Case Law

Back to school – Keyword advertising 101

By In Case Law, Protection & Enforcement

In the 21st century, when advertising is frequently conducted via the Internet, the use of keyword advertising has become an increasingly contentious point of trade-mark law.

In short, keyword advertising is a form of online advertising in which a business selects words or phrases (the “keywords”) that trigger its advertisements to appear when the user of a search engine performs a search using those keywords.  The advertisements typically appear alongside the organic search results produced by the search engine.

Where multiple companies use the same keywords to trigger advertisements, the search engine will use an algorithm to select which company’s advertisements actually appear and in what order, based at least in part on the amount each business is willing to pay for the advertisement.  The difficulty from a trade-mark perspective is that businesses frequently choose competitors’ trade-marks as keywords.

There has been little development in Canadian jurisprudence in the area since the first Canadian decision on keyword advertising in 2010.  Last week, the Supreme Court of British Columbia, writing through Justice Affleck, tackled the issue head-on in Vancouver Community v. Vancouver Career (Burnaby) Inc., 2015 BCSC 1470.

In this case, the Vancouver Community College (“Community”) brought a passing off action against the Vancouver Career College (“Career”) in which it alleged, among other claims, that Career, principally through keyword advertising, misrepresented its educational services as those of Community.  As part of its claims, Community objected to the use of the acronym VCC by Career as part of the latter’s keyword advertising campaign, notwithstanding Community’s unregistered, common law trade-mark rights in VCC.  The evidence showed that Community used VCC as a trade-mark from 1965 until 1990, when it largely abandoned the use of VCC, until 2013, when significant use resumed.

Ultimately, Justice Affleck concluded that there was no passing off by Career, since Community failed to meet the first part of the test for passing off, in that it did not have sufficient goodwill and acquired distinctiveness in its unregistered VCC trade-mark to impart a secondary meaning to consumers.  However, the trial judge went on to discuss the second part of the test, namely, whether Career had caused confusion by misrepresenting its services as those of Community.  In doing so, Justice Affleck made the following comments of interest:

-on bidding by advertisers, and the operation and process of searching using search engines – “a bid on a keyword may send a searcher to the bidder’s landing page, but the process of the search is controlled by the searcher and the search engine, not by the advertiser”.

-on when a first impression is made on the consumer – consistent with the decision in Insurance Corporation of British Columbia v. Stainton Ventures Ltd., 2014 BCCA 296 (the “ICBC Decision”), “the “first impression” cannot arise on a [search] at an earlier time than when the searcher reaches a website […] the “relevant consumer” will “understand that it is necessary to view a website to determine whose site it is” [citing the ICBC Decision].  In my opinion that is the point during a search when the relevant first impression is made”.

-on bidding on another company’s trade-mark as a keyword – “to award damages to the plaintiff or to enjoin the defendant from certain conduct because the defendant bids on the plaintiff’s name for the purposes of keyword advertising would be to disadvantage the defendant in a way that other online advertisers are not”.

In the result, Justice Affleck concluded that Career did not cause confusion by taking advantage of the keyword advertising service offered by Google.

Other than the issue of keyword advertising, which we expect is the point that will garner the most interest and commentary from practitioners, the decision is interesting for:

-Justice Affleck’s reliance on the ICBC Decision, as referenced above, which sparked its own interest for its assessment of when a “first impression” is made upon Internet users;

-Justice Affleck’s disposition of the official mark issue raised by Community in essentially 3 brief paragraphs without going into detail, such as whether Career actually used VCC as a trade-mark prior to publication of Community’s official mark for VCC;

-Justice Affleck’s finding that Community’s VCC mark enjoys “goodwill in the educational services it provides, but [has] not achieved a “secondary meaning” in the marketplace”, which contrasts with the comments of the Trade-marks Opposition Board (the “Board”) with respect to Community’s VCC mark in an earlier decision in which the Board rejected Career’s application to register the trade-mark VCCollege.ca; and

-Justice Affleck’s observation that Community’s action for passing off was an attempt to handicap Career, and was “motivated by a concern that its own inability to invest the necessary funds and expertise to create a sophisticated online advertising program leaves it at a competitive disadvantage in the marketplace in comparison with [Career]”.

