Clark Wilson

Distinguishing Guise or Partly Functional?: Trial Required

By In Case Law

In Crocs Canada Inc. v. Holey Soles Holdings Ltd. the Defendants, Holey Soles, sought summary judgment dismissing Crocs Canada’s claim of copyright infringement and passing-off under the Trade-marks Act. At issue was plastic footwear sold by Crocs Canada. The footwear features distinctive holes placed in the upper portion, as well as side venting.

Prior to 2004, Holey Soles and other companies had been allowed to sell Crocs Canada’s shoes under their own brand names. When that arrangement ended, Holey Soles began selling shoes similar in style, but manufactured for Holey Soles in China.

In seeking a summary judgment, Holey Soles argued that Crocs Canada’s claim disclosed no triable issue because the doctrine of functionality precluded the assertion of any trademark right. Both parties relied on the 2005 “Lego case” (Kirkbi AG et al. v. Ritvik Holdings Inc.) in which the Supreme Court of Canada concluded that the shape of the building blocks was purely functional and not a distinguishing guise.

Here, the Court noted that the circles and semicircles on the shoes did have a functional role namely, to allow air and water in and out of the shoes.

However, the Court also noted that the decision in Lego did not rule out the possibility of trademark protection for a design that was only partly functional. Given this, the Court here concluded the summary judgment application could not succeed. The question whether the design and pattern of the circles and semicircles on Crocs Canada’s shoes was sufficiently functional so as to support distinguishing guise claims, was a question of fact that required a trial.

More Champagne, anyone?

By In Branding

We recently reported on the difficulties in registering wine trademarks consisting of names of geographic locations. The Federal Court of Canada (Trial Division) concluded that geography was one of the most important considerations of the average consumer when purchasing a wine. Accordingly, the registration of a trademark consisting of a geographic description unfairly prevented other local winemakers from listing that place of origin on their brands. As all good wine gurus know, it is the land, air, water and weather where grapes are grown that make each wine unique. Geographic location is a huge selling point for exclusive brands, as is evident with the popularity of real French champagne.

For more than eight decades, only 319 select vineyards within specific boundaries of north-eastern France had the right to brand their sparkling white wines as “champagne“. But now, due to the increasing demand for champagne from China and Russia, the Institut national de l’origine et de la qualite, which governs the Appellation d’Origine Controlee designation for champagne, is set to expand the appellation’s boundaries. The move is expected to provide a windfall for the lucky vintners whose vineyards happen to lie within the expanded region and highlights the value of a trademark consisting of a geographic location. Worldwide exports of champagne hit an all time record in 2007.

The name champagne is legally protected in most countries in order to prevent sparkling wines from outside the Champagne region of France from using the brand. Until two years ago, US winemakers, in particular, capitalized on the popularity of the brand and commonly sold sparkling wines under the name “California Champagne”, ignoring the outcries from indignant French viticulturists. But now, only a few older grandfathered brands in the US may use the name “champagne” in a move to correctly label US sparkling wines as “sparkling wines”. In 2003, Canada and the European Union entered into an agreement which committed the parties into protecting each others’ geographical indications for wines and spirits and the use of the term “Canadian Champagne” will cease after December 31, 2013.

Last year, the wine regions of Sonoma County and Paso Robles, California; Chianti Classico, Italy; Tokaj, Hungary; and Victoria, and Western Australia, Australia added their names to a growing list of signatories of the Joint Declaration to Protect Wine Place & Origin, a set of principles aimed at educating consumers about the importance of location to winemaking.

Trademark Appeals: Stays and Service Requirements

By In Protection & Enforcement, Trademark Oppositions

A recent blog noted that a failure to obtain a stay of a Federal Court judgment when an appeal to the Federal Court of Appeal is sought, means the Registrar of Trademarks will act in accordance with the Federal Court judgment, which may be contrary to what the appellant is seeking before the Court of Appeal.

A recent Practice Notice from the Trademarks Office clarifies the issue. Section 50 of the Federal Courts Act allows the Federal Court and the Federal Court of Appeal to stay proceedings. If there is an appeal from the Federal Court to the Federal Court of Appeal, the Registrar, absent a stay, must act in accordance with the judgment of the Federal Court.

