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  • The duration of copyright protection in Canada is extended to 70 years as of December 30, 2022

    On June 23, 2022, Bill C-19 received Royal Assent. The bill was introduced by the Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance, and resulted in amendments to the Copyright Act1 that will come into force on December 30, 2022, further to an order in council issued earlier this week. Bill C-19, or An Act to implement certain provisions of the budget tabled in Parliament on April 7, 2022, and other measures, was tabled on April 28, 2022, by the federal government following the release of the 2022 budget. This bill essentially follows up on the commitments the government made in its annual budget. In the 2022 budget, the federal government said it wanted to make changes to the Copyright Act. It announced a legislative amendment to meet its obligation under the Canada-United-States-Mexico Agreement (CUSMA) to extend the general term of copyright protection from 50 years to 70 years after the death of the author. Like the United States and Mexico, Canada has committed to a copyright protection term that is not less than the life of the author, plus 70 years following the natural person’s death.   Section 6 of the Copyright Act currently stipulates that copyright protection lasts for the author’s lifetime and an additional 50 years after their death. The section will now read as follows: Except as otherwise expressly provided by this Act, the term for which copyright subsists is the life of the author, the remainder of the calendar year in which the author dies, and a period of 70 years following the end of that calendar year. [emphasis added]. The term of copyright is also extended to 70 years after the death of the author or the last surviving co-author in the case of posthumous works and collaborations. Finally, Bill C-19 clarifies that legislative amendments to the Copyright Act do not reactivate copyrights that expired before the effective date of the amendments. [1] RSC 1985, c C-42.

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  • Can an Idea, Style or Method Be Protected Under the Copyright Act?

    Ahead of the 2021 holiday season, as children dream about the toys that Santa Claus will bring them, let’s take a look back at a landmark decision that reviews what is copyrightable under the Copyright Act. As visual artist Claude Bouchard (“Bouchard”) learned from the outcome of her legal action against Ikea Canada (“Ikea”),1 the Copyright Act2 does not protect the ideas, styles or methods developed and used by artists to create their works, even if their work is exhibited in museums and marketed internationally. From 1994 to 2005, Bouchard sold in a Montreal’s Unicef store soft toys that she designed based on children’s drawings. In September 2014, Ikea held a drawing competition for children and made 10 soft toys from the winning entries, marketed as part of the “Sogoskatt” collection. A portion of the profits were donated to UNICEF. Originally, Bouchard was seeking a monetary award against UNICEF and Ikea for copying her toys, alleging that they had used, in particular, her idea, her original style and her methods. In 2018, the Superior Court ruled on the case for the first time, dismissing the legal action against UNICEF based on the privileges and immunities of the United Nations.3 UNICEF’s immunity from suits is in this case absolute since Bouchard’s legal action is directly related to the organization’s mission.4 In January 2021, Justice Patrick Buchholz of the Superior Court put an end to the dispute between Bouchard and Ikea, dismissing the legal action for infringement of Bouchard’s works based on the Copyright Act as being ill-founded, destined to fail and unreasonable, thus opening the door to its dismissal for abuse of process.5 Why was Bouchard’s infringement action ill-founded? The Court first examined the arguments put forward by Ikea to the effect that two essential elements giving rise to the infringement action6 could not be demonstrated by Bouchard: There is no evidence that Ikea had access to Bouchard’s work.7 There is no evidence that Ikea reproduced a substantial part of the plaintiff’s work. Therefore, Ikea argues that there was no infringement of the copyright of Bouchard, who was seeking a monopoly on an idea, style or method, which is not protected under the Copyright Act8 Lack of access to Bouchard’s works The Court did not accept Ikea’s first argument that there was a lack of access to Bouchard’s works. It ascertained that the proceedings were at a too preliminary stage to make a determination.9 The Honourable Justice Buchholz pointed out that section 51 of the Code of Civil Procedure is not [our translation] “a free pass to bypass the judicial process and prematurely set aside otherwise allowable claims” when the evidence is still incomplete.10 The Court also noted the seriousness of the links between Ikea and UNICEF, which may have made access to Bouchard’s works possible and likely.11 In this context, only a hearing on the merits could have clarified the question of access to Bouchard’s works by making it possible to test, more precisely, the credibility of the witnesses at trial.12 Lack of reproduction of a substantial part of the work Bouchard alleged that the toys designed by Ikea incorporate eight essential features of her soft toy concept, namely [our translation]: Round eyes cut from non-fraying fabrics and sewn around the edges; Thinly cut linear mouths sewn into non-fraying fabrics; iii. Polyester fibre stuffing; iv. The toy is proportionate to the size of children’s hands; v. Soft toy faithful to the child’s drawing; vi. Child’s name and age on the tag; vii. Everything is solid (head, body, legs, and tail), in the same plane and stuffed; viii.  Use of textiles, plush, and the original colours of the drawings.”13 However, the Court accepted Ikea’s second argument that Ikea’s soft toys did not reproduce a substantial part of Bouchard’s work. Since Bouchard’s works and Ikea’s works did not share a resemblance, this means that a substantial part of the works was not reproduced.14 How to determine if a “substantial part” of a work has been reproduced? Under the Copyright Act, copyright, “in relation to a work, means the sole right to produce or reproduce the work or any substantial part thereof”.15 The Supreme Court defined “substantial part” of the work in the Cinar decision,16 stating that it is a flexible notion to be interpreted based on the facts. The assessment is holistic and qualitative in nature. The criteria to be used by the courts to determine whether there has been a reproduction of a “substantial part” of a work are as follows: The originality of the work, which must be protected under the Copyright Act;17 The part “represents a substantial portion of the author’s skill and judgment”;18 The nature of the two works as a whole, without looking at isolated passages;19 “[T]he cumulative effect of the features copied from the work”.20 Although there are some similarities between the Bouchard and Ikea soft toys, the soft toys are completely different and do not look the same because they are designed from the drawings of different children. Bouchard even admitted that [our translation] “a toy made from a unique child’s drawing is in itself a unique toy”.21 Can the Copyright Act protect an idea, a concept or a body of work? Bouchard instead claimed that Ikea illegally reproduced her idea, concept, style or methods.22 She ultimately argued that Ikea did not copy a specific work, but instead copied her “work” in a broader sense.23 Bouchard’s arguments highlight issues that often come up in the court system and demonstrate a misunderstanding of what is protected by copyright. Copyright of an idea, concept, style or method In 2004, the Supreme Court pointed out that copyright protects the expression of ideas in a work and not the ideas themselves.24 Justice Buchholz rightly pointed out that an artist can be inspired by another artist without infringing the rights protected by the Copyright Act. He noted, for example, that if styles were protected, Monet could not have painted in the Impressionist style.25 The Court also noted that the soft toys made by Bouchard correspond to a generic style dictated by safety standards for the manufacture and sale of toys.26 Thus, the Copyright Act does not offer any protection for ideas, concepts, styles or manufacturing methods and techniques. Copyright of an artistic legacy, corpus, or collection The Court specified that the Copyright Act does not protect a body of work or an artistic legacy, but rather each individual work.27 Bouchard c. Ikea Canada, 2021 QCCS 1376. R.S.C. 1985, c. C-42. Bouchard c. Ikea Canada, 2018 QCCS 2690. Idem, para. 24–25. Section 51, Code of Civil Procedure, CQLR c. C-25.01. Section 2, “infringing”, Copyright Act. Bouchard c. Ikea Canada, supra, note 1, para. 16–17. Idem, para. 15. Idem, para. 34. Idem, para. 28. Idem, para. 37–39. Idem, para. 40. Idem, para. 49. Idem, para. 55. Section 3, Copyright Act. Cinar Corporation v. Robinson, 2013 SCC 73, para. 26, 35–36. Idem, para. 26. Idem. Idem, para. 35. Idem, para. 36. Bouchard c. Ikea Canada, supra, note 1, para. 53. Idem, para. 56. Idem, para. 69. CCH Canadian Ltd. v. Law Society of Upper Canada, 2004 SCC 13, para. 8. Idem, para. 67. Toys Regulations, SOR/2011-17, adopted under the Canada Consumer Product Safety Act, S.C. 2010, c. 21, s. 29, 31–32. Bouchard c. Ikea Canada, supra, note 1, para. 69–71.

