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Sunday, 12 February 2017 11:24
Note: This is Part 2 of my discussion of the B.C. Court of Appeal’s decision in Vancouver Community College v. Vancouver Career College (Burnaby) Inc. Part 1 can be found here. The initial post considered issues around official marks as well as the first element of the tort of passing off in which the plaintiff must establish that they have acquired goodwill/reputation in a mark. This post considers the remaining two elements: the likelihood of confusion and the likelihood of damage.
As noted in my earlier post, the B.C. Court of Appeal found that the appellant, the Vancouver Community College had considerable goodwill in the mark VCC. I was critical of this decision as it seems to conflate the official marks protection obtained by the Community College with the acronym as a trademark for the purposes of the passing off analysis. The Court of Appeal’s finding regarding the scope of the Community College’s rights in the mark VCC influences its reasoning with respect to the issue of confusion, which is the second element in the tort of passing off.
The alleged passing off in this case arose out of new marketing strategies adopted by the respondent Vancouver Career College in 2009. At that point it adopted VCCollege as a trademark and registered VCCollege.ca as a domain name for its website. The appellant Vancouver Community College objected to the use by the respondent of the acronym VCC in its “internet presence”. It also objected to the Career College’s bidding on keywords that included “VCC” and “Vancouver Community College.” It argued that the result of these activities was passing off. Because the official marks arguments had been separated from the passing off claim, the Court of Appeal considered only the issue of passing off with respect to the use of “VCC”.
The Court of Appeal summarized the essence of keyword advertising for the purposes of this case in these terms: “a bid on a keyword will make it more likely that the bidder’s advertisement with its domain name, linking to its website, will appear on the first search page revealed to the searcher.” (at para 19). The Court acknowledged that bidding on keywords in order to drive traffic to one’s website is legitimate, so long as it stays within the bounds of what is permissible. In the passing off context, the issue is whether the use of the keywords results in consumer confusion. When presented with a link in an ad on a search results page, the searcher has the option of following the link to the website to which it resolves. American case law on keyword advertising has focussed on the issue of confusion, rather than on the simple use of protected words as keywords. These cases have considered how the resulting ads are displayed on the page (e.g., whether they are in a location or font that distinguishes them from search results) and whether their content or presentation is misleading. The Court of Appeal does not address this case law or these issues in its confusion analysis.
The Court of Appeal found that “”VCC” was the keyword that generated the most “clicks” to the respondent’s website, such that the respondent’s advertisements appeared almost always in searches for VCC (over 97% of the time), and the respondent’s text advertisements always displayed VCCollege.ca in the web address line of the advertisement.” (at para 22) However, as I noted in Part 1 of my discussion of this case, VCC is an acronym shared by both the respondent and the appellant. As an acronym, it is a weak mark. The Community College led evidence of confusion among some students searching for the Community College. The trial judge had given this evidence relatively little weight, particularly in a context in which VCC was also the acronym for the respondent’s name. He noted that the respondent’s web site made it evident that it was the site for the Career College.
The Court of Appeal was critical of the trial judge for assessing confusion at the moment at which a student searching for VCC arrived at the landing page for the Career College – as opposed to when the student received the results of a browser search using VCC as a key word. According to the Court of Appeal, the authorities support a finding that first impressions are what matters in the confusion analysis. The Court of Appeal relied heavily upon Masterpiece Inc. v. Alavida Lifestyles Inc., a Supreme Court of Canada (SCC) decision involving an assessment of confusion under the Trade-marks Act. In that case, the SCC appeared to confirm that so-called “initial interest confusion” was actionable. In the internet context, initial interest confusion arises where a party’s trademarks have been used in such a way (in domain names or metatags, for example) that a person searching for the products or services of one company ends up at the website of another by mistake. In the early days of the internet, courts were more likely to find initial interest confusion to be actionable per se; more recently, courts in the United States have given searchers more credit for being able to find their way around the internet, and have looked for other evidence of uses of the marks that contribute to confusion. A searcher who quickly realizes they have made their way to a website other than the one for which they were searching is not confused. However, some have still maintained that initial interest confusion should be actionable because even if the consumer is not confused, they might still decide, once presented with similar goods or services from an alternate source, that they are happy enough to acquire them from that source rather than the one for which they were originally searching. In such circumstances, the use by a defendant of a competitor’s trademarks to draw business away from them is said to cause harm that should be actionable. In Masterpiece, the SCC stated that the diversion of consumers “diminishes the value of the goodwill associated with the trademark and business the consumer initially thought he or she was encountering in seeing the trademark. Leading consumers astray in this way is one of the evils that trademark law seeks to remedy.” (at para 73) While this has been taken by some to address initial interest confusion on the internet, it should be noted that Masterpiece did not deal with either the internet context or with passing off.
Whichever view one takes on initial interest confusion, the problem in this case is that the appellant used the appropriate acronym for its name as a key word and its domain name was one in which it would doubtless be found to have a ‘legitimate interest’ under domain name dispute resolution policies. According to the Court of Appeal, the confusion required for a finding of passing off “is fully established by proof that the respondent’s domain name is equally descriptive of the appellant and contains the same acronym long associated to it.” (at para 71) This approach gives excessive scope to what should be – in the context of passing off – relatively weak rights in VCC. The acronym is obvious and appropriate for both the Vancouver Community College and the Vancouver Career College. While the Community College may have acquired goodwill in the acronym, its highly descriptive nature necessarily limits the scope of the goodwill and does not, without more, allow it to preclude its use by the Career College, itself in business for 20 years. Weak marks deserve limited protection in passing off. Having tolerated the presence of the Vancouver Career College since 1997, the action in passing off with respect to its use of its acronym online seems misdirected.
