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The Cassels Brock Report

The Cassels Brock Report - March 2011

Published: 03/31/2011

By Casey Chisick, Catherine M. Dennis Brooks, Leonard Glickman, John McKeown, Stephen I. Selznick

In This Issue

1. The Edible Play Dough
2. Use of a Composite Mark may not be Use of a Registered Mark
3. BC-BUD
4. Breaking News
5. The New gTLDs and How to Cope with Them
6. So, You Thought Bill C-32 Would Fight Piracy? Think Again...
7. Distinctiveness of A Colour and Shape Trade-mark
8. That's Hot: Trade-mark Rights in Catch Phrases
9. An Overview of Canadian Tax Credits for Foreign Based Canadian Location and Service Productions in the Film and TV Industry

The Edible Play Dough

By John McKeown

A recent judgement of the High Court of the United Kingdom illustrates the problems relating to launching a new product and an interesting application of the principles relating to trade-mark infringement.

The Facts

The plaintiff makes and sells a children’s modeling composition under the trade-mark PLAY-DOH for which it had obtained trade-mark registrations. Although the plaintiff’s product can be used to make food-like products, it is not intended to be eaten and contains components that make it taste bad.

For many years the plaintiff’s product has been sold in small yellow tubs. The trade dress is predominately bright yellow. The design presentation of the mark has white lettering against a red background and looks like this:



The defendant manufactures and sells a powdered dough mix under the name YUMMY DOUGH. This product, when mixed into a dough, can be played with, but it also can be eaten raw or when baked. The plaintiff did not object to the use of the YUMMY DOUGH mark but it did object to the defendant’s use of the phrase on its packaging: “The edible play dough”. Here is what the defendant’s packaging looked like:





After lengthy discussions between the parties, the plaintiff brought an action for trade-mark infringement and passing off. The defendant attacked the validity of the plaintiff’s trade-mark registrations and denied infringement and passing off.

Invalidity

The defendant asserted that the plaintiff’s registrations were invalid since they were devoid of distinctive character and designated the kind, quality and intended purpose of the goods for which they were registered.

Under UK trade-mark legislation, validity is determined by an assessment of the ability of the mark to distinguish the goods of the registered owner from those of others. This approach is similar to the Canadian approach.

The Trial Judge observed that PLAY in the context of toys is completely descriptive of what to do with the finished product and DOH is the phonetic equivalent of “dough” which refers to the dough-like nature of the product. When the mark is heard rather than seen those elements are at their strongest. However, the lack of inherent distinctiveness was offset by the plaintiff’s significant market share, length of use of the trade-mark and extensive promotional investment.

As a result, the Trial Judge found that a large proportion of the relevant public would associate the PLAY-DOH trade-marks, used in association with the plaintiff’s product, as marks identifying a product that originated from the plaintiff. As a result, the defendant’s reliance on a claim of invalidity failed.

Infringement

The defendant submitted that the plaintiff should not succeed because the defendant was not using the words “play dough” as a trade-mark. The Trial Judge, in rejecting this argument, observed that the defendant had gone to lengths to weave the phrase “play dough” into the naming of its product. He found that the relevant consuming public would understand “play dough” as being part of the name of the product that designated origin and, as a result, the words were used in a trade-mark sense.

While the judge accepted that some consumers would understand that the words on the packaging were used in a purely descriptive sense, he found that for a significant number of consumers, recollections would be triggered, perfect or imperfect, of the trade-mark PLAY DOH. This was particularly so since the mark had been used for a significant period of time and on a significant scale. As a result, the judge felt the mark was capable of having an extended reach.

The likelihood of confusion was also encouraged by the particular way in which the defendant used the impugned words. Some consumers would interpret the phrase “the edible play dough” as meaning the only edible play dough on the market, but to other consumers who did not understand it in this way, the phrase would be interpreted as emphasizing that the product was the edible version of PLAY-DOH.

Passing Off

In order to consider this claim, a comparison has to made between the plaintiff’s packaging and the defendant’s packaging as they are presented to the public. The Judge observed that it was relevant to consider that consumers familiar with the additional features of the plaintiff’s brand such as the cloud logo would notice its absence on the defendant’s product packaging. However, in the end it was found that the additional features were not adequate to avoid confusion amongst a significant proportion of consumers.

Conclusion

A Canadian court would likely approach the issues raised in this case in a similar fashion. The Canadian Trade-marks Act provides that “trade-mark” means a mark that is used by a person for the purpose of distinguishing wares sold by that person from those sold by others. In applying this definition in the context of infringement claims, Canadian Courts consider both the intention of the defendant and the recognition by the public of the mark in issue. While it is not necessary to show both, one or the other must be shown to establish that the defendant has used the mark as a trade-mark.

While this decision is close to the line, the commercial reality seems to be that the defendant made a conscious decision to use “play dough” as a subsidiary or secondary trade-mark. 

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Use of a Composite Mark may not be Use of a Registered Mark

By John McKeown

A recent decision made in the context of Section 45 of the Trade-marks Act illustrates the importance of ensuring that a trade-mark is used in the form in which it is registered.