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  • Winkler v. Hendley: The Federal Court applies a subjective standard to the notion of “history”

    “Historical facts”1 are not protected by copyright. Referring to the Storming of the Bastille or the Battle of the Plains of Abraham will not get an author sued in Federal Court, but must these events have really happened to be considered “historical facts”? The Federal Court recently ruled on this issue in Winkler v. Hendley.2 In its decision, the Federal Court stated that if an author presents their literary work as a history book,3 as long as this assertion is plausible, the events that they describe must be treated as “historical facts” even if they are not. Therefore, the author cannot claim originality when an assessment is made of whether there has been a substantial taking of their work. Originality remains only in the selection and arrangement of the facts. Background This case deals with the following three books written about the Donnelly family, whose crimes made headlines in late 19th century Ontario: The Black Donnellys (hereinafter referred to as The Black Donnellys), a history book published in 1954 by Thomas P. Kelley (hereinafter referred to as Kelley); Vengeance of the Black Donnellys (hereinafter referred to as Vengeance), a work of fiction published in 1962 by Kelley (the same author); and  The Black Donnellys: The Outrageous Tale of Canada’s Deadliest Feud (hereinafter referred to as The Outrageous Tale), a history book published in 2004 by Nate Hendley (hereinafter referred to as Hendley). John Winkler (hereinafter referred to as Winkler), Kelley’s heir and copyright holder, accused Hendley of copying, in The Outrageous Tale, a substantial part of both The Black Donnellys and Vengeance. He argued that both works are fiction, as many of the events described in them are objectively false. Winkler claimed that Hendley repeated the same mistakes in his work. He also asserted that Hendley copied the structure, tone, theme, atmosphere and dialogue in his telling of events. For his part, Hendley admitted that he referred to both of Kelley’s literary works when writing The Outrageous Tale. However, he contended that The Black Donnellys should be considered a history book, as Kelley originally described and presented it as such. Given that “historical facts” are not protected by the Copyright Act4 (the “Act”), Hendley denied having copied Kelley’s work and claimed that The Outrageous Tale is an original literary work. In support of their motions for summary judgment, both parties filed affidavits. In addition, Winkler filed two expert reports. The first compared excerpts from The Black Donnellys and Vengeance to excerpts from The Outrageous Tale.The second was an analysis of the factual nature of The Black Donnellys. The Federal Court’s findings were as follows: Facts that are credibly presented by the author as historically factual must be excluded from copyright protection. Therefore, the author cannot claim originality when an assessment is made of whether there has been a substantial taking of their work. Hendley did not infringe Winkler’s copyright on The Black Donnellys by referring to “historical facts” without copying the structure, tone, theme, atmosphere or dialogue used in presenting them in The Outrageous Tale. Hendley did not infringe Winkler’s copyright on Vengeance, although he did copy various aspects of a fictional character in The Outrageous Tale in a non-literal way.This copying does not concern a substantial part of the literary work Vengeance whenviewed as a whole. Facts that are credibly presented by the author as historically factual must be considered as such The Federal Court ruled that The Black Donnellys was a history book, and, for all intents and purposes, considered it to be an account of “historical facts.” First, the Court relied on Kelly’s statement that he presented The Black Donnellys as “The True Story of Canada’s Most Barbaric Feud” when it was published.5 Second, the Court referred to the introduction in the original 1954 edition in which Kelly stated that the information that he used was gathered from old newspapers, police and court records, trips to the area, and other “unimpeachable sources.”6 The Court determined that it did not have to consider the conclusions of the expert report that the work was “two-thirds fiction.” The law is not a tool to ensure the accuracy of various historical accounts, and its role is not to decide between them based on an objective standard.7 Thus, the notion of “historical facts” must necessarily include those that the author plausibly presents as such.8 The Court has therefore introduced a subjective standard in the assessment of the factual nature of history books. The Federal Court found that Hendley was justified in relying on the version of events presented in The Black Donnellys. The purpose of the law is to maintain a balance between, on the one hand, protecting the talent and judgment of authors and, on the other hand, allowing ideas and material to remain in the public domain for all to build upon. To allow Kelley to present something as a “historical fact” and then allow Winkler to sue another author on the grounds that such “historical fact” is false would