The Court of Appeal found that the appellant had suffered damage to its goodwill. This flowed in part from “the lack of power to control the use of the marks to which the goodwill attached by unauthorized users” (at para 75). To characterize the Vancouver Career College as an “unauthorized user” of the appropriate acronym for its own name seems problematic. Essentially, the Court of Appeal would carve out an absolute monopoly for the appellant in VCC for use in association with education services notwithstanding the fact that the acronym is shared by two parties with names that are highly descriptive of similar services and that share the same acronym. In such circumstances, it is appropriate to require something more in the respondent’s conduct on which to base a finding of passing off.
Of course, the appellant is not without its nuclear option – the VCC official mark, although it is clear that there are other difficulties with the official marks claim. As noted in Part 1, official marks give the kind of absolute protection for entirely descriptive marks that the appellant is clearly seeking. While the official mark issues in this case have yet to be resolved, it is unfortunate that the passing off analysis seems to have been carried out under the shadow of the official mark. The result is an analysis peculiar to the circumstances of this case that would be dangerous to extend to other cases of passing off.
Wednesday, 08 February 2017 08:38
Note: As I started to write this post, which comments on the recent B.C. Court of Appeal decision in Vancouver Community College v. Vancouver Career College (Burnaby) Inc., I realized that it was going to be far too long for a single post. I have decided to divide the issues in two. This first post will focus on the official mark question and the issue of goodwill (the first element in a passing off action). A second post will later deal with issues of confusion and damages in passing off.
The BC Court of Appeal has recently ruled in a case that involves allegations of online trademark infringement. The parties raised issues around the purchase of keyword advertising, the use of trademarks in metatags and domain names, and the infringement of official marks. However, the Court’s decision ultimately addresses only a subset of these issues, and refers the question of official marks back to the trial court because of deficiencies in the factual record. The Court of Appeal’s decision focuses on passing off. In doing so, it touches on some questions unique to the internet context.
The dispute involves two educational institutions with very similar names and a shared acronym. The appellant Vancouver Community College is a post-secondary institution with official designation under B.C.’s College and Institute Act. It began its existence as the Vancouver City College in 1964, changing its name to Vancouver Community College in 1974. The respondent is a private career college called Vancouver Career College. It has operated under that name since 1997. Over time it has expanded its operations considerably. It is regulated under the province’s Private Training Act. Not only do both institutions share the identical acronym VCC, the only difference in their full names is with respect to the middle of the three words used in each. Both names are highly descriptive, and, as such, are inherently weak trademarks.
Because of its links to government, Vancouver Community College has taken advantage of the official marks provisions of the Trade-marks Act. These provisions allow a “public authority” to circumvent the usual requirements for trademark registration in order to protect a name or mark. The protection available for official marks is more extensive and more enduring than trademark protection, and the scheme is controversial. While a business would not be allowed to register a trademark that is entirely descriptive without being able to demonstrate that it had acquired secondary meaning, the official marks regime is indiscriminate when it comes to marks. The Vancouver Community College claimed ‘VCC’ as an official mark in January 1999 and also holds the official mark ‘Vancouver Community College’ since 2005. Both dates are later than the adoption by Vancouver Career College of its name – and quite possibly its adoption of the acronym VCC. Case law supports the view that the rather generous protection for official marks is only prospective; uses of the same or highly similar marks that predate the publication of the official marks are permitted to continue, although their use cannot expand to new products or services. The trial judge had found that the prior use of its own name and acronym by the Vancouver Career College insulated it from claims that it violated the Vancouver Community College’s official marks. The Court of Appeal ruled that the factual record was not sufficient to decide the issue. They sought additional facts as to the extent and nature of the use of each of the marks, whether the use by the respondent of the acronym had so expanded as to negate the defence of prior use, as well as facts relating to whether prior use had been abandoned by the time the official marks were published. In addition, because the Court of Appeal had concluded that the Career College’s prior use was tortious, it speculated as to whether the tortious adoption of a mark could count as prior use. It is an interesting question, but as I will discuss below, the Court of Appeal’s conclusions on the tort of passing off are not entirely satisfactory. At this point, it should be noted that there is some circularity around the issue of passing off and official marks. The Community College’s ability to obtain an official mark appears to bolster its claim to goodwill/reputation in the Court of Appeal’s reasoning. Yet official marks receive no scrutiny by the Registrar; they can be descriptive, generic, or confusing with existing marks – there really are few boundaries. As a result, the two analyses must be kept distinct. There may be a violation of rights in an official mark without there being a sufficient factual basis to support a finding of passing off. The threshold for the first is much lower than the second since all that needs to be shown is the existence of an official mark. For passing off it is necessary to establish sufficient goodwill/reputation – in other words, a plaintiff has to show that a mark distinguishes it as the source of particular goods or services.
A plaintiff in a passing off case must establish three elements: goodwill, a likelihood of confusion and a likelihood of damage. The first element requires the plaintiff to prove that they have acquired goodwill in a particular mark (whether it be a name, design, acronym, or some other indicium). In this case, the mark at issue is VCC which is an acronym for both Vancouver Community College and for Vancouver Career College. The law of passing off is not particularly generous to those who lack imagination or forethought in coming up with names. Names that are entirely descriptive make poor trademarks. The law is reluctant to provide a kind of monopoly over terms that simply describe a product or service. Both college names share “Vancouver” and “College” – both institutions are based in Vancouver and are of a kind typically referred to as “colleges”. The middle word is different but starts with the same letter, leading to two identical acronyms. As a result, the Community College’s acronym, on the face of it, is very weak. It deserves almost no protection from the law of passing off unless it is able to show that it has acquired such a level of distinctiveness through use by the Community College, that the public now associates VCC with its particular services. Further, even if it succeeds in showing acquired goodwill, it is not necessarily entitled to have the defendant’s use of its mark enjoined. The defendant might still be capable of using the same descriptive mark so long as, in doing so, it takes steps to ensure there is no confusion.
