Trading Trade-mark for Trademark and its International Effects: A Brief Overview of Bill C-31

April 9, 2014

By Nathaniel B.F. Marshall and Adam Bata 

Substantial changes to Canadian trade-mark laws may soon come into force. On March 28, 2014, Canada’s newly appointed Minister of Finance, Joe Oliver, tabled an omnibus budget implementation bill, Bill C-31, titled Economic Action Plan 2014 Act, No. 1. Bill C-31 will make changes to numerous pieces of legislation, and deals with a range of issues from food safety to the remuneration for judges. Of particular note to readers of The Medium are the substantial reforms to Canadian trade-mark laws, which are the second set of proposed changes to the Trade-marks Act in the last year (the first set being introduced in Bill C-8, Combating Counterfeit Products Act).

The stated intention of the amendments is to bring the Trade-marks Act in line with the international trade-mark regimes outlined in the Singapore Treaty and Nice Agreement, while preparing for the Madrid Protocol a third treaty that will give Canadian brand owners access to an international trademark registration scheme. For a myriad of reasons, Canada’s current trade-mark laws do not comply with these international agreements. Bringing Canadian trade-mark laws into accordance with these agreements will, in theory, allow Canadian businesses to synchronize their filing and registration processes with the international trademark requirements.

The first change that many will notice in the amendments is the drop of the hyphen from “trade-mark”. Although this is a seemingly minor aesthetic change, it ensures Canadian terminology is consistent with the terms used in the international agreements and is intended to create uniformity in trademark laws with other signatory jurisdictions. Moreover, the term “wares” will be replaced with “goods”, which is another change that will ensure consistency with both the United States and the international agreements.

Other proposed changes, however, may not be so uniformly welcomed. For example, applicants will no longer need to indicate whether they are making an application for the use or proposed use of a trademark, or for use and registration of the trademark outside of Canada. Additionally, the proposed amendments will also eliminate the need to file a declaration of use before registration if the use is to take place within Canada. While these changes will arguably simplify the process for filing a trademark application by doing away with some of the content requirements that currently exist, some commentary has suggested that this will cause a drastic increase in the number of trademark registrations that may have the effect of ‘clogging’ the system.

Despite the new procedure for trademark applications, use will still be a critical feature of Canadian law moving forward. Trademark registrations may still be summarily cancelled if the trademark has not been used for three consecutive years and individuals will continue to have the right to oppose an application for registration based on their prior use. Further, new grounds of opposition are proposed, including that the applicant did not have use or an intent to use a mark when it was filed. We expect that if these amendments are passed there will be far more trademark oppositions within Canada, adding potentially significant costs for Canadian businesses. Trademark owners will also experience cost increases due to the fact that the trademark protection term has been reduced to 10 years from 15 years, thus requiring more frequent renewals.

Bill C-31 will introduce some new requirements to trademark applications. Applicants may be required to provide evidence establishing their mark is distinctive at the filing date under revised section 32. Moreover, the Nice Agreement requires that goods and services be grouped according to their international classification. The Trade-marks Act will adopt this condition, with the Registrar having the final say on the correct classification. Current trademarks owners should be aware that the Registrar will also have the power to require their registrations to  comply with these requirements. As Nice classifications will be required with trademark applications under the new system, it is conceivable that we end up with a fee-per-class system, similar to the standard used in most Nice countries.

Overall, the proposed changes to the Trade-marks Act contained in Bill C-31 will bring Canadian trademark law into accordance with international trademark law. However, in doing so, it is clear that Canadian businesses will face additional costs in complying with the international trademark regime. It is possible that some of these changes may be removed from the Bill as it has yet to become law but, as it currently stands, it is clear that several traditional features of Canadian trademark law will soon cease to exist.

By Nathaniel B.F. Marshall and Adam Bata 

Substantial changes to Canadian trade-mark laws may soon come into force. On March 28, 2014, Canada’s newly appointed Minister of Finance, Joe Oliver, tabled an omnibus budget implementation bill, Bill C-31, titled Economic Action Plan 2014 Act, No. 1. Bill C-31 will make changes to numerous pieces of legislation, and deals with a range of issues from food safety to the remuneration for judges. Of particular note to readers of The Medium are the substantial reforms to Canadian trade-mark laws, which are the second set of proposed changes to the Trade-marks Act in the last year (the first set being introduced in Bill C-8, Combating Counterfeit Products Act).

Stewart McKelvey Tweets

The Perils of Congratulating Celebrities without their Permission: Michael Jordan v. Jewel Food Storage, Inc. et al, USCA, 7th Cir., February 19, 2014

April 7, 2014

By Rob Aske

In September, 2009, Michael Jordan, the basketball great, was inducted into the Basketball Hall of Fame in USA.  Soon afterward Sports Illustrated produced a special edition to celebrate his career.  They offered a Chicago area grocery store chain known as Jewel-Osco free advertising in return for a promise to stock and sell the magazines in their stores.  The store operator and defendant, Jewel Food Stores, agreed to the deal and its marketing department prepared a full page colour ad (as shown at the bottom of this article), which was placed on the inside back cover of this commemorative issue.

Soon after the issue hit the newsstands, Jordan filed a lawsuit against Jewel in Illinois courts, claiming among other things infringement of his publicity and trade-mark rights.

Jewel applied to have the case thrown out, on the basis that the advertisement consisted of “non-commercial speech”, and therefore under US constitutional law was entitled to free speech protection.  The lower court agreed with Jewel, but Jordan appealed and was successful.

The US Court of Appeals (Seventh Circuit) ruling clearly indicates that an advertisement does not need to suggest that the reader buy a specific product or service to constitute commercial speech (such commercial speech is subject to a lesser level of free speech protection).  The Court provided the following nuggets:

“The commercial-speech category is not limited to speech that directly or indirectly proposes a commercial transaction. 

…. 

