There were three recent trademark decisions from the Canadian courts that readers may find of interest:

Expungement Allowed – In Candrug Health Solutions Inc. v. Thorkelson, Candrug and Pharmawest commenced identical applications and sought expungement of the respondent’s trade-marks in Federal Court. The proceedings were consolidated and Candrug discontinued its application. Therefore, Pharmawest was the sole applicant.

The respondent had applied and been issued registration in May 2003 for the trade-marks CANADA DRUGS and CANADADRUGS.COM. The respondent had disclaimed the exclusive right to use the words “Canada” and “Drugs” apart from the trade-marks. The Federal Court agreed with the applicant and expunged the trade-marks CANADA DRUGS and CANADADRUGS.COM on the basis that they were both clearly descriptive and deceptively misdescriptive under section 12(1)(b) of the Act. The respondent was unable to discharge his onus under section 12(2) to show the marks had acquired distinctiveness as of the date the application was filed. Therefore, the marks were not registrable and were ordered expunged.

Damages Reduced on Appeal – In 2703203 Manitoba Inc. v. Parks, the Nova Scotia Court of Appeal allowed an appeal in part and reduced the quantum of damages for copyright infringement, passing-off and interference with contractual relations awarded by the trial judge. The Court of Appeal upheld the trial judge’s finding that the appellants infringed the respondent’s copyright in the publication, Coffee News, by producing and distributing the publication, Flying Cow, in the form they did.

Witnesses at trial testified that the first several issues of the Flying Cow were published by the same printer as Coffee News and were identical in every respect including design, format, and quality and colour of the paper. Only the editorial content and the mast-head were different. The Court of Appeal also paid considerable deference to the trial judge’s advantage of seeing and hearing the witnesses and upheld the trial judge’s conclusion that the respondent was entitled to damages from the appellants for passing-off.

Referring specifically to the testimony of several witnesses, the trial judge concluded that the appellants had devised a strategy of lies and deceit in producing Flying Cow as practically identical to Coffee News, with the objective being to cause confusion so that advertisers, distributors and readers may be persuaded that the two publications were sister editions rather than competitors.

The Court of Appeal did, however, take issue with the trial judge’s calculation of damages as there was limited explanation or justification of how the amounts were arrived at. The Court of Appeal reviewed each amount and reduced the trial judge’s order of general damages from $139,000 to $70,500 and punitive damages from $100,000 to $40,000.

Challenging Official Marks – In See You In? Canadian Athletes Fund Corporation v. Canadian Olympic Committee the Applicant sought judicial review of the Registrar’s decision to grant the COC two official marks, SEE YOU IN BEIJING and SEE YOU IN VANCOUVER. The Applicant was incorporated in 1997 to raise money for Canadian athletes and had used marks such as SEE YOU IN ATHENS in the past and had applied to register the two marks at issue. The Federal Court agreed with the Registrar that the COC was a public authority since there was a significant degree of public control over it’s ongoing activities and the organization existed for the public benefit.

However, the Federal Court also concluded that a mere statement by the public authority that it had adopted and used a mark was not sufficient to prove that such adoption and use had actually occurred. A negative inference could be drawn from a failure to provide details regarding alleged adoption and use. Moreover, any such evidence must show an element of public display. Since the COC had not established adoption and use at the relevant time, the Registrar’s decision to publish notice of the adoption and use by COC of the marks as official marks was quashed. We understand that the COC is considering an appeal of this decision.

An earlier blog reported that the organizers of the Beijing 2008 Olympic Games have threatened legal action against pranksters who mock the Olympic brand through the use of spoofs or parodies on the Internet.

We do not propose to comment on trademark law in China. However, a review of the Canadian law indicates that in the Canadian trademark context, legal actions against pranksters poking fun, even with malice, are not likely to be successful. The Canadian Trade-marks Act is of little assistance if the pranksters do not use the marks for a commercial purpose or if the marks have been humourously altered to the extent that it is apparent to the average person that the parodies are not the work of the trademark owners.

In bringing an action the trademark owner must prove that there has been, pursuant to section 22 of the Trade-marks Act (the “Act”), a depreciation of the goodwill attaching to the owner’s registered trademark. Given the wording of section 22, there must also be commercial use of the mark.

In the leading case of Cie Générale des Éstablissements Michelin-Michelin & Cie v. C.A.W. – Canada (1996), 71 C.P.R. (3d) 348 (F.C.T.D.) (“the Michelin case”), the defendant attempted to unionize the workers of Michelin North America (Canada) and handed out pamphlets to employees parodying the Michelin corporate logo, namely the Michelin Tire Man, a beaming marshmallow-like rotund figure composed of tires. The pamphlets depicted a broadly smiling Michelin Tire Man with arms crossed, his foot raised, seemingly ready to crush underfoot an unsuspecting Michelin worker together with the caption, “Bob, you better move before he squashes you”.

The Court held that handing out pamphlets to recruit members into a trade union did not qualify as a commercial activity (i.e. use in association with wares or services) under section 4 of the Act. Moreover, the use of the trademark as a parody could not be said to depreciate the goodwill of the registered mark under section 22 because the menacing depiction was not likely to confuse the average customer that the altered mark originated with the registered owner. It is worth noting, however, that the plaintiffs were successful with their claim of copyright infringement in respect of which the Court ruled that parody was not a form of criticism, a defense to copyright infringement under what is now Section 29 of the Copyright Act.

The Michelin case was followed in British Columbia Automobile Assn. v. Office and Professional Employees’ International Union Local 378 2001, BCSC 156. This was another labour relations situation where the Court ruled that the use by the defendant of the plaintiff’s trademark for the non-commercial provision of information on the Internet did not constitute depreciation of the goodwill of the registered trademark even though one of the purposes of the website was to discourage members of the public from doing business with the plaintiff. The defendant was entitled to express its position and speak freely provided it did not violate section 22 of the Act and that “to accept the plaintiff’s argument, that the reference to an employer’s trade-mark to identify a Union site depreciates goodwill associated with that trade-mark would be a result that goes far beyond what Parliament intended by s. 22”.

An earlier case provides an illustration of a true commercial use. In Source Perrier (Société Anonyme) v. Fira-Less Marketing Co. Limited [1983], 2 F.C. 18 (T.D.), the defendant sold bottled water for $1.00 under the name “Pierre Eh”, a humourous reference to the Canadian Prime Minister at the time. The bottles were designed to resemble those used by the plaintiff, but included a disclaimer that the bottles were not to be confused with those of the plaintiff.  The Court found that this use led to depreciation of the plaintiff’s goodwill because the defendant’s commercial spoof of the plaintiff’s marks and image tended “to dilute the quality of the plaintiff’s trade-marks, to impair its business integrity established over the years, and to cause injury to its goodwill”.

Thus, trademark owners, before pursuing pranksters, will want to determine whether there is commercial use of a registered trademark, or, possibly, an infringement of copyright. Otherwise, the trademark owner may be forced to see (and live with) the humourous side of a prankster’s efforts.