By Richard Stobbe

In time for the holidays, this is tale of competing brands sloshing around the marketplace. Please enjoy responsibly.

Diageo North America, Inc. is purveyor of some of the world’s best-known brands of spirits and beer, some of which are probably in your cupboard somewhere: Crown Royal, Baileys, Smirnoff, Johnny Walker, Captain Morgan, Tanquery and Gordon’s Gin, Guinness and Kilkenny, among many others.  In two parallel trademark disputes, Diageo recently faced off with Constellation Brands, one of Canada’s largest producers and distributors of wines.

In Constellation Brands Canada, Inc. v Diageo North America, Inc., 2018 TMOB 133 (CanLII), Diageo applied for the trademarks:

• MAKE IT NAKED for use in association with distilled spirits, namely rum and rum-flavoured beverages.
• DON’T WORRY DRINK NAKED & Design also for use in association with distilled spirits, namely rum and rum-flavoured beverages.

In Arterra Wines Canada, Inc. v Diageo North America, Inc., 2018 TMOB 134 (CanLII), Diageo applied to register three variations of the trademark:

• THE NAKED TURTLE for use in association with distilled spirits, namely rum and rum-flavoured beverages (vodka and beer excluded).

Constellation Brands/Arterra Wines owns the popular NAKED GRAPE family of trademarks, for use in association with wine, wine spritzers, and icewine.   These guys sell a lot of wine: between 2008-2015 yearly sales of NAKED GRAPE branded wines ranged between $16-26 million across Canada.

Are the Diageo marks confusing with the NAKED GRAPE marks?

Interestingly, the legal test for confusion reflects the modern consumer: The test to be applied is a matter of first impression in the mind of a casual consumer somewhat in a hurry who sees the mark at a time when he or she has no more than an imperfect recollection of the prior brand, and does not pause to give the matter any detailed consideration or scrutiny.  Hmmm.. apparently we’re a nation of consumers in a hurry and we don’t pause to give things any detailed scrutiny.  Let’s leave the philosophical implications for a future discussion.

Test to Determine Confusion

The test to determine the issue of confusion is found in the Trademarks Act: the use of one trademark causes confusion with another trademark if the use of both marks in the same area would likely lead a consumer to infer that the associated goods are both manufactured and sold by the same person.  Courts look at:

1. the inherent distinctiveness of the trade-marks and the extent to which they have become known;
2. the length of time the trade-marks have been in use;
3. the nature of the goods and services or business;
4. the nature of the trade; and
5. the degree of resemblance between the trade-marks in appearance, or sound or in the ideas suggested by them; oh, and don’t forget
6. “all the relevant surrounding circumstances.”

In the end, three of the five Diageo marks were refused. For the marks MAKE IT NAKED, DON’T WORRY DRINK NAKED & Design and THE NAKED TURTLE Design, the final decision was that a casual consumer with an imperfect recollection of the NAKED GRAPE trademark who encounters rum or rum flavoured beverages sold under any of these brands may think that these goods are sold by the owner of the NAKED GRAPE mark, due to resemblance between the marks.

One Design Survives

However, one of the design marks was permitted to go ahead:  The Naked Turtle Design – front label (Application No. 1592265) was one of the variations among Diageo’s applications. Here, the decision was different since the most striking aspect of this mark was the phrase THE NAKED TURTLE and the depiction of the turtle lounging in a hammock between two palm trees. As turtles do.  For this mark, it was considered to be more different than alike as a matter of first impression.

One Word Mark Survives

The opposition was also refused for one of the word marks ( THE NAKED TURTLE) (Application No. 1561944). For this application, there was no reasonable likelihood of confusion between the trade-marks even though the nature of the goods and channels of the trade overlaps.

What are the lessons in this case?

