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Pouring Warm Beer on your Descriptive Trade-mark

May 23, 2013

A series of Canadian beer cases shows the challenge of determining whether a trade-mark is too descriptive to be registered.

Trade-marks cannot be registered in Canada, and under similar principles in other countries, if they are clearly descriptive or deceptively misdescriptive of features of the goods or services, including their character or quality or the conditions of their production or place or origin.

The line between what is descriptive and what is not can take on a beer-like cloudiness, and competing brewers are often willing to wage legal battles back and forth through this haze. I will mention five Canadian cases which illustrate the challenges.

Back in the 1970′s, an applicant named Provenzano sought to register KOLD ONE in respect of beer, but the Trade-marks Registrar refused to register on the basis of descriptiveness. This was overturned on appeal, and the Federal Court of Appeal approved of the trial judge’s finding that:

“Although a majority of people might prefer to drink their beer cold, others may prefer it at room temperature. The word “cold” in such a case can refer only to the state at which the product, namely, the beer, may or may not be sold or consumed and not to any intrinsic quality or characteristic of the product. It, therefore, is not descriptive of the beer itself.”

We then jump ahead to the next century, and four battles between Molson as applicant, with opposition from Anheuser-Busch.

In 2010 the Trade-marks Opposition Board considered Molson’s application for the mark SUPER COLD, for beer. Evidence was presented to show that at the time the public was aware of a new type of beer which required low temperatures as part of the brewing process. As a result, Anheuser-Busch successfully opposed because the mark was descriptive of the conditions of production of the beer, and the earlier Provenzano case was distinguished.

The SUPER COLD case was followed by three Opposition Board decisions of 2012, and in the first, Molson was applying for the trade-mark SUB ZERO. The Board found that the evidence did not show that the public was familiar with the term SUB ZERO in connection with a type of beer. While there was some evidence that SUB ZERO described a dispensing system to serve beer below zero temperature, the Board found it did not describe a condition of production nor an intrinsic quality or characteristic of the beer itself.

Just a month later the Opposition Board issued its next decision involving Molson’s application for COLD CERTIFIED, which was a mark applied to the beer cans and containers to indicate when the beer reached a certain cold temperature. The Board found that there was no debate that the evidence established that low temperatures are part of the brewing process, and that the public had become familiar with the phrases “cold filtering” and “ice beer”. As a result, the Board concluded:

“A member of the public who saw or heard the words “cold certified” in association with beer…would probably have regarded these words as assuring, that is certifying, that the beer was designed and manufactured to be sold at a cold temperature. It follows that the proposed mark…was clearly descriptive…of the conditions of the production of beer.”

A couple of months later we get our latest Board decision, which had Molson applying for COLD CASE in respect of beer. The Board reviewed all of the above decisions in respect of KOLD ONE, SUB ZERO, SUPER COLD and COLD CERTIFIED, and ruled COLD CASE was not descriptive, stating as follows:

“I fail to see how COLD CASE could be viewed as clearly descriptive of the conditions of production of beer. I must look at the Mark as a whole. Even though the evidence shows that low temperature is part of the brewing process, the word “cold” in the mark is used to qualify the noun “case”. .… I agree with the Applicant that the Mark could be considered as clearly descriptive of the character and quality of a container. However the Wares are not containers. As for the argument about the possibility that the average Canadian might think that the beer contained in the container bearing the Mark is cold, this does not mean that the Mark is clearly descriptive of beer….”cold” is not an intrinsic characteristic of beer.”

To summarize these five decisions:

KOLD ONE was not descriptive of beer; SUPER COLD was descriptive; SUB ZERO was not; COLD CERTIFIED was descriptive, but COLD CASE was not.

These cases show the inherent risks and (unpredictable) challenges associated with trade-marks which are either descriptive, or nearly descriptive, and the marks’ owners must be prepared to face vigorous challenges to their validity.

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By Rob Aske

A series of Canadian beer cases shows the challenge of determining whether a trade-mark is too descriptive to be registered.

When a Cease & Desist Letter Backfires

May 12, 2013

By Marc Belliveau

Often when a work of art or a logo is appropriated by a rogue for an ulterior purpose, the owner of the intellectual property wants to exercise their legal rights as quickly as possible, almost reflexively, to curtail the use and potential harm caused by such use, typically in the form of a cease and desist legal letter warning the unauthorized user that serious consequences will happen unless they stop forthwith. But such a letter can draw more attention to the rogue and cause even more harm to the owner.

Such a case recently occurred in New York when an environmental artist used the iconic and very popular “Smokey The Bear” image to protest hydraulic gas fracturing, commonly known as “fracking”. In the appropriated image, Smokey’s hat states “NO FRACKING” and the slogan underneath the bear’s face manipulates the well-known tagline “ONLY YOU can prevent FAUCET FIRES”. The artist’s parody went “viral” on the web (or spread like wildfire to stay with the “meme”) and international sales of t-shirts, tote bags and patches displaying the parody grew quickly. In response, the U.S. government agency with oversight on Smokey The Bear, through its legal counsel, sent the artist a cease and desist letter threatening six months in jail and $150,000 in penalties under the 1952 Smokey Bear Act, among other possible intellectual property claims. The deadline to halt use and marketing of the offending image and slogan came and went, yet sales continued to climb. Then the press got hold of the dispute and turned it into a constitutional free speech and copyright fair use story.