There is, however, an exception in the case of opposition and section 45 procedings. If there is an appeal to the Federal Court of Appeal the Registrar will not treat the Federal Court decision as final because it must, pursuant to sections 39(1) and 45(5) of the Trade-marks Act, act in accordance with “the final judgment given in the appeal”.

Thus, where there is an appeal from the Federal Court to the Federal Court of Appeal, it is important to consider whether an opposition or section 45 proceeding is at issue, and if not, obtain the requisite stay.

The Practice Notice also provides guidance regarding the service of court documents on the Registrar.

Where a decision of the Registrar is appealed under section 56 of the Trade-marks Act or where judicial review of a Registrar’s decision is sought, the Registrar must be served personally. This is best effected by leaving the document with an employee of the Executive Office who is authorized to accept service.

All Notices of Appeal filed with the Federal Court must also be filed with the Registrar. These may be transmitted by any means, but failure to comply with sections 56(1), (2) and (3) of the Act, including the filing requirement, may render the appeal a nullity.

Change You Can Xerox

By In Branding

When Hillary Clinton recently accused presidential rival Barack Obama of political plagiarism by describing him as the candidate of “change you can Xerox“, trademark lawyers at Xerox Corporation winced. For years, Xerox has fought against the genericisation of the Xerox brand and trademark. A genericised trademark is a trademark or brand name that has become the colloquial or generic description for a particular class of product or service. The generic use of the term “Xerox” as a verb in place of the word photocopy, diminishes the value of the Xerox trademark in the marketplace and can result in the loss of intellectual property rights by the trademark holder. In the past, Xerox Corporation has attempted to police its brand use by launching advertising campaigns promoting the “Xerox machine” and has been successful in protecting the trademark in Canada and the United States. The brand has, however, become generic in Russia, Bulgaria, Portugal and Romania. Aspirin, Band-Aid and Thermos are also examples of brands which became victims of brand genericisation.

Under Canadian trademark law, a trademark should never be used as a noun (whether in singular, plural or possessive form) or as a verb. Every day phrases such as “I need a Kleenex” should be discouraged as the correct use of the trademark is “I need a Kleenex tissue”. It may seem natural and even beneficial from a marketing perspective to use the trademark as a noun or verb. Many like to have their trademark considered synonymous with the wares or services with which it is associated. However, certain trademarks, through misuse by their owners and others, have passed into the English language by becoming generic terms. The brands Escalator, Jacuzzi, Linoleum and Tabloid were all once trademarks of a specific product but are now generic terms commonly used to describe a product category. The use of a brand name as part of the English language, or any language should always be avoided to prevent genericisation of the trademark.

A Successful Interlocutory Injunction

By In Case Law, Protection & Enforcement

A recent posting noted how difficult it is to obtain interlocutory injunctions in Canadian trade-mark actions. However, a judge of the Manitoba Court of Queen’s Bench recently concluded that the Plaintiffs in Marlborough Hotel Corporation et al. v. First Canadian Hotels & Entertainment Ltd. et al. were entitled to an interlocutory injuction. The Plaintiffs had since 1959 marketed and advertised a large ballroom at their hotel facilities as the “Skyview Ballroom”. On May 1, 2007, the Defendant, a hotel located one block away, started using the name “Radisson Winnipeg Skyview”.

The judge applied the three-part test in R.J.R. MacDonald Inc. v. Attorney General (Canada) noting also that, according to Apotex Fermentation Inc. v. Novopharm Ltd, a 1994 decision of the Manitoba Court of Appeal, the three factors are not individual hurdles for an applicant to overcome, but are to be viewed as interrelated. 

The judge concluded that there was a serious issue to be tried. Although the Defendants raised numerous arguments regarding the Plaintiffs’ likelihood of success, these were matters for the trial judge to assess.

The judge also found that there would be irreparable harm, noting that there would very likely be confusion, given that the two businesses were one block apart. The judge was also satisfied that it would be difficult for the Plaintiffs to quantify or prove the extent of any damages, both financially and to their goodwill, should the Defendants be allowed to use “Skyview”. Finally, the judge was satisfied that the balance of convenience favoured the Plaintiffs, given that the Plaintiffs were a long-established business and that the Defendants had only started to use the word “Skyview” in May of 2007.

Setting Aside a Trademark Default Judgment

By In Case Law

We recently reported on the trial judge’s decision in Louis Vuitton Malletier S.A. et al. v. Yang et al., a case which discussed the type of damages which can be awarded against a Defendant trading in counterfeit goods.

