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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.
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
IT services dispute: the Supreme Court considers the non-liability clause
In IT service contracts, it is common to find non-liability clauses protecting companies that provide software and professional IT system implementation or integration services. Issue In Dispute Is such a contractual non-liability clause valid under Quebec civil law where a fundamental obligation is breached? In 6362222 Canada inc. v. Prelco inc., recently rendered, the Supreme Court of Canada ruled that the non-liability clause in question was freely negotiated between the parties and resulted from compromises made by both sides. It therefore had to be respected. The respondent “Prelco” mandated the appellant “Créatech” to supply software and provide services to implement an integrated management system, the purpose of which was to manage and track all operational services information found in a large number of databases. Further to the many recurring problems during the system implementation, Prelco decided to end its contractual relationship with Créatech and hired another company to render the system operational. Prelco then claimed damages from Créatech, while Créatech filed a counterclaim for the unpaid balance for the project from Prelco. This began a long legal battle, which ended in the Supreme Court. In its decision, the Supreme Court treated various arguments which, according to Prelco, would have precluded the application of the non-liability clause. The Court dismissed these arguments. Reaffirmation Of The Primacy Of Freedom Of Contract The Supreme Court of Canada held that the Civil Code is set out in such a way as to provide for parties’ freedom to contract and to strike a balance between the notion of public order and the principle of freedom of contract. In considering the applicable legal principles, the judges noted however that the principle of respect for the contractual will of the parties does have exceptions, for example in cases of gross negligence or intentional fault, where economic forces are unbalanced ( such as a contract between a merchant and a consumer), where adhesion contracts and other types of contracts, such as nominate contracts mentioned in the Civil Code are involved, or where exclusions cover liability for body or moral injury. Conclusion From this decision, it appears beneficial for IT service providers or other service providers to choose to be governed by the Quebec regime in contracts where the parties negotiate a clause limiting or excluding liability.
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
Entrepreneurs and Intellectual Property: Avoid These Thirteen Mistakes to Protect Yourself (Part 1 of 3)
In this three-part article series, we will share with you the intellectual property (IP)–related mistakes that we regularly see with startups. We hope you will find it useful for your business. Happy reading! Part 1 of 3: Mistakes concerning IP in general Mistake #1: Believing that IP issues don’t affect you Some companies don’t put too much thought into intellectual property considerations, either because they feel they don’t have any intellectual property worth protecting, or because they simply don’t want to go through the trouble of obtaining such protection. While refraining from obtaining IP protection might, in rare instances, be a viable business decision, that does not mean that your company should ignore IP considerations altogether. This is because of the existence of third-party intellectual property rights. As an example, if your business sells or uses technology that has already been patented by a competitor, or your business uses a trademark that is confusingly similar to that of a competitor, then said competitor may be able to sue you for infringement, regardless of whether or not said infringement was deliberate. This is why it is always important to consider third-party IP rights, regardless of the nature of your business activities, and regardless of whether you intend on obtaining IP protection. Mistake #2: Believing that IP will cost you too much Many business owners think that intellectual property is too expensive to warrant spending money on when their company is just starting out. However, while obtaining intellectual property rights can sometimes be an expensive process, it is important to remember that investing in your company’s IP rights is just that: an investment, one that can result in the creation of a valuable asset for your company. This can include a trademark registration for a brand that, over the years, will become incredibly popular, or a patent for a highly sought-after piece of technology. In fact, if properly protected, a company’s intellectual property assets can easily become more valuable than any physical asset. And just like any other valuable asset, it will increase your company’s worth and make your business all the more appealing for potential investors. Mistake #3: Hoping for the intervention of the “IP police” Some entrepreneurs believe that once they have obtained an IP right, the government will be the one to enforce it with their competitors. This is unfortunately not the case. It is up to you, as an IP owner, to monitor the market and ensure that your competitors don’t infringe your rights. Should you fail to do so, you’ll be leaving the door wide open to those who would wish to imitate your products and services. In addition, you even risk losing some of your previously acquired rights. For example, your trademark could become non-distinctive—meaning you would no longer be able to protect it—if you were to fail to react and let a third party copy it. Reacting to every single situation isn’t necessarily called for, but each case should be examined in order to determine what consequences third-party use might have on your rights as a holder. Should you discover, in your market monitoring, that a third party is imitating your intellectual property, talk to your IP advisor