Without the rose-coloured glasses, Jewel’s ad had an unmistakable commercial function: enhancing the Jewel-Osco brand in the minds of consumers.  The commercial message is implicit but easily inferred, and is the dominant one.

There is a world of difference between an ad congratulating a local community group and an ad congratulating a famous athlete.  Both ads will generate goodwill for the advertiser.  But an ad congratulating a famous athlete can only be understood as a promotional device for the advertiser.  Unlike a community group, the athlete needs no gratuitous promotion and his identity has commercial value.  Jewel’s ad cannot be construed as a benevolent act of good corporate citizenship. 

…. 

The ad is plainly aimed at fostering goodwill for the Jewel brand among the targeted consumer group – “fellow Chicagoans” and fans of Michael Jordan – for the purpose of increasing patronage at Jewel-Osco stores.

 ….

 The ad is a form of image advertising aimed at promoting goodwill for the Jewel-Osco brand by exploiting public affection for Jordan at an auspicious moment in his career. 

…. 

A contrary holding would have sweeping and troublesome implications for athletes, actors, celebrities, and other trade-mark holders seeking to protect the use of their identities or marks.

Therefore Jordan’s case will now go forward, subject to further appeals.  The message for all advertisers is not to get careless by assuming that a mere congratulatory ad of a celebrity can proceed without permission.

Text of the ad below:

A Shoe In!
After six NBA championships, scores of rewritten
record books and numerous buzzer beaters, Michael
Jordan’s elevation in the Basketball Hall of Fame was
never in doubt!  Jewel-Osco salutes #23 on his many
accomplishments as we honor a fellow Chicagoan
who was “just around the corner” for so many years.

MJordan Ad

By Rob Aske

In September, 2009, Michael Jordan, the basketball great, was inducted into the Basketball Hall of Fame in USA.  Soon afterward Sports Illustrated produced a special edition to celebrate his career.  They offered a Chicago area grocery store chain known as Jewel-Osco free advertising in return for a promise to stock and sell the magazines in their stores.  The store operator and defendant, Jewel Food Stores, agreed to the deal and its marketing department prepared a full page colour ad (as shown at the bottom of this article), which was placed on the inside back cover of this commemorative issue.

Soon after the issue hit the newsstands, Jordan filed a lawsuit against Jewel in Illinois courts, claiming among other things infringement of his publicity and trade-mark rights.

The New Anti-Spam Law – The BIG Exceptions

March 3, 2014

By Rob Aske

Canada’s new federal anti-spam law comes into force in a significant way on July 1, 2014. The prohibition against spam is a very broad one, and the key focus immediately turns to the exceptions where either the law does not apply to the message, or, consent is not required to send the message. Section 6 of the law contains the basic prohibition against sending “commercial electronic messages” without firstly, consent, and secondly, compliance with certain form and content requirements (including the unsubscribe mechanism). Commercial electronic messages are defined broadly to capture emails or other electronic messages that have as one of their purposes “encouraging participation in a commercial activity”, and “commercial activity” is also broadly defined to include any act or conduct of a commercial nature. But for many businesses, there will be exceptions and a transition period which will be helpful, so that it may not be difficult to continue to deal with your customers. The first exceptions for consideration under the Act include those which entirely exclude the application of the Act to the message – so that neither consent, nor compliance with the form and content requirements (such as the unsubscribe mechanism) are required.  There are some fairly obvious ones in this list (though look at the fine print closely) for family or personal communications, responses to commercial inquiries, internal business communications, legal communications and other fairly obvious examples, but the big exceptions of note for many businesses include:

  1. Business to business communications, i.e. commercial electronic messages sent between different organizations (or their employees, representatives, or consultants) provided the organizations have a relationship, and the messages concern the activities of the recipient organization. The term “relationship” is not defined and will hopefully be interpreted quite broadly.
  2. Messages sent by charities, when the message has the primary purpose of raising funds for the charity, and the charity is a registered charity in accordance with Canada’s Income Tax Act.  (There is a similar exception as well for political fundraising).

If one of the above exceptions does not apply, then there may still be a second group of helpful exceptions which exclude the requirement for express consent. Some such exceptions state that neither express or implied consent is required, and while others state where consent is deemed to be implied.  (Always remember that implied consent may be explicitly revoked by a recipient.) Neither express or implied consent is required in many obvious cases involving situations such as providing a quote or estimate as requested by the recipient, facilitating a commercial transaction, providing warranty or recall information, dealing with ongoing subscriptions, or employment and benefit plans. Consent is also implied in certain key situations including:

  1. Existing business relationship:  Consent is implied if there has been a purchase or lease of products or services or a contract between the parties in the last two years, or if the recipient has made an inquiry or application to the sender in respect of their business in the last six months.  This critical exception which will require many businesses which deal with customers and the general public (rather than pure business customers) to track their last dealings with customers.
  2. Disclosure of address:  Consent is also implied where the recipient has disclosed their address to the sender, has not indicated they do not wish to receive commercial messages, and the message is relevant to the recipient’s business or official capacity.  This exception will be helpful to many businesses, such as professional services businesses, which deal with a wide array of businesses or organizations.
  3. Grace period:  For the first three years under the law (until June 30, 2017), there will be implied consent to send commercial messages to recipients where, as of July 1, 2014, there was an existing business or non-business relationship, regardless of when that relationship may have last been active (i.e. without reference to the two year or six month time periods referred to above), provided the recipient does not withdraw consent, and also provided that the relationship had included the exchange of commercial electronic messages such as emails.

If you would like further details summarizing this complicated new law, see our guide at http://www.stewartmckelvey.com/en/home/resources/publications/getreadyforantispam.aspx

By Rob Aske

Canada’s new federal anti-spam law comes into force in a significant way on July 1, 2014. The prohibition against spam is a very broad one, and the key focus immediately turns to the exceptions where either the law does not apply to the message, or, consent is not required to send the message.