One of the Defendants in that case, Lin Pi-Chu Yang (also known as Pi-Chu Lin, Wai Ying, Martina and Coco), brought a motion to set aside the Default Judgment by arguing that she was never served with the Statement of Claim and that she had no interest whatsoever (other than as the lessor of the premises) in the business known as K2 Fashions, which traded in the counterfeit goods.

The Federal Court declined the order requested on the basis that the Defendant failed to meet the well-established test for setting aside a default judgment (1. a reasonable explanation for the failure to file a Statement of Defence; 2. a prima facie defence on the merits to the Plaintiff’s claim; and 3. that the Defendant moved promptly to set aside the Default Judgment.) Although Ms. Lin met the third element of the test given her promptness in seeking to set aside the Default Judgment, Ms. Lin was unable to satisfy the Court that there was a reasonable explanation for her failure to file a Statement of Defence, or that she had a prima facie defence on the merits to the Plaintiff’s claim. While Ms. Lin argued that as a landlord and not an owner of K2 Fashions she should not be liable in respect of counterfeit stock, the evidence showed Ms. Lin to be “the person in control of the business”. Furthermore, an affidavit by a licensed private investigator was presented to the Court which showed that Ms. Lin had been correctly served with the Statement of Claim.

Accordingly, the motion to set aside the Default Judgment was dismissed.

Interlocutory Injunctions in Trademark Cases: A Difficult Test to Meet

By In Case Law, Protection & Enforcement

Two recent cases, one from the Federal Court and the other from the Federal Court of Appeal, illustrate how difficult it is to meet the test for an interlocutory injunction in a Canadian trademark case.

In CMAC Mortgages Ltd. et al v. Canadian Mortgage Expert Centres Ltd. et al, Lemieux, J. of the Federal Court applied the 3-part test found in the Supreme Court of Canada’s decision in RJR-MacDonald Inc. v. Canada Attorney General (that the applicant for an injunction must demonstrate (1) a serious question to be tried; (2) that the applicant would suffer irreparable harm in the absence of the injunction; and (3) that an assessment of which party would suffer greater harm from the granting or refusal of a remedy favours the applicant.)

The Applicant (Plaintiff), Ontario Mortgage Action Centre Ltd. c.o.b. as OMAC, had been operating a residential mortgage business in Ontario for a number of years and had several trademark registrations. The principal of OMAC had only recently incorporated CMAC Mortgages Ltd. and opened a Calgary office under the latter name.

The Defendant Canadian Mortgage Expert Centres Ltd. c.o.b. CMEC was incorporated shortly after CMAC Mortgages Ltd. and opened two offices, both in Ontario. Thus, CMAC Mortgages Ltd. and the company carrying on business as CMEC operated in different jurisdictions.

There was no evidence of actual confusion regarding CMAC and CMEC. There was, however, some evidence of actual confusion as between OMAC and CMEC, although minimal. Lemieux, J. concluded that there was a serious issue to be tried in respect of confusion and passing–off between OMAC and CMEC, but not between the other Plaintiffs and CMEC since the latter were not operating in the same marketplace.

However, the Plaintiffs had not led sufficient evidence to establish irreparable harm. According to Lemieux J. “the loss of goodwill and the resulting irreparable harm cannot be inferred. It must be established by ‘clear evidence'”. It was noted that the Plaintiffs, rather than focusing on evidence of irreparable harm had attempted to show the defendants were impecunious.

Finally, Lemieux, J. explained that his preliminary assessment of OMAC’s case was that it was weak in terms of confusion since buying mortgage services is not like buying wares off a shelf, given that the buyer of mortgage services will be more discriminating.

In Hyundai Auto Canada v. Cross Canada Auto Body Supply (West) Limited et al the Court of Appeal dismissed the appeal with costs noting that the test for granting an interlocutory injunction had been clearly set out by the Supreme Court of Canada in RJR-MacDonald. The Court of Appeal also agreed with the trial judge that the evidence as to irreparable harm was essentially speculative and there was no demonstration that the harm could not be compensated in damages if the injunction was refused.

It is clear from these cases that interlocutory injunctions are very difficult to obtain. In the absence of clear evidence of irreparable harm that cannot be compensated for in damages, courts will refuse to grant the injunction.