The case concerned transportation accused of violating Québec’ Charter of the French Language (R.S.Q., c. C-11). for using the slogan COAST TO COAST SERVICES and CLASS OF 200_ in association with transportation services.  While the defendant was able to establish use of the slogan as a trade-mark, it failed to establish that the words CLASS OF 200_   wares being used as a mark. Consequently, the defendant was found guilty of an offence under Division III “Public Signs and Posters and Commercial Advertising” of the Regulations Respecting the Language of Commerce and Business (R.R.Q., 1981. c. C-11. r. 9) and fined for using an English only sign on its delivery truck.

St-Germain Transport (1994) Inc. confirms that when doing business in the province of Québec, nothing prevents a company from using a unilingual trade-mark in any language other than French and not be considered contrary to the Charter of the French Language (R.S.Q., c. C-11). Thus, users of unregistered trade-marks, have the onus of proving their unilingual mark does indeed consist of a trade-mark that has been used in association with specific wares or services for a certain period of time.

However, a certificate of registration of a trade-mark under the Canadian Trade-marks Act, a federal statute, is prima facie evidence of a valid trade-mark.

Exporters often realize the importance of registering their trademarks abroad once it is too late, that is, once they are faced with counterfeiters or once they are accused of infringing the rights of others. The risks of doing so are high and the consequences may be extremely costly for a company’s entire business and export strategy.

The main function of a trademark is that of allowing a consumer to distinguish between similar products and services. Trademarks provide information about a product and about the origin of a product that may not be visible at first sight. When a consumer is satisfied with a given product it is in everybody’s (the consumer’s and the producer’s) best interest that the former may be able to identify it in order to purchase it again in the future. Trademark protection therefore enables successful exports to be easily identifiable aiding to the formation of loyal customers in foreign markets based on their trust in the products bearing certain trademarks.

Registering a trademark in foreign markets gives a company the exclusive right to commercialize its products in those markets. This not only provides a solid basis to stop counterfeiters but also ensures that the exporting company enjoys exclusivity over what may be one of its most valuable business assets. Registering a trademark abroad also provides the opportunity to license the trademark to others (often in conjunction with other IP rights) or may be the basis for a company’s franchising or merchandising strategy.

The International Registration of Marks

The international route of registration of marks refers to the Madrid system of international registration of marks, which is governed by two treaties: the Madrid Agreement Concerning the International Registration of Marks, which dates from 1891 and the Protocol Relating to the Madrid Agreement, which came into operation in 1996. The system, administered by the World Intellectual Property Organization (WIPO), provides the opportunity of ensuring the protection of marks in several countries by filing one single international application. It does not substitute national trademark rights and provides a legal bridge between the national and global market place, by facilitating the protection of foreign trademarks within the member country and of national trademarks abroad.

The objectives of the system are two-fold: first, to simplify the procedures with a view to protecting a mark with much lower costs and formalities; second, to facilitate the subsequent management of that protection, since an international registration is equivalent to a bundle of national registrations. There is only one registration to renew, and changes such as a change in ownership or in the name or address of the holder, can be recorded in the International Register through a single simple procedural step. As such, this global protection system, by providing cheaper and simpler procedures, makes the possibility of protecting trademarks in a large number of countries a reality for many enterprises, especially small and medium-sized enterprises, which otherwise would have never been able to afford protecting their marks internationally. In turn the system contributes to fairer competition and economic development, both at a national level and regionally and globally, which is also in the interests of SMEs.

At the end of 2003, some 412,000 international registrations were in force, which is equivalent to 4.9 million national registrations. During that year, more than 21,800 registrations were effected, containing 262,000 designations, an average of 12 designations per registration. Compared to previous years and despite a slight decrease in the number of new registrations, the total number of transactions under the Madrid system continued to increase for the sixth consecutive year.

The trend towards growing membership and interest in the Madrid system is continuing. In 2003, seven countries joined the system, bringing the overall number of member States to 76. The United States of America joined the Madrid Protocol on November 2, 2003. Albania, Cyprus, Iran (Islamic Republic of) and the Republic of Korea also acceded to this treaty that year, while Croatia, Namibia and Syria did so in January, April and May 2004, respectively.