In the 1990s, a similar situation took place when Smokey The Bear’s image was used to protest the U.S. government’s forestry practice of auctioning off land to timber companies for commercial exploitation; the then slogan was “Say it ain’t so, Smokey”. That dispute ultimately went to court and it was found that the satirical use of the famous image to criticize forest management was unlikely to cause confusion or dilute the value of the mark. So there was legal precedent to conclude that a cease and decist letter and a traditional litigation approach would likely not be effective to stop the satire in the recent fracking situation.

In Canada, our Copyright Act was amended in 2012 to confirm and enshrine into Canadian law two new categories of “fair dealing” user rights, namely parody and satire. The statutory amendment had the welcome effect of reversing an old (and arguably flawed) Federal Court decision, Michelin v. CAW, which had rejected both fair dealing and freedom of expression defences in relation to claims of copyright and trade-mark infringement. In that case, the defendant union, who was trying to organize local workers of Michelin in Nova Scotia, handed out pamphlets to employees using the Michelin corporate logo in a demeaning manner, somewhat like the Smokey The Bear incident in the U.S. involving the anti-fracking protest. Such satirical and parody expression is now clearly back in the public domain in Canada and, depending on the facts of each case, no intellectual property grounding exists, whether under the Copyright Act or the Trade-marks Act, to give any real teeth to a cease and desist letter. It may be better to consider alternatives to litigation to mitigate the potential harm caused by the parody or satire.

While it’s true that cease and decist letters can have a strong deterrent effect on a rogue, if it is only a bluff without a solid legal foundation, the sender loses much credibility and the recipient capitalizes even more on the “culture jamming” purpose of the satire or parody by waving around the ineffective cease and desist letter. An analogous circumstance exists in defamation disputes, where often suing the defamer merely brings more unwanted attention to the victim. Although it’s instinctive to want to protect the scope of one’s intellectual property rights through the courts, care and contextual pragmatism is definitely warranted in these satire and parody disputes in order to avoid falling into a painful trap. Please bear with me on the grizzly metaphors, they’re as tempting as honey!

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By Marc Belliveau

Metadata Analysis – Data About Data

April 24, 2013

By Nancy Rubin

A Nova Scotia court judge recently required a plaintiff to relinquish his hard drive for a “metadata” analysis which would show the active use of his computer (Laushway v. Messervey, 2013 NSSC 47). Metadata (or metacontent) refers to information about one or more aspects of the data, such as:

Time and date of creation
Creator or author
Location on a network where the data was created, updated and accessed
Descriptive information about the data, etc.

In this case, the plaintiff, Laushway was injured in a car accident.Before the accident, he earned income through a multi-level marketing system on the internet. He claimed that after the accident, the amount of time he could devote to his online operations was greatly reduced since he couldn’t sit at his computer for very long. The defendant asked that Laushway’s hard drive be turned over so it could obtain information about his hours of usage through metadata analysis.

Laushway protested that this would be an invasion of his privacy since the data compiled could reveal his private emails, client information, correspondence or a list of websites visited. He also pointed out that others used his computer on occasion so the result would be unreliable.

The Judge quickly found that the information requested was relevant as the amount of time Laushway could use his computer was directly related to his claims for lost income and general damages. In balancing the privacy concerns, the Judge concluded that what was sought was usage pattern as opposed to specific documents or website analysis. The data analysis could also filter out other users. Ultimately, the order was granted.

Not every case will justify the expense of metadata analysis but Nova Scotia Civil Procedure Rules do authorize a Judge to order disclosure of electronic information, which includes metadata. In the right case, a computer hard-drive and its data about data can provide a powerful litigation tool.

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By Nancy Rubin

Time and date of creation
Creator or author
Location on a network where the data was created, updated and accessed
Descriptive information about the data, etc.

In this case, the plaintiff, Laushway was injured in a car accident.

Picking a Privacy Regime in the MUSH Sector

April 15, 2013

By Christopher Marr

Recently I had the opportunity to prepare an agreement where a municipal body was being contracted to provide its services and in so doing would have to collect, use, and disclose personal information. This resulted in the agreement setting out obligations with respect to privacy law. As the drafter of this agreement, I was faced with one major issue: does the service provider have to comply with provincial privacy law, or with the federal Personal Information Protection and Electronic Document Act (“PIPEDA”)?

Municipalities, their commissions, boards, and bodies are what most people would call government. In Canada, provincial and municipal governments and their different bodies are subject to the privacy regimes set out in provincial legislation, rather than PIPEDA. An organization’s commercial activities that involve collection, use or disclosure of personal information are subject to PIPEDA. But the distinction between applying provincial privacy law and PIPEDA can become mushy in what is called the “MUSH” section.

