Archive for September, 2016

Craft Beer Trademarks (Part 2)

By Richard Stobbe

In Part 1 we noted the growth in the craft beer industry in Canada and the U.S., and how this has spawned some interesting trademark disputes.

The case of  Brooklyn Brewery Corp. v. Black Ops Brewing, Inc. (January 7, 2016) pitted New York-based Brooklyn Brewery Corporation against California-based Black Ops Brewing, Inc. in a fight over the use of the mark BLACK OPS for beer. Brooklyn Brewery established sales, since 2007, of its beer under the registered trademark BROOKLYN BLACK OPS (for $29.99 a bottle!). It objected to the use of the name BLACK OPS by the California brewery, which commenced operations in 2015.

The California brewery argued that a distinction should be made between the name of the brewery versus the names of individual beers within the product line, which had different identifying names such as VALOR, SHRAPNEL and the BLONDE BOMBER.  However, this argument fell apart under evidence that the term “Black Ops” appeared on each label of each of the above-listed beers, and there was clear evidence that the California brewery applied for registration of the mark BLACK OPS BREWING in association with beer in the USPTO.

The court was convinced that use of the marks “Black Ops Brewing,” “Black Ops,” and “blackopsbrewery.com” created “a likelihood that the consuming public will be confused as to who makes what product.” An preliminary injunction was issued barring Black Ops Brewing from selling beer using the name BLACK OPS.

Black Ops Brewing has since rebranded to Tactical Ops Brewing.

 

Calgary – 07:00 MST

 

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Alberta’s Prospectus Exemption For Start-Up Businesses

By Richard Stobbe

If you’re a start-up, raising money can feel like a full time job.

Alberta recently brought in a few rule changes which may be of interest: ASC Rule 45-517 Prospectus Exemption for Start-up Businesses (Start-up Business Exemption – PDF) (effective July 19, 2016) is designed to “facilitate capital-raising for small- and medium-sized enterprises on terms tailored to deliver appropriate safeguards for investors.” Second, Alberta is considering the adoption of Multilateral Instrument 45-108 Crowdfunding (MI 45-108) and opened it for a comment period in July.

Crowdfunding (MI 45-108)

If the crowdfunding rules are adopted for Alberta issuers, it would facilitate the distribution of securities through an online funding portal in Alberta as well as across any of the other jurisdictions which have adopted it. Alberta would join Saskatchewan, Manitoba, Ontario, Quebéc, New Brunswick and Nova Scotia who have already adopted MI 45-108.

Start-up Business Exemption (Rule 45-517)

As for the new Start-up Business Exemption, here are the essentials as pitched by the ASC:

  • Designed for Alberta start-ups seeking to raise funds from Alberta investors
  • Aimed at “very modest financing needs”, see the caps below
  • Designed to be a simpler and less costly process
  • Can be used by issuers wishing to raise funds through their friends and family, or to crowdfund through an online funding portal provided the portal is a registered dealer, and funds are raised only from Alberta investors
  • The issuer can issue common shares, non-convertible preference shares, securities convertible into common shares or non-convertible preference shares, among other securities
  • Issuer must prepare an offering document
  • There is a cap of $250,000 per distribution and a maximum of two start-up business distributions in a calendar year
  • Aggregate lifetime cap $1 million
  • Designed for a maximum investment amount of $1,500 per investor.  However, through a registered dealer, the maximum subscription from that investor can be as high as $5,000.
  • The offering must close within 90 days.
  • There is a mandatory 48 hour period for investors to cancel their investment
  • The issuer must provide each investor with a specified risk disclosure form and risk acknowledgment form.

Interested in hearing more?

Get in touch with Field Law’s Intellectual Property and Technology Group.

Calgary – 07:00 MST

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Craft Beer Trademarks (Part 1)

By Richard Stobbe

Canadians drink a lot of beer.

The number of licensed breweries in Canada has risen 100%  over  the  past  five  years to over 600. In Alberta and B.C. alone, the number of breweries doubled between 2010 and 2015.

Industry trends are shifting, driven by the growth in micro and craft breweries in Canada, a phenomenon mirrored in the U.S., where over 4,000 licensed breweries are vying for the business of consumers, the highest number of breweries in U.S. history.

And with this comes an outpouring of beer-related trademarks.  Brewery names and beer labels invariably lead to the clash of a few beer bottles on the litigation shelf. Let’s have a look at recent U.S. cases:

  • The mark ATLAS for beer was contested in the case of Atlas Brewing Company, LLC v. Atlas Brew Works LLC, 2015 TTAB LEXIS 381 (Trademark Trial & App. Bd. (TTAB) Sept. 22, 2015).
  • Atlas Brewing Company opposed the trademark application for ATLAS, arguing that there was a likelihood of confusion between ATLAS and ATLAS BREWING COMPANY. The TTAB agreed that there was a likelihood of confusion, since the two marks are virtually identical (the addition of “Brewing Company” is merely descriptive or generic) and the products are identical.
  • However, the TTAB ultimately decided that the applicant had earlier rights, since Atlas Brewing Company did not actually sell any products bearing the ATLAS BREWING COMPANY trademark before the filing date for the trademark application. The only evidence related to the pre-sales period – for example, private conversations, letters, and negotiations with architects, builders, and vendors of equipment. The TTAB characterized these as “more or less internal or organizational activities which would not generally be known by the general public”.
  • Secondly, there was evidence of social media accounts which used the ATLAS BREWING COMPANY name, but the TTAB was not convinced that this amounted to actual use of the brand as a trademark. “The act of joining Twitter on April 30, 2012, or Facebook on May 14, 2012, does not by itself establish use analogous to trademark use. “
  • Interestingly, the TTAB rejected the argument that the beer industry should be treated in a way similar to the pharmaceutical industry: Atlas Brewing Company argued that “there are special circumstances which apply because regulatory approval is required prior to being able to sell beer; and that the beer industry is similar to the pharmaceutical industry, where trademark rights may attach prior to the actual sales of goods, and government approvals are needed prior to actual sales to the general public.” The TTAB countered this by pointing out that pharma companies engaged in actual sales of the product bearing the trademark during the clinical testing phase, prior to introduction into the marketplace. In this case, however, there were no actual sales.
  • Thus, the opposition was refused and the application for ATLAS was allowed to proceed.

