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TRADEMARKS IN CANADA: The Federal Court clarifies the concept of “bad faith”
In the decision Beijing Judian Restaurant Co. Ltd. v. Wei Meng, 2022 FC 743, rendered by the Honourable Angela Furlanetto on May 18, 2022, the Federal Court clarified what constitutes bad faith in trademark law. Prior to the decision, the concept of bad faith in relation to trademarks was interpreted rather cautiously in Canadian jurisprudence. Background Beijing Judian Restaurant Co. Ltd. (the “Applicant”) petitioned the Court to invalidate the registration of Respondent Wei Meng (the “Respondent”) for the trademark depicted below (the “Respondent’s Mark”), on the grounds that the registration was obtained in bad faith, and to strike the trademark from the Canadian Register of Trademarks, in accordance with subsection 57(1) and paragraph 18(1)(e) of the Trademarks Act (the “Act”). In support of its application, the Applicant filed two affidavits of its representatives, which set out the facts below. The Respondent did not cross-examine the Applicant on the affidavits, file any evidence, or appear at the hearing. The following facts are therefore undisputed. The facts Since 2005, the Applicant has been running a chain of restaurants in China and using, in connection with its restaurants, the mark below, as well as each of the components of this mark, alone or in combination (the “JU DIAN Marks”). The JU DIAN Marks are highly visible in China. They are featured in numerous advertisements promoting the Applicant’s restaurants and the JU DIAN Marks. The JU DIAN Marks and the Applicant’s chain of restaurants are therefore well known in that country. Moreover, in 2011 and 2013, respectively, the Applicant began promoting its restaurants in association with the JU DIAN Marks on the WEIBO and WECHAT platforms in an effort to target the Chinese population in and outside China. In 2015, the Applicant considered the possibility of bringing its chain of restaurants to Canada. The Applicant decided to open its first restaurants in Canada in the Vancouver and Toronto regions, as these have a large Chinese population that would likely be familiar with the Applicant’s chain of restaurants. The Applicant opened restaurants in Vancouver and Toronto in 2018, and a restaurant in Richmond, British Columbia, in 2019. The Applicant was however unaware that the Respondent had applied to register the Respondent’s Mark in Canada a few months earlier, on June 27, 2017, based on proposed use in association with restaurant services, among others. It appears that, during the same period, the Respondent had also applied to register in Canada several marks belonging to other Chinese restaurant chains. In April 2019, the Respondent visited the Applicant’s Vancouver restaurant and accused the Applicant of stealing his mark. A series of meetings and discussions between the parties ensued, during which the Respondent demanded that the Applicant pay him the sum of $1,500,000 to use the Respondent’s Mark without acquiring its ownership, and threatened to contact the Canada Revenue Agency if the Applicant did not cease using the mark. The Applicant refused to pay the Respondent any sum whatsoever and did not yield to his threats. In the meantime, the Respondent’s Mark was registered in Canada. In June 2019, the Applicant learned of an advertisement that the Respondent had posted on a British Columbia website. The advertisement was for the sale of the registration of the Respondent’s Mark. The Applicant contacted the Respondent anonymously to obtain more information on the offer. The Respondent offered the Applicant a trademark license at a cost of $100,000 per year, justifying the price by stating that the mark was already well known in China with the Applicant’s restaurants. The Applicant then sent the Respondent a formal notice demanding that he cease using the Applicant’s mark and abandon its registration in Canada. The Respondent refused to comply. The Applicant thus filed an application for invalidation and expungement of the registration. The law Although paragraph 18(1)(e) of the Act provides that a registration may be invalidated if the application for registration was filed in bad faith, the Federal Court noted in its decision that the Act contains no definition of the term “bad faith.” It pointed out that, because paragraph 18(1)(e) of the Act is relatively new, very little Canadian jurisprudence has examined what constitutes bad faith in trademark matters. In its decision, the Federal Court drew on various sources to determine whether the registration of the Respondent’s Mark could be invalidated on the basis of bad faith. First, the Court considered the observations of the Parliament of Canada regarding the adoption of the amendments to the Act, which state that: The amendments aim, notably, to hinder the registration of a trademark for the sole purpose of extracting value from preventing others from using it. The amendments would prevent the abusive use of the trademark regime, such as by applying for registration with the sole intention of seeking remuneration from the legitimate owner of a trademark. Second, the Court analyzed certain Canadian decisions rendered prior to the adoption of paragraph 18(1)(e) of the Act in matters of bad faith. It noted that Canadian jurisprudence had already invalidated trademark registrations on the basis of bad faith where the applicant had filed a series of applications for registration in Canada for well-known trademarks. Lastly, the Court reviewed decisions rendered in Europe and the United Kingdom. It concluded that in these jurisdictions, filing an application for registration of a trademark without intending to use it for a legitimate commercial purpose and with the sole intention of preventing a third party from entering the market or interfering with its business may constitute bad faith. The same is true where an applicant wishes to register a trademark for extortion purposes. The Court then analyzed the relevant date in order to assess bad faith under paragraph 18(1)(e) of the Act. It stated that while the relevant date is the date on which the application was filed, evidence subsequent to that date may be considered relevant if it helps to clarify the reasons why the application was filed. The Court held that the Applicant had the burden of establishing bad faith, which had to be proven on a balance of probabilities with clear and convincing evidence. The Court however specified that where the facts could only be known to the Respondent, circumstantial evidence and inferences from proven facts could be sufficient to establish the Respondent’s objectives at the time of the application’s filing. The facts show that, at the time the application was filed, the Respondent was aware of the Applicant’s restaurants in China and that the JU DIAN Marks had acquired a certain reputation, at the very least, among the Chinese population in British Columbia. The Court also concluded that it was highly unlikely that the Respondent had created a mark identical to that of the Applicant on his own, considering the originality of the mark. It was therefore more likely that the Respondent had wanted to register the same mark, knowing that it was associated with the Applicant’s restaurants in China, in order to benefit from its reputation. The Court nonetheless made the following clarification: filing an application for a trademark, even if it is identical to that of a third party, is insufficient to invalidate its registration, as there may be a legitimate basis to obtain a registered trademark in Canada for the same trademark that is registered and used by a third party elsewhere, where the third party’s trademark has no reputation in Canada. Thus, it is the intention to “abuse the trademark regime” or the bad faith of the owner that must be established on a balance of probabilities. The Court concluded that the Applicant’s evidence established that the Respondent had registered the trademark without a legitimate commercial purpose: The JU DIAN Marks are known in Canada, at least by the Chinese population in British Columbia. The Respondent acknowledged in his exchanges that the JU DIAN Marks are associated with the Applicant’s chain of restaurants and are well-known trademarks. The Respondent applied to register the Respondent’s Mark in Canada for the purpose of extorting money by leveraging the trademark’s reputation. The Respondent applied to register trademarks in Canada belonging to Chinese restaurant chains. The Court therefore held that the circumstances of the case constituted bad faith, but noted that in the United Kingdom, an inference of bad faith may be rebuttable where there is registration of a known trademark by an applicant who has no connection with the legitimate owner of the trademark. However, in the United Kingdom, where an applicant has engaged in a pattern of acquiring multiple such registrations, rebutting the inference of bad faith becomes significantly more difficult. In the absence of evidence from the Respondent to rebut the inference of bad faith created by the circumstantial evidence, the Court found that the evidence on file established the Respondent’s intent to use the registration for extortion purposes. The Court invalidated the registration of the Respondent’s Mark and ordered that the registration be expunged from the Register of Trademarks. What this means It appears from this decision that the Court’s analysis is largely factual and that the burden of establishing the intent of the owner of a given trademark at the time an application is filed may be difficult, especially where a foreign applicant’s trademark has no reputation in Canada.
