This paper will discuss the following intellectual property issues:
Generally. Intellectual property is a phrase used to describe rights in property of an intangible or "intellectual" nature, such as a poem, a process for manufacturing a chemical, or the name of a company's product. These rights may include the right to sell or transfer the property, the right to manufacture a product using certain technology, the right to exploit a name or famous character to market a product, or the right to reproduce a literary, dramatic, musical or artistic work. Intellectual property rights are distinguished from physical property rights. Ownership of the physical property in a good does not necessarily lead to ownership of the intellectual property, or vice versa. For example, when you own the physical property in a book you have the right to read the book, and to loan or sell the book to a friend. You do not have the intellectual property right to make a photocopy of the book, to adapt the book as a screenplay, or to publish the book.
Intellectual property generally includes five main areas: patents, copyrights, industrial designs, confidential information and trade secrets, and trademarks.1
Patents. Patents arise under the federal Patent Act2. A patent is a federally issued right embodied in a document which describes an invention and confers on the patent owner a lawful monopoly to make, use or sell this invention in Canada for a period of 20 years. This invention must be a new and useful art, process, machine, manufacture or composition of matter, or any new and useful improvement to an invention. Generally, to be patentable, an invention must be new (i.e. does not already exist), useful (i.e. functional, operative, practical) and unobvious (to someone skilled in the area).
Examples of a patented invention may include a machine that makes bread, a process for making a pharmaceutical or a corkscrew.
Copyrights. Copyright arises automatically upon the creation of a work pursuant to the federal Copyright Act3. A copyright includes the right to reproduce and exploit an original literary, dramatic, musical or artistic work. Another right conveyed by the Copyright Act is a creator's moral rights in the paternity and integrity of a work. Although copyright is generally transferable, moral rights remain the inalienable rights of the creator. However, a creator may waive his or her right to assert the moral rights to a work. Copyright generally lasts for a period of 50 years from the creator's death. Whereas the design of an article, such as the shape of a teapot, is copyrightable, in some cases copyright protection will not exist where the article is reproduced in quantities of more than fifty.4
Examples of copyrighted works include poems, songs, compilations of photographs, computer programs and architectural drawings.
Industrial Designs. The Industrial Design Act5 protects the aesthetic features of shape, configuration, pattern or ornament and any combination thereof, in a finished article. Industrial design protection arises upon the registration of an original, novel design which has aesthetic appeal and lasts for a period of 10 years. In order to obtain this protection, the owner of the design must apply to register the design within one year following publication of the design. A design that is purely functional will not be afforded protection.
Examples of industrial designs include the shape of a chair, the shape of a knife handle or the pattern on a boot tread.
Confidential Information and Trade Secrets.
Confidential information and trade secrets arise under the common law of contracts and torts. The duty to maintain confidential information or trade secrets arises from certain relationships - employee/employer, solicitor/client, or between contracting parties. Different from patents, trademarks and industrial designs, trade secrets and confidentiality only protect information that is not disclosed to the public. Exclusivity may not exist if a competitor acquires the same information by its own efforts. For example, the right to manufacture a soft drink may belong exclusively to the first person to seek a patent for the invention. If the recipe is protected merely by trade secrets or confidentiality, two companies may independently develop the invention and have the right to produce the product. The best way to protect trade secrets is to keep this information secret and only allow access to limited personnel for limited purposes. A good way to protect confidential information is by contract. The contract should describe the type of information that is protected, the time and geographic scope of protection and allowable uses of the information.
An example of a famous trade secret is the recipe for the COCA-COLA drink. Examples of confidential information include customer lists and databases.
Trademarks. A trademark is a mark, symbol or sign that is used to identify the source of the wares or services associated with the mark and sufficiently distinguishes the wares or services from that of another. It can even be the shaping of the product or packaging for the product. Registration of the mark under the federal Trade-marks Act6 provides the applicant with the exclusive right to use the mark throughout Canada in association with the wares and services claimed in the trademark application for a period of 15 years. Trademarks may also arise under common law, but the rights are limited to the territorial area in which the mark has been used or where the owner can establish a reputation in that mark. A trademark is generally not registrable if it is merely the name or surname of a living individual or one who has died within the preceding 30 years or it is clearly descriptive or deceptively misdecriptive of the character or quality of the wares or services or it is the name for the wares or services in any language. A trademark is not registrable if it is confusing with a registered trademark or is otherwise prohibited by the Act.
Examples of trademarks are the word and logo "COCA-COLA" and the distinctive shape of the COKE bottle.