The trial judge had concluded that the Vancouver Community College did not have goodwill in the VCC mark. This was in part based on his finding that ‘VCC’ had been little used by the Community College between 1990 and 2013. The trial judge referred to the added level of distinctiveness required for an entirely descriptive mark as “secondary meaning”, and he was correct to do so. Nevertheless, the Court of Appeal took issue with this approach. It opined that because what was at issue was the name of the college, it was not necessary to establish secondary meaning. Instead, it framed the question as whether the acronym VCC “carried sufficient distinctiveness in its primary sense to be recognized as designating the appellant and the educational services it provides.” (at para 40) This argument seems to either miss the point that the name of the college is entirely descriptive as well, or it conflates the name of the college with its status as a public institution. Unlike the B.C. University Act, which limits use of the term “university” to only specified institutions, the College and Institute Act gives no special protection to the term “college”. The Court of Appeal emphasized the public nature of the Community College and found that: “Its public character establishes a level of public awareness of the role it plays in the community” (at para 47). As a public institution, the Community College has access to official marks protection. Yet the huge boondoggle that is official marks protection should only count once – in the context of an official marks analysis – and should not be used to shape a passing off analysis that requires that marks be shown to be sufficiently distinctive to have acquired goodwill or reputation as a condition of their protection.
“Vancouver Community College” effectively describes a community college located in Vancouver. It is entirely descriptive. The acronym VCC similarly lacks inherent distinctiveness. In fact, it could stand for Vancouver Civic Centre, Vancouver Chamber of Commerce, Vancouver City Centre, or, in this case Vancouver Career College – to give just a few examples. The Court of Appeal’s decision sets a low threshold for goodwill/reputation in the face of a rather common acronym for a highly descriptive name. While it found sufficient evidence of an association by the public between VCC and the Community College, noting that the acronym was used in media reports, brochures, calendars and other materials, and it was the name of the SkyTrain station near the appellant’s campus. However, the extent of this association (or whether there is also a public association between VCC and the Career College) is not at all clear from the facts.
It may ultimately be that the Community College has acquired sufficient goodwill in ‘VCC’ to support an action in passing off. My difficulty with the resolution of this issue is with the road taken to get there. The Court of Appeal never acknowledged the weakness of either Vancouver Community College or VCC as marks in the context of the passing off analysis. While it is still possible to find that such a weak mark as VCC had acquired sufficient goodwill to provide a basis for an action in passing off, the inherent descriptiveness of the mark is relevant to the rest of the passing off analysis. For example, courts have found that minor differences in presentation of goods or services, or the use of disclaimers may sufficiently reduce any possibility of confusion between similar descriptive marks. The interweaving of the official marks issues with the passing off issues is perhaps to blame here. The Court of Appeal seems to be giving the Community College credit for being a public institution, and its burden of establishing goodwill seems to be lightened as a result. This approach ignores the very special (i.e., ‘anomalous ‘ or ‘problematic’) character of official marks.
Note: Part 2 of this comment is now available here.
Wednesday, 01 February 2017 13:34
This post is based upon a presentation I gave at a panel organized jointly by the Centre for Law, Technology and Society and the Centre for Health Law, Policy and Ethics at the University of Ottawa on February 1, 2017.
Canada is on the cusp of passing new legislation and enacting new regulations that will put us among a growing number of countries that have made plain packaging mandatory for tobacco products. Bill S-5, currently before the Senate, will amend the Tobacco Act to enable regulations to dictate the appearance of tobacco packaging. While the regulations are not currently available, it is to be expected that they will contain measures similar to those already introduced in Australia and Britain. Essentially plain packaging means prescribing a plain colour, size and configuration for all tobacco packages. In addition, packages will be used to convey graphic images and public health warnings. The only permitted use of tobacco trademarks will be of word marks consisting of the brand name and sub name in a prescribed font, colour and type-size. Tobacco trademarks consisting of logos, crests, images, colour, shape, configuration, or design will no longer be capable of use on tobacco product packaging.
Plain packaging is a movement driven by the World Health Organization’s Framework Convention on Tobacco Control, of which Canada is a signatory. Interestingly, however, the treaty does not require signatories to implement plain packaging. Article 11 of the Convention addresses packaging, but merely requires that false and deceptive elements on packaging be banned (e.g. using “mild” to designate cigarettes that are every bit as harmful as regular cigarettes); that health warnings take up 30-50% of packaging surface; and that packages contain information about constituent ingredients and product emissions. Canada’s current packaging regulations are consistent with these requirements. Plain packaging is merely mentioned as something that signatory states “should consider” in paragraph 46 of the Guidelines for Implementing Article 11 of the Convention. Thus, it is important to underline that Canada is not under an international obligation to introduce plain packaging legislation.
While the link between smoking and serious illness/death seems uncontestable, and the reduction of smoking is clearly an important public health objective, there is reason to question the wisdom of the plain packaging approach. Australia was the first country to introduce plain packaging in 2011. Its legislation survived a constitutional challenge (it was argued to be an illegal expropriation of trademark owners’ rights), and is currently being challenged before the World Trade Organization (WTO) as a violation of Australia’s obligations under the TRIPS Agreement. Although considerable sums of money have been spent on defending Australia’s statute, the evidence emerging as to the beneficial impact of the legislation is ambivalent.