Ten things you should know about the amendments to Quebec’s Charter of the French language
Quebec recently enacted Bill 96, entitled An Act respecting French, the official and common language of Québec, which aims to overhaul the Charter of the French language. Here are 10 key changes in this law that will impose significant obligations on businesses: As of June 1, 2025, businesses employing more than 25 people (currently the threshold is 50 people) for at least six months will be required to comply with various “francization”1 obligations. Businesses with between 25 and 99 employees may also be ordered by the Office québécois de la langue française (the OQLF)2 to form a francization committee. In addition, at the request of the OQLF, businesses may have to provide a francization program for review within three months. As of June 1, 2025, only trademarks registered in a language other than French (and for which no French version has been filed or registered) will be accepted as an exception to the general principle that trademarks must be translated into French. Unregistered trademarks that are not in French must be accompanied by their French equivalent. The rule is the same for products as well as their labelling and packaging; any writing must be in French. The French text may be accompanied by a translation or translations, but no text in another language may be given greater prominence than the text in French or be made available on more favourable terms. However, as of June 1, 2025, generic or descriptive terms included in a trademark registered in a language other than French (for which no French version has been registered) must be translated into French. In addition, as of June 1, 2025, on public signs and posters visible from outside the premises, (i) French must be markedly predominant (rather than being sufficiently present) and (ii) the display of trademarks that are not in French (for which no French version has been registered) will be limited to registered trademarks. As of June 1, 2022, businesses that offer goods or services to consumers must respect their right to be informed and served in French. In the event of breaches of this obligation, consumers have the right to file a complaint with the OQLF or to request an injunction unless the business has fewer than five employees. In addition, any legal person or company that provides services to the civil administration3 will be required to provide these services in French, including when the services are intended for the public. As of June 1, 2022, subject to certain criteria provided for in the bill, employers are required to draw up the following written documents in French: individual employment contracts4 and communications addressed to a worker or to an association of workers, including communications following the end of the employment relationship with an employee. In addition, other documents such as job application forms, documents relating to working conditions and training documents must be made available in French.5 As of June 1, 2022, employers who wish to require employees to have a certain level of proficiency in a language other than French in order to obtain a position must demonstrate that this requirement is necessary for the performance of the duties related to the position, that it is impossible to proceed using internal resources and that they have made efforts to limit the number of positions in their company requiring knowledge of a language other than French as much as possible. As of June 1, 2023, parties wishing to enter into a consumer contract in a language other than French, or, subject to various exceptions,6 a contract of adhesion that is not a consumer contract, must have received a French version of the contract before agreeing to it. Otherwise, a party can demand that the contract be cancelled without it being necessary to prove harm. As of June 1, 2023, the civil administration will be prohibited from entering into a contract with or granting a subsidy to a business that employs 25 or more people and that does not comply with the following obligations on the use of the French language: obtaining a certificate of registration, sending the OQLF an analysis of the language situation in the business within the time prescribed, or obtaining an attestation of implementation of a francization program or a francization certificate, depending on the case. As of June 1, 2023, all contracts and agreements entered into by the civil administration, as well as all written documents sent to an agency of the civil administration by a legal person or by a business to obtain a permit, an authorization or a subsidy or other form of financial assistance must be drawn up exclusively in French. As of September 1, 2022, a certified French translation must be attached to motions and other pleadings drawn up in English that emanate from a business or legal person that is a party to a pleading in Quebec. The legal person will bear the translation costs. The application of the provisions imposing this obligation has, however, been suspended for the time being by the Superior Court.7 As of September 1, 2022, registrations in the Register of Personal and Movable Real Rights and in the Land Registry Office, in particular registrations of securities, deeds of sale, leases and various other rights, must be made in French. Note that declarations of co-ownership must be filed at the Land Registry Office in French as of June 1, 2022. The lawyers at Lavery know Quebec’s language laws and can help you understand the impact of Bill 96 on your business, as well as inform you of the steps to take to meet these new obligations. Please do not hesitate to contact one of the Lavery team members named in this article for assistance. We invite you to consult the other articles concerning the modifications made to Quebec’s Charter of the French language: Trademarks and Charter of the French language: What can you expect from Bill 96? Amendments to the Charter of the French Language: Impacts on the Insurance Sector “Francization” refers to a process established by the Charter of the French language to ensure the generalized use of French in businesses. The OQLF is the regulatory body responsible for enforcing the Charter of the French language. The civil administration in this law includes any public body in the broad sense of the term. An employee who signed an individual employment contract before June 1, 2022, will have until June 1, 2023, to ask their employer to provide them with a French translation if the employee so wishes. If the individual employment contract is a fixed-term employment contract that ends before June 1, 2024, the employer is not obliged to have it translated into French at the request of the employee. Employers have until June 1, 2023, to have job application forms, documents related to work conditions and training documents translated into French if these are not already available to employees in French. Among these exceptions are employment contracts, loan contracts and contracts used in “relations with persons outside Quebec.” There seems to be a contradiction in the law with regard to individual employment contracts which are contracts of adhesion and for which the obligation to provide a French translation nevertheless seems to apply. Mitchell c. Procureur général du Québec, 2022 QCCS 2983.
Trademarks and Charter of the French language: What can you expect from Bill 96?
On May 13, 2021, the Quebec government introduced Bill 96 to amend the Charter of the French language (the “Charter”) to strengthen the provisions regarding the use of French, particularly with respect to the language of commerce and business. This bill has been thoroughly reviewed in parliamentary committee and the committee tabled its report on April 26. In the current political context, it is expected that Bill 96 will be adopted in the coming months. The final form of the bill and its coming into force have yet to be determined. However, we can already anticipate that the timeframe for compliance with these new rules will be three years following assent of the Bill.1 The bill provides for a number of changes to the Charter, including amendments with respect to trademarks, which currently benefit from an exception. Under this exception, businesses may currently use a trademark in a language other than French in Quebec, provided that the French version of the trademark has not been registered. Since 2019, sufficient French must be present in public signage outside a building when a trademark is used in a language other than French.2 Under Bill 96, it will still be possible to use a trademark in a language other than French on products, in commercial publications and on public signage and commercial advertising in Quebec. However, the conditions for benefiting from this exception under the Charter will be modified and deserve not only attention, but also action! Start by reading the following. If you use a trademark in a language other than French in Quebec or if you plan to do so, you must first make sure that this trademark is registered.3 You will also need to review the public signage outside your premises, to comply with the new requirement of a markedly predominance presence of French.4 Finally, you will need to revise your product labels and packaging if your registered trademarks contain descriptive or generic terms in a language other than French.5 In such a case, you may have to modify your packaging and labels to add a French translation of these terms. It should be noted that the Charter applies to businesses with an establishment in Quebec, but also possibly to businesses based outside Quebec, insofar as their website is intended to perform a commercial act on Quebec territory. With respect to websites, the current practice of the Office québécois de la langue française (“OQLF”) is to intervene only in cases where the business has an establishment in the province of Quebec. If the enterprise communicating with Quebec customers does not have an establishment there, the OQLF favours an incentive approach.6 The future will tell whether this practice will be maintained once the Charter is amended.There is no doubt that foreign companies that are the subject of a complaint in this regard will be given time to translate their website into French in order to avoid the sanctions that will be more severe under the new rules. Let’s take a closer look at what each of the proposed changes means, should the bill be passed in its current form. Change #1: French to be markedly predominant on public signage outside the premises Bill 96 replaces the requirement of the sufficient presence of French with a requirement of markedly predominance of French visible from the exterior of the premises.7 Currently, the markedly predominance of French is assessed within the parameters set out in the Regulation defining the scope of the expression “markedly predominant” for the purposes of the Charter of the French Language. According to this regulation, the presence of French is considered markedly predominant if the French text has a much greater visual impact than the text in the other language (i.e. twice as large). It will be interesting to see if these rules will be maintained or if new criteria will be established for the application of Bill 96. The first element to keep in mind with respect to the requirement of the markedly predominance of French under the current law is to disregard the visual impact of the trademark. Indeed, section 1 of the Regulation provides as follows: In assessing the visual impact, a family name, a place name, a trade mark or other terms in a language other than French are not considered where their presence is specifically allowed under an exception provided for in the Charter of the French language (chapter C-11) or its regulations. Thus, as long as the trademark is registered in accordance with the new applicable rules, the visual field occupied by the trademark must be disregarded in assessing whether French is otherwise markedly predominant in the public signage outside the premises. In other words, no modification of your public signage will be required as long as your sign consists of the following: (1) a trademark (registered) in a language other than French and (2) generic or descriptive terms in French. Indeed, the only elements displayed in such a case (apart from the trademark) would be in French. However, if your public signage includes elements in a language other than French, the French should be markedly predominant (i.e. twice as large) in the visual field (excluding the space occupied by the trademark. The regulations set out various presumptions to determine whether the criterion of the much greater visual impact of French is met. In the case of a single poster: the French text will be deemed to have a much greater visual impact if the following conditions are met:8 the space devoted to the French text is at least twice as large as that devoted to the text in another