The Trade-marks Act defines a trade name as the name under which a business is carried. Registration of a trade name must be made in accordance with the relevant federal or provincial corporation legislation. A trade name may not be registrable if a confusingly similar trademark has been registered and vice-versa.
Words, Designs, Combinations, Slogans and Shapes. Owners typically register words, designs, or combinations of words and designs as their trademarks. They may also register the labelling for their products or slogans used by the owners to promote or sell their products or services. In these cases these marks are used to distinguish the wares or services of the owner from others.
An example of a word mark is "COLGATE".
The stylized design for "COLGATE" is also registered, as shown below.
Shapes or package designs. The Trade-marks Act provides for the protection and registration of a "distinguishing guise" as a form of trademark. A distinguishing guise mark is a shaping of one party's wares or their containers, or a mode of wrapping or packaging of wares, that distinguishes these wares from those of others. Registration of the distinguishing guise can not interfere with the use of any utilitarian feature of the guise and can not unreasonably limit the development of any art or industry. Registration of any trademark requires that the application include an "accurate representation" of the mark. For a distinguishing guise, a drawing of the guise is generally accepted as a representation of the mark. The drawing must show different profiles of the mark. Marks which are three-dimensional figures must be represented by drawings showing details of both the front and back surfaces or all the surfaces that comprise the mark. Examples include the bottle shape for the COCA-COLA beverage and the doughnut shaped breakfast cereal.
A well known example of a distinguishing guise mark is the bottle shape for ketchup manufactured by H.J. Heinz of Canada Ltd.. This design is represented in the Trade-marks Register as follows:
Generally. Most countries have accepted word, design and even slogan marks as being capable of registration. As the countries of the world attempt to harmonize intellectual property laws, there may be even broader protection granted to less conventional forms of marks on a worldwide basis. Even now, the definition of a trademark under the Canadian Trade-marks Act is broad enough to cover marks comprised of colour, sound and possibly even scent and motion. For example, Owens-Corning has had registration for the colour pink for its insulation since 1993 and Capitol Records registered its sound mark in Canada almost ten years ago. One of the difficulties with registering the sound, scent and motion marks is to accurately describe the mark. Another more substantive difficulty is to establish that there has actually been use of the non-traditional mark in a trademark sense. For example, according to the definition of "use" for a product under the Canadian Trade-marks Act, notice of the mark must be given to the consumer at the time the product bearing the mark is sold to the consumer. With a sound, smell or motion mark, the use of the mark may be contained within the product and the consumer will only be made aware of the mark after the purchase is made. If notice is given after the purchase is made, this is strictly not trademark use. These, however, are technical difficulties that can be overcome with creative marketing of the product.
Examples of colour, sound, scent and motion marks are the colour pink for insulation, the sound of a Harley-Davidson motorcycle engine, the flowery smell of embroidery thread and a spinning icon appearing on a computer screen.
Under the Canadian Trade-marks Act, there is no specific prohibition against a sound mark. A trademark is defined as a mark used to distinguish the owner's products or services from those of another. Mark is not defined. If we check dictionaries for a definition of "mark", they refer to symbols, signs and even sounds. To date, the Canadian Trade-marks Office has registered one "sound mark". Since 1989, Capitol Records, Inc. has owned a registered trademark comprised of the eleven musical notes:
C2 C3 C4 C5 C6 C7 C8 C9 E9 G#9 C10
The trademark is used in connection with phonograph records, audio and video tapes, and films. The sound appears at the very beginning of recording media to identify the source of the media.
The owner also filed a specimen of the mark as requested by the Office and pursuant to the Trade-marks Regulations7 at that time. Capitol Records filed audio tapes as specimens.
Common musical notation describes the sound in the registration, as follows:
In examining the trademark application, the issues raised by the Trade-marks Office included the following:
Since the registration of the Capitol Records sound mark, other companies have also attempted to register their sound marks. These include the following:
Intel Corporation. Filed in October of 1997, the Intel mark, depicted as follows, is used with computer hardware and software:
Queisser Pharma GmbH. Filed in October of 1996, the sound described by the following is claimed in association with the sale of cosmetics and pharmaceutical products:
Qlicksmart Pty. Ltd. Filed in August of 1996, Qlicksmart Pty. Ltd. applied to register a "clicking" sound for use with surgical instruments.
