Wednesday 22 February 2017
Tuesday 7 February 2017
Recent Trademark Cases of Interest - Part 2
Several additional trademark decisions of
interest from the past two years include cases concerning the treatment of
software downloaded from the Internet (goods not services), a very rare order
for jail time as a result of trademark infringement, and the use of a variation
of a registered trademark.
Specialty Software Inc. v. Bewatec Kommunikationstechnik GmbH 2016 FC 223
Specialty Software had registered the mark
“MEDINET” in association with computer software programs in relation to wares
in 1991, which was later assigned to Medinet
Health Systems Inc. in 2011. In 2013, Bewatec
Kommunikationstechnik initiated proceedings to expunge the mark. To maintain the registration, Specialty had
to show evidence of use of the mark between November 22, 2010 and November 22,
2013. Specialty failed to file any evidence, and the mark was expunged.
Specialty appealed, and presented evidence of
use. Specialty’s software was originally sold on disks, and was later made
available for download over the internet. Bewatec argued that this change meant
that Specialty was now providing a service instead of wares/goods. The Judge
disagreed, and held that Specialty never actually sold the software itself; it
sold an entitlement to obtain access to it by way of licenses. The disks merely
represented the means by which the transfer of the wares/goods occurred. The
real goods were, and continued to be, the licenses.
Trans-High Corporation v. Hightimes Smokeshop 2015 FC 1104
In November 2013, Hightimes Smokeshop was found
to have infringed Trans-High Corporation’s “HIGH TIMES” trademark. Despite
knowledge of the judgment, the Hightimes continued to use the mark on its shop
signage, sales receipts and printed materials. On June 18, 2015, Hightimes and
its Officer and Director, Ameen Muhammad each pleaded guilty to five counts of
contempt, which resulted in the issuance of a Contempt Order that imposed
fines, costs and possible imprisonment for Mr. Muhammad if payments were made in
accordance with the order.
No payments of the amounts owed to Trans-High
were made, nor did Hightimes pay into Court the fine that was owed under the
Contempt Order. Trans-High brought an ex parte motion to enforce the Contempt
Order.
The Judge found that Hightimes and Mr. Muhammad had
had numerous chances to offer an explanation for their failure to pay, or to
demonstrate an inability to pay, and had exhibited a brazen indifference
towards the rights of Trans-High and the authority of this Court. The motion
was granted, and Mr. Muhammad was ordered to be arrested and imprisoned for a
period of not less than 14 days and remain imprisoned until all fines, costs,
and other amounts owing under the Contempt Order and the prior judgment had
been paid in full.
Trademark
Tools Inc. v. Miller Thomson LLP 2016
FC 971
TradeMark Tools Inc. owned the LOGIX design trademark. Proceedings were initiated to expunge its
mark, and to maintain the registration TradeMark Tools had to submit evidence
of use for the period from December 19, 2011 to December 19, 2014. The
registration was expunged for failure to show use after several time extensions
had been granted.
TradeMark Tools appealed, and presented evidence
of use. The mark as registered included
a colour claim, and was described as a rectangular bar with a long vertical
axis with the text “LOGIX” depicted as shown on the right:
TradeMark Tools’ evidence of use included an
affidavit with attached invoices and product depictions, which the affiant
stated “use a slightly updated LOGIX trademark”. The Judge acknowledged the
jurisprudence that use of a variant of a registered trademark will be
considered use of the mark if the variant is not “substantially different” from
the registered mark and the “dominant features” of the trade-mark have been
preserved.
The updated Logix mark differed from the mark as
registered in a number of ways including: different background colors.
different colours for the letters, different fonts, the letters are lower case,
the distinctive punctuation for the “o” and “i” were missing, the 2 rectangular
boxes framing the word logix were absent and the word logix was displayed
vertically. The Judge found that the mark was therefore
substantially different, and upheld the expungement.
Tuesday 31 January 2017
Recent Trademark Cases of Interest - Part 1
Week 1
There were a number of interesting trademark
decisions during the past two years, which included the Federal Court granting
a rare interlocutory injunction, and providing more clarity regarding place of
origin under paragraph 12(1)(b) of the Trademarks Act, which led to the
issuance of a new practice notice by the Registrar.