unduly impede the flow of ideas and disturb this fair balance.9In short, Winkler cannot seek to refute the historical nature of Kelley’s book and claim copyright over the fabricated facts it contains.10 Given that they are considered “historical facts,” Winkler cannot claim originality as part of the assessment of whether there has been a copying of a substantial part of his work. Hendley did not copy a substantial part of Kelley’s work The Federal Court reiterated that the law protects original literary, dramatic, musical and artistic work. Thus, copyright protection exists whether a literary work is a history book or a piece of fiction. However, in the case of a history book, the protection does not extend to “facts of history” or their chronological sequence.11 The originality of Kelley’s work lies solely in the means of expression and thus in the selection and arrangement of facts. Consequently, the Court analyzed the copying of structure, tone, theme, atmosphere and dialogue in the telling of “historical facts,” not the facts themselves. The Supreme Court advocated a holistic and comprehensive approach to determining whether a substantial part of a plaintiff’s work was copied by a defendant.12 However, given the format of the expert report, the Federal Court found it necessary to analyze every single excerpt and then assess whether their cumulative effect amounted to a substantial copying of each of Kelley’s works.13 A) The Outrageous Tale does not amount to a reproduction of a substantial part of The Black Donnellys The Federal Court concluded that the expert report did not demonstrate any significant similarities in the comparison of some twenty excerpts from The Black Donnellys with allegedly analogous excerpts from The Outrageous Tale. Winkler alleged that the mere copying of fictional events in The Outrageous Tale constituted an unauthorized reproduction. The Court rejected this argument because to consider The Black Donnellys a history book implies that the “historical facts” it contains are not part of the originality of the work.14 Consequently, the Federal Court excluded the 20 or so excerpts because they merely mentioned the same “historical facts.”15  As for the excerpts that show some significant similarities, the Federal Court criticized the expert’s method of analyzing isolated words out of context to demonstrate greater similarities between the two texts. Instead, the Court chose to rely on more complete passages taken directly from the works to assess similarities in the selection and arrangement of facts.  The reproduction of fictional events is more easily detectable. Indeed, describing the same “historical facts” means that some significant similarities are inevitable. The Federal Court said the following regarding the description of a street battle:   In the foregoing passage, the linguistic similarity—references to Flanagan, the gun, the road, the 17 men—are all important parts of the factual aspect of the event. There may be a vast number of ways in which to recount facts. However, it would be difficult if not impossible to describe an event in which Flanagan, carrying a shotgun, went down the road with 17 men without using those terms. Here, the lack of copyright in “facts,” whether actually factual or simply asserted to be factual, becomes particularly important. If these descriptions of a fight were found in two works of fiction, there would be a stronger case that copying these elements contributed to a substantial taking. In a work of nonfiction, these factual elements are not part of the work’s originality.16 The Federal Court rejected the allegations of copying in the other passages based on the same argument. It concluded that the analysis carried out on the structure, tone, theme, atmosphere and dialogue of the work does not demonstrate that Hendley copied in The Outrageous Tale any substantial part of The Black Donnellys.  The decision is surprising in that the protection given to works under copyright and the assessment of whether there has been a substantial taking of the work should be objective: Was a substantial part of the first work copied in the second work in terms of quality? A fact is either historical or it is not. That an author may reasonably believe that such fact is historical should not affect the originality of the first work, nor should it affect the issue of “substantial taking” in the second work. While one understands that the judge was trying to achieve a fair outcome, one might question whether the legal means adopted were adequat For the purposes of this text, “historical facts” refer to events of a factual nature. 2021 FC 498 In this text, the notion of “history book” refers to a work of “history,” understood as the branch of knowledge that studies the past and seeks to reconstruct “historical facts.”  R.S.C., 1985, c. C-42 Winkler v. Hendley, supra note 2, para. 72 Id., para. 73 Id., para. 96 Id., para. 92 Id., para. 92 Id., para. 92 Id., para.  56 Cinar Corporation v. Robinson, 2013 SCC 73; Copyright Act, supra note 6, s. 3  Id., para. 113 Winkler v. Hendley, supra note 2, para. 58 Id. Id., para. 122

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  • The Doctrine of File Wrapper Estoppel in Canada: The Court of Appeal Hands Down its Decision