“MUSH” means, municipalities, universities, schools, and hospitals, which are all institutions that fall under provincial privacy law, being different arms of provincial government. But for my draft agreement, one of the MUSH institutions was buying a service, and the other was providing a service for a price, i.e. commercial activity. So, in this case, and a host of others like it, one has to ask if the MUSH institution providing the service needs to comply with provincial privacy law, or PIPEDA?

According to the Office of the Privacy Commissioner of Canada, this is a frequently asked question, and they have come out with the following answer. Since the MUSH sector relies primarily on taxes and grants for funding, as a general rule, PIPEDA does not apply to the activities that are central to the mandate and responsibilities of MUSH sector institutions.

Providing a service for a fee is not necessarily a commercial activity triggering PIPEDA, if the service is part of the institution’s core activities. For example, a hospital could likely charge a fee for a private room, or a municipality could likely charge a fee for arena time, without being subject to PIPEDA. On the other hand, if a MUSH sector institution engages in a non-core commercial activity, it could become subject to PIPEDA, unless substantially similar provincial legislation exists. For example, a university or hospital running a parking garage, or a coffee shop in city hall would likely be considered non-core commercial activities that are subject to PIPEDA.

In the case of my agreement, it was decided that provincial privacy law applied, as the service was at the core of the responsibilities and mandate of the institution. Choosing the correct privacy regime is of course a decision which must be made depending on the specific situation when dealing with the MUSH sector, especially when MUSH institutions are charging fees for services and the collection, use, or disclosure of personal information is involved.

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By Christopher Marr

A Trade-mark tale about a Red Horse and a Black Horse

March 8, 2013

By Rob Aske

A February 2013 Federal Court of Canada decision in San Miguel Brewing International v. Molson Canada tells a galloping tale of a trade-mark battle between RED HORSE and BLACK HORSE.

The applicant, San Miguel Brewing, applied to register the trade-mark RED HORSE in association with certain beers.

They were opposed by Molsons who owned the trade-mark BLACK HORSE.

The Court began its decision with the following quip:

“The potential for the use of phrases such as “this is a horse of a different colour” or equine and beer jokes jump out at one. The Court will refrain from such frivolities for this is a case about beer and a case of beer is a serious matter.”

If you have been to Newfoundland and like beer, you have likely consumed a Black Horse (beer), and indeed the BLACK HORSE trade-mark has been registered in Newfoundland since 1922. The evidence showed that Molson sold in excess of 150,000 hectolitres and spent $13,000,000 on advertising the brand between 2000 and 2008.

San Miguel was unsuccessful before the Trade-marks Opposition Board, which found that there was a likelihood of confusion between the applicant’s RED HORSE mark and Molson’s BLACK HORSE.

San Miguel filed further evidence on appeal to the Federal Court about other trade-marks registered or in the marketplace such as LE CHEVAL BLANC, FLYING HORSE, GOLDEN HORSESHOE PREMIUM LAGER, IRON HORSE and DARK HORSE. The Court indicated that this new evidence might have changed the outcome if it had been presented to the Opposition Board.

The Court noted that the confusion test requires one to look at the marks as a whole, and not to tease out each portion of the mark. The Court said that confusion should be approached on the basis of first impression, from the perspective of the average person who goes to market, and common sense is required, which the court described in this case as “common sense in relation to a beer consumer”.

The Court also repeated recent Supreme Court of Canada summaries of the confusion test, including the notion of the consumer as the “ordinary, harried purchaser” – neither the careful, diligent purchaser nor the “moron in a hurry”.

The Court stated:

“Applied to the beer consumer (the relevant “ordinary person” at the bar or beer/liquor store), I am of the view that the ordinary beer drinker is sensitive to the names of beers and to what they know and like. The test is premised on the ordinary beer drinking consumer – not on what might be a legal fiction of the non-beer drinking life partner who is asked to pick up beer.”

The Court quoted from a 1982 case involving beer trade-marks where that Court stated:

“Even though the colours and designs of the two labels are somewhat similar a purchaser would have to be nearly blind, (or perhaps having consumed so much beer as to be in the same condition), not to be able to see at a glance from the label on the bottle or container, that he was getting either Plaintiff’s Standard Lager or Defendant’s Budweiser as the case might be. ….

The second major contributor to sales is of course the product itself and the flavour thereof, as regular beer drinkers will have considerable loyalty to their favourite brand.”

The Court in our Horse case stated further:

“… the question is whether an ordinary beer drinking consumer, on hearing the words RED HORSE (as in “Do you have (serve) RED HORSE?”), is likely to think that RED HORSE must be a beer made by the same company that makes BLACK HORSE.”

The Court concluded that confusion was unlikely, and stated:

“The fact that DARK HORSE [one of the competing brands highlighted in evidence] is sold without evidence of confusion with BLACK HORSE undermines any notion that Molson has secured such necessary recognition in relation to the word HORSE in relation to beer.

