When the Liberal Party decided to brand their environmental policy earlier this year, they picked the name “Green Shift” …and walked right into a trade-mark lawsuit.  The mark GREEN SHIFT was already in use by a Toronto environmental consulting company.  The company promptly fired off a cease-and-desist letter, followed up by a trade-mark infringement suit in early July.  It would have been interesting, from a trade-mark law perspective, to see how a court would resolve the interplay of political brands and trade-marks. Alas, we’ll have to wait for the next case.  Election campaigns have a way of motivating settlement and yesterday the Liberal Party announced that they had resolved the dispute, and posted a notice on their site stating that: “The Liberal Party of Canada and Green Shift Inc. have resolved their dispute over the ‘Green Shift’ trademark. The Liberal Party of Canada will continue to use ‘Green Shift’ under license from Green Shift Inc.  Green Shift Inc. is not affiliated with the Liberal Party of Canada and the grant of the license does not constitute an endorsement by Green Shift Inc. of the Liberal Party of Canada.”

The business issues:

• For any new brand, trade-mark clearance searches are essential.  The Liberal Party may not have done a trade-mark search when picking a brand for their policy; it might not be standard procedure, considering that a polictical policy is not what we think of as a “product” or a “service” (not unless we’re thinking cynically).
• This shows the increasing complexity of brands and the cost of clean-up in the wake of the launch of a new brand that hasn’t been properly screened.

Calgary – 10:30 MST

 

The U.S. Customs and Border Protection Office recently announced that the value of counterfeit and pirated products seized at the border had increased in 2008, up to $113.2 million. Of course, that’s just the stuff they seized, and countless other counterfeits and knock-offs are flowing in.

In Canada, the recent case of Louis Vuitton Malletier SA v. 486353 B.C. Ltd. 2008 BCSC 799, illustrates how one brand owner tackled the problem. Louis Vuitton’s investigations showed that counterfeit Louis Vuitton handbags were being sold at various retails locations throughout suburban Vancouver, all operated by one proprietor. The lawyers pounced, seized the counterfeit evidence, but avoided litigation by entering into a settlement agreement with the proprietors in 2006. This included a slap-on-the-wrist payment of $6,000 to Louis Vuitton. After monitoring the stores throughout 2007, it became apparent that the settlement agreement had been breached, and Louis Vuitton brought a second lawsuit, this time pushing it through trial to arrive at a significant damage award of close to $1 million, when all the trade-mark and copyright damages were added up. The court also made it clear that the directors would not avoid personal liability:

“A corporation cannot be used to shield an officer or director or a principal employee, when that individual’s actions amount to a deliberate, willful and knowing pursuit of a course of conduct which was likely to constitute infringement or at least where those actions reflect an indifference to the risk of an infringement.”

The battle against counterfeits has spilled over into eBay where various luxury-goods brand owners such as Tiffany have complained that eBay had become a clearing house for counterfeits. A US judge recently decided that eBay was not liable for the providing the means of selling counterfeit goods, and the key to eBay’s win was its set of policies and procedures to respond to complaints of trade-mark infringement.

The take-home message is that brand owners must police their own brands both online and offline. Online venues such as eBay cannot be pressed into service as trademark watchdogs – though they must be prepared to react if notified of an infringement. Just as brand owners must be prepared to investigate and act decisively in maintaining their brand’s integrity.
Calgary – 22:00 MST

A ranking of Canada’s top brands puts Research In Motion out in front, with its newly-introduced Blackberry Bold (left).  The BlackBerry brand is pegged at a value of $5.6-billion, well ahead of the Canadian financial institutions such as RBC and TD Canada Trust that topped the list in years past.  Other iconic Canadian trade-marks such as Tim Horton’s and Canadian Tire are bumped down the list. 

Link to the report: Best Canadian Brands 2008  (PDF copy)

In a story we posted last year, eBay lost when the Canada Revenue Agency compelled disclosure of its records – specifically, records showing how much money was earned in Canada by so-called “PowerSellers”. 

