Maintained by Clark Wilson LLP

March 2007 Case Law

There were four decisions from the Canadian courts in March that readers may find of interest.

Expungement Allowed – In Emall.ca Inc. et al. v. Cheap Tickets and Travel Inc. the applicant sought expungement of the respondent’s trademarks in Federal Court after the respondent commenced an action in the British Columbia Supreme Court for infringement. The Federal Court agreed with the applicant and expunged the trademarks CHEAP TICKETS and CHEAP TICKETS AND TRAVEL & Design on the basis that they were clearly descriptive, noting that in effect the respondent, by registering the trademarks had “withdrawn the combination of words from use in the commercial world in Canada”.

Passing Off Claim Allowed (In Part) – In BMW Canada Inc. v. Nissan Canada Inc. BMW claimed that Nissan’s advertising of its Infiniti vehicles in association with the letter M alone and the advertising and sale of its M6 vehicle infringed BMW’s M3, M5 and M & Design marks. The Federal Court concluded that BMW’s claim of infringement under section 20 of the Trade-marks Act was not established given that there was no likelihood of confusion as to the sources of the wares or as to the wares themselves among the relevant group of prospective purchasers. Likewise, the claim for depreciation of the value of the goodwill attaching to BMW’s registered marks failed since Nissan’s use of the letter M was not a use of a registered trademark. Moreover, the evidence of loss of goodwill came from individual witnesses and there was no evidence of sales lost or a price reduction. However, BMW’s claim of passing-off contrary to section 7(b), was successful. Nissan’s use in 2005 of the letter M and of the descriptor M6 as trademarks, both similar in form to BMW’s trade-marks for similar wares, in essentially the same trade or business, created a likelihood of confusion, whether intentional or not. Nissan has applied for a stay of the order pending appeal (Nissan Canada Inc. v. BMW Canada Inc.).

Section 45 Expungement Set Aside  – Guido Berlucchi & C.S.r.l. v. Brouilette Kosie Prince was from a decision of the Registrar under section 45 of the Trade-marks Act to expunge the applicant’s trademark (a label for sparkling wines), registered in 1983. The Registrar concluded there was evidence of a sale during the relevant three-year period, but the evidence was ambiguous as to whether a registered trademark had been used. On appeal, the applicant filed a new affidavit attaching a label that was affixed to bottles sold to a distribution company during the relevant period. The Court acknowledged the evidence of a single sale, whether wholesale or retail, in the normal course of trade was sufficient to establish “use” so long as the evidence cannot be seen to be manufactured, although it was also noted that if an owner only produces evidence of a single sale, “he is playing with fire”. The Court also commented on the standard of review for an appeal of a decision under section 45, explaining that where new evidence is produced, the issue is to be decided de novo, but otherwise, for matters considered by the Registrar, the standard is one of reasonableness. After considering the new evidence of use and concluding the differences between the trademark as registered and the label actually used were not significant, the Court set aside the expungement order. The Court also concluded that the Registrar had correctly concluded that the sale to an exclusive agent was a genuine commercial transaction.

Severing Liability and DamagesOsmose-Pentox Inc. v. Société Laurentide Inc. (March 1, 2007) involved a procedural issue. The defendant applied for a second time in 4 years to sever the issues of validity and infringement from those relating to remedy. The Federal Court agreed that the circumstances had changed and the Court could revisit the severance issue. Given that discoveries had become bogged down in matters relating to the defendant’s profits, that Court concluded it was proper to sever the issue of damages and profits and first decide the issues of validity and infringement, particularly when a decision contrary to the plaintiff on these issues would render the question of damages and profits unnecessary.

Rebranding Costs Lead To Short Circuit

U.S. based Circuit City has put its Canadian chain of stores up for sale, citing, among other reasons, the tens of millions of dollars it was forced to spend in re-branding. Circuit City acquired the chain of stores formerly known as Radio Shack in Canada three years ago. Following completion of that transaction, they were forced to change the name of the stores to The Source by Circuit City. As well as the large re-branding costs incurred, other reasons cited for the sale include increased competitiveness and shrinking margins in the consumer electronics business, difficulties in changing the focus of the types of merchandise offered and Circuit City’s own difficulties in the U.S. market.

Trying to Make Sense of Olympic Trademarks

The front page of the Vancouver Sun today (Thursday, March 29, 2007) features an interesting article on the official marks registered by the Vancouver Organizing Committee for the 2010 Olympic Games (“VANOC”) and the Canadian Olympic Committee. The article notes that VANOC has rights to FRIEND as an official mark and could potentially bring legal proceedings if someone attempts to use it in connection with a business.  

According to VANOC, they have no intention of preventing the use of words like “friend” on their own. They are, however, concerned about ambush marketing in the lead up to the 2010 Olympic Games and intend to prevent persons who are not properly licensed from marketing wares and services that suggest a connection with the Games.

