WebFuel welcomes back James Katz, Ottawa Lawyer with BrazeauSeller LLP., as our guest blogger. This is his fifth blog post in a regular series related to legal search issues in Canada. WebFuel blogs about online marketing, but this topic is related to trademarks on the Internet from a legal perspective.

Guest Post by: James Katz

As a Registered Trade-Mark Agent I provide advice on a daily basis to clients who are interested in protecting their trade-marks, or who are concerned about whether or not a competitor is infringing their trade-mark rights. More and more, these questions specifically turn to trade-mark rights and infringement in the Internet context, and in particular, the kinds of uses of trade-marks on the Internet that may constitute trade-mark infringement.

Given that Canada’s Trade-Marks Act hasn’t been substantially amended since before the Internet age, it has been up to Canada’s Courts to adjust the “old” law to the new reality. However, as stated several times in my previous blog posts about legal issues and the Internet, Canadian Courts have been slow to adjust to what many still consider to be the relatively new reality of the Internet. Therefore, in addressing legal issues surrounding trade-marks and the Internet, there is very little case law that is of assistance. The last case to look squarely at the issue of online trade-mark infringement, and which found that use of a trade-mark in online advertising constituted trade-mark infringement, was later overturned by the Ontario Court of Appeal. However, in its decision, the Court of Appeal did provide some guidance on that issue, and until another case comes along, this decision does give parameters as to what types of Internet based trade-mark use constitutes infringement.

Briefly, Canada’s Trade-Marks Act provides that the rights of an owner of a registered trade-mark are infringed if someone that is not entitled to use that mark sells, distributes or advertises wares or services in association with a confusing trade-mark or trade-name. In many Internet cases that I have dealt with, there is usually no issue as to whether or not the trade-mark used by the other party is confusing: it is usually identical in spelling and appearance and used to advertise almost identical goods and/or services as those sold by the owner of the registered mark. This is not surprising in the Internet context, as the selling of counterfeit goods and services online has risen to epidemic proportions, largely because counterfeiters can easily scour the Internet and copy the next big product to come along. Rather, the main issue that the Courts have had to deal with is what constitutes “use” of a trade-mark in the Internet context, which, given the wording of the statute, must be proven before an infringement may be found.

In short, the Ontario Court of Appeal rejected the lower trial Court’s decision that tried to expand, by taking a holistic approach, the definition of “use” as set out in the Trade-Marks Act. Instead, the Court stuck with the strict definition of that term as it is appears in that statute. Therefore, under the Trade-Marks Act, “use” of a trade-mark (infringing or otherwise) in association with the sale of goods (termed “wares” under the statute) requires that the trade-mark be used in association with wares at any time during the transfer or the property or possession of those wares. Note also that in terms of use of a trade-mark in association with services, the definition is much broader, and “use” of a trade-mark will be found as long as the infringing mark is used in advertising those services.

Therefore, in terms of the use of a confusingly similar trade-mark on a website, the Court of Appeal found in the case before it that, although the marks in question were identical, there was no “use” of the impugned trade-mark by the defendant. This was because the website where the defendant was displaying the plaintiff’s trade-mark was entirely passive in nature (that is, the website was used only to transmit information, and it was not possible to purchase products or otherwise transfer ownership of products through the website), and was advertising the sale of wares (and not services). In other words, the mark was not, based on its appearance on the website alone, being “used” (as that term is defined in the Trade-Marks Act) by the defendant at the time of the transfer or sale of goods.

Three important lessons can be gleaned from this decision, which is still considered to be good law in Canada:

  1. It is clear from this decision that trade-mark infringement will not be found if a confusing mark is used solely on a passive website. But, it stands to reason that, in the case of an active website that does allow for the transfer of goods to consumers (i.e. you can order goods through the site), such use would almost certainly constitute trade-mark infringement. This is because, as the Court of Appeal pointed out, “the transfer of ownership [is] possible through that medium”.
  1. Given that the definition of “use” of a trade-mark in association with services is met simply when advertising of those services occurs, the use of a passive website that displays such a mark will likely be considered advertising, and would thus amount to an infringement of the owner’s trade-mark. Keep in mind, however, that the infringing services in question must be also performed in Canada before infringing use will be found.
  1. When faced with a statutory cause of action (which trade-mark infringement is) the Courts, even when faced with new technologies, will not deviate beyond the established definitions of, as the Court of Appeal put it “a carefully crafted” statute. Importantly, the Court of Appeal did indicate in its decision that common law tort relief may have been available to the plaintiff, without going into further detail as to a particular cause of action. However, the tort of passing off, which broadly protects against causing consumer confusion, comes to mind. Importantly, a successful cause of action in passing off does not require that the plaintiff have a registered trade-mark.

In closing, it is important to note that, although the issue addressed in this post deals specifically with the use, in text or graphic format, of a confusing trade-mark on a website, the legal principals established in such a case may (eventually) be found to apply to other internet issues, including the unauthorized use of a trade-mark in Google AdWords, and the use of a confusing trade-mark as part of a website’s domain name. Nor have I addressed the very real issue of jurisdiction in cases where the website in question is located outside of Canada. Stay tuned for more on these issues in future editions of this blog.

Related Blog Posts:

The Shifting Legal Landscape of Google AdWords: From a Canadian Perspective
Legal Issues with Google Places: From a Canadian Perspective
Domain Name Disputes: From a Canadian Perspective
Domain Name Dispute Resolution Set to Change for dot-Ca Domains

James Katz is a Lawyer and Trade-mark Agent with the Ottawa law firm BrazeauSeller LLP. James’ practice focuses primarily on Internet related legal issues and litigation, including trade-mark and copyright infringement, defamation and online privacy issues.

Disclaimer: The contents of this Blog post, and associated opinions are those of its Author, and do not necessarily represent the opinions of WebFuel, or its employees.