Teresa Scassa - Blog

The Quebec Court of Appeal has overturned the decision of Justice Zerbisias of the Quebec Superior Court to award $125,000 in extra-judicial costs and punitive damages against a company that lost a trademark infringement suit.

Les Industries Lassonde is the owner of the registered trademarks OASIS and associated marks that feature the word OASIS, for juices, drinks and sherbets. In 2009 they brought a trademark infringement suit against L’Oasis d’Olivia Inc., arguing that the defendant’s mark OLIVIA’S OASIS for body care products was confusing with their OASIS marks. After a five-day hearing, Justice Zerbisias found that there was no likelihood of confusion, nor was there any depreciation of the goodwill associated with the plaintiffs’ mark. She concluded that “to impute the likelihood of confusion between Plaintiff’s and Defendant’s mark to the average consumer would insult him or her by assuming that such consumer is completely devoid of intelligence; of normal powers of observation, recollection and recognition; or, is so totally unaware or uninformed as to the environment in which they are found, that they would be easily deceived about the origin or nature of the wares they purchase.” (at para. 52)

At the end of the trial, counsel for the defendant made an oral motion seeking extra judicial costs and punitive damages against the plaintiffs. They relied upon provisions in the Quebec Code of Civil Procedure that came into effect on June 4, 2009. The Bill which added these provisions was titled “An Act to amend the Code of Civil Procedure to prevent improper use of the courts and promote freedom of expression and citizen participation in public debate.” (S.Q. 2009, c-12) In short, these provisions are a kind of anti-SLAPP legislation. Strategic Lawsuits Against Public Participation (SLAPP) are typically baseless law suits that have as their goal the intimidation of those who are critical of or who oppose certain types of activity. The intimidation is chiefly economic; the cost of defending against a SLAPP suit can be devastating for most individuals or public interest groups.

In this case, the defendant argued that the plaintiffs had “engaged in manifestly unfounded, frivolous, vexations proceedings, excessive and unreasonable in the circumstances, in an attempt to bully it and to prevent it from the lawful exercise of its rights to use its trade-mark and to engage in business under the name of Olivia’s Oasis” (at para 56). Justice Zerbisias agreed. In a very blunt assessment of the conduct of the plaintiffs she found that they had “unnecessarily pursued a claim they knew or should have known would not succeed” (at para 63). She based this conclusion on the sharp differences between the parties’ wares and target clientele, and on the fact that there had been no evidence of any confusion over the 5-year period of concurrent use of the parties’ trademarks. She found as well that the plaintiffs knew that the word OASIS was not a strong mark, and that there were many other registered trademarks incorporating that word, as well as many other businesses in Canada that used the word as part of their business name. Justice Zerbisias noted the disparity in power and resources between the parties, and referred to the plaintiffs’ conduct as “menacing and abusive”.

The plaintiffs did not appeal the judge’s finding of lack of confusion; instead, they confined their appeal to arguing that the award of extra-judicial costs and punitive damages was not justified on the facts, and that even if it was, the calculation of the amount of extra-judicial costs was not based on any evidence and was therefore flawed. In its decision on March 30, 2012, the Court of Appeal agreed on both points. The most significant finding, of course, is that the conduct of the plaintiffs did not amount to the kind of abuse contemplated by articles 54.1 and 54.4 of the Code of Civil Procedure. The Court began by noting that there was nothing in the actual conduct of proceedings that was abusive. The defendant’s argument depended instead on a finding that the proceedings should not have been brought in the first place. In contrast to the trial judge, however, the Court of Appeal found nothing to suggest that the commencement of proceedings was inappropriate. They noted that there was nothing inherently excessive about seeking to enforce one’s trademark rights. Once the plaintiffs had concluded that there was a risk of confusion created by the defendant’s mark, the plaintiffs were within their rights both to oppose its registration and to sue for trademark infringement. The Court noted that this was not simply the normal practice in such situations; it was almost an obligation in order to protect one’s trademark rights.

The Court of Appeal was also unprepared to find that the action commenced by the plaintiffs was doomed to fail from the outset. They noted that the trial judge spent 50 paragraphs of her decision discussing the issue of confusion following a five-day trial and a long period of deliberation. They observed as well that good faith must be presumed, and bad faith must be proven. They found no evidence to support the conclusion that the plaintiffs were motivated by bad faith. While the trial judge had found that other suits brought by the plaintiffs against other holders of marks for vastly different wares or services that incorporated the word “oasis” was evidence of a pattern of conduct, the Court of Appeal refused to draw an inference that this was evidence of harassment of any and all who might use the word “oasis” in relation to a business. They noted that a different inference could well be made: that the plaintiffs sought to protect the distinctiveness of their trademark. The Court indicated that much more evidence would need to be provided to support a finding of bad faith.

The case raises interesting issues about what might constitute sufficient proof of bad faith to give the anti-SLAPP provisions any application in the trademark context. It is certainly the practice for trademark owners to vigorously defend the distinctiveness of their marks; loss of distinctiveness is fatal for a trademark. The kind of disparity in economic power in this case is not unusual in a context where a new entrant in the market place has adopted a trademark that an established company might see as encroaching upon their existing trademark rights. The assessment of confusion requires a fact-driven, contextual analysis; it is not something that is always apparent on the face of things.

Perhaps the anti-SLAPP provisions might have a greater role to play when there is better evidence either that the rights being asserted are dubious, or that they are being asserted in a vexatious manner. This might occur where the proceedings themselves are conducted in an abusive manner, or where there is evidence of the bad faith assertion of trademark rights that goes beyond the normal practice of protecting one’s interests. It might also occur in circumstances where the plaintiff has no valid cause of action. For example, the non-commercial, critical use of a trademark seems to fall outside the scope of the legislation (although such a use of a design mark might infringe copyright, which raises a different set of issues). Such a case would also raise the freedom of expression issues which seem to be identified as central to the bill which brought about the amendments to the Code of Civil Procedure.

Published in Trademarks

The Federal government launched a new open data initiative in March 2011. One year in, the pilot project is growing and evolving. The government has also integrated the open data portal within a broader open government initiative. This initiative has three main components: open data, open information and open dialogue. The initiative is important, and it brings Canada into line with similar initiatives already underway in comparable democracies such as the United Kingdom, the United States, Australia and New Zealand, to name just a few. Of course, the open government movement has taken hold elsewhere in Canada too. Notable initiatives are found at the provincial government level in B.C., and in major municipalities such as Vancouver, Toronto, Edmonton and Ottawa.

The open data part of open government sees governments providing data sets to the public, free of cost and of most restrictions. The idea is stimulate innovation (allowing application developers, for example, to develop innovative ways to make use of the information); to improve services to the public (for example, applications involving public transit data have been hugely popular to transit system users); to allow researchers better access to data for analysis and study; and to improve government transparency. To be truly effective, data must be provided in usable (machine readable) formats; standardization of formats is important if different data sets are to be combined.

In a country such as Canada which still clings to Crown copyright, and where both Federal and Provincial crowns have asserted rights to their data (notwithstanding that copyright does not protect facts, only the original selection or arrangement of facts), the licensing of government data through open data initiatives is important. (See my own article on copyright in fact based works here; and an excellent piece by Elizabeth Judge on access to and use of public sector information here). The default position has been for the government to assert its rights. Open data requires a major cultural shift. This is clearly something that is still in process at the federal level in Canada. A look at the licence currently (as of March 16, 2012) available through the open government portal reveals a licence that in theory lets go of the data, but that does so wrapped in excessively legalistic formulations.

An important element of interoperability of data sets is the compatibility of the licences under which they are granted. There are real advantages to open government licences that evolve along very similar lines. The U.K. government developed an open government license that has the virtue of being accessible and user-friendly, and that clearly conveys the message that the data is there to be used as freely as possible. This licence has been used as a template for B.C.’s open data licence. The Canadian government portal is a work in process; let’s hope that a new version of the licence will soon be forthcoming.

Picture the small university town which holds its convocation ceremonies every spring. Proud parents and siblings, aunts, uncles and grandparents flock to the town to see junior graduate. This is the single biggest annual event in the community, and it creates a boon for local businesses of all kinds, including hotels, restaurants, bars, gift shops, florists, and convenience stores. Many of these local businesses will hang signs or banners in their windows celebrating the graduating class. In doing so, they recognize the importance of the event to the community, and they celebrate a significant occasion in the lives of residents and visitors to the community. Many of the businesses also recognize the important economic benefit brought to the community by the students, and feel it appropriate to signal this appreciation. Graduating students have likely worked as part-time employees in many of these businesses. In some cases, business owners are alumni of the schools, or have children who have attended the school. Of course, it is also true that the businesses recognize that they may benefit financially by tapping into the enthusiasm and pride of visitors to the community.

Now picture the university deciding that it “owns” convocation. After all, the event only happens because of the operations of the university. It is a major, recurring event that requires organization and preparation. The University, which is in part publicly funded, has no doubt experienced budget cuts and dislikes raising tuition to meet its needs. It might have a few key private sector donors that it would like to reward and encourage as much as possible. These donors, it reasons, have supported the university, and so should receive some sort of exclusivity when it comes to major university events. The donors think this is a good idea too. So, the university decides that it is entitled to control the goodwill associated with convocation; it wants to prevent local businesses from trading on that goodwill without paying for the right to do so. Alternatively, it might decide that rights to associate commercially with convocation should be available only to a few select corporations – those who are able to pay premium prices for an exclusive opportunity. It decides to take legal action against any company that puts up signs or banners that make any direct or indirect reference to its major event.

Does this scenario sound absurd and far-fetched? Perhaps it is an extreme example, but it is clear that we are beginning to head in the direction of recognizing some form of property right in the goodwill associated with major events. And there are good reasons why we should be concerned.