The Brief on Bitcoins

February 26, 2014

By Adam Bata

Bitcoins are a digital currency obtained when computers compete to solve mathematical problems and the winning ‘miner’ is rewarded with a block of new Bitcoins. The virtual currency’s decentralized network has been programmed to release 21 million Bitcoins at a progressively slower rate with the size of each batch dropping by half approximately every four years. Therefore, in spite of the fact that more than half have already been mined, the size of each batch of Bitcoins won’t reach zero until 2140.

The virtual currency is not supported by any government or central bank and has been described as an “individualistic monetary system.” As there is no regulatory oversight over Bitcoins at the moment, they can be traded anonymously – only a computer code identifies a user in a Bitcoin transaction and this code changes. However, this feature of Bitcoins may be short lived as bank regulators in New York anticipate implementing rules to address business transactions being completed in Bitcoins during the current year.

Although owners store the Bitcoins in digital wallets and can transfer them over the Internet, they are not legal tender in Canada. Their value fluctuates according to demand by users – the Bitcoin Price Index Chart on Coindesk rose from $13.51 at the start of last year to a November high of $1,165.9 before it dropped to $757.50 at the end of the year. More recently, the value of Bitcoins has been falling as certain marketplaces have encountered unforeseen technical issues. Despite these downward fluctuations, there are still those who believe Bitcoin values will increase over time due to their fixed total number.

Bitcoins have become quite popular of late: tens of thousands of businesses around the world now accept the virtual currency including the National Basketball Association’s Sacramento Kings which will let fans use Bitcoin to purchase tickets, merchandize and food; merchant processor Bitpay has more 20,000 separate clients; and e-commerce site Overstock.com plans to become the first major U.S. retailer to accept the digital currency. In Canada, there are over 100 businesses that currently accept Bitcoin as a form of payment, according to CoinMap, a website that tracks Bitcoin usage around the world. Vancouver, Ottawa and Toronto all have Bitcoin ATMs and Montreal unveiled its first one during this month.

Canadian Tax Overview

Canada Revenue Agency (CRA) treats Bitcoins as a commodity for the purposes of the Income Tax Act (Canada) as they are not considered to be a currency issued by a government of a country. If you use Bitcoins to purchase goods or services in Canada, the barter rules of the Income Tax Act apply. CRA provides guidance on the Canadian tax implications of a barter transaction in Interpretation Bulletin IT-490, “Barter Transactions“. Paragraph 3 of that interpretation bulletin describes a barter transaction as “effected when any two persons agree to a reciprocal exchange of goods or services and carry out that exchange usually without using money”.

The rules in the Income Tax Act assume that a person or business selling a good or service that accepts Bitcoins must consider the value of the Bitcoins received to be equal to the value of the good or service they are offering. Therefore, the person must include in their income an amount equal to the price (in Canadian dollars) that the taxpayer would normally have charged an arm’s-length person for the goods or services. Any Canadian business that sells its goods or services for Bitcoins must remember to report the income from these transactions.

If you trade or sell Bitcoins like a commodity, any gain or loss is taxable on account of income or capital. You can determine whether this gain or loss would be considered income or capital in your case by reviewing CRA’s Interpretation Bulletin IT-479R, “Transactions in securities“. Assuming that the sale is on account of capital, if the value of your Bitcoins increased by $1,000 between when you purchased them and when you sold them, you would have a capital gain of $1,000 and a taxable capital gain of $500.

Finally, if you donate gifts to a ‘qualified donee’ as that term is used under the Income Tax Act, you should make sure to record the fair market value of the Bitcoins at the time they are transferred for your records. This number is used in determining the eligible amount of the gift for tax purposes.

For the purposes of determining the GST/HST payable, if a taxable supply of a goods or services is made in exchange for Bitcoins, the consideration for the supply is deemed to be equal to the fair market value of the Bitcoins at the time the supply is made. If you are a GST/HST registrant who, for example, sells guitars for 25 Bitcoins and the sale is subject to GST/HST, you will be required to collect the GST/HST calculated on the fair market value of the 25 Bitcoins at the time of the sale. You will also be required to include in your net tax remittance the GST/HST collectible. The buyer of your guitars, if a GST/HST registrant, will be eligible to claim an input tax credit for the GST/HST to the extent the good is for consumption, use or supply in such buyer’s commercial activities (which seems unlikely with guitars).

CRA’s positions on these issues are set out here and in CRA Document No. 2013-0514701I7 “Bitcoins” (December 23, 2013). Unfortunately for Bitcoin miners, CRA does not provide any guidance on whether producing Bitcoins through mining constitutes earning income.

In the Government of Canada’s 2014 Budget, the Government indicated that they will introduce anti-money laundering and anti-terrorist financing regulations for Bitcoins and other virtual currencies.

US Taxation & Regulation of Bitcoins

The US government has not determined how it will approach Bitcoin taxation. The Internal Revenue service said in an emailed statement that it is “aware of the potential tax-compliance risks posed by virtual currencies” and “continues to study virtual currencies and intends to provide some guidance on the tax consequences of virtual-currency transactions”.

Peter J. Henning, a professor at Wayne State University Law School, has written an interesting piece on the development of Bitcoin regulation in the United States that may be of interest.

Moving Forward

Merchants have good reason to monitor the development in the virtual currency space while initial problems are sorted out because of the potential of virtual currencies to eliminate certain business costs which currently exist and thus make it easier to buy and sell over the Internet. Use of Bitcoins would avoid exchange rate issues and transaction fees are reportedly lower than those associated with credit cards. Some people believe that Bitcoins could be a critical component improving the global financial system.

That being said, participants in this unregulated space are strongly urged to proceed with caution. This week Mt. Gox, one of the largest Bitcoin exchanges, halted trading and there are indications that over 700,000 Bitcoins have gone missing. It is unclear whether this incident is an “isolated case of mismanagement” as other exchanges are calling it, a natural part of Bitcoin’s development or whether it represents a major step backwards for virtual currencies.