Section 45

The purpose of the section is to provide a summary procedure for trimming the register of "dead wood". Frequently proceedings under the section are instituted by applicants who are prevented from obtaining a registration for a desired mark by a registration for a mark that is perceived not to be in use. 

The section provides that the Registrar of Trade-marks, at the written request of any person (who pays the prescribed fee), made after three years from the date of the registration of a trade-mark, must give notice to the registered owner of the trade-mark requiring the owner to furnish within three months an affidavit or statutory declaration showing, with respect to each of the wares or services specified in the registration, whether the trade-mark was in use in Canada at any time during the three year period immediately preceding the date of the notice and, if not, the date when it was last in use and the reason for the absence of such use since that date.

The Facts

In a recent case, a Section 45 notice was provided to the owner of the registered trademark SIGMA ACCOUNT for use in association with financial services. The evidence consisted of a brochure which included in its text a trade-mark consisting of the trade-mark owner’s name combined with the words SIGMA ACCOUNT followed by the symbol ®. The trade-mark SIGMA was also included in the text followed by the symbol ®. Appearing at the bottom of the brochure the words “®SIGMA is a registered trade-mark of”, were followed by the name of the trade-mark owner. There was no trade-mark notice on the brochure referring to the trade-mark SIGMA ACCOUNT.

Composite Trade-Marks

It is well established that the use of a trade-mark in conjunction with another trade-mark or a prefix may not be use of the trade-mark but use of new mark. In the leading case it was found that use of the composite trade-mark CII HONEYWELL BULL did not constitute use of the registered trade-mark BULL. The Court said that the practical test to resolve a case of this nature is to compare the trade-mark as registered with the trade-mark as used and determine whether the differences are so unimportant that an unaware purchaser would be likely to infer that both, in spite of their differences, identify goods having the same origin.

The hearing officer applied this principle and found that the trade-mark owner had failed to show use of its mark. He also said that the location of the symbol ® and the reference at the bottom of the page were consistent with the use of a composite mark and not the registered mark. As a result, the registration was expunged.

Conclusion

It is clear that in order to maintain a trade-mark registration the mark must be used as registered. Unfortunately, despite the best intentions, problems can occur in carrying this out. One way of avoiding this type of problem is to carry out periodic audits of trade-mark use to ensure that all registered trade-marks of importance are being used appropriately. If new variants are being used and it is likely that such use will continue, new applications should be filed.

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BC-BUD

By John McKeown

A recent decision of the Trade-marks Opposition Board gave effect to the fame of the “BUD” mark.

The Facts

The Applicant filed an application for the trade-mark “BC-BUD” for use in association with clothing, novelties, knick knacks and the operation of a retail store selling these types of goods.

The application was opposed by Anheuser Busch on the grounds that, among other things, the applied-for mark was confusing with its “BUD” trade-mark registrations used in association with beer, clothing and a wide range of collateral merchandise, including drinking vessels, sporting goods and novelty items.

Determining the Potenial for Confusion

In its decision, the Board referred to the fact that the onus was on the applicant to establish, on a balance of probabilities, that there was no reasonable likelihood of confusion between its mark and Anheuser Busch’s trade-marks. The Board applied the provisions of the Trade-marks Act that require that, when determining whether trade-marks are confusing, regard must be had to all the surrounding circumstances including: 
 

• the inherent distinctiveness of the trade-marks and the extent to which they have become known;
   
• the length of time the trade-marks have been in use;
   
• the nature of the wares or business;
   
• the nature of the trade; and
   
• the degree of resemblance between the trade-marks in appearance, sound or the ideas suggested by them.
   

The Board’s conclusions with regard to these statutory factors are set out below.

Inherent Distinctiveness

The hearing officer found that the trade-marks were inherently distinctive in relation to the parties’ respective wares and services. But, given the strong geographic significance of the abbreviation BC, inclusion of BC in the applicant’s mark did not increase the distinctiveness of it. The hearing officer was satisfied that Anheuser Busch’s marks were well known in association with beer and were also known to some extent in association with collateral merchandise including clothing, drinking vessels, sporting goods and novelty items.

The Length Of Time the Marks Have Been In Use

The Opponent’s marks have been in use for many years but the Applicant’s mark was filed on the basis of proposed use.

The Nature of the Wares and Channels of Trade

There was significant overlap between the respective wares of the parties, although not for beer. The parties’ channels of trade would likely overlap, with the exception of beer, apart from the Province of Quebec where there could be in overlap on channels of trade.

Degree of Resemblance between the Marks in Appearance or Sound or the Ideas Suggested

The applicant filed evidence to show that BC-BUD was a type of marijuana grown in British Columbia. However, the applicant did not show that the average Canadian would be aware of this name.

The Board was found there was a high degree of resemblance between the respective marks in appearance and sound, though some divergence with respect to meaning since Anheuser Busch’s trademark BUD was a very well known abbreviation of BUDWEISER for beer.