Plain packaging measures in Canada are also likely to face legal challenges. Restrictions on the use of trademarks in the 1988 Tobacco Products Control Act were found by the Supreme Court of Canada to be a violation of the freedom of expression of trademark owners that could not be justified under s. 1 of the Canadian Charter of Rights and Freedoms. These provisions were struck down by the Court. Provisions related to the use of tobacco trademarks in sponsorship activities in a reconstituted Tobacco Act were also challenged for violating the freedom of expression, but the Supreme Court in 2007 found that the violation was justified as rationally connected to a pressing and substantial government objective, and that it minimally impaired the rights concerned. The takeaway from these cases is that restrictions on the use of tobacco trademarks (such as those necessary to implement plain packaging) clearly violate the freedom of expression. In any court challenge, therefore, the issue will be whether the measures can be justified under s. 1 of the Charter as a “reasonable limit, demonstrably justified in a free and democratic society”. It is important to remember that plain packaging restrictions are extreme and the evidence linking plain packaging to harm reduction is ambivalent. It is not obvious at the outset that such measures would survive a Charter challenge.
Trademark owners have also objected that the restrictions will harm their ability to acquire and maintain trademark rights in relation to tobacco products. Bill S-5 contains provisions that indicate that non-use of tobacco trademarks resulting from plain packaging regulations will not be a basis for the invalidation of existing registered trademarks. However, this does not settle the question. Trademark rights cannot be acquired (or maintained) at common law without use, and the law does nothing to address this category of rights. Further, certain kinds of trademarks (distinguishing guises, three-dimensional marks and other non-traditional subject marks soon to become registrable in Canada) cannot be registered until they have acquired distinctiveness through use. Plain packaging regulations might therefore constitute a bar to the registration of certain types of trademarks for use in relation to tobacco products.
Canada’s existing international obligations under both the TRIPS Agreement and the NAFTA may lead to further challenges to the introduction of plain packaging. The creation of an impediment to the registration of certain types of trademarks for tobacco products may violate Article 15 of TRIPS, and there is an open and ongoing debate as to whether plain packaging laws also violate Article 20 which provides that “The use of a trademark in the course of trade shall not be unjustifiably encumbered by special requirements, such as use with another trademark, use in a special form or use in a manner detrimental to its capability to distinguish the goods or services of one undertaking from those of other undertakings.. . “. Australia’s legislation has been challenged under TRIPS, and a decision on its compliance with that treaty may be imminent.
For its part, Article 1110 of the NAFTA provides that no member state can take a measure that is “tantamount to expropriation” of an investment except in limited circumstances which include a requirement to pay compensation. It is not clear whether a U.S.-based tobacco company could succeed before a NAFTA tribunal in arguing that the plain packaging laws amounted to an expropriation of their investment in their trademarks. The domestic challenge to Australia’s legislation turned on a property rights clause in the Australian constitution, and raised the question of whether the plain packaging was an expropriation of trademark rights. The majority of the court found that it did not, but of course that decision would not be binding on a NAFTA tribunal.
The plain packaging regulations on the horizon for Canada are being introduced in the face of considerable uncertainty as to their legality both under Canada’s constitution and Canada’s international trade obligations. The extensive resources required to defend such measures should be weighed carefully not just against the likelihood of success of any challenges, but also against the public health benefits that are likely to flow from further changes to how tobacco products are packaged in Canada.
It is perhaps also worth noting that there have been rumblings about plain packaging measures for other products considered harmful to public health, such as alcoholic beverages and junk food. The issues raised in relation to tobacco products have much broader implications, making this file one to watch.
Monday, 19 December 2016 08:52
Municipalities are under growing pressure to become “smart”. In other words, they will reap the benefits of sophisticated data analytics carried out on more and better data collected via sensors embedded throughout the urban environment. As municipalities embrace smart cities technology, a growing number of the new sensors will capture data in real time. Municipalities are also increasingly making their data open to developers and civil society alike. If municipal governments decide to make real-time data available as open data, what should an open real-time data license look like? This is a question Alexandra Diebel and I explore in a new paper just published in the Journal of e-Democracy.
Our paper looks at how ten North American public transit authorities (6 in the U.S. and 4 in Canada) currently make real-time GPS public transit data available as open data. We examine the licenses used by these municipalities both for static transit data (timetables, route data) and for real-time GPS data (for example data about where transit vehicles are along their routes in real-time). Our research reveals differences in how these types of data are licensed, even when both types of data are referred to as “open” data.
There is no complete consensus on the essential characteristics of open data. Nevertheless, most definitions require that to be open, data must be: (1) made available in a reusable format; (2) prepared according to certain standards; and (3) available under an open license with minimal restrictions or conditions imposed on reuse. In our paper, we focus on the third element – open licensing. To date, most of what has been written about open licensing in general and the licensing of open data in particular, has focused on the licensing of static data. Static data sets are typically downloaded through an open data portal in a one-time operation (although static data sets may still be periodically updated). By contrast, real-time data must be accessed on an ongoing basis and often at fairly short intervals such as every few seconds.
The need to access data from a host server at frequent intervals places a greater demand on the resources of the data custodian – in this case often cash-strapped municipalities or public agencies. The frequent access required may also present security challenges, as servers may be vulnerable to distributed denial-of-service attacks. In addition, where municipal governments or their agencies have negotiated with private sector companies for the hardware and software to collect and process real-time data, the contracts with those companies may require certain terms and conditions to find their way into open licenses. Each of these factors may have implications for how real-time data is made available as open data. The greater commercial value of real-time data may also motivate some public agencies to alter how they make such data available to the public.
While our paper focuses on real-time GPS public transit data, similar issues will likely arise in a variety of other contexts where ‘open’ real-time data are at issue. We consider how real-time data is licensed, and we identify additional terms and conditions that are imposed on users of ‘open’ real-time data. While some of these terms and conditions might be explained by the particular exigencies of real-time data (such as requirements to register for the API to access the data), others are more difficult to explain. Our paper concludes with some recommendations for the development of a standard for open real-time data licensing.
