions or initiating domain name dispute proceedings.

The "WHOIS" information for corporate registrants is still displayed by default, though such registrants can request protection in certain circumstances, however, under its new WHOIS policy, CIRA will not longer post information about individual registrants of domain names, although individual registrants can choose to 'opt-in' to release this information.

As a result of the new WHOIS policy, IP rights holders now have to go through additional and potentially time consuming steps in order to obtain information about registrants whose websites or domain names may be infringing on their rights. Now, in order to contact a registrant, the IP rights holder must first attempt to contact the registrant through the CIRA website using the "Interested Party Contact -Message Delivery Form". This form permits any entity to send a message to an individual registrant without revealing their "WHOIS" information. This allows for the sending of an initial cease and desist letter, for example to the owner of an infringing website.

Once no response is received from the registrant, only then can the IP rights holder request disclosure of the registrant's information directly from CIRA using the Request for Disclosure of Registrant Information Form. A requestor, however, must be an intellectual property owner in a dispute involving a registered trade-mark, registered copyright, issued patent or registered corporate, business or trade name, and other enumerated disputes. Holders of common law trade-marks do not qualify.

CIRA has not indicated how long is a sufficient amount of time to wait for a response from the registrant to the Interested Party Contact -Message Delivery Form or how long it will take to respond to the Request for Disclosure of Registrant Information. As a result, by the time an IP rights holder obtains the registrants WHOIS information, the registrant may have already transferred the domain name to another party, forcing the IP rights holder to begin the process over again. Since this policy is in its infancy, it remains to be seen whether this will prove to be a problem for IP rights holders going forward.

Groundbreaking Expansion Of Domain Name System Expected In 2009. There are currently twenty-one generic top level domain names ("gTLDs"), including the well-known .com, .net, .org, .biz, and .info. In 2009, the Internet Corporation for Assigned Names and Numbers ("ICANN") plans to begin accepting applications for a significantly larger number of new top level domain names.¹⁴

Although many details remain to be settled, applicants are expected to be able to apply for a new top level domain for their exclusive use or to operate as a registrar to permit third party use. For example, Fasken Martineau could apply to operate the top level domain name ".fasken". The firm could use this top level domain exclusively, or it could permit others to register .fasken domains.

ICANN has published a detailed Applicant Guidebook for comment and plans to begin accepting applications for new top level domains in mid-2009. Trade-mark and other intellectual property owners should consider evaluating their online branding and enforcement strategies and monitor the ICANN process carefully.

On one hand, the new gTLDs offer trade-mark owners the ability to control domains that reflect their brand (e.g. .fasken) or to participate in new gTLDs appropriate to their business (e.g. .lawyers). However, with an increased number of top level domain names, trade-mark owners will have to monitor new gTLD applications for infringement as they are submitted, and then monitor a wider range of second level domains for possible infringement.

Intellectual property owners should be thinking ahead to the launch of the new gTLD and developing affirmative and defensive intellectual property strategies now.

Web 2.0 – The Tax Man Cometh. In the new generation of Web 2.0 service providers – including Facebook^TM, YouTube^TM, Wikipedia^TM and iTunes®, among others – users supply online content (e.g., profiles, videos, podcasts, photos, product listings and customer reviews) to fill virtual space on the host's servers. Web 2.0 service and content providers have struggled to find new ways to protect themselves, and to profit, in this emerging commercial environment.

In eBay Canada Ltd. et al. v. Minister of National Revenue¹⁵, the Federal Court of Appeal upheld the earlier decision¹⁶ of Justice Hughes, which afforded Revenue Canada access to confidential information concerning some of the biggest Canadian eBay® sellers, including a disclosure of gross sales, for use in verifying their income tax information.

The information, although stored on computer servers in foreign jurisdictions, was not considered "foreign-based information", since it was available for display on the company's computer screens in Canada with the entry of a few keystrokes.

Notably, the Court viewed its role as one of interpreting existing legislation "in light of contemporary technology and, if necessary, ['transposing'] its terms to take into account the changed technological environment in which it is to be applied."¹⁷ The decision may have a lasting impact upon Web 2.0 service providers for years to come.

Footnotes

^{1 .2008 FCA 124}

^{2. 2008 FC 876}

^{3. 2008 FC 188}

^{4. Kirkbi AG v. Ritvik Holdings Inc., [2005] 3 S.C.R. 302}

^{5. 2008 FC 425}

^{6. Trade-marks Act, s. 10}

^{7. 2007 FC 1179}

^{8. 2008 FC 45}

^{9. 2008 FC 6}

^{10. 2008 ONCJ 355 (CanLII)}

^{11. 2008 WL 1995837}

^{12. 2005 FCA 193}

^{13. http://www.cira.ca/en/Whois/whois_intro.html}

^{14. http://www.icann.org/en/topics/new-gtld-program.htm}

^{15. 2008 FCA 348}

^{16. Ebay Canada Limited v. Canada (National Revenue), 2007 FC 930}

^{17. http://www.wipo.int/pct/guide/en/gdvol1/annexes/annexc/ax_c_ca.pdf , at Paragraph 42.}

www.fasken.com

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.