Category Archives: Intellectual Property

Piece of Cake! Vachon Wins HOSTESS Infringement Lawsuit for Bread

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The Federal Court recently rendered a decision that seems worth discussing as a to a trademark infringement matter involving the (relatively) well known Québec bakery Vachon. The decision at issue, Boulangerie Vachon Inc. v. Racioppo (2021 FC 308) centers primarily on a matter of trademark confusion between a business known for its cakes, pies and the like, and a new comer on the Canadian market that elected to go with the HOSTESS trademark to sell bread, knowing Vachon owned the mark for other types of products.

The piece of litigation at issue started when the owner of the defendant corporations was given the impression that Vachon (and its predecessor in title), notwithstanding owning the HOSTESS trademark in Canada, wasn’t interested in bread products. Seeing this, the defendant started selling bread in Canada, which it did from 2016-2017 to 2019, only to realize too late that Vachon had in fact started to sell bread before his business did. See where this is headed?

Yup, you read this right: someone saw the mark and who it belonged to and decided that since Vachon didn’t (then) sell bread, it was fair game to do so through his own company. After all, there’s no link between bread and cakes right? Yeah, completely different things. I’m guessing this guy did not obtain advice from counsel (or an agent) before making his decision.

The case is a pretty good example of good infringement proceedings, in a case where the marks are essentially the same (notwithstanding different logos) and the goods are definitely in the same area, including by being sold in the same types of stores, generally in proximity on store shelves. Not too surprisingly, the judges ends-up siding with Vachon and agreeing that, under circumstances such as these, confusion is more than likely. Yeah, HOSTESS for bread vs. HOSTESS for cakes, cookies, muffins, etc. Who could have foreseen this coming?

One thing that seems worth mentioning as this judgment, is the court agreeing that not only was this a case of infringement but also one of goodwill depreciation, under Section 22 of the Trademarks Act. As you may know, though this is often tried by plaintiffs, it is not something Canadian courts have traditionally been too fond of granting. This time, however, the Federal Court judge agreed that use of the HOSTESS trademark on bread products from a source other than VACHON did not just infringe the rights of the mark owner but that it also depreciated the value and the distinctive character of the original mark. This is encouraging for mark owners in Canada.

That said, I should point out the end result is a little lackluster, as the Federal Court awards an injunction (of course) and… $10,000 in nominal damages. Given the fairly limited scope of the infringing activities (something like $70,000 in sales, and profits around $5,000), the court felt this was reasonable amount, under the circumstances.

Finally, one other point is somewhat unusual with this case, with the plaintiff attempting to obtain that the companies’ principal be personally held liable, something Canadian courts are often reluctant to do. Not too surprisingly, the judge held this case did not justify finding Mr. Racioppo personally liable. Though Vachon tried to argue the individual was clearly to blame for his recklessness (we knew of VACHON’s trademark full well), in the end the court elected to consider the principal’s behavior did not necessarily reach the level of culpable behavior that would justify holding him liable. For the court, one could look at this fact-pattern as a simple case of an ordinary course business decision that wasn’t entirely devoid of rational basis, if not for Mr. Racioppo’s mistaken belief that a competitor not making a specific type of product (i.e. bread) made it fair game for him and his business.

So, the lesson here, I guess, is that you shouldn’t assume that the listing of products and services in a registration are all there is to it. Sure, looking at the register is useful, but one should always remember that confusion takes much more than just the product listing into consideration.

Québec Looking to Curtail English (and Other Languages) Trademarks Through Revised French Charter

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The Québec government recently tabled a bill, called Bill 69, that seeks to amend several statutes, including the province’s Charter of the French Language, so as to better protect the French language. This bill seeks to consolidate existing rules, so as to reinforce the idea that French is the sole official language of the province of Québec, including in principle in how business is conducted.

Interestingly, as to I.P., the revised Charter would do away with an exception that legislators had inserted in the original statute, namely that trademark were generally exempted from complying with normal rules, including on store signs. Indeed, up to now, the Charter accepted that trademarks, whether registered or unregistered, were essentially outside the scope of what could be regulated by this provincial statute. As such, the OQLF could hardly enforce rules meant to force businesses to use and display French (e.g. on store signage, etc.), whenever trademarks were involved. This lead many businesses to adopt and use English-based trademarks, something that Québec courts eventually confirmed as totally acceptable under the existing Charter of the French Language.

