Branding

Battle Royal(e): Use of Trademarks Beyond Sales Representative Agreement Constitutes Infringement and Passing Off; SCC Dismisses Appeal

By In Branding, Case Law, Domain Name Disputes, Domain Names, Litigation, Protection & Enforcement

On May 6, 2021, the Supreme Court of Canada (SCC) dismissed an application for leave to appeal in the case of Dong, et al. v. Royal Pacific Real Estate Group Ltd., et al., 2020 BCCA 323 (39550). The lower courts in the Province of British Columbia, both at the trial level and on appeal, had held that the appellant’s use of certain licensed trademarks owned by the respondent, outside of the precise terms of the parties’ Sales Representative Agreement, constituted infringement and passing off; as a result of the SCC’s dismissal, the BC Court of Appeal decision now stands.

This case serves as a good reminder for licensees to carefully review trademark license provisions in sales representative, product distribution and similar agreements for their specific terms relating to permitted use of relevant trademarks – and to consider the risks of using  such trademarks outside the  activities specifically permitted in such agreements.

The respondent in this case is a well-known, Vancouver-based real estate company “Royal Pacific Group” (consisting of Royal Pacific Real Estate Group Ltd. and Royal Pacific Realty (Kingsway) Ltd.), owner of the registered trademark ROYAL PACIFIC Logo and the unregistered trademarks ROYAL PACIFIC and ROYAL PACIFIC REALTY (collectively, the “Trademarks”). In 2012, Royal Pacific Group entered into a Sales Representative Agreement (the “SRA”) with the appellant, Mr. Steven Dong (the “Mr. Dong”), pursuant to which Mr. Dong was licensed to act as a real estate representative for Royal Pacific Group.

However, in 2013, Royal Pacific Group discovered that Mr. Dong had, without the knowledge or consent of Royal Pacific Group, launched a separate referral platform for real estate professionals under the name “Bliip Box”. The website for this service used the domain name royalpacific.co and displayed the Trademarks. Mr. Dong was also sending emails to third parties containing the Trademarks and the following language: “Royal Pacific Realty is one of BC’s largest brokerages and now we are looking to endorse local businesses on our Bliip Box.”

Shortly after this discovery, Royal Pacific Group sent a cease and desist letter to Mr. Dong, demanding that he take down the website and cease using the domain name royalpacific.co.  When there was no immediate compliance, Royal Pacific Group also sent notice of termination of the SRA. However, Mr. Dong continued to operate the website at royalpacific.co as well as a related Facebook page (royalreferrals) that also displayed the Trademarks.

The BC Supreme Court (2018 BCSC 1272) held that Mr. Dong was liable for infringement and passing off, as the SRA did not grant Mr. Dong rights to use the Trademarks in connection with his Bliip Box business, which was outside the scope of his activities as a sales representative. Moreover, the judge rejected Mr. Dong’s arguments that Royal Pacific Group had provided consent or acquiesced to such use. According to the trial judge (at para. 100):

Mr. Dong has failed to appreciate the difference between his using the Trade-mark in connection with his duties as a sales representative of [Royal Pacific Group] and using it in a manner that represents that there is an association between the Royal Pacific Group and the Bliip Box technology or other businesses that Mr. Dong was pursuing.

The trial judge further noted (at para. 120-120) that, in the context of the Vancouver real estate industry, in which Royal Pacific Group has a well-recognized name and reputation:

[U]se of the domain name royalpacific.co for the website together with numerous references to aspects of [Royal Pacific Group’s] business and the fact that the webpage was offering real estate related products would have caused confusion in the mind of an “ordinary hurried consumer”, who could have confused the owner of the website with the Royal Pacific Group.

The BC Court of Appeal upheld the lower court’s decision, further dismissing a counterclaim brought by Mr. Dong that Royal Pacific Group had wrongfully denied him the right to use the Trademarks and had terminated the SRA for an unlawful purpose.  By dismissing Mr. Dong’s appeal, the SCC has tacitly agreed with the decision of the BC Court of Appeal.  The lesson arising out of this decision is that parties to agreements such as sales representative agreements, which contain provisions relating to and restricting use of trademarks, need to carefully consider whether any proposed activities will be offside the license provisions relating to such trademarks.

Trademark Interlocutory Injunctions: A POWERful Tool—When Available

By In Branding, Case Law, Litigation, Protection & Enforcement

As Canadian trademark practitioners know, historically it has generally been difficult to obtain interlocutory (or interim) injunctions in trademark infringement matters. This has been particularly so due to the difficulty in showing irreparable harm, if the injunction were not granted.

As the recent decision of the Alberta Court of Queen’s Bench in Corus Radio Inc. v. Harvard Broadcasting Inc., 2019 ABQB 880 shows, there may be some novel ways to argue irreparable harm, including what is essentially a consideration of ‘lost opportunity’. In this case, a trademark owner was able to convince the Court to enjoin use of similar marks by another party, notwithstanding some 15 years’ absence of use by the owner in the relevant marketplace.

Read more in this Knowledge Bytes article.

No Hotel in Canada? No Problem – Trademark Owner Maintains Trademark Registration With Hotel Services

By In Branding, Case Law, Famous Marks, Registration

The Federal Court of Canada (the “Court”) recently released its decision in Hilton Worldwide Holdings LLP v Miller Thomson, 2018 FC 895. In the decision underlying this appeal, the Registrar expunged the Canadian trademark registration for WALDORF-ASTORIA, owned Hilton Worldwide Holdings LLP (“Hilton”), on the basis of non-use. The Court allowed the appeal, and found that Hilton had proven the requisite use of its trademark in Canada, notwithstanding the fact that it did not operate a physical hotel in Canada.

Under the Canadian Trade-marks Act (the “Act”) a trademark is deemed to be used in association with services if it is “used or displayed in the performance or advertising of those services.” Courts have found that this statutory provision includes a condition that the services themselves must be performed or delivered inside Canada, and the mere advertisement of services in Canada does not constitute use within the meaning of the Act.

For trademarks associated with hotels, the Registrar has interpreted this condition restrictively. The Registrar has issued a number of recent decisions which found that the operation of a “bricks and mortar” hotel in Canada is necessary to establish the use of a trademark for “hotel” or “hotel services” in Canada (see, for instance, Bellagio Limousines v Mirage Resorts Inc, 2012 TMOB 220; Stikeman Elliot LLP v Millennium & Copthorne International Limited, 2017 TMOB 34; and Ridout & Maybee LLP v Sfera 39-E Corp, 2017 TMOB 149).

In contrast to the Registrar’s decisions involving “hotel services”, the Court has increasingly recognized circumstances in which companies operating outside of Canada can establish use of their trademarks in association with services directed to consumers in Canada. In HomeAway.com v Hrdlicka, 2012 FC 1467, the Court held that the appearance of a trademark on a computer screen via a website accessed in Canada, regardless of where the information may have originated from or is stored, constitutes use and advertising of the mark in Canada. The evidence in HomeAway.com also showed that people in Canada used the service at issue to post available rental properties located in Canada, and that these postings were available online to customers in Canada.

In allowing the appeal brought by Hilton, the Court focused on the ordinary understanding of the term “hotel services”, which would include ancillary services, such as reservation and booking services. Because these ancillary services would be included in “hotel services”, the Court found the Registrar erred in equating these services with “the operation of a hotel” – services which can only be performed at a physical hotel location. The ancillary services, in contrast, go beyond the physical “bricks and mortar” hotel, and the evidence showed that Hilton had performed such services in Canada, despite operating a physical hotel in another country.

Moreover, the type of hotel services which can be delivered online had greatly expanded since Hilton’s registration issued. The scope of the registration, according to the Court, must be considered in light of the development in online commerce as it relates to the ordinary commercial understanding of “hotel services.” Technological developments which occurred post-registration meant that Hilton could provide services online to Canadians who benefited from them. This also supported Hilton’s claim that it used the mark in Canada.

The decision forms part of a growing trend of Canadian trademark decisions which recognize that companies based entirely outside of Canada can offer services in Canada, and that the performance of those services will constitute use in Canada of the trademarks associated with such services.

David Bowden

2018 Global 500 Brands: Who Takes Prime Spot?

By In Branding, Famous Marks

February is the month Canadians look to for signs winter may come to an early end. It’s also the month when trademark practitioners around the world eagerly await Brand Finance’s Global 500 report. With an impressive 42% increase in brand value, AMAZON jumped from 3rd spot last year, to take the lead this year. Staying steady at number 2 was APPLE, seeing a 37% increase in brand value. The former leader, GOOGLE, now comes in 3rd, with a relatively modest 10% increase in brand value (it’s affiliated YOUTUBE brand, however, saw a 114% increase, vaulting from number 112 to 42!). While there was movement within the top ten brands, as a group these remained the same as last year, highlighting the staying power of already dominant brands. The top brands remained principally tech-focused and for the first time since the Global 500 study began, the top 5 were all technology brands. Rounding out the top ten in 2018 were SAMSUNG, FACEBOOK, AT&T, MICROSOFT, VERIZON, WALMART and ICBC. As is evident, United States-based brands dominated, but Chinese brands continue to make strong gains: in 2008 they accounted for a mere 3% of the total brand value (lagging far behind other countries), and in 2018 they account for 15%, coming in second to the United States (48% in 2008 to 43% today). According to the report, the strongest brand of the year was DISNEY (ranking 31 overall in value), while the top Canadian brand by value was RBC at number 107.

Global 500 Brand Rankings Feature A Shift At The Top

By In Branding, Famous Marks

Brand Finance has recently published its 2017 Global 500 Brand Rankings, where GOOGLE has overtaken APPLE in the number one spot for the world’s most valuable brand.  APPLE’s five year dominance at the number one ranking follows a 27% fall in brand value in the past year.  Bringing up third spot again this year is AMAZON.COM, which showed an impressive 53% growth in its  brand value over the prior year.  The top 10 includes a number of other top tech sector brands such as Microsoft, Samsung and Facebook.  The list also includes a number of fast growing brands from China, including Alibaba, Tencent, WeChat, JD.com and Huawei.