language; the characters used in the French text are at least twice as large as those used in the text written in another language; and the other features of the posters do not reduce the visual impact of the French text. In the case of separate posters of different dimensions: the French text will be deemed to have a much greater visual impact if the following conditions are met:9 the posters bearing the French text are at least as numerous as those bearing the text in the other language; the characters used in the French text are at least twice as large as those used in the text in the other language; and the other features of posters do not reduce the visual impact of the French text. In the case of texts both in French and in another language: the text in French is deemed to have a much greater visual impact if the following conditions are met:10 the posters bearing the French text are at least as numerous as those bearing the text in the other language; the posters bearing the French text are at least twice as large as those with the other language text; the characters used in the French text are at least twice as large as those in the text in the other language; and the other features of the posters do not reduce the visual impact of the French text Finally, it should be noted that the criterion of the markedly predominance of French will also be applied to the trade name of the business, if it is visible from outside the premises and includes an expression from a language other than French.11 Change #2: In order to avoid translation into French, registration of the trademark used in public signage and commercial advertising is mandatory In order to use a trademark in a language other than French, without translation, with regard to public signage and commercial advertising, it will now be required to demonstrate that: the trademark is already registered in Canada; and no corresponding French version appears on the Trademarks Register.12 If these conditions are not met, the trademark will have to be accompanied by a markedly predominant French translation. If you are currently using a brand in a language other than French that is not registered, be quick because the registration process in Canada can easily take three years! Otherwise, you may be required to modify your public signage and commercial advertising to include a markedly predominant French version of the trademark. While it is possible to request an accelerated examination of an application for registration in certain special circumstances (including the fact that a court proceeding is pending), it is far from certain that the Canadian Intellectual Property Office will agree to expedite examination of applications for reasons of compliance with the Charter. It is therefore better not to delay filing your trademarks in order not to expose yourself to the consequences provided under the law. In practical terms, public signage includes any message posted in a place accessible to the public, whether inside or outside the premises, whereas commercial advertising is the expression of a commercial message, regardless of the form. The following examples are considered public display or commercial advertising: signs, posters, billboards, displays, bulletin boards; delivery vehicles, promotional bags, carts, employee uniforms; catalogues, brochures, leaflets, directories and other similar publications; and websites and social media. Change #3 : A trademark used in connection with the products must be registered to avoid French translation In its original form, the bill was silent on the issue of the use of a trademark on a product, suggesting that the status quo would continue to apply, namely that it would still be possible to use a trademark in a language other than French on a product (including its packaging or label), without the need for registration. However, the government has added a provision during the course of the parliamentary work by providing for the obligation to register trademarks in a language other than French, to avoid the addition of a French translation.13 So, no exception for product labels and packaging: make sure you register your trademarks if you have not already done so. Otherwise, you could be forced to withdraw your products from the market and pay fines under the new law, as discussed below. Change #4: Requirement to translate generic and descriptive terms for product trademarks The amendment proposed in parliamentary committee discussed above goes much further than the need to register the trademark and could have a major impact on some businesses by requiring them to modify their packaging and labels forproducts sold in Quebec. The new section 51.1 of the Charter proposed in parliamentary committee, provides that if the registered trademark (in a language other than French) contains generic or descriptive terms, these will have to be translated into French. 51.1 notwithstanding section 51, on a product, a registered trademark within the meaning of the Trademarks Act (Revised Statutes of Canada, 1985, chapter T-13) may be, even in part, solely in a language other than French where there is no corresponding version in French on the register kept under that Act.However, if generic or descriptive terms of the product are included in such trademark, they must appear in French on such product or on a medium permanently attached to it. (emphasis added) A reading of the Committee’s work provides a better understanding of the purpose of this product-specific rule: the government seems to want to limit the practice of some businesses which register, as a trademark, the label affixed to a product consisting of the main trademark, but also of several descriptive or generic terms, which would otherwise have to be translated to comply with the Charter. The example of the SOFTSOAP trademark was discussed in parliamentary committee. To illustrate this, we reproduce here two examples of registered trademarks for SOFTSOAP products: As the law currently stands, these trademarks may be registered under the Trademarks Act and they comply with the Charter. The owner of these trademarks can therefore rely on the “recognized trademarks” exception and sell its products in Quebec without translating into French the descriptive or generic terms such as “soothing clean,” “aloe vera fresh,” “refill” and “good for 800 dispenses.” Based on discussions in the parliamentary committee, the government’s concern does not seem to be directed towards the main trademarks, in this instance, SOFTSOAP, but rather towards the registration of purely descriptive terms, which do not, in themselves, have the vocation of a trademark and which nevertheless benefit from the exception of recognized trademarks under the current law. The regulations will, we hope, clarify the scope of this section 51.1 of the Charter, if it is adopted, by providing that this new requirement does not apply to the main trademarks of products. We also hope that a reasonable period of time will be given to businesses to allow them to change their labels and packaging. Change #5: Complaints, powers and penalties in the event of violation The OQLF is responsible for ensuring compliance with the Charter and its regulations. While it has the authority to identify violations, it mainly acts on complaints from the public. After reviewing a complaint, the OQLF sends an official letter if it judges that there has been a violation and it gives the business a deadline to respond. The OQLF can refer the matter to the Director of Criminal and Penal Prosecutions if the matter is not resolved to its satisfaction, who can in turn bring an action before the Court of Québec. In the event of a conviction, the court determines the amount of the fine to be paid. The OQLF mainly intervenes in cases of violations regarding public signage and websites for businesses with an establishment in Quebec. The bill brings some changes to the handling of complaints. The OQLF will have to inform the complainant of the handling of the complaint and the measures that the OQLF intends to take against the company targeted by the complaint.14 The OQLF will also benefit from new powers as of the assent of Bill 96,15 including: the power to issue orders in case of a breach (removal of products from shelves);16 the power to ask to the Superior Court to issue an injunction for the removal of non-compliant products or the removal or destruction of posters, advertisements, billboards or illuminated signs that contravene the Charter.17 Finally, the amount of fines to be paid in the case of a violation is increased as follows:18 individuals: $700 to $7,000; legal persons: $3,000 to $30,000. The bill provides that the amount of the fines doubles for a first recidivism offence and triple for any subsequent offence.19 The amount increases with each day the violation continues, with each day counted as a separate violation.20 Conclusions: What to do to prepare yourself for the entry into force of Bill 96? In practice, the requirement of having a registered trademark will be problematic for businesses who want to use a non-French trademark in Quebec, without a French translation. To comply with the new rules, businesses will indeed have to delay their launch in the province of Quebec until their mark is registered. As indicated above, registration process may easily take up to three years if not more. Let’s hope that the government will amend Bill 96 to require filing of an application as opposed to trademark registration. Businesses that use trademarks in a language other than French have every reason to take the following measures right now: List all trademarks used in a language other than French (including slogans) as well as those to be used in upcoming projects; Consult a trademark expert to determine the best strategy, including clearance searches to ensure that these trademarks are registrable; File trademark applications quickly, given the lengthy registration process in Canada (i.e. a minimum of three years),. A review of product labels and packaging should also be initiated to ensure compliance with the new rules, once the bill is passed. Finally, public signage outside the premises will also have to be reviewed insofar as a language other than French is used, apart from the trademark. A proactive approach will allow you to avoid costs related to the addition of a French translation in public signage, advertising and labelling of your products and services and, moreover, to avoid fines in the event of non-compliance with the new rules. Ready, Set, Register! Bill 96, article 201 paragraph 5 Regulation respecting the language of commerce and business, section 25.1 Bill 96, article 47 Bill 96, article 47 Bill 96, article 42.1 10 legal questions about the Charter of the French Language, websites and social media accounts, Question 3 and Question 6; Les médias sociaux et la Charte de la langue française – Guide pratique à l’intention des entreprises, https://www.oqlf.gouv.qc.ca/francisation/entreprises/guide-medias-sociaux.pdf, pages 7 and 8 Bill 96, article 47 Regulation defining the scope of the expression “markedly predominant” for the purposes of the Charter of the French language, section 2 Regulation defining the scope of the expression “markedly predominant” for the purposes of the Charter of the French language, section 3 Regulations defining the scope of the expression “markedly predominant” for the purposes of the Charter of the French language, section 4 Bill 96, article 48 Bill 96, article 47 Bill 96, article 42.1 Bill 96, article 107 Bill 96, article 201 Bill 96, article 113 (177) Bill 96, article 113 (184) Bill 96, article 114 (205) Bill 96, article 114 (206) Bill 96, article 114 (208)
Entrepreneurs and Intellectual Property: Avoid these 13 mistakes to protect yourself (Part 3 of 3)