Metro-Goldwyn-Mayer. Filed in October of 1992, the MGM "roaring lion" is described by the following sound graph and was applied to be registered for both products (motion picture films and video tapes) and entertainment services:
While there does not appear to be any application or registration of a scent mark in Canada, there is nothing in the Canadian Trade-marks Act to prohibit the registration of this kind of mark. Again, the applicant would have to clearly describe the scent mark and would likely have to provide specimens and confirmation that the scent is not functional. The applicant will also be asked by the Office to confirm that the mark is actually used in a trademark sense, that is, the purchaser is made aware of the mark at the time the product bearing the mark is purchased. The registration of a scent mark has been allowed in the United States. In that case, the mark was registered for "a high impact, fresh, floral fragrance reminiscent of Plumeria blossoms" to be used for scented thread and yarn. At first instance the mark was refused, but the United States Trademark Appeal Board considered that the mark was capable of registration (In re Clarke8). The Trademark Examiner argued that the mark did not identify or distinguish the applicant's goods from those of others. The Appeal Board disagreed finding that:
The Appeal Board also noted the difficulty in describing the fragrance, but accepted the description provided by the applicant. Other legal commentators have suggested that scents can be described by physico-chemical formulas, or analog, spectrometric or chromatographic descriptions.
Motion Marks. While there does not appear to be any applications or registrations in Canada for motion marks, there is no express prohibition against their registration. An applicant may therefore be able to register the movement of words or designs. Examples may include the way in which words blink or the way a globe spins in the corner of a computer program. The description for this type of mark should explain the manner in which the word or design moves. A specimen in the form of a videotape may also be filed.
For all the non-traditional trademarks, the applicant faces a challenge in convincing the Trade-marks Office that actual use of the mark has taken place. "Use" of a mark on a product is defined to mean that a consumer is aware of the mark at the time of purchase of the product. However, with the right approach to marketing the products and services, this should be possible.
Trademark owners directly and through their advertising agencies can protect and even enhance the value of their trademarks through proper trademark usage. This can be done in a number of ways:
Protection of a trademark begins at home. A trademark owner will want to make sure its employees and advertising partners know how to use its marks. A good "trademark usage" manual is a place to start. Most large companies have manuals setting out how their marks are to be used. There should also be a company directive about reviewing information, promotional material and company publications including annual reports and press releases to make sure that the trademarks are properly presented to the public. Once the company has established these rules for proper usage, it has given its employees and colleagues a guide. It can then encourage its workforce and colleagues in the marketing and advertising field to keep an eye for misuses of the mark in the marketplace. Quickly correcting such misuses protects marks. In order to maintain a strong mark, a trademark owner must ensure that it does not misuse its own mark. If it does misuse the mark, it jeopardizes the validity of the mark itself and its ability to enforce its rights in the mark against infringers.
Infringement. The registration of a trademark provides the owner with the exclusive right to use the trademark throughout Canada with respect to the wares or services claimed in the registration.9 Infringement occurs when someone uses the trademark to sell, distribute or advertise wares or services in a way that is confusing.10 Generally, confusion will occur when the use of the trademark by the infringing party is likely to lead to the inference that the wares or services are manufactured, sold, leased, hired or performed by the trademark owner. Relevant factors in assessing whether a mark is a confusing trademark include:
A plaintiff to a trademark infringement action may claim an injunction, an award for damages or profits, require destruction or delivery up of offending wares and a prohibition on future importation of the offending wares
Passing Off. The tort of passing off exists at common law and statutorily under section 7(b) of the Canadian Trade-marks Act to prevent the unfair trading of one's goods deceitfully as the goods of another. The Supreme Court of Canada has stated that the tort consists of three elements:11
Depreciation of Goodwill. The Canadian Trade-marks Act prohibits the use of a trademark by another person in a manner that is likely to have the effect of the depreciating the value of the goodwill attached to the mark.12 Trademark owners often rely on this section when their registered trademarks are used by their competitors on the competitors' products or in advertising for the purposes of comparing the companies' products or services. One example where a trademark owner did not prevail on the basis of its trademark rights is the Federal Court Trial Division case of Cie Generale des Etablissements Michelin-Michelin & Cie v. C.A.W. - Canada13. In this case, the plaintiff owned the trademark and copyright in the marshmallow-like character "BIBENDUM".
In its attempts to become the bargaining agents for the plaintiff's employees, the defendants distributed leaflets to workers containing a version of the BIBENDUM character stomping on the head of a worker.
In this case, the trademark infringement action failed because, according to the judge, the mark was not used in the classic trade-mark sense in the sale of any wares or services. In refusing the claim for depreciation of goodwill, the court noted that the goodwill was not depreciated because (1) there was no commercial "use" of the trademark and (2) the pamphlets were directed to the employees of the plaintiff and not its customers, hence no depreciation of goodwill. However, the court did find in favour of the plaintiff based on its claim that the defendants were infringing the copyright in the BIBENDUM character.