or lawyer. They can help you decide on an effective first approach to take, either on your own or through them. Said approach might involve asking the third party to cease its activities, claiming compensation for prejudice caused, requiring that certain modifications be made to the use, and/or negotiating a coexistence agreement or a license with or without royalties. Mistake #4: Believing that you won’t be able to “defend your IP” We sometimes hear entrepreneurs say that securing IP rights isn’t worth their while, as they won’t be able to “defend their IP.” They essentially believe that the only purpose of holding IP rights is to sue competitors who imitate their products and services, which they necessarily believe is very expensive. The result is that they fail to protect their innovations and let their competitors appropriate their products and services. Without IP rights, it is true that they have little recourse. In reality, a lawsuit is usually the last option to use against competitors. Many other steps can be taken before resorting to a lawsuit. As is the case for other IP owners, holding IP rights may allow you to: - Significantly discourage competitors from imitating your products and services by clearly indicating that you hold IP rights; and - Negotiate agreements with your competitors who would like to imitate or who are already imitating your products and services. Remember that only a small minority of IP disputes are resolved in court; all other disputes are resolved out of court quickly and at relatively little cost. Mistake #5: Launching your product or service on the market and waiting to see if it will be a success before obtaining IP protection Some entrepreneurs, preoccupied with saving money, launch their new products or services on the market and wait to see if they are successful before protecting them with IP rights. This constitutes a serious mistake, because some IP rights may no longer be available. More specifically, once a product or service is launched, the possibility of protecting it by patent or industrial design is no more. Note that some exceptions apply, particularly in some jurisdictions that allow grace periods. If you are considering protecting one of your products or services by patent or industrial design, you should start the protection process before you launch your innovation on the market. However, said protection process doesn’t need to be completed in order to begin marketing your product or service. 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 2 | Part 3
Product advertising in the time of COVID-19: Health Canada and the Competition Bureau are on the lookout for misleading claims
It’s been more than a year since the COVID-19 pandemic began, and many companies are attempting to market products intended to help consumers deal with the risks associated with COVID-19. Some of the most common examples of such products include face masks, testing devices, hand sanitizers, and hard-surface disinfectants. However, while many of these products can be useful (such as by helping reduce the risk of infection), there remains the question of what COVID-19 related claims, if any, can be attributed to the product (e.g. on the product's packaging or in an advertisement). An inaccurate or inappropriate statement can garner the attention of both Health Canada and the Competition Bureau. In fact, since the start of the pandemic, the Competition Bureau has been issuing compliance warnings to businesses across Canada regarding potentially false or misleading claims that their products and services can prevent the disease and/or protect against the virus.1 Accordingly, we have written this newsletter to summarize what Health Canada and the Competition Bureau are looking for when assessing COVID-19-related claims. We also provide examples of the types of statements that have been considered “unacceptable,” as well as a brief description of the consequences of utilizing such unacceptable statements. Please note that the following does not address which licenses are necessary to sell specific products in Canada, nor does it address which legal requirements apply. For example, hand sanitizers, in order to be sold in Canada, must meet the requirements of the Natural Health Products Regulations (NHPR). The general principles of the Competition Act and the rules of the Canadian Competition Bureau With respect to both COVID-19-related claims and product claims in general, the Competition Act prohibits false or misleading claims about any product, service, or business interest. This applies to both the literal meaning of a statement and the general impression it creates. Furthermore, the Competition Act prohibits performance claims that are not backed up by adequate and proper testing. First, such testing must be performed prior to the claim being made and on the actual product being sold, as opposed to a comparable or similar product. Second, they must reflect the product's real-world usage—such as in-home use. Third, the results of the tests must support the general impression created by the claims. Since as early as May 2020, the Competition Bureau has enforced the above guidelines by issuing direct compliance warnings to a variety of businesses across Canada to stop potentially deceptive claims, including warnings against: Making claims that certain products (including herbal remedies, bee-related products, vitamins, and vegetables) can prevent COVID-19 infections; and Making claims—without first conducting the testing required by law—that certain UV and ozone air sterilization systems, as well as certain air filters or air purifiers, will effectively kill or filter out the virus. Accordingly, the above rules should always be followed when making any COVID-19-related claim about a product. Examples of advertising incidents addressed by Health Canada Health Canada has provided a list of more than 400 advertising incidents related to COVID-19.2 The table provided in footnote 2 lists products and corresponding companies or advertising media found to engage in non-compliant