Copyright in Trademarks or Logos

If copyright subsists in the trademark or logo which has been assigned to the trademark owner by the author of the work subsection 14(1) of the Copyright Act will apply. The assignment does not operate to vest in the assignee any rights in the copyright for more than 25 years after the author's death, and the reversionary interest, notwithstanding any agreement to the contrary, devolves on the author's legal representatives as part of the author's estate. Presumably, this provision has no effect on the trademark rights under the Trademarks Act.

Extension of the Term of Copyright

When the Canada-United States-Mexico Agreement was finalized Canada was required to extend the term of protection for anonymous and pseudonymous works, cinematographic works, performances fixed in sound recordings and sound recordings. This has been done. Canada is also obliged to extend the general term of protection granted to authors to the life of the author plus 70 years, but Canada has two and half years from the in force date of the Agreement to do this and it has not yet been done.

The extensions that have been made do not have the effect of reviving the copyright or a right to remuneration in any work, performer's performance fixed in a sound recording or sound recording in which the copyright or the right to remuneration had expired on July 1, 2020, Section 34, S.C. 2020, c. 1.

Estoppel and No Challenge Clauses

In Loops v Maxill Inc Loops 2020 ONSC 971 it was alleged that contrary to a previous settlement agreement, Maxill Canada had directly or indirectly attacked the validity of or assisted another person in attacking the validity of intellectual property, namely a patent, owned by Loops. Maxill Canada agreed would not attack the validity of or assist any person in attacking the validity of, either directly or indirectly. Loops sought an interlocutory injunction to enforce the provision of the settlement agreement. The court categorized the provision as a restrictive covenant. 

This type of provision is common to settlement agreements relating to all types of intellectual property disputes including copyright.

The court said in cases where the injunction sought involves the enforcement of a restrictive covenant, the moving party must show a strong prima facie case. If the moving party demonstrates a clear breach of the covenant, the second and third parts of the test may not need to be proven.

The restrictive covenant must be reviewed in light of the circumstances surrounding the contract and the applicable principles regarding the enforceability of restrictive covenants. The court must consider whether the restrictive covenant is reasonable both in the interests of the parties to the covenant and the interests of the public.

The onus is on the party seeking to enforce the restrictive covenant, to establish that it is reasonable in the interests of the parties. The onus for establishing that it is not reasonable in the public interest is on the party opposing the enforcement.

The court was not satisfied that the wording of the restrictive covenant was so “clear and unambiguous” that it supported the interpretation sought by Loops. Maxill's US affiliate which was attacking the validity of the patent was not mentioned in the covenant. 

From Loops' perspective, the restrictive covenant was reasonable, however after reviewing US and UK decisions the court concluded that the covenant was not reasonable in the public interest since if the covenant was enforced the court would be precluded from considering the legal foundation the complaint was based on and you cannot infringe an invalid patent.

An appeal from this decision has been allowed and an interlocutory injunction granted by the Ontario Divisional Court, Loops L.L.C. v. Maxill Inc. 2020 ONSC 5438 (Divisional Court). The Divisional Court noted that the trial judge was mistaken in concluding that Maxill's U.S affiliate was attacking the validity of patent mentioned in the covenant when in fact it was Maxill Canada who did so.

With respect to the interpretation of the covenant the court said an understanding of the intention of any contract begins with the words used in the agreement. In this case there is nothing in the no-challenge clause that distinguishes an attack on the validity of a patent commenced in response to a claim for a breach of the settlement agreement from an attack that originates in a proceeding initiated by Maxill Canada. The injunction against questioning the validity of the applicable patents found in the no-challenge clause is clear. The suggested distinction would render the no-challenge clause largely meaningless.

The motion judge erred in failing to conclude that a strong prima facie case of breach was present. There was a legally binding contract; it was entered into by the parties to resolve an outstanding dispute between them. The meaning of the clause in issue is clear and unambiguous: by the restrictive covenant the Maxill interests have agreed not to challenge the validity of the U.S. Patent and in breach of that agreement Maxill Canada has been a party to pleadings in the action in Washington asserting that the U.S. Patent is invalid.