Jamieson Laboratories Ltd v Reckitt Benckiser
LLC, 2015 FCA 104
Schiff Nutrition International owned the Canadian
mark, “MEGARED” which registered in March of 2011 in association with a line of
omega-3 products. The Canadian registration was based on Schiff’s U.S.
registration, and Schiff was yet to launch these goods in Canada. In 2012
Reckitt Benckiser wanted to enter the Canadian market and was in acquisition
talks with Schiff and Jamieson, and decided to acquire Schiff. In February
2013, Jamieson registered the mark “Omega Red” for “vitamins, minerals,
nutritional supplements and dietary supplements” and then launched the new
brand in June in Canadian stores. This launch prompted Reckitt to send two warning
letters, even though they had yet to launch their “MEGARED” brand in Canada.
In October 2014, Reckitt commenced an action to
enforce its trademark rights against Jamieson, which was followed soon after by
a motion for an interlocutory injunction. An interlocutory injunction is a
court order that forces or compels the other party to stop a certain act until
the issue at trial is decided. In a rare decision, the Federal Court granted
the injunction, which was upheld on appeal. A party seeking an interlocutory
injunction is required to satisfy the three part test set out in RJR -- MacDonald Inc. v. Canada (Attorney
General), [1994] 1 SCR 311: 1) a serious issue to be tried, 2) the party
seeking the injunction will suffer irreparable harm if the injunction is not
granted; and 3) the balance of convenience favours the party seeking the
injunction.
The Federal Court of Appeal held irreparable harm
would occur if the interlocutory injunction was not granted because Reckitt
would never have opportunity to the market its MEGARED line of goods in the
absence of Jamieson’s infringing behaviour. Loss of distinctiveness and
confusion with Reckitt’s MEGARED mark were also cited as additional reasons.
MC Imports Inc. v. AFOD Ltd., 2016
FCA 60.
MC
Imports Inc imports and sells food products under the trademark Lingayen.
Lingayen is also a municipality in the Philippines known for shrimp paste
products characterised by their aroma and flavour. MC Imports commenced an action
against AFOD alleging infringement its trademark. AFOD imports and sells shrimp
paste products and other fish paste products. AFOD’s imported products included
49 cases of bagoong alamang, a type of fish sauce, and 49 cases of bagoong
guisado. The labels from these products were marked with the AFOD’s trademark
Napakasarap, which also included the words “Lingayen Style” in smaller script,
immediately below the trade-mark.
At
trial, MC Import’s mark was held to be invalid.
The Judge found that since the goods did originate from Lingayen, the mark
was clearly descriptive of the product’s place of origin and the perspective of
the ordinary consumer was not relevant.
The
decision was upheld on appeal. The Federal Court of Appeal held if a trademark
is a geographic name that refers to the actual place of origin of the goods or
services with which the trade-mark is associated, it is clearly descriptive of
place of origin within the meaning of paragraph 12(1)(b) of the Act. The Court
noted that it should remain open to all businesses to describe the origin of
what they are selling, even if the ordinary consumer may not be previously
familiar with that place.
Friday 25 November 2016
New Securities Law Requirements
“WARNING! This investment is risky”: New securities law
requirements coming this May/15 for Ontario businesses will put your Love
(Money) to the test!
In
many instances, the first source of funds for new ventures by Ontario
entrepreneurs is so-called “love money” from family members, friends and
business contacts. But there is no doubt the bonds of love and friendship
will be tested after May 5 2015 with the recently announced introduction in
Ontario of a family, friends and business associates prospectus exemption
(“FFBA Exemption”) to replace the current founder, control person and family
exemption, along with additional changes adopted by the Canadian Securities
Administrators to the accredited investor exemption (“AI
Exemption”). So don’t be caught off guard:
Ontario entrepreneurs embarking on capital-raising activities are advised to
seek advice well before the end of April on the changes described briefly below
to the exempt market landscape.
How
strong is the love or friendship of your start-up investors?
·
One
highly visible change is the requirement to provide investors with a risk
acknowledgement form that begins with the following words: “WARNING! This investment
is risky. Don’t invest unless you can afford to lose all the money you pay for
this investment.”
