Canada Updates its Competition Act

I recently became aware of changes to the Canadian Competition Act (the Act) meant to modernize this piece of legislation, including to give it a little more teeth.

The changes at issue include the following, in case you hadn’t been following this (I hadn’t):

  • The act now prohibits “drip-pricing” by on-line retailers, as it may be tantamount to false (or misleading) advertising. This is familiar to anyone who has shopped on-line where you may be drawn to a particular source offering a what seems like a good deal, until you go through the whole process and realize fees and costs are successively tacked on, so that you end-up with a price that is substantially more than the “price” that attracted you in the first place.
  • Speaking of false (or misleading) advertising, the recent changes to the Act now allow courts to impose penalties that are no longer limited to fixed (capped) amounts. From now on, whenever a judge must impose a penalty on a given business for this, (s)he may elect to set the penalty according either to what profit the business derived from its misdeed, or better yet, on a percentage (3%) of its annual global revenue. Do I have your attention now?
  • Likewise, the recent changes also remove the cap on competition-related criminal penalties, instead providing that judges now have discretion under the Act as to the amount of penalties imposed on wrongdoers.
  • Anti-poaching agreements between employers are now a big no-no, as an unacceptable constraint on the working conditions of Canadian employees by what amounts to a form of cartel. As to this, one has to admit, if you allow business to agree between them to refrain from hiring from competitors, you’re seriously limiting the prospects of employees working in that industry.

The changes at issue came into effect on June 22, 2022.

Canadian Court Cancels Trademark Registration Obtained in Bad Faith -a First

The 2019 changes to the Trademarks Act (the “TMA”) introduced a requirement that trademark applicants not file applications (nor obtain registrations) in “bad faith”. Though this has been part of Canadian trademark law for nearly 3 years, courts had yet to use the provision empowering them to cancel a trademark registration obtained in bad faith. This has now changed, thanks to a recent decision by the Federal Court, in Beijing Judian Restaurant Co. Ltd. v. Meng (2022 FC 743).

The case at issue basically stems from an individual becoming aware of a well known trademark, as used in China for restaurant services, and managing to secure a registration for that mark, before the actual owner really brought the mark to Canada. Yep, this is a story of good old fashion trademark piracy.

Fortunately for the good guys, given the 2019 additions to the TMA, brand owners now have a new tool with which to combat such high-handed attempts to squeeze and essentially defraud them. If they are reasonably quick, the first thing they can do, once a fraudulent application is advertised in Canada, is to oppose the application, based on the new ground of bad faith. Alternatively, if they fail to oppose and the mark actually gets registered by the bad guys, the real owner may attack the resulting registration, by relying on paragraph 18(1)(e) of the TMA, which now allows for cancellation of any registration that resulted from an application filed in bad faith.

In the case at issue, Mr. Meng filed the application at issue along with about 20 other applications reproducing famous marks relating to restaurants. Then, after securing actual registration, he contacted the legitimate Chinese business’ partners in Canada, and initiated what can only be described as a shakedown. Basically: you pay me or I sue you in Canada to stop your (legitimate) operations, because I now own a trademark registration for your mark -Ha ha ha [insert cartoon villain evil laugh here].

Well, too bad for this genius extortionist (alleged, should I say, right?), the TMA now allows us to cancel registrations like these, which is exactly what the real owner did, after refusing to pay the ransom, err, I mean the “price” which Mr. Meng asked for.

Given the portfolio of clearly fraudulent applications in his name and a request for 1.5 Millions dollars from this trademark pirate, the court had little difficulty finding bad faith here. Consequently, it ordered cancellation of the registration at issue.

As a result, we (at least) now have a first case of jurisprudence confirming that, yes, in clear cases of crass registration and extortion attempts, the new provisions of the TMA as to bad faith may be used to cancel a registration outright. As to other cases where facts will be less clear-cut, we’ll just have to see, including all eventual cases where pirates are not stupid enough to demand money outright and/or file tens of fraudulent applications in their own names.

For now, let’s just call it progress, and not dwell too much on the fact that this kind of situation now exists partly because the Canadian legislator, in its infinite wisdom, decided to do away with most rules relating to actual use, to file and register trademarks.

Québec Adopts its Charter of the French Language v. 3.0

The province of Québec recently sought to modernize its Charter of the French Language (the “Charter“), a piece of legislation many Quebecers still call “Bill 101” to this day. After partially amending this statute in 2019, the Québec government overhauled it earlier this month, by adopting Bill 96. Through this bill, Québec is expanding the obligations imposed on organizations and businesses, to use French whenever (and however) interacting with residents of the province.

Though I don’t want to get into all the details this morning, it seems worthwhile to provide you with an overview of the kinds of changes this new version of the Charter brings us, so here it is so as to provide you with an idea of what we’re now facing:

  • A general obligation that all organizations serve their clients in French, by providing them with any and all documents and documentation in French, as the case may be;
  • A major change of the rule as to the display of non-French trademarks, by doing away with the exception relating to the common law trademarks. From now on, only common law trademarks composed solely of French words will be tolerated under the Charter, while the rest of trademarks used in Québec will have to be actually registered to pass muster;
  • Reinforcement of the provisions relating to public display of trademarks (e.g. signage) by now requiring that the overall appearance provide substantially more space to French, as compared to other languages such as English (i.e. store fronts should show about twice as much content in French than other languages, not taking into account the trademark);
  • Introduction of a new rule stating that adhesion contracts must now be available in French as a condition of validity for the contracts that are actually entered into by Quebecers, I including but not limited to those for consumers;
  • Lowering from 50 employees to 25, the threshold above which organizations must adopt and apply a francization program;
  • Adoption of stricter rules as to job postings in French and when an organization may require that job applicants have language skills unrelated to French;
  • Addition of a new rule that all written documents and documentation provided by employers to their employees systematically be in French.

It also seems worthwhile to mention that Bill 96 also adds a very American twist to the Charter, by introducing a private right of action. Once in force, this will allow individuals to sue businesses that violate the Charter, so as to obtain either injunctions or (and yes, this is what’s going to have business owners pay attention) damages and punitive damages. As if often the case whenever such rights are introduced in a piece of legislation, class actions will be the first type of proceedings we can expect them to be used for.

I should mention, finally, that most changes outlined above will not come into effect for 3 years, so as to provide businesses with a transition period during which they can bring their organizations in line with the new rules. So, June 1st, 2025 is the deadline you should remember, to update all your practices and your way of doing things in Québec. Mark your calendars!

So, is your organization in-line with all this? Probably not. If it is not, then you now have less than 3 years to do your homework!