Trademark Settlement Agreements: Lost in Translation

A recent Ontario case is a rare example of parties seeking a judicial interpretation of a trademark settlement agreement.  It also emphasizes the importance of understanding all possible translated meanings of a word before committing to refrain from using any translated versions, a challenge that often arises in a bilingual country.

In Skipper Online Services (SOS) Inc. v. 2030564 Ontario Inc., the Ontario Superior Court of Justice considered a settlement agreement that restricted Boatsmart from using translated versions of particular words.  Skipper and Boatsmart were competing companies that administered online training for the Pleasure Craft Operator Card as required by Transport Canada.  The parties had a trademark dispute regarding the words each party could use as metatags, which are “hidden keywords” affecting how the parties appear in search engine results.  The two companies entered into a settlement agreement, wherein Boatsmart agreed to refrain from using the following words or “any reversals, misspellings, translations or plurals” thereof in its metatags:  BOATER EXAM; EXAMEN DE BATEAU; EXAMEN BATEAU; BOATEREXAM; EXAMENBATEAU.

Boatsmart, however, continued to use the phrases “BOAT EXAM” and “BOATING EXAM”, both of which can be translated as “EXAMEN DE BATEAU”.  Skipper sought a declaration that Boatsmart’s continued use of “BOAT EXAM” and “BOATING EXAM” was in breach of the agreement, since the agreement plainly restricted translations of “EXAMEN DE  BATEAU”.

Boatsmart, on the other hand, contended that the agreement was ambiguous, and that the parties never intended to restrict the terms “BOAT EXAM” and “BOATING EXAM”.  It argued that the word “translations” in the agreement referred to translations into any languages other than English or French, since the agreement already included specific terms in English and French.  Boatsmart further asserted that any other interpretation would result in commercial absurdity and go beyond what was necessary for the agreement’s purpose.

The Court found that the plain meaning of the agreement restricted Boatsmart from using the translated terms of “EXAMEN DE BATEAU”, including “BOAT EXAM” and “BOATING EXAM”.  Furthermore, the Court disagreed that the agreement’s context indicated an intention to allow Boatsmart to use the terms.  The purpose of the agreement was to limit as much as possible the parties’ use of certain terms and phrases in relation to their websites, in order to affect the search engine results.  A finding that Boatsmart was restricted from using these terms did not go beyond what was necessary for the agreement’s purpose.  The application was therefore granted.

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Official Marks in Canada – Foreign public authorities need not apply

In a recent decision, the Federal Court of Canada (Trial Division) has ruled in favour of Maple Leaf Foods Inc. (“Maple Leaf”) in an appeal of the decision of the Registrar of Trade-marks refusing Maple Leaf’s application to register the trade-mark PARMA & Design.  The Registrar had refused the application on the basis that the mark so nearly resembled as to be mistaken for Consorzio Del Prosciutto Di Parma’s Official Mark for PARMA & Design and therefore was prohibited from registration pursuant to s. 9 of the Trade-marks Act

The issue that was of particular interest was whether Consorzio Del Prosciutto Di Parma (“Consorzio”) was a “public authority” within the meaning of s. 9 of the Act.  The Court applied the test for a public authority, as clarified by the Federal Court of Appeal in United States Postal Service v. Canada Post Corporation, 2007 FCA 10 (reported in a previous post).  In that case, the Court of Appeal held that for the purpose of Section 9, a public authority must be one that is subject to control by a Canadian government.  

In the case involving Parma & Design, because Consorzio was subject to control by the Italian and not a Canadian government, it was a foreign public authority and therefore not a “public authority” within the meaning of s. 9 of the Act.  As a result, the Court held that Consorzio’s Official Mark was invalid and void ab initio.  The Court of Appeal therefore directed the Registrar of Trade-marks to allow Maple Leaf’s application for PARMA & Design.

 

Social Media: A Lesson for Trademark Owners

A recent Quebec case and the resulting social media criticism provides a cautionary tale for trademark owners who aggressively assert their rights.  Success in the court room may in some instances have a negative impact on goodwill. Trademark owners should be taking social media into account when assessing their litigation options.

Deborah Kudzman, the founder of Olivia’s Oasis, Inc., was embroiled in a lengthy trademark dispute with Lassonde, the Quebec fruit-juice corporation. Kudzman’s company sells olive-oil based beauty products in association with the trademark OLIVIA’S OASIS & Design. Lassonde sells a line of juices in association with the trademark OASIS and other marks that include OASIS. In 2005, Lassonde commenced legal proceedings against Kudzman, alleging that Kudzman’s company was infringing its trademark rights.

In a judgment handed down in 2010, Justice Zerbisias of the Quebec Superior Court rejected Lassonde’s claim. The difference in the nature of the products, together with the visual disparities in the design of the marks, made confusion under s. 6 of the Trade-marks Act highly unlikely. Furthermore, while Lassonde’s juices and Kudzman’s beauty products were sold in some of the same stores, the placement of the OLIVIA’S OASIS products was in a completely different store section – in the non-edible, health and beauty section. Zerbisias J., in quashing Lassonde’s assertion of confusion, explained that “to impute the likelihood of confusion between Plaintiff’s and Defendant’s marks to the average consumer would insult him by assuming that such consumer is completely devoid of intelligence”.

Zerbisias J. also found that Lassonde’s action was an improper use of the legal process. Lassonde’s claim, with the unnecessary injunction application, threatening letters and overly complicated litigious conduct, was deemed to be “menacing and abusive”.  To compensate Kudzman and punish Lassonde, Kudzman was awarded $100,000 to cover her legal fees and $25,000 in punitive damages.

However, Kudzman’s story was not yet finished.  Lassonde appealed.  The Quebec Court of Appeal, while agreeing that there was no trademark infringement, reversed Zerbisias J.’s decision regarding Lassonde’s abuse of process and dismissed the $125,000 award. The Court of Appeal declined to hold that Lassonde’s behaviour was abusive, holding that Lassonde had every right to bring its trademark dispute before the court.

Little did Lassonde know, it was about to be inundated with social media criticism. La Presse, a Quebec newspaper, ran a story on April 7th, 2012 chronicling Kudzman’s battle with Lassonde. Within 8 hours, the story had been shared over 1000 times on Facebook, and #Oasis began trending in the Twittersphere, becoming the most used hashtag in Montreal that day. Hundreds of negative comments flooded Lassonde’s Facebook page. Guy Lepage, a Quebec media star, tweeted his boycott of OASIS juice products in protest to Lassonde’s actions.  Internet users reacted to the David and Goliath scenario that Kudzman’s story represented – almost universally decrying what they saw as Lassonde’s bullying tactics.

Lassonde, undoubtedly sensing a public relations nightmare, decided that same evening to offer a settlement. Although details are not available, Kudzman has assured the media that the settlement sum was similar to the amount that she was awarded in the lower-court decision – and was enough to cover the debts she had incurred during the protracted court case.

Ultimately, Lassonde’s success in the courtroom was irrelevant and it was public opinion as expressed in the social media that mattered. Whether Lassonde might have handled the litigation differently is an open question, but it is clear that owners, when enforcing trademark rights, need to consider the potential impact of social media.