Trade-mark Dilution Update: Louis Vuitton v. Haute Diggity

It’s a classic clash of Euro-couture and irreverent American parody. This time, the Americans won.

The famous French hand-bag company sued the US maker of “Chewy Vuiton” dog toys.  The decision a year ago in Louis Vuitton Malletier S.A. v. Haute Diggity Dog, LLC was appealed and the TTAB (Trademark Trial and Appeal Board) recently issued its decision upholding the lower court’s ruling.  The appeal court agreed that Haute Diggity Dog’s products are not likely to cause confusion with those of Louis Vuitton and that Louis Vuitton’s copyright was not infringed. The “Chewy Vuiton” dog toys were considered “successful parodies” of Louis Vuitton’s trademarks, designs, and products. (Louis Vuitton Malletier S.A. v. Haute Diggity Dog, LLC, US Fourth Circuit Court of Appeals, No. 06-2267 (Decided: November 13, 2007))


Calgary – 10:30 MST

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Infringement of Patent on Higher Life Form

The decision earlier this year in Monsanto Canada Inc. v. Wouters 2007 FC 625 (Barnes, J.) marks the first damage award in a case pitting Monsanto against a farmer in Canada. In the 2004 landmark case of Monsanto Canada Inc. v. Schmeiser, 2004 SCC 34, [2004] 1 S.C.R. 902, Monsanto sued a Saskatchewan farmer for unauthorized use of Monsanto’s patented Roundup Ready Canola, a canola variety containing genetically modified genes and cells. The court decided that Schmeiser had infringed Monsanto’s patent by growing the plants on his farm, but Schmeiser “did not gain any agricultural advantage from the herbicide resistant nature of the canola since no finding was made that they sprayed with Roundup herbicide to reduce weeds.” In short, the farmer earned no profit from the patented invention and Monsanto was not entitled to any compensation for the infringement.

In the Wouters case, the Ontario farmer may have been able to raise the Schmeiser defence (or any number of other defences). Problem is, Wouters never filed a proper defence, leaving the court with little choice but to declare Monsanto the winner by default. The court concluded that Wouters infringed the patent by growing, harvesting and selling 392 acres of soybeans which Wouters knew contained the patented genes and cells. The resulting damage award of over $100,000 appears to mark the first award for infringement of a patent covering a so-called “higher life form” in Canada.

Yes, the Supreme Court of Canada in the famous Harvard Mouse Case decided clearly that “higher life forms” are not patentable in Canada. However, the same court in Schmeiser had to admit that the individual cells are patentable, and the patented genes and cells are not merely a part of the plant; rather, the patented cells compose its entire physical structure. So the court may not want to permit the patenting of higher life forms, but the higher life forms are inseparable from the patented cells of which they are comprised. You can’t destroy all the cells and leave the plant alive.

Life forms have a way of getting up and moving around: seeds propagate and blow away, creatures crawl, viruses replicate and invade.  Where will the Monsanto cases go when they grow legs and start crawling around the patent landscape? 

Calgary – 09:35 MST

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First GPL Suit Settles; Second Round Begins

The lawsuit Andersen and Landley v. Monsoon Multimedia Inc, (No. 07-CV-8205) which promised to tackle the enforceability of the GPL head-on has settled, with Monsoon agreeing to appoint an Open Source Compliance Officer to monitor its use of open source software. Flush with this success, the lawyers at the Software Freedom Law Center promptly filed two new lawsuits, this time against Xterasys Corporation and High-Gain Antennas, LLC, also for violation of the terms of GPL in connection with the use of BusyBox open source code.

Calgary – 20:35 MST

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Canadian Copyright Changes Coming

According to the Ottawa Citizen, the government’s new copyright reform bill may be tabled within a matter of weeks. Hopefully there is more input into the next set of changes to the Copyright Act than there were to the recent anti-camcording law which came into effect several months ago. Last week, police made their first arrest   under the new law – a man who was trying to record “Dan in Real Life” in a Montreal area theatre.

Calgary – 20:35 MST

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Lululemon: The Value of a Brand

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

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Limitations of Liability: Do they work?

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

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Trade-mark Decision: Perfumebay vs. eBay

The question is whether the trade-mark PERFUMEBAY is confusingly similar to EBAY for online sales of perfume. Yesterday after a lengthy battle, the court came down in eBay’s favour.

eBay Inc. secured broad protection for its famous EBAY mark in the decision released on Monday in Inc. v. eBay Inc., (Ninth Circuit Court of Appeals No. CV-04-01358-WDK, November 5, 2007). The decision upholds a permanent injunction against Perfumebay, stopping it from using the marks PERFUMEBAY (and variations such as perfumebay, perfume-bay or PerfumeBay). The injuction did not extend to “non-conjoined variants” (don’t you love lawyers?); in other words, eBay couldn’t prevent the use of “Perfume Bay” as two separate words. This is a minor and largely meaningless concession considering that Perfumebay’s business is all online and “non-conjoined variants” can’t function as domain names. This leaves Perfumebay without an internet storefront.

The Court reiterated the factors to be considered in determining trade-mark confusion in the internet context:

  1. the similarity of the marks,
  2. the relatedness of the goods and services, and
  3. the parties’ simultaneous use of the Web as a marketing channel.

A mark can only enjoy protection within its field of use. Significantly, the Court defined eBay’s field of use as “the sale of products on an internet-based marketplace”. This appears to extend eBay’s trade-mark monopoly to include any mark that contains the suffix “bay” and involves online sales of any kind.
Calgary – 09:22 MST

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Forget Dot-Com. How about Dot-Cat?

Rather than becoming a mature, stable industry, the domain name world is still a shifting target. The release of new top-level domains provides fertile ground for domainers and cybersquatters. Trade-mark owners and their lawyers scramble to keep up with the steady stream of developments. If the WIPO dispute resolution statistics are any measure, we’re heading into another period of intense activity, not seen since the days of the 2000 dot-com boom. In 2000 WIPO handled a record 1,857 domain name cases; that record looks like it will be surpassed this year.

On the Canadian front, CIRA is working on its revised WHOIS Privacy Policy, with implementation scheduled for March 2008.

Internationally, the following is the current list of generic top-level domains and their sponsors:

The following are reserved for US government uses or international organizations:

Calgary – 10:35 MST

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