marketing, which are currently under review or have been resolved. While many of these incidents have been resolved, it is unclear what resolution occurred. Was the claim modified or removed entirely? Did the company have to pay a fine? Did the company manage to convince Health Canada that their claim was acceptable as is? Nonetheless, it is clear that the statements were questionable enough that Health Canada found it necessary to intervene. The COVID-19-related claims found therein can thus serve as an effective guide of what claims not to use when advertising products. Along with many unauthorized general claims of “preventing” or “treating” coronavirus and/or COVID-19, some interesting examples of statements flagged by Health Canada include the following: “To protect against Coronavirus” – with respect to a “bandana and protection mask set.” “Flatten the curve with these on trend Fashion Masks” – with respect to a face mask. “Anti-Microbial Micropoly Fabric” – with respect to a face mask. “Ideal for Covid-19” – with respect to a face mask. “Anti-coronavirus, blocks pollution like: exhaust fume, smog, flu virus” – with respect to a face mask. “Effectively isolates saliva carrying coronavirus” – with respect to an “Anti-Dust And Anti-Fog Hat Anti Coronavirus Hat.” “The importance of boosting the immune system during the threat of COVID-19” – with respect to various natural health products. “Suitable in bathroom, living room, bedroom hotel, flu Covid-19” – with respect to a “UV Disinfection Lamp Steriliser.” “labeled ‘COVID-19’ under tab” – with respect to a face mask. As can be seen, some of the statements do not even directly mention COVID-19 or coronavirus, and instead reference concepts such as “flattening the curve” or make general representations about having “anti-microbial” properties. Moreover, many of the claims simply reference COVID-19, without making any representations about treating and/or preventing it. In addition to consulting the above guidelines and examples, it may be wise to seek out products that have been approved by Health Canada for use against COVID-19. Some examples of such products include the following: Disinfectants with evidence for use against COVID-19. Authorized medical testing devices for uses related to COVID-19. Authorized medical devices other than testing devices for uses related to COVID-19. Based on the above, products should only bear COVID-19-related claims if they have been approved for use against COVID-19 by Health Canada, and, even then, such claims should be limited to said use and to what the supporting evidence demonstrates. Some of the links above also contain information on how to obtain the aforementioned approval from Health Canada. Please note that, as of the date of this newsletter, no hand sanitizers have been approved in Canada with COVID-19-related claims.3 Consequently, although hand sanitizers can help reduce the risk of infection by, or spread of, microorganisms, COVID-19-related claims should not be used with such products. Even so, Health Canada has provided a list of hand sanitizers that they have authorized for sale in Canada. In general, a sound policy is to thoroughly review your marketing materials to identify any claims related to the prevention or treatment of COVID-19 that may be false, misleading, or unsubstantiated, and immediately modify or remove such claims accordingly. Penalties for false representations and misleading marketing practices The penalties for using COVID-19-related claims that do not comply with the law can be quite severe and can include fines and jail time.4 In fact, false or misleading representations and deceptive marketing practices, regardless of whether they involve COVID-19-related claims, can be prosecuted under civil law and/or criminal law. As an example, under civil law, the court may order a person to cease an activity, publish a notice and/or pay an administrative monetary penalty. On first occurrence, individuals are liable to penalties of up to $750,000, and corporations, up to $10,000,000. For subsequent occurrences, the penalties increase to a maximum of $1,000,000 for individuals and $15,000,000 for corporations. Under criminal law, a person is liable to a fine of up to $200,000 and/or imprisonment for up to one year. We thus strongly recommend avoiding making false or misleading COVID-19-related claims at all times. We hope that our newsletter serves as a useful guide regarding what Health Canada and the Competition Bureau consider an “inaccurate” or “false” COVID-19-related claim, and that it has clearly laid out what the consequences of making such a claim in association with a given product can be. However, whether a COVID-19-related claim is appropriate will depend on many factors, such as the exact wording of the claim and the exact nature of the product. Our intellectual property team would be happy to help you with any questions you may have regarding what COVID-19-related claims, if any, you should use on your products, as well as any other legal requirements that must be met before a specific product can be sold in Canada. https://www.canada.ca/en/competition-bureau/news/2020/05/competition-bureau-cracking-down-on-deceptive-marketing-claims-about-covid-19-prevention-or-treatment.html https://www.canada.ca/en/health-canada/services/drugs-health-products/covid19-industry/health-product-advertising-incidents.html https://www.canada.ca/en/health-canada/services/drugs-health-products/disinfectants/covid-19.html https://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03133.html
An introduction to Trade Secrets: What they are and why they matter to your business