If you are interested in purchasing Bitcoins in Canada, one service available is Tinkercoin where you are able to purchase Bitcoins with a credit card. There is a six percent fee in addition to the cost of purchasing the Bitcoins. I haven’t used this service personally so please use caution when purchasing Bitcoins from it or any other service. There may also be the possibility of investing in Bitcoins in the future through a Bitcoin exchange-traded fund.

Additional Articles

Why Bitcoin Matters” by Marc Andreessen.

By reading this article, you’re mining Bitcoins” by Ritchie S. King, Sam Williams & David Yanofsky.

Bitcoin Is Broken—Here’s a Simple Plan to Fix It” by Matthew O’Brien.

Bitcoin goes Boom: Will the World’s Favorite Cryptocurrency Explode or Implode?” by Yuri Takhteyev and Mariana Mota Prado.

By Adam Bata

Bitcoins are a digital currency obtained when computers compete to solve mathematical problems and the winning ‘miner’ is rewarded with a block of new Bitcoins. The virtual currency’s decentralized network has been programmed to release 21 million Bitcoins at a progressively slower rate with the size of each batch dropping by half approximately every four years. Therefore, in spite of the fact that more than half have already been mined, the size of each batch of Bitcoins won’t reach zero until 2140.

The virtual currency is not supported by any government or central bank and has been described as an “individualistic monetary system.” As there is no regulatory oversight over Bitcoins at the moment, they can be traded anonymously – only a computer code identifies a user in a Bitcoin transaction and this code changes. However, this feature of Bitcoins may be short lived as bank regulators in New York anticipate implementing rules to address business transactions being completed in Bitcoins during the current year.

Beastie Boys and Toys: Verse 2

February 5, 2014

By Christopher Marr

            As interesting as the dispute between the Beastie Boys and GoldieBlox already is, there is another aspect to this dispute that makes it even more fascinating. In the public letter that GoldieBlox issued shortly after filing their suit, GoldieBlox apologized to the Beastie Boys for its use of Girls in its commercial because this use defied Adam Yauch’s final wishes set out in his will.

           One of the three members of Beastie Boys, Yauch died in May 2012, and his will was filed with the New York Surrogate Court in Manhattan in August 2012, making it a public document. Like many other celebrities, Yauch’s will was drafted to prohibit his name or image from being used for advertising purposes. Sometime after his will was drafted though, Yauch added the following words in his own handwriting to the prohibition on his name or image being used in advertising:

“or any music or any artistic property created by me”

           From a legal perspective this addition is problematic, and may not help accomplish what Yauch likely intended. For example, the additional words in his own handwriting may not be valid as they were added after the will was already signed in the appropriate fashion (never add words to your will after it is signed! Make a new will if you want changes!). There could also be a problem from a copyright law perspective.

           If Yauch’s will was interpreted under Canadian law, “artistic property” that he created that would be protected by copyright law, would have a term of protection covering his lifetime, to the end of the year that he died, and then for another fifty years after that. After fifty years, his “artistic property” will enter the public domain. Before entering the public domain, interests in copyright can be passed from the owners thereof to their heirs by will or intestate succession. Canada’s Copyright Act further states that where the author of a work is the first owner of the copyright therein, no matter what agreements they made during their lifetime, every interest they granted or assigned in their copyright will revert back to the author’s estate, and will devolve on their legal representatives twenty-five years after the death of the author. So, even if Yauch had granted all of his interests in his copyrights during his lifetime, under Canadian law, his interest would revert back to his estate twenty-five years after his death, meaning that his will would then control the copyright interest (in Yauch’s case, purportedly prohibiting a grant for advertising purposes).

            Even though Yauch’s will can effectively deal with his copyright interests, the problems with his handwritten insertion are still not solved. Assuming that his handwritten insertion is not invalidated, the trustee(s) of Yauch’s estate will have to determine what is meant by the words “created by me”. Are these words meant to limit the advertising prohibition to creations that Yauch authored solely, or are they also meant to include creations that Yauch helped to author jointly with others (i.e. a song like Girls, authored by the Beastie Boys and Rick Rubin)?

           If “created by me” is interpreted broadly to include works that Yauch authored jointly with others, Yauch’s will can only prevent the trustee(s) of his estate from allowing Beastie Boys’ songs from being used in advertising. It cannot prevent the other joint authors from granting their interests in the work of joint authorship, so long as any profits earned are equally paid to each joint author. This means that the surviving Beastie Boys could settle the litigation with GoldieBlox by reaching an agreement that licenses Girls to GoldieBlox for commercial use, despite the restriction in Yauch’s will, so long as his share of the profits are paid to his estate. This of course depends on any agreement that the Beastie Boys may or may not have made among each other with respect to their joint copyright interests in the band’s music.

           As much as Yauch’s will won’t play a part in the litigation with GoldieBlox (even if Yauch’s handwritten insertion is valid, as a finding of fair use would prevail), this part of the story is but another example of the importance of a well drafted estate plan that takes into account every type of property that will form part of an estate, in order to effectively carry out the final wishes of the deceased.

By Christopher Marr

            As interesting as the dispute between the Beastie Boys and GoldieBlox already is, there is another aspect to this dispute that makes it even more fascinating. In the public letter that GoldieBlox issued shortly after filing their suit, GoldieBlox apologized to the Beastie Boys for its use of Girls in its commercial because this use defied Adam Yauch’s final wishes set out in his will.

           One of the three members of Beastie Boys, Yauch died in May 2012, and his will was filed with the New York Surrogate Court in Manhattan in August 2012, making it a public document. Like many other celebrities, Yauch’s will was drafted to prohibit his name or image from being used for advertising purposes. Sometime after his will was drafted though, Yauch added the following words in his own handwriting to the prohibition on his name or image being used in advertising:

“or any music or any artistic property created by me”

           From a legal perspective this addition is problematic, and may not help accomplish what Yauch likely intended. For example, the additional words in his own handwriting may not be valid as they were added after the will was already signed in the appropriate fashion (never add words to your will after it is signed! Make a new will if you want changes!). There could also be a problem from a copyright law perspective.

