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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.

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.

I Hear You Calling – Sound Mark Applications Now Being Accepted

In a reversal of it’s long held position, the Canadian Intellectual Property Office (CIPO) has today announced that it is now accepting applications to register sound marks.  This announcement apparently comes as a result of ongoing Federal Court of Canada proceedings regarding an application filed in 1992 by Metro-Goldwyn-Mayer Studios Inc. (MGM) to register as a trade-mark in Canada, the sound of a roaring lion that precedes most, if not all, of their film productions.  

For many years, CIPO’s blanket policy has been to refuse all applications for sound marks on the basis that Section 30(h) of the Trade-marks Act requires “a drawing of the trade-mark and such number of accurate representations of the trade-mark as may be prescribed” unless the application is for a word or words not depicted in a special form.  The MGM case is the first where the issue of the registrability of sound marks has been dealt with by the Federal Court.

CIPO’s new Practice Notice on applications for sound marks states that “The application for the registration of a trade-mark consisting of a sound should:

  1. state that the application is for the registration of a sound mark;
  2. contain a drawing that graphically represents the sound;
  3. contain a description of the sound; and
  4. contain an electronic recording of the sound.”

This change of tune for CIPO comes on the heels of a recent (and still outstanding) consultation on a number of proposed changes to the Trade-marks Act Regulations, including a proposal to permit registration of non-traditional marks, such as sound marks, motion marks and holograms.  Time will tell how many applicants decide to take advantage of this change of policy.  Certainly, there are a number of well known sound marks in the marketplace and registration of such marks has been possible in other important jurisdictions, such as the United States, for many years.

Teachers Get Schooled In Trademarks – Again

In a previous post, we reported on a Federal Court of Canada decision, upholding the decision of the Registrar of Trademarks to refuse registration of the mark TEACHERS in association with services described as “administration of a pension plan, management and investment of a pension for teachers in Ontario”.  Undaunted, the Ontario Teachers’ Pension Plan Board decided to appeal that decision to the Federal Court of Appeal.  

The Federal Court of Appeal has now issued its own decision in this matter, upholding the lower Court’s ruling and again refusing registration, on the basis that the mark is clearly descriptive of the character of the claimed services.  In dismissing the Applicant’s arguments on Appeal, the Court of Appeal found that “the word TEACHERS’, which clearly describes those whose pension plan the appellant administers and in whose benefit the management and investment services of the pension fund are rendered, describes a highly prominent feature, trait or characteristic belonging to the appellant’s services.”

It remains to be seen whether the Applicant has learned its lesson or will seek leave to appeal to the Supreme Court of Canada.

A Tale of Two Trademark Appeals

In Clic International Inc. v. Convenience Food Industries (Private) Ltd., 2011 FC 1338, Clic International appealed a decision of the Registrar to expunge its trademark. The mark, which was used in association with the company’s line of canned fava beans, consisted of LAZIZA and an accompanying palm-tree design. Under s. 45 of the Trade-marks Act, a trademark may be expunged at the request of a third party if the owner cannot demonstrate use within the last three years. Here, Convenience Foods made the s. 45 request to the Registrar.

Before the Registrar, Clic attempted to show use of its trademark with evidence of the word LAZIZA on a can of fava beans. However, the Registrar noted that Clic had not used the accompanying palm tree logo (which was part of the trademark). The “evidence of modified use” did not constitute “use” for the purposes of s. 45, as far as the Registrar was concerned, and the trademark was expunged.

On appeal, Clic was entitled to provide new evidence and asserted that the change to its logo was within the scope of “cautious variations” that are allowed under current jurisprudence, citing, among other cases, Promafil Canada Ltee v. Munsingwear Inc, [1992] FCJ 611, which held that as long as the dominant features of a trademark are maintained and the differences are “so unimportant as not to mislead an unaware purchaser”, the use of the modified trademark should be enough to satisfy s. 45.

In response, Convenience Food pointed to Bierrsdorf AG v. Becton Dickinsons and Co., (1992), 44 CPR (3d) 151, where use of the word component and an altered design component were sufficient for s. 45, noting that Clic’s design component was done away with altogether.

The Court, agreed with Convenience Food, explaining that the logo being used was quite different than the registered trademark. Not only was there no palm-tree drawing, but LAZIZA was in a different font and was above an oval depicting some Arabic characters. This gave the whole mark quite a different look, which, according to the Court, departed from a “cautious variation”.

The Court was careful to refute Clic’s assertion that the trademark not be expunged because consumers still recognized the mark and associated it with Clic’s fava beans. This had no bearing on the issue of “use” for s. 45, and the correct consideration was whether the mark had been used in a substantially unchanged manner.