This is compounded by the existence of CHEVAL BLANC, which, while dismissed as of limited importance because it might be sold in restaurants, and is thus considered a different ware, shows that there is no automatic association of a horse with the Molson product. ….

The Board did not consider that what it was doing was, in effect, granting to Molson a trade-mark monopoly over the word HORSE of any colour (green, golden, brown, blue, etc.) in relation to beer. The breadth of that monopoly is unreasonable.”

The Court thus allowed the appeal and the RED HORSE trade-mark application will proceed.

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By Rob Aske

A February 2013 Federal Court of Canada decision in San Miguel Brewing International v. Molson Canada tells a galloping tale of a trade-mark battle between RED HORSE and BLACK HORSE.

The applicant, San Miguel Brewing, applied to register the trade-mark RED HORSE in association with certain beers.

They were opposed by Molsons who owned the trade-mark BLACK HORSE.

The Court began its decision with the following quip:

Bill C-56 Brings Changes in Canadian Trade-mark Law

March 4, 2013

by Adam Bata, Articled Clerk

Last Friday, Bill C-56 or the Combating Counterfeit Products Act was introduced for first reading by the Federal Government. While this bill is primarily focused on amending the Copyright Act and the Trade-marks Act to add new civil and criminal remedies and border measures in order to “strengthen the enforcement of copyright and trade-mark rights and to curtail commercial activity involving infringing copies and counterfeit trade-marked goods,” it will also amend the Trade-marks Act in other notable ways.

First, Bill C-56 expands the scope of what can be registered as a trade-mark. The primary definition of trade-mark is currently “a mark that is used by a person for the purpose of distinguishing or so as to distinguish wares or services manufactured, sold, leased, hired or performed by him from those manufactured, sold, leased, hired or performed by others.” Bill C-56 proposes to change the definition of trade-mark to include “a sign or combination of signs that is used by a person for the purpose of distinguishing or so as to distinguish their goods or services from those of others.” The definition of sign will be added to the Trade-marks Act and a sign will include “a word, a personal name, a design, a letter, a numeral, a colour, a figurative element, a three-dimensional shape, a hologram, a moving image, a mode of packaging goods, a sound, a scent, a taste, a texture and the positioning of a sign.” This open-ended definition will support a number of new trade-mark registrations.

However, the bill will also update the Trade-marks Act to expressly prevent the registration of trade-marks whose features are dictated primarily by a utilitarian function and will clearly state that the registration of a trade-mark does not prevent a person from using a utilitarian feature embodied in the trade-mark. These changes are in line with jurisprudence on this issue (for example, see the Supreme Court of Canada’s comments in Kirkbi AG v. Ritvik Holdings Inc., 2005 SCC 65).

Second, Bill C-56 will “streamline and modernize the trade-mark application and opposition process.” It will establish the filing date of a trade-mark application as the day on which the Registrar of Trade-marks has received an explicit or implicit indication that the registration is sought, information allowing the identity of the applicant to be established and the Registrar to contact the applicant, a description of the trade-mark, a list of the goods or services for which registration is sought, and any prescribed fees. If the application does not contain all the required information, the applicant has a fixed period of two months from the date of notice to submit the outstanding items. If these items are not received in this timeframe, the application is deemed never to have been filed and the applicant will lose their application fees. The bill will also give the Registrar the power to correct obvious errors in the register within six months after an entry in the register is made.

The Trade-marks Act will be amended to allow a trade-mark application to request the Registrar to strike out all or part of a statement of opposition if it doesn’t fall within the established grounds for opposition or if it fails to set out a ground of opposition in sufficient detail to allow the applicant to reply to it. When an applicant files a counter statement to a statement of opposition, it will only need to state that the applicant intends to respond to the opposition. The applicant can then, as under the current Trade-mark Act, respond to the opposition with evidence in due course.

Finally, the Federal Court will expressly be given the power to expunge the registration of a trade-mark if the court determines that the registration is likely to unreasonably limit the development of any art or industry. Any ‘interested person’ will be able to apply to the court to have a trade-mark registration expunged for this reason.

As the bill is still in its early stages, it is likely that many of the initial provisions will change before they eventually receive royal assent and come into force. Keep checking The Medium for updated information on Bill C-56′s progress.

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by Adam Bata, Articled Clerk

The Public Domain – A Copyright Primer

March 3, 2013

By Marc Belliveau

“If I have seen further it is by standing on the shoulders of giants.” – Sir Isaac Newton

Before the first copyright law was ever created, authors had no rights in or to their written works. The common law provided no judicial remedy for the infringement of an expressed original idea. It was a copying free-for-all as books, songs, paintings and plays were part of the “commons”, available for anyone to copy or reproduce without permission.