One of the most common questions we receive as intellectual property lawyers is “How can I prevent others from using technology that I have developed and that has significant value to my business?” That question can often be answered by advising clients to file a patent application. However, there exists another type of intellectual property protection, known as a “trade secret,” that may be more suitable for certain situations and technologies. This brings us to the main topic of this newsletter: the importance of trade secrets. Specifically, this newsletter will first provide a general definition of trade secrets, including examples thereof, followed by information regarding the various ways trade secrets can be effectively used and protected by a business. Brief overview of trade secrets The definition of a trade secret is incredibly broad; in fact, the term “trade secret” can include any valuable business information that derives its value from secrecy. This information can be, for example, financial, business, or scientific information, such as patterns, plans, compilations, formulas, programs, codes, prototypes, or techniques. As indicated by the Canadian Intellectual Property Office, to protect and benefit from trade secrets in Canada, a business must: Obtain value from the secret; Keep the information a secret; and Take all possible measures to ensure that the information remains a secret. Generally, if the above criteria are met, then the information in question can be considered a trade secret. Some of the most famous examples of trade secrets are for recipes (such as the Coca-ColaTM recipe or the KFC Original RecipeTM); chemical formulas (such as WD-40TM); and the client information of social media platforms and dating apps (such as FacebookTM or TinderTM). While the definition of a trade secret may seem quite broad, this breadth is precisely why trade secrets can be such a powerful tool: they can allow your company to monopolize information or technology that may not be protected using other means, such as patents. In addition, the protection granted by keeping valuable information secret can last indefinitely (or at least until the secret is revealed). The premise behind trade secrets is that, by keeping this valuable information secret, third parties are prevented from accessing and using the information in question, thereby giving your business an advantage over competitors. Accordingly, if your company has information from which it derives value (such as a newly developed piece of technology), trade secrets may be an appealing alternative to patents and other forms of IP protection. Best practices for businesses with respect to their trade secrets Having provided a brief overview of trade secrets, we will now focus on practical considerations, specifically with respect to helping ensure that trade secrets are kept confidential even when the information in question needs to be shared with an employee or a third party. Frequently, businesses will have to share their trade secrets with others. For example, specific employees of a company will often have access to some (or all) of that company’s trade secrets. Similarly, companies will often have to share their trade secrets with third parties; for example, a company that hires an external consultant may be required to furnish that consultant with trade secret information. Also, a company that has developed a new piece of technology it aims to keep secret may be required to divulge how to make said technology to a third-party manufacturer. In such situations, it is important to have certain measures in place that will better ensure that your trade secret remains a trade secret. Contractual obligations When employed correctly, the use of contractual clauses can provide ample protection with regard to a company’s trade secrets. Specifically, for any employee or third party that may gain access to trade secrets, it would be prudent to ensure that a robust written agreement is signed that stipulates what said employee’s or third party’s obligations are with respect to the trade secrets to which they gain access. Some examples of clauses pertaining to trade secrets that can be included in an employment contract or a contract with a third party include the following: Definition of "Confidential Information" or “Trade Secrets”: This clause would give a definition as to what information to be provided to the employee or third party is considered a trade secret. Obligation of non-disclosure and non-use: This clause would specify that the employee or third party in question is not allowed to use or disclose the confidential information they receive except in accordance with “permitted uses.” Definition of "permitted uses”: This clause would define the manner in which an employee or third party is allowed to use or disclose the confidential information they receive. Undertaking not to use/disclose/publish/reproduce confidential information of third parties (e.g., a former employer): This clause would remind an employee or third party that they are forbidden from using or disclosing confidential information they have received from a previous employer or contractor. Data destruction/return of documents: This clause would specify that the employee or third party is required to destroy and/or return all confidential information they have received to the company upon termination of their contract. Obligation to report if information was inadvertently transmitted: This clause would specify when and how an employee or third party must notify the company should any confidential information in their possession be disclosed or used in a manner that contravenes their contractual obligations. Penalty clause (articles 1622 and 1623 of the Civil Code of Quebec): This clause would specify that the employee or third party is obliged to pay the company a certain fee should any confidential information they receive be disclosed or used in a manner that contravenes their contractual obligations. The above clauses represent but a few examples of important clauses that can be included when drafting a written contract for any employee or third party that will be given access to a company’s trade secrets. However, it is not always feasible to draft a robust written agreement. Accordingly, there are other ways to implement the above clauses; for example, the above clauses can be defined in a company’s policy manual that would be provided to employees when they are being hired by the company. It is also important to