    In December 2018, section 53.1 was added to the Patent Act (the “Act”) allowing reference to be made to communications exchanged with the Canadian Intellectual Property Office (“CIPO”) during the prosecution of an application with respect “[...]to the construction of a claim.” This concept is more commonly known as “file wrapper estoppel.” Salient points Expert evidence regarding how to construe the claims of a patent is not required in order to determine whether infringement has occurred. In a motion for summary judgment, the responding party must put its best foot forward and cannot simply contest the motion on the grounds that the moving party’s evidence is insufficient. File wrapper estoppel applies when rebutting a representation made by the patentee; however, only communications with CIPO are accepted, not those with a foreign patent office. There are several substantive issues yet to be resolved with respect to the file wrapper estoppel doctrine in Canada. In September of 2019, the Federal Court rendered its first decision concerning section 53.1 of the Act in Canmar Foods Ltd v. TA Foods Ltd.1 The decision was appealed, and, on January 20, 2021, the Federal Court of Appeal rendered its first judgment on the application of said section, and thus on the file wrapper estoppel doctrine in Canada.2 Background Canmar Foods Ltd. (“Canmar”) holds a patent on a method for roasting seeds used to produce vegetable oil (the “Patent”). The method claimed in the Patent consists of four steps, including heating the oil seed to a certain temperature in a “stream of air” and transferring the heated oil seed into an “insulated or partially insulated roasting chamber or tower.”  During the prosecution of the Patent application, the steps of heating in a “stream of air” and transferring the seeds in the manner mentioned above was added to the Patent claims by amendment in order to limit the scope of the claims. During the prosecution of the Patent application in Canada, Canmar referred to amendments that were “substantially the same” as those made during prosecution of the corresponding U.S. patent application in response to novelty and obviousness objections that had been raised by the examiner. After the Patent was obtained, Canmar sued TA Foods Ltd. (“TA”) for infringement thereof. TA filed a motion for summary judgment on the grounds that the method it used did not include either the step of heating the seeds in a “stream of air” or the step of transferring them into an “insulated or partially insulated roasting chamber or tower.” In support of the motion for summary judgment, the parties both filed affidavits. However, no expert evidence was filed regarding the construction of the claims of the Patent by a person of ordinary skill in the art, a “POSITA.” The Federal Court found that: Expert evidence regarding how to construe the claims of a patent is not required in order to determine whether infringement has occurred. In a motion for summary judgment, the responding party must put its best foot forward and cannot simply contest the motion on the grounds that the moving party’s evidence is insufficient. Section 53.1 of the Act applies because, in contesting the motion for summary judgment, Canmar advanced a construction of the claims that would have the effect of nullifying the amendments made during the prosecution of the patent application. Exceptionally, the prosecution history of the U.S. patent could be relied upon because Canmar made reference thereto during the prosecution of the application for the Canadian Patent. In light of the prosecution history of the U.S. patent, the steps of heating the seeds in a “stream of air” and transferring the heated oil seed into an “insulated or partially insulated roasting chamber or tower” were found to be essential elements of the claims of the Canmar Patent. Even without reference to the prosecution history of the U.S. patent, the Court would have found that these elements were essential. The Court of Appeal upheld the Federal Court’s decision, but pointed out that the judge erred in law by referring to the prosecution history of the U.S. patent. Thus, the Court of Appeal confirmed that the Federal Court had jurisdiction to construe the claims of the Patent and that expert evidence regarding a POSITA’s construction was not necessary in this case. The Court of Appeal nevertheless issued the following warning: Of course, the judge who dispenses with expert evidence will do that at his or her own peril, and it is not a practice that should be lightly countenanced. Claims must always be construed in an informed and purposive way, and it is only in the clearest of cases that judges should feel confident enough to construe the claims of a patent as they would be understood by a skilled person, without the help of any expert evidence. The Court of Appeal also criticized Canmar for failing to produce reply evidence with respect to the infringement. Specifically, the Court states that Canmar should have put its best foot forward, for example by submitting a claim construction that could lead even theoretically to a finding of infringement. In the absence of such evidence, the judge committed no palpable and overriding error in granting the motion for summary judgment.  However, the Court of Appeal found that by referring to the prosecution history of the U.S. patent, the Federal Court judge erred in law.  After a detailed review of American and British case law on file wrapper estoppel, the Federal Court of Appeal stated: I agree with the appellant that courts should be wary to extend the detailed language of section 53.1, which is specific about the communications being limited to those with the Canadian Patent Office. The legislation is carefully tailored, and it would go against statutory interpretation principles to try to go beyond its original intent. There are also public policy reasons for treading carefully in allowing extrinsic evidence. Opening the door to allowing foreign patent prosecution history into the analysis might lead to overly contentious and expensive litigation. It should be noted that the Court of Appeal then qualified the above statement as follows: Yet, whether the doctrine of incorporation by reference should formally be treated as an exception to the general prohibition on foreign prosecution files, is a question best left for another day. (…) There is nothing in the prosecution file of the ’376 Patent that identifies with any detailed particularity what specific “written communication” from the US prosecution history is incorporated and where that written communication can be found. It is virtually certain that if Canmar had amended its claims and filed with the Canadian patent office the same response that it filed with the U.S. patent office, that response could have been invoked under section 53.1 of the Act. Nevertheless, in such a case, the response in question would unambiguously form part of the Canadian file. On the other hand, if, instead of filing the U.S. response, the applicant had only referred to it in express terms, would section 53.1 of the Act have applied? This is a question that another court will likely have to answer. The Court of Appeal nonetheless dismissed the appeal because the trial judge had found that even without reference to the prosecution history of the U.S. patent, the Federal Court would have concluded that the elements in question were essential. The Court of Appeal found no manifestly unreasonable error in this part of the Federal Court’s judgment. Nor did the Court of Appeal rule on the question as to whether patent prosecution history can be raised solely to rebut an inconsistent construction made by the patentee, or whether it can be referred to whenever claim construction is called into question: The emphasis, therefore, is not so much on the rebuttal of a particular representation, but rather on the interpretive process itself. As the Court stated in Bauer Hockey, “there is no need to identify a particular representation and rebuttal every time a reference is made to the prosecution history. It is simply integrated in the interpretive process” (at para. 65). The resolution of this dispute is best left for another day, as the facts of this case clearly meet the more restricted interpretation of section 53.1 and do not require a broader reading of that section. More germane to the resolution of the case at bar is whether this new provision allows for the consideration of foreign prosecution files. This issue is more than just a theoretical discussion point. In fact, in a recent decision, the Federal Court3 found that section 53.1 was not applicable since the file wrapper was not raised to rebut the patentee’s claim construction. This is because the patent owner had left it to its exclusive licensee to allege infringement.  Therefore, although the patentee was eventually made a party to the proceedings (only because invalidity of the patent had been alleged), the claim construction that the defendant wanted to rebut was not made by the patentee, but rather by its exclusive licensee. Thus, unlike Judge Manson in Canmar, Judge Barne in Allergan adopted a much more restrictive interpretation of section 53.1 of the Act.  This debate regarding the file wrapper estoppel doctrine will continue and will most likely go all the way to the Supreme Court of Canada. Stay tuned! Canmar Foods Ltd. v. TA Foods Ltd. 2019 FC 1233 Canmar Foods Ltd. v. TA Foods Ltd. 2021 FCA 7 Allergan Inc. v. Sandoz Canada Inc. et al. 2020 FC 1189.