This paper is part of ongoing research carried out as part of Geothink, a partnership grant project funded by the Social Sciences and Humanities Research Council of Canada.
Published in Geospatial Data/Digital Cartography
Monday, 17 October 2016 07:27
The Toronto Star is reporting that Canadian architect and indigenous activist Douglas Cardinal is seeking an injunction to prevent the Cleveland Indians from wearing uniforms bearing their logo and team name, and from displaying their logo when the visit Toronto this week for the Major League Baseball playoffs. The legal basis for the injunction is an argument that the team’s name and mascot are discriminatory. Mr. Cardinal has also filed human rights complaints with the Ontario Human Rights Tribunal and the Canadian Human Rights Commission.
While Mr. Cardinal is litigating, he might also want to consider that the name and the offensive cartoonish mascot are also registered trademarks in Canada. (Search for “Cleveland Indians” in the Canadian Trademarks Database). Challenges to the registration of the Washington Redskins’ notorious trademarks are currently before the courts in the U.S. The Redskins trademarks, which most recently have been cancelled in the U.S. for being disparaging of Native Americans (with that decision under appeal), are also registered trademarks in Canada. To date, no one has challenged these or other offensive trademarks in Canadian courts.
Canada’s Trade-marks Act bars the adoption, use or registration of trademarks that are “scandalous, obscene or immoral”. I have written before about circumstances in which this provision has been invoked – or not – to disallow the registration of trademarks. Any challenge to the validity of the marks could be based on the argument that the marks should never have been registered, as they were racist and discriminatory at the time of registration (which, in the case of the Cleveland logo was in 1988). While an applicant to have the trademark expunged might have to address issues of delay in bringing the application, it should be noted that s. 11 of the Trade-marks Act also prohibits the use of a trademark that was adopted contrary to the provisions of the Act. In principle then, the continued use of a trademark that was “scandalous, obscene or immoral” when it was adopted is not permitted under the legislation. Of course, this use restriction raises interesting freedom of expression issues. In the United States, marks that are denied registration for being “disparaging” can still be used, thus arguably shielding the trademarks legislation from First Amendment (free speech) challenges. There is a great deal of unexplored territory around the adoption, use and registration of offensive trademarks in Canada.
Former Justice Murray Sinclair of the Truth and Reconciliation Commission (now Senator Sinclair) called for action to address the use of offensive and racist sports mascots and team names. Douglas Cardinal has clearly responded to that call; there is still more that can be done.
Note: At the hearing on the injunction on October 17, 2016, the Court declined to grant the injunction, with reasons to follow. Toronto Star coverage is here.
Monday, 12 September 2016 07:01
The U.S. Court of Appeals for the Ninth Circuit has applied U.S. trademark law (the Lanham Act) to the activities of a Canadian citizen operating a business in Vancouver. The court acknowledged that it was applying the Lanham Act extraterritorially, but ruled that it was justified in doing so on the facts of the case.
The extraterritorial application of trademark law is unusual. Registered trademarks are valid only in the country of registration. A Canadian who uses trademarks in Canada could normally only infringe another party's trademark rights if those rights have been acquired through registration or use in Canada. Countries normally get to decide which marks receive protection within their own borders, and a judgment from a foreign court would not be enforceable in Canada without a Canadian court’s approval. The decision in Trader Joe’s Company v. Hallatt, which applies U.S. law to U.S. registered trademarks used in Canada, is therefore quite unusual. However, the facts of the case are also unique.
Many Canadians will recognize the name Trader Joe’s. This grocery store chain, which operates exclusively in the U.S., has carved out a niche for itself as a purveyor of high quality fresh foods. A majority of the products sold in Trader Joe’s stores are branded with Trader Joe’s’ U.S.-registered trademarks. The company has no stores in Canada. It may have contemplated a possible expansion north of the border; in 2010 it took steps to register two of its trademarks in Canada. However, these registrations have not been perfected – quite probably because the company has not started to use the marks in Canada.
The defendant Hallatt is a Canadian citizen living in British Columbia who also has permanent resident status in the United States. In 2011 employees of a Trader Joe’s store in Washington State noticed that Hallatt was making several large purchases per week. It transpired that he was driving the purchased goods across the Canada/U.S. border in order to sell them in Canada. He later opened a store in Vancouver for this purpose. Originally called Transilvania Trading, he changed its name to Pirate Joe’s. He sold Trader Joe’s labelled merchandise at this store at prices considerably higher than in the U.S. After Trader Joe’s took steps to limit Hallatt’s access to their stores, he began to wear disguises to make his purchases. There was also some evidence that he hired people to purchase goods from Trader Joe’s that he could then bring into Canada. The court also found that he used a store sign that resembled Trader Joe’s’, and that the trade dress of his store also resembled that of the plaintiff company.
Trader Joe’s objected to this use of their trademarks and trade dress in Canada. They alleged that it could cause confusion among Canadian consumers who were familiar with the U.S. brand, and that the defendant’s activities might harm their trademarks because they had lost the ability to maintain their strict controls over product quality and freshness. They alleged that they had already received one complaint from a customer who had been made ill after eating Trader Joe’s food from Pirate Joe’s in Canada. They were also concerned about harm to their reputation because the food sold at Pirate Joe’s was overpriced and because the customer service did not meet their standards. Since Canadians would also cross the border and shop at Trader Joe’s stores in the U.S., harm to the store’s reputation from Pirate Joe’s activities in Canada could have an effect on the U.S.-based business.
