First Canadian Decision on Keyword Advertising

The British Columbia Supreme Court recently issued the first Canadian Court decision dealing with the use by one party of another party’s trademarks in keyword advertising.  The case involved a defendant, Vancouver Career College (Burnaby) Inc. (VCC), that provides post-secondary career training services under different business names and trademarks.  As part of its internet marketing strategy, VCC, like numerous other businesses, uses keyword advertising, whereby VCC pays search engines such as those provided by GOOGLE and YAHOO! for links to its websites to appear as “sponsored links” or “‘sponsored results” alongside the search engine’s normal search results.  In order to use keyword advertising, VCC selected certain keywords to describe its website, including the business names and trademarks of various VCC competitors.

The plaintiff, the Private Career Training Institutions Agency (Agency) is a provincial regulatory agency charged with overseeing career training institutions that operate throughout the Province of British Columbia.  Acting on complaints received from other career training institutions in the Province, the Agency sought an injunction against VCC’s practice of using the names and trademarks of those other institutions in VCC’s keyword advertising program, on the basis that such use was false, deceptive or misleading.  The Court held that VCC’s keyword advertising program was not false, deceptive or misleading and therefore no injunction was granted.

While framed as a false, deceptive or misleading advertising complaint, rather than a trademark infringement or passing off claim, the Judge in his reasons specifically referenced trade-mark and passing off concepts when looking at the issue of what is confusing or misleading in the context of alleged improper advertising.  The Judge found that what the defendants were doing did not amount to false, deceptive or misleading advertising.  The Judge also held in his reasons that: “I also accept VCC Inc.’s argument that its practice of using Keyword Advertising is no different than the time-honoured and generally accepted marketing practice of a company locating its advertisement close to a competitor’s in traditional media (e.g., placing its Yellow Pages advertisement next to or in close proximity to a competitor’s telephone number  in the same directory so that potential customers of that competitor discover there is another company offering a similar product or service and that they, the consumer, have a choice).”

The Agency has until June 28, 2010 to file an Appeal of the decision, should it choose to do so.

Feud Over Family Name Spills Into Federal Court

In a recent decision of the Federal Court Trial Division, the registration of the mark STENNER was expunged on the basis that it was not distinctive. 

STENNER was registered as a trademark in the Canadian Intellectual Property Office (“CIPO”) in 2005.  The Application, filed in 2003, was objected to by the CIPO Examiner on the basis that the mark was primarily merely the surname of an individual.  That objection was overcome when the Applicant provided sufficient evidence of secondary distinctiveness – i.e. evidence that the mark was recognized as the source of the Applicant’s financial services and newsletters, as much or more than than it was recognized as a surname.  The Application was not opposed by anyone.

The Federal Court found that the evidence established that the registered owner had used the STENNER mark on and off over the years, commencing in the late 1980’s, though rarely, if ever, as a standalone mark and periods of use had been punctuated by lengthy periods of non-use.  In the early 2000’s, the principal of the registered owner had a bitter falling out with his two children who were also in the financial services industry and who also used the STENNER name in association with the performance of their services.  That falling out had been the subject of a separate lawsuit, however the Court in those proceedings specifically declined to rule on the validity of the trademark registration for STENNER.

The application to expunge the registration for STENNER was based on various grounds, but the argument that won the most favour with the Federal Court was that the mark was no longer distinctive (assuming it ever had been), due to extended periods of non-use, lack of use as a standalone mark and the results of expert evidence on the recognition of the mark as a source indicator for the registered owner’s services.   The expert evidence put forward showed that the mark was recognized by virtually no one outside of the Lower Mainland of British Columbia and even within that region, the recognition factor was very low.  Also, the use of the same mark by the two children in the same industry and geographic area also pointed to a lack of distinctiveness.

In the end result, the Federal Court ordered the expungement of the registration for the STENNER mark.  There is no indication yet of whether an appeal will be filed, though the deadline for doing so is fast approaching.

“Bad Faith” Decisions Bad News for Trademark Applicants?

The following article, authored by Jeffrey Vicq, was originally posted on the IPiloguea co-operative blog hosted on the IP Osgoode website of York University’s Osgoode Hall Law School.

Those of us who provide trademark prosecution and counselling services—and particularly those of us who work with clients that have multi-national trademark portfolios—know that clients are sensitive to developments not only in Canadian practice, but also in other key markets around the world.  Many of my clients were concerned about a line of United States cases, decided over the last several years, that regarded innocent filing errors in applications, renewal forms, and other correspondence with the US Patent and Trademark Office as attempts to perpetrate a fraud on the Office, justifying refusal, expungement, or some other highly punitive penalty.  These decisions had effectively broadened the notion of “fraud” on the USPTO to include innocent mistake and negligence.

However, it appears generally acknowledged that this trend halted in 2009 with a decision titled In re Bose Corp. In the most general terms, Bose served to restore the concept of fraud on the Office to a more conventional meaning.  Now, only if an applicant knowingly makes a false, material representation with the intent to deceive does their action rise to the level of fraud, meriting harsh punishment.

However, I am becoming concerned we may be seeing the start of a trend in Canada toward permitting challenges to applications for alleged lack of good faith akin to what our US friends experienced pre-Bose.  In decisions released over the last two years, the Canadian Trade-marks Opposition Board appears to be breathing new life into the ability of opponents to challenge applications on the basis of good faith. Read more

Special Circumstances Excuse Non-Use of Trademark

Cobalt Brands, LLC v. Gowling Lafleur Henderson LLP concerned the registration of the mark USQUAEBACH & Design for use in association with blended Scotch Whiskey. The mark was registered in 1977 by a U.S. company which suspended production and sales in 2003 after the death of two owners holding a 95% interest. Van Caem, a Dutch liquor company and creditor, acquired the mark and assigned it to its Belgian subsidiary, but the owner of Van Caem died and Van Caem and its subsidiaries were forced to liquidate, which involved a lengthy process. The registered owner, Cobalt Brands, purchased the mark in 2007 and the assignment to Cobalt Brands was recorded by the Registrar. However, the section 45 expungement notice sent by the Registrar was not received by Cobalt Brands and the Registrar expunged the registration.

Cobalt Brands appealed. Cobalt Brands agreed the mark had fallen into disuse, but argued that special circumstances excused the non-use and the Court agreed.

The Court noted that Cobalt Brands was not prohibited from adducing evidence before the Federal Court simply because none was produced before the Registrar and that it was entitled to produce more than one affidavit. Read more

Trademark Issues at Richmond Night Market

Target Event Production Ltd. v. Paul Cheung and Lions Communication Inc. concerns a trademark and copyright claim that arose when the Defendants took advantage of a business opportunity the Plaintiff chose not to exploit.

During the summer months of 2000 through 2007 the Plaintiff operated a popular Asian night market in Richmond, British Columbia.  The market was held on land leased by the Plaintiff, and the Plaintiff in turn leased space to vendors selling a wide variety of food products and merchandise.  The Plaintiff created a logo which included the text “Richmond Night Market Summer Festival” in English and “Richmond Summer Night Market” in Chinese characters.  The market was popularly known as “Richmond Night Market” and the Plaintiff applied for that name as a trademark in English and Chinese, although only the English mark was registered at the time of the hearing of the court action.

In 2007, when the Plaintiff was unable to renegotiate its lease at a favourable price, it announced that the market might not be held in 2008, unless the Plaintiff located an alternative space, which it was unable to do.  The Defendants became aware that the space the Plaintiff had been leasing was available, negotiated a lease, obtained the necessary permits from the City and sought out vendors.  However, the Defendants adopted a name similar to that which the Plaintiff had been using, and copied various documents the Plaintiff had created, including a vendor application form and a plan for the market showing the location of food and merchandise booths.

In lengthy reasons, Madam Justice Simpson of the Federal Court carefully examined the various allegations of passing off and copyright infringement.

The Court found that the Plaintiff had acquired rights in four trademarks:  RICHMOND NIGHT MARKET, RICHMOND NIGHT MARKET SUMMER FESTIVAL and Chinese characters for each of these.  The trademarks were originally merely descriptive, but by January 2007 they were valid trademarks because they enjoyed substantial goodwill and had acquired distinctiveness in association with the Plaintiff and the location of the market.  However, the Court also concluded that the distinctiveness was not durable, and the marks lost their distinctiveness and associated goodwill when the Plaintiff failed to open another night market in 2009.

The Court then examined the allegations of passing off, taking into account the elements of confusion listed in section 6(5) of the Trade-marks Act, including the surrounding circumstances.  The Court concluded that the visitors, but not the vendors, would have been confused by the Defendants’ actions and thus passing off was established (the key elements of the tort being the existence of goodwill, deception due to a misrepresentation and actual or potential damage).  However, given that the Defendants lost money in their endeavor, there could be no accounting of profits; further, given that the Plaintiff had not operated a market in 2008 or 2009, the Plaintiff had not lost money as a result of the Defendants’ activities.  However, the Plaintiff did recover damages for copyright infringement for use by the Defendants of the Plaintiff’s site plan and application forms, but the total amount was only $15,000.00 plus costs and interest.

Thus, the Defendants had failed to adequately distance themselves from the Plaintiff’s former business when trying to take advantage of the opportuntity presented by the Plaintiff’s cessation of services.  As a result, the Court found both copyright infringement and passing off, although in the circumstances the damages were small.

Proposed Practice Notices: Professional Designations and Abbreviations, Acronyms and Initials

The Canadian Intellectual Property Office has initiated two short consultations (January 29 to February 28, 2010) for proposed Practice Notices regarding section 12(1)(b) of the Trade-marks Act.  Section 12(1)(b) provides that “a trademark is registrable if it is not, whether depicted, written or sounded, either clearly descriptive or deceptively misdescriptive in the English or French language of the character or quality of the wares or services in association with which it is used or proposed to be used or of the conditions of or the persons employed in their production or of their place of origin”. The two proposed Practice Notices address the application of 12(1)(b) to professional designations and to abbreviations, acronyms and initials.

If research discloses that an applied for trademark consists of a professional designation, the examiner will apply a first impression test to determine whether a consumer would assume the goods and services are produced by a professional with a designation similar to the applied-for trademark and if so, the trademark will be unregistrable, being clearly descriptive of the persons employed in the production of the wares and services.  The addition of an abbreviation, acronym or initial to the professional designation will not make the trademark registrable.

A trademark that consists of or contains an abbreviation, acronym or initial will be considered unregistrable if considered as a whole and if as a matter of first impression the abbreviation, acronym or initial is clearly descriptive or deceptively misdescriptive of the wares and services.  Moreover, the addition of an abbreviation, acronym or initial to a clearly descriptive word or phrase will not render it registrable as a trademark.

The changes arise in light of a recent Federal Court decision, College of Traditional Chinese Medicine Practitioners and Acupuncturists of British Columbia v. Council of Nature Medicine College of Canada, that considered some 39 trademark applications and registrations containing abbreviations, acronyms and initials and allegedly confusing with certain professional designations. Read more

Books Titles Unregistrable as Trademarks in Canada

In a decision that could significantly impact rights-holders in the media and entertainment industries, the Federal Court has suggested that book titles are, prima facie, not properly registrable as trademarks in Canada.

In Drolet v. Stiftung Gralsbotchaft (2009 FC 17) the court was tasked with considering a range of copyright and trademark issues.  The litigants were all involved in the Grail Message movement—a religious movement centred around a series of writings prepared in Germany in the 1920s and 1930s. The plaintiff sought to expunge the defendant’s Canadian trademark registrations pertaining to the title of a book central to the movement for reasons relating to descriptiveness.

First applying the conventional analysis proscribed under s. 12(1)(b) of the Trade-marks Act (the “Act”) to determine if the mark was “clearly descriptive”, the court concluded the mark did not meet this test, as the title did not convey to a consumer a clear indication of the book’s contents or subject matter.  However, writing for the court Mr. Justice de Montigny went on to assert: Read more