This provides context to Bill 69’s introduction, as the Québec government is clearly now attempting to slam the door shut on that trademarks exception, to the fullest extent (legally) possible. To do, the revised version of the French Charter would essentially restrict what are considered trademarks for purposes of the exception explained above. If/when the bill goes through, the only trademarks that would remain considered protected from the obligation of being shown in French, are marks that have been duly registered, period. In effect, this would do away with trademarks displayed by businesses that did not bother or did not manage to register in Canada.

Québec cannot forbid non-French trademarks (because of the Canadian Constitution), but it can try and restrict what it will consider a trademark for the purposes of its language laws, which is exactly what this is about.

Setting aside the issue of whether legally a province may do something like this, businesses may want to start preparing for the proposed changes to the French Charter, by simply registering their marks, assuming they haven’t done so already. Though large companies will usually have done so, a lot of small and medium sized businesses do not bother registering their marks, preferring to fall back on common law rights. If those marks are in a language other than French, this may soon become a problem.

Fortunately for SMEs, registering a mark in Canada is relatively inexpensive, as compared to other jurisdictions. Businesses should however take note that typical delays are now around 3 years to register a mark in Canada. Given that the French Charter’s new provisions on trademarks will come into force 3 years after adoption of the bill, businesses the trademarks of which have not already been registered may want to get on it.

Mind you, Bill 69 has not yet been formally adopted but with a majority government in Québec at the moment, it seems to make little doubt that the bill will be adopted at some point.

Reuse of Clips from a CBC Broadcast, in Online Ads, Held Fair Dealing

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The Federal Court (la «F.C.») recently gave us a copyright decision worth mentioning in Canadian Broadcasting Corporation v. Conservative Party of Canada (2021 FC 425), a judgment that provides us with a rare interpretation and application of the exception relating to criticism.

As one may remember, the Copyright Act (the “Act”) contains a series of exceptions allowing reuse of copyrighted content to certain ends that fall under the category of what the act consider “Fair Dealing”. One of those (described in Section 29.1 of the Act) allows using works for purposes of criticism, a specific exception that the F.C. had the opportunity to interpret in the recent CBC case.

This decision stems from a lawsuit by the CBC against the Conservative Party of Canada (the “CPP”) further to the use of video segments from a political debate (originally aired by the CBC) in online advertising run in 2019, without permission from the CBC. According to the CPP, given that the goal of the political ads at issue was to criticize the Prime Minister, the use of portions of CBC broadcasts should be protected as fair dealing. Contrary to the usual attempt to invoke the exception at issue, the criticism in this case was not a criticism of the work being copied (the broadcast itself) but rather criticism of an individual shown on-screen and the ideas and views he expressed. So, the question stood: could such criticism qualify under Section 29.1 of the Act so as to protect the CPP from an infringement claim?

Upon examining the issue, the F.C. had to agree that the goal of the ads at issue was clearly to criticize the Prime-Minister and his views and decisions. Given this, the F.C. concludes we are indeed in a situation where copyrighted materials was used for purposes of criticism. Given the treatment of fair dealing by the Supreme Court of Canada (and others) over the past few years, such exceptions should be interpreted broadly, so as to balance adequately the rights of creators with those of users.

According to the F.C., the exception relating to criticism may of course extend to the works that are reproduced but may also apply in other cases, including criticism of ideas, values and anything that has been expressed in the works that were reused. In the case at hand, portions of political debates during which the Prime-Minister expressed certain views could thus be reused for purposes of criticizing him, his ideas and his handling of certain issues. At law, this was clearly criticism.

Doing so, the F.C. sets aside a common interpretation of Section 29.1 of the Act, namely that this exception was included in the Act to solely allow criticizing works, including for example by literary critics. On the contrary, according to the F.C., nothing in this provision of the Act restricts what the criticism at issue can relate to. The article at issue simply allows reuse for purposes of criticism, without specifying what the criticism must relate to.

After holding this was indeed a case of reuse for purposes of criticism, the court then applied the usual test to determine whether reuse of the materials at issue in this case has been “fair”, agreeing it has been. Given the fair dealing defense applied, the F.C. rejected the infringement proceedings against the C.P.C.

The F.C. decision at issue represents yet one more example of a trend, during the last few years, as courts gradually broaden the meaning of fair dealing exceptions under Canadian copyright law.