Premier’s Blogger Battle

Canadian domain name aficionados and Albertan politicos of all stripes have had a chuckle over the edstelmach.ca story the last few days. In case you missed it, popular Alberta blogger Dave Cournoyer (who blogs at daveberta.ca) was threatened by lawyers for Alberta Premier Ed Stelmach, who were agitated that Cournoyer had registered the edstelmach.ca domain name.

Stelmach’s lawyer, a specialist in family and criminal injury issues, claimed that Cournoyer had registered the name in “bad faith” (which would open up a claim under CIRA’s Domain Name Dispute Resolution Policy) and also accused Cournoyer of “misappropriating” Stelmach’s personality, which led Cournoyer to quip: “I’m not sure where Ed Stelmach’s personality is, but I certainly didn’t take it.”

However, in a development under the heading “turnabout is fairplay”, on Wednesday the domain daveberta.com was purchased by Calgary-based financial advisor Andrea Kirby. For a brief period on Thursday, the daveberta.com site was directed to the Wikipedia page for weasels.

For more coverage, including Michael Geist’s comments about the Premier’s poor chances of success, see the list of links at see daveberta.ca.

Damages for Counterfeit Goods – A Significant Award

Louis Vuitton Malletier S.A. et al v. Yang et al. provides a useful analysis of the damages that can be awarded against a Defendant trading in counterfeit goods.

In this case, the owners of the well-known brand had been attempting since 2001 to stop the sale of counterfeit goods at K2 Fashions, a Richmond, British Columbia retail store, having obtained two previous judgments, having sent numerous letters and having made a number of seizures. This latest action, against the persons who controlled and operated the business and premises, was not defended and the Plaintiffs brought a motion for default judgment, including an assessment of damages.

The Federal Court concluded that the Defendants had been properly served and the time to file a defence had expired. The Court was also satisfied that infringement was established.

The Court then assessed damages for both copyright and trademark infringement.  

The Plaintiffs had elected an award of statutory damages pursuant to section 38.1 of the Copyright Act. After considering the relevant factors set out in section 38.1(5) (the good or bad faith of the Defendant, the conduct of the parties during the proceedings and the need to deter other infringements of the copyright in question), the Court concluded that the Plaintiffs were entitled to the statutory maximum of $20,000.00 for each of the two copyrighted works at issue.

With regards to trademark infringement, the Court concluded that it could not quantify the damages suffered by the Plaintiffs, it being difficult to determine what depreciation of goodwill or loss of sales may have occurred.

The Court chose instead to assess the profits made by the Defendants “based on the best available evidence, reasonable inferences, the Plaintiffs’ experiences in similar situations and a dose of common sense”. However, since its estimate of $76,000.00 was only the minimum, the Court applied a “nominal award per infringing activity” and assessed damages at $87,000.00. To this the Court also added punitive damages of $100,000.00, being satisfied that the requisite elements were present (conduct that was planned and deliberate, outrageous conduct over a lengthy period of time, an attempt to conceal, an awareness by the Defendants that they were wrong, and profiting from the misconduct).

Finally, the Court awarded solicitor and client costs of $36,699.14, given the Defendants’ intentional infringement and ongoing behaviour that was “scandalous and outrageous”.

The total judgment amounts to $263,699.14.

A Globe & Mail article notes that this is believed to be the “highest amount ever awarded in an undefended action involving counterfeit goods”. Clearly, the Court is sending a message that counterfeiting should and will be treated harshly.

Fashionable, But No Injunction

In Nada Fashion Design Inc. v. Designs by Nada et al., the Plaintiff sought an interlocutory injunction against the Defendants a few days before the Plaintiff and Defendants were to participate in Toronto’s L’Oréal Fashion Week. The Plaintiff alleged that it had prior use of the trademark NADA, although it had only recently applied to register the mark, and that the Defendants’ use of BY NADA and NADA YOUSIF constituted passing-off.

The Court applied the three-part test to determine whether an interlocutory injunction was warranted:

(1) the existence of a serious issue to be tried;
(2) the existence of irreparable harm if the injunction is not granted; and
(3) that the balance of convenience favours the granting of the injunction.

With regards to the first part of the test, the Court focused on whether, with regards to passing-off, there was likely to be confusion, concluding confusion was likely with BY NADA, but not with NADA YOUSIF.

However, with regards to the second part of the test, the Court decided that the Plaintiff had not provided the “clear evidence” necessary to establish irreparable harm. The Plaintiff’s allegations with regards to the importance of a brand in the fashion industry and its negotiations with major retailers was not sufficient. Thus, there was no irreparable harm and the balance of convenience favoured the Defendants.

No interlocutory injunction was granted and whether the Plaintiff continues with its action remains to be seen.

Another RIM Trademark Suit

In a complaint filed in the U.S. District Court for the Central District of California, Research In Motion (“RIM”) based in Waterloo, Ontario, is again alleging that another company is using trademarks that are similar to those used by RIM. In this most recent complaint, RIM seeks to prevent LG Electronics Inc. from using such names as Black Label, Strawberry and Black Cherry. An earlier claim brought against Samsung Electronics regarding its use of the mark BlackJack was settled earlier this year.

Passing Off: Like Father Like Daughter?

In Stenner v. ScotiaMcLeod, a recent decision of the British Columbia Supreme Court, the Plaintiff successfully established that his surname used in association with financial services was a valid trademark and that the Defendants’ use of the name constituted passing-off. 