The hearing officer accepted that the trade-mark BUD for use in association with beer was famous in Canada but it was not famous for use in association with the collateral merchandise in issue.

The Board’s Decision

The hearing officer observed that the test to be applied was a matter of first impression in the mind of a casual consumer who, somewhat in a hurry, sees BC-BUD on the applicant’s wares at the time he or she has no more than an imperfect recollection of Anheuser Busch’s trade-marks and does not pause to give the matter any detailed consideration or scrutiny. In light of the extensive reputation of Anheuser Busch’s BUD marks in association with beer, the Board concluded that a casual consumer would likely believe the wares and services associated with the applicant's mark and Anheuser Busch's marks were manufactured, sold, or performed by the same person. As a result, the application was dismissed.

Comment

This decision gives effect to the fame associated with the opponent’s BUD marks. In this case the Bud mark transcended the wares for which they were registered. Unfortunately, there is relatively little guidance concerning when such an event will occur.

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Breaking News

By Casey Chisick

On March 24, the Supreme Court of Canada granted leave to appeal in three cases that will put copyright and entertainment law at the forefront of its docket for the coming year.

In Rogers v. SOCAN and Entertainment Software Association of Canada v. SOCAN, the Court will determine whether the transmission of music downloads and videogames to individual users via the Internet are “communications to the public by telecommunication,” which in turn will determine whether SOCAN is entitled to collect royalties for the telecommunication of music when online services transmit those types of digital files to their customers. These cases will be heard on December 6, 2011 along with the case of SOCAN v. Bell, which will consider whether the 30-second music previews offered by iTunes and other online music services qualify as “fair dealing” for the purpose of “research.”

In ACTRA v. Bell Aliant, the Court will consider whether retail Internet service providers carry on “broadcasting undertakings” within the meaning of the Broadcasting Act when they provide access through the Internet to broadcasting requested by end users. In a reference commenced by the CRTC, the Federal Court of Appeal held that ISPs do not carry on “broadcasting undertakings” and therefore are not subject to many of the obligations of traditional broadcasters, including the requirement to contribute financially to the development of Canadian content. No date has yet been set for this case to be heard.

In a future edition of the Cassels Brock Report, we will bring you a full analysis of these upcoming cases – and what they could mean in the long run for copyright and entertainment law in Canada.

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The New gTLDs and How to Cope with Them

By John McKeown

ICANN’s proposal to make an unlimited number of new top-level domain names available may soon become a reality. A top-level domain name is the part of a domain name to the right of the dot, e.g. .com.  

The proposal raises two pressing issues for brand owners. First, what gTLDs are available? Second, assuming that the gTLDs will become available in the near future, what should be done?

History and Availability

When ICANN was created in 1998, the generic top-level (gTLD) domain space was limited to eight generic Top-Level Domains. In 2000 and 2004 a limited number of additional gTLDs were introduced to expand the number to 22 gTLDs.

In October 2007, the Generic Names Supporting Organization (GNSO)—one of the groups that coordinate global Internet policy at ICANN—developed a policy concerning new gTLDs. Stakeholder groups were engaged in discussions for more than 18 months on the issues relating to implementation.

At its June 2008 meeting ICANN voted unanimously to modify the domain name system to permit an unlimited number of new gTDLs. Under the proposal anyone may apply for and, subject to ICANN approval, administer the new gTLD. Applicants can select a domain name that is most appropriate for their customers or potentially the most marketable. It seems likely that this will result in a multitude of new gTLDs.

ICANN says that the new gTLDs will create more choice for Internet users, empower innovation, stimulate economic activity and generate new business opportunities around the world. Brand owners’ views are more critical since they will be obliged to obtain registrations for defensive purposes and incur expenses relating to monitoring a significantly increased number of potential abuses.

In response to brand owners’ concerns ICANN set up an Implementation Recommendation Team (IRT) to develop solutions. The IRT identified five proposals to address immediate concerns.

On November 12, 2010 ICANN posted a Proposed Final Applicant Guidebook (DAG4) which took into account the IRT report as well as the comments of hundreds of interested stakeholders. There was a flurry of objections by brand owners and others over the process and the substance of the new gTLD program.

ICANN's actions were criticized as a drive toward conclusion without meaningful dialogue, without a thorough and reasoned explanation of decisions taken and for failing to adequately resolve key overreaching issues.

The Government Advisory Committee (GAC), which is made up of representatives of more than 100 governments and is intended to give governments from around the world a voice in ICANN’s multi-stakeholder community, made it clear to the ICANN Board that it had concerns and some issues needed resolution before the launch of new gTLDs.

In reponse, ICANN’s Board of Directors indicated that they would have an extended meeting with the GAC, scheduled for the end of February in Brussels, to resolve the remaining concerns of GAC’s members.

In addition to consulting with the GAC, ICANN also said it would:

• Take into account public comment on the DAG4 and make appropriate revisions;
   
• Provide a thorough and reasoned explanation of ICANN’s decisions, the rationale therefor and the sources of data and information on which ICANN relied.  

