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

October 28, 2016

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.

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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Alain Y. Dussault
Partner, Lawyer and Trademark Agent

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Although it is not often well-understood in business and tax circles, the Indian Act (the “Act”), coupled with federal and provincial tax laws, provides several tax planning opportunities for Indigenous taxpayers. These laws provide various tax exemptions for people who qualify as “Indians” under the Act, as well as for “bands” and other “councils.” These terms are defined in the Act and require case-by-case analysis, but essentially they refer to people of Indigenous origin who have at least one family member who is registered or entitled to be registered as an Indian within the meaning of the Act. The criteria for a tax exemption In particular, those who qualify can benefit from a tax exemption when income is earned on a “reserve.” There are several criteria to be met, and although the Canada Revenue Agency (“CRA”) has issued guidelines on the subject, their application remains a question of fact that varies depending on the particular circumstances applicable to each taxpayer. In general, the CRA requires that income earned by an “Indian” within the meaning of the Act be sufficiently connected to a reserve to be exempt. This is the case when, for example, income-generating services are performed entirely or almost entirely within the territory of a reserve, when the employer and the employee reside on a reserve, or when income is derived from non-commercial activities carried out by a band. Business income can also be tax-exempt, but the criteria for being considered connected to a reserve are stricter, since generally only income-generating activities situated on a reserve will be tax-exempt. However, it is still possible to organize the affairs of a taxpayer and their corporate entities to ensure that these criteria are met, or to highlight certain connecting factors. Such planning, if done properly, is entirely legitimate and can result in significant tax savings. In a recent interpretation (CRA Views 2022-0932231I7), the CRA illustrated this principle by considering employment income related to an off-reserve airport to be exempt, even if none of the guidelines are followed, in cases where such an airport is necessary to supply a reserve that has no other means of transportation and delivery. This interpretation shows that the connection between an income and a reserve is not established solely by the physical presence of the income-generating business, and that several other arguments, sometimes more subtle, can be used to support the connection between an income and a reserve. A few nuances to consider However, care must be taken when a company is incorporated by someone who qualifies as an “Indian.” A company with its head office on a reserve cannot qualify as “Indian” within the meaning of the Act. Its income therefore cannot be tax-exempt, and will be taxed according to the usual rules. Despite this, certain plans can ease the tax burden on these companies and on shareholders who qualify as “Indians” under the Act, such as paying wages and bonuses to an employee shareholder. But it’s essential to carefully analyze the various pitfalls and risks that such planning entails. Furthermore, certain exemptions exist for companies formed by bands, but the eligibility criteria are strict and require a thorough analysis of the proposed structure. In addition to the income tax exemption, “Indians” within the meaning of the Act and certain entities mandated by bands may benefit from a tax exemption when they purchase goods on a reserve or have goods delivered to them on a reserve. Different exceptions and nuances apply. However, companies headquartered on a reserve are not exempt from their tax collection obligations and may be required to register for the GST/QST. To help you understand these rules and ensure optimal tax planning, we invite you to consult our tax team. We look forward to working with you on your business projects.

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Can artificial intelligence be designated as an inventor in a patent application?