The Federal Court of Appeal (eBay Canada Limited vs. The Minister of National Revenue, 2008 FCA 141) has now upheld that lower court decision, and ordered eBay Canada Ltd. to produce the names, addresses, phone numbers, e-mail addresses as well as gross sales figures for all Canadian PowerSellers.  eBay’s argument that the records were stored in the US and did not reside in Canada, was not accepted by the Court and this decision has implications on a number of levels – the right to privacy for anonymous eBay sellers, as well as the production of documents by US and other foreign companies doing business in Canada.

 Calgary – 10:15 MST

As a plug for the local technology industry, we report that the Government of Alberta has just announced a few economic measures aimed at tech companies:

• Starting January 1, 2009, companies will be able to take advantage of a refundable tax credit worth 10% of eligible expenditures on scientific research and experimental development up to $4 million for a maximum annual credit of $400,000.
• $100 million is earmarked to establish the Alberta Enterprise Corporation. This government entity will provide early-stage venture capital for technology start-ups by co-investing in early-stage venture capital funds.

Calgary – 10:00 MST

This story is reminiscent of the dot-com days, when tech companies hit the wall at two hundred miles an hour.  One day they’re flush with cash, enjoying the new marble floors and capuccino machines; the next, the doors are closed and everyone is laid off.

Canadian company Geosign rode this wave in 2007 with $100 million in revenue and $160 million in VC funding.  Now, a year later, the sign posted on their home page says it all: “Sorry, this site is temporarily unavailable. Please check back later.” 

How did it happen?  The company was like a small sailboat that capsized when the mighty Google supertanker changed direction.  Geosign initially profited by taking advantage of an internet advertising system that came to a crashing halt when Google changed its policies. The changes were made by Google to ensure that ad-words took visitors to legitimate content, rather than pages which were composed of nothing but more ads. Google feared that customers would lose confidence in ad-words (and the Google search engine) if searches simply led to a nest of advertising links.  Before Geosign could reposition itself as a content-provider, Google had changed its policies and the damage was done.  Geosign went belly-up.  It serves as a cautionary tale for small tech companies and illustrates the power of dominant players like Google.

Related reading: Financial Post Business Magazine Cover story: “Blown away“

 

Calgary – 15:25 MST

A new decision and a new policy:

• In a recent decision (Enterprise Rent-A-Car Company v. David Bedford ), Enterprise won handily in its dispute over the bank of names registered by Mr. Bedford, a BC domainer. The dozen domain names (enterpriseautorental.ca, enterprisecarrentals.ca, enterprisecanada.ca, etc.) were used with a pay-per-click advertising scheme and this decision provides a useful precedent for trade-mark owners, along with the panelist’s finding that the test under the CDRP is one of resemblance, not confusion.
• CIRA, Canada’s official dot-ca domain name registry, is introducing changes to the WHOIS policy, starting in June 2008.  Under the new policy, private information about individual registrants will no longer be accessible through the dot-ca WHOIS database. The WHOIS information of corporate registrants will be displayed by default. This means that in order to contact an individual owner of a dot-ca domain name – say, for the purposes of proposing a transaction, or complainaing about trade-mark abuse – a new “administrative process” will be used.  This new process is under development, but it is expected to be an online form which will automatically forward correspondence to anonymous registrants, via CIRA. 

 

Calgary – 10:30 MST

Million of colours or millions of dollars in damages?  Apple’s lawyers must be wondering whether people have too much time on their hands.  A recent California lawsuit  alleges that Apple’s ad copy for its iMac computers is misleading because it incorrectly boasts “millions of colours”.  Gullible customers take this to heart and suffer when it turns out to be inaccurate. Just like Microsoft’s ads claim that “Xbox Live is where games come alive.”  And Maxwell House alleging that it’s “Good to the Last Drop.” …Right. That’s what ads do. They make the products sound great so you spend your money.