In the third and final entry of this three-part article series, we share with you the last set of intellectual property (IP)–related mistakes (mistakes #10 to #13) that we regularly see with startups. We hope you will find it useful for your business. Please be sure to read our first and second entries in this series, where we go over mistakes #1 to #5 and #6 to #9, respectively. Happy reading! Part 3 of 3 Mistake #10: Assuming that your invention is unpatentable One common mistake we see business owners make is that they assume their technology is not patentable. This frequently applies to computer-related inventions, such as software. Even though there is no outright ban on patenting software in Canada, many inventors are under the impression that software is unpatentable. This is most likely due to the fact that many patent applications for computer-implemented inventions are initially refused because the Patent Office determines that the invention in question is merely a disembodied series of mental steps and/or a mathematical formula (both of which are not considered patentable subject matter). However, it is important to remember that, while certain types of subject matter are not patentable in Canada (e.g., disembodied mental steps and mathematical formulae, as mentioned above), that does not mean that technology involving such unpatentable subject matter (e.g., computer software) is completely void of patentability. Often, it simply means that another aspect of the technology should be the focus of the patent application. For example, with regard to computer-implemented inventions, one strategy to increase the likelihood of patentability is to draft the patent application in such a way so as to emphasize that the computer hardware is essential, or to draft the application in such a way that it is clear that the invention creates an output comprising discernible effects or changes (e.g.: this can be as simple as generating distinct groups in a classification method). It is also worth noting that many inventors are under the mistaken impression that a new piece of technology has to be all but revolutionary in order to be patentable. However, improvements over existing technology are also patentable as long as they are sufficiently new and inventive. Accordingly, it is important to speak to a patent agent to properly determine if and how your invention may be patented. Mistake #11: Believing that your patent automatically gives you the right to use and/or commercialize your invention One common misconception regarding patents is that they give the owner thereof the right to use and/or commercialize the patented technology without fear of infringing third-party patents. However, what a patent actually does is allow its owner to exclude others from using and/or commercializing their patented technology. It is not a shield against potential infringement of third-party IP rights. For example, if you obtain a patent for a piece of technology you developed, that does not necessarily mean you have the right to use or commercialize that technology. Specifically, if your technology incorporates patented technology owned by another company, then that company can actually prevent you from using or commercializing your own invention. This is an important aspect of “patent protection” that all entrepreneurs should be aware of. Mistake #12: Not informing yourself about the criteria for recognition as an inventor or owner of an invention, and not training your employees on these criteria Many types of intellectual property disputes can arise within a business. Most of the time, they are the result of misconceptions, such as: An employee believes they are the inventor of an invention, when they are not; An employee believes that as the inventor of an invention, they are necessarily entitled to consideration (monetary or otherwise); the invention belongs to them rather than to the company; they are free to use the invention, for example upon leaving the company to become a competitor; or An employer believes that their company can use the specific results of a researcher’s work obtained from a previous job. It’s easy to imagine how messy such issues can get! An ounce of prevention is certainly worth a pound of cure. Get informed! Also, clarify these issues with new employees as soon as you hire them, and set down in writing who will own the rights to intellectual property developed during the course of employment. A quick training session before such problems arise can set the record straight and avoid conflicts based on unrealistic expectations. Mistake #13: Not having an intellectual property protection strategy After reading this three-part article, we hope you now have a better understanding of the importance of developing an intellectual property strategy for your company. While such strategies can be very complicated, we have provided three broad questions that you should consider at all times (not just when starting out). What intellectual property is my company using? This first question tasks you with identifying intellectual property that your company uses. This would include any technology that you are using or selling; any brand names/logos; and any works you are currently using (e.g., logos, slogans, website layouts, website texts, pictures, brochures or computer programs). Is there a risk that I am infringing a third party’s IP? Once you have identified the above intellectual property, you should ask yourself if your activities might infringe a third party’s IP rights. Obtaining a response may involve the following: Hiring a patent agent to perform a freedom to operate search for any technology you plan on using. Hiring a lawyer specialized in IP to perform a trademark search and opinion for any brand names/logos you use, as well as to negotiate and prepare an assignment of IP rights. How can I expand my own IP portfolio? This question involves determining, for each piece of IP you have identified, if and how it can be protected. This can include asking yourself the following additional questions: Is any of the technology I use or commercialize worth protecting? If so, should I file a patent application or keep the technology a trade secret? In which countries do I want IP protection? Are any of my company’s brand names or logos worth protecting by filing a trademark application? What’s important is not necessarily that you protect each and every piece of intellectual property your company owns, but that you have properly evaluated your company’s IP and have come up with an effective strategy that suits your business. In order to properly optimize your company’s IP portfolio, we naturally recommend speaking with your IP professional, whether it be a patent agent, a trademark agent, or a lawyer. Conclusion Lavery’s intellectual property team would be happy to help you with any questions you may have regarding the above or any other IP issues. Why don’t you take a look at our Go Inc. start-up program? It aims to provide you with the legal tools you need as an entrepreneur so you can start your company on the right foot. Click on the following links to read the two previous parts. Part 1 | Part 2
Entrepreneurs and Intellectual Property: Avoid These Thirteen Mistakes to Protect Yourself (Part 2 of 3)
In the second entry of this three-part article series, we share with you the next set of intellectual property (IP)–related mistakes (mistakes #6 to #9) that we regularly see with startups. We hope you will find it useful for your business. Please be sure to read our first entry in this series, where we go over mistakes #1 to #5. Happy reading! Part 2 of 3: Mistakes concerning trademarks, industrial designs, copyrights, and trade secrets Mistake #6: Launching your product on the market without having verified the availability of your trademark Choosing a trademark can be a long and expensive process. People sometimes focus on the attractive qualities of a trademark, forgetting that its primary function is to distinguish a company’s products or services from those of others. To properly fulfil this function, the trademark must not be confusing with other trademarks, trade names, and domain names. In order to avoid conflicts with existing rights, an availability search should be conducted prior to a trademark’s adoption and the launch of a new product, service, or business. Furthermore, it may not be possible to register a trademark if it doesn’t have certain necessary intrinsic qualities, and a trademark may not be usable if it conflicts with the rights of third parties. A search will make it possible to determine where your desired trademark stands in terms of these two aspects; if necessary, a different mark may need to be adopted. Conducting a pre-adoption trademark search may prevent you from having to change trademarks after sales have begun or after the marketing development of your products or services is underway. Redesigning your advertising campaign; modifying your documentation, website, and packaging; and developing a new marketing strategy to transfer and retain the goodwill surrounding your initial trademark will be an expensive task, taking up time that could have been invested elsewhere. Such a process also carries the risk of tarnishing your reputation or losing your goodwill. Mistake #7: Not having your software or graphic designer sign a copyright assignment Many people think that a copyright is intended to protect a work with exceptional artistic qualities. However, such thinking is erroneous. As long as a text, drawing, graphic design or computer program is a creation that required a certain amount of effort and is not a copy of an existing work, it constitutes a “work” and is automatically protected by copyright. As a general rule, in Canada, the author is the first copyright owner; thus, just because the work was created in exchange for remuneration doesn’t mean that its copyright was transferred. For a startup business owner to ensure that they own a copyright, they should ask the artist or author to sign a written transfer of copyrights, thereby ensuring that the business can publish and use the work as it sees fit. It is also important to have the author of a work sign a waiver of moral rights or to outline the terms and conditions that will apply to the work’s authorship and integrity. If these steps are omitted, you’ll be limited in the use of such works. They won’t be part of your assets and will therefore not increase the value of your portfolio. In addition, you’ll be dependent on the consent of the actual holders of the rights to commence actions for infringement, should that ever be necessary. Mistake #8: Not having your employees, officers, and contractors sign confidentiality agreements (before entering into a business relationship) The sooner the better! Your company should see to having an agreement intended to preserve the confidentiality of its information signed by all those whom it mandates to perform work that is significant for its development, including its employees. The type of information that can be protected is virtually unlimited; at a minimum, it includes information related to R&D, market studies, prototypes, ongoing negotiations, marketing research of any kind, and lists of target customers. Ideally, in an employer-employee relationship, when an employee or officer leaves, a company should make sure to remind them of the confidentiality obligations that will continue to apply despite the end of the relationship. Applying these principles reduces the risk that an employee or partner will publicly share or independently use your strategic information at your company’s expense. Mistake #9: Not protecting your original products’ shapes and ornamentation within the prescribed time limit Many are unaware of the benefits of protecting an object’s shape, form, and ornamentation through the Industrial Design Act, or they learn of such benefits too late. In Canada, such protection has two key requirements: The industrial design must not have been published more than one year before the date on which an application for registration is filed; and The protection must be acquired by registration to exist. This type of protection is more effective than one might think and should not be overlooked. For example, a search of the industrial design register will reveal how many industrial designs tech giants have obtained. Some industrial designs have even been the subject of high-profile disputes, including one between Apple and Samsung over the shape of tablets. Apple Inc. uses such protection to prevent the presence of competing products that copy its designs on the market. As an example, in Canada, the shape of the headphones shown below was protected in 2021 and the shape of the phone shown below was protected in late 2020. For more detail on the protection of each of these articles, see Registration 190073 and Registration 188401. Conclusion Lavery’s intellectual property team would be happy to help you with any questions you may have regarding the above or any other IP issues. Why don’t you take a look at our Go Inc. start-up program? It aims to provide you with the legal tools you need as an entrepreneur so you can start your company on the right foot! Click on the following links to read the two previous parts. Part 1 | Part 3
Accelerated trademark examination – Canada
Good News from the Canadian Intellectual Property Office! CIPO is taking measures to allow expedited examination of trademark applications in the following cases: Upcoming or current court action in Canada; Combating counterfeit products at the Canadian border; Protecting intellectual property rights from being severely disadvantage on online marketplaces; Preserving a claim to priority within a set deadline and in response to a foreign Trademarks Office request. All requests must be made by way of an affidavit or statutory declaration. There are no fees involved. If the request is accepted, the application will be examined as soon as possible. If not, an explanation for the refusal will be provided. Important to note that if the examination is expedited, this advantage could be lost if the applicant requests an extension of time or misses a deadline.