·
New
Form 45-106F12 to be completed by all FFBA Exemption investors requires the
investor to describe the relationship with the director, executive officer,
control person or founder of an issuer (“principal”) or spouse of a principal,
and must be signed by the investor, the principal and the issuer.
·
New
Form 45-106F9 to be completed by individual AI Exemption investors requires an
individual investor to confirm his or her accredited investor status using
certain “bright-line” income or asset tests, and for the issuer to confirm this
information.
·
In
both cases, the issuer is required to keep the relevant form for eight years
after the financing.
Will Ontario entrepreneurs need to keep detailed notes on their
close personal friends and close business associates?
So
how “close” are you and your personal friend or business associate?
Securities regulators have tried to give guidance as to who qualifies as a
“close personal friend” and “close business associate” for purposes of the FFBA
Exemption and the private issuer exemption described in National Instrument
45-106 (“PI Exemption”).
Securities
regulators suggest that issuers should gather details about the length of time
the individual investor has known the principal, and the nature of any personal
relationships between the individual investor and the principal, including, the
frequency of contact between them and the level of trust and reliance in the other
circumstances. With respect to close business associates, information is
also required regarding the nature of any specific business relationships
between the individual and the principal, including, for each relationship,
when it began, the frequency of contact between them and when it terminated if
it is not ongoing, and the nature and number of any business dealings between
the individual investor and principal, the length of the period during which
they occurred, and date of the most recent business dealing.
Who is considered a “close personal friend” or “close business
associate”?
A
close personal friend of a principal is an individual who knows the principal
well enough and has known them for a sufficient period of time to be in a
position to assess their capabilities and trustworthiness and to obtain
information from them with respect to the investment. A close
personal friend can include a family member who is not specifically listed in
the exemptions, such as the aunt, uncle or cousin of a principal of an
issuer. However, securities regulators have noted that an individual is
not considered a close personal friend if the individual is solely a relative,
a member of the same club, organization, association or religious group; a
co-worker, colleague or associate at the same workplace; a client, customer,
former client or former customer; a mere acquaintance; or connected through
some form of social media, such as Facebook, Twitter or LinkedIn. An individual
is also not considered a close personal friend if the relationship is primarily
founded on participation in an Internet forum. Similar criteria apply for
an individual to qualify (or not) as a “close business associate”.
Securities
regulators have indicated as well that they are interested in the number of
“close personal friends” and “close business associates” to whom securities
have been distributed in reliance on the FFBA exemption or PI exemption.
These
are merely a glimpse of the changes which
are scheduled to take effect on May 5, 2015. Securities regulators have
clearly stated that the responsibility is on the SELLER of securities to fully
understand the terms and conditions of the exemption being relied on as they
must be able to explain to an investor the meaning of the terms and conditions
of the particular exemption, including the difference between alternative
qualification criteria for the same exemption. The person relying on a
prospectus exemption is responsible for determining whether the terms and
conditions of the prospectus exemption are met, and should retain all necessary
documents to demonstrate that they properly relied on the exemption. Standard
investor representations in a subscription agreement or an investor’s initial
beside a category on an accredited investor form are not sufficient, unless
additional reasonable steps are also taken to verify the representations made
by the investor, including gathering background information about the investor.
Bottom line: There are now more rules around raising
love-money from family, friends and business associates and accredited
investors. Ontario entrepreneurs are advised to proceed with caution and
to obtain advice on the changes described above to understand the impact on
their capital raising activities and to avoid costly securities law mistakes.
American Broadcasting Companies v. Aereo
The U.S. Supreme
Court’s decision in American Broadcasting Companies v. Aereo, 573 U.S. ___ (2014)
is an interesting case that had the potential to change the way television programs
were broadcasted in America. The case
had a small start-up, Aereo, pitted against broadcasters including Fox and ABC.
Aereo
was providing a service through which customers could pay a small monthly
subscription to “rent” one of Aereo’s several antennae. The service essentially
allowed a subscriber to remotely record and watch via the cloud, programs being
broadcasted over-the-air with only a slight delay. Though this business model may have appealed
to consumers with its small subscription fee and cordless nature, the
broadcasters took the position that Aereo’s business model could threaten the “retransmission
fees” that cable companies pay the broadcasters for the use of their
over-the-air transmissions. These retransmission fees account for billions of
dollars of profit for the broadcasters.
