Intellectual property continues to be an essential topic for many businesses throughout North America. This article covers Canadian considerations when choosing a trademark, proving bad faith, the statutory claim for passing off, and a recent lawsuit in the USA against TikTok’s concerning voiceover services.
If you have any questions, thoughts or ideas, please feel free to contact the GSNH IP Specialist: John McKeown at mckeown@gsnh.com
Do Not Be Overly Optimistic or Aggressive When Attempting to Obtain a Trademark Registration
A decision of the Canadian Federal Court illustrates important lessons concerning choosing a mark and trademark infringement. https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/495909/index.do
The Facts
The defendant wished to use the HOSTESS mark in association with bread and rolls. The defendant applied for the trademark HOSTESS in association with the goods bread, bread rolls, bagels, and the wholesale distribution of bread, bread rolls, and bagels. The defendant could not overcome examiner reports claiming the applied mark was confusing with the plaintiff’s registered HOSTESS Word Mark. This mark was widely used in association with cakes and sufficiently well known to have significant goodwill attached to it.
Undeterred, the defendant imitated the section 45 proceedings and began to use the mark in association with bread and buns.
The plaintiff brought an action for infringement of its marks and subsequently a motion for summary trial. The parties agreed the facts were sufficiently set out in affidavits and their exhibits, and the matter proceeded on this basis.
The Decision
The plaintiff primarily relied on registration for the trademark HOSTESS as a wordmark (the HOSTESS Word Mark). The mark was registered in 1925. When this matter was heard, the HOSTESS Word Mark was registered for use in association with the goods consisting of rolls, cakes and biscuits. The plaintiff also owned registrations relating to design versions of the Word Mark.
The Section 45 Proceeding
The Judge initially considered the impact of the decision in the section 45 proceeding. The Hearing Officer’s decision had not been released when the matter was initially heard but was released before the Judge issued his decision.
The Hearing Officer maintained the registration for the goods cakes while expunging the goods rolls and biscuits from the registration. The summary trial motion was largely unaffected by the Hearing Officer’s decision. The plaintiff’s evidence and primary arguments were all directed to the plaintiff’s registration and use of the HOSTESS Mark in association with cakes and snack cakes.
Invalidity
Next, the Judge considered the defendant’s counterclaim, which alleged the plaintiff’s trademarks were invalid based on non-distinctiveness under paragraph 18(1)(b) of the Act. Again, the onus was on the defendant to show that registration was not valid. The defendant showed four other traders who owned HOSTESS-related registrations for different food products that co-existed on the register. However, the defendant filed no evidence of the use of these other registrations.
The Judge said that two registrations contain other word elements that added points of distinction compared to the plaintiff’s HOSTESS Word Mark. None of the registrations were for food products, particularly the cakes and other pastries in the plaintiff’s registration. The presence of a few other traders with HOSTESS-formative marks on the register for other food products was far from sufficient to show that the plaintiff’s HOSTESS Word Mark did not distinguish products it was used in association with from those of others.
Confusion
The judge observed there may be infringement even where a defendant sells a good not listed in the registration and even if those goods are not in the same general class. Paragraph 20(1)(a) of the Trademarks Act states that the exclusive right granted by section 19 is deemed infringed by anyone who sells, distributes or advertises goods or services in association with a confusing trademark or trade name. A trademark or trade name is “confusing” with another trademark if using both in the same area “would be likely to lead to the inference that the goods or services associated with [them] are manufactured, sold, leased, hired or performed by the same person, whether or not the goods and services are of the same general class or appear in the same class of the Nice Classification.”
The determination is made after considering “all the surrounding circumstances,” including, in particular, the list of circumstances set out in subsection 6(5) of the Trademarks Act:
(a) the inherent distinctiveness of the trademarks and the extent to which they have become known;
(b) the length of time the trademarks have been in use;
(c) the nature of the goods, services or business;
(d) the nature of the trade; and
(e) the degree of resemblance between the trademarks, including in appearance or sound or the ideas suggested by them.
The Judge reviewed the application of these factors in a detailed fashion. Three matters were of particular importance. First, the defendant relied on the state of the register to argue that that different HOSTESS-formative trademarks can co-exist on the register in respect of different food products and that the word HOSTESS is not highly inherently distinctive when used in association with food products. Second, the Judge said that the state of the register is an indicator of the state of the marketplace, suggesting that a consumer could distinguish between the marks of different traders based on small differences where the market is crowded with similar marks. However, without evidence of the extent of use of the marks, it is difficult to draw a meaningful inference of common adoption of the HOSTESS mark in the trade, such as to reduce the likelihood of confusion.