The complex set of cross-border factors in this case motivated the Court to find that Hallatt had violated the Lanham Act. In the first place, they found that the “use in commerce” requirement of the Lanham Act had been met. Normally, where there is extraterritorial application of the Lanham Act, the plaintiff has to show that goods sold outside of the U.S. have made their way back into U.S. markets in order to show use in commerce. This was not the case here. However, the court was prepared to find that there was nevertheless an impact on U.S. commerce from the sale of the goods in Canada. This flowed from the potential reputational harm from the sale of products of compromised quality and from selling the goods at inflated prices. The court noted that Canadians were regular customers at the Trader Joe’s stores in northern Washington State (40% of credit card transactions at the Bellingham store were by non-residents of the U.S.). These customers might be confused by the sale of Trader Joe’s products in Canada, and might form a negative opinion of the company if the goods sold in Canada were overpriced or of inferior quality. The Court also found other links to the United States that could be used to ground a decision to apply the Lanham Act extraterritorially. The defendant travelled to the U.S. to purchase the goods and/or hired people based in the U.S. to purchase them for him. It also found that his activities might have been assisted to some extent by his landed immigrant status in the U.S.
International comity is a relevant consideration in deciding on extraterritorial application of a country’s laws. The idea is to interfere as little as possible with the sovereignty of another state. In this case, the court noted that there was no ongoing litigation in Canada over trademark issues on the same facts. It also noted that both parties in this case had ties to the United States; the defendant through his landed immigrant status. The Court also found that “an essential part” of Hallatt’s commercial venture took place in the U.S. Perhaps most importantly, the Court found that it was in a position to order the remedies sought by Trader Joe’s. The defendant had assets in the United States so that an award of damages could be enforced in the U.S. against those assets. A court in the U.S. could also order an injunction to stop Hallatt’s activities in purchasing the goods in the U.S. for export to Canada.
The particular facts of this case were clearly a central factor in the court’s decision to apply the Lanham Act extraterritorially. In this sense, then, the case does not signal a shift that would see U.S. courts hearing a flood of trademark infringement suits relating to U.S.-registered trademarks that happen to be used in Canada. Without the substantial links to the U.S. – and the deliberate attempt to trade on the goodwill of the U.S.-based company, the court would likely not have extended U.S. law in this case. Nevertheless, it is a warning to Canadian entrepreneurs that the exploitation of well-known U.S. trademarks, even if not registered in Canada, could, in the right circumstances, expose them to liability on either side of the border.
Wednesday, 17 August 2016 06:28
Canada’s anomalous and downright dysfunctional official marks system is once again deserving of attention as the Rio Olympics unfold. The protection of Olympic marks in Canada reveals many of the deficiencies of this system.
Under the Trade-marks Act, “public authorities” in Canada can sidestep the whole process for application, review and registration of trademarks by simply asking the Registrar of Trade-marks to advertise whatever logo or word mark they have come up with for whatever undertaking they are engaged with. This includes the names and/or logos of government departments (eg: Heritage Canada & Design), the names and/or logos of municipalities (City of Windsor & Design) or even the names of publicly-funded institutions such as the National Gallery of Canada. At the other end of the spectrum are the myriad logos, slogans and words associated with government activities that are largely run as businesses, such as lotteries and casinos. Official marks are available to any ‘public authority’ and the meaning of this term has not always been clear. In the last 15 years or so the courts have tightened up the definition of a “public authority”, but nonetheless the register is crowded with official marks held by entities that were never entitled to hold them. These illegitimate official marks will remain protected unless someone spends their hard earned money to challenge them in court. This is just one of the ways in which the official marks regime is deeply flawed. The marks never expire; there is nothing in the Act that prevents them from being identical to or confusing with trademarks in which registered trademark owners may have invested a great deal of resources; and none of the limitations on the registrability of trademarks apply. There is also no mechanism (short of going to court) by which a mark can be removed from the Register by anyone other than the public authority once it is advertised. The Register is crowded with obsolete official marks. These marks stand in the way of new trademark registrations.
The Canadian Olympic Committee (COC) has long relied upon official marks to protect hundreds of marks relating to current and past Olympic Games and activities. Yet this protection was not enough for the IOC. In 2007, Canada enacted the Olympic and Paralympic Marks Act (OPMA) to fulfill a commitment made to the IOC in Vancouver’s bid for the 2010 Winter Olympics. Controversially, the OPMA added a new protection against ambush-marketing, and I have written about this aspect of the legislation elsewhere. But it also created a list of protected Olympics-related marks in Schedule 1. These marks are protected for as long as they remain on the Schedule. They include 39 basic Olympic and Paralympic related marks and logos. Further, the federal government can, by regulation, add new marks to the list whenever there is a need to do so. The OPMA also created a second schedule for the protection of Olympic marks related specifically to Games hosted by Canada. These marks would be protected only for the period of time set out in that schedule. In other words, they were limited to the period directly before and after the hosted event. There was no schedule for marks related to Olympic Games that were not hosted by Canada, such as the Rio Olympics.
In spite of this special legislation for Olympic-related marks, the COC still relies upon the official marks provisions of the Trade-marks Act to protect Olympics-related marks. Some of the marks found in Schedule 1 of the OPMA are also official marks under the Trade-marks Act (see, for example: FASTER HIGHER STRONGER, OLYMPIAD, OLYMPIC GAMES and OLYMPICS). This means that even if the federal government decided to remove these marks from this Schedule, they would still receive protection under the Trade-marks Act. The situation was much worse prior to 2014, when the COC (finally) withdrew from the Register of Trade-marks many of its official marks that also appeared in Schedules 1 and 2 of the OPMA, thus limiting the impact of the double-protection. Of course, this double protection endured for 7 years before being rectified, and it has not been completely corrected. Further, it was done purely voluntarily. Nothing in Canadian law prevents the COC from asking the Registrar of Trade-marks to advertise the same marks again as official marks. The legislative dysfunction is also evidenced by the surfeit of Olympic marks that are still protected as official marks including, for example, WINTER OLYMPIC GAMES, SUMMER OLYMPIC GAMES, OLYMPIC FLAME, OLYMPIC TORCH, and the list goes on. In addition, there is a pile of Olympic clutter on the Register, including marks and logos from past Olympiads such as the ones in Lake Placid, Calgary, Torino, Seoul – you get the picture.
