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.

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

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.

A Good Little Example of the Importance of Respecting the Moral Rights of Creators, in Canada, Yes Even After Securing a License as to a Work

A Québec lower court recently provided us with a good (albeit modest) example of the problem that moral rights can be for Canadian businesses, when handling third-party creations such a photographs, without first obtaining an adequate waiver from creators. The case at issue was: Lavigne (Valmedia) v. 9061-6632 Québec inc. (2021 QCCQ 13322).

This case stemmed from a relationship between a Québec publication called “Journal Accès” and a free-lance photographer who provided certain of his pictures for reuse in the publication at issue. This case was not concerned with whether the publication could publish the 3 photographs at issue, as the creator had consented to the publishing. The issue rather involved how the photographs were presented, upon actual publication, namely after making certain changes to the photos at issues and, worse yet, without acknowledging who the author was.

For the author, the problems in this case included the removal of his logo from the photos, Access’ failure to credit him for taking the 3 pictures at issue, in addition to the publication making unauthorized changes to the photographs, included adjusting colors and cropping them.

Moral rights are a idiosyncrasy of Canadian copyright law, though technically distinct from “copyrights” per se. In effect, “moral rights” generally allow authors to insist that third parties which handle their creations not modify them to any degree one might consider would affect their integrity in a manner that may be prejudicial to the author. Moral rights also allow creators to insist on being acknowledged as the author, whenever a work is used, unless the parties agreed otherwise.

In the case at issue, the photograph had agreed to the publication of his photos but had NOT agreed to the modification of these photos, nor that they could be published without acknowledging he was the author. This justified the photographer taking Accès to court (in small claims court, but still), to obtain redress further to the alleged violation of his moral rights.

At the end of the day, the judgement does confirm that there really was an issue with moral rights in this case, albeit only as to the issue of identifying the photographer as the creator of the photos at issue, and nothing else. Indeed, thought Accès did modify the photographs to a certain extent, including correcting colors and cropping the images, the judge essentially came to the conclusion that such changes were minor enough to be unlikely to have a real effect on the photographer’s reputation, notwithstanding whatever else he may be claiming.

That said, for the judge, the omission of the photographer’s logo, as originally included on the 3 photographs at issue, coupled with the omission of his name next to the photographs pretty clearly constituted a violation of this moral rights. That being the case, one could apply the rules relating to statutory damages, to come up with a “damages” figure, with or without actual evidence of prejudice from the plaintiff.

In practice, this lead the court to award very modest damages ($400.00). The decision is nevertheless worth mentioning, if only as a example of the continued importance of keeping moral rights in mind, whenever dealing with the use of Canadian works. Even when an organization has first obtained a license (or even an assignment), the issue of moral rights may rear its ugly head later on, unless a full waiver was obtained. Failing that, the full recourses contained in the Copyright Act may be brought to bear for things like modifications or even the simple failure to acknowledge who the original author was.