The European Community announced its intention to accede to the Madrid Protocol following the adoption in 2003 by the Madrid Union Assembly of amendments to the Madrid Regulations in order to allow for the establishment of a link between the Community Trademarks and the Madrid Protocol. In the same year the Assembly of the Madrid Union also adopted Spanish as a working language of the Madrid Protocol, making the system more attractive, especially for Latin American countries, that are at present largely outside the system. Trademark holders are allowed to file international applications under the Protocol in Spanish as of April 1, 2004. These recent events and in particular the sharp expansion of the geographical coverage of the Madrid system are significantly increasing its usefulness and attractiveness, especially for SMEs.

It should be noted that for a trademark owner in a country, which is not a party to the International System, the only way to obtain protection abroad is to apply separately for registration in each of the countries concerned. This traditional method has become extremely cumbersome, time consuming and costly because it entails getting involved with different legal requirements (one can estimate that there are 200 jurisdictions throughout the world for registration of trademarks) and languages of the respective countries, paying fees in different currencies and engaging a local lawyer. All these formalities have also a cost, which goes well beyond the fees charged by the Offices. Agent fees, fees for the issuance of supporting documents, for their certified translations, etc. should also be taken into account. Moreover, obtaining a portfolio of national registrations is not the end of the process. If the company changes its name or address, or if there is a change of ownership of the mark, this should be recorded in each of the respective countries, involving once again different legal procedures, languages and fees. A large enterprise generally has resources for these purposes while for an SME, it will simply mean that trademark protection abroad is out of reach.

Using the Madrid system, SMEs can obtain protection of their marks in all member States (except the country of origin) with fewer formalities and far less expenditure: the applicant needs only to file a single international application, in one language, with one set of fees payable in one currency, resulting in a single international registration with only one renewal date to monitor. No supporting documents, translation or legalization of signature are required.

It goes without saying that reduced costs can enhance profits for SMEs and lead to considerable savings, which can encourage them to seek broader protection of their trademarks abroad, thereby facilitating and fostering the marketing of their branded products in foreign countries. In fact SMEs can perhaps benefit the most from advantages afforded by the Madrid system. It is not by chance that the 412,000 international trademarks registrations in force at the end of 2003 belonged to some 134,000 different owners; and that over 100,000 such owners are enterprises holding one or two international registrations.

This shows that the Madrid system offers an attractive route for SMEs to protect their marks. As to WIPO, its strategy on that matter has a clear and overreaching objective: to render every assistance to SMEs in all sectors to enhance their competitiveness and to ensure their penetration of foreign markets through a wider and more effective use the Madrid system.

For further information, please contact: intreg@wipo.int

William Shakespeare, Othello, Act 2, Scene 3

What if your name and goodwill were stolen tomorrow, what would your business be worth?  Not much!  A company must create and control its identity in the marketplace.  Your company may have the best product or service in the marketplace; however, if people do not know about your products or services, your market-share will not exist.  Ernest & Julio Gallo discovered it early, others such as Les Caves Jordan & Ste-Michelle Ltée have suffered the consequences.

What is a Trade-mark?

1. a trade-mark is any word, logo, design or symbol or a combination of words, logos, designs or symbols which identifies and distinguishes the sources of wares or services of one party from those of others in the marketplace

2. a trade-mark represents the goodwill, trust, loyalty, brand recognition of a product or service

3. unregistered trade-marks are recognized and protected at common law but receive additional protection by registration under the Trade-marks Act.

Examples of Trade-marks:

• a single word, i.e., “Coke “
• a combination of words, i.e.”President’s Choice “
• a design or symbol, i.e., the golden arches big “M ” for McDonalds
• a slogan, i.e., “Where do you want to go today ” of the Microsoft Corporation
• a package or container designs, i.e., “the Coca-Cola bottle”

In addition to investing in and nurturing their corporate images, your competitors no doubt understand the value of protecting them and are taking steps to protect them.

Why are Registered Trade-marks so important to Wineries?

Reputation is everything.  A registered trade-mark can represent one of the most valuable assets of a company.  It represents legal title to owning and protecting your corporate identity.  The president of Coca-Cola is quoted to have said that if it lost all its manufacturing plants, the company could survive and rebuild as long as it still had its trade-mark.  Thus, be it a small, medium or large enterprise, a trade-mark has tremendous value since it can:

• be monetized to reflect a company’s marketing investments
• reflect the value of the company’s brand equity
• be leveraged to obtain additional financing
• reflect quality and reliable standards that clients and potential clients trust
• be a source of revenue through licensing
• keep imitators at bay

A trade-mark distinguishes your company from others.  It also has future and present marketing value.