For the Rio Games, the Canadian Olympic Committee has chosen to use the Trade-marks Act to protect two Rio-specific marks as official marks: Rio 2016, and Rio 2016 & Rings Design. Anyone who, misled by the title of the Olympics and Paralympics Marks Act, checked that statute to see what Olympic marks were protected and which ones were not, could be forgiven for missing those two – but forgiven they will not be if they use either of the marks.
There really are two issues here that need to be addressed. The first is that the federal government must do something about the hugely problematic category of official marks. That the official marks regime is dysfunctional is a well-known fact. The federal Liberals surely know this; when they were in opposition, MP Geoff Regan brought forward a private member’s bill to address the regime’s deficiencies.
The other problem is that the government has put in place two different regimes that can be used simultaneously to protect Olympic and Paralympic marks, and the (limited) checks and balances in one are not reflected in the other. The result is a mess of, well, Olympic proportions.
Friday, 05 August 2016 06:30
The BBC has reported that the U.S. Olympic Committee is taking a hard line against companies that use the twitter hashtag #Rio2016 in their tweets and who are not official sponsors of the Games. The USOC holds a registered trademark in the US for Rio2016. According to the BBC story, while the USOC is prepared to tolerate the non-commercial use of the hashtag in tweets by individuals, it draws the line at corporate use.
The move is hardly surprising – for decades now Olympic organizers have been trying to crack down on ambush marketing. Ambush marketing relies upon the creation of mental associations between a major event (in this case, the Olympics) and the products or services of non-sponsor companies. They can do so through trademark law, which protects the registered trademarks of the event, as well as through special laws prohibiting ambush marketing. These special laws have proven controversial because they ban the creation of “associations”, and such associations can be generated by using ordinary words that are descriptive of the event, its location or the year in which it is held.
Sponsors pay top dollars for sponsorship rights and insist upon a high degree of protection for this investment, and event organizers will insist that these revenues are necessary in order to make the games a success. Without the sponsorship money, the story goes, there would be no games. Thus everyone wins if sponsors’ rights are protected. The story is, however, a bit more complicated than that. There are many companies that invest, in one way or another, in amateur sporting associations and in athletes. A company that sponsored a promising young athlete for years, allowing her eventually to train and compete at the national level would find that when that athlete finally made it to the Olympics, they might run afoul of ambush marketing laws by publicly celebrating her achievement. “XYZ Corporation celebrates Jane Doe in her quest for Olympic Gold!” would, for example, most likely attract cease and desist letter.
The Twitter hashtag issue is both interesting and controversial. According to Twitter, hashtags are a device created on Twitter to allow for the indexing of key words or topics. In other words, hashtags facilitate conversations on a vast social network and allow people both to follow and to participate in those conversations. Thus, while Rio 2016 may be registered trademark of the USOC, #Rio2016 is an indexing term that allows people interested in the summer games to follow Twitter conversations on that subject. For the USOC to assert that non-sponsor companies cannot use the hashtag is to tell them that they cannot participate in those conversations. As such, their position likely goes too far. At least one U.S. court would seem to agree. In 2015 the U.S. federal district court in Eksouzian v. Albanese ruled that it was not trademark infringement to use a trademarked term in a hashtag “because hashtags are merely descriptive devices, not trademarks, unitary or otherwise, in and of themselves.”
Ironically, the push to crack down on so-called ambush-marketing may have its greatest impact on small businesses that do not have the resources to fight back when sent a cease-and-desist letter. As my co-authors and I noted in a 2011 article on ambush marketing, the real competitors of Olympic sponsors are generally large corporations with teams of lawyers that can help them design marketing campaigns that stay just on the right side of any anti-ambush marketing legislation.
Coverage of this issue can also be found in the article in Le Devoir by Boris Proulx “Ne sera pas Rio qui veut”.
Monday, 07 March 2016 09:08
The Fédération Étudiante Collégiale du Québec has succeeded in its opposition to a Quebec entrepreneur’s attempt to register its symbol of protest, the carré rouge (which means “red square”), as a trademark for use in association with T-shirts, posters, cups, wristbands, and other paraphernalia. While this decision offers some protection from the appropriation and commercialization of a protest symbol, it also reveals the limits of such protection.
The carré rouge – essentially a small square of red fabric attached to clothing by a gold safety pin – was adopted by the Fédération in January of 2011 as a symbol of a massive strike that was about to be launched to protest proposed tuition fee hikes in Quebec. Members of the Fédération – which included over 65,000 students – were encouraged to wear the symbol on their clothing and to participate in the series of organized rallies and protests across the province. The student demonstrations received a great deal of media attention and the carré rouge quickly became a public symbol associated with the student unrest.
Very shortly after the last of the major demonstrations in 2012, Raymond Drapeau sought to register as a trademark a design consisting of a red square with a gold pin. The Fédération opposed this registration. While they had clearly been the first to adopt and use the carré rouge as a symbol, they had not used it as a trademark – in other words, they had not used it to distinguish their goods or services from those of others. Absent a prior commercial use, they could not rely on grounds of opposition based upon their greater entitlement to the registration of the mark. This was confirmed by the Trade-marks Opposition Board (TMOB) in its December decision.