At its public meeting in San Francisco on March 13, 2011 ICANN announced a new working timeline for the completion of the process and the launch of the new gTLDs. The GAC’s additional feedback was expected by March 25 and a final score card relating to the GAC’s concerns, as well as any changes to the DAG4, are to be made available to the public for comment by April 15. The comment period will close May 15, the final version of the DAG4 will be posted by May 30 and ICANN’s final decision will be announced at its Singapore meeting on June 20.


How to Cope

In broad terms, brand owners can start the process of securing their new gTLD or find a way to deal with third party applications for new gTLDs.

Many parties are said to be interested in securing new gTLDs such as .brand, .car, .health and so on. One source has suggested at least 115 proposals would be presented this year. However, the costs are high. The ICANN evaluation fee is USD $185,000 which must be paid before the process begins. However, these fees are just the tip of the iceberg and the real costs may be in the millions.

An alternative strategy is to monitor the actions of third parties as they seek to obtain new gTDLs. ICANN will post all applications considered complete and ready for evaluation as soon as practicable after the close of the application submission period.

An objection may be based on any one of four grounds including a "Legal Rights Objection", asserting that the applied-for gTLD string infringes the existing legal rights of the objector.

Where formal objections are filed and filing fees paid during the objection filing period, a dispute resolution process applies. An independent dispute resolution service provider will initiate and conclude proceedings based on the objections received. 

In addition, defensive registrations at the second level may also be possible. For example, if the .car gTLD was obtained, it may be possible to secure edsel.car or the like. A brand owner’s rights are protected to a degree since the registry operator of the new gTLD must implement, at a minimum, either a sunrise period or a trademark claims service during the start-up phases for registration in the gTLD. These mechanisms are to be supported by the establishment of a "Trade-mark Clearinghouse" which is intended to provide a listing of valid trade-marks. The sunrise period allows eligible rights holders an early opportunity to register names in the gTLD.

To the extent that these procedures do not work, a separate dispute resolution known as the Uniform Rapid Suspension (URS) system is available to brand owners. The proposal for the URS resulted from the perceived need for a rapid take-down process for egregious and clear-cut infringing domains that would supplement the existing Uniform Domain Name Dispute Resolution Procedure (UDRP). Unfortunately the URS only provides for suspension as a remedy and resort must be made to the UDRP to obtain cancellation or transfer of the impugned domain name.

All of the issues described above need to be monitored and considered by brand owners as they continue to unfold. Like it or not, ICANN is ensuring that brand owners live in interesting times.

A version of this article originally appeared in the March 11, 2011, issue of The Lawyers Weekly published by LexisNexis Canada Inc.

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So, You Thought Bill C-32 Would Fight Piracy? Think Again...

By Casey Chisick

With the defeat of the Conservative government on March 25, Bill C-32 – the so-called Copyright Modernization Act – died on the order paper, joining its predecessors, Bill C-60 (2005) and Bill C-61 (2008), in the scrap heap of Canadian copyright reform. A reform process that began in 2001 and has produced three failed bills in 10 years must surely rank among the most ignominious in the history of copyright law.

Supporters of Bill C-32 will lament that its demise has further delayed Canada’s ratification of the 1996 WIPO treaties, which were designed to bring international copyright law into the digital age. Certainly, the Conservative government touted the potential of the Bill to promote new markets for digital content and fight piracy, focusing on two key components: the proposed protections for technological protection measures – TPMs, for short – and a new provision that would target those who enable copyright infringement, such as illegal peer-to-peer file sharing sites. But the reality is that, without substantial amendments, Bill C-32 wouldn’t have done its job even had it passed.

It’s true that Bill C-32 contained robust protections for TPMs: it would have prohibited the act of circumventing access controls (technological measures that control access to copyright-protected works) while also outlawing services and devices that are intended to circumvent either access controls or copy controls (technological measures that prevent copyright infringement). And TPMs are more than just “digital locks.” Many established and emerging business models, from Netflix and Apple TV to interactive video games and the Amazon Kindle, rely on various forms of technological protection to ensure that consumers are able to use the content they purchase in accordance with their terms of use, without unfairly extracting more value than they’ve paid for. TPMs are the only way to prevent a Netflix subscription, which is designed to facilitate online video “rentals,” from turning into an inexpensive way to build a great DVD library for only $7.99 a month.

But TPMs are not a complete answer. Even the brightest minds in Silicon Valley have yet to devise a digital lock that can’t be picked, and even with legal protections in place, it would remain an uphill climb to detect circumvention, locate infringers, and secure legal remedies. And what about the many digital business models that don’t use TPMs? Putting digital locks on music CDs proved to be a failed experiment for the major record labels, and even the market-dominating iTunes Store abandoned TPMs from its online music downloads when it became clear that its customers wanted to enjoy their content on multiple devices.

Addressing these problems is not a simple matter. It requires a delicate combination of enforcement and education, along with cooperation among the many stakeholders in the digital economy. Unfortunately, Bill C-32 failed on all three counts.