“Retransmission fees”
do exist in Canada but cannot be collected for the retransmission of specialty
and pay television services (e.g. Food Network, BBC Canada, etc.) as they are
copyright-cleared. However, these fees are
collected for channels and programs that do not fall under the specialty and
pay-television category by retransmission collectives like the Canadian
Retransmission Collective (CRC).
Returning to the case at hand, the
broadcasters argued that Aereo had essentially “performed” their copyrighted
works publicly. Aereo attempted to argue
that because it was not one central antenna broadcasting to all its customers,
but several antennae transmitting to individual customers, their business model
would not constitute a “public performance” of the copyrighted works. Ultimately, the Court would decide against
Aereo, and it would be required to obtain permission from the copyright owners
of the programs it broadcasted. The
decision resulted in Aereo filing for Chapter 11 bankruptcy, and its trademarks
and other intellectual property were sold to TiVo. The decision was a 6-3
decision, and the dissenting minority noting that the broadcasters had made
similar predictions regarding the potential impact of the VCR.
Would Aereo have been decided differently
in Canada? Under the Copyright Act
(Canada), the case would likely turn on the Court’s interpretation of Section
29.23(1) which states that it is not an infringement of copyright to fix signals
and record programs for later listening or viewing, subject to the following
six conditions[1]:
(a) the individual receives the program legally;
(b) the individual, in order to record the program, did not circumvent,
a technological protection measure, (defined under Section 41 of the Act), or
cause one to be circumvented;
(c) the individual makes no more than one recording of the program;
(d) the individual keeps the recording no longer than is reasonably
necessary in order to listen to or view the program at a more convenient time;
(e) the individual does not give the recording away; and
(f) the recording is used only for the individual’s private purposes.
The first two conditions under 29.23(1) are
not problematic. Over-the-air transmissions can be legally received by anyone
with an antenna within the reception range, and the signals are not encrypted. It’s
definitely problematic whether the remaining conditions were satisfied by
Aereo’s service. However, if each of Aereo’s subscribers would have had the
exclusive use of a single antenna (i.e. the exclusive use of its signal), and
the attached equipment for recording the signal and later viewing, Aereo might
have had a different outcome in Canada.
[1] note, there is also an additional
condition under 29.23(2) which prohibits recordings generated from on-demand services.
Wednesday 16 November 2016
Friday 28 October 2016
Registering El Chapo™
It was widely reported last month that the Mexican Institute
of Industrial Property (“IMPI”) had recently denied an application by wanted
drug kingpin Joaquin “Chapo” Guzman to trademark his name. According to reports,
the IMPI had also denied two applications for the marks “Joaquin El Chapo
Guzman” and “El Chapo Guzman” in 2011.
As of February 10, 2016, there are no Canadian trademark
applications pending for “El Chapo”, while the United States Trademark Database
does have two pending applications and one registration in association with
graphic T-shirts. A key distinction is that the owners of these marks do not
appear to be related to Mr. Guzman.
Under Canadian trademark law, there is a good possibility
that the proposed marks “Joaquin El Chapo Guzman” and “El Chapo Guzman” would
also have been denied on the basis that the marks are “primarily merely the
name or the surname of an individual who is living or has died within the
preceding thirty years” regardless of whether the applicant is related to Mr.
Guzman. It is unlikely however that a similar objection to the proposed mark “El
Chapo” would be made based on the Canadian Trademark Office’s current
practices.
Although Canada’s Trademarks
Act does include a provision at Paragraph 9.1(j) prohibiting the
registration of any “scandalous, obscene or immoral word or device”, it is
unlikely this prohibition would be raised during examination based on the prior
jurisprudence. The threshold on whether a mark is scandalous, obscene or
immoral appears to be fairly high, based on the Registrar’s decision in 2014 to
issue a Notice of Approval for the design mark F
CANCER & Design.[1]
It remains to be seen whether “El Chapo” can be registered
as a trademark in Canada, although the Canadian registration for BILLY THE KID
is consistent with the U.S. position that such marks are registerable.
[1] Note:
this application was successfully opposed by an individual who was able to
asset superior common law rights to the mark
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