Community has until September 19, 2015 to appeal Justice Affleck’s decision to the British Columbia Court of Appeal.

Just in time for the Olympics – a Race to the Trademark Podium

By In Case Law, Famous Marks, Protection & Enforcement

As we approach the opening ceremonies of the 2014 Olympic Winter Games in Sochi, the Canadian Olympic Committee (COC) has launched a lawsuit against outdoor apparel maker The North Face in the British Columbia Supreme Court, over allegations that it is infringing on Olympic trademarks through ambush marketing techniques.

The COC is seeking an injunction against The North Face and unspecified damages.  Readers of this blog will recall that the 2010 Winter Olympic Games in Vancouver/Whistler featured many similar skirmishes and special legislation enacted to assist the COC in its ongoing battle against ambush marketing.

As reported in the Globe and Mail, the North Face is not a sponsor of the Olympic games, but introduced a new line of clothing in November 2013.  The clothing line, originally launched as the Villagewear Collection, was renamed as the International Collection in response to complaints by the COC. 

The clothing line, which includes jackets, toques and bags, is decorated with the colours and flags of various countries. This includes items bearing the Canadian flag which feature the colours red and white.  Some items featured a patch with the symbol “RU 14” which, according to the COC, is a reference to the Winter Olympic games in Sochi, Russia.  Other merchandise showed a world map with a red star where Sochi is located.  A t-shirt featured the date of the opening ceremonies for the Games.

.CA Domain Names Held To Be Personal Property

By In Case Law, Domain Name Disputes, Domain Names

A recent Ontario Superior Court of Justice decision (Court File No. CV-13-480391) has held that .CA domain names are personal property and as such are subject to the rules that govern any other type of personal property, including those against wrongful conversion.  Perhaps more importantly, the case appears to stand for the proposition that title in .CA domain names exists independently of the registration of those domain names.

17 .CA domain names were in issue,  including mold.ca and mould.ca.  All were registered by Mr. Sullivan in his own name for the benefit of a company that he co-founded with Mr. Dalrymple, called Mold.Ca Inc.  (Mold.Ca Inc.)  The business of Mold.Ca Inc., not surprisingly, involves  mold inspection and removal services in the Greater Toronto area.  Sullivan purchased the domain names using the company’s credit card but listed himself as the Registrant of all of the domain names, rather than Mold.Ca Inc., unbeknownst to Dalrymple. 

Sullivan parted ways with Dalrymple and Mold.Ca Inc. a year later, while Mold.Ca Inc. continued to carry on its business, as before.  Unbeknownst to Dalrymple, Sullivan retained the domain name registrations and the passwords for the domain name registrations and then subsequently transferred the domain name registrations to a third party (Romelus).   Once Dalrymple found out about the above events, he commenced a Canadian Internet Registration Authority (CIRA) Dispute Resolution Proceeding (CDRP) against Romelus.  The CDRP proceeding were unsuccessful because there was no evidence that the domain names had been registered by Romelus in bad faith (they hadn’t been), nor was there evidence that they were being used for other than legitimate purposes by Romelus.

Following the failed CDRP proceeding, Romelus transferred the domain names back to Sullivan and Sullivan began using them in a competing business to that of Mold.Ca Inc.  Undaunted by its loss in the CDRP, this turn of events led to Mold.Ca Inc. to commence proceedings in the Ontario Superior Court of Justice.  Finding in favour of Mold.Ca Inc., the Court held that “the issue is a simple matter of property law”, whereby title to the domain names belongs to the company, which had been wrongly converted by Sullivan.  The Court therefore ordered that all of the domain names, including all administrative information and passwords, be transferred to Mold.Ca Inc.