Enforcement: Confusing Prohibitions and Ineffective Remedies

Consider the proposed prohibition in Bill C-32 on so-called “online enablers” – those who provide services that are “designed primarily to enable acts of copyright infringement.” Under the Copyright Act, it is already illegal to “authorize” copyright infringement – that is, to do anything to “sanction, approve or countenance” another person’s infringing act. As interpreted by Canadian courts, however, authorization has been tough to establish. So, in Bill C-32, the government seemed to take a page out of the American playbook, modelling the online enabler provisions after the U.S. doctrine of contributory infringement. So far, so good – after all, it was that very doctrine that led to the landmark decision in MGM v. Grokster, which shut down what was then the dominant file-sharing service in the world.

But a closer look at Bill C-32 shows that its proposed online enabler provisions were all bark and no bite. To take just a few examples: 
 

• The prohibition was restricted to services that are “designed primarily to enable acts of copyright infringement.” What about services that may have been designed for other purposes but are used predominantly for infringing purposes? This is not just splitting hairs: after all, many peer-to-peer networks were designed to facilitate the consensual swapping of academic and other material, but are used overwhelmingly for the illegal sharing of music and video files. 
   
• The prohibition would have applied only “if an actual infringement of copyright occurs by means of the Internet or another digital network as a result of that service.” Want to take proactive steps to prevent infringement by a threatening new online service? You’d have had to look elsewhere. 
   
• In determining whether a person has infringed copyright as an online enabler, the court was directed to consider, among other things, whether the person knew that the service “was used to enable a significant number of acts of copyright infringement” and whether the service had “significant uses other than to enable acts of copyright infringement.” But no guidance was given as to how many infringing acts, or what other types of use, might be considered “significant.” Years of litigation would have been required before the scope of these provisions could be clearly understood. 

Those weren’t the only problems. Under the law as it exists today, copyright owners are entitled to elect, in lieu of actual damages, to recover statutory damages of between $500 and $20,000 per work infringed. But Bill C-32 would have made that remedy unavailable against online enablers. As a result, rightsholders who want to pursue relief against those infringers would have been forced to prove actual damages – a notoriously difficult thing to do in many copyright cases. This limitation seems curiously at odds with the government’s stated intention that these provisions be used to crack down on online file sharing. If the government were serious about achieving that goal, it would not have moved to deprive rightsholders of access to statutory damages, the most effective deterrent remedy in the Act.

Education: Sending the Wrong Message to Students and Teachers

Copyright stakeholders don’t agree on much these days. But one thing that seems to be universally acknowledged is that if respect for copyright is to be restored, the public will need a better understanding of what it is and why it’s important. An entire generation of consumers has now grown up in an environment in which the traditional models of paying for content have given way to piracy and unauthorized file sharing as the dominant forms of distribution. It will take more than an attempted crackdown on copyright pirates to reverse this trend. Education about the purpose and importance of copyright is key.

Unfortunately – and perhaps inadvertently – Bill C-32 undermined this principle by introducing, as part of an expansive package of new exceptions for the education sector, a provision that would all but eliminate liability for teachers, students and others acting under the authority of an educational institution when using content that is available through the Internet. Under this provision, sometimes referred to as the “publicly-available information” or “PAM” exception, rightsholders would have been forced to take affirmative steps to protect their work, either by using a TPM or placing a clearly visible notice – and not just the well-known © symbol – on the website where the work is available. Only then, or if the teacher or student had reason to believe that the work was made available without the consent of the copyright owner, would any obligation have arisen to seek a licence or pay a royalty for the use.

The PAM exception would have sent exactly the wrong message to both teachers and students. Instead of learning about the importance of balancing user access with respect for the rights of creators, which would have promoted the goals of reducing online piracy and infringement, students would instead have come to believe that material available through the Internet is free unless someone specifically indicates otherwise. In fact, perhaps more so than any other existing or proposed exception, the PAM exception would have turned copyright upside down, making use without permission the rule rather than the exception and teaching students to ignore copyright rather than respecting it. Not only would this have done nothing to fight piracy, it would have created a serious challenge to the future of copyright.

Cooperation: Bringing Stakeholders Together?

More and more, rightsholders are responding to the challenges of the digital age by reconsidering the traditional conception of copyright. Instead of attempting to control the use of their works, they are interested in promoting access, and compensation, through innovative licensing mechanisms. However, to achieve this goal requires meaningful incentives for all stakeholders to participate in the creation of these systems. In its approach to liability for Internet service providers (ISPs), Bill C-32 would have moved in exactly the opposite direction.

The question of ISP liability has been dealt with differently in various jurisdictions. The U.S., one of the first to move on the issue, opted for a “notice and takedown” system, which requires ISPs to take steps to disable access to infringing content after receiving a notice of claimed infringement from a rightsholder. More recently, other countries have experimented with “graduated response” systems, which require ISPs to deliver a series of notices to alleged infringers, warning them of the potential legal consequences of their actions, before taking steps to stop the infringing use through coercive means. (Contrary to popular belief, there is much more to graduated response systems than a “three strikes, you’re out” policy that culminates in the loss of Internet access for the infringer, but that’s a whole other article.)