That is what the public domain essentially is. It is the collection of intellectual works that can be copied, used and re-used without restriction or payment. With the advent of copyright legislation, public domain primarily came to mean that the prescribed term of copyright protections had expired for a work and that the heirs or successors of the author, composer, artist or playwright could no longer refuse to give permissions to copy or sue for infringements of the work by third parties.

Public Domain in Canada

Now, public domain varies from country to country depending on the statutory term of copyright protection, typically described as the remaining life of the author plus a certain number of years after the death of the author. In Canada, the term of protection has generally been life plus 50 years since 1924 (subject to a few exceptions), such that every January 1^st, works of authors who died 50 (calendar) years prior lose their exclusive monopoly rights.

The copyright term rule is also known as “50 years pma”, where “pma” means post mortem auctoris. Interestingly, prior to the 1994 passage of the NAFTA Implementation Act, the 50 years pma in Canada was calculated from the actual date of death of the author, whereas since that time it is calculated from the end of the calendar year in which the author’s death occurs.

Thus for January 1, 2013 in Canada, the magic number is 1962: works of creators who died during that year are now in the public domain. In the US and many other jurisdictions, the statutory term of copyright protection was extended to life plus 70 (i.e. 70 years pma) during the 1990s and published works will not enter the public domain until at least 2019 in those countries. For example, Elvis Presley died in 1977, so his songs and performances should only enter the public domain in 2048 unless the US further extends its term of copyright protection.

Impact on Culture

Public domain is generally understood to be synonymous with open and shared public knowledge and more generally an informed society. When copyright ends, works enter our collective culture, prices fall, new editions come out, fresh versions of songs are performed, new films are made and people build upon what came before. Human innovation and popular culture flourish when ideas are free for all to use. In fact, several countries celebrate Public Domain Day every January 1^st. The long (and increasingly longer) terms of monopoly protection are viewed as encroachments on the creative commons of ideas and intellectual advancement. After all, copyright protection was originally set to be 14 years only (with one 14 year renewal), similar to current statutory trade-mark monopoly protection of 15 years (albeit with unlimited renewals).

Other Categories of Public Domain

In addition to works that have entered the public domain because the copyright term of protection has expired, there are two other categories worthy of note: (a) works that are not copyrightable (e.g. ideas, facts, numbers, titles, names, slogans, processes, systems, etc.) and (b) works that have been dedicated or assigned to the public domain by their creators (e.g. academic research papers, open source software, gaming engines and platforms, etc.).

Exploiting the Public Domain

How can a business take advantage of public domain works for profit? One way to address that question is to consider the particular exclusive rights that the copyright owner held prior to their deemed expiry. In Canada, under section 3 of the Copyright Act, the owner has the “sole right to produce or reproduce a work or any substantial part thereof in any material form whatever, to perform the work or any substantial part thereof in public or, if the work is unpublished, to publish the work or any substantial part thereof”. As such, a business could 1. Produce, 2. Reproduce, 3. Perform and/or 4. Publish public domain works for economic gain, without requesting any permission or paying any compensation or royalty to the former owner.

The Copyright Act goes on to provide eleven illustrative examples of those four exclusive monopoly rights, namely the rights (my underlining of the “rights’ verbs):

1. to produce, reproduce, perform or publish any translation of the work;

2. in the case of a dramatic work, to convert it into a novel or other non-dramatic work;

3. in the case of a novel or other non-dramatic work, or of an artistic work, to convert it into a dramatic work, by way of performance in public or otherwise;

4. in the case of a literary, dramatic or musical work, to make any sound recording, cinematograph film or other contrivance by means of which the work may be mechanically reproduced or performed;

5. in the case of any literary, dramatic, musical or artistic work, to reproduce, adapt and publicly present the work as a cinematographic work;

6. in the case of any literary, dramatic, musical or artistic work, to communicate the work to the public by telecommunication;

7. to present at a public exhibition, for a purpose other than sale or hire, an artistic work created after June 7, 1988, other than a map, chart or plan;

8. in the case of a computer program that can be reproduced in the ordinary course of its use, other than by a reproduction during its execution in conjunction with a machine, device or computer, to rent out the computer program;

9. in the case of a musical work, to rent out a sound recording in which the work is embodied;

10. in the case of a work that is in the form of a tangible object, to sell or otherwise transfer ownership of the tangible object, as long as that ownership has never previously been transferred in or outside Canada with the authorization of the copyright owner; and

11. to authorize any such acts.

Examples of Public Domain Usage

There are many examples of businesses successfully using public domain works. Probably the best known and most lucrative use of such works has been by Disney Corporation; here are a few examples: Snow White from the Brothers Grimm folk tale; Christmas Carol from Charles Dickens; Hunchback of Notre Dame by Victor Hugo; Little Mermaid by Hans Christian Anderson; Jungle Book by Rudyard Kipling; Adventures of Huck Finn by Mark Twain; 20,000 Leagues Under the Sea by Jules Verne; Pinocchio by Carlo Collodi; and Bug’s Life from Aesop’s Fables. It is ironic that Disney, who made vast fortunes using public domain works in its animated films, was the primary catalyst for the Copyright Term Extension Act (oft referred to as the Mickey Mouse Protection Act) of 1998 which extended copyright terms in the United States by an extra 20 years and prevented those very valuable Disney works from entering the public domain for a long, long time to come.