Second, regarding the nature of the goods, the judge said there were substantial similarities between the defendants’ sliced bread and bun products and the cakes identified in the HOSTESS Word Mark. As the plaintiff pointed out, both are not just food products but fall within a narrower category that might be described as “bakery products” or “baked goods.” This similarity is underscored by the evidence that showed such products are often sold near each other in retail outlets, whether in the same or adjoining aisles.
Third, both cakes and the breads are “run-of-the-mill consumer wares” that are taken “from a supermarket shelf,” on which a consumer would spend less time than for a luxury item. This further suggests that a consumer would be less attuned to differences in the trademarks or the goods than might be the case for other items or channels of trade.
The Judge concluded that using the defendant’s HOSTESS trademark in association with its bread products in the same area as the cakes identified in the plaintiff’s HOSTESS Word Mark would likely lead to the inference that the same person sells the goods. Effectively identical marks, being used on very similar goods, in a retail context where the goods are sold in the same channels, would commonly be seen near each other. As a result, consumers would spend less time, which was likely to create confusion.
Comment
This decision raises two continuing themes. First, it does not pay to be overly optimistic or aggressive concerning the potential availability of a mark. Given the nature of launching a mark and the associated time, effort and expense involved, some prudence is required. Second, you cannot build a solid foundation on sand.
Second, if you are involved in litigation relating to a trademark, you need to carefully consider the evidence required to support the positions you wish to take. That means when the distinctiveness of a mark is involved presenting marketplace evidence on a consumer level to show the mark is not distinctive. Similar considerations apply to the state of the register evidence.
If you have questions, don’t hesitate to get in touch with me at mckeown@gsnh.com.
These comments are of a general nature and not intended to provide legal advice as individual situations will differ and should be discussed with a lawyer.
How to Prove Bad Faith
A recent decision of the English High Court provides additional insight into the meaning of “bad faith” in a trademark context and the evidence required to support such a finding. [2021] EWHC 719 (Ch)
The Facts
Apple Inc. has used the phrase “One More Thing” at launches of Apple products since 1998. The well-known Chairman and founder of Apple, Steve Jobs, would reach what would seem to be the end of his keynote address at an industry event chosen for an important announcement, turn as if to leave the stage, and then turn back with the words ‘but there’s one more thing.’ In 1998 the first ‘one more thing’ was the return of Apple to profitability. In later years, the ‘one more thing’ would often be a new Apple product. The tradition appears to have lapsed on Steve Jobs’ death in 2011 but was revived by his successor Tim Cook in 2015 for the launch of the Apple Watch.
Swatch is a well-known manufacturer of watches based in Switzerland. There appears to be a long-running trademark dispute between Swatch and Apple about the marks ‘I-WATCH’ and ‘I-SWATCH.’ The dispute predated the present dispute.
Swatch filed international registrations, which designated the U K for the trademarks SWATCH ONE MORE THING and ONE MORE THING for use in association with a wide range of goods, including watches and consumer electronic products.
Apple opposed the application on grounds based on the use and associated goodwill that Apple had acquired in the phrase ONE MORE THING. In addition, it was alleged the application was made in bad faith regarding Swatch’s knowledge of Apple’s reputation in the phrase, the circumstances in which the marks were applied, and Swatch’s likely intentions in relation to the use of the marks.
Regarding the first ground of opposition, the Hearing Officer rejected the objection. While he accepted that a non-trivial (though relatively small) number of people in the United Kingdom would have known of Apple’s usage of the phrase ONE MORE THING, he did not consider this would turn what is a common phrase in English usage into a ‘distinguishing sign’ indicating the trade origin of Apple’s goods or services.
He also found that the public would not be deceived by using the phrase by Swatch in relation to the goods within the scope of the Applications. At worst, he thought, some people aware of Apple’s usage might ‘wonder’ whether Swatch’s use of the phrase had some connection with Apple, but this was not enough to pass off.
Regarding the second ground of opposition, the Hearing Officer noted that Swatch had failed to present evidence about its actual intentions and done nothing to displace the prima facie case which he had held to exist.