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  • 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: [186] 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. [187] 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. [188] […] 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: [61] 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: [66] 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, [1992] 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. [1975] 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, [1992] R.J.Q. 2666 (C.A.), p. 30.

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  • Intellectual Property: New Options for Patent Ownership Disputes

    Since 1995, the Federal Court of Canada has refused to hear questions relating solely to patent ownership. In Lawther v. 424470 B.C. Ltd.1 the Federal Court declined jurisdiction, stating that “[t]his Court has no jurisdiction to entertain a dispute which is solely a matter of contract”, thereby deeming that such a dispute fell within the jurisdiction of the provincial superior courts of each province (hereinafter a “Provincial Court”). In Quebec, the provincial superior court is the Superior Court of Québec. Therefore, in patent ownership disputes, the inventor, or the person to whom the patent had been assigned, had to seek relief for these contractual issues in Provincial Court (typically, these issues would pertain to an assignment, an employment contract, an option to purchase, etc.). The Federal Court would then have to endorse the decision and ultimately order the Patent Office to change the name of the patent owner. At a time where the proportionality of proceedings in relation to the nature of disputes is a hot-button issue,2 the Federal Court’s adherence to this 20th century decision, which was the norm until recently, could leave a bitter taste in one’s mouth. However, in Salt Canada Inc. v. Baker, 2020 FCA 127, in a unanimous decision rendered on July 28, 2020, the Federal Court of Appeal overturned a Federal Court decision that followed this precedent, thereby closing the door on a long-standing jurisprudential trend. Justice Stratas, in his reasons, relies on section 52 of the Patent Act, stating that “the Federal Court has jurisdiction, on the application of the Commissioner or of any person interested, to order that any entry in the records of the Patent Office relating to the title to a patent be varied or expunged.”  For Justice Stratas, the fact that even the Commissioner of Patents must refer any question of title to the Federal Court is important and demonstrates that Parliament intended to assign a judicial function, and not merely an administrative function, to the Federal Court. The Federal Court is a statutory court, such that it must derive its jurisdiction from a statute, unlike provincial superior courts, which are courts of original and general jurisdiction. There appears to have been a debate before the Court of Appeal on the enabling statutory provisions.  The respondent argued that the Federal Court’s jurisdiction in intellectual property matters is derived from section 20 of the Federal Courts Act: Industrial property, exclusive jurisdiction 20 (1) The Federal Court has exclusive original jurisdiction, between subject and subject, as well as otherwise, (…) (b) in all cases in which it is sought to impeach or annul any patent of invention or any certificate of supplementary protection issued under the Patent Act, or to have any entry in any register of copyrights, trademarks, industrial designs or topographies referred to in paragraph (a) made, expunged, varied or rectified. Industrial property, concurrent jurisdiction (2) The Federal Court has concurrent jurisdiction in all cases, other than those mentioned in subsection (1), in which a remedy is sought under the authority of an Act of Parliament or at law or in equity respecting any patent of invention, certificate of supplementary protection issued under the Patent Act, copyright, trademark, industrial design or topography referred to in paragraph (1)(a). Considering the title “Industrial property, (…) jurisdiction,” and the fact that the issue here is a question of jurisdiction, the following statement by Justice Stratas may seem surprising: “Arguably, it has no relevance whatsoever. This matter does not arise and has nothing to do with section 20 of the Federal Courts Act.” According to Justice Stratas, because the Patent Act is a federal statute, the Federal Court has jurisdiction by virtue of the combination of section 52 of the Patent Act and section 26 of the Federal Courts Act, which provides that the Federal Court has jurisdiction over any matter in respect of which jurisdiction has been conferred by an Act of Parliament. Justice Stratas goes on to review a series of decisions in which the Federal Court has agreed to interpret various contracts and legal documents as part of its jurisdiction in relation to various federal statutes, including federal tax laws, maritime law, and intellectual property disputes. Ultimately, Justice Stratas dismisses the respondent’s argument that the interpretation of contracts falls within the exclusive jurisdiction of the Provincial Courts. Finally, relying on a 1941 Supreme Court decision,3 Justice Stratas, at paragraph 24 of his decision, states the following: The rule in Kellogg is simple: the Exchequer Court (and now the Federal Court) can interpret contracts between private citizens as long as it is done under a sphere of valid federal jurisdiction vested in the Federal Court.It is true that, absent a specific statutory grant of jurisdiction to the Federal Court, parties cannot assert a contractual claim in the Federal Court against another private party to obtain a damages remedy.But Kellogg tells us that where such a grant is present, parties can claim a remedy even if their entitlement turns on a matter of interpretation of an agreement or other instrument—for example, the remedy of correcting the records in the Patent Office to recognize one’s title to a patent under section 52 of the Patent Act. Note that the Federal Court has jurisdiction only to amend the Register or to deal with matters relating to the Patent Act, such as patent infringement issues. It appears from this judgment that all other matters nevertheless remain matters of common law or civil law and fall within the jurisdiction of the Provincial Courts. In some cases, it may be advantageous to institute proceedings before the Federal Court rather than a Provincial Court such as the Superior Court of Québec. Among other things, the sums that a litigant can claim for reimbursing their attorney fees, if successful, are much higher in Federal Court than in some Provincial Courts. In addition, the time required to obtain a judgment is often shorter in Federal Court; furthermore, seeking relief in Federal Court makes it possible to avoid having to seek relief before both Federal and Provincial Courts4 in order to register rights with the Patent Office. On the other hand, if the issue doesn’t involve a strictly Canadian patent, but also corresponding patents in other jurisdictions (the United States, Europe, etc.) it is preferable to obtain a judgment before a competent Provincial Court in order to inter alia determine the full ownership of a patent family, obtain an injunction against a defendant to transfer titles, or have a judgment confirmed in each relevant jurisdiction. Conversely, the jurisdiction of the Federal Court is limited to the Canadian Patent Register and does not extend to other jurisdictions. It may also be preferable to institute proceedings in a provincial superior court if the goal is to claim damages for breach of contract or seek other remedies that fall under civil or common law. Regardless, the Salt Canada Inc. v. Baker decision provides a new strategic alternative for lawyers, meaning they now have more options to tailor procedures to the specific needs of litigants in patent ownership disputes.   Lawther v. 424470 B.C. Ltd., (1995) 95 F.T.R. 81 (TD) Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 SCR 87 Kellogg Company v. Kellogg, [1941] SCR 242 Although it could be argued that a provincial superior court has jurisdiction to order a patent title entry to be changed, on reading sections 20 and 26 of the Federal Courts Act and sections 41 and 52 of the Patent Act.