Studios and designers: How to protect the intellectual property of your video games?
Behind every video game, there is intellectual property (IP) which is worth protecting to optimize monetisation of the game. As discussed in Studios and designers: Are you sure that you own the intellectual property rights to your video games, the first step for studios and designers is to make sure that they own all IP rights on the video game. The next step is to identify what type of IP protection is available between trademarks, copyrights and patents and then put in place an IP strategy to protect these assets in Canada and abroad. Below is a summary of the types of protection to consider to fully protect a video game. Trademarks The name of a video game is a valuable asset, with a potential to become internationally famous. Just think about Call of Duty, Fortnite, Minecraft and Assassin’s Creed or, for the more nostalgic, classic games such as Super Mario. Pokémon and Pacman. Trademarks have this power to evoke unique and captivating experience in the gaming world. In this industry, experience shows that a video game may become an instant international success, since it is an online market with powerful gaming influencers. For this reason, being proactive with trademark protection is key. What does it mean? First, clearance searches should be made as soon as you decide on the name of your game, in the most important markets where you anticipate sales. The idea here is to make sure that your brand is not conflicting with other marks so that you may use it and register it in your main market. Once the mark is cleared, you may then proceed with filing. Here again, the earlier the better as trademark protection is, in most countries, granted to the first-to-file. Filing before your project becomes public is therefore strongly recommend. As for the scope of the application, it should of course cover the game itself but also potential merchandising goods, either because it is part of the business plan to monetize the brand, or as a defensive strategy. Apart from the main brand, other aspects of the game may qualify as trademarks and be protectable. For instance, a sound or sequence of sounds associated with starting a console or a game could potentially be registered as trademarks. The names and image of characters in a game may also be protected, especially for merchandising goods. In short, for studios and designers involved in the video game industry, trademark registration is key to getting the most value out of a video game. This begins with a well-orchestrated protection strategy to minimize risk of conflicts and to build a solid and valuable brand. Copyrights A video game is a mix of literary, artistic and musical works which are protected by copyright, including computer program behind a game’s architecture is also explicitly protected by law.1 The protection offered by the Copyright Act (“CA”) applies as soon as a work is created, without the need for registration. This protection extends to the 176 member countries of the Berne Convention. Although the protection of a work by copyright is automatic, copyright owners may register their right with the Canadian Intellectual Property Office (“CIPO”) at any time. In particular, registration makes it easier to prove ownership of the right in the event of a dispute in that it creates the presumption that the person named in the registration owns the copyright. Copyright protection applies to the entirety of the game, as well as to its various components. Any infringement of these rights by a third party may give rise to a copyright infringement claim if the work or a substantial part of it is copied, unless a defense such as fair dealing is applicable. In this respect, the following activities may qualify as fair dealing: research and private study, education, parody as well as criticism or review and news reporting. Is video game live streaming copyright infringement? In recent years, the phenomenon of video game live streaming has really taken off. Video gamers film or record their computer screens and broadcast them on platforms such as YouTube and Twitch to show their characters, strategies and tactics for completing certain levels of a game. Some live streaming video gamers, who make this their living, have achieved celebrity status and have thousands of followers. Is live streaming a video game without express permission copyright infringement? The courts have yet to rule on whether live streaming games online constitutes a copyright infringement to communicate the work to the public by telecommunication under section 3(1)(f) of the Act. Faced with this widely popular trend, some studios accept this practice because positive reviews from such gamers can boost game sales. Others criticize the fact that they profit from video games without copyright owners receiving any compensation. Chances are that live streaming is not the highest priority of the video industry who is more concerned by the illegal downloads and counterfeits, which may explain why the courts have not yet had the opportunity to rule on video game live streaming. Patents Patents protect the functional aspects of an invention. The owner of a patent may prevent anyone from making, using or commercializing the patented innovation from the date the patent is obtained. Three aspects are taken into consideration before granting a patent:2 Novelty – The invention must be different or be innovative compared to anything that has been done before, anywhere in the world. Utility – The invention must have a useful function and economic value. Inventiveness – The invention must not be obvious to a person skilled in the field. In Canada, it is not possible to patent an abstract idea, but it is possible to patent the physical embodiment of that idea, provided that it meets the criteria of novelty, utility and inventiveness. Canadian patents in the video game industry Patents obtained in the video game industry mainly relate to consoles, controllers, headsets and other gaming accessories. The video game industry has proved to be innovative with the development of inventions that are both fun and useful. In 2012, Nike patented an invention to encourage physical activity among video game players.3 The patent describes a device placed in a gamer’s shoe when the gamer is physically active and connected to a video game. The energy spent by the gamer gives energy to the virtual character. Once the character’s energy is depleted, the gamer must engage in physical activity again. Are game play mechanics patentable? Certain aspects of a video game are less easy to patent, in particular the game play mechanics, which are a distinctive aspect from the standpoint of gamers when choosing a video game. The game play mechanics consists in the virtual experience of a video game: character movement, the interaction of the player with the game, the way the player moves through the levels of the game, etc. Unique and well-developed game play mechanics can be a great asset for a developer wanting to market new versions of a game. Gamers will go back to a familiar game to get immersed in a new experience. This makes patenting such an experience appealing for a studio. Given that game play mechanics are developed using computer code, it might seem that even if the criteria of novelty, utility and inventiveness were met, this type of invention could not be physically embodied and thus could not be patented. To be patented, game play mechanics must have a physical component in addition to the code itself. Consider a patent describing a video game in which a gamer’s heartbeat is integrated into the game,4 which is a good illustration of physical embodiment. Such transposition of a gamer’s vital signs is done physically through a heart monitor worn by the gamer and connected to the game. As all these aspects were described in the invention, this type of inventive game play mechanics was considered patentable. In the United States, the criteria for patents are similar to those in Canada, meaning that abstract game play mechanics would have to be linked to a physical aspect in order to be patentable. Conclusion Implementing an IP protection strategy prior to launching a video game can prevent conflicts, increase the value of assets and strongly position a company in the market to maximize profits. Copyright Act, section 2. “A guide to patents,” Canadian Intellectual Property Office, Government of Canada, 2020-02-24. Patent No. 2,596,041, issued February 9, 2006. Patent No. 2,208,932, issued June 26, 1997.