Google Glass-wearing Driver Ticketed in the US – What’s the law on distracted driving in Nova Scotia?

January 31, 2014

By Michelle Chai

A San Diego traffic court has thrown out a citation against a woman ticketed for driving while wearing a Google Glass device.  If you haven’t heard about these; they’re essentially an eyeglass-like frame with a thumbnail-size transparent display above the right eye, which responds to voice commands.  It can be used to check email, learn background about something the wearer is looking at and get driving directions, etc.  Sounds pretty distracting right?

The San Diego traffic court commissioner ruled the driver was not guilty because she had been cited under a code requiring proof beyond a reasonable doubt the device was in operation.  No such proof was provided in this case.  The commissioner did note that the California code specifically bars the operation of a video or TV screen while the vehicle is moving, which might have been broad enough to apply to the Google Glass.

What’s the law in Nova Scotia?

We all know you can’t use a cell-phone while driving, so where does a device like Google Glass fit in?  The Motor Vehicle Act[1] states that drivers cannot have ornaments, decorations, screens, or other things located in the car so that they obstruct the vision or distract the attention of the driver.[2]  It also states that you can’t drive a car with a screen, or other means of visually receiving a television broadcast, visible to the driver while he is operating the vehicle.[3]

Coupled with the duty to drive “in a careful and prudent manner”[4], one could see how a device like Google Glasses could “distract the attention of the driver”.  Most provinces in Canada have similar distracted driving legislation banning screens which are visible to the driver, with exceptions for GPS devices (although programming it while driving is banned).[5]

Unlike in California, the law in Nova Scotia does not require proof the device was in operation.  It is likely that if you’re wearing a Google Glass or similar device, or like the man in Alberta who was caught earlier in the month watching TV on his laptop while driving at night on an icy road, you could be ticketed for distracted driving.

This is an interesting story to keep an eye on, especially in light of a recent announcement by Google that they have invented contact lenses which can monitor glucose levels.  Three US states – Delaware, New Jersey, and West Virginia – have already introduced bills to ban driving with Google Glasses.


[1] R.S.N.S. 1989, c. 293.

[2] s. 184(5).

[3] s. 184(7).

[4] s. 100.

[5] Caution: Using your cell-phone to navigate is still banned.  In July 2013, the Nova Scotia Supreme Court ruled that a woman who had been using her cell-phone to navigate was still guilty of using “a hand-held cellular telephone” while driving.

By Michelle Chai

A San Diego traffic court has thrown out a citation against a woman ticketed for driving while wearing a Google Glass device.  If you haven’t heard about these; they’re essentially an eyeglass-like frame with a thumbnail-size transparent display above the right eye, which responds to voice commands.  It can be used to check email, learn background about something the wearer is looking at and get driving directions, etc.  Sounds pretty distracting right?

Tarantino, Gawker and The Hateful Eight – A Case of Inglorious Infringement?

January 30, 2014

By  Nancy Rubin and Nathaniel Marshall (Articled Clerk)

Academy Award winning director, screenwriter and producer Quentin Tarantino has filed a copyright action in the U.S. District Court of Los Angeles against Gawker Media for facilitating the dissemination of the unproduced script for his film The Hateful Eight. As the media outlet that attempted to purchase the video of Toronto Mayor Rob Ford allegedly smoking crack, Gawker is no stranger to controversy.

The lawsuit alleges Gawker “made a business of predatory journalism” by posting multiple links to the entire script on its blog, the Defamer. Further, according to Tarantino’s claim, Gawker encouraged users to download the copyrighted content with the cheery invitation to “Enjoy!” and has refused to remove the posted URL links.

The law in the United States currently does not recognize hyperlinking itself as a form of copyright infringement. In Perason Educ., Inc.v. Ishayen, 2013 WL 3948505 the United States Federal Court held that merely providing a link to a copyrighted content is not direct infringement of the copyright in that content. The court stated:

A hyperlink (or HTML instructions directing an internet user to a particular website) is the digital equivalent of giving the recipient driving directions to another website on the internet. A hyperlink does not itself contain any substantive content; in that important sense, a hyperlink differs from a zip file. Because hyperlinks do not themselves contain the copyrighted or protected derivative works, forwarding them does not infringe on any of a copyright owner’s five exclusive rights under [Section 106 of the Copyright Act].

However, Tarantino’s claim asserts that Gawker has gone well beyond merely providing a link to the copyrighted work and is itself contributing to the infringement. Contributory copyright infringment can be found on the part of someone who is not directly infringing but nevertheless is making contributions to the infringing acts of others. Tarantino alleges that Gawker is materially contributing to copyright infringement by knowingly providing links to third party sites where users can access his content which Gawker knew had been leaked without his permission. To succeed on contributory infringement, Tarantino must show that the webmaster or service provider actually knew or should have known of the infringing activity.

Contributory infringement has often been claimed against file sharing sites and search engines which exist as directories of others’ content.  Although it has yet to file a Defence, Gawker has publically stated that it is a news site and publication of the link was connected to informing its readership of a matter of public interest – the earlier leak of The Hateful Eight, Tarentino’s public complaints about the leak and the resultant public discourse. 

Although there are no decided cases on copyright hyperlinking in Canada, the Supreme Court of Canada has refused to find that a bare hyperlink to defamatory content constitutes “publication” for purposes of a defamation claim, absent any statement endorsing the truth of its contents (Crookes v. Newton, 2011 SCC 47).  The Court’s conclusion echoes the roadmap analogy used in the United States:

Hyperlinks are, in essence, references, which are fundamentally different from other acts of “publication”. Hyperlinks and references both communicate that something exists, but do not, by themselves, communicate its content. They both require some act on the part of a third party before he or she gains access to the content. The fact that access to that content is far easier with hyperlinks than with footnotes does not change the reality that a hyperlink, by itself, is content-neutral. Furthermore, inserting a hyperlink into a text gives the author no control over the content in the secondary article to which he or she has linked.