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  • Estoppel based on patent prosecution history in Canada: The Pandora’s box is opened

    Nearly twenty years ago, the Supreme Court of Canada1 rejected the theory of estoppel based on a patent’s prosecution history, more commonly known as "file wrapper estoppel"2). At the time, Justice Binnie wrote, “[…]purposive construction, which keeps the focus on the language of the claims, seems also to be inconsistent with opening the pandora's box of file wrapper estoppel”. However, in December 2018, section 53.1 was added to the Patent Act (the "Act"), which allows for references to communications with the Canadian Intellectual Property Office ("CIPO") "to rebut any representation made by the patentee in the action or proceeding as to the construction of a claim". In Canmar Foods Ltd v. TA Foods Ltd 2019 FC 1233, Justice Manson of the Federal Court rendered the first decision on file wrapper estoppel in Canada since this new provision came into force. The decision was handed down in the context of a motion for summary judgment. Salient points When a patentee amends the claims to limit their scope, the elements thus introduced are essential elements of the claims. Section 53.1 of the Act can apply even if the patentee has not adopted a construction that contradicts a previous statement. Where the patentee refers to the "file wrapper" of another jurisdiction (in this case, the US) during prosecution of the patent application in Canada, they make that file wrapper relevant for the purposes of applying section 53.1 of the Act. The Federal Court appears to be loosening the jurisprudence applicable to motions for summary judgment. The party challenging a motion for summary judgment must submit the best evidence available. The construction of certain terms of the claims may be made by a judge even in the absence of expert evidence. Background Canmar Foods Ltd. ("Canmar") holds a patent on a method for roasting oil seeds as well as products derived therefrom (the "Patent"). The method claimed in the Patent consists of foursteps, including heating the seeds to a certain temperature in a "stream of air" and transferring the heated seeds "into an insulated or partially insulated roasting chamber or tower." During prosecution of the Patent, the aforementioned steps of heating the seeds in a "stream of air" and transferring the heated seeds had been added to the claims; this amendment to the claims was made to reduce the scope thereof. While making this amendment, Canmar mentioned that the claims “correspond substantially” to those submitted during prosecution of a related US patent application. Canmar sued TA Foods Ltd. ("TA") for patent infringement. TA made a motion for summary judgment on the grounds that the method employed by TA does not include heating the seeds in a "stream of air," nor does it include transferring the heated seeds "into an insulated or partially insulated roasting chamber or tower." In support of the motion for summary judgment, the parties both produced affidavits. However, no expert evidence as to the construction of the terms of the Patent by a person of ordinary skill in the art ("POSITA") was presented. Issues before the Federal Court Should the Court grant the motion for summary judgment or leave these questions to the trial judge? Can the Court use the file wrapper of the corresponding US patent application to construe claims under section 53.1 of the Act? Can the Court conclude on the basis of the file wrapper that the elements "stream of air" and "into an insulated or partially insulated roasting chamber or tower" are essential elements of the patent claims? Is the evidence presented sufficient to construe the terms in question and to conclude that they are absent from the defendant's method? The judgment In his judgment, Justice Manson first considers the criteria applicable to a motion for summary judgment. The case law indicates that when certain issues require assessing the credibility of witnesses, these issues should be left to the trial judge. Justice Manson refuses to apply these principles, which had been elaborated by the Federal Court of Appeal in MacNeil Estatec v. Canada (Department of Indian and Northern Affairs), 2004 FCA 50. Justice Manson further writes: The Supreme Court held that “summary judgment rules must be interpreted broadly, favouring proportionality and fair access to the affordable, timely and just adjudication of claims” (Hryniak, above at para 5) […]There is no determinative test for summary judgment. One articulation is that the test is not whether the Plaintiff cannot possibly succeed at trial, but whether the case is so doubtful that it does not deserve consideration by the trier of fact at a future trial […]3. He adds that the party defending an application for summary judgment cannot simply claim that the applicant has not met its burden and speculate as to grounds that could possibly be raised on the merits: Parties are required to put their best foot forward. The responding party cannot rely on what might be adduced as evidence at a later stage, but must set out specific facts and adduce evidence showing that there is a genuine issue for trial (Federal Courts Rules, r 213; Sterling Lumber Co v Harrison, 2010 FCA 21 at para 8)4. Justice Manson refers to the principles of claim construction developed by the Supreme Court in Free world trust and to the fact that Justice Binnie refused to apply the doctrine of file wrapper estoppel; however, Justice Manson then refers to the newly added section 53.1 of the Act, and adds: This new provision is specific to using Canadian prosecution file histories to rebut any position taken on claim construction.5 “However, in this case, I find that the patentee specifically referred to the corresponding US Application prosecution history and acknowledged that the amendments to the claims in the ‘376 file history were made to overcome novelty and obviousness concerns as raised in the US Application prosecution history. Accordingly, the Court may look at the US Application prosecution history as part of a purposive construction of the claims of the ‘376 Patent.”6 The Court in part imports the principles of US law to determine the scope of section 53.1 of the Act. Quoting the United States Supreme Court, Justice Manson adds: "By amending the application, the inventor is deemed to concede that the patent does not extend as far as the original claim” (Festo at 737-738)7. Consequently, Justice Manson concludes that the elements of heating the seeds in a "stream of air" and transferring them "into an insulated or partially insulated roasting chamber or tower" are essential elements of the claim. The plaintiff argued that the Court cannot construe the terms of the Patent in the absence of expert evidence demonstrating how said terms would beconstrued by the POSITA. The Court rejected this argument: Based on the claim, the disclosure, and the prosecution history of the ‘376 Patent, I find that expert evidence is not required for me to be able to purposively construe the two elements of Claim 1 that are at issue.8 Although not explicitly stated in the judgment, it can be reasonably assumed that, had the plaintiff submitted expert evidence regarding claim construction by the POSITA which supported a finding of infringement, the Court would have possibly dismissed the motion for summary judgment. In the absence of such evidence, the Court seems to take for granted that it does not exist (since the plaintiff had to "put their best foot forward"). Therefore, patent agents in Canada must be cautious in their representations to CIPO and especially when referring to the prosecution of corresponding applications and patents in other jurisdictions. An admission that an amendment was made to limit the scope of a claim in response to prior art will likely result in the application of section 53.1 of the Act. Unsurprisingly, the Federal Court interprets section 53.1 of the Act as a desire on the part of the legislature to introduce the doctrine of file wrapper estoppel into Canadian law. It will, however, be interesting to see whether its application will be limited to merely rebutting "any representation made by the patentee in the action or proceeding as to the construction of a claim in the patent," or if, as Justice Manson appears to have done, it will be used to support the notion that the "prosecution history aids in the purposive construction of the disputed elements"10 of the claims11.   Free World Trust v. Électro Santé Inc., 2000 SCC 66, para 66. Despite this clear decision, the Federal Court has accepted / refused variations of this doctrine in the past: see interalia Distrimedic Inc. v. Dispill Inc., 2013 FC 1043, para 210; Eli Lilly Canada Inc. v. Mylan Pharmaceuticals ULC, 2015 FC 125, para 154; and Pollard Banknote Limited v. BABN Technologies Corp. 2016 FC 883 paras 238 and 239. Paras 46 and 48 Para 50 Para 62 Para 70 Para 67 Para 81 See para 79 “Regardless of the US Application prosecution history, I do not see how the process described in the Popowich Affidavit could possibly constitute heating the oil seed “in a stream of air” as that term is used in Claim 1 of the ‘376 Patent.” Para 85 On the other hand, Justice Mansonwrites the following at paragraph 84: The Plaintiff argued that section 53.1 is not engaged, as the Plaintiff did not make any representation as to the construction of Claim 1.Further, the Plaintiff argued that the Court is not in a position to determine whether the disputed claim elements are essential or not. However, as submitted by the Defendant, the Plaintiff made multiple representations in its written submissions to the effect that the language of Claim 1 is not limited to a particular type or source of heating. Note, however, that these representations would have only been submitted in response to the motion for summary judgment, which would certainly have referenced the file wrapper before any representations had been made by the plaintiff.