Comparative Advertising. Comparative advertising is governed in Canada by the Trade-marks Act, the Competition Act, common/civil law, consumer protection acts and voluntary industry regulations. In addition to possible trademark infringement and depreciation of goodwill under the Trade-marks Act, and the misrepresentation of goods under the tort of passing off, the torts of injurious falsehood and unlawful interference with economic interests may also be applied.
The Competition Act provides for criminal sanctions for the making of false or misleading advertisements about a product, i.e. product X is 50% more effective at removing stains than product Y.
Advertising Standards Canada (ASC), formerly the Canadian Advertising Foundation, has developed the Canadian Code of Advertising Standards. Under the Code, anyone may make a complaint about an advertisement. Failure to comply with a decision of the ASC may result in the recommendation by the ASC to media not to exhibit the advertisement. Pre-approval is also possible through the mechanism of the ASC.
Copyright. A trademark owner may be able to use the additional leverage of copyright when dealing with design marks or products capable of protection under the Copyright Act. As was mentioned in the Michelin case, the defendants were prevented from continuing to use a version of the BIBENDUM character in their flyers and signage because they infringed the plaintiff's copyright in its character design. This can be a powerful weapon. Trademark owners should ensure that they are the owners of the copyright in any designs or material created for a product or service and in the advertising and promotional material about the product or service. If the owner itself does not create the works, there should be a written assignment of the copyright from the creator. That assignment document should also include a waiver of the creator's right to assert his or her moral rights in respect of the copyrighted works.
Trademarks. The issue of a Canadian court's claim for jurisdiction over activity on the Internet has yet to be decided in Canada. However, the Federal Court decision in Tele-Direct (Publications) Inc. v. Canadian Business Online Inc.14 is an example of a Canadian court enforcing trademark protection against a Canadian website operator. In this case, the plaintiffs, the owners of the "Yellow Pages" and "Walking Fingers" trademarks, sought and received an injunction restraining the defendants from using the expression "Canadian Yellow Pages on the Internet" alongside the Walking Fingers design on its Internet website.
Domain Names. omain names are the unique Internet addresses assigned by various Internet administrators, such as "yahoo.com", "harvard.edu" or "cbc.ca". The domain names proprietary to the owners in these examples are yahoo, harvard and cbc. The endings ".com", ".edu" and ".ca" define the type of organisation or the location of the organization - ".com" for commercial organization, ".edu" for educational organization and ".ca" for a Canadian organization. In Canada, CDNet operated the ".ca" domain name registry starting in 1987, but responsibility for ".ca" domain names was transferred to the Canadian Internet Registration Authority (CIRA) on December 1, 2000. Since deregulation in the United States, numerous registrars around the world now administer the ".com", ".net" and ".org" domain names. The original registrar, Network Solutions Inc. ("NSI"), continues to administer the transfer of registered domain names
A person who is searching the Internet for information on a certain company or product will often try to locate the company by using its company name or its main product name as a domain name. In this way, a domain name can be a very important marketing tool for a company. If someone other than the trademark owner holds the domain name, then the person reaching the information on that other company could be confused into thinking there is a connection with the trademark owner. There have been various conflicts in the United States and elsewhere involving the appropriation of one person's trademark by another person as a domain name. These cases have generally settled. However, a prudent trademark owner will want to make sure it has registered its company name and in many cases its major brands as domain names. It may prevent others from appropriating the identical names as their domain names.
In Canada, many domain names have also been registered as trademarks. Examples include "THESTAR.COM" (registered in March, 1998), "T-O.COM" (registered in March, 1998) and "AGRIBIZ.COM" (registered in September, 1997). In each case, the mark has been registered for providing information services on-line. In order to gain trademark registration for a domain name, the domain name must be "used" in a trademark sense in association with a product or service. It is not enough that the name has been registered as a domain name. In the case of providing on-line information services, the Office will be looking for an actual service to be performed by the applicant for customers and for the domain name to be used in association with the performance of that service. It is useful to have the domain name appear on the website or as part of the on-line services, in addition to its use as a domain name.
CIRA will be implementing a Dispute Resolution Policy in early 2002 and has received comments by interested parties and the public on the draft policy and dispute resolution rules that will govern the conduct of disputes under the CIRA domain name dispute resolution policy.15
In both cases, the plaintiff has sought an interlocutory injunction restraining the use of a domain name and in both cases the plaintiffs were unsuccessful.