remind employees or third parties of their obligations regarding your company’s trade secrets at the relevant times. For instance, when a contract with an employee or a third party is to be terminated, that might be an opportune moment to remind the employee or third party that they have a duty to return and/or destroy all confidential information and documents they have received from your company. This reminder can be made in an email, in a release to be signed by the employee, or even during an exit interview. Employee duty of loyalty It should be mentioned that, in Quebec, all employees have a duty of loyalty to their employers, due to article 2088 of the Civil Code of Quebec, which states inter alia that “The employee is bound […] to act faithfully and honestly and not use any confidential information he obtains in the performance or in the course of his work. These obligations continue for a reasonable time after the contract terminates […].” [emphasis added]. Accordingly, even without a written employment contract containing the above-discussed clauses, employees are still required to keep trade secrets confidential and to not appropriate the material or intellectual property of the employer. However, this protection is quite limited (for example, it only applies for a reasonable time once the employment contract is terminated), and so it is always more prudent to explicitly define an employee’s obligations regarding trade secrets in, for example, an employment contract or a company policy manual. It should also be mentioned that article 2088 of the Civil Code of Quebec concerns employees only, and does not apply to third parties who gain access to trade secrets. Remedies Even with the best of safeguards in place, a current or former employee or third party may nonetheless use or disclose your company’s trade secrets. While such a situation is unfortunate, there are a number of legal remedies that can allow you to mitigate the damage done, as well as to recover amounts from the rule-breaking parties. Specifically, it is generally possible to obtain injunctions or safeguard measures against parties that have misappropriated your company’s trade secrets. In addition, it is generally possible to recover damages from said parties. While the above remedies may seem relatively inconsequential, they can be quite severe under certain circumstances. One recent example is a lawsuit commenced in 2017 by Motorola Solutions against Hytera Communications in the United States. In their lawsuit, Motorola Solutions alleged inter alia that three former Motorola Solutions employees had gone to work for Hytera and taken Motorola trade secrets with them, after which Hytera used these trade secrets to develop its Digital Mobile Radio (DMR) products. Motorola was eventually awarded a jury verdict of $764.6 million earlier this year. The above example not only demonstrates how powerful legal remedies regarding trade secret protection can be, but it also demonstrates why it is important to respect the trade secrets of others. Otherwise, your company may find itself on the receiving end of a lawsuit similar to the one commenced by Motorola. It is also worth mentioning that, despite the lawsuit taking place in the United States, the injunction sought by Motorola (which has yet to be ruled upon) would forbid Hytera from selling any of the contested DMR products worldwide. In addition to civil remedies (such as the example provided above), there are also criminal ramifications for violating the trade secrets of others. In Canada, the newly implemented Canada-United States-Mexico Agreement (CUSMA) has required Canada to implement criminal procedures and penalties specifically for trade secret theft. Said regulations no doubt serve as an additional incentive to respect the trade secrets of competitors. Conclusion We hope that the above has demonstrated the importance of trade secrets, both in terms of how they can be used and why the trade secrets of competitors should be respected. However, while the above guidelines may serve as a good starting point for protecting your company’s trade secrets, the best strategy (including whether or not trade secrets are preferable over, say, patents) will depend heavily on your business, the information/technology in question, and various other factors. Accordingly, our intellectual property team would be happy to help you with any questions you may have regarding how to best protect your business’ most valuable information and technology.
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.
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.
The Canada-European Union Comprehensive Economic and Trade Agreement (CETA) is coming into force today!
It is today, September 21st 2017, that Bill C-30 1 comes into force. As a result of its provisions, several Canadian laws are amended in order to allow for implementation of the Canada–European Union Comprehensive Economic and Trade Agreement “CETA” 2. Chapter 20 of the CETA deals with the commitments made by signatories in relation to intellectual property rights. Here is a summary of the principal changes brought to the legislative schemes governing these rights: Trade-marks Expressions that depict the place of origin of goods are not registrable as trade-marks under the Trade-marks Act 3. Only the designation of wines and spirits by Geographical Indications “GIs” can be protected under this act 4. CETA broadens the protection to more than 170 GIs, which are listed under Annex 20-A of the agreement. From this day forward, in Canada, it is prohibited to use a GI in association with a product if it does not originate from the territory specified in Annex 20-A, or if it does originate from the specified territory but was not produced in accordance with the laws and regulations governing the specified territory. Subject to certain exceptions provided by law, the use of terms such as “kind”, “type”, “style” or “imitation” in combination with a listed GI is also prohibited. These prohibitions will undoubtedly prompt changes in advertising, packaging and