MACDIMSUM: Challenging a Family of Marks

By In Case Law, Famous Marks, Registration, Trademark Oppositions

In Cheah v. McDonald’s Corporation, the Federal Court of Canada held that MACDIMSUM is likely to be confusing with the MacDonald’s family of trademarks.  Focusing on the evidence presented, the Court distinguished several earlier cases in which McDonald’s failed to preclude other businesses from using the MC or MAC prefix, including McDonald’s Corporation v. Silcorp Ltd (1989) and McDonald’s Corporation v. Coffee Hut Stores Ltd (1996), where McDonald’s failed to prevent the use of MAC for convenience stores and MCBEAN for a coffee business.  In Cheah, the Applicant, who was self‑represented, did not meet the onus on him to prove the mark was registrable.  It was also important that the application was simply for the word MACDIMSUM and not for that word in any particular type style or in combination with any other word or design.  Since a proposed use application was at issue, the Court stated that it must remain open to the fact that the trademark could potentially be used in any type style, with any combination of words or design, and in any trade environment as may present itself from time to time.

The Applicant failed to present any evidence of actual use and during cross‑examination he acknowledged he had not yet finalized plans regarding use.  McDonald’s’ evidence focused on its family of marks and included affidavits regarding McDonald’s “four score” trademarks, use and advertising in Canada, as well as an expert survey. 

In dismissing the appeal, the Court stated that the evidence presented regarding use or intended use is critical to a decision such as this.  While the respondent McDonald’s Corporation presented considerable evidence to oppose the registration of the word MACDIMSUM, the Applicant presented little probative evidence throughout the proceedings.  The Court also accepted the survey that McDonald’s presented, which involved showing certain members of the public a card bearing the word MACDIMSUM, and others a card bearing the word MAZDIMSUM.  Based on the results, the expert concluded that a statistically significant portion of consumers would identify the McDonald’s as the source of the MACDIMSUM food products.

The Court also found that the Applicant’s evidence of the use of MC and MAC in other jurisdictions was largely hearsay and did not establish dilution in Canada.  Finally, the Court found no merit in the Applicant’s assertion that he was being bullied, noting that the McDonald’s counsel was proper and courteous.  Instead, a hint of the Applicant’s true intention was to be found in a letter in which he suggested the possibility of “a global MACDIMSUM partnership”.

Trademark Interlocutory Injunction Denied

By In Case Law, Protection & Enforcement, Trademark Oppositions

A recent decision of the Saskatchewan Court of Appeal, setting aside the interlocutory injunction granted by the Chambers judge, illustrates how difficult it is to obtain an interlocutory injunction absent convincing evidence that satisfies the three part test for an interlocutory injunction.  In Kulyk v. Wildman (Weight Loss Forever Consulting), the Saskatchewan Court of Queen’s Bench granted the plaintiff an interlocutory injunction precluding the defendant from using or carrying on business under the plaintiff’s alleged business name and trademark, “Global Healthcare Connections” and directing the defendant to remove all references to the plaintiff’s mark on social media sources.  In assessing the plaintiff’s application, the Chambers judge looked to Potash Corp. of Saskatchewan Inc. v. Mosaic Potash Esterhazy Limited Partnership which set out the well‑established test for an interlocutory injunction:  

(1) the strength of the plaintiff’s case;

(2) the presence of a meaningful risk of irreparable harm if the injunction is not granted; and,

(3) whether the balance of convenience favours the granting of the injunction. 

The Court of Appeal allowed the appeal and held that the plaintiff’s application for injunctive relief was based on the common law tort of passing off, which in turn, required evidence of goodwill, deception of the public due to misrepresentation, and actual or potential damage to the plaintiff.  The Court stated that the plaintiff’s case was weak because she failed to put forth any evidence to establish the existence of goodwill associated with the name Global Healthcare Connections.  The plaintiff’s affidavit referred to various steps she had taken to launch her business, but it also stated that she had had difficulty launching her business because of the defendant’s actions.  Thus, there was no evidence that the plaintiff or her services were known in the market.

The Court found it unnecessary to assess the remaining elements of the common law tort, although it did comment on these.  With respect to the element of irreparable harm, the Court disagreed with the Chambers judge’s finding that the plaintiff had suffered loss of business, finding instead, that the similarity between the names used by the parties would likely result in a benefit rather than harm to the plaintiff’s business.  Noting that a balance of convenience analysis could be “compendious”, the Court was satisfied that the balance of convenience also favoured the defendant, given the weakness of the plaintiff’s case and given that irreparable harm favoured the defendant.  Thus, the Chambers judge’s decision could not stand.