Bill C-32 would have created a “notice and notice” system that would have imposed far more lenient obligations on ISPs. Upon receiving a notice of  claimed infringement, the ISP would have been required to deliver it to the alleged infringer. Period. No takedown requirement, no further notices. And the failure to deliver the notice would have resulted in a penalty of no more than $10,000 for the ISP.

Not surprisingly, opinions differ greatly on whether and to what extent ISPs should be liable for infringing activities that take place through the use of their facilities, and this article is not the place to debate the differing viewpoints. The question, instead, is what, if anything, a “notice and notice” system would do to combat piracy, either by discouraging online infringement or by encouraging ISPs to engage with other copyright stakeholders in developing progressive solutions to the problem. The combination of expansive immunities for ISPs and weak penalties for failure to comply with their minimal obligations would seem to accomplish little on either count.

Conclusion

Whatever its strengths may have been , Bill C-32 was not an anti-piracy bill. It simply failed to provide the right mix of incentives, education and enforcement to make a meaningful contribution to the very complex problems faced by the content industries. If the next government is serious about fighting online piracy, it will need to think very carefully about the issues, and take a more realistic view of the problem and the available solutions, before tabling its inevitable copyright reform bill. Maybe in that case, the fourth time could be the charm. 

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Distinctiveness of A Colour and Shape Trade-mark

By Catherine M. Dennis Brooks

The Federal Court of Appeal recently considered the issue of the distinctiveness of a trade-mark consisting of a two-tone colour combination applied to the outside of a disk-shaped inhaler. The trade-mark depicted below consisted of the colours dark purple and light purple applied to the surface of an inhaler used to administer pharmaceuticals. The Federal Court of Appeal upheld the Federal Court’s decision to expunge the registration.





The Background

In 2004 Glaxo Group Limited (“Glaxo”) filed a trade-mark application for the mark and it proceeded to registration in 2007. The registration was challenged by a collection of generic pharmaceutical companies on the basis that it lacked distinctiveness. The Federal Court expunged the registration, finding that consumers of the inhaler did not associate its colour and shape with Glaxo as the sole source of the product, but rather associated it with therapeutic use.

Glaxo appealed this decision but was unsuccessful, with the Federal Court of Appeal rejecting all of its grounds for appeal.

The Federal Court of Appeal confirmed that the test to determine the distinctiveness of a trade-mark is whether it distinguishes the product from others in the marketplace and that a critical factor is the message given to the public. Distinctiveness is to be determined from the point of view of an everyday user of the product. The Court of Appeal held that in order for a mark to be distinctive, “the relevant consumers must distinguish the source’s product from the wares of others based on the source’s trade-mark”. In support of its claim regarding the distinctiveness of its mark, Glaxo pointed to the millions of dollars in advertising it spent to promote the product, the unique appearance of the product, and affidavits from patients, doctors, and pharmacists regarding the use of the appearance of the product to distinguish the Glaxo inhaler from others. The Court of Appeal, in reviewing the case, noted that the lower court assessed the evidence, including evidence that the trade-mark ADVAIR (the trade-mark used on the packaging) was the prominent mark with which consumers, doctors, and pharmacists associated the source of the product, and considered that there was no indication on the product packaging or on the inhaler itself that Glaxo was the source of the product, as well as the fact that the colour and shape of the inhaler was not featured prominently in its advertising. The Court of Appeal concluded and that the lower court properly applied the test for distinctiveness and found that the registered mark was not distinctive. Finding no error in the lower court’s judgment, the Court of Appeal dismissed the appeal. 

Glaxo has sought leave to appeal to the Supreme Court of Canada.

Conclusions

Though the matter is still under appeal, the Federal Court’s decision confirms that the ambit of protection given to colour and shape trade-marks in Canada is quite limited. The owner of a mark consisting of colour and shape should ensure that its packaging, advertising and marketing materials feature the colour and shape and associate this colour and shape with the brand name and the source of the product. Such precautions, as well as the use of proper trade-mark ownership notices on products and packaging, should help to make consumers aware of the source of the product and would be useful evidence when trying to demonstrate distinctiveness in relation to colour and shape trade-marks.

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That's Hot: Trade-mark Rights in Catch Phrases

By Leonard Glickman

In this third instalment of my ongoing series of articles on trade-mark rights in the film and television industries, I deal with trade-mark rights in catch phrases.