In an oft-cited Ontario case (Church & Dwight Ltd. v. Sifto Canada Inc., 1994 CanLII 7314 (ON S.C.)), the court dealt with an allegation of false advertising.  To succeed on this claim in Canada, you have to prove: 

• actual economic loss,
• that the offensive statements were false, and
• that they were made with the intent to cause injury,
• that they were made without lawful justification.

According to the Sifto case, advertisements claiming a product is “100 per cent pure and 100 per cent natural” are “examples of the ‘puffery’ which is the staple of the advertising industry and of marketers everywhere.”   Apparently, this hasn’t been explained to iMac customers in California.

Related Reading:  “Quebec couple battles corporate giant and wins” where a Telus customer successfully sues for a deceptive promotion under Quebec’s Consumer Protection Act

Calgary – 10:30 MST

We posted last month about a Canadian company that lost a patent infringement suit in Texas to competitor Blackboard Inc.  The Canadians lost another round a few weeks later when the judge barred them from selling the infringing products in the US.  In a recent reversal of fortune, the U.S. Patent and Trademark Office has now issued a preliminary decision that rejects all 44 patent claims made by Blackboard Inc. in its software patent. 

This shows the value of a coordinated patent litigation defence – fighting the patent infringement claim both in the courts and in the USPTO. 

 

Calgary – 15:30 MST

 

You win some, you lose some.

An injunction is essentially a court order which prevents a company from doing something, such as using a trade-mark or a patent.  It can be a very useful tool in intellectual property litigation.  However, as we’ve reviewed in other cases, the test in Canada for obtaining – and maintaining – an injunction is not easy to meet.  The test derives from the Supreme Court decision in RJR-Macdonald Inc. v. Canada (A-G), 1994 CanLII 117 (S.C.C.) .  Two recent Canadian cases illustrate this – one win and one loss:

• Trade-Mark Case: In a recent decision out of Manitoba, the Court decided that the Plaintiffs in Marlborough Hotel Corporation et al. v. First Canadian Hotels & Entertainment Ltd. et al. were entitled to an interlocutory injuction in a battle over the use of the “Skyview Ballroom” mark for hotel services.
• Patent Case: In the recent Alberta decision in Core Laboratories Canada Ltd. v. Lonkar Services Ltd., 2008 ABCA 76 (CanLII), the Court of Appeal overturned an injunction granted by the lower court.  At the lower court, the judge had granted an interim injunction prohibiting the appellants from marketing and providing services which include the use of a gamma ray spectral memory tool. On appeal, the court decided the test had not been met.

Calgary – 10:45 MST

A photographer is hired to do some work on an ad campaign.  If the photographer’s bill is never paid, and the photographs are used, is it copyright infringement? 

The Copyright Act makes it clear that copyright would belong to the person who ordered the photographs.  But that only applies if the photographer is paid – no money, no copyright.  The recent Alberta decision in Don Hammond Photography Ltd. v. The Consignment Studio Inc., 2008 ABPC 9 might be the first time a court has considered those particular sections of the Act.  In that decision, the court was clear that copyright was infringed when the photographs were used without payment of the photographer’s invoice, and that statutory damages were appropriate in the circumstances.  The lessons for business? 

• Pay your photographers;
• When engaging an ad agency, website designer or other graphic designer, determine who is responsible for payment of photographers and other sub-contractors; and
• Remember this doesn’t just apply to an ad campaign. The same principle applies to images used in any corporate media – websites, annual report packages, brochures, and newsletters.

Calgary –  10:30 MST

A promising Canadian company is hit with a dubious software patent owned by a US competitor. The Canadian company is based in Ontario; the US patent-holder is headquartered in Washington, DC.  But the lawsuit takes place in the infamous Eastern District of Texas: the plaintiff-friendly outback of patent infringement litigation.  