*****

In David M. Locke v. Osler, Hoskin & Harbourt LLP, 2011 FC 1390 the Registrar expunged a mark in the initial hearing, but the Court overturned that decision based on new evidence. Here, the Court did not have to consider a modified trademark. Rather the issue was much more straightforward; the trademark holder had not introduced any evidence at the initial hearing, but did on appeal.

The trademark in question here was SPORTSMAN’S CHOICE, which was used in association with a small, home-based sporting goods and pet accessories store. In the original s. 45 hearing, Locke did not put forth any evidence because he had not initially understood the nature of the claim, and only retained legal counsel just prior to the extinguishment of the trademark. The Federal Court held that a failure to adduce evidence during the underlying hearing was not a bar to introducing it on appeal. So, Locke was able to introduce evidence of his use of SPORTMAN’S CHOICE in the appeal, including labels affixed to pet food, labels on hunting clothes and gear, and tags on pet supplies.

In considering this evidence, the Court noted that the threshold for proving “use” is quite low, and a prima facie case of “use” is enough. Indeed, evidence of a single sale can suffice as long as it is not contrived for the purposes of the hearing.

Off to the Marché We Go! – Not Descriptive and Not Confusing

The Federal court recently dismissed an appeal to have a trademark expunged on grounds of descriptiveness and confusion. In Movenpick Holding AG v. Exxon Mobil Corporation and Attorney General of Canada (Registrar of Trade-marks), the Court considered whether Esso’s “Marché Express” mark is too descriptive of the services it provides as a gas-station convenience store. Then it went on to consider whether it was possible to confuse “Marché Express” with Movenpick’s “Marché” mark, which it uses for its chain of restaurants.

Movenpick claimed that “Marché Express” is descriptive of the services Esso offers. Section 12(1)(b) of the Trade-marks Act provides that a trade-mark must not be “clearly descriptive” of the character or quality of the wares or services associated with the mark. So, the question before the Court was whether, in the French language, “Marché Express” was descriptive of a convenience store.

Both sides produced expert evidence of the meaning of the phrase “Marché Express”. The Court was unimpressed with this, favouring evidence of the phrase’s colloquial use rather than academic musings as to its meaning. The Court noted that one must look at the perception of the phrase by regular everyday consumers, not its meaning as derived from a scholarly analysis.

The Court ultimately found that while the word “marché” is used to describe convenience stores (it translates strictly to “market”), the construction “Marché Express” is not something that regularly appears in colloquial French. At best, it could be construed to mean the result produced from shopping at a such a store. Thus, “Marché Express” is not “clearly descriptive”, contrary to s. 12(1)(b).

Movenpick also claimed that Esso’s mark, when used to denote a convenience store, was easily confused with its own registered trademark, “Marché”, which is used in association with the operation of Movenpick’s restaurant. Under s. 12(1)(d), a trade-mark is not registrable if it is confusing with another registered trade-mark.

The Court outlined the test for confusion from Veuve Cliquot Ponsardin v. Boutiques Cliquot Ltée, 2006 SCC 23, wherein the Court must look for confusion in the mind of a “casual consumer somewhat in a hurry” who only has an “imperfect recollection” of the other mark. The Court also carefully considered all of the surrounding circumstances dictated by s. 6(5) of the Act. Most interestingly, the Court agreed with the Registrar’s statement that “Marché” was a weak mark. The term “Marché” is commonly used in the food and beverage industry; thus, consumers are used to seeing it in the marketplace (no pun intended!). When a mark has such a broad usage, the trademark holder cannot expect to have a wide range of protection over the mark. Consumers are able to pick up on slight differences between such weak marks, so the sphere of protection is accordingly narrower. The Court held that the inclusion of “Express” was enough for casual consumers to distinguish the two marks in question.

So, in the end, Esso was able to keep the registration of its trade-mark, and decidedly un-confused consumers are still able to both shop at the Marché Express and dine at Marché restaurants.

Target Settlement

We are following up on a blog we posted in 2011 reporting that Target Brands Inc., the U.S. retailer, was refused an interlocutory injunction in its continuing battle with owner of the Canadian trade-mark registration for TARGET. 

The U.S. retailer has plans to open in Canada beginning in 2013.  However, the owner of the Canadian trade-mark registration, such ownership dating back to 2002,  had begun operating a series of stores in 2010 Canada.  The ongoing battle has been commented on frequently as an example of the importance of policing key trademarks in foreign jurisdictions.

The Globe and Mail is reporting on February 2, 2012 that a settlement has now been reached.  The details are not known, but it is suggested that the settlement may be worth millions of dollars to the Canadian owner, who must cease all use of the TARGET trademark by January 31, 2013.