In sharp contrast,  the Federal Court of Australia has deviated from the approach in North America  in Cooper v. Universal Music Australia Pty. Ltd. [2006] FCAFC 187.  There the court found the defendant guilty of “authorizing” copyright infringement by embedding hyperlinks on his website to remote 3rd party sites which users could use to have music transmitted directly to their computers.

This highly publicized case may well yield some interesting law about how much editorial content moves a content-neutral bare link along the continuum to contributory infringement.  Gawker may also have to defend itself as a news site which will test the boundary of what constitutes “news reporting” and whether what it did was “fair”.  Both the U.S. and Canada have a fair use (or fair dealing) exemption for news reporting so this case will, no doubt, be watched from both sides of the border.  And, whatever the outcome, it’s all publicity if The Hateful Eight ever does make it to screen.

By  Nancy Rubin and Nathaniel Marshall (Articled Clerk)

Academy Award winning director, screenwriter and producer Quentin Tarantino has filed a copyright action in the U.S. District Court of Los Angeles against Gawker Media for facilitating the dissemination of the unproduced script for his film The Hateful Eight. As the media outlet that attempted to purchase the video of Toronto Mayor Rob Ford allegedly smoking crack, Gawker is no stranger to controversy.

The lawsuit alleges Gawker “made a business of predatory journalism” by posting multiple links to the entire script on its blog, the Defamer. Further, according to Tarantino’s claim, Gawker encouraged users to download the copyrighted content with the cheery invitation to “Enjoy!” and has refused to remove the posted URL links.

Beastie Boys and Toys: Verse 1 (Copyright and Fair Use)

January 29, 2014

By Christopher Marr

In November 2013, just in time for Black Friday, a start-up toy manufacturer that specializes in making engineering and science related toys marketed to girls, GoldieBlox, launched an online commercial depicting three young girls playing with a GoldieBlox toy. The audio of the commercial features the three girls singing what unmistakably sounds like the Beastie Boys’ song “Girls” with rewritten lyrics that promote young girls having an interest in science and engineering. The one thing that was missing from this commercial though, was a license for the use of Girls.

Soon after this commercial went viral, and without missing a beat, lawyers representing the Beastie Boys contacted GoldieBlox and threatened legal action on the basis of copyright infringement. In response to this, on November 21, 2013, GoldieBlox filed a lawsuit against the Beastie Boys in the Northern District of California, asking for a declaratory judgment finding that GoldieBlox’s use of Girls is not copyright infringement on the basis that it falls under the Fair Use Doctrine. Soon after this GoldieBlox took the commercial down, and released a public letter apologizing to the Beastie Boys for not seeking their permission, explaining the company’s intentions, and stating that the company would drop its lawsuit if the Beastie Boys agreed not to take any legal action. Sorry wasn’t good enough though, and in early December 2013, the Beastie Boys launched a countersuit claiming copyright infringement against GoldieBlox. Publically, the surviving members of the Beastie Boys have stated that no matter how good GoldieBlox’s intentions are with respect to the commercial, it is still a commercial to sell a product, and the Beastie Boys long ago agreed that they would never allow their music to be used in commercials.

GoldieBlox’s claim that its use of Girls is a fair use of copyright is based on its assertion that the rewritten lyrics parody the original song by criticizing its sexist lyrics. Parody has been recognized by US courts as a potential ground for fair use. Canada’s copyright law has a doctrine similar to fair use, called fair dealing. Upon coming into force in November 2012, Canada’s Copyright Modernization Act added parody as a ground by which a fair dealing exception to copyright infringement may be claimed in Canada. Therefore a claim like GoldieBlox’s could now be made in Canada, though its chances for success are not yet clear.

What is clear under Canadian law is that simply claiming that a use of copyright is a parody is not sufficient. It also has to be proven that the use is fair. Proving that a dealing with copyright is both fair and fits into one of the categories of fair dealing set out in the Copyright Act (like parody), is the test set out by the Supreme Court of Canada in CCH Canadian Limited v. Law Society of Upper Canada to determine what is a fair dealing. Under this test, the following six factors will be important (though not exclusive) in determining whether or not the particular dealing was “fair”:

  1. The purpose of the dealing
  2. The character of the dealing
  3. The amount of the dealing
  4. Alternatives to the dealing
  5. The nature of the work
  6. The effect of the dealing on the work

It is difficult to determine what finding a Canadian court would make in the Beatie Boys case, so it will be very interesting to see the decision of the United States District Court for Northern California, as it may be informative to a Canadian court at some point in the future. A court decision assumes of course that GoldieBlox and the Beastie Boys will fail to play nice and come to a settlement.

By Christopher Marr

In November 2013, just in time for Black Friday, a start-up toy manufacturer that specializes in making engineering and science related toys marketed to girls, GoldieBlox, launched an online commercial depicting three young girls playing with a GoldieBlox toy. The audio of the commercial features the three girls singing what unmistakably sounds like the Beastie Boys’ song “Girls” with rewritten lyrics that promote young girls having an interest in science and engineering. The one thing that was missing from this commercial though, was a license for the use of Girls.

Robinson v. Cinar: Blatant Copying is Substantial Copying

January 13, 2014

By Marc Belliveau

It put me upon reflecting how little repining there would be among mankind at any condition of life, if people would rather compare their condition with those that were worse, in order to be thankful, than be always comparing them with those which are better, to assist their murmurings and complaining.” ― Daniel Defoe, Robinson Crusoe.

