Uses and abuses of trademarks online

Uses and abuses  of trademarks online
Illustration: Matthew Billington
The tale of the British fishmonger may be one of the best examples. The way John McKeown tells the story — and you can almost hear him smiling over the phone — it sounds like some sort of fable for trademark lawyers everywhere.

There once was a fishmonger based in Bristol, and like almost all small businesses operating in the 21st century, the fishmonger had a web site. The web site listed the fishmonger’s name, address, some information about the fish, and even a way for those far from the U.K. to make inquiries. “People outside the country could make an order for the fish and receive it, but obviously it wouldn’t be fresh,” says McKeown, a lawyer with Goldman Sloan Nash & Haber LLP in Toronto. Did that mean, though, that the fishmonger was legally using its company trademark in those foreign countries?

If that notion sounds a little, well, fishy, it’s only one of the more apocryphal examples of recent cases that lawyers say are making it more difficult than ever to give clients good advice about how to properly register and maintain trademarks in an increasingly online — and increasingly globalized — world.

Traditionally, courts have interpreted s. 4 of the Trade-marks Act — which says a trademark must be “used or displayed in the performance and advertising of services” — to mean an organization must be physically operating within Canada. Now no one seems sure of anything. Two years ago, after The Sports Authority closed all its Canadian locations, a Federal Court decided if people here were using The Sports Authority web site to look up products or find U.S. stores, those services were enough to validate the use of its trademark in Canada. More recently, however, the owners of Las Vegas’ Bellagio Hotel and Casino lost the right to use its trademark for providing “hotel services,” just “promotional and guest relations” services, like booking a room. If you can’t walk into a Bellagio in Canada, the judge decided, you’re not really using hotel services.

In other words, the hard line about needing a brick-and-mortar presence that defined trademark use is becoming more blurred. An online presence can extend an organization’s reach across borders, but it may be up to individual judges to determine what “use” really means.

“We’ve had all kinds of discussions in our office,” says Cynthia Rowden, a partner with Bereskin & Parr LLP in Toronto. “If [a client] wants to operate a restaurant here and goes and finds the same restaurant name in Thailand, what does that mean for me in searching for a clearing? How do you merge that global Internet and its borderless business model with a system that requires national rights?”

According to McKeown, the contentions around trademark use in an online world have been percolating for some time. Last year, McKeown published a report and comparative chart about online trademark use as part of his work with the International Trademark Association’s Internet committee/online trademark use subcommittee. It showed relative consistency among 25 countries about what constituted trademark use via online channels, whether it involved advertising or the ability to purchase or order shipments of goods or services. An updated version of his report is due sometime next year. “It’s become a little more cohesive. There are fewer outlier countries,” he says, adding the law in Canada will probably remain unchanged for the foreseeable future. “Basically it seems to work, with the caveat that you can get into situations that are a little odd that require some analysis. That’s the way it’s always been.”

It’s true, the uncertainty predates the Internet era. Take the case in the late 1980s involving Saks Fifth Avenue, the iconic retail brand recently acquired by HBC. “They had some customers from Canada, people who travelled down to the U.S., shopped there, and then received catalogues through the mail,” says Neil Melliship, a partner with Clark Wilson LLP in Vancouver. “You could phone up a 1-800 number in the U.S. and get warranty service on a watch from Saks in the States, or you could mail in the product. There was a question at the time about whether they were using the mark in association of retail services.”

Although web sites allow customers to do a lot more than merely contact a company via toll-free numbers, some judicial decisions are looking even more broadly at use. A recent case, Inc. v. Hrdlicka, saw the Federal Court expunge a registration for the trademark VRBO that HomeAway had been using in Canada for online vacation rental booking services. Justice Roger Hughes said although the web site was hosted in the U.S., the service is available to Canadians, which therefore constitutes use. “He basically said something along the lines of, ‘the appearance of a trademark on a computer screen web site’ is use of a mark in Canada,” says Melliship. “Taken out of context, that can be a very broad statement that probably goes way too far in terms of what constitutes use.”

Alison Hayman, an IP lawyer with Cassels Brock & Blackwell LLP in Toronto, agrees. “That decision has created a large degree of uncertainty,” she says. “When a client comes to us and says, ‘Can I use this trademark in Canada?’ we can’t provide solid advice. . . . Trademark laws are national, but business has become global.”

This problem may only get worse, in part because what some view as improvements in technology are making it even harder to recognize a “local business” and one operating in a far-flung country. “There’s a tension in the cases and also among the decision-makers who haven’t really cottoned onto the idea that a web site has the capability of identifying the user’s location and catering it to who’s accessing the web site,” says Rowden.

For example, many online users are no longer just sitting at their desktops but looking up goods and services via their laptop, tablet, or mobile phone. Many companies operating online are using location-based software to serve up specific pages with Canadian pricing and availability. “In fact, they could be in Mongolia and you simply don’t know,” says Rowden.

The situations causing most of the controversy are typically being driven by existing trademark rights. In many of those cases, a foreign organization has obtained a Canadian trademark registration, but if it hasn’t been used within a three-year period, it can be subject to a s. 45 summary cancellation proceeding. “It’s a pretty easy process for another party to come in,” says Melliship. That means the onus is on trademark owners to be in a position to prove use even as the online world — and possibly their business model — evolves. “In my view, depending on trends we see over time, the courts and the opposition boards who handle use cases don’t want to take away rights,” says Rowden. “They’re trying to give rights or help owners keep rights that they have.”

Similarly, IP lawyers are trying to figure out the best way to protect their clients’ interests. “It might be easier if there were more direction in the legislation, but I think it would be difficult to do,” says McKeown, adding that if Canada were to sign onto the international trademark registration system known as the Madrid Protocol, “there would be more consistency. Canadian law would be more consistent with international law and other trademark regimes around the world, but Canada hasn’t really been on that particular agenda.”

Companies may also need to make protecting their IP more of a priority, particularly the growing number of technology startups that launch their businesses with international ambitions at the outset. “Registering a domain name is great, but the ability to get a unique domain name and draw a big fence around it is very difficult,” says Rowden. “You need to marshal all the intellectual property rights you can.”

Finally, the legal community may just have to wait until enough of the oddities have crept up that case law around online use of trademarks covers most of the possible scenarios. In the meantime, Melliship says lawyers need to improve the clarity with which they explain how trademarks are used in cyberspace. “As time goes on and technology changes, judges will become more comfortable with the online world when they’re making their submissions,” he says. “Judges are consumers too. They probably themselves book hotels. I think it will be just a case where, over time, they’ll use prior precedents to push the envelope.”

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