Other non-film examples of public domain exploitation include: artistic depictions of Santa Claus, adaptations of Greek mythology, translations of fairy tales, performances of classical music, clothing displaying renaissance art, advertising jingles using Tin Pan Alley songs, ring-tones of early jazz tunes, mash-ups of old gypsy folk songs and lip-syncing famous speeches.

Be creative. Stand on the shoulders of giants. The possibilities are endless. So much content is available to you without restriction or cost. Think of any creator who died in 1962 or earlier and consider how to exploit one of her or his public domain works, whether as part of your business model (e.g. advertising campaign) or in a new business venture (e.g. on-line content). But do it soon, as Canada will likely extend its term of copyright protection, to 70 years pma, as part of the on-going Trans-Pacific Partnership treaty negotiations.

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By Marc Belliveau

“If I have seen further it is by standing on the shoulders of giants.” – Sir Isaac Newton

Cloud Computing: How to Navigate Risky Skies

February 26, 2013

Written by Daniela Bassan, and Michelle Chai, Articled Clerk

What is Cloud Computing?

“Cloud computing” is a system where information and/or applications are stored online, allowing access to information/data remotely and without restriction to geographic location. Cloud computing covers a wide range of activities such as storing photos/video online (i.e. Flickr), supporting social media websites (i.e. Facebook), using webmail (i.e. Gmail), storing or backing up computer files, and sharing of information (i.e. GoogleDocs).

Users of cloud computing technology should be familiar with jurisdictional and privacy issues which are increasingly associated with the storage of data.

What are Jurisdictional and Privacy Issues?

Through cloud computing, organizations have the option of sending, storing, and processing data in convenient ways across multiple jurisdictions. Issues of lawful access, data permanence, and data ownership will affect a company’s decision to store data, especially personal data, within a cloud environment.

Private sector privacy legislation, at provincial and federal levels in Canada, does not generally prohibit the transfer of personal information to an organization in another jurisdiction for processing and storage, provided that:

The transfer does not entitle the recipient organization to use the information for purposes other than those for which individuals expressly or impliedly consented;
The transferring organization remains accountable for the protection of any personal information that has been transferred, and must remain in control of the information;
The organization receiving the personal information provides a “comparable level of data security” as would be required under Canadian law. This means the third party processor must be able to provide protection comparable to the level of protection that would otherwise have applied to the information, had it not been transferred; and
The transferring organization ensures that disclosure is made to individuals including notice that: (i) their information will be transferred outside of Canada for the purpose of storage and processing; (ii) their information will be subject to the laws of a foreign jurisdiction; and (iii) the laws of that other jurisdiction may be different (and less protective) than those in Canada.

Where an organization transfers personal information to a cloud-infrastructure provider, its actions may fall under the watch of Canada’s Privacy Commissioner under the Personal Information Protection and Electronic Documents Act, even if the cloud is private. As well, data transferred to a cloud in another country will be subject to the privacy laws of that country – for example, personal information transferred to the US will be subject to the Patriot Act.

Where the Privacy Commissioner has jurisdiction over the subject matter of a complaint but the complaint deals with cloud infrastructures located outside of Canada, the Privacy Commissioner may still exert jurisdiction where there is a “real and substantial connection” to Canada. This is a constitutional requirement to ensure that Canada is only involved in matters where its interests are engaged. Recent jurisprudence suggests that a higher standard of connection may be required in international situations. In a 2006 Federal Court case, the fact that the plaintiff suffered damage via a computer in Canada was not sufficient to establish a connection where the defendant company had no physical presence or business assets in Canada. The Federal Court determined it would be unfair to subject the defendant company to the jurisdiction of a Canadian court because it would mean that a company could be sued in any jurisdiction in which its products are downloaded.

It is also noted that public bodies or governmental organizations, or persons retained to perform certain services for a public body, may also be required to ensure that personal information is stored in and accessible only from Canada (e.g. provincial legislation such as Nova Scotia’s Personal Information International Disclosure Protection Act). However, some important exceptions may apply, such as instances where consent has been given to store the personal information outside Canada.

What are Risk Management Options?

An organization can actively reduce the risks associated with cloud computing by keeping in mind the following:

Parties to a data-related contract should pay special attention to their respective rights/obligations related to notifications for breach of security, data transfers, creation of derivative (or modified) works of copyright, change of control, and access to data by law enforcement entities;
An organization should learn about the jurisdiction(s) in which its data is being stored, and what privacy laws or data protection laws apply in the country(ies) of storage – for example, the EU has relatively stringent data protection laws compared to other jurisdictions;
An organization should not move all information to a cloud in all circumstances – for example, confidential and sensitive information may become inadvertently mixed with third-party data in a cloud, such that the organization loses control over where the data is stored (and therefore where the data is accessible);
An organization which is transferring data should be aware of its overall responsibility for the protection of the information – it is important to review the terms of any service agreement with the cloud-infrastructure provider to ensure that adequate protection will be provided;
Customers may need to be notified or given opt-out/termination opportunities related to the data transfer, depending on the scope of the organization’s privacy policy or other customer commitments; and
An organization should consider including specific terms in its contract with the cloud-infrastructure provider to ensure adequate protection of the data against legal uncertainties.