As is often said, it’s a rare occurrence for an intellectual property case to reach the Supreme Court of Canada (SCC). In those rare instances, sometimes new law is pronounced that affects every Canadian, like the 2012 SCC pentalogy of copyright cases dealing with tariffs and user rights. This is not one of those. This is a case about uniquely disturbing facts and generally settled copyright law. It is also an “access to justice” case, in which a victim of dirty dealing is dragged through the appeal courts for almost two decades, ultimately emerging with a pyrrhic victory despite incurring millions in legal fees (83 day trial, four appeal proceedings) and suffering significant psychological trauma. Vindicated but broken from the voyage.

The Dreamer

Claude Robinson, who is described as a “dreamer” by a unanimous SCC, “spent years meticulously crafting an imaginary universe for an educational children’s television show” based on the 1719 Daniel Defoe novel Robinson Crusoe. As early as 1982, he drew sketches and storyboards, wrote scripts and synopses and designed promotional materials. To attract investors, he presented his original materials (e.g. proposals, treatments, formats, etc.) to various companies and individuals in Canada, the United States and France. Nothing materialized from the promotional efforts he undertook. Then in 1995, he was “stunned” to watch the television premiere of a blatant copy of his work by some real life “pirates”.

The trial judge ordered a global damage award of $5.2 million, which was reduced to $2.7 million on appeal, but then increased to $4.5 million by the SCC (contrast that amount with the recent default judgment in Fox v. Hernandez of over $10.5 million for copyright infringement).

The Robinson case deals with other legal issues besides copyright, which are quite complex, however I do not propose to cover those other issues here. For example, there is significant discussion in the SCC decision about the calculation of infringement losses (e.g. pecuniary damages, disgorgement of profits, personal versus corporate liability, joint and several liability, non-pecuniary damages, punitive damage, etc.) some of which is peculiar to the Quebec civil code. One particularly interesting aspect of the profit calculation involved the rejected argument that revenues from the audio soundtrack should be excluded from the calculation because it was not copied; it was held to have no stand-alone value and merely accessory to the infringing TV show. For this IP blog, I propose to deal only with the copyright infringement issues.

Copyright Basics

As a starting point of its December 23, 2013 decision, the SCC lays down a few fundamental axioms of Canada’s copyright infringement analytical framework:

1. The Copyright Act strikes “a balance between promoting the public interest in the encouragement and dissemination of works of the arts and intellect and obtaining a just reward for the creator”.

2. The Copyright Act “seeks to ensure that an author will reap the benefits of his efforts, in order to incentivize the creation of new works. However, it does not give the author a monopoly over ideas or elements from the public domain, which all are free to draw upon for their own works”.

3. The Copyright Act “protects original literary, dramatic, musical, and artistic works…. It protects the expression of ideas in these works, rather than ideas in and of themselves…. An original work is the expression of an idea through an exercise of skill and judgment… Infringement consists of the unauthorized taking of that originality”.

4. The Copyright Act “does not protect every “particle” of an original work, “any little piece the taking of which cannot affect the value of [the] work as a whole”…. Section 3 of the Copyright Act provides that the copyright owner has the sole right to reproduce “the work or any substantial part thereof”.

5. “A substantial part of a work is a flexible notion. It is a matter of fact and degree. “Whether a part is substantial must be decided by its quality rather than its quantity”…  What constitutes a substantial part is determined in relation to the originality of the work that warrants the protection of the Copyright Act. As a general proposition, a substantial part of a work is a part of the work that represents a substantial portion of the author’s skill and judgment expressed therein. A substantial part of a work is not limited to the words on the page or the brushstrokes on the canvas. The Act protects authors against both literal and non-literal copying, so long as the copied material forms a substantial part of the infringed work”.

None of the foregoing is particularly ground-breaking. It makes eminent sense to look at all of the surrounding facts and circumstances to get a better appreciation of what was infringed, just as the SCC proclaimed in the Masterpiece case about trade-mark confusion and infringement. One should not get into dissections and minute parsing to avoid what should be readily apparent as a logical conclusion to the ordinary person.

Copying a Substantial Part

In order to avoid liability for their infringement, the appellants argued that the SCC should apply an American 3-step infringement test, called “abstraction-filtration-comparison”, whereby a judge must (1) determine in abstract what elements of the allegedly infringed work are original and capable of copyright protection, (2) exclude or filter out non-protectable elements of the allegedly infringed work (such as ideas, elements drawn from the public domain or generic elements) and (3) compare what remains of the allegedly infringed work after this “weeding-out” process to the infringing work to determine whether a substantial part of the original was reproduced. That “reductive” test comes from computer software infringement jurisprudence, where perhaps it is more commonplace for allegedly infringed source code to include public domain or generic programming language which an infringer cannot be held to have infringed.

While the SCC did not foreclose the use of that 3-step test in Canada in appropriate cases, it preferred to stick with the traditional Canadian “qualitative and holistic approach” in assessing whether a substantial part of the original was stolen in this particular factual matrix. Here is a key passage of the SCC decision:

“As a general matter, it is important to not conduct the substantiality analysis by dealing with the copied features piecemeal: [citation omitted]. The approach proposed by the Cinar appellants would risk dissecting Robinson’s work into its component parts. The “abstraction” of Robinson’s work to the essence of what makes it original and the exclusion of non-protectable elements at the outset of the analysis would prevent a truly holistic assessment. This approach focuses unduly on whether each of the parts of Robinson’s work is individually original and protected by copyright law. Rather, the cumulative effect of the features copied from the work must be considered, to determine whether those features amount to a substantial part of Robinson’s skill and judgment expressed in his work as a whole. (my emphasis)

The SCC also rejected arguments that the numerous differences between the works outnumbered their rather obvious similarities, such that the infringing work was in effect its own entirely new work (this raises the specter of “transformative” jurisprudence under US fair use doctrines). At most, they argued, the infringers merely reproduced ideas and elements drawn from the public domain. Here the SCC refused to embark on a fresh assessment of the factual findings made at the trial level, namely that the copying was of a substantial part of the work, not of the idea behind the work, and that the infringed work was an original work that was the product of sufficient skill and judgment to satisfy the Act’s originality criterion. These passages of the SCC decision are helpful in understanding the “similarities-differences” dichotomy:

The Cinar appellants contend that the trial judge focused almost exclusively on the similarities between Sucroë and Curiosity, and failed to consider the differences between the works. They point to significant differences between the works: the secondary characters in Sucroë are humans, whereas in Curiosity several of those characters are animals; Sucroë prominently features as its “villains” a band of marauding pirates, whereas Curiosity does not seem to have any villains; and the protagonist in Sucroë is not particularly curious, whereas curiosity is the dominant personality trait of the protagonist in Curiosity.