procurement of food-related products sold in Canada. Therefore, agri-food companies can benefit from a better understanding of their rights in relation to the use of GIs and should consider taking concrete actions in response to imminent competition. Our previous newsletter provides a series of recommendations to that effect. Patents The legal regime governing patent protection of innovative drugs and marketing of generic equivalents has been considerably modified in order for Canada to meet its CETA undertakings. A more detailed analysis of the new provisions will be published shortly; however it is relevant to summarize their substance as follows: – Patent Term Extension In order to compensate for time spent in research and obtaining marketing authorization 5, that is, a Notice of Compliance “NOC”, Canada’s Minister of Health is now authorized to issue a certificate of supplementary protection “CSP” to patentees with patents relating to new human and veterinary drugs. The term “new” refers to a drug containing active ingredients that have not been previously approved in a NOC. A CSP confers the exclusive right to prevent the manufacture, use or sale of the patented drug. The CSP is also subject, like a patent, to a validity challenge. Capped at a maximum of 2 years, the precise term of a CSP is set to be the difference between the date of the filing of the patent application and the date of issuance of the authorization for sale (NOC), minus five years. The Minister of Health can reduce this calculated term taking into account delays caused by the NOC applicant. A single CSP may be requested for a product, even though the product may be protected by more than one patent. The term of protection takes effect upon the expiry of the basic patent and, in cases where several patentees hold a patent protecting their respective products, at the expiration of the patent of the holder who files the application for additional protection. Other conditions apply. – Equal Rights of Appeal and the End of “Dual Litigation” In Canada, the right of a pharmaceutical company to market a generic version of a patented drug product is conditional upon obtaining a NOC issued by Health Canada certifying the bioequivalence of the generic product. Before proceeding with the sale of a generic version of a brand name drug, the generic company must provide the manufacturer of the brand name drug with a notice of allegation indicating “NOA”: that it accepts that the generic product will not be sold before the patent expires, or that the patent is invalid, or that the generic company does not infringe any patent claim relating to the medicinal ingredient, the formulation, the dosage form or the use of the medicinal form. Until now, the brand manufacturer could respond to the NOA by initiating a summary court proceeding to obtain a prohibition order preventing Health Canada from issuing a NOC to the generic manufacturer. If the Court application was rejected, the brand manufacturer could theoretically appeal the decision to higher Court. However, the appeals were generally rejected as rendered moot by the issuance of a NOC by Health Canada immediately after the first Court decision. Although the allegations of patent invalidity and infringement were examined by the Court in the proceedings described above, the decisions on these matters were not final. Consequently, the same parties could engage in an infringement or invalidity action, in parallel or subsequently, to debate the allegations. By ratifying the CETA, Canada committed to ensuring that the pharmaceutical linkage mechanism provides all litigants with equivalent rights of appeal. Accordingly, the Patented Medicines (Notice of Compliance) Regulations 6 were amended to allow the Court to grant an injunction against a generic company to stop acts of counterfeiting. This remedy can now be ordered despite the issuance of a NOC by Health Canada. The amended Regulations also replace the summary procedure described above by a complete action enabling the Court to rule definitively on issues of invalidity and infringement. This new framework will limit the parties from engaging in parallel actions on the same issues, thus reducing the risk of conflicting judgments. Copyrights The Copyright Act 7 has been amended in 2012 to reflect the standards established by the World Intellectual Property Organization 8. No further modifications were required to ensure Canada’s compliance with the CETA’s requirements. Industrial Design Under the CETA, Canada has committed to make all reasonable efforts to accede to the Geneva Act of the Hague Agreement Concerning the International Registration of Industrial Designs. Although the Hague System is not yet in force in Canada, many amendments have already been made to the Industrial Design Act 9 and proposed industrial design regulations have been drafted 10 to facilitate Canada’s adherence to the Hague System. Plant Varieties By ratifying the CETA, Canada has committed to cooperating with the European Union countries to promote and strengthen plant variety protections on the basis of the 1991 Act of the International Convention for the Protection of New Varieties of Plants. Canadian legislation has not been affected by this commitment. Canada–European Union Comprehensive Economic and Trade Agreement Implementation Act, L.C. 2017, c. 6. The complete text of the CETA, online: http://www.international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-acc/ceta-aecg/text-texte/toc-tdm.aspx?lang=eng. Trade-marks Act, R.S.C., 1985, c. T-13, section 12(1)b). Trade-marks Act, supra note 3, section 2. Government of Canada, « REGULATORY IMPACT ANALYSIS STATEMENT», Canada Gazette, Vol. 151, no 28, July 15, 2017, available online : http://www.gazette.gc.ca/rp-pr/p1/2017/2017-07-15/html/reg16-eng.php. DORS/93-133. R.S.C., 1985, c. C-42. WIPO Copyright Treaty; WIPO Performances and Phonograms Treaty. R.S.C., 1985, c. I-9 Government of Canada, «Proposed Industrial Design Regulations draft», online : http://www.ic.gc.ca/eic/site/cipointernet-internetopic.nsf/eng/wr04255.html.