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Written by Daniela Bassan, and Michelle Chai, Articled Clerk

What is Cloud Computing?

Users of cloud computing technology should be familiar with jurisdictional and privacy issues which are increasingly associated with the storage of data.

Trade-mark Licensing is all about Maintaining Control

February 11, 2013

Written by Marc Belliveau

“He who controls the present, controls the past. He who controls the past, controls the future.” – George Orwell

It’s been said many times about trade-marks: Use it or Lose it.

It’s trite, but use your mark consistently or risk losing it. But what if you are a trade-mark owner, yet you do not actually use it (or even plan to use it) because it is exclusively licensed to others under franchise or other branding contracts? Do you lose it because you did not use it?

Background

Under common law principles, trade-mark licensing was prohibited because of the potential for public deception and confusion in the marketplace. Then, in 1954, the Trade-Marks Act (the “Act”) was amended to regulate licensing with a view to facilitating trade and commerce in Canada. The solution at that time was to have every user of a registered trade-mark to be formally registered as such. Owners and users had to apply for registration and the Registrar could approve or disallow such applications, depending on what was in the public interest.

In 1993, Section 50 of the Act, which governs trade-mark licensing in Canada, was amended to abolish the old registered user provisions and replace them with a more flexible trade-mark licensing regime that no longer required physical registration of users or their authorizing documents. Since then, where the trade-mark owner can prove that it has direct or indirect “control” over the character or quality of the licensed goods or services, then the use, advertisement or display of the trade-mark by the licensee or sub-licensee is deemed to have the same legal effect as use, advertisement or display of the trade-mark by the actual owner.

Obviously, this “deeming” effect is a legal fiction based on “control”, but it has served Canadian businesses far more effectively and with more commercial certainty over the years than the registered user structure. Under the previous regime, a trade-mark license had to be registered to be effective and to deem the licensee’s use of a mark to be that of the licensor. Further, owners were always at risk that their trade-mark registration might be held to be invalid because an authorized licensee had not been duly registered and no actual use of the mark could be proven by the lawful owner.

Section 50

The specific provisions of the Act are worthy of review:

50. (1) For the purposes of this Act, if an entity is licensed by or with the authority of the owner of a trade-mark to use the trade-mark in a country and the owner has, under the licence, direct or indirect control of the character or quality of the wares or services, then the use, advertisement or display of the trade-mark in that country as or in a trade-mark, trade-name or otherwise by that entity has, and is deemed always to have had, the same effect as such a use, advertisement or display of the trade-mark in that country by the owner.

(2) For the purposes of this Act, to the extent that public notice is given of the fact that the use of a trade-mark is a licensed use and of the identity of the owner, it shall be presumed, unless the contrary is proven, that the use is licensed by the owner of the trade-mark and the character or quality of the wares or services is under the control of the owner.

(3) Subject to any agreement subsisting between an owner of a trade-mark and a licensee of the trade-mark, the licensee may call on the owner to take proceedings for infringement thereof, and, if the owner refuses or neglects to do so within two months after being so called on, the licensee may institute proceedings for infringement in the licensee’s own name as if the licensee were the owner, making the owner a defendant.

Control

The word “control” is not defined in the Act but should be given its ordinary literal meaning. Similarly, the Act does not stipulate what degree of control is required, nor that the owner be the person exercising such control. It can be delegated. However, it is not sufficient to merely have the contractual right to such control, there has to be actual control of the products and services, subject to the control presumption in subsection 50(2).

Subsection 50(2) is important, because if public notice is given of the identity of the owner and that the trade-mark is being used under license, typically in a footnote relating to the brand display, a legal presumption arises that such use is licensed by the owner and that the owner has control over the character and quality of the relevant products and services.

Nevertheless, given that Section 50(2) only creates a presumption, which is rebuttable, it is always recommended that any such branding and marketing arrangements be fully documented in a comprehensive trade-mark license agreement.

It is noteworthy that a “parent-subsidiary” corporate structure, by itself, may not always be enough to presume sufficient control in order to find a valid licensing relationship. In a recent case, the court was prepared to find one in light of all the circumstantial evidence presented (Spirits International BV v. BCF and Registrar of Trade-marks, 2012 FCA 131).

License should be written

License agreements should be in writing and may include regular quality control provisions, industry-specific use requirements, internet and public display rules, advertising restrictions, rights of inspection and audit over the licensee, limitations on geographic territory and/or temporal conditions, usage reporting schedules, service guidelines, notifications and product pre-approvals, responsibility for enforcing the marks against unauthorized third parties and other similar legal and marketing issues.