The old Atlas Brewing Company has since rebranded as Burnt City Brewing, with a knowing wink at the legal headaches: “We’ve all been burned by something, but now we’re back and better than ever.”

Hat tip to Foley Hoag for their round-up of American cases.

Related Reading: How the Craft Brew Boom Is Changing the Industry’s Trademark Game 

 

Calgary – 07:00 MST

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Bozo’s Flippity-Flop and Shooting Stars: A cautionary tale about rights management

 

By Richard Stobbe

If you’ve ever taken piano lessons then titles like “Bozo’s Flippity-Flop”, “Shooting Stars” and “Little Elves and Pixies” may be familiar.

These are among the titles that were drawn into a recent copyright infringement lawsuit brought by the Royal Conservatory against a rival music publisher for publication of a series of musical works. In Royal Conservatory of Music v. Macintosh (Novus Via Music Group Inc.) 2016 FC 929, the Royal Conservatory and its publishing arm Frederick Harris Music sought damages for publication of these works by Conservatory Canada and its music publisher Novus Via Music.

The case serves as a cautionary tale about records and rights management, since much of the confusion between the parties, and indeed within the case itself, could be blamed on missing or incomplete records about who ultimately had the rights to the musical works at issue. In particular, a 1999 agreement which would have clarified the scope of rights, was completely missing. The court ultimately determined that there was no evidence that the defendants Conservatory Canada and its music publisher Novus Via Music could benefit from any rights to publish these songs; the missing 1999 agreement was never assigned or extended to the defendants.

In assessing damages for infringement, the court reviewed the factors set forth in the Copyright Act, including:

  •  the good faith or bad faith of the defendant;
  •  the conduct of the parties before and during the proceedings;
  •  the need to deter other infringements of the copyright in question;
  •  in the case of infringements for non-commercial purposes, the need for an award to be proportionate to the infringements, in consideration of the hardship the award may cause to the defendant, whether the infringement was for private purposes or not, and the impact of the infringements on the plaintiff.

In evaluating the deterrence factor, the court noted: “it is unclear what effect a large damages award would have in deterring further copyright infringement, when the infringement at issue here appears to be the product of poor record-keeping and rights management on the part of both parties.  If anything, this case is instructive that the failure to keep crucial contracts muddies the waters around rights, and any resulting infringement claims.  The Respondents should not alone bear the brunt of this laxity, because the Applicants played an equal part in the inability to provide to the Court the key document at issue.” [Italics added]

For these reasons, the court set per work damages at the lowest end of the commercial range ($500 per work), for a total award of $10,500 in damages.

Calgary – o7:00 MST

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Protective Order for Source Code

 
By Richard Stobbe

A developer’s source code is considered the secret recipe of the software world – the digital equivalent of the famed Coca-Cola recipe. In Google Inc. v. Mutual, 2016 BCSC 1169 (CanLII),  a software developer sought a protective order over source code that was sought in the course of U.S. litigation. First, a bit of background.

This was really part of a broader U.S. patent infringement lawsuit (VideoShare LLC v. Google Inc. and YouTube LLC) between a couple of small-time players in the online video business: YouTube, Google, Vimeo, and VideoShare. In its U.S. complaint, VideoShare alleged that Google, YouTube and Vimeo infringed two of its patents regarding the sharing of streaming videos. Google denied infringement.

One of the defences mounted by Google was that the VideoShare invention was not patentable due to “prior art” – an invention that predated the VideoShare patent filing date.  This “prior art” took the form of an earlier video system, known as the POPcast system.  Mr. Mutual, a B.C. resident, was the developer behind POPcast. To verify whether the POPcast software supported Google’s defence, the parties in the U.S. litigation had to come on a fishing trip to B.C. to compel Mr. Mutual to find and disclose his POPcast source code. The technical term for this is “letters rogatory” which are issued to a Canadian court for the purpose of assisting with U.S. litigation.

Mr. Mutual found the source code in his archives, and sought a protective order to protect the “never-public back end Source Code files”, the disclosure of which would “breach my trade secret rights”.

The B.C. court agreed that the source code should be made available for inspection under the terms of the protective order, which included the following controls. If you are seeking a protective order of this kind, this serves as a useful checklist of reasonable safeguards to consider.

Useful Checklist of Safeguards

  1. The Source Code shall initially only be made available for inspection and not produced except in accordance with the order;
  2. The Source Code is to be kept in a secure location at a location chosen by the producing party at its sole discretion;
  3. There are notice provisions regarding the inspection of the Source Code on the secure computer;
  4. The producing party is to test the computer and its tools before each scheduled inspection;
  5. The receiving party, or its counsel or expert, may take notes with respect to the Source Code but may not copy it;
  6. The receiving party may designate a reasonable number of pages to be produced by the producing party;
  7. Onerous restrictions on the use of any Source Code which is produced;
  8. The requirement that certain individuals, including experts and representatives of the parties viewing the Source Code, sign a confidentiality agreement in a form annexed to the order.

A Delaware court has since ruled that VideoShare’s two patents are invalid because they claim patent-ineligible subject matter.

Calgary – 10:00 MST

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