The question of whether there has been substantial copying focuses on whether the copied features constitute a substantial part of the plaintiff’s work ― not whether they amount to a substantial part of the defendant’s work: [citation omitted]. The alteration of copied features or their integration into a work that is notably different from the plaintiff’s work does not necessarily preclude a claim that a substantial part of a work has been copied. As the Copyright Act states, infringement includes “any colourable imitation” of a work: definition of “infringing”, s. 2.

This is not to say that differences are irrelevant to the substantiality analysis.  If the differences are so great that the work, viewed as a whole, is not an imitation but rather a new and original work, then there is no infringement.  As the Court of Appeal put it, “the differences may have no impact if the borrowing remains substantial.  Conversely, the result may also be a novel and original work simply inspired by the first.  Everything is therefore a matter of nuance, degree, and context”.

The trial judge engaged in a qualitative and holistic assessment of the similarities between the works, which took into account the relevant similarities and differences between the works… He concluded that, despite any differences between the works, it was still possible to identify in Sucroë features copied from Curiosity and that these features constituted a substantial part of Robinson’s work. (my emphasis)

Summary

In conclusion, the main copyright law take-away from the SCC Robinson decision is that the analysis for substantial reproduction remains the same as it ever was, namely that a substantial part is measured by its quality rather than its quantity. If a rogue steals a substantial portion of the originality in a work, essentially the creator’s skill and judgment, it is an infringement just as much as reproducing it entirely. It matters not whether the infringement involves literal or non-literal copying. One must assess qualitatively and holistically the similarities that the infringing work has to the original work, and put their differences into their appropriate context. While some have criticized this flexible approach for its lack of judicial predictability, life is full of “nuance, degree, and context” and so is copyright infringement analysis in Canada.

By Marc Belliveau

It put me upon reflecting how little repining there would be among mankind at any condition of life, if people would rather compare their condition with those that were worse, in order to be thankful, than be always comparing them with those which are better, to assist their murmurings and complaining.” ― Daniel Defoe, Robinson Crusoe.

As is often said, it’s a rare occurrence for an intellectual property case to reach the Supreme Court of Canada (SCC). In those rare instances, sometimes new law is pronounced that affects every Canadian, like the 2012 SCC pentalogy of copyright cases dealing with tariffs and user rights. This is not one of those. This is a case about uniquely disturbing facts and generally settled copyright law. It is also an “access to justice” case, in which a victim of dirty dealing is dragged through the appeal courts for almost two decades, ultimately emerging with a pyrrhic victory despite incurring millions in legal fees (83 day trial, four appeal proceedings) and suffering significant psychological trauma. Vindicated but broken from the voyage.

Another Appearance Release Holds Up in Dragons’ Den Case. (Ribeiro et al v. CBC, Ontario Court of Appeal, November, 2013)

January 6, 2014

By Rob Aske

This recent decision from Ontario’s highest court shows that appearance and production releases can achieve the producers’ desired result.  Ribeiro appeared in a well known CBC reality show known as Dragons’ Den, where guests make pitches to the distinguished panel, and seek investment in their businesses.  But the Dragons can often be very harsh in their responses to proposals they perceive as weak.  Of course CBC has each participant sign a very broad release to eliminate any claims. But in this case the plaintiff claimed that despite the release, the broadcast had been edited in such a fashion as to completely misrepresent the merits of the business plan, and that CBC’s conduct amounted to “gross and reckless negligence, intentional misconduct, malice and bad faith”.

The plaintiffs were particularly concerned with the program’s voice over that introduced the segment as follows:

“The Dragons never pull punches when they spot a money-losing venture.  Unfortunately, these next few ideas hit the mat immediately”.

The broadcast also described the business proposal as a “complete flop”.

The Court of Appeal agreed with the lower court that the release signed was broad enough to protect CBC from any claims, and part of the release wording included the following:

“I further understand that my appearance, depiction and/or portrayal in the Program may be disparaging, defamatory, embarrassing or of an otherwise unfavourable nature which may expose me to public ridicule, humiliation or condemnation.”

That’s strong language, but the plaintiff argued that CBC nonetheless was obliged to edit the Program in good faith.

But the Court of Appeal said that Canadian courts do not recognize a duty of good faith which alters express terms of a contract, and stated:

“The release gives CBC sole discretion to edit the recording as it saw fit and to portray a factual, fictional or defamatory image of the appellants.  Under these circumstances, there could be no contractual duty to edit the broadcast in a favourable manner as alleged. …it falls squarely within the terms of the release.”

By Rob Aske

This recent decision from Ontario’s highest court shows that appearance and production releases can achieve the producers’ desired result.  Ribeiro appeared in a well known CBC reality show known as Dragons’ Den, where guests make pitches to the distinguished panel, and seek investment in their businesses.  But the Dragons can often be very harsh in their responses to proposals they perceive as weak.  Of course CBC has each participant sign a very broad release to eliminate any claims. But in this case the plaintiff claimed that despite the release, the broadcast had been edited in such a fashion as to completely misrepresent the merits of the business plan, and that CBC’s conduct amounted to “gross and reckless negligence, intentional misconduct, malice and bad faith”.