The Hearing Officer concluded that filing of applications supported a potential parodying form of use (which could not only poke fun at but may also denigrate Apple) against a competitor and rival with which it was at loggerheads would, prima facie, be considered by experienced men in the field to fall short of the standards of acceptable commercial behaviour. The marks being used as part of a parody of another trader is also difficult to reconcile with the use of the marks in accordance with their essential function of indicating the commercial source of the goods. In reaching this finding, he accepted that there was nothing wrong with parody as such. It is an important part of free speech. However, there is a difference between parody in commercial communications and registering trademarks consisting of parodies of a rival’s marketing signs. Using the trademark registration system to obtain exclusive rights to such signs goes far beyond what is necessary to engage in legitimate parody. Moreover, the applicant’s attempt to secure an exclusive right to engage in this form of commercial parody would exclude Apple’s commercial use, which was objectionable.
The Appeal
Swatch appealed from the dismissal of its applications to the High Court. The Judge said that the ‘bad faith’ objection to the registration of trademarks had defied any straightforward definition, either by the UK Courts or by the CJEU. However, it was clear that it involves considering the state of mind of the applicant and, in particular, their intentions regarding the application. It also requires an assessment of those intentions against certain norms, in particular (i) what would be considered honest and fair behaviour by a business and (ii) the proper purpose of obtaining trademark protection (to protect a mark used to distinguish goods and services from those of other traders).
The case law has also established that a person is presumed to have acted in good faith unless the contrary is proved. An allegation of bad faith is a serious allegation that must be distinctly proved. The standard of proof is on the balance of probabilities, but cogent evidence is required due to the seriousness of the allegation. It is not enough to prove facts also consistent with good faith.
The Judge disagreed with the Hearing Officer that a prima facie case of intention to parody Apple followed from the applications upsetting Apple. Nor did the Judge consider that a prima facie case of intention to parody Apple was otherwise established by the evidence.
More specifically
- a) While the Hearing Officer was entitled to be unimpressed by the failure of Swatch to explain its intentions, having been accused of an intention to put the mark to parodic use, this proved nothing. Moreover, Swatch had also been accused of intending to deceive the public, an allegation which the Hearing Officer had no difficulty in rejecting.
- b) There was no evidence that Swatch had made a practice of parodic advertising in the past against any party, let alone Apple.
- c) It was not clear how the suggested parodic use of the mark would be effective when, on the Hearing Officer’s findings, it was only associated with Apple by only a few people.
- d) There may be cases where a mark is inherently offensively parodic, so any use of it must inevitably transgress honest business practices and unfairly undermine the interests of the subject of the parody. However, where the mark itself is not offensive, it is hard to see how the mere prospect it might be put to some parodic use which overstepped the mark, provides a ground for refusal based on bad faith. This is because (i) the filing of the Application is equally consistent with the proprietor acting in good faith, so a finding of bad faith would contravene the presumption previously set out and (ii) the Court would be essentially engaging in speculation.
Comment
This decision provides a useful summary concerning the U.K. law relating to bad faith. The lesson to be learned is that the evidence supporting the allegation of “bad faith” must be clear and not speculative.
If you have questions, please get in touch with John McKeown at mckeown@gsnh.com.
What is a Statutory Claim for Passing Off?
The common law cause of action for passing off has a lengthy history. The claim has evolved to take into account changing commercial realities and is concerned with unfair competition or unfair trading. As illustrated by a recent decision of the Federal Court the statutory claim for passing off available in that court is much more constrained.
The Facts
The plaintiff is the owner and publisher of an Indian Punjabi-language daily newspaper called the “Ajit Daily”. This paper has been published in India since 1955 and is well-known among the Punjabi population in India. An online version, which Canadian Punjabis, read has been available since 2002.
While only a few subscriptions have been sold in Canada the plaintiff presented the evidence of several individuals who said they knew the Ajit Daily and its reputation as an important Punjabi paper in India.
The plaintiff’s logo for its newspaper originally looked like this:
The defendant owns and publishes a Canadian Punjabi-language newspaper called the “Ajit Weekly.” The newspaper has been published in Canada since 1993 and is distributed without charge at the front of supermarkets and other stores. An online version has been available since 1998.
For many years the defendant’s masthead incorporated the Punjabi word AJIT (essentially in the form of plaintiff’s logo shown above), with the words “The Ajit (Weekly Newspaper)” underneath, and with a design featuring two Canadian flags flanking the Sikh Khanda symbol under those words, as shown below:
Since September 2009, the defendant has used the following design mark normally with the stylized Punjabi word AJIT in the colour green:
The defendant adopted the above mark, (the Modified Logo) because of a Partial Settlement Agreement signed by the parties on September 15, 2009.