In the absence of a written agreement, courts are sometimes prepared to find the factual existence of a license arrangement and deemed quality control, for example in the case of inter-corporate branding relationships (mentioned above) or where an individual owner also happens to be the president of the company using the mark with implicit authorization.

From an evidentiary perspective, all relevant documents defining and evidencing the licensed use should be maintained to have a paper trail to prove measures have in fact been taken on a regular basis, either directly or indirectly, to monitor and control the character and quality of the licensed products and services. Proper record-keeping of all emails, letters, correspondence and documents relating to “control” of the licensed products and services is clearly fundamental to defending the overall brand and the licensed trade-marks that make it up.

Conclusion

It may not always be at the forefront of business negotiations between related parties, particularly when the burgeoning relationship is excellent, but the risk of losing the trade-mark to expungement and invalidity should prompt both parties to put together at least a basic license agreement with general control provisions. It does not have to be a complicated document; in fact the Act does not even stipulate that it needs to be in writing. As long as the owner can establish it has the right to exercise direct or indirect control over the licensee’s use of the mark, as described above, then the owner will be deemed to have used it and not to have lost it.

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Written by Marc Belliveau

“He who controls the present, controls the past. He who controls the past, controls the future.” – George Orwell

It’s been said many times about trade-marks: Use it or Lose it.

Esso Wins Another Round in Lengthy “Marché” Trade-mark Battle

February 3, 2013

Written by Rob Aske

In mid-January 2013, Canada’s Federal Court of Appeal released a brief decision which provided another victory for Esso/Exxon Mobil in its efforts to defend its trade-mark MARCHÉ EXPRESS. Esso’s application was opposed by the restaurant chain Mövenpick.

Mövenpick first opened Marché restaurants in Toronto in 1992. In 1994 Mövenpick filed a trade-mark application for Marché in association with the operation of restaurants, and obtained registration in 1996.

In 2001 Esso opened its first Marché Express convenience stores, and applied in December of 2001 to register Marché Express in association with convenience store and fast-food services offered at gasoline stations.

Mövenpick filed a statement of opposition to Esso’s application in late 2004, and so this trade-mark battle has now been running for almost 10 years.

In 2010 the Trade-Marks Opposition Board dismissed the opposition, and this was confirmed by the Federal Court in 2011, and then again by the Federal Court of Appeal in this most recent decision of January 15, 2013.

Esso operates 60 or more convenience and fast-food stores under the Marché Express banner in Quebec and Ottawa.

Mövenpick had limited evidence of ongoing use of its Marché mark, which may have been influential in these proceedings.

Mövenpick first argued that Esso’s Marché Express mark was too descriptive of the convenience stores, but this argument was rejected, and the Federal Court in its 2011 decision reiterated that the Trade-Marks Act only prohibits registration of marks that are clearly descriptive, and that courts have consistently recognized that a trade-mark is registrable even though it is suggestive or even descriptive.

On the issue of confusion, the Court of Appeal’s latest decision reproduces part of the Opposition Board’s initial ruling, which includes some interesting statements on the descriptions of wares and services in trade-mark applications, and how they may be applied in opposition proceedings. The quoted portion of the Board’s decision included the following:

“When considering the wares, services and trades of the parties, it is the statement of wares or services in the parties’ trade-mark application and registration that govern.

The Opponent [Mövenpick] submits that the Applicant’s [Esso's] services include fast food services and points to evidence establishing that convenience stores and gas stations now offer a wider variety of ready-to-go food items, which it argues falls within the scope of restaurant services, necessarily overlapping with its [Mövenpick's] services.

The parties’ respective statements of services must be read with a view to determining the probable type of business or trade intended by the parties rather than all possible trades that might be encompassed by the wording. The marks are also to be compared as they are used in business. In this regard, the evidence establishes that the Applicant’[s] convenience stores at gasoline stations, sell a variety of items such as cigarettes, candy bars and salty snacks and offer fast food items such as sandwiches, doughnuts, coffee and soft drinks. As I understand it, the Applicant’s services are not fast food restaurant services, but rather convenience stores at gasoline stations where limited food items are sold. In this regard, based on the evidence of record, I find it unlikely that the parties’ trades would overlap. On the other hand, I note that the Opponent’s statement of services does not include any limitations regarding its trade channels; thus nothing would prevent the Opponent from operating its restaurants, particularly in the form of fast food restaurants at gasoline stations and in such cases, the Applicant’s fast food items could potentially overlap with the Opponent’s restaurant services.” [citations omitted, emphasis added]

The passage above will be cited many times when trade-mark applicants are trying to overcome an examiner’s findings that existing registrations are confusing with a new application, based on the descriptions of wares and services, when in fact the actual wares and services may not overlap.

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Written by Rob Aske

Mövenpick filed a statement of opposition to Esso’s application in late 2004, and so this trade-mark battle has now been running for almost 10 years.

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