The Court of Appeal Adds a Few More Shades to Canada’s Grey Market
In Canada, as elsewhere in the world, intellectual property owners have made numerous attempts to control their distribution channels through trademark law, copyright law, or exclusive contracts, without much success. However, in a recent decision (Costco Wholesale Canada Ltd. c. Simms Sigal & Co. Ltd.,1 hereinafter referred to as “Costco”), the Court of Appeal of Quebec found that Costco Wholesale Canada Ltd. had committed the fault of contractual interference in a situation involving the grey market, also known as “grey marketing.” This decision calls into question a long series of decisions on the legality of the grey market and the principle of free competition, which is well established in Quebec law.2 The grey market is defined as follows: Goods that are imported contrary to the wishes of the copyright holder or an authorized importer in a specific territory. It refers to goods which, as a general rule, are legitimately marketed in the foreign market, but whose presence in the local market is clouded by allegations of infringement. For this reason it is referred to as the ‘grey market’ in contrast to the black market, in which copyright is infringed, and the white market, where there is no copyright infringement.1 The Court of Appeal for Ontario recently confirmed that grey marketing is a legal way of buying genuine branded products abroad and reselling them in competition with a local distributor of the foreign manufacturer.3 In Costco, Simms Sigal & Co. Ltd. (“Simms”) imported and distributed high-end clothing to retailers in Canada. In 2006, Simms entered into an exclusive distribution agreement with Rock & Republic Enterprise Inc. (“R & R”) for the distribution of R & R’s denim line, ready-to-wear clothing, and accessories. R & R jeans were not only high-end; they were also in high demand, selling for between $250 and $325 a pair. In November 2009, Costco Wholesale Canada Ltd. (“Costco”) was approached by a distributor who offered to sell it R & R jeans at a very low price. The evidence shows that R & R knew that those jeans would end up in the Canadian market— R & R would sell to a first distributor who would then sell to a second distributor, who would in turn sell to Costco. Thus, Costco bought R & R jeans through two intermediaries and offered them to its customers for $98.99. Simms sent a formal notice to Costco demanding that it cease selling the R & R jeans, alleging that it was the exclusive distributor and that the jeans Costco was selling were counterfeit. After checking with its distributor, Costco received a letter from R & R confirming that the jeans were genuine products. Costco’s distributor added that R & R “are already dealing with the mad distributor” and asked Costco to “please [not] release this letter to the distributor”.4 With this letter in hand, Costco answered Simms that the jeans were genuine products acquired on the grey market, and that it was entitled to sell them in Canada. In July 2010, Simms sent a second formal notice to Costco, reiterating that it had exclusive distribution rights to R & R jeans in Canada. Simms then instituted proceedings against R & R and Costco, but R & R filed for bankruptcy. At trial, the Superior Court judge held Costco liable for damage caused to Simms as of November 2009, when it had received the first formal notice.5 According to the judge, Costco chose to ignore the existence of the exclusive distribution agreement between Simms and R & R, adopting a position of wilful blindness, whereas it should have inferred, based on its distributor’s behaviour, that an exclusive distribution agreement did indeed exist and that R & R was breaching it. Costco was ordered to pay the sum of $361,005.44 in damages to Simms. Costco was also ordered to pay exemplary punitive damages of $500,000.00 as a result of the gravity of its fault of contractual interference and the effect on Simms’ reputation on the Canadian market. The Court of Appeal of Quebec upheld the Superior Court’s decision and held Costco liable. Contractual interference and the notion of fault In Quebec civil law, under the principle of relativity of contracts, contractual obligations and undertakings may bind only the contracting parties. The fault of contractual interference is an exception to this principle. In the 1975 decision Trudel v. Clairol,6 which dealt with a form of grey market, the Supreme Court of Canada defined the fault of contractual interference as “an act of dishonesty to be associated knowingly with a breach of contract.”7 Simply put, to justify granting remedy for contractual interference, a plaintiff must show: “The existence of a contract and valid contractual obligations that the third party allegedly contravened”;8 “The constituent elements of the fault of a third party,” which are: “the third party’s knowledge of the contractual rights; incitement to or participation in the breach of the contractual obligations; and bad faith or disregard for the interests of others.”9 In Costco, the Court of Appeal specified that “receipt of a copy of the contract by the third party or even that the exclusivity clause was read by the third party”10 is not required to find that the third party committed a fault, and that the analysis of the third party’s knowledge of the contract is contextual.11 In this regard, the Court of Appeal confirmed that the formal notice of November 2009 was not ambiguous, given that Simms’ assertion that it was the exclusive distributor of R & R products was “clear and require[d] no interpretation”.12 It added that Costco’s conduct was not that of a normally prudent and diligent person, and that it had adopted a position of wilful blindness by continuing to sell R & R jeans even though R & R’s letter concerning its rights was not signed and predated the request for confirmation. In the Court of Appeal’s opinion, these facts combined with the formal notice should have been sufficient to conclude that there was indeed a breach of contract.13 Although the Court of Appeal concluded that the trial judge did not impose an additional burden on Costco to inform itself,14 the introduction of the notion of “wilful blindness” makes the situation highly subjective. The Superior Court judge wrote:  Costco relies on the fact that they were dealing with a trusted intermediary. Costco has filed no evidence that it was ever advised that, in fact, R & R had “resolved promptly” the matter with Simms. Accordingly, there was no reason for Costco to believe it could ignore the cease and desist letters.  Costco allowed itself to limit its focus to the issue of authenticity of the Product despite being put on notice by Simms that the up-front issue with Simms was the EDA (Exclusive Distribution Agreement). If Costco was not prepared to deal directly with Simms to resolve the issue, it needed to have the issue of the EDA asked and answered by R & R. Costco failed to do either.  […] Ms. Janek on behalf of Costco was at fault in not seeking: (a) some confirmation emanating from R & R that they knew the goods were being sold in Canada by Costco and (b) that there was no Simms EDA that would prevent such sales. […] 15 [Our emphasis] The Court of Appeal appears to agree with the trial judge’s reasoning. Echoing the Superior Court’s analysis quoted above, the Court explained:  Not only did Costco not obtain the confirmations demanded by Ms. Janek, it also chose to ignore information it received indicating that Simms was the exclusive Canadian distributor of R & R products [...].16 Even though no duty to inquire exists, Costco was criticized for having settled for questionable answers to its request for confirmation from the distributor and R & R that the goods were genuine and that they could be sold in Canada. Would the ruling have been different if Costco had only asked R & R to confirm that the goods in question were genuine, while also asking its distributor whether it was bound by a contractual obligation not to sell in Canada? If the answer is yes, the Court of Appeal’s conclusions make little sense. If, as the Court of Appeal stated, Costco had no duty to inquire, its mistake was to have inquired to R & R directly about Costo’s right to sell the jeans in Canada and it actually would have been preferable for it to ask as few questions as possible. If a minimal duty to inquire had indeed existed, what should Costco have done? The Superior Court judge concluded on the basis of facts proven at trial that Costco should have obtained a letter signed by the owner of the trademarks in question confirming or denying Simms’ exclusive rights. The Court of Appeal appears to agree, adding that:  There is no question here of ambiguity or interpretation regarding Simms’ exclusivity that would have prevented Costco from understanding its scope or extent, but only of Costco’s knowledge of its existence.17 Thus, the Costco decision seems to create a duty to inquire that must be fulfilled to avoid a fault of contractual interference. However, the scope of this duty remains vague. Free competition and the grey market If such duty to inquire is interpreted broadly, it would be possible for an intellectual property right holder to arrange its distribution network in such a way as to make it difficult for a third party to claim ignorance of contractual restrictions with respect to exclusivity in a given territory. At trial, Costco alleged that the R & R jeans that it was selling at a low price had been legitimately acquired on the grey market and that it was entitled to sell them. With respect to the grey market, in Consumers Distributing Co. v. Seiko18 the Supreme Court explained that “[t]he concepts of restraint of trade and free competition [...] would be battered because of an implied recognition of a right of an individual marketing a product to entail and control the sale of identical personal property, however legitimately acquired, of another person.”19 In the present case, the Superior Court determined that Costco could not exonerate itself by alleging its right to purchase and resell grey market goods, as the contract between R & R and Simms was a juridical fact that was opposable to Costco.20 Did the particular facts of this case affect both the outcomes in Superior Court and the Court of Appeal? Certainly, but given that a contract is a juridical fact that is opposable to third parties; that such third parties have a form of duty to inquire about such juridical facts; and that one cannot be wilfully blind, the combination of these decisions seems to give greater weight to honouring contracts than to the principle of free competition.21 Is this a particularity of Quebec civil law (as opposed to common law)? How far does the duty to inquire go following the receipt of a formal notice? What degree of ambiguity is required for a party to claim that it has no knowledge of contractual obligations? The Canadian Courts will likely have to shed more light on the various legal shades of grey in the coming years. 2020 QCCA 1331. Free competition is a well-established principle in civil law. In Excelsior (L’), compagnie d’assurance-vie c. Mutuelle du Canada (La), compagnie d’assurance vie, the Court of Appeal recognized free competition as [TRANSLATION] “a fundamental principle to the organization of economic activities [...] subject to its legislative or regulatory framework.” Thus, competition is unique in that it can voluntarily cause harm to others without constituting a fault. Competition is only considered a fault if it is illicit or unfair; that is, if dishonest practices are used. Excelsior (L’), compagnie d’assurance-vie c. Mutuelle du Canada (La), compagnie d’assurance vie,  R.J.Q. 2666 (C.A.), p. 30. Mars Canada Inc. v. Bemco Cash & Carry Inc., 2016 ONSC 7201, para. 7; conf. 2018 ONCA 239. Costco Wholesale Canada Ltd. c. Simms Sigal & Co. Ltd., supra note 1, para. 18. Simms Sigal & Co. Ltd. c. Costco Wholesale Canada Ltd., 2017 QCCS 5058.  2 SCR 236. Id., p. 241. Costco Wholesale Canada Ltd. c. Simms Sigal & Co. Ltd., supra note 1, para. 51. Id. para. 50. Costco Wholesale Canada Ltd. c. Simms Sigal & Co. Ltd., supra note 1, para. 57. Id. Id. para. 58. Id. para. 64; Simms Sigal & Co. Ltd. c. Costco Wholesale Canada Ltd., supra, note 6, para. 181 to 183. Costco Wholesale Canada Ltd. c. Simms Sigal & Co. Ltd., supra note 1, para. 64. Simms Sigal & Co. Ltd. c. Costco Wholesale Canada Ltd., supra note 6, para. 186–188. Costco Wholesale Canada Ltd. c. Simms Sigal & Co. Ltd., supra note 1, para. 61. Costco Wholesale Canada Ltd. c. Simms Sigal & Co. Ltd., supra note 1, para. 66. 1984 1 SCC 583. Id., p. 584. Simms Sigal & Co. Ltd. c. Costco Wholesale Canada Ltd., supra note 6, para. 94 and 214. Excelsior (L’), compagnie d’assurance-vie c. Mutuelle du Canada (La), compagnie d’assurance vie,  R.J.Q. 2666 (C.A.), p. 30.