The Divisional Court disagreed with the motion judge's conclusion whether the clause was reasonable in the public interest. The court said  

“There may be limits to the power to contract where the general public is harmed. An agreement, between competitors, to fix the price of some generally required good or service is an example of such a limit. However, so far as I am, agreeing in a contract to preclude the subsequent use of a defence that is otherwise available simply because it will result in personal gain or protection of one party is not one. To impose such a limitation would require evidence of the “price” so that a rational understanding that it is “too high” can be arrived at and the threat to public trust and confidence in the administration of justice is explained. Put differently there would have to be evidence that allowed the court to weigh the implications (both negative and positive) of enforcing the no-challenge clause against the implications of refusing to do so. In this case there was no such evidence in the record in this court or before the motion judge.”, at para. 50.

U.S. law relating to no-challenge clauses in the context of a license, was not binding in Canada. In addition, the court observed that the acceptance of a no-challenge clause in the context of settling litigation dealing with alleged infringement of a patent may be maintained because that timing makes the policy in favour of protecting settlements predominant.

Finally, the court disagreed with the motion judge's conclusion that Loops had not suffered irreparable harm. The motion judge allowed Maxill to do the very thing it agreed it would not do in its settlement of the original Federal Court action. The loss of Loops' ability to hold Maxill to its bargain and prohibit Maxill from attacking the validity of the U.S. patent was an irreparable harm. It would change the nature of the case that goes forward. The strategy adopted, the evidence presented, the law relied on and the risks Loops will face in the litigation will all be different. What is emphasized and what is minimized will be adjusted or altered. There is nothing speculative or contingent about this. The loss of the ability to rely on a proper legal right or position is a harm that, once the proceeding is complete, cannot be recovered in damages, at para 77.

Claiming relief in Action Claiming Breach of Trademark and Copyright

A plaintiff in such a case is entitled to separate remedies for the breach of both the Trademarks Act and the Copyright ActBiofert Manufacturing Inc. v. Agrisol Manufacturing Inc. 2020 FC 379,175 C.P.R. (4th) 1 at para.221.

Accounting for Profits

In Nova Chemicals Corporation v. Dow Chemicals Company, 2020 FCA 141 (F.C.A.) the Federal Court of Appeal provided a detailed analysis of the guiding principles that underlie the law regarding accounting of profits. The Court said, “absent some exceptional or compelling circumstance or persuasive expert evidence to the contrary in a particular case, the full cost method is the appropriate approach to deducting costs in an accounting of profits. Not only incremental costs, but also fixed costs, are deductible.

New Offence for the Removal or Altering of Rights Management Information

The Canada-United States-Mexico Agreement Implementation Act, S.C. 2020, c. 1, s. 30 has added a new offence relating to the removal or altering of rights management information. 

Expediting Proceedings before the Copyright Board

Effective December 4, 2020 a new government regulation proscribes time limits for matters before the Copyright Board. In a tariff proceeding with no hearing, the Board is required to make its final decision before the effective period of the proposed tariff begins, Time Limits in Respect of Matters Before the Copyright Board SOR/20202-264 section 2.

In a tariff proceeding where a hearing on the matter is held as well as in an individual dispute proceeding (in which a hearing on the matter is always held), the Board is required to make its final decision no later than 12 months after parties present their final submissions to the Board, section 2-3].

The Board is also required to issue a notification as to whether or not a hearing will be held for a given tariff proposal no later than three months after its publication, section 5]. This notification measure will help clarify the timelines applicable to decisions for all parties.

The Necessity to Identify with Precision Information Alleged to be Confidential.

In The Racing Partnership Ltd v. Sports Information Services Ltd., [2020] EWCA Civ 1300 at para. 49 the English Court of Appeal said the starting point in any confidential information case is to identify with precision the information which is alleged to be confidential. Experience shows that claimants are apt to make unfocused allegations of misuse of confidential information, and that when they are required precisely to identify the allegedly confidential information, it can turn out that the information is either not protectable or has not been misused. Moreover, even if confidential information has been misused, it is necessary precisely to identify what has been misused when it comes to considering remedies for such misuse, such as an injunction.

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.