Artificial intelligence (“AI”) is becoming increasingly sophisticated, and the fact that this human invention can now generate its own inventions opens the door to new ways of conceptualizing the notion of “inventor” in patent law. In a recent ruling, the Supreme Court of the United Kingdom (“UK Supreme Court”) however found that an artificial intelligence system cannot be the author of an invention within the meaning of the applicable regulations under which patents are granted. This position is consistent with that of several courts around the world that have already ruled on the issue. But what of Canada, where the courts have yet to address the matter? In this bulletin, we will take a look at the decisions handed down by the UK Supreme Court and its counterparts in other countries before considering Canada’s position on the issue. In Thaler (Appellant) v Comptroller-General of Patents, Designs and Trade Mark,1 the UK Supreme Court ruled that “an inventor must be a person”. Summary of the decision In 2018, Dr. Stephen Thaler filed patent applications for two inventions described as having been generated by an autonomous AI system. The machine in question, DABUS, was therefore designated as the inventor in the applications. Dr. Thaler claimed that, as the owner of DABUS, he was entitled to file patent applications for inventions generated by his machine. That being so, he alleged that he was not required to name a natural person as the inventor. Both the High Court of Justice and the Court of Appeal dismissed Dr. Thaler’s appeal from the decision of the Intellectual Property Office of the United Kingdom not to proceed with the patent applications, in particular because the designated inventor was not valid under the Patents Act 1977. The UK Supreme Court, the country’s final court of appeal, also dismissed Dr. Thaler’s appeal. In a unanimous decision, it concluded that the law is clear in that “an inventor within the meaning of the 1977 Act must be a natural person, and DABUS is not a person at all, let alone a natural person: it is a machine”.2 Although there was no doubt that DABUS had created the inventions in question, that did not mean that the courts could extend the notion of inventor, as defined by law, to include machines. An ongoing trend The UK Supreme Court is not the first to reject Dr. Thaler’s arguments. The United States,3 the European Union4 and Australia5 have adopted similar positions, concluding that only a natural person can qualify as an inventor within the meaning of the legislation applicable in their respective jurisdictions. The UK ruling is part of the Artificial Inventor Project’s cross-border attempt to ensure that the DABUS machine—and AI in general—is recognized as a generative tool capable of generating patent rights for the benefit of AI system owners. 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In 2020, Dr. Thaler also filed a Canadian patent application for inventions generated by DABUS.8 The Canadian Intellectual Property Office (“CIPO”) issued a notice of non-compliance in 2021, establishing its initial position as follows: Because for this application the inventor is a machine and it does not appear possible for a machine to have rights under Canadian law or to transfer those rights to a human, it does not appear this application is compliant with the Patent Act and Rules.9 However, CIPO specified that it was open to receiving the applicant’s arguments on the issue, as follows: Responsive to the compliance notice, the applicant may attempt to comply by submitting a statement on behalf of the Artificial Intelligence (AI) machine and identify, in said statement, himself as the legal representative of the machine.10 To date, CIPO has issued no notice of abandonment and the application remains active. Its status in Canada is therefore unclear. 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In such a case and given the current state of the law, the legislator would likely have to intervene. Would this proposed change spur innovation in the field of generative AI? We are collectively investing a huge amount of “human” resources in developing increasingly powerful AI systems. Will there come a time when we can no longer consider that human resources were involved in making AI-generated technologies? Should it come to that, giving preference to AI system owners could become counterproductive. In any event, for the time being, a sensible approach would be to emphasize the role that humans play in AI-assisted inventions, making persons the inventors rather than AI. As concerns inventions conceived entirely by an AI system, trade secret protection may be a more suitable solution. The professionals on our intellectual property team are at your disposal to assist you with patent registration and provide you with a clearer understanding of the issues involved. [2023] UKSC 49 [Thaler]. Ibid., para. 56. See the decision of the United States Court of Appeals for the Federal Circuit in Thaler v Vidal, 43 F. 4th 1207 (2022), application for appeal to the Supreme Court of the United States dismissed. See the decision of the Boards of Appeal of the European Patent Office in J 0008/20 (Designation of inventor/DABUS) (2021), request to refer questions to the Enlarged Board of Appeal denied. See the decision of the Full Court of the Federal Court of Australia in Commissioner of Patents v Thaler, [2022] FCAFC 62, application for special leave to appeal to the High Court of Australia denied. ZA 2021/03242. Federal Register: Inventorship Guidance for AI-Assisted Inventions. CA 3137161. Notice from CIPO dated February 11, 2022, in Canadian patent application 3137161. Ibid. R.S.C., 1985, c. P-4. SOR/2019-251. Apotex Inc. v. Wellcome Foundation Ltd., 2002 SCC 77 at paras. 96–97. Sarnoff Corp. v. Canada (Attorney General), 2008 FC 712, para. 9. Thaler, paras. 48–49, 79. Ibid., para. 79.

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In addition, their conduct could hinder or even prevent the transfer of an authorization as part of an asset sale. Directors and officers have a vested interest in ensuring that the legal person they represent complies with environmental laws. Evidently, compliance is not only in the interest of the legal person itself, but also that of its directors and officers, whose personal liability and assets could be at stake should the legal person fail to comply. Articles 321 and 322 of the Civil Code of Québec (C.C.Q.) Article 312 of the C.C.Q. These environmental laws are the Environment Quality Act, the Act to increase the number of zero-emission motor vehicles in Québec in order to reduce greenhouse gas and other pollutant emissions, the Natural Heritage Conservation Act, the Act respecting threatened or vulnerable species, the Pesticides Act and the Dam Safety Act (section 1 of the Act). Section 51 of the Act. Section 49 of the Act. 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March 13, 2024