Without commenting on the merits of the case, the recent decision in Blackboard Inc. vs. Desire2Learn Inc. illustrates the perils for Canadian businesses of facing a patent lawsuit in the US. The Canadian company lost last week and is now reviewing its options to appeal the $3.1 million ruling.  The lessons for business?

• defensive patents may provide leverage for settlement or cross-licensing; 
• a successful challenge to the vailidity of the plaintiff’s patent will deep-six the patent infringement claim; developments in US law are bringing clarity to the patentability of software and business-methods and the grounds for challenging such patents (See: Business Method Patents Under Review);
• experienced patent litigation lawyers will review other options, including interim injunction orders which, if successful, can effectively put the defendant out of business.

Meanwhile, draft US patent reform legislation attempts to control forum-shopping, and may force litigants to commence their lawsuits in jurisdictions which are more closely connected to their headquarters or their actual place of business. In other words, Washington-based Blackboard Inc. would have to sue in Washington.  What a thought.  Until then, the patent battles will continue in Texas, and Canadian companies will have to keep their powder dry. 

Calgary – 9:45 MST

The US Federal Circuit Court of Appeals has decided to review a number of issues that go to the heart of business-method patents in the In re Bilski case. Essentially Bilski has claimed a method for managing risk.  The claim is not tied to any software or “machine”; it is merely a mental process of how to conduct business.  The court will review:

(1) Whether the business method claim in Bilski’s patent application is “patent-eligible subject matter”?

(2) What standards should be used to determining whether a process or method is eligible for patent protection?

(3) Whether the claimed method is not patent-eligible because it is an abstract idea or mental process; when does a claim that contains both mental and physical steps create patent-eligible subject matter?

(4) Whether a method or process must result in a physical transformation of an article or be tied to a machine to be patent-eligible subject matter under US patent law? and

(5) Whether it is appropriate to reconsider or overrule the leading business-method-patent decision in State Street Bank & Trust Co. v. Signature Financial Group, Inc., (Fed. Cir. 1998)?

The State Street Bank case has been held up for the last 10 years as authority for the patentability of software and business methods.  For those watching the business-method-patent and software-patent debate, this is the front line and will impact patent holders in both the US and Canada. 

For related reading, see: US Patent Reform

 

Calgary – 10:50 MST

There was a time when the words “Made in Japan” were synonymous with cheap, low quality trinkets. Today those words are the hallmark of high-quality electronics. The words “Made in China” are on the same path. From an intellectual property and trade-mark perspective, there are cheap knock-offs – like Mickey-Mouse t-shirts and pirated DVDs. And then there are legitimate, cutting-edge imitators that just might beat the original product in its own backyard.

Case in point: the Meizu M8 or miniOne (the one on the right, if you were wondering) is in the vanguard of made-in-China products that will soon be competing directly against Western technologies like the Apple iPhone (on the left). Not only in the US, Canada and Europe, but perhaps more importantly, in the ballooning consumer markets in China and India.

The miniOne is no slouch in the technology department and it appears to be backed up by its own IP portfolio – Meizu’s patent application in China was laid bare earlier this month (See images from the patent application from the State Intellectual Property Office of the PRC or SIPO). In this arena the game for IP owners is no longer one of trying to squelch cheap knock-offs, but to compete head-to-head, armed with IP protection for patents, trade-marks and copyright, at home and overseas.  And to watch out for the miniOne in a store near you.

Related reading: China’s iClone
Calgary – 11:30 MST

Some of the common issues facing Canadian businesses today are: ensuring compliance with e-commerce laws, handling employee surveillance issues and protecting brands online. The following links relate to online contracting and e-commerce in Alberta, as well as employee surveillance issues and online brand strategies for Canadian business:

• E-Commerce: Alberta Internet Sales Contract Regulation
• E-Commerce & Privacy: Alberta Investigation Report P2007-IR-007 – A case in which Ticketmaster contravened PIPA by requiring on-line customers to consent to the use of personal information for event provider’s marketing purposes as a condition of ticket sales transactions.
• Video Surveillance (Federal Case): Eastmond v Canadian Pacific Railway, 2004 FC 852 – in this case, the Federal Court reviewed video surveillance under federal privacy laws and articulated a four-part test.
• Video Surveillance (Provincial Case): Talisman Centre For Sport and Wellness Order P2006-008 (Alberta) – in this case, the Alberta Privacy Commissioner reviewed video surveillance under provincial privacy laws and confirms a three-part test for reviewing the appropriateness of video surveillance.
• Video Surveillance (Provincial Case): R.J. Hoffman Holdings Ltd. Investigation Report P2005-IR-004 (Alberta) – in this case, the Alberta Privacy Commissioner reviewed video surveillance in an employment context, under provincial privacy laws.
• Domain Name Decision: Neteller PLC vs Prostoprom – in this recent decision, Neteller successfully challenged the registration of a domain name under the UDRP rules, and the panel reviewed a number of common issues that were all present in this case: confusing similarity, likelihood of confusion, commercial use when using affiliate advertising programs or pay-per-click advertising, and the use of disclaimers.
• Community Trade Mark (EU): Regulations

Calgary – 20:00 MST

Our earlier post reviewed one of the decisions in the ongoing trade-mark dispute between Cross-Canada Auto Body and Hyundai, the Korean car manufacturer.  This is a dispute over the distribution of Hyundai auto parts.  Hyundai’s injunction application recently failed on appeal (Hyundai Motor America v. Cross Canada Auto Body Supply (Windsor) Limited.), under the three-part test set out by the Supreme Court of Canada:

1. There must be a serious question to be tried in the main action.
2. It must be demonstrated that in the absence of an interlocutory injunction the plaintiff will suffer irreparable harm; and
3. It must be demonstrated that the balance of convenience as between the parties favours the grant of an injunction against the defendants.

The Federal Court of Appeal reinforced the prevailing law that injunctions can be difficult to obtain in trade-mark cases and this factor must be taken into account in any trade-mark litigation strategy. 

Calgary – 10:45 MST

In what might be a high-water mark for online vendors, a decision of the US Third Circuit Court of Appeals in Schwartz v. Comcast Corporation has upheld the terms of a subscription agreement even in the absence of any proof that the customer actually knew of, let alone assented to the terms.  This echoes the reasoning of the Supreme Court of Canada in the Dell case last year.  In Dell the online contract was referred to in a linked document, but did not appear on the sales page. It was at least arguable that a customer would be aware that a contract existed even if the customer never took the time to read those terms. 

In the Comcast case the court went one step further stating that: “in some cases, a party is excused from the terms of a contract where he never had access to the contract and thus could not make himself aware of its terms. However, in this case, the terms of the contract were available to Schwartz via the web site, and thus they are binding, despite the fact that he was unaware of them.”  The customer argued that he never received any notice of any terms and was therefore completely unaware that there were terms for him to find. 

Does this mean that merely posting the fine-print on the company website will suffice to make online terms binding?  Probably not. Comcast was able to convince the court of its practice of providing the Subscriber Agreement to all new customers.  Consistent corporate practices are critical to establishing evidence that the terms should be upheld.  Canadian courts may not go this far, but it does provide some guidance for Canadian companies doing business online with US customers.

 

Calgary – 17:00 MST 

 

 

A brand is brought into sharp relief in the glare of the media spotlight. 

On a “tip” (from an investor short-selling Lululemon shares), the share price of the Canadian apparel-maker went for a ride this week.  The reputation of the LULULEMON ATHLETICA brand came under scrutiny amid allegations over the seaweed content of the company’s VITASEA clothing line.  Today the company countered with assurances about the results of independent tests and the share price was back up.

The brand lessons for business?

• In a fast-paced media environment, a small story can snowball and grab world headlines.  The response must be quick but also consistent across the company.  Confusion within will only fuel speculation.  Lululemon quickly engaged one of its contractors to re-test the fabric and put the matter to rest.
• If there were problems with the fabric, then the contracts with manufacturers and suppliers would quickly come into play. As a preventative measure, quality assurance provisions and warranties are critical components of any outsourcing agreement such as a manufacturing agreement or product supply contract.