It may be up to the courts to determine whether ordinary words like “friend” can be official marks. The Vancouver Sun article references an Alberta case (Canadian Olympic Association v. Hipson) that arose in the lead up to the 1988 Calgary Winter Olympics in which the court questioned the Association’s right to claim “winter” and “1988” as official marks.

What the Vancouver Sun article does not discuss is the proposed legislation now before Parliament which we discussed in an earlier blog and which, if enacted, will extend the power of VANOC even further.

getafirstlife.com Gets a Legal Nod

We previously reported on the Canadian law regarding parodies of trademarks. Parodies of websites and domain names can be a more complex issue but it seems that some targets actually have a sense of humour.

Recently the website getafirstlife.com, created by Vancouver based blogger Darren Barefoot and parodying the website of the increasingly popular “metaverse” of secondlife.com created by San Franciso based Linden Lab, has been given the go ahead from Linden Lab’s lawyers. Second Life is a 3-D virtual world entirely built and owned by its residents with its own economy and a currency referred to as Linden Dollars (L$), prompting residents to question the legal status of their virtual currency in the real world.

Getafirstlife.com imitates the look of the website for Second Life’s virtual world and uses a logo that’s a modified version of Second Life’s logo. A link on the getafirstlife.com website invited cease-and-desist letters, the type lawyers often send threatening legal action against website parodists. In response, Linden Lab’s lawyers sent a humorous “permit and proceed” letter claiming “Linden Lab objects to any implication that it would employ lawyers incapable of distinguishing such obvious parody. Linden Lab is well-known for having strict hiring standards, including a requirement for having a sense of humour, from which our lawyers receive no exception.” The letter also grants Barefoot a “nonexclusive, nontransferable, nonsublicenseable, revocable, limited license” to use the modified logo on T-shirts he sells.

Barefoot acknowledged that the “permit and proceed” letter was “of enormous credit to the company”. Second Life have registered 3 million new account holders in the last four months.

Olympic Trademark Legislation

The Canadian government has now come forward with new legislation to prevent unauthorized persons from marketing their wares and services in association the 2010 Olympic and Paralympic Winter Games. As noted in an earlier blog, similar legislation has been introduced prior to other Games, including legislation introduced by Italy prior to the 2006 Turin Winter Games.

The Olympic and Paralympic Marks Act (Bill C-47) received a first reading in the House of Commons on Friday, March 2, 2007. Most importantly, section 3 of the Act prohibits any person from adopting or using in connection with a business, as a trademark or otherwise, an Olympic or Paralympic mark or a mark that resembles an Olympic or Parlympic mark. Note the reference to “in connection with a business”. Schedules 1 and 2 of the Act set out lists of the Olympic and Paralympic trademarks.

There are exceptions to this prohibition, including, of course, use by the Canadian Olympic Committee and Canadian Paralympic Committee and persons acting with their consent, but also excused are owners or licensees of marks that were being used prior to March 2, 2007.

Section 3(5) of the Act specifically allows for use of the Olympic trademarks in news reports and “for purposes of criticism”.

Section 4 of the Act prohibits anyone from promoting or otherwise directing public attention to a business in such manner as to lead the public into believing that there is a connection with the COC or CPC. A court must take into consideration the use of a combination of the expressions set out in Part 1 of Schedule 3 of the Act (Games, 2010, Twenty-ten, 21st, Twenty-first, XXIst, 10th, Tenth, Xth, Medals) or a combination of an expression in Part 1 of Schedule 3 with any of the expressions in Part 2 of Schedule 3 (Winter, Gold, Silver, Bronze, Sponsor, Vancouver, Whistler).

Potential remedies include injunctions (in respect of which irreparable harm need not be proved), damages, punitive damages, publication of corrective advertisements and destruction of wares.

The Act includes a “sunset clause” such that Schedule 2 is repealed on December 31, 2010. In the interim, and assuming the legislation is passed, it will be interesting to monitor just how effective the legislation proves to be.

Access To WHOIS Information To Be Restricted?

A story on law.com today states that the Internet Corporation for Assigned Names and Numbers (ICANN), which controls the registries for domain names with the popular .com, .net and .org top level domain extensions, will likely be voting in September on a proposal to limit the public availability of WHOIS information. This proposal has sparked a battle between trademark owners and their legal representatives on the one hand, who favour more disclosure, and privacy advocates on the other, who favour less disclosure.

The ICANN council is considering three options: Continue to let domain name owners’ personal, technical and administrative contact information be viewed by all Internet users; display only the name and country of an owner and allow that person or entity to designate additional information for a point of contact; or keep the current system and allow owners to cloak contact information only if there’s a risk to a registrant’s personal safety.

 See our post of February 27, 2007 for details on the status of the proposal to restrict public access to WHOIS information of registrants of .ca domain names.