In the PEINET case, the plaintiff provided network services and Internet access under the name PEINET. The defendant was an employee of the plaintiff until 1994, at which time he left and started his own business as an Internet service provider. The defendant used the domain name "pei.net". The court found that the use of lower case letters and the separation of the words "pei" and "net" with a period would not lead to confusion and was therefore not trademark infringement. In considering the claim for passing off, the court considered the second branch of the tort, misrepresentation to the public. In likening the domain name to a telephone number, the court concluded that there was no misrepresentation to the public as the domain name was used for a very short period of time and was not advertised to the public.
In ITV Technologies, applicant, WIC Television, was the owner of the trademark "ITV". It has operated various television stations using this mark since 1974. The respondent, ITV Technologies, operated a website by the name of "itv.net" since 1995. While the court found a serious issue to be tried, the resulting confusion between the domain name and the trademark did not in itself establish irreparable harm (harm not compensable by damages). The court was also clearly swayed by the respondent's undertaking to indicate on its website that there is no affiliation with the trademark owner and to keep accounts of its revenues and customers until trial.
Hyperlinks. Hyperlinks, better known as "links", are a means by which a website creator can provide an Internet "surfer" with a branch or pathway to get to other sites of possible interest. For example, a running shoe company may provide "links" to professional sport websites.
Two cases on hyperlinks have gained attention.
In Washington Post v. Total News, the defendant provided a hyperlink to the plaintiff's news stories. The defendant's website was designed so that the news stories were framed by the defendant's logo and associated advertising. The plaintiff claimed trademark infringement, dilution of trademark rights and copyright infringement. This case settled before trial. However, when checking the Total News website, it appears that when a news story is selected on the Total News website, a separate window appears displaying only the linked news website. In other words, the linked site is not framed or otherwise modified by the Total News site.
In The Shetland Times Ltd. v. Wills and The Shetland News, the defendant provided links directly to the plaintiff's news stories without advising readers of the true origin of the stories. The plaintiff claimed copyright infringement. This case was settled on the condition that the links must clearly indicate which stories belong to the plaintiff. Links must be made to the plaintiff's headline page.
At this stage it is difficult to determine whether a party will be found to be infringing another's trademark rights or copyright in providing these links. If a party is willing to assume the risks in providing these links, he or she should at a minimum make sure that links to other websites direct the reader to the homepage of the linked company, and links to specific content should indicate the owner of the linked material. Website operators may also consider placing a notice prohibiting any copying of its material, linking, or use of any of its trademarks.
Meta-tags. Meta-tags can be used to lure Internet users away from competing sites. This is possible because all websites are created using a programming language called hypertext mark-up language (HTML). Like any computer program, a programmer may include non-operational lines of code in the program (i.e. programmer's notes), also known as meta-tags. When a website is viewed, the reader only sees text and graphics produced by the HTML programming, not the source code or the meta-tags. When an Internet user is searching for a website containing specific information, the user will normally employ a search engine, such as "Yahoo", to find the appropriate site. The user will enter a word or phrase and the search engine will produce a list of sites that contain the word or phrase. Most search engines will list sites by giving a higher rank to those sites with a greater frequency of the desired word or phrase.
The meta-tag problem occurs because some of the major search engines will consider the meta-tags to be part of the text of the website when conducting a search. An unscrupulous website operator may take advantage of this by including the names of its competitors in the form of a meta-tag, often repeating the key words dozens of times.18
For example, Tess, an avid Internet user, may be interested in knowing the hours of operation or the price list for her favourite dry cleaner, "Good Guy Dry Cleaning Ltd.". Not knowing the specific Internet address for this dry cleaner, Tess may employ a search engine to find the site. By entering the phrase "Good Guy Dry Cleaning" in her Internet search engine, the search engine will produce a list of websites that contain the phrase, listing the results in order of the highest frequency of the phrase per site. "Bad Guy Dry Cleaners Inc.", however, has inserted the names of its competitors in the form of a meta-tag and repeated each name fifty times. The search engine, not differentiating between text and meta-tags, will rank Bad Guy's website at the top of its list. Tess will view the list and see Bad Guy Dry Cleaners at the very top of the list, possibly visiting the site and sending her business to Bad Guy's.
No cases have been decided based on meta-tag misuse, but such a case may be actionable as trademark infringement, depreciation of goodwill or unfair competition.
The Internet has provided a new and rapidly growing area of commerce and communication. It has also spawned many legal disputes, including those over intellectual property rights. Intellectual property owners will continue to use traditional legal remedies and seek new ways to stop infringers from using their property rights.
Disclaimer: This Newsletter is intended to provide readers with general information on legal developments in the areas of e-commerce, information technology and intellectual property. It is not intended to be a complete statement of the law, nor is it intended to provide legal advice. No person should act or rely upon the information contained in this newsletter without seeking legal advice.
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