An insurer ordered to pay damages – The Court of Appeal intervenes

On February 12, 2024, the Court of Appeal of Quebec handed down its decision in Société d’assurance Beneva inc. c. Bordeleau,1 dealing in particular with the burden of proof incumbent on an insurer when it denies coverage on the basis of an insured’s intentional fault, and an award of damages against an insurer for breach of its duty of good faith. The facts This decision was rendered further to a dispute between Société d’assurance Beneva inc. (hereinafter the “Insurer") and some of its insureds, including Mr. Michel Bordeleau, the owner of a multi-storey rental building that was damaged by fire. He lived in one of the units with his parents. According to the uncontested expert evidence presented, the fire originated in one of the storage spaces in the basement of the building, which was assigned to a lessee couple. Access to the basement and all storage spaces was locked. The cause of the fire was deemed to be intentional, given the traces of accelerant found in the area of the fire’s origin. The instigator or instigators were not identified. On November 21, 2016, 60 days after the fire, the Insurer denied coverage because of the intentional nature of the fire, which it attributed to its insured, Mr. Bordeleau. A few months later, on March 22, 2017, it reached an agreement with Mr. Bordeleau’s hypothecary creditor. The subrogation release provides for the Insurer’s payment of the balance of the hypothecary debt of $149,720.99, and subrogation to the creditor’s rights up to the amount paid. Mr. Bordeleau, in his belief that he had been harmed by the Insurer’s decision, instituted legal proceedings to recover the insurance benefit to which he claimed to be entitled, while also claiming damages. The Insurer filed a cross-application for recovery of the balance paid to the hypothecary creditor. The trial The trial judge, relying on the evidence, concluded that although the fire was intentional in nature, the Insurer had not discharged its burden of establishing the insured’s involvement in the fire. Taking this conclusion into account, she then proceeded to analyze the plaintiffs’ claim and to weigh the damages in light of the evidence and the limits of the insurance policy. In particular, she ruled in favour of Mr. Bordeleau’s claim for damages for the building, the amount of which was admitted. In addition, she ordered the Insurer to pay $15,000.00 in damages for nuisance and inconvenience caused by its conduct, which she considered faulty. This conclusion was based on the Insurer’s duty to act in good faith, to consider the facts and act on their basis, and to conduct a full investigation, duty which the Insurer had breached by failing to sufficiently follow-up on leads that could have identified who was responsible for the fire. In order to deny coverage, clear and compelling evidence of the insured’s involvement, going beyond mere suspicion, was necessary. Given the sometimes implausible and sometimes contradictory testimonies of the people met during the investigation, there was no such evidence. In other words, the claims adjuster had jumped to conclusions. In light of her conclusions, the trial judge dismissed the Insurer’s cross-application, which she deemed to be unfounded, without giving further reasons. The appeal The Court of Appeal first refrained from intervening in light of the Superior Court’s conclusions regarding the failure to demonstrate Mr. Bordeleau’s involvement in the fire. It did however intervene on the damages awarded for nuisance and inconvenience suffered by the insureds, and pointed out the following: [40] [translation] Firstly, apart from the strict mathematical calculation of the amounts payable, and perhaps other technical aspects not requiring the exercise of judgment, the processing of a claim is an obligation of means, not one of result. The fact that a court found at the end of a trial held many years after the incident that an insurer should have covered in the first place obviously does not mean that the insurer necessarily committed a fault other than its refusal to pay, making it civilly liable, let alone that it acted in bad faith. [41] In this case, there was nothing in the evidence to support a finding of fault or breach of the duty of good faith. [42] On the contrary, there is enough evidence to conclude that the investigation by the appellant and its experts, which led to the denial of coverage, was not botched. . . . In the opinion of the Court of Appeal, the evidence showed that the Insurer’s investigation had been done in a conscientious manner, in particular because it had transferred the claim file to a special investigative unit, mandated a fire origin and cause expert and external investigators, and interviewed many witnesses who could have provided information on the circumstances of the incident. Moreover, it had no allegations that the Insurer had failed to consider exculpatory evidence against its insured. In this context, although it took several years for the insured to obtain his due, with all the inconveniences of going through proceedings, the Insurer’s conduct could not be considered offending or revealing of bad faith. No damages could be awarded. Lastly, the Court of Appeal took a closer look at the question of the Insurer’s subrogation to the hypothecary creditor’s rights, which was little discussed in the judgment under appeal. Reiterating the fundamental principle in property and casualty insurance that the indemnification of an insured cannot result in enrichment, the Court of Appeal concluded that dismissing the Insurer’s cross-application would have such an effect. In addition to receiving an insurance benefit for the damages sustained, Mr. Bordeleau would also have had seen his hypothecary debt discharged. This would have given him a clear advantage. In this case, the benefit paid to the hypothecary creditor needed to be deducted from the damages claimed by the insured. The trial judge’s finding were thus revised accordingly. Conclusion Despite the clear principles addressed in this case, the Court of Appeal’s analysis points to practical difficulties that insureds and insurers can encounter when dealing with similar claims. 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