Trade name vs. Trade-mark

A trade name is the corporate or business name under which a company conducts business.  A trade name can also be used as a trade-mark if it is used to identify wares or services.  For instance, “The Xerox Company” is a business name, and “Xerox ” is a trade-mark.  Therefore, a trade name can only be registered under the Trade-marks Act if it is also used as a trade-mark to identify wares and services.

The registration of a trade name under applicable corporate law such as the Ontario Business Names Act, the Ontario Business Corporations Act or the Canada Business Corporations Act is for public information purposes and does not confer any exclusive trade-mark rights.  The owner of a trade name has common law rights to the trade name based upon entitlement to prevent others from “piggybacking” on the goodwill of a trade name. This, however, may prove to be an expensive endeavour.

Registered Trade-mark vs. Unregistered Trade-mark

By registering a trade-mark, a company obtains the exclusive right to use the mark across Canada for 15 years.  This exclusive right is a monopoly to use it and to prevent all others from doing so.  Upon payment of the government fee, it can be renewed every 15 years thereafter, even though it may be in use only in one particular area of the country. Unregistered or common law rights to a trade-mark extend only to the area in which the owner has established a reputation.  There is potential for long and expensive legal disputes over who has the right of use.  Registration, on the other hand, provides the opportunity for faster recourse in the case of trade-mark infringement.  It provides a presumption and evidence of ownership.  In addition, a company’s existing common law trade-mark rights may be limited if another party obtains registration in good faith and such registration is not contested within 5 years.

Once registration is obtained, it facilitates the registration of the same trade-mark in other countries that are members of the Paris Convention.  Given that wineries export, this is a strong advantage. Also within six months of filing in Canada, the filing date for the same trade-mark application can be used in another country.  No such international rights exist for trade names or unregistered trade-marks.

In addition to being offshore, it is of the utmost importance also that there are no officers or directors of the corporation residing in Canada. Otherwise they may well find themselves answering for the corporation’s actions as the case below demonstrates.

In Tele-Direct (Publications) Inc. v. Canadian Business Online., Sheldon Klimchuck and Canadian Yellow Pages on the Internet Inc. the defendant, a Canadian resident, controlled and used U.S. –the based corporations to infringe the plaintiff’s trade-marks in Canada.  Interim injunctions were issued against the  defendants, which were ignored.  In levying a fine against Mr. Sheldon Klimchuck, personally, the court found that it had jurisdiction over Mr. Sheldon.  Further, the court found that he had purposely and intentionally attempted to circumvent its orders issued against the corporate defendants.

A name today is as important as the bricks, bytes and mortar of a business. Names denote or evoke a certain meaning or cachet associated with a business. Once chosen, depending on the nature of the business, it may become a substantial asset, However, the improper selection or use of a name can attract unnecessary risks and liability to a business. As such, the utmost caution should be exercised in its selection and use.

Under the Ontario Business Names Act, a person operating under his/her own legal name is usually under no obligation to register it as a business name. An individual or partnership carrying on business under a name other than his/her own or that of the partners is required to register the name.

Once a sole proprietorship or partnership is registered, there are no particular legal designations or descriptions. One may indicate “Josephine P. Bloggs, sole proprietorship” or “Percival & Percival, a general partnership”. So what are the financial and legal consequences of non-compliance? Well, as an individual, you can expect a maximum fine of $2,000 and if a corporation, a fine of not more than $25,000. Also, non-compliance deprives the owner(s) of the unincorporated business of the ability to sue.

Corporations must also register. However, in the case of a corporation, mere registration is not sufficient, the Ontario Business Corporations Act requires that the words corporation, corp., incorporated, Inc., limited, ltd., or the French equivalent must always be present in the use of the business name. Why is this designation required?

The designation indicating that a business is incorporated is of paramount importance in terms of liability. In the classic case of Wolfe v. Moir, the individual owner of a corporation rather than the corporation that operated a roller-skating rink was held personally liable for injuries suffered by one of its clients.  Why? Principally, because the individual failed to have the proper designation advising the public that it was dealing with a corporation, a legal entity of limited liability. In this case, the roller-skating rink was known by the name of the individual and all advertising was done in the individual’s name.

So, if you want to be shielded from personal liability, it is not enough to incorporate. You must ensure that you describe your corporation as registered when dealing with the public.

