Category Archives: Jurisprudence

A Sign of the Globalizing of U.S. Trademark Law?

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The U.S. Supreme Court is set to hear next year an appeal against a recent decision from Texas holding that American trademark law may sometimes be made to apply to foreign sales of trademarks merchandise. Yup, you read this right.

As one will remember, trademark law (as with most laws) may apply within a given country that adopted or applies this law but will not generally apply once you cross the border. Though there are plenty of exceptions to this, one can still rely on the fact that, in the normal course of things, rules that apply IN a country will not apply as to what goes on OUTSIDE of that country. For example, owning a Canadian trademark registration is nice, but it won’t allow you to stop a Brazilian company from selling goods in South America, even if they are stamped with that same specific trademark.

A recent American case (Abitron Austria v. Hetronic International) involves partly doing away with this, as the court at issue concluded that it could impose liability as to trademark infringement (to the sweet tune of $90M, no less) by basing the calculation of damages on worldwide sales by the infringer. According to the court in this case, demonstration by the plaintiff that it had lost sale IN the U.S. justifies granting it substantial damages because, well, you know, the bad guys caused an American company some lost sales, so they SHOULD be liable under American law, right? (This is a Texas case, need I say more?)

This is of course NOT how things work normally, which is why most businesses making sales abroad (including the likes of Amazon) can operate without getting constantly being sued in the U.S. because something they sold somewhere reflected a trademark that was protected in the U.S. Causing confusion in the U.S. that results in actual lost sales in the U.S. is one thing, but being on the hook just because you had the gull of making foreign sales is another altogether.

This may become really uncomfortable for a lot of business operating outside the U.S. if that specific case is allowed to stand and ends-up catching on. Were something like this to represent a shift in the way American trademark law handles U.S. trademark infringement claims when international sales by an “infringer” are involved, a lot of businesses (including Canadian ones) may end-up in trouble. Hmm, should I stop telling my clients that U.S. trademark registrations have an effect only in the U.S.?

The U.S. Supreme Court will hear this case next year and, hopefully for Canadian businesses, reconsider how damages were assessed in this particular case. We’ll see.

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

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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.

Confirmation on Appeal of the Pyrrha Copyright Decision Involving Alleged Copying of Jewelry Design

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The Federal Court of Appeal (the “FCA”) recently confirmed a first instance decision from 2019 and relating the alleged copying of certain pieces of jewelry. The decision at issue is Pyrrha Design Inc. v. Plum and Posey Inc. (2022 FCA 7).

As one may remember, the original decision involved a dispute between competing designers of jewelry who both produced and sold certain pieces based on antique wax seals. Though there was unmistakable resemblances between the products at issue, the Federal Court held this did not amount to copying for the purposes of copyright law. Indeed, the concept of the jewelry at issue being the same, did not amount to actually copying works protected by copyright. Given the exact work by the original designer has not been copied (as opposed to the concept of such pieces, for example), no copyright infringement occurred in this case.

On appeal, the FCA validated the reasoning originally applied by the Federal Court, including how it analyzed the issue of the resemblance between the works at issue and whether there had been reproduction of a substantial portion of the original works. As held in the 2019 decision, the FCA decision confirms that, in order to ascertain whether there was infringement, it is appropriate to adopt  a two-step process, whereby one first determines whether there is substantial similarity between the works at issue, then ascertaining whether this resemblance actually relates to portions of the original works that were the fruit of the original artist’s actual contribution to the end result, meaning those that resulted from the exercise of his/her creativity, choices and judgment. In other words, though two works may look like one-another, if the overlap actually relates to pre-existing elements (in the public domain, as in this case) legally we should conclude there was no real copying and, thus, no infringement.

In so doing, the FCA confirmed it is preferable to adopt a holistic approach (by looking at the works at issue as a whole), by contrast to seeking to compare discreet elements/components side-by-side.

Here, one should note that the original artist’s treatment of the antique seals to turn them into jewelry was limited to slight changes to their borders and applying certain effects like oxidation and polishing. As such, these aspects were what his creative efforts resulted in, not the whole of the piece of jewelry, as such. Under such circumstances, the FCA confirms the scope of protection should be limited, as most of what constitutes the works at issue did not result from the exercise of the author’s skill and judgment.

This decision is also a good reminder that copyright law does not deal in concepts, methods or ideas. Having an idea to use antique wax seals as a basis for pieces of jewelry may be neat, but it is not something copyright law protects. The concrete expression of that idea, in designing actual pieces -yes, but not the idea itself. Though a competitor may have “stolen your idea”, it does not mean that we can necessarily do something about it, especially not through copyright law.