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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