Catch phrases are expressions that are typically popularized through repeated use by a real person or fictional character. The catch phrase du jour appears to be WINNING, adopted by Charlie Sheen and used frequently in his recent media campaign against Warner Brothers and the producers of Two And A Half Men. Bart Scott of the New York Jets coined the phrase “CAN’T WAIT!” in a post-game interview following the Jets’ defeat of the New England Patriots earlier this year and has filed a trade-mark application to protect the phrase. Sports announcer Gus Johnson, who is calling NCAA March Madness games for Turner and CBS, is known for his catch phrase “RISE and FIRE!”. Johnson has registered the catch phrase as a trade-mark in the U.S. and is selling t-shirts and hats bearing the catch phrase. In 2006, TV-Land compiled a list of the 100 greatest TV catch phrases. The list includes such well known catch phrases as:
 

Bam! – Emeril Lagasse

Book ‘em, Danno – Hawaii Five-O

Come On Down – The Price is Right

D'Oh! – Homer Simpson

Dyn-O-Mite – JJ on Good Times

Here’s Johnny! – Ed McMahon on The Tonight Show

Live Long and Prosper – Spock on Star Trek

No Soup for You – The Soup Nazi on Seinfield

That’s Hot! – Paris Hilton on The Simple Life

Yaba Daba Do! – The Flintstones

You’re Fired! – Donald Trump on The Apprentice

Catch phrases are capable of being registered as trade-marks in Canada and the United States and have been the subject of a number of cases. In a very recent case, filed in the United States District Court for the Middle District of Tennessee on March 3, 2011 (case 3:11-cv-00194), comedian Jeffrey Mishler (professionally known as Jeff Allen) sued NBCUniversal LLC and Fabulicious, LLC for their use of the catch phrase HAPPY WIFE, HAPPY LIFE. In his complaint, Mr. Mishler cited his use of the same catch phrase since at least as early as 1999 and his trade-mark registration for the catch phrase in international classes 9, 25 and 41. According to the complaint, both NBC and Teresa Jiudice, (the principal of Fabulicious, LLC and one of “The Real Housewives of New Jersey”) used the catch phrase HAPPY WIFE, HAPPY LIFE on television and the internet and sold t-shirts, coffee mugs and hats bearing the HAPPY WIFE, HAPPY LIFE mark. Mr. Mishler’s complaint alleges trade-mark infringement in violation of the Lanham Act, unfair completion, false designation of origin, passing off and false advertising under Section 43(a) of the Lanham Act, trade-mark dilution and violation of the Tennessee Consumer Protection Act.

Two of the catch phrases on the list above have also been the subject of litigation. In Paris Hilton v. Hallmark Cards, 580 F.3d 874 (9th Cir. 2010), Paris Hilton sued Hallmark Cards for Hallmark’s use of her name, likeness and famous catch phrase and registered trade-mark “That’s Hot” on a birthday card with the caption “That’s Hot” as depicted below:
 

 

In her lawsuit, Hilton asserted claims of misappropriation of publicity under California common law, false designation under the Lanham Act and trade-mark infringement. The U.S. District Court for the Central District of California allowed Hallmark’s motion to strike the trade-mark infringement claim but denied Hallmark’s motion to strike the right of publicity claim pursuant to California’s anti-SLAPP statute which allows defendants to dismiss “strategic lawsuits against public interest” that are brought simply to interfere with the exercise of free speech rights. The Ninth Circuit upheld the District Court and rejected Hallmark’s argument that its depiction of Ms. Hilton was sufficiently transformative and therefore protected free speech under the First Amendment. To succeed, Hallmark would have had to establish that the image in question was so transformed as to constitute an image separate from the celebrity’s likeness. While the Ninth Circuit noted some differences between the Simple Life episode and the image on the card, the court stated “Despite these differences, the basic setting is the same: we see Paris Hilton, born to privilege, working as a waitress”. The case was settled in September, 2010 with media reports indicating Hilton received an undisclosed amount from Hallmark.

In a 1983 case, John W. Carson and Johnny Carson Apparel, Inc. v. Here’s Johnny Portable Talents, Inc. 698 F.2d 831 (6th cir), Johnny Carson sued a Michigan corporation engaged in the business of renting and selling “Here’s Johnny” portable toilets. The phrase “Here’s Johnny” was used to introduce Carson on The Tonight Show and was also licensed for use on clothing labels and in advertising campaigns. The plaintiffs commenced an action alleging unfair competition, trade-mark infringement under federal and state law and invasion of privacy and publicity rights. The District Court in Michigan dismissed Carson’s complaint, holding that the plaintiffs had failed to satisfy the likelihood of confusion test and that “Here’s Johnny” was not such a strong mark that its use for other goods should be entirely foreclosed. The right of privacy and right of publicity claims failed, with the court holding these rights only apply to a name or likeness and that “Here’s Johnny” did not qualify.

The Sixth Circuit affirmed the District Court’s decision on likelihood of confusion and dismissed the privacy claim but took a broader view of the right of publicity and held that “a celebrity’s legal right of publicity is invaded whenever his identity is intentionally appropriated for commercial purposes”. In this case, the “Here’s Johnny” catch phrase was considered part of Carson’s identity. 

The “Here’s Johnny” catch phrase was previously the subject of a decision in Canada by the Federal Court, Trial Division in Carson v. Reynolds, [1980] 49 CPR (2d) 57 (FCTD). In this case, Reynolds applied to register the mark HERE’S JOHNNY in association with portable trailers, outhouses and lavatory facilities. The application was opposed by Johnny Carson on the basis of Section 9 (1)(k) of the Trade-marks Act (the “Act”), which provides as follows: 
 

“No person shall adopt in connection with a business, as a trade-mark or otherwise, any mark consisting of, or so nearly resembling as to be likely to be mistaken for...any matter that may falsely suggest a connection with any living individual.”