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  • Bell v. Cogeco: Unfair competition – the “best Internet experience” results in an unfavorable judicial experience

    In the field of telecommunications, it is not uncommon to see competing Internet service providers engage in advertising war campaigns in order to attract new customers, particularly in this highly competitive market due to the small number of competitors. Competitors are prepared to do anything to attract consumers, perhaps even making their offered products and services appear more attractive than they are. It is in this context that the Superior Court of Ontario issued, in Bell Canada v. Cogeco Cable Canada, 2016 ONSC 6044 1, September 20, 2016, an interlocutory injunction against Cogeco Cable Canada, in order to cease any use of the advertising phrase “the best Internet experience in your neighborhood ” in its advertisements, on the grounds of false and misleading representations. 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. --> Facts and background of the case Bell Canada (hereinafter “Bell”) and Cogeco Cable Canada (hereinafter “Cogeco”) are two competing Internet providers in Ontario. However, Bell and Cogeco do not use the same technology to provide their services to consumers. Specifically, Cogeco uses “Hybrid fiber coaxial cable” technology (Cable / HFC), while Bell uses “Digital subscriber lines” (DSL) technology. In addition to DSL, Bell also uses “Fiber to the home” (FTTH) through the entire province of Ontario while Cogeco offers this technology only in new residential neighborhoods. In August 2016, Cogeco announced its new brand identity as part of its advertising campaign for the back to school period. To reflect this new brand image, Cogeco changed the name of its Internet packages for “UltraFibre” and added two new advertising phrases on the homepage of its website: “There’s no limit to the things you can explore” and “Enjoy unlimited entertainment with the best Internet experience in your neighborhood.” After becoming aware of this new advertising campaign, Bell filed an action against Cogeco for false and misleading representations under section 52 of the Competition Act and section 7 of the Trade-marks Act. Specifically, Bell contests the addition of the term “Ultra” in the brand name of the Internet packages, and more particularly, Cogeco’s use of the expression “the best Internet experience in your neighborhood” in its advertisements appearing on the homepage of its website. Analysis and decision Justice Matheson analyzed the facts of the case at issue based on the three-part test for granting an interlocutory injunction, as set out in RJR-MacDonald Inc 2., as follows: 1) Is there a serious issue to be tried? 2) Will the Applicant suffer irreparable harm without an injunction? and 3) What is the relative impact on the parties if granted or not? (the “balance of convenience” factor). It is worth mentioning that Justice Matheson dismissed Bell’s claims regarding the rebranded Internet packages “UltraFibre” by Cogeco. While the prefix “Ultra” was added by Cogeco, the actual download speed appears on the package description; thus, this cannot be false or misleading. 1. Serious issue to be tried a) Overall impression of the advertisement Under section 52(4) of the Competition Act, the overall impression conveyed by the advertisement must be considered from the perspective of an average consumer to determine whether or not the public can be deceived or misled. The advertisement will be considered false or misleading in a material respect if the consumer would likely be influenced by that impression when making a choice that seems advantageous to him/her based on the content or message of the advertisement. In this regard, Justice Matheson analyzed whether the advertisement “the best Internet experience in your neighborhood”, as a whole, appearing on Cogeco’s homepage, created a false or misleading representation in a material respect, from the point of view of an average consumer, credulous and technologically inexperienced. Cogeco submitted that the overall impression should be conveyed by taking into consideration the fact that the consumer has consulted all the content of the homepage, including all texts, graphics and hyperlinks. Cogeco also relies on a disclaimer placed on its website, stating that Cogeco uses a combination of optical fiber and coaxial cable technologies. However, this disclaimer appears in very small print and is not immediately apparent since the consumer must click on several links and read the entire page before reaching the warning. Contrary to the argument raised by Cogeco, the Court considered that the overall impression of the Internet advertisement in the present case should be analyzed taking into account what a consumer would see on a single screen rather than considering all pages and the links connected. The disclaimer of Cogeco to the effect that it uses a combination of technologies is not sufficient to overcome the general impression created by the advertisement because the disclaimer does not appear on the main screen of Cogeco’s homepage. b) Definition of “Internet experience” Considering the general impression of the advertisement, the Court attempted to define the “Internet experience” including the criteria consumers are looking for when seeking Internet access services. Cogeco submits that the “Internet experience” consists of a multitude of factors including not only the speed and performance, but also the customer service and the network security. By this argument, Cogeco attempts to justify the fact that the advertisement signified that Cogeco was delivering an exceptional customer experience. On the other hand, Bell submits that the most important factors to consider in the consumer Internet experience are speed and performance. Justice Matheson, on the basis of a report issued by the Canadian Radio-Television and Telecommunications Commission (CRTC) 3 regarding the performance of Internet services to Canadians, refused Cogeco’s argument, as speed is an important factor for consumers regarding their choice of Internet services. In its report, the CRTC indicated that the optical fiber technology surpasses Cable / HFC technology in, among others things, download speed, upload throughput speed, and reliability. The CRTC report also raises the matter that higher speeds are generally what consumers are looking for. Moreover, Cogeco itself acknowledged that this report is a reliable comparison of the various Internet access technologies on the market. Further, since Cogeco is currently not offering FTTH in all areas in Ontario, it cannot claim to offer “the best Internet experience in your neighborhood.” The Court is satisfied that there is a serious issue to be tried regarding false or misleading representations. 