Overview of a Trade-mark License

By definition, a license is a permission granted to a person to do what he/she may not be authorized to do, usually with geographical and temporal limitations.

1. Contractual Mechanism

Prior to contemplating licensing intellectual property, one of the foremost issues that should be addressed is the existence of a validly registered and subsisting trade-mark right in the target market. The trade-mark right must be able to stand by itself, independent of any contractual agreement. A license is not a right; rather it is only a contractual mechanism. This means that the owner of a trade-mark issued in Spain has no registered trade-mark rights to license in Canada, unless the owner has filed for a corresponding Canadian trade-mark. A potential licensor should therefore always attempt to secure the registration of its trade-mark prior to commencing licensing negotiations.

By licensing a trade-mark, the licensor seeks to expand the use and coverage of his/her asset. While undoubtedly great benefits can be reaped, it can also be equally perilous. The loss of distinctiveness of a trade-mark is the most fatal occurrence, and this may arise in several ways in a licensing agreement. To avoid this predicament, a careful analysis and compliance with section 50 of the Trade-marks Act R.S.C. 1985, c. T-13 (hereinafter referred to as TMA) is in order. Subsection 50(1) of the TMA provides:

For the purposes of this Act, if an entity is licensed by or with the authority of the owner of a trade-mark to use the trade-mark in a country and the owner has, under the licence, direct or indirect control of the character or quality of the wares or services, then the use, advertisement or display of the trade-mark in that country as or in a trade-mark, trade-name or otherwise by that entity has, and is deemed always to have had, the same effect as such a use, advertisement or display of the trade-mark in that country by the owner.

2. Written Agreement

First, it is prudent to have a written license agreement. The license agreement must provide express powers that allow the licensor to have direct or indirect control over the quality of the wares or services. Lack of control or improper management could result in the loss of a trade-mark’s distinctiveness.

The control provisions should be detailed, giving the licensor contractual rights to all that is necessary to maintain the quality and distinctiveness of the trade-mark, including for example, inspections, product pre-approvals, service guidelines and the treatment of customer complaints.

Second, the agreement should address cases of infringement and the duty of either party to protect the trade-mark. Again, this issue goes to the root of the trade-mark’s distinctiveness. Subsection 50(3) of the TMA provides:

Subject to any agreement subsisting between an owner of a trade-mark and a licensee of the trade-mark, the licensee may call on the owner to take proceedings for infringement thereof, and, if the owner refuses or neglects to do so within two months after being so called on, the licensee may institute proceedings for infringement in the licensee’s own name as if the licensee were the owner, making the owner a defendant.

This requires the licensor of trade-mark to protect its licensee against infringement by a third party. However, this obligation may be transferred to the licensee and if so, it should be stated in the license agreement.

3. Drafting Points

a) Scope of license & Subject matter

What intellectual property is being licensed?

• Description, registration numbers and issue dates
• Serial numbers and filing dates if applicable

b) Grant of license

• Intent of license
• Exclusive, sole, non exclusive

Exclusive

• All future licenses
• Excluding all licensees including present ones
• Excluding the licensor
• Can be made exclusive subject to rights of licensor

Sole

• Does not exclude licensor
• No other licensor will be granted to 3rd parties

Define

• • What rights are granted that exclude all others
• Rights reserved for licensor above
• Rights reserved for the licensor’s use and 3rd parties now and hereafter
• Limited
• Conditions

c) Duration of license

• Irrevocable
• Revocable (breach)
• Cancellation
• Renewal

d) Field of use

• Use, abuse and disposal limitation clause or Manner of use
• Use, reproduced, modify, make, manufacture, have made or manufactured, market, promote, sub-license, sell, distribute, transmit etc.
• Quality standards, quarterly reports, inspection, samples, pre-approval

e) Trade-mark Rights

• Acknowledgment of license and validity of trade-mark
• Registered and unregistered
• Agreement not to contest validity or assist others directly or indirectly
• Acknowledgment of ownership of trade-mark
• Maintenance/prosecution of trade-mark registration/application

f) Infringement

• Scope of admission
• Indemnity
• Compensation
• Insurance

g) Transfer of Rights

• Sub-licensing
• Consent required
• Control of sub-licensee
• Assumption agreement by licensee

h) Termination – Default – By Licensor

• Control quality
• Field and manner of use
• Failure to pay compensation
• Bankruptcy/material change

i) Licensee

• If trade-mark held invalid
• Failure to enforce trade-mark against 3rd party

j) Mutual termination

k) Post termination clauses

l) Rights of License

• Sale of inventory products
• Limitations (marketing)

m) Rights of Licensor

• Buy-back of licensee products (price formula)
• Audit and inspection of records
• Payment of Royalty

n) Governing Law

o) Insurance and indemnification

p) Responsibility for liability insurance

q) 3rd party infringement

r) Product liability

s) Warranties

• Ownership
• Authority to act
• Right to license
• Validity of trade-mark
• Non-infringing, or confusing trade-marks
• Distinctiveness
• Continuous use