Carson’s opposition was rejected by the Opposition Board but succeeded on appeal to the Federal Court, Trial Division primarily on the basis of new survey evidence introduced by Carson showing that the phrase “Here’s Johnny” suggested Johnny Carson to over fifty percent of those persons.

Under Canadian law, in addition to raising a claim under Section 9(1)(k) of the Act, any plaintiff attempting to enforce its rights in a catch phrase that is also a registered trade-mark would commence trade-mark infringement proceedings under the Act and would also likely add a depreciation of goodwill claim under Section 22.1 of the Act, which states “No person shall use a trade-mark registered by another person in a manner that is likely to have the effect of depreciating the value of the goodwill attaching thereto”. If the action commenced by Jeffrey Mishler in the United States were to be brought in Canada, he would likely succeed on the trade-mark infringement claim given that the marks are identical and the mark was used by the defendants in association with wares covered by the plaintiff’s registration.

With respect to rights of publicity in catch phrases, a plaintiff in Canada would consider pursuing a common law claim for misappropriation of personality and/or statutory action under the provincial privacy statutes in British Columbia, Manitoba, Newfoundland and Saskatchewan or the privacy provisions in the Quebec Civil Code. By way of example, the British Columbia Privacy Act (the “BCPA”) defines a “portrait” as a likeness, still or moving, and includes a likeness of another deliberately disguised to resemble the plaintiff and a caricature. The BCPA further provides that it is actionable “for a person to use the name or portrait of another for the purpose of advertising or promoting the sale of, or other trading in, property or services, unless that other, or a person entitled to consent on his or her behalf, consents to the use for that purpose”. In Joseph v. Daniels, [1986] 4 BCLR (2d) 239 (BCSC), the first reported case under the BCPA, the British Columbia Supreme Court held that the use of the plaintiff bodybuilder’s torso without also showing his head, was not a violation of the BCPA because the torso was impossible to identify as that of Mr. Joseph without showing his face. Privacy legislation in Manitoba, Newfoundland and Saskatchewan all tie the violation of privacy rights to the unauthorized commercial exploitation of the use of the name, likeness or voice of a person and would therefore not provide the basis of a claim for the unauthorized use of a catch phrase. Similarly, Article 36(5) of the Quebec Civil Code states: 
 

“The following acts, in particular, may be considered as invasions of the privacy of a person...using his name, likeness or voice for a purpose other than the legitimate information to the public”

In a case under Quebec civil law dealing with catch phrases, Serge Theriault, one of the Quebec comedians known as Ding et Dong brought an application for an interlocutory injunction to restrain the use of Ding et Dong’s well known phrases “est bonne! est bonne! est bonne! (translation: great! great! great!) and “est effrayante” (translation: it’s scary) in a print and radio advertising campaign by the La Ronde amusement park in Montreal. In Theriault v. Association Montréalaise d’action Récréative et Culturelle, [1984] C.S. 946, Madame Justice Alice Desjardins denied the injunction and held, in obiter, that individuals cannot appropriate for themselves catch phrases that are in common usage in the language even where the individual is responsible for making the phrase famous.

It is an interesting question as to whether a catch phrase can form the basis of misappropriation of personality action under Canadian common law. The leading case on misappropriation of personality in Canada is Gould Estate v. Stoddart Publishing Co. (1998), 39 OR 549 (CA), where the court adopted the “sales versus subject” distinction whereby “if the defendant used the plaintiff’s name or likeness predominantly in connection with the sale of consumer merchandise or solely for the purposes of trade” then the claim would be established. Conversely, if the plaintiff was the subject of the defendant’s work, such as the subject of a biography, it is unlikely that the plaintiff would succeed in establishing that his or her personality rights where infringed.

There is no doubt that the U.S. cases noted above would fall on the “sales” side of the sales versus subject analysis. The larger question is whether personality rights in Canada would be given the broad definition given to publicity rights in the United States in the “Here’s Johnny” case and other cases where a catch phrase was considered to be part of the identity of the plaintiff. While not dealt with in Gould, where the name and likeness of the plaintiff were clearly in issue, other cases have held that a person’s identity can also include voice, reputation and virtually any other unequivocal aspect of the persona. Whether catch phrases fit the bill will be for the courts to decide.

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An Overview of Canadian Tax Credits for Foreign Based Canadian Location and Service Productions in the Film and TV Industry

By Stephen I. Selznick

Canada continues as a leader in the development and innovation of public sector initiatives for film and television production. These incentives have stimulated a billion dollar industry in Canada for the production of foreign based Canadian location and service productions, as well as domestic Canadian content programming. In this updated article, we explore Canadian Federal and Provincial refundable tax credit programs available to domestic and foreign producers of non-Canadian content programming that employ Canadians and choose Canada as a location or service center. We also examine the Canadian content program recognition designation for both Canadian qualifying domestic productions and foreign co-ventures. Click here to read more.

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