2) Irreparable harm The other test criteria for granting an injunction were also satisfied following the analysis of Justice Matheson. Bell has demonstrated that it will suffer irreparable harm since it is not possible to determine the exact number of existing or potential clients who have made a choice based on Cogeco’s representations to the effect that it offers the best Internet access services. 3) balance of convenience It was also concluded that the balance of convenience favored the granting of an interlocutory injunction. Indeed, although Cogeco invokes the costs associated with its advertising campaign, it is possible for Cogeco to modify the homepage of its website by removing or replacing the word “best” at little cost since the phrase only appears on the homepage of Cogeco’s website. The Court concluded that Cogeco has altered the competitiveness of the market by claiming to be “the best”, despite the fact that it does not provide the fastest and the best performance in at least one geographical area in which both companies compete in Ontario. An ordinary consumer is likely to be deceived or misled by the representation of Cogeco to the effect that it offers “the best Internet experience in your neighborhood.” The decision teaches a valuable lesson in the considerations and care to be taken when developing advertising campaigns and slogans in such highly competitive fields. For any information on this or other intellectual property matters, please do not hesitate to contact a member of our team.  Bell Canada v. Cogeco Cable Canada, 2016 ONSC 6044.  RJR-MacDonald Inc. v. Canada (Attorney-General), [1994] 1 S.C.R. 311.  http://crtc.gc.ca/eng/publications/reports/rp160317/rp160317.htm

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  • Canada strengthens the protection of copyright and trademark rights with the enactment of new border enforcement measures

    Since January 1st 2015, the sections of the Act to amend the Copyright Act and the Trade-marks Act and to make consequential amendments to other Acts (“the Act”) with respect to the new border enforcement measures have come into force in Canada. The purpose of the Act is to help Canadian copyright or trademark owners in curtailing the exportation and importation of counterfeit goods that violate their intellectual property rights.  For this purpose, the Act creates new measures, specifically enabling customs officers to detain goods that they suspect infringe copyright or trademark rights. The Act also establishes a mechanism of sharing of information (for example the name and address of the owner of the goods, the name of the importer, the name of the exporter, etc.) and sharing of samples between customs officers and copyright and trademark owners who have filed a Request For Assistance to the Canadian Border Services Agency (CBSA) Intellectual Property Rights Program (“Request for Assistance”) which can be found on Canada Border Services Agency’s website at the following address: http://www.cbsa-asfc.gc.ca/security-securite/ipr-dpi/app-dem-eng.html. With the sharing of information and samples, right owners can more easily pursue a remedy in court against those persons who have violated their rights. 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. --> It is important to note that the Request for Assistance Form only covers registered trademarks, while both registered and non-registered copyrights are included. The Request for Assistance must include the legal name of the right holder, the right holder’s address, the contact information of the right holder’s representative for service in Canada (if applicable), the trademark or copyright (if the latter is registered) registration number, the Harmonized System Code maintained by the World Customs Organization, the name and description of authentic goods, a list of known authorized importers permitted to bring these goods into Canada (if applicable) and of known distributors of illegitimate or suspect goods. The Request For Assistance is valid for a 2-year period and can be renewed on demand. It is essential that copyright and trademark owners be aware that the government can require (1) that the copyright or trademark owner furnish security as a condition of accepting a Request for Assistance or for extending a request’s period of validity, and (2) that if they receive a sample they are liable for storage and handling charges for detained goods and, if applicable, for charges for destroying them. If the right holder decides not to obtain a remedy in court with respect to the information or samples received, then the right holder will not be liable for any charges. In order to keep goods from being released, the right holder who filed a Request for Assistance at the CBSA must file a civil suit in the 10 days following the notice of detention received from the CBSA, and therefore must be responsible in contacting their lawyers in Canada promptly in order to obtain a remedy when appropriate. Should you have any questions, please contact a member of our firm.

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