The Fédération was, however, successful with its argument that the carré rouge could not be distinctive of Drapeau’s goods because the public would associate the symbol with the Fédération and its protests, and not with Drapeau. The quintessential characteristic of a trademark is its capacity to distinguish its owner as the source of the goods or services in association with which it is used. This quality is referred to as distinctiveness. The TMOB found that the size of the student protests and the degree of media coverage was such that the symbol would be associated with the Fédération’s protest movement. It was therefore not capable of distinguishing Drapeau as a trade source. The application for trademark registration was therefore refused.
The Fédération’s victory is an important one, but it is not one that should allow activist or protest groups to feel complacent. It is important because the TMOB was prepared to recognize the link between a protest group and its symbol as being of a kind that can make the symbol difficult for others to appropriate for commercial purposes. However, the decision of the TMOB merely denies registration of the mark. It does not prevent Drapeau (or others) from using the symbol as an unregistered trademark. Use in this way might actually lead to acquired distinctiveness; which could, in turn, be a basis for eventual trademark registration. Indeed, the TMOB observed that “substantial evidence of use of the Mark by the Applicant might possibly have supported an argument that the Mark had become distinctive as of the relevant date.” (at para 40). It also noted that “a symbol can be a trade-mark if it can serve to identify the source of the goods and services associated with it.” (at para 43)
A protest movement that wishes to acquire the kind of goodwill in its mark or symbol that will give rise to its own trademark rights will need to use the mark in association with goods or services. This type of commercial use might well go against the movement’s ideology – and might, in any event, be too complicated within the context of a spontaneous movement; particularly one that gathers more momentum than initially anticipated at the outset. Copyright law offers a possible source of protection: an original design can be protected by copyright law – and it is possible to oppose the registration of a trademark that would infringe the copyright of another. But the carré rouge as used by the students is not a “work” in which copyright subsisted. In this case, the simplicity of the symbol, while contributing to its uptake and use, undermined its capacity to be “owned” by the Fédération and in turn controlled by it. Of course, the whole concept of private ownership of public symbols runs against the spirit of the protests, and the Fédération maintained throughout that the carré rouge was in the public domain and thus not capable of private ownership. They were successful on the facts as they stood, but the TMOB decision reminds us that even symbols in the so-called public domain may be appropriated in certain circumstances.
Tuesday, 05 January 2016 08:32
Citizen science is the name given to a kind of crowd-sourced public participatory scientific research in which professional researchers benefit from the distributed input of members of the public. Citizen science projects may include community-based research (such as testing air or water quality over a period of time), or may involve the public in identifying objects from satellite images or videos, observing and recording data, or even transcribing hand written notes or records from previous centuries. Some well-known citizen science projects include eBird, Eyewire, FoldIt, Notes from Nature, and Galaxy Zoo. Zooniverse offers a portal to a vast array of different citizen science projects. The range and quantity of citizen science experiences that are now available to interested members of the public are a testament both to the curiosity and engagement of volunteers as well as to the technologies that now enable this massive and distributed engagement.
Scientific research of all kinds – whether conventional or involving public participation – leads inevitably to the generation of intellectual property (IP). This may be in the form of patentable inventions, confidential information or copyright protected works. Intellectual property rights are relevant to the commercialization, exploitation, publication and sharing of research. They are important to the researchers, their employers, their funders, and to the research community. To a growing extent, they are of interest to the broader public – particularly where that public has been engaged in the research through citizen science.
What IP rights may arise in citizen science, how they do so, and in what circumstances, are all issues dealt with by myself and co-author Haewon Chung in a paper released in December 2015 by the Commons Lab of the Wilson Center for International Scholars in Washington, D.C. Titled Best Practices for Managing Intellectual Property Rights in Citizen Science, this paper is a guide for both citizen science researchers and participants. It covers topics such as the reasons why IP rights should be taken into account in citizen science, the types of rights that are relevant, how they might arise, and how they can be managed. We provide an explanation of licensing, giving specific examples and even parse license terms. The paper concludes with a discussion of best practices for researchers and a checklist for citizen science participants.
Our goal in preparing this report was to raise awareness of IP issues, and to help researchers think through IP issues in the design of their projects so that they can achieve their objectives without unpleasant surprises down the road. These unpleasant surprises might include realizing too late that the necessary rights to publish photographs or other materials contributed by participants have not been obtained; that commitments to project funders preclude the anticipated sharing of research results with participants; or that the name chosen for a highly successful project infringes the trademark rights of others. We also raise issues from participant perspectives: What is the difference between a transfer of IP rights in contributed photos or video and a non-exclusive license with respect to the same material? Should participants expect that research data and related publications will be made available under open licenses in exchange for their participation? When and how are participant contributions to be acknowledged in any research outputs of the project?
In addition to these issues, we consider the diverse IP interests that may be at play in citizen science projects, including those of researchers, their institutions, funders, participants, third party platform hosts, and the broader public. As citizen science grows in popularity, and as the scope, type and variety of projects also expands, so too will the IP issues. We hope that our research will contribute to a greater understanding of these issues and to the complex array of relationships in which they arise.
Note: This research paper was funded by the Commons Lab of the Wilson Center and builds upon our earlier shorter paper: Typology of Citizen Science Projects from an Intellectual Property Perspective: Invention and Authorship Between Researchers and Participants. Both papers are published under a Creative Commons Licence.
Published in Copyright Law
Canadian Trademark Law
Published in 2015 by Lexis Nexis
Electronic Commerce and Internet Law in Canada, 2nd Edition
Published in 2012 by CCH Canadian Ltd.
Intellectual Property for the 21st Century
Intellectual Property Law for the 21st Century: