In 9038-3746 Quebec Inc. v. Microsoft Corporation the Federal Court of Appeal upheld a sentence for contempt, one of several court decisions and orders arising from trademark and copyright infringements dating back to the 1990’s. 

In the 2006 decision, Microsoft Corporation  v. 9038-3746  Quebec Inc., two corporate defendants and an individual found to be the controlling mind, Carmello Cerrelli, were ordered, jointly and severally, to pay statutory damages under the Copyright Act of $500,000 and punitive damages of $100,000 each.  Permanent injunctions were also issued enjoining the defendants from directly or indirectly infringing Microsoft’s trademarks or selling, distributing or advertising counterfeit copies of the twenty-five computer programs that were at issue in the proceedings.  Subsequently, Microsoft was also awarded costs of $1,410,000 plus the Canadian equivalent of $175,715.23 USD.

Notwithstanding these significant awards, the defendants violated the injunctions and continued to sell the software.  Microsoft brought contempt of court proceedings and Cerrelli plead guilty to: (1) violating the Court Order by selling seven counterfeit copies bearing the trademark MICROSOFT and possessing for the purpose of selling 545 counterfeit units bearing the trademark MICROSOFT; and (2) possessing for the purposes of selling 88 counterfeit units that constituted a breach of copyright.

In oral reasons the Federal Court ordered Cerrelli to pay $50,000 for each offence within 120 days, failing which he would serve a 60 day term of imprisonment.  Cerrelli appealed, but the Federal Court of Appeal found no reason to overturn the lower Court’s order, finding that there was no error in principle, failure to consider a relevant factor or overemphasis of the appropriate factors.  Moreover, the sentence was not demonstrably unfit.  The Court of Appeal referred back to the original judgment and the finding that Cerrelli “had little regard for the truth at discovery or trial” and “acted in bad faith”.  It was also noted that Cerrelli had sought to transfer his residential property for $1.00 following the judgment.  In upholding the sentence the Court of Appeal sought to “deter the offender from repeating his unlawful behaviour as well as other persons who would be tempted to commit the same offences”.

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.

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