Last week the Supreme Court of Canada (SCC) released a significant trade-mark decision in Masterpiece Inc. v. Alavida Lifestyles Inc., 2011 SCC 27.  It represents a major review of the legal concept of “confusion” in trade-mark law, as well as the vexing question of registered versus unregistered or “common law” trade-mark rights.

In this case, Masterpiece starting using its MASTERPIECE brand in 2001 in Calgary, Alberta, for retirement residences. However, the brand owner did not register the marks. A few years later, another company, Alavida, based in Ottawa, Ontario, applied to register the mark MASTERPIECE LIVING for similar services, and that application matured to registration in 2007, claiming use since 2006. So we have unregistered marks used since 2001 in Calgary, and a registered mark used since 2006 in Ottawa. Which one should prevail? 

The SCC agreed with Masterpiece that Alavida’s registered mark (the later one, based in Ottawa) should be cancelled, based on confusion with the earlier unregistered mark. This is because the later registered mark failed to survive the confusion analysis, on the assumption that both marks are used in the same geographic area. In reality, the marks were never used in the same region. However, for an owner of a registered trade-mark to have exclusive rights to the trade-mark across Canada, that mark cannot be confusing with another previously used trade-mark anywhere in Canada.  Even if that previously used mark is not registered.  Put another way, an unregistered trade-mark in Canada can be the basis of a challenge to a registered mark.  

Lessons for business:

• This case makes it clear that common-law trade-mark rights are enforceable in Canada. That’s good news for brand owners. However, it’s also important to remember that with an earlier application and registration, Masterpiece would have avoided this lengthy and costly battle since their registration would have blocked the later entry of Alavida’s trade-mark application.
• The importance of effective trade-mark searching is critical to a successful trade-mark application. Consider clearance searches and an availaibility opinion as part of your risk mitigation strategies for the launch of a new brand, or the registration of a long-standing unregistered mark.

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Canadian trade-mark owners take note: The .XXX top-level domain is a new sponsored TLD designed for the adult entertainment industry. It is expected to launch in 2011. Trade-mark owners can make use of a blocking procedure to ensure that their trade-marks are not reflected in .XXX domain names. The opt-out process blocks names at the .XXX registry so these names cannot be registered by others. This will be available to trade-mark owners for a fee during the “Sunrise B” period. This period will commence in September 2011 for a period of 30 days. As an example, Microsoft might make use of this procedure to block the registration of “microsoft.xxx” as a domain name. For further details see: xxxempt.com and see this related article IPRota White Paper on xxx Launch.

Contact the Field trade-mark team for assistance on taking advantage of the blocking process. 

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Our update on Canadian copyright law now should be updated, as the Tory majority government is set to take the reins of power in Parliament.  The Conservatives made it clear in their campaign that they would, if given a majority, reintroduce and pass the bill formerly known as Bill C-32, An Act to amend the Copyright Act  (which will have a new number in the next Parliament). The bill’s digital-lock provisions remain contentious, and it is unclear how this will be addressed or amended, if at all, by the Harper government.  Parliament will resume June 2.  The traditional summer recess also usually starts in June.  So Parliament will not likely get much done before September.

On a related note, leave to appeal was granted by the Supreme Court of Canada in the case of Province of Alberta as represented by the Minister of Education, et al. v. Canadian Copyright Licensing Agency operating as “Access Copyright” (SCC #33888 - appeal from the Federal Court of Appeal; link to decision: 2010 FCA 198) This case deals with non-infringing use of copyrighted material for the purposes of “fair dealing“. This means the SCC will hear two “fair dealing” cases this term: the decision in SOCAN v. Bell Canada is also on the court’s docket; that case deals with the interpretation of the word “research” and whether 30-second song previews qualify as “fair dealing“.
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Patent owners have to tread carefully when they send cease-and-desist letters for patent infringement.  In a 2003 case, Imaging, Inc. v. Coyle, 340 F.3d 1344 (Fed. Cir. 2003), the court found that the patent owner was subject to the jurisdiction of the state of the recipient of the cease-and-desist letter. In other words, even though the patent owner had no ties or contacts to the state where the infringer was located, the “nasty lawyer’s letter” was enough to establish those contacts to that particular state. Jurisdiction is critical in patent enforcement strategy, since the patent owner typically makes a careful choice about the court in which it will pursue an infringement claim - for example, to obtain a home-field advantage in its own state. 

However, in a recent US decision (Radio Systems Corp. v. Accession, Inc., No. 10-1390 (Fed. Cir. Apr. 25, 2011), the Federal Circuit decided that the cease-and-desist letter was not sufficient to establish jurisdiction over the patent owner, even in a situation where the patent owner had engaged in marketing the patented article in that state.  This is good news for Canadian patent owners who can take strategic enforcement steps against infringers in another state - if these steps are taken carefully - without fearing that they will become subject to the jurisdiction of the courts in that state.

