2017 Canadian trademark cases: progressive and regressive

Insufficient attention is sometimes paid to Canadian trade mark judgments. Kat friend (and inductee into the IP Hall of Fame) Dan Bereskin has kindly provided us with a summary of 2017 developments.

“The Internet Has No Borders”: Worldwide De-indexing Injunction

In Google, Inc. v Equustek Solutions Inc., the Supreme Court of Canada upheld an order requiring Google to de-index websites globally, not just in Canada. The operators of the websites had misappropriated confidential information, and misled consumers into believing the products sold on these sites were Equustek’s products. Equustek obtained Court orders enjoining such conduct, but the operators of the websites failed to comply. At the request of Equustek, Google de-indexed the sites in Canada but refused to do more. Equustek sought a Court order to require Google, a non-party to the infringement case, to de-index the sites globally. Google refused.

The Supreme Court of Canada saw Google as the “determinative player” in the harm occurring and found:

“[t]he problem […] is occurring online and globally. The Internet has no borders — its natural habitat is global. The only way to ensure that the interlocutory injunction attained its objective was to have it apply where Google operates — globally.”

It will come as no surprise to many IPKat readers that a U.S. court has found that the SCC order is not enforceable in the USA. For more detail, see here.

Use of Competitor’s Trademarks in Keyword Advertising

In Vancouver Community College v Vancouver Career College (Burnaby) Inc., the British Columbia Court of Appeal reversed the trial judge and found the defendant liable in passing off for using a competitor’s “trademarks” in keyword advertising. The Court of Appeal decision appears to have been influenced strongly by the fact that a person, who keys in VCC or Vancouver Community College when performing a search using the Google® search engine, would likely see the respondent’s ad on the same page as the appellant’s listing.

Passing off was found irrespective whether the person making the search actually selects the respondent’s ad and is confused into thinking that the respondent is the appellant or that the respondent is connected with the appellant in a business sense. This is surely wrong, absent proof of likelihood of confusion, of which the trial judge found none, despite hearing testimony from 18 witnesses. On January 18, 2018, the Supreme Court of Canada denied an application for leave to appeal this decision.

No Infringement of Registered Trademarks Dominated by Descriptive Term

In Venngo Inc. v Concierge Connection Inc. (Perkopolis), the Federal Court of Appeal affirmed a finding of the Trial Division that use of the trademark PERKOPOLIS did not infringe any of Venngo’s six trademark registrations for various “PERKS” suffix marks (e.g. MEMBERPERKS, WORKPERKS, etc.). Both parties used their marks in the context of providing companies with incentive programs for their employees, i.e. “perks”. Clearly, in cases involving descriptive or highly suggestive trademarks, some level of confusion must be tolerated to avoid undue interference with honest competition, as was well said by Lord Simmonds in Office Cleaning.

Registered Trademark May not be a Defence to Infringement

In Group III International Ltd. v Travelway Group International Ltd., the Federal Court of Appeal overturned the lower court’s decision and granted the plaintiff, Wenger S.A., a permanent injunction prohibiting the defendant, Travelway, from using its registered trademarks on its luggage products and other relief. Notably, the Federal Court of Appeal did not expunge Travelway’s trademark registrations that were found to infringe Wenger’s, nor did it issue an order for damages, referring these matters back to the lower court.

The decision is perplexing: trademark registrations found to be confusing nevertheless continue to co-exist on the Trademarks Register. The Federal Court of Appeal’s decision is noteworthy in that it means that a valid trademark registration may not be a complete defense to claims of infringement and passing off, contrary to long-standing case law.

Rare Interlocutory Injunction Granted in a Trademark Case

The Federal Court rarely grants interlocutory injunctions in trademark cases, but did so in Sleep Country Canada Inc. v Sears Canada Inc. (not as yet published). Since 1994, Sleep Country has used the slogan "WHY BUY A MATTRESS ANYWHERE ELSE" in TV, radio, print, and online advertising, and it owns two trademark registrations for the slogan. In July 2016, Sears began advertising “THERE IS NO REASON TO BUY A MATTRESS ANYWHERE ELSE” in online flyers and social media. Justice Kane found that Sleep Country had satisfied her that, on the balance of probabilities, confusion is likely and that Sleep Country would suffer irreparable harm if Sears were not enjoined.

No doubt Sears’ conduct was cheeky, but it’s hard to imagine Sears’ advertising would cause Sleep Country irreparable harm, especially in the absence of any proof of such harm. Justice Kane held that the impossibility of quantifying damages supported a finding of irreparable harm, a conclusion if widely followed that could lead to suppression of tough but honest competition.

Other Cases Worth Noting

Diageo Canada Inc. v. Heaven Hill Distilleries, Inc. Diageo, one of the world’s largest producers of spirits, sells several varieties of rum under the CAPTAIN MORGAN trademark. Each variety bears a label containing a fanciful depiction of Sir Henry Morgan, a 17th century privateer. Diageo successfully sued Heaven Hill for an injunction and other relief for selling ADMIRAL NELSON’S rum with labels bearing a fanciful depiction of Vice Admiral Horatio Lord Nelson, a British naval officer in the late 18th and early 19th centuries. The Court evidently was persuaded by survey evidence that confusion is likely.

Domaines Pinnacle Inc. v Constellation Brands Inc. et al. The Federal Court of Appeal held that an application for the trademark DOMAINE PINNACLE & Design is unlikely to cause confusion with the registered mark PINNACLES covering wines, since the visual element of the two marks was sufficiently different, and each mark suggested different ideas. "Pinnacle" is a commonly used term with little distinctiveness. Therefore, the Court held that the design context must play a greater role in distinguishing the respondents' mark from the numerous other registered marks in Canada that feature the word "Pinnacle".

For detailed commentary on other recent cases, see here .

Photo at lower left by Ktsquare from Canada, who has released it into the public domain.