Injunction for Trademark Infringement: Québec

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

In Solutions Abilis Inc. v. Groupe Alithis Inc., the Québec Superior Court granted the plaintiff an interlocutory injunction precluding the defendant from using ALITHIS as part of its corporate name or trade name or as a trademark.  The test for an interlocutory injunction in Québec turns on whether the rights which the plaintiff invokes are clear, doubtful or non-existent.  If those rights are clear an injunction should be granted if serious harm would otherwise result.  If those rights are doubtful the court must also consider the balance of convenience.  This test is similar, although not identical, to the test used in the common law provinces where the courts must consider whether there is a serious issue to be tried, irreparable harm and the balance of conclusive irreparable harm. 

After setting out the test the Court then considered the plaintiff’s trademark rights, starting from the premise that trademarks are a guarantee of origin and intended to protect the public by indicating the source of the goods and services.  The Court then focused on whether there was confusion, finding that the plaintiff’s marks,

 abilis it           abilis ti

were inherently distinctive, since the included word, ABILIS, was a coined term with 3 syllables that created a strong sonority – “ab-il-is” and because of the use and position of the “it” and “ti” symbols in the marks.  The defendant’s mark,

alithis

 also used 3 syllables and a symbol.

The length of time also favoured the plaintiff and the nature of the trade was similar, namely computer consulting services.  The Court was not willing to accept the defendants’ argument that persons purchasing computer services would take time to determine the source, noting that initial interest confusion was sufficient and might, among other things, result in the plaintiff not being invited to bid for a potential customer’s work.  The Court was also convinced there was a sufficient degree of resemblance, referencing a number of Québec cases where the degree of resemblance led to a finding of confusion even where the goods or services were different. 

Since the likelihood of confusion was clear, a loss of goodwill and clientele were presumed and therefore the injunction was granted.  A decision regarding the balance of convenience was not necessary, but the Court noted, in the event of an appeal, that it favoured the plaintiff, particularly given the shorter period of time the defendants had been in the market.

Both Here and There: Trademark Use on Websites Available in Canada

By In Case Law, Registration

According to a December, 2012 decision of the Federal Court, HomeAway.com, Inc v. Hrdlicka, “a trade-mark which appears on a computer screen website in Canada, regardless where the information may have originated from or be stored, constitutes for Trade-marks Act purposes, use and advertising in Canada.”  This broad statement suggests that the appearance of a trade-mark on a computer screen is sufficient whether or not services are available or performed in Canada.  However, the decision is best understood in context. 

HomeAway.com, which acquired and now operates the well known Vacation Rentals by Owner or VRBO website at VRBO.com, sought to expunge the trade-mark VRBO which Hrdlicka had applied to register in 2009 for use in association with services described as “vacation real estate listing services”.  HomeAway.com sought to establish prior use of VRBO.  HomeAway.com had a computer presence in Canada, but no physical presence.  In analyzing section 4(2) of the Act which states that “a trade-mark is deemed to be used in association with services if it is used or displayed in the performance or advertising of those services”, the Court noted that there was little jurisprudence regarding use by means of a computer screen display.  The Court then adopted the concept that an activity can be “both here and there” from a series of earlier cases involving tax, criminal activity and copyright and sought to interpret section 4(2) “in a manner consistent with modern day realities”, namely “that information which is stored in one country can be said to exist in another; in this case Canada.”

The Court then went on to describe the HomeAway.com business as being “advertising, on its website, homes, apartments and the like owned by third persons who wish to rent them to others”, suggesting that HomeAway.com offers the same services as the Classifieds section of a newspaper.  The Court used the accessing of properties in “Montreal” and “Niagara-on-the-Lake” as examples of how the website might be used.  It is not clear whether there was actual evidence before the Court of Canadians posting and accessing properties on the website, but presumably this was available.

In the circumstances, Hrdlicka’s registration was expunged in light of HomeAway.com’s prior use, the absence of any use by Hrdlicka until 2012 and evidence that Hrdlicka was trying to sell his trade-mark to HomeAway.com.

The question now is whether the mere appearance of a trade-mark in advertising available on a website in Canada is enough to constitute use in association with services.  However, when the statement from the Federal Court is read in context, it would appear that the services must be available to or accessed by Canadians.  Some further case law may be necessary to clarify this point.