Update: Metatags at the Federal Court of Appeal
In December 2015, the Federal Court of Appeal rendered its judgment in the case of Red Label Vacations Inc. (redtag.ca) v. 411 Travel Buys Limited (411travelbuys.ca) 1. The Court dismissed all grounds of appeal and upheld the decision of the Federal Court. Background and Federal Court decision Red Label Vacations and 411 Travel Buys are two competing businesses offering online services related to the travel industry. Red Label noticed that some of its metatags incorporating its registered trademarks were copied into 411 Travel’s web pages. Metatags are words or phrases embedded in a website’s source code that are used by search engines to classify and rank web pages when a user conducts a search. Red Label brought an action against 411 Travel for copyright infringement, trademark infringement, passing off and depreciation of goodwill. The Federal Court dismissed all claims alleged by Red Label, who appealed the decision 2. 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. --> Federal Court of Appeal (FCA) decision Concerning trademark infringement The FCA first dealt with the issue of trademark infringement. The Court held that the trial judge did not err in finding that there was no “use” of Red Label’s registered trademarks in a manner to establish infringement according to the Trademarks Act. Although Red Label’s trademarks were copied into 411 Travel metatags, none of the metatags appeared in the visible portion of 411 Travel’s website. In that sense, 411 Travel did not use Red Label’s trademarks in order to associate its services with those of Red Label. Although the FCA has not concluded that there was trademark infringement in this particular case, the Court has somehow left open the possibility that “use” of a registered trademark in metatags may, in some cases, lead to an action for trademark infringement. At paragraph 22 of the decision, the Court commented as follows: “While, in some situations, inserting a registered trade-mark (or a trade-mark that is confusing with a registered trade-mark) in a metatag may constitute advertising of services that would give rise to a claim for infringement, in this case, this reference to “Book Online with Red Tag Vacations” cannot be considered to be advertising the services of 411 Travel Buys in connection with the services offered by Red Label.” [Emphasis added] However, it should be noted that the Court has not provided any specific details on when and how the unauthorized use of trademarks in metatags could give rise to a claim for infringement under the Trademarks Act. Concerning passing off and depreciation of goodwill Regarding the action for passing off and depreciation of goodwill, the FCA concluded that Red Label has failed to show that the trial judge made any palpable and overriding error in his finding by rejecting these claims. In particular, Red Label has not submitted any evidence to establish that its trademarks were visible once a person enters the 411 Travel website. Given the fact that there was no “use” of Red Label’s trademarks since the metatags were not visible, the consumer still has the freedom to choose the link of the website he wants to access, and therefore there is no possible likelihood of confusion. Concerning copyright infringement Finally, the FCA confirmed the Federal Court decision regarding copyright infringement. The Court mentioned that since it was a finding of facts, Red Label has not established that the trial judge made any palpable and overriding error by concluding that Red Label’s metatags were not protected under the Copyright Act. It was held that metatags can acquire copyright protection but only if there is evidence of sufficient degree of skill and judgment in their creation, which was not the case in this particular instance. This case is yet another example of the challenges and uncharted territory in issues of intellectual property in today’s online age. Red Label Vacations Inc. (redtag.ca) v. 411 Travel Buys Limited (411travelbuys.ca), 2015 FCA 29, confirming 2015 FC 19. Please refer to our newsletter dated August 24, 2015 for further comments on the Federal Court decision, https://www.lavery.ca/en/publications/our-publications/3122-federal-court-of-canada-examines-metatags-under-copyright-and-trademark-law.html
Federal Court of Canada examines metatags under copyright and trademark law
In the decision Red Label Vacations Inc. (redtag.ca) v. 411 Travel Buys Limited (411 travelbuys.ca) 1, the Federal Court examined whether metatags attract copyright protection and whether use of a competitor’s trademark or trade name in metatags constitutes a violation of trademark rights in Canada. Metatags are words or phrases written in a website’s source code that search engines use to rank websites and which are not displayed on the actual webpages. Although the issue of intellectual property protection in the context of metatags is the subject of heated debate all over the world, this decision marks one of the first times that the Federal Court has provided clarification on how metatags fit within the Canadian copyright and trademark schemes. Facts Red Label Vacations Inc. (the plaintiff), a business offering online travel information via its website redtag.ca, is the owner of three registered trademarks: “redtag.ca”, “redtag.ca vacations” and “Shop. Compare. Payless!! Guaranteed”. The plaintiff began an action before the Federal Court for copyright infringement, trademark infringement, passing off and depreciation of goodwill against its competitor, 411 Travel Buys Limited (the defendant), an online travel agency. Specifically, several of the defendant’s webpages contained metatags that were identical or similar to the plaintiff’s metatags, including the words “red tag vacations” and “shop, compare & payless”. Since the allegedly infringing content was only found in the defendant’s metadata, it was not visible to consumers visiting the defendant’s website. The Court dismissed the plaintiff’s action. 