 

Calgary – 14:20 MST

In Canada, many contracts contain “limitation of liability” clauses – in the intellectual property context, this can include technology licenses, software development contracts, outsourcing agreements and so on. For example, a typical clause may indicate that, regardless of the cause of the breach, the liability of one party is limited to a certain dollar amount.

Can these clauses actually limit liability? Generally, if the clause is well-drafted, clear, and isn’t buried in the fine-print then yes, a limitation of liability will be upheld by courts in Canada. There are exceptions: A court will refuse to uphold a limitation of liability clause if there has been a “fundamental breach” of the contract; in other words, a breach which goes to the very heart of the contract, and one party is deprived of the whole benefit of the contract. Courts will also look at whether the parties are in an equal bargaining position. And whether the limitation will result in an “unfair and unreasonable result”.
Here are a few examples, from the internet law context and also from general commercial law:

Zhu v. Merrill Lynch HSBC, 2002 BCPC 535 (CanLII) : this is an interesting internet law case in which Mr. Zhu first placed, then cancelled, an online sell order for shares on Merrill Lynch HSBC’s NetTrader system. He then placed a second sell order. The first sell order was never cancelled, with the result that two sell orders were processed, leaving Mr. Zhu in a short position. He claimed losses of $9,000 for having to make up the shortfall. Merrill Lynch HSBC sought to rely on the limitation of liability clause in its terms of service, but the court refused to uphold it. Two significant factors were the lack of evidence that Mr. Zhu ever assented to the terms, and also the higher degree of care required when handling financial investments.

Whighton v. Integrity Inspections Incorporated, 2007 ABQB 175 : a recent Alberta case where a house inspection failed to disclose the extent of repairs required; the house inspector sought to rely on a $10,000 limitation of liability. The court pointed to unequal bargaining power and relied on the “unfair and unreasonable result” argument to deny the limitation clause.

Fraser Jewellers (1982) Ltd. v. Dominion Electric Protection Co., 1997 CanLII 4452 (ON C.A.): in this Ontario case, the Court of Appeal upheld a limitation of liability clause on behalf of a security company whose security system failed during an armed robbery of a jewelry store. The store sued after losing $50,000 in diamonds, and the security firm pointed to its contract which limited liability to “a sum not exceeding the annual service charge of $890”. The court upheld the limitation clause.

Calgary – 21: 35

Costco must have been pretty worried about the impact of a competitor’s mark PRICECO WAREHOUSE for retail sales. They assert that the competitive mark is confusing with their marks PRICE COSTCO and COSTCO. Costco opposed the mark in the Trade-marks Office in 2005, and then launched a trade-mark infringement lawsuit in 2007 against the competitor, seeking an injunction restraining the use of the competing mark. They even tendered expensive survey evidence to show the court how serious the risk of confusion was. The problem? The competitor hadn’t even started using the mark yet.

In Price Costco International, Inc. v. Welcome Warehouse Ltd., 2007 BCSC 1227 (CanLII) the judge was clear that:

“There has been no evidence of actual use of the PRICE WAREHOUSE mark, or anything similar, and no evidence of intention to use it until the Registrar rules in the defendant’s favour. On the contrary, the defendant has undertaken in writing not to use any such mark until that time.”

The lessons?

• First, in high-stakes pre-emptive injunction application where there is no actual infringing use, there must at least be a “real probability of passing off or infringement”; that was not the case here.
• Court is not the only option for fighting this kind of battle; the opposition procedure in the Trade-marks Office had yet to run its course, so those alternatives must be weighed.
• Even though their application failed, Costco may have proved its point; it has done its homework and will be ready if and when the competing mark is ever actually used, provided their survey evidence is not out of date by then.

Calgary – 20:11 MST