Trader Joe’s trying to make Pirate Joe’s “walk the plank” in U.S. trade-mark case

By In Branding, Case Law, Foreign Protection, Litigation, Protection & Enforcement

In the ongoing dispute between Michael Hallatt, a Vancouver businessman, and U.S. based retailer Trader Joe’s, the United States Court of Appeals for the Ninth Circuit (the “Ninth Circuit”) has overruled the 2013 decision of the U.S. District Court for the Western District of Washington (the “District Court”) not to hear Trader Joe’s claim against Hallatt for, among other things, trade-mark infringement, dilution, unfair competition and false advertising.

The dispute arose out of Hallatt’s purchase of products from Trader Joe’s stores in the U.S., particularly in the state of Washington, for resale in Canada (there are no Trader Joe’s stores in Canada).  Hallatt has and continues to mark up and re-sell Trader Joe’s products at his store in Vancouver, named Pirate Joe’s.

The goods are not counterfeit, and the source of the products being sold is not in dispute – the packaging on the products bears Trader Joe’s trade-marks, and Hallatt states on his website that he sells Trader Joe’s products.  Hallatt expressly states on his website that he is not an authorized or affiliated distributor or reseller of Trader Joe’s.  Nevertheless, Trader Joe’s took the view that Hallatt’s conduct violated its U.S. trade-mark rights under the U.S. Lanham Act, and in 2013 it brought a claim against Hallatt in the District Court.

Taking the view that any unlawful conduct by Hallatt would have taken place in Canada rather than the U.S., and that Hallatt’s activities did not cause a cognizable injury to Trader Joe’s in the U.S. or an effect on American foreign commerce, the District Court judge decided in October 2013 that the Court had no subject matter jurisdiction to hear Trader Joe’s claims.  Trader Joe’s appealed that decision to the Ninth Circuit.

The Ninth Circuit disagreed with the District Court judge, opining instead that Hallatt’s activities could affect the goodwill and value of the Trader Joe’s brand in the U.S., and accordingly, its U.S. trade-mark rights.  The Ninth Circuit concluded that the Lanham Act does apply to Hallatt’s allegedly infringing conduct, and in the result, remanded the case back to the District Court for further proceedings.

We will be keeping an eye on this trade-mark case that is likely of particular interest to cross-border shoppers.

In no mood for charity: Federal Court confirms that charities are not necessarily public authorities

By In Branding, Case Law, Protection & Enforcement, Registration

The Federal Court of Canada recently confirmed in Starbucks (HK) Limited v. Trinity Television Inc., 2016 FC 790 (the “Decision”) that status as a charity is, in and of itself, insufficient to constitute an entity as a public authority for the purpose of obtaining an official mark.

(For a discussion about official marks and their interplay with regular trade-marks, please see this previous post on our blog.)

The facts leading up to the Decision are straightforward: in 2013, Starbucks (HK) Limited (“Starbucks”) filed an application to register the trade-mark NOW TV & Design.  During prosecution, an official mark for NOWTV, owned by Trinity Television Inc. (“Trinity”), was cited against the Starbucks application.  In response, Starbucks commenced a judicial review application against the Registrar’s decision – made in June 2001 – to give public notice of the adoption and use of NOWTV as an official mark.

In the result, the Court quashed the Registrar’s decision to grant NOWTV as an official mark to Trinity, clearing the path for Starbucks to move ahead with its application.  Of particular interest were the following points made by the Court:

– the law is now clear that status as a charity is, in and of itself, insufficient to constitute an entity as a public authority; and

– it would be patently unfair and completely contrary to the interest of justice if an entity that is not a public authority was permitted to enjoy the exceptional rights conferred on the holder of an official mark.

As a potential point of distinction when it comes to the precedential value of this case, it is noteworthy that Trinity did not participate in the judicial review application; indeed, the Court was advised by counsel for Starbucks that a former president and director of Trinity had advised that Trinity had sold its business to Rogers in 2005.  That being said, given how easily the Court arrived at the conclusion that charitable status does not necessarily equate to being a public authority, it seems unlikely that Trinity’s participation would have changed the result.

From a practical perspective, the Decision serves as a timely reminder to trade-mark applicants that, while robust, official marks can nevertheless be challenged and removed under the right circumstances.  Where an official mark has been cited during prosecution of a regular trade-mark application, it is important to carefully scrutinize the official mark, in order to ascertain any potential vulnerabilities that could lead to its removal.

On the other hand, the Decision is also a reminder to charities holding official marks that those official marks may potentially be at risk, if challenged via judicial review.  To mitigate that risk, those charities ought to consider filing regular applications to register their trade-marks.