The Action
This dispute has been before the Federal Court and the Federal Court of Appeal on numerous occasions. After a motion for a summary trial the judge dismissed the first action. The plaintiff appealed to the Federal Court of Appeal who allowed the appeal and ordered that a new trial take place. We discussed this trial and subsequent decision in March of 2016.
A further appeal was allowed 2019 FCA 295 and a further redetermination was ordered. The current decision, 2021 FC 602 helpfully reviews the statutory codification of the cause of action for passing off.
As the litigation continued the plaintiff was left with an action for passing off and other related claims.
The Claim for Passing Off
The plaintiff’s claim relied on paragraph 7(b) of the Trademarks Act, which is a statutory codification of the common law cause of action. The claim under the paragraph 7(b) protects the goodwill associated with a trademark and is directed to avoiding consumer confusion through use of trademarks. To bring such a claim a plaintiff must prove possession of a valid and enforceable trademark, whether registered or unregistered, when the defendant first directed public attention to its own goods and services.
To succeed in an action for passing off, a plaintiff must establish three elements: the existence of goodwill; deception to the public because of a misrepresentation; and actual or potential damage to the plaintiff. A plaintiff must establish that:
(1) goodwill or reputation attached to the goods or services supplied by the plaintiff exists, in the mind of the purchasing public, from association with the identifying get up, such as a brand, recognized by the public as distinctive of the plaintiff’s goods or services;
(2) the defendant has made a misrepresentation to the public (whether intentional or not) resulting in or likely to result in the public concluding the defendant’s goods or services are those of the plaintiff; and
(3) the plaintiff has suffered or likely will suffer damage because of the erroneous belief caused by the defendant’s misrepresentation about the source of the goods or services.
There is a threshold requirement for a plaintiff to establish that it has used its trademark to distinguish its goods and services from those of others, which results in a valid and enforceable trademark, whether registered or unregistered, when the defendant directed public attention to its own goods and services: A plaintiff who does not meet this minimum threshold cannot prevent others from using that mark or name:
A trademark’s distinctiveness resides in its ability to indicate the source of a particular product, process or service in a distinctive manner, so consumers know what they are buying and from whom. While a trademark’s traditional role was to create a link in the prospective buyer’s mind between the product and the producer, it has come to represent not only a guarantee of origin but also an assurance to the consumer that the quality will be what they associate with the mark.
An assessment of deception to the public because of a defendant’s alleged misrepresentation necessitates consideration of the likelihood of confusion under section 6 of the Trademarks Act. All of the factors set out in subsection 6(5) of the Act and surrounding circumstances must be assessed and balanced. The section 6(5) factors include:
- the inherent distinctiveness of the trademarks and the extent to which they have become known;
- the length of time the trademarks have been in use;
- the nature of the goods, services or business;
- the nature of the trade; and
- the degree of resemblance between the trademarks, including in appearance or sound or in the ideas suggested by them.
The test for confusion to be applied is a matter of first impression in the mind of a casual consumer somewhat in a hurry who sees the mark when he or she has no more than an imperfect recollection of the prior trademark and does not give the matter any detailed consideration or scrutiny or examine closely the similarities and differences between the marks.
With respect to the third factor, it was unnecessary for the parties to have been or be in direct competition for the plaintiff to have suffered injury. Further, the defendant’s decision to use the name “Ajit” when it launched Ajit Weekly in Canada, with no credible basis and given Daily Ajit’s reputation in Canada which preceded it supported the inference that the name had commercial value in Canada at that time. It also meant that the plaintiff effectively lost control over the impact of its trade name in the defendant’s jurisdiction. Such a loss was sufficient to ground the third component of the test for passing off.
However, the plaintiff failed to establish that it suffered any significant damage by such loss of control in Canada.
When the Judge applied this approach to the facts of the case she was satisfied that the defendant has engaged in passing off during the period July 2004 to September 2009. The plaintiff was unsuccessful in asserting claims for passing off or other claims concerning the Modified Logo used after September 2009.
Comment
The judge’s statements apply to the statutory cause of action under subsection 7(b) of the Trademarks Act in the Federal Courts. Because of jurisdictional issues specific to the Federal Court such a claim must be in relation to a registered or unregistered trademark.