The Plaintiff was a well-known Vancouver-based investment advisor and financial consultant with his own radio show. He worked under contract with the National Bank where investment and financial services were provided by a team that included his daughter and her husband. The daughter’s surname was Stenner-Campbell. In 2002 the Plaintiff negotiated unsuccessfully with his daughter to sell her his book of business. That book of business was instead sold to another National Bank employee for $61 million. The daughter and her husband then joined ScotiaMcLeod, a rival investment firm, began soliciting clients and started a radio show using the Stenner name. The Plaintiff then commenced an action against his daugther and her husband.

Among other relief, the Plaintiff claimed breach of fiduciary duty and passing-off and sought an injunction to prevent the Defendants from using STENNER with any of INVESTMENT, TEAM or FINANCIAL. The Plaintiff had successfully applied to register the STENNER trademark, but the application was only filed after the lawsuit was commenced.

The Court concluded that there was no breach of fiduciary duty because the daughter in particular was not a key employee of the Plaintiff’s team. Moreover, under British Columbia law, a former employee could solicit customers so long as he or she did not take and use confidential information or trade secrets of the former employer.

However, the Court also concluded that passing-off was established since the Defendants’ use of Stenner-Campbell in print and on radio created confusion, depending on the context and a person’s prior experience with the financial world. There was a benefit to be derived by the Defendants’ use of the name and the daughter did nothing to avoid confusion by also using her given name, Vanessa. However, with regards to damages, the Court reasoned that because the passing-off due to confusion with STENNER had diminished greatly over time, 10% of the Defendants’ gain to trial, and 5% for a further five years after, was the appropriate measure.

The Court also issued a permanent injunction with regards to the Defendants’ use of the domain name www.stennerteam.ca and required that domain name to be transferred to the Plaintiff. However, no injunction was issued regarding the use of STENNER with INVESTMENT, TEAM, or FINANCIAL, since it would be too broad.

The decision has now been appealed to the British Columbia Court of Appeal and we will report if there is a further ruling.

Penny For Your Thoughts

The lowly Canadian penny (to be fair, it’s currently worth more than it’s American counterpart) has been the subject of some intense legal discussions lately, according to a recent story in the Globe and Mail. This story highlights the importance of protection for trademarks under both trademark and copyright law in Canada.

 The Royal Canadian Mint has taken issue with the apparently unauthorized use of a Canadian penny design by the City of Toronto as part of an ad campaign which appears on posters on buses and in bus shelters and on bumper stickers and buttons. The campaign is part of the City’s attempt to convince the Federal Government to provide more funding to municipalities, specifically one cent out of every six collected by the Federal Government through the Goods and Services Tax. The penny design is also featured on the City’s Onecentnow.ca webpage

According to the story, the Mint claims ownership of intellectual property rights  in the design of the penny and is demanding that the City stop all use of its design and payment of a licensing fee for past use. While the news story doesn’t get into the legal specifics, the Mint is likely  relying on both copyright and its Official Mark status for the penny design. The Mint caused the Registrar of Trade-marks to publish a notice in the Trade-marks Journal on June 2, 2004, of the Mint’s adoption and use of the penny design as an Official Mark. Once such notice is published, Section 9 of the Trade-marks Act prohibits any other person from adopting, using or registering that mark in connection with a business, as a trademark or otherwise – a very strong form of protection available only to Canadian public authorities – basically government entities and entities over which there is significant ongoing governmental control – and universities. From the article, it appears the City is asserting a defence that it is using the penny design for educational purposes, but it’s not clear that even educational use is permitted under Section 9 without the consent of the owner.

The Mint may also be able to assert its copyright against the City, irrespective of the Official Mark issue, assuming ownership, originality, subject matter, fair dealing and related issues are not a problem. Copyright provides a very different cause of action than trademark – once a copyright protected work is copied, it’s irrelevant to a claim of infringement whether the copy is being used in association with any wares or services.

Actual Infringement Required for an Injunction

Two recent Canadian cases may be of interest to our readers.

In the first, because the Defendant had not yet used the alleged infringing trademark and because the Registrar of Trade-marks had not yet made a decision regarding the Defendant’s applications to register the mark at issue and expunge certain of the Plaintiffs’ marks, the British Columbia Supreme Court refused the Plaintiffs’ summary trial application – Price Costco International, Inc. et al. v. Welcome Warehouse Ltd.. Costco, the international “big box” retailer, alleged that the Defendant, a local British Columbia company, would be passing off and infringing the Plaintiffs’ registered trademarks (which included PRICE CLUB PRICE COSTCO, PRICE COSTCO & Design, COSTCO Design and COSTCO WHOLESALE & Design) if the Defendant proceeded to use PRICECO WAREHOUSE. The Defendant had applied to register its mark on the basis of proposed use, which the Plaintiff opposed. The Defendant also brought proceedings to expunge PRICE CLUB, PRICE COSTCO and PRICE COSTCO & Design.

Notwithstanding the Plaintiffs’ survey evidence demonstrating confusion, the court declined to grant declaratory or injunctive relief since there was no evidence of any actual infringement or damage by the Defendant.

With regard to the second case, we earlier reported the decision in Sun World International Inc. v. Parmalat Dairy and Bakery Inc. in which the prothonotary agreed with the Registrar of Trade-marks that the statement filed in opposition to the registration of a trademark could not be amended after the Registrar had decided the merits of the registration. This decision was appealed further, to a Federal Court judge, who handed down a decision in late August, agreeing with the prothonotary.