Background

The judgement creditor is UMBRO International, Inc., and owner of an internationally known trademark UMBRO. The judgment debtor, a Canadian corporation and purveyor of pornographic material over the Internet, registered the domain name “umbro.com”.

The judgment creditor demanded USD$50,000.00 payable to an Internet charity and a free, unlimited supply of Umbro products to the owner of the judgement debtor in exchange for the transfer of the domain name umbro.com.

Umbro sued and obtained judgement and an award of attorney’s fees totalling USD$23,490 which it wished to collect. Umbro proceeded to obtain a writ of fi fa and also commenced garnishment proceedings to force a judicial sale of the Judgement debtor’s other domain names. NSI filed a response that it did not hold any money or garnishable property of the judgement debtor.

Law

The questions of law that follow, considered under Virginia Statute, were whether:

1.             a domain name is the kind of property subject to garnishment;

2.             specifically, the judgement debtor has a possessory interest in the domain name as an intangible property.

In response to the first question, the Virginia statute clearly states that a writ of fi fa is a lien on all the intangible property of the judgement debtor.   With respect to the second question, NSI argued that a writ of fi fa does not apply to domain names because its registration agreement was dependant on unperformed future and continuing conditions.  The court found that NSI, by its dispute policy, undertook to abide by any order and therefore its argument was immaterial. Furthermore, the court, true to fundamental property principles, held that “property can be garnished that may be subject to other liens that affect the value of the property”.

Therefore, it would be entirely possible for an Ontario court to rule with respect to a domain name garnished under the Ontario Personal Property Security Act (PPSA) or under a general security agreement. As a chose in action, an intangible form of personal property, a domain name may be subject to a security interest under, for example, the PPSA or under a general security agreement. The PPSA provides that upon default, the secured party may enforce a security interest, take possession by any method permitted by law, take possession and dispose of the collateral.

Briefly, the Defendant, a British Columbia resident, allegedly published defamatory information about the Plaintiff, a Nevada corporation domiciled in British Columbia with a research facility in Texas.

The Plaintiff sued the Defendant in Texas for defamation, obtained judgement and sought to enforce it in British Columbia.

In reversing the lower court’s decision that allowed the summary judgement application, the B.C. Court of Appeal considered the standard of review of a foreign judgement set by the Supreme Court of Canada in DeSavoye v. Morguard Investments Limited, [1990] 3 S.C.R. 1077.

The B.C. Court of Appeal had to decide whether there was a real and substantial connection between Texas and the wrongdoing that allegedly took place in that state, and a reasonable balance between the rights of the parties.

The Court considered the three categories of Internet activity in which American courts would assume personal jurisdiction as set out by Zippo Manufacturing Company v. Zippo DotCom, Inc.  W.D. Pa, 1997.  The first category includes instances where personal jurisdiction is found because the defendants entered “into contracts with residents of foreign jurisdiction that involve the knowing and repeated transmission of computer files over the Internet”.  The second category, a middle ground, deals with situations “where a user can exchange information with the host computer. In these cases, the exercise of jurisdiction is determined by examining the level of interactivity and commercial nature of the exchange of information with the host computer”.  The third category, at the opposite end of the scale, where a court would not exercise personal jurisdiction, deals with passive web sites, i.e. sites that merely provide information.

The court based its analysis on DeSavoye and Zippo, reasoning that the posting of a message on an out-of-state bulletin board consisted of a “mere transitory, passive presence in cyberspace”, and therefore does not constitute a real and substantial connection.

Furthermore, the Internet is a global computer network with users in multiple jurisdictions, having over 30 million users.  It is reported that the number of web pages doubles every 100 days.  Therefore, it is all the more important to “protect [...] defendants from being forced to answer for their actions in a foreign jurisdiction based on “random, fortuitous or attenuated” contacts .