The common law cause of action is not restricted in the same way although the same three elements: the existence of goodwill; deception to the public because of a misrepresentation; and actual or potential damage to the plaintiff, must be shown. This cause of action can be more flexible, but it must be brought in a court of competent jurisdiction of one of the provinces.
If you have questions, please contact John McKeown at mckeown@gsnh.com.
TikTok Sued Concerning Inappropriate Use of a Voice
A recent lawsuit filed against TikTok in the United States raises interesting issues concerning the rights of individuals providing voiceover services.
The Facts
The plaintiff is a Canadian voice-over actor and is well-known in the voice-over industry. In addition, because of the extent of her work, her voice is said to be well-known in the US and other countries, including Canada.
The plaintiff was hired by the Institute of Acoustics, a research organization of the Chinese government, in 2018 to perform voice work. The work consisted of reading thousands of English sentences which she was told would be used for translation purposes. The work is related to “text to speech” and artificial intelligence technology that resulted in the Institute’s acquisition of electronic data files of the plaintiff’s voice she recorded on her equipment. The Institute was not granted permission to transfer the data to any other person or entity for later use.
Bytedance, Inc. and Bytedance E- Commerce Inc. doing business as TikTok (the “Defendants”), provide social networking services and a social medium platform. The services are used to make short-form videos of one minute in length or less. There are various features available through the platform, including the ability of a user to add a computer-generated voice that will play when the user’s videos are uploaded. The videos, including any computer-generated voice, are available for consumption by the millions of TikTok users worldwide.
In November of 2020, the plaintiff discovered that her electronic voice files had been acquired by the Defendants, using her voice as the female computer-generated voice of TikTok. The plaintiff did not consent to such use of her voice.
The Action
The plaintiff instituted a civil action in the United States District Court for the Southern District of New York. The plaintiff alleges copyright infringement and breach of her right to publicity and the other claims relating to unfair competition.
Comments concerning the Canadian law relating to the claims follow.
The Copyright Act
Under the Canadian Copyright Act, the maker of a sound recording is entitled to a copyright in the recording consisting of the sole right to do the following about the recording or a substantial part of it: to publish it for the first time, to reproduce it in any material form and to rent it out and to authorize such acts. In addition, the sound recording maker’s copyright includes the right to make it available to the public by telecommunication and other rights relating to the transfer of ownership if the sound recording is in the form of a tangible object.
The maker of a sound recording is the person by whom the arrangements necessary for the first fixation of the sounds are undertaken. Thus, the maker is the first owner of the copyright in the sound recording. “Undertake” means to be responsible for, in a financial sense and generally. Usually, the maker will have made a financial contribution to produce the recording and not necessarily a creative or technical contribution.
It is clear from the definition of “sound recording” that the underlying work need not be the subject of copyright. However, the underlying work may be protected by copyright under the Act. In this case, only the copyright owner may make or authorize the making of a sound recording.
The plaintiff asserts that the stylization and artistic nature of the work contained in the voice files are sufficiently original to be protected by copyright. In addition, she asserts that since the voice files were recorded on her equipment, she is the owner of the copyright subsisting in the sound recordings. Therefore, since the Defendants have apparently reproduced the voice files, they have engaged in copyright infringement.
The Right of Publicity
In Canada, the right of publicity is protected through the tort of appropriation of personality. Usually, the tort is restricted to endorsement-type situations such as where there is an implication that a celebrity was endorsing a defendant’s business or products. However, the complete scope of this tort has yet to be fully defined by the courts.
In this case, the plaintiff alleges that the Defendants have conveyed the false and misleading representation to the public that the plaintiff endorses, sponsors or approves the Defendants’ services or is affiliated with the Defendants.
Comment
The Defendants ceased to use the plaintiff’s voice in response to her action. Therefore, how the lawsuit will be decided remains to be seen.
It seems odd that anyone would pay for voice-over services without having a written contract to set out a clear understanding of how the resulting voice files could be used and who would be the owner of the applicable copyrights.
If you have questions, don’t hesitate to get in touch with me at mckeown@gsnh.com.
Goldman Sloan Nash & Haber LLP
480 University Avenue, Suite 1600
Toronto, Ontario M5G 1V2, Canada
Direct Line: 001 416 597-3371
Fax: 001 416 597-3370
These comments are of a general nature and not intended to provide legal advice as individual situations will differ and should be discussed with a lawyer.
A version of this article originally appeared in the Lawyer’s Daily published by LexisNexis Canada Inc.