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When a popular iPad app aggregates news articles and re-packages them for reading on the iPad, is it copyright infringement?

The Washington Post and a dozen other media companies would say yes.  Zite, the Canadian app developer, argues the content is aggregated in much the same way that Google and other search engines crawl and index web content. Is there a difference between the two?  This is reminiscent of the early days of internet copyright disputes (in 1997), when the Washington Post and other media companies sued Total News Inc. for aggregating and framing news articles on the Total News webpage. The Washington Post had the same complaint as they now have with the Zite app: namely, that ads are removed or obstructed in the process, and the media company’s ad revenue is threatened. 

Other US lawsuits have established that certain types of framing, such as the reproduction of thumbnail images, can be excused as “fair use”. Google successfully raised this defence in the US decision in Perfect 10, Inc. v. Amazon.com, Inc. [PDF] based on the “transformative” nature of the copying. 

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In recent privacy decision from the Ontario Court of Appeal (R. v. Cole, 2011 ONCA 218), the court recognized a core right to privacy of personal information which extends into the workplace - in this case, an employer’s laptop that was used by the employee in the course of employment.  The question was whether the employee had a “reasonable expectation of privacy” in the contents of the laptop. The court decided that the circumstances of this case, the employee did enjoy privacy in the contents of the laptop.

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A recent app dispute between the Globe and Mail newspaper, and Spreed Inc., a Toronto-based app developer, highlights the risks with outsourcing app development, for both companies and developers.  Spreed developed an iPhone app news reader for the Globe, which was popular enough to pull in 700,000 readers. For whatever reason, the Globe later decided to develop its own app inhouse.

When the Globe’s inhouse app was launched, Spreed issued a software update to the users of Spreed’s Globe and Mail app. Updates provide bug fixes, upgrades to a new iOS, or new functionality - at least that’s what users expect. However, in this case, the update peeled off the Globe and Mail user-interface, and transformed the app into something new called “Free Press News” - a generic news reader no longer associated with the Globe and Mail.  Why can Spreed do this? Because, according to them, they own the code.  Lessons for business?

• Get advice. If you’ve hired an independent app developer, then check your contract: who owns the code? This becomes critical when the relationship breaks down - in this case between the content-provider and the app developer.
• App ownership is important in other situations including: privacy (who has access to what information during and after the contract?), and transfer of IP rights (let’s say you sell your company and want to transfer all the intellectual property - including your popular iPhone or Blackberry app. You can’t transfer the code if you don’t own it).

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The Lawyers Weekly interviewed Richard Stobbe for its recent article Canada mulls registration of non-traditional marks.

The introduction of motion marks in the Canadian Intellectual Property Office (CIPO) would permit registration of marks such as the “VeriSign Secured” motion mark, depicted at left. The mark is an EU Community Trade mark registered in 2006 (No. 004366001).  The graphic depicts a stop-action representation of the motion mark. The new CIPO guidelines are expected soon, for motion and hologram marks. To permit registration of other nontraditional marks in Canada (particularly sound marks), CIPO may have to seek changes to the Trade-marks Act and Regulations rather than simply issuing a practice notice.

Related Reading:

• Holograms & Other Nontraditional Trade-marks in Canada
• Time for Sound Marks in Canada?

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My article Software Licensing in the Cloud  [PDF copy] is published in the May 6th edition of The Lawyers Weekly, which addresses the legal issues arising in the use of “cloud computing” services: including data handling, jurisdictional issues, warranties and service levels, customization and subcontracting, and licensing models.

Contact me at the Intellectual Property and Technology Group at Field LLP for advice on your cloud computing licenses.

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It is a long established principle that, under Canadian law, a mark must be used in the form it is registered. For example, Apple couldn’t remove the “bite” out of its famous Apple logo, or for example, add an extra bite. This could result in loss of rights in the original mark. However, Canadian trade-mark law does permit some variation to occur, as long as the differences are unimportant and the dominant features of the mark are maintained. A recent decision has raised questions about what constitutes use of the mark as registered. In the Trade-Marks Opposition Board (TMOB) case Bigras v. BMO Nesbitt Burns Corporation Limited, 2010 TMOB 174, Bank of Montreal has lost its registration of the trade-mark SIGMA ACCOUNT because it published a brochure with the word SIGMA followed by the symbol ®. Elsewhere on the brochure, the words ”BMO Nesbitt Burns Sigma Account ®” appeared, but the TMOB decided that consumers were misled when the symbol ® was placed immediately after SIGMA in the core of the brochure, and by a footnote stating that SIGMA is a registered trade-mark. Lessons for business?

• Seemingly small details - such as placement of the ® symbol, footnotes, or the font size of the trade-mark - can be critical in a situation like this.
• Brand guidelines can help ensure consistent use of your brand across the business - in marketing, advertising, social media and packaging.
• Seek advice to ensure that your core brands are protected, and that use of the marks matches registration of the marks.

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