BRAND MGT. NWS. 2014-02

Intellectual Property Newsletters

May 2014

— McKeown's Brand Management in Canadian Law Newsletter

John McKeown

© Thomson Reuters Canada Limited or its Licensors (excluding individual court documents). All

rights reserved.

Contents

I. Headlines

I.1 Canadian Trademark Reform

I.2 All-important IP Audits

I.3 Declarations of Non-infringement

I.4 When is an Actor an Author?

I. — Headlines

I.