E-commerce: Protecting Your Work
As distribution channels with a global reach, websites are a powerful tool for doing business, and during the pandemic, they even play a critical role. A website consists of a set of webpages accessible from an address hosted on a server through the internet or an intranet. A website is a collection of various elements protected by intellectual property laws. We will focus on the following: Copyright It protects an original work (i.e., the author’s own creative work), insofar as it involves the exercise of skill and judgment. This exclusive right allows the owner to produce or reproduce the work in any material form, to perform, represent or publish it, and to exercise other exclusive rights. A website may include the following works: the content of screen page, graphic designs, animation, texts, still and animated images, sounds, databases (which comprise a collection of works, data or other independent elements), software, as for example the ones relating to the creation, operation and launch of the website, computer programs, photographs, cartoons, videos. Ownership of Copyright Copyright is the author’s property, unless the author (i) has assigned his or her right, or (ii) has created the work in the course of his or her employment, in which case the copyright belongs to the employer. It is important to identify the various copyright owners of the works appearing on a website. If a company mandates an external firm to develop a website (website developer), the company will not immediately own the copyright to the website. A development contract entered into with a website developer will usually include a provision regarding the ownership of copyright. It is often provided that the assignment of intellectual property rights to the client who has commissioned a website will take place after payment for said website has been made in full. This poses a problem when the website developer does not complete the website or when a dispute arises over the course of the mandate. Stock Photos Generally speaking, websites that offer photographs do not transfer the copyright of the photographs to the users. They grant a licence to use (a right to use) for a limited time and for a specific purpose. The conditions of these licences must therefore be read carefully. Assignment of Rights An assignment must be in writing in order to transfer the copyright to the company that commissioned the website. Moral Rights Moral rights allow the author or performer (even if he or she is not the copyright owner) to: Claim authorship of the work; Claim respect for the integrity of the work (to protect the work against distortion, mutilation or modification or to prevent use that prejudice the honour or reputation of the author or performer or if the work is associated with a product or service without the consent of the author or performer). Recognition of Copyright in Other Countries Given that Canada is a party to the Berne Convention, copyright owned by a Canadian national, such as a company incorporated in Canada or a Canadian citizen, is recognized in other countries members of the Convention , and said copyright need not be registered in those other countries to acquire rights. In Canada, copyright registration is not mandatory, but it does give rise to a presumption of law that it is advisable to register, at the very least, for works that are important to the business, in order to more effectively act against infringement. Copyright infringement is the reproduction of an entire protected work or any substantial part of it without permission. In the same manner that website contents owned by the copyright owner may not be copied without permission, one must ensure that he or she does not import or publish on his or her website any work protected by copyright without first obtaining permission. Domain Name Some domain names are protected by trademark laws, and some are not. This depends on the nature of the domain name and the use made of it. Merely registering a domain name does not create a right that could prohibit the use of a conflicting domain name or trademark. Using a distinctive domain name could confer upon its owner the right to oppose the subsequent use by third parties of a confusing domain name, trademark or trade name. Effective domain name arbitration mechanisms exist for .com and for .ca in the event of misappropriation of a conflicting domain name. Trademark A website owner using a trademark on his or her website in order to identify his or her products or services should protect said trademark by registration. Without listing all the benefits of registering a trademark, suffice it to say that registering one’s rights is significantly less costly than trying to recover said rights once they have been appropriated by a third party. The trademark owner may oppose any confusing third party’s trademark, trade name or domain name (the test of confusion takes into account various factors) if his or her rights precede those of the other. In the case of unauthorized appropriation of a third party’s logo or figurative mark, the owner may, in many cases, not only invoke trademark infringement but also copyright infringement. Right to One’s Image and Privacy The Civil Code of Québec provides that every person is the holder of personality rights, such as the right to life, the right to the inviolability and integrity of his person, and the right to the respect of his name, reputation and privacy. Similar provisions exist in other legislation, such as the Quebec Charter of Human Rights and Freedoms and the Canadian Charter of Rights and Freedoms. The law is similar in other Canadian provinces, and comparable legislation exists in various countries around the world. Thus, as a general rule, a website owner may not: (i) Publish, for example, a photograph or image of a person without that person’s consent. This rule must be weighed against the rule relating to public interest in the right to freedom of expression and the right to information; (ii) Damage a person’s reputation; (iii) Imply or suggest that a person endorses a product or service without that person’s consent. The Civil Code of Québec further provides that the use of a person’s correspondence, manuscripts or other documents without his or her consent constitutes an invasion of his or her privacy. Trade Secret Various components of a website may be protected by trade secret if a confidentiality agreement was signed and the information remains secret. This could be the case with the website coding. Many people have preconceived ideas about intellectual property in the world of e-commerce. Often, they wrongly assume that since they commissioned their website, they own its intellectual property rights or that they can post a photo of a product copied from another website without authorization because they sell the product. Although it is easy, fast and free to access, a website is governed by a legal framework regarding intellectual property, with which website operators must comply. We did not cover the wide array of rights that are involved in a website in just a few lines. For example, for some websites, there may be patent and industrial design issues to deal with. All these legal considerations are not self-evident. Several rules must be followed to avoid engaging in illegal practices, to avoid the unpleasant surprise of discovering that you do not own the intellectual property rights to parts or all of the website, and to avoid facing threats of legal action for violating the rights of third parties. Furthermore, all the work invested in the creation and operation of the website may not provide any additional value to your company if the intellectual property rights have been neglected, even though in many cases it is a significant asset to the company. It is important to become familiar with these rules, protect your rights and resolve legal pitfalls-ideally before launching a website. If the issue of intellectual property rights is only addressed after launching the website, there may still be time to seek protection or to attempt to overcome legal problems. Whether the website is already online or is about to be launched, an audit should be carried out to determine the situation and, if necessary, obtain protection, sign contracts and find solutions to problems that could lead to illegal or disadvantageous situations.
New notification process at the Trademarks Office
The new provisions of the Trademarks Act allow for earlier intervention with the Registrar in an attempt to prevent the registration of trademarks that create confusion with registered or applied-for trademarks through a notification system. As the owner of pending or registered trademarks in Canada, it is in your interest to know and take advantage of the notification procedure, as it allows you to become more proactive and possibly avoid the costs associated with traditional opposition proceedings. Indeed, the notification procedure allows you to bring to the Registrar's attention grounds bearing on the registrability of a third party’s pending trademark application, as soon as the application is filed, without waiting for it to be published in the Trademarks Journal. The grounds that may be invoked in a notification have recently been specified by the Trademarks Office: The mark applied for creates confusion with a registered mark or with a mark for which a previous application for registration is pending. One or more registered trademarks are used in a trademark application to describe the claimed goods and services. In order to protect your rights and take advantage of the notification procedure, make sure that you have proper trademark monitoring services that allow you to be promptly informed of new trademark applications that may infringe upon your exclusive rights. For any questions regarding trademark protection, the notification process as well as our trademark monitoring services, we invite you to contact our professionals.