• Sub-brands are becoming more and more important within a competitive marketplace such as sales of alcoholic beverages.
• This illustrates the extent to which highly competitive industry subsectors will clash even where the products are different within the sector – distilled spirits, such as rum, are very different from wines, wine spritzers, and icewine. One is an alcoholic beverage made from the fermentation of grapes and one is a spirit produced through distillation. However, the goods and channel of trade are considered to overlap, even though the products are sold in different areas of the store.
• In its defence, Diageo tried to cite other alcoholic beverages where the word “naked” appears in the label: Back Forty Naked Pig Pale Ale, Four Vines Naked Chardonnay, Naked on Roller Skates, Naked Winery wines, Nøgne Ø Naked Kiss Imperial Porter, Barenaked Vodka, and Snoqualmie Naked Riesling.  This is considered “cheeky advertising” according to the decision. Diageo argued that because there are other such brands available, consumers are accustomed to seeing this term with alcoholic beverages and thus can distinguish between marks that include this element.  The decision-maker was not convinced, and dismissed this as “limited evidence” of the use of this term by other parties in Canada.
• Diageo pursued a strategy of filing a range of applications, both word marks and design marks, including both the front and back labels of the bottle. This strategy proved to be successful – or, at least it help avert complete disaster.  Unless it’s challenged on appeal, two of Diageo’s marks will proceed to registration, permitting Diageo to carve out registered trademark protection for its NAKED TURTLE brand.

 

To review trademark strategies for distilled, brewed or fermented products, contact us at craftlawyers.ca or visit us on the Instagram.

Calgary – 07:00 MST

 

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By Richard Stobbe

A certain code is adopted into law. Someone sells copies of that code, but they’re sued for copyright infringement.  So… who owns the copyright? If the government owns copyright, then how can a reproduction of the law be considered infringement?  If the government does not own copyright, then how did the code become part of the law in the first place?

These are the vexing questions that the Federal Court of Appeal tackled in a new and interesting decision on Crown copyright and fair dealing.

In P.S. Knight Co. Ltd. v. Canadian Standards Association, 2018 FCA 222, the court reviewed  copyright issues surrounding the Canadian Electrical Code, which has been adopted by federal and provincial legislation: for example, in Alberta, the Electrical Code Regulation formally declares the Canadian Electrical Code, Part 1 (Twenty‑third edition) to be “in force” in the province in respect of electrical systems. This means that the Code is essentially part of the law of the land, and there are penalties for any failure to comply.  In fact, Alberta, Newfoundland, Ontario and Yukon expressly require that the Canadian Electrical Code be made available to the public in some form.

This is a commercial dispute that stretches back to the late 1960s, when Knight began developing products that competed with the publications of the Canadian Standards Association (CSA). Knight even created a simplified version of the Code (the Electrical Code Simplified).  Through a series of events, Knight eventually sought to reproduce and sell the entire Canadian Electrical Code as its own publication, at a discount, undercutting the CSA price.  That’s when the CSA sued for copyright infringement. The CSA obtained an order for Knight to deliver up all infringing copies of the Code, Part I (the CSA Electrical Code or the Code), and ordered Knight Co. to pay statutory damages and costs of close to $100,000.

Knight appealed.

The Federal Court of Appeal dismissed Knight’s appeal, deciding that the Code is protected by copyright, even though it was developed and authored by committee. Just because the CSA made the Code available to be part of the mandated standard for the country, this doesn‘t mean the CSA gave up its own copyright interests in the Code.   The court also found that the Crown did not own copyright in the Code.  As for the defence of ‘fair dealing’, the court weighed the various factors – the purpose of the dealing, character of the dealing, amount of the dealing, alternatives to the dealing, nature of the work and the effect of the dealing. It the court’s analysis, these factors “overwhelmingly“ supported the conclusion that Knight’s copying and sale of the Code did not qualify as “fair dealing.”

In a strong dissent, Justice Webb seemed to appreciate the absurdity of penalizing someone from reproducing a Canadian law.

“What is in issue in this case,” according to the dissent, “is the right to publish certain works that have become part of the laws of Canada. …. Since the Code was considered as part of the text of the Regulations when it was incorporated by reference, it is the same as if it had been reproduced in full in the Regulations and, therefore, is part of the Regulations. Since the Reproduction of Federal Law Order permits any person to copy any enactment, the Crown has already granted P.S. Knight Co. Ltd. the right to copy the Code.”

 

Calgary – 07:00 MST

 

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