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. --> Decision Concerning the alleged copyright infringement, the Court held that although the defendant copied the plaintiff’s metatags, there was no infringement since the plaintiff’s metatags did not acquire copyright protection. The Court’s rationale was based on evidence that the plaintiff’s metatags came from a list of Google key words which were combined into small generic phrases descriptive of the travel industry. As such, the threshold of originality laid out by the Supreme Court of Canada 2, i.e. requiring sufficient skill and judgment, was not met. Further, the Court concluded that in the hypothetical situation that copyright could exist in the plaintiff’s metatags, no substantial copying had occurred since only 48 out of approximately 180,000 pages of the plaintiff’s website were copied by the defendant. Finally, Justice Manson observed that the defendant inadvertently reproduced the redtag.ca metatags and that it would have nonetheless been considered innocent infringement. With regard to the alleged trademark violation, the Court acknowledged that several of the defendant’s metatags contained the dominant terms of the plaintiff’s registered trademarks and trade name, but that they were not visible to customers visiting the defendant’s webpages. The Court further indicated that the defendant had not “used” the plaintiff’s trade name or trademarks on their website. With respect to the allegations of trademark infringement and depreciation of goodwill, the Court reiterated that there had been no “use” of the plaintiff’s trademarks within the meaning of the Trademarks Act, making the claims inapplicable since “use” is a prerequisite for such claims. In assessing whether the plaintiff could succeed in a passing off claim under section 7(b) of the Trademarks Act, the Court reiterated the 3 elements that must be proven: (i) the existence of goodwill, (ii) the likelihood of deception of the public due to a misrepresentation, and (iii) actual or potential damage. The Court found that the plaintiff’s trade name Red Tag and trademarks “redtag.ca” and “Shop. Compare. Payless!! Guaranteed.” had the necessary goodwill to satisfy the first prong of the test. On the question of misrepresentation, the defendant’s use of the words “red tag” in their metadata led to redirected traffic from the plaintiff’s website to that of the defendant, both of which offer travel services to Canadians. Justice Manson’s inquiry turned on whether the defendant’s use of the dominant words of the plaintiff’s trademarks and trade name in their metatags was likely to cause deception. The Court remarked that the use of metatags in search engines provides consumers with a list of distinct links to choose from and that it does not direct them to a specific website. Although the consumers’ choice might be impacted by where a link ranks on a page of search results, the consumers always have the choice to pick the link of the particular competitor they had initially searched for. In this respect, the Court stated that: “…Accordingly, use of a competitor’s trademark or trade name in metatags does not, by itself, constitute a basis for a likelihood of confusion, because the consumer is still free to choose and purchase the goods or services from the website he or she initially searched for.” For these reasons, the Court concluded that there was no likelihood of deception and rejected the plaintiff’s claim of passing off. Our thoughts on the Federal Court decision (i) Copyright protection in metatags Although Justice Manson did not dismiss the possibility of “original” metatags, we find it unlikely that most metatags have the potential to enjoy copyright protection in Canada. Metatags, mainly composed of descriptive key words that businesses use to attract consumers to their website, are largely guided by their function to affect search engine behavior. In this respect, they have been labelled as nothing more “than the operation of an algorithm” 3. As such, it is doubtful that a metatag can be embedded with sufficient skill and judgment. It will be interesting to see whether a future decision will provide details on what constitutes a sufficiently “original” metatag to acquire copyright protection in Canada. (ii) Use of a competitor’s trademark and trade name in metatags: a case of unfair competition? No passing off was established on the basis that metatags in a search engine simply influence website rankings while the consumers are free to choose the link representing the initial source they desired. The claims for trademark infringement and depreciation of goodwill were equally rejected as there was no “use” within the meaning of the Trademarks Act by the defendant of the plaintiff’s trade name or trademarks. While we agree with the Federal Court’s statement that there can be no trademark violation without “use” of a trademark, we wonder whether, with the proper evidence of consumers’ perceptions and reactions, this practice could constitute a form of unfair competition. Conclusion The plaintiff filed for an appeal of the Federal Court’s decision. As such, the Court of Appeal may further develop the question of intellectual property rights in metatags. We suggest you tag along… Red Label Vacations Inc. (redtag.ca) v. 411 Travel Buys Limited (411travelbuys.ca), 2015 FC 19 (CanLII). CCH Canadian Ltd v. Law Society of Upper Canada, 2004 SCC 13. Insurance Corp of British Columbia v. Stainton Ventures Ltd, 2012 BCSC 608.