Heffel Gallery Limited : The National Importance of Foreign Art in Canada
On April 16, 2019, the Federal Court of Appeal issued a judgment resolving a deadlock that had been plaguing the Canadian art community since June 12, 2018. Since June 2018, the Canadian Cultural Property Export Review Board (the “Board”) has had to take into consideration the Federal Court’s findings in Heffel Gallery Limited v. Canada (Attorney General).1 As a result of this judgment, the eligibility of foreign artwork was facilitated with respect to the issuance of permits to export cultural property2 but compromised with respect to the issuance of income tax certificates.3 It was thus easier to obtain a permit to export artwork abroad and more difficult for donors to Canadian museums to benefit from income tax deductions In contrast to the way the Board had been operating, this trial judgment interpreted the “national importance” criterion very restrictively. As a result, the applicability of the Cultural Property Export and Import Act4 (the “Act”) was limited to works with a direct connection to Canada. Outstanding objects that were not produced in Canada or by a Canadian artist could no longer benefit from the protections afforded by the Act when exported5 or qualify for income tax certificates. In a unanimous decision, the Federal Court of Appeal6 overturned the trial judgment by finding that a work by an international artist can meet the level of national importance required under the Act. In this regard, the Federal Court of Appeal found that the “national importance” criterion allows for a determination of the effect that exporting the object would have on the country.7 As a result, a work or its creator does not need to have a direct link to Canada to be eligible for tax deductions and the application of the export control mechanism. The Trial Judgment The piece “Iris bleus, jardin du Petit Gennevilliers”8 (“Iris bleus”) by impressionist painter Gustave Caillebotte is at the heart of this dispute. In November 2016, the Heffel Gallery held an auction in which a London-based commercial gallery acquired the painting. In order to deliver Iris bleus to its buyer, the Heffel Gallery had to apply to the Board9 for an export permit. The expert examiner in the case refused the application, and, subsequently, the Board’s review panel did the same.10 Following these refusals, an application was made to the Federal Court for judicial review, in which it had to rule on the meaning of the national importance criterion as it appears in the Canadian Cultural Property Export Control List11 (the “Control List”). Following to their analysis, the Court deemed the Board’s interpretation of the national importance criterion to be too broad.12 Although it recognized the plurality of Canadian culture, the Federal Court found that the objects covered by the “national importance” criterion must have a direct connection to Canada.13 Pursuant to this interpretation, the Court adopted a position expressly favouring the property rights of owners of cultural property as well as economic liberalism in the art market.14 The trial judgment had unfortunate consequences, most notably, the fact that numerous institutions had to suspend or even cancel new acquisitions15 because certain generous donors could no longer receive tax certificates.16 The Federal Court of Appeal Judgment In its reasons for judgment, the Federal Court of Appeal first reiterates the broad outlines of the applicable legislative framework and its primary objective. In 1977, Parliament enacted the Cultural Property Import and Export Act17 in order to protect Canada’s national heritage. In adopting said law, Parliament was complying with its international commitments to UNESCO to combat the trafficking of cultural objects.18 The control list system established by Parliament (the “Control List”) sets out a number of conditions that must be met in order for an object’s export to be controlled under the Act.19 If the object is not included in the Control List, an export permit may be issued. If it is, an expert examiner determines whether the object "(a) is of outstanding significance by reason of its close association with Canadian history or national life, its aesthetic qualities or its value in the study of the arts or sciences; and (b) is of such a degree of national importance that its loss to Canada would significantly diminish the national heritage”.20 According to the Federal Court of Appeal, the trial judge erred in refusing to defer to the Board’s decision. In other words, when interpreting its own incorporating legislation, the Board is “better situated to understand the policy concerns and context needed to resolve any ambiguities in the statute.”21 » This error is significant because Parliament had granted broad powers to the Board when assessing an object according to the “national importance” criterion. More specifically, these powers recognize the expertise of the members appointed to the Board based on their specialization in the fields of cultural property, cultural heritage and cultural institutions.22 Conclusion Canada’s cultural institutions were undoubtedly relieved by this jurisprudential outcome. By recognizing that a work can be of national importance without necessarily being Canadian, this decision crystallizes the experts’ interpretation of the Act and the resulting practices that were predominant in the cultural community prior to the trial judgment. Donors who own exceptional works by foreign artists can once again donate them to Canadian institutions’ collections and benefit from tax incentives in return. The Federal Court of Appeal concludes by reiterating the purpose of the existing legislative framework, namely to “prevent many Canadian institutions from being ‘culturally ghettoised’ in allowing them to acquire works of art with a view of preserving cultural heritage for future generations.”23 2018 CF 605. Cultural Property Export and Import Act, R.S.C. 1985, c. C-51, ss. 7-16 Id., ss. 32 and 33. The income tax certificate is the mechanism of the Cultural Property Export and Import Act (the “Loi”) that allows those who donate works to Canadian institutions to benefit from the tax deductions provided for in the Income Tax Act. Supra note 2. Under the terms of the Cultural Property Export and Import Act, institutions may exercise a priority right of purchase that delays the export of any work considered exceptional and of national importance for up to six months. Canada (Attorney General) v. Heffel Gallery Limited, 2019 FCA 82 Id., para. 37. 1982, oil on canvas, 21 ¾ x 18 ¼ inches. Cultural Property Export and Import Act, supra note 2, ss. 8(3) and 40. Heffel Gallery Limited v. Canada (Attorney General), supra note 1, para. 8. C.R.C., c. 448. Heffel Gallery Limited v. Canada (Attorney General), supra note 1, para. 12. Id., para. 20-21. Id., para. 26-27. On this subject, see Catherine LALONDE, “Des dons qui échappent aux musées,” Le Devoir, December 19, 2018. Cultural Property Export and Import Act, supra note 2, ss. 32 and 33. Supra note 2. In order to comply with their commitment under the Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property, 14 November 1970, 823 UNTS 231 (entered into force April 24, 1972), signatory countries were required to adopt legislation ensuring cross-border control of cultural property. The object must be included in one of the well-defined categories of the Control List, be at least 50 years old and, in the case of a natural person’s work, its creator must be deceased. In addition, where the object is not of Canadian origin, it must have been in Canada for at least 35 years. Cultural Property Export and Import Act, supra note 2, s. 11(1), emphasis added. Canada (Canadian Human Rights Commission) v. Canada (Attorney General), 2018 SCC 31, cited in Attorney General of Canada v. Heffel Gallery Limited, supra note 6, para. 52. Canada (Attorney General) v. Heffel Gallery Limited, supra note 6, para. 33. Id., para. 57
The countdown is on to protect your trademarks in Canada
A few weeks before the coming into force of the amendments to the Trade-marks Act, the following is a reminder of the actions you should consider taking before June 17, 2019 to protect your rights and save costs. Actions To Take Benefits Renew your registrations and classify your products & services Cost savings before June 17, 2019: $50 per renewal. $125 for each class of products and services (beyond the 1st class), since products and services must henceforth be classified according to a system of 45 classes. Protect the trademarks associated with your main products & services Review your trademark portfolio and ensure that your currently marketed products and services are protected. If not, file an application before June 17 to save costs: before June 17: a single $250 filing fee, regardless of the number of classes of products and services covered by your application. on or after June 17: a $330 fee for the 1st class + $125 per additional class. Protect your trademarks for your future plans Do you intend to launch new lines of products and services in the next few years? Take advantage of lower fees until June 17 and the elimination of the declaration of use by filing a trademark application to extend your protection. Beware of trolls! Monitor your marks The elimination of the declaration of use has encouraged the spread of trademark trolls to Canada. Use a monitoring service to react quickly to third parties who attempt to misappropriate your mark. The trademark registration process will be greatly simplified as of June 17, 2019, particularly because of the elimination of the declaration of use. The new registration process will indeed allow trademark registration, without any use requirement in Canada by the applicant. To avoid disputes involving your trademarks, remember that it is important to conduct searches before launching a new mark and to quickly file applications for registration.
Why register your brands with the Amazon Brand Registry
If you sell your products on Amazon, you can benefit from enrolling your trademarks with the Amazon Brand Registry. The Amazon Registry is a free program accessible to monitor brands on Amazon’s website. This program includes proprietary search tools designed specifically to help online merchants identify trademark infringements on Amazon’s platform. If an infringing product is found, the registered owner can request that Amazon remove the product from its website. Companies registered with this program may also benefit from more control over product listings, mainly in terms of product titles, descriptions, images and advertisement. Goudreau Gage Dubuc, one of the leading intellectual property firms in Canada, joins Lavery Lawyers. The two firms have integrated their operations in order to offer their clients a complete range of legal services. The integration consolidates Lavery’s multidisciplinary approach. As the largest independent law firm in Quebec, Lavery is continuing to grow by adding the expertise brought by lawyers, patent agents and trademark agents specializing in intellectual property law, who belong to one of the most respected teams in the country. To learn more, visit www.YourIPLawyers.ca. --> Eligibility criteria To enroll a trademark with the Amazon Brand Registry, the following requirements must be met: The trademark must be registered in each country where you wish to enroll. To this day, Amazon accepts only trademarks registered in one of the following countries: Canada, United States, Mexico, Australia, India, Japan, France, Germany, Italy, Spain, United Kingdom or on the European Union Registry. The trademark must be in the form of words or a logo combined with words, letters or numbers. It follows that “design” marks consisting solely of logos are not eligible for the Register, unless they also comprise words, numbers or letters. The trademark must match the brand name that appears on the products or on their packaging. Additional information If your trademark is eligible for the Amazon Brand Registry program, you will have to provide the following information to complete your enrolment: your trademark, the registration number, images of products and packaging showing the trademark, a list of categories in which your trademark should be listed and a list of countries in which your products are manufactured and distributed. We can help you! If you wish to use the Amazon Brand Registry but have not yet registered your trademark in Canada (or in one of the eligible countries), GGD can advise you on the most efficient procedure to register your trademarks. If your trademark is already enrolled with the Amazon Brand Registry, we can assist you in monitoring your brands on Amazon’s platform as your authorized agent. Please do not hesitate to contact the members of our team for any questions you may have concerning the registration process of your trademarks in different countries in which you may have commercial interest and the Amazon Brand Registry.