We are now only months away from the 2012 summer Olympic Games that will take place in London, England. To call this a major event is an understatement. Along with the fanfare, pomp and ceremony of the Games, we will be bombarded with advertising and merchandising campaigns. These campaigns, for the most part will be engineered by Olympic sponsors – those mega corporations that have shelled out enormous sums of money for the privileges that come with sponsorship.

There are other voices in the story of marketing and the Olympic Games, however. For years, non-sponsors have sought to associate themselves with the Olympic Games (or with other major sporting events, for that matter) without paying the exorbitant sponsorship fees. Such campaigns are called “ambush marketing”, and they are often cleverly designed so as to create associations without actually using the protected intellectual property of the International Olympic Committee (IOC) (which includes all manner of trademarks such as the name Olympics and the famous rings). For example, in 1992, Mastercard, a commercial rival of credit card company and Olympic sponsor VISA, ran an advertising campaign that stated: “And remember, to visit Spain, you don't need a visa”. (Get it?)

In frustration at the persistence of companies seeking to reference a mega international event in their marketing campaigns without having paid through the nose for the right to do so, the IOC has, for a number of years now, made a commitment to enact strong anti-ambush marketing legislation a condition of a successful Olympic bid. You might not have noticed that Canada did so for the 2010 Winter Olympics in Vancouver. This is because (as Dana Ellis, Benoit Séguin and I argue elsewhere), Canada’s constitutional division of powers made the drafting of such a law a tricky business, and the legal departments of major corporate non-sponsors quickly found the obvious loopholes and drove their marketing trucks right through them. (Does anyone remember the Lululemon ambush?)

Being a unitary state, these division of powers issues are not shared by Great Britain, and their anti-ambush marketing laws are among the most stringent ever seen. Former British Minister of Sport, Richard Caborn, explained to Parliament that the laws were drafted in extremely broad and open-ended terms because “we must have flexibility in our approach, to allow us to respond appropriately to any changing demands by the IOC – and there will be some – and to enable us to react to any new or innovative ambush marketing techniques that might arise between now and 2012.” (House of Commons Debates (U.K.), 2005). If that makes you feel even a little bit queasy, consider the draft regulations that have just been proposed in the U.K. The regulations give an extraordinarily broad definition of advertising. It includes just about any kind of message placed in any location that is “wholly or partly for the purpose of promotion, advertisement, announcement or direction.” It expressly captures the display of messages on a human or animal body, having a human or animal carry anything on which an advertisement is displayed, wearing advertising attire, or displaying an advertisement on an individual’s body (which includes using body paint). The regulations go so far as to target human and animal bodies because these were among the last uncontrolled communicative spaces left around the Games.

You may recall that during the 2010 FIFA World Cup of Soccer in South Africa, a group of Dutch women were arrested and charged with ambush-marketing offences (yes, FIFA now insists on such legislation too) after they attended a football match together wearing unbranded orange dresses that had been supplied by a Dutch brewery. The charges were only dropped after the story received an embarrassing amount of media coverage that made the laws seem rather difficult to justify. It is safe to assume that the Dutch women in orange dresses would not be welcome at the London Games either. We all know that the female body is considered by marketers a powerful advertising medium; what is interesting in this example is that the women themselves were criminalized for being the vehicle by which a banned message was communicated.

It is also interesting that instead of letting major corporations and event organizers duke it out in the business arena, these pillars of the free market economy have insisted upon government intervention to silence all possible distracting messaging during substantial periods before, during and after the event. And although the most problematic ambush marketing campaigns are ones that come from major corporate rivals of event sponsors, these are also the players that have the most resources to hire teams of clever lawyers to find the legal loopholes for them. Yet ambush marketing laws are applied to all businesses, large or small, with the result that small local businesses in the communities which host such major events, are allowed only to carry on their normal marketing practices and may not even mention that big event taking place on their doorstep. The mom and pop diner offering gold, silver or bronze breakfast specials during the Olympics is among those least able to respond to or fight the cease and desist letter they would inevitably receive.

By creating property-like rights in major events, governments have acted to further shrink the already embattled public domain and have contributed once again to the creeping propertization of just about anything. In this case, the IP-like right is given to event organizers, notwithstanding the fact that a major public event is a multi-stakeholder enterprise. These events do not take place without national and local government involvement, without taxpayer support, without citizens making sacrifices related to local disruptions, without athletes training and preparing for years in advance, and without the support of thousands of local volunteers – to name just a few of the stakeholders. Event organizers are being given rights in something that is not solely theirs, and in doing so, they have the power to shut down the very natural ways in which communities respond and interact to events taking place in their midst.

Universities are not next in the queue for protection under this sort of legislation. Expect it to reach all major international sporting events first (look for it again in Canada, for example, when Canada hosts the Pan-Am Games in 2016). Then look for it in relation to major sporting events such as the Stanley Cup or the Superbowl. Once it gets that far, then universities can get into what will likely be a very long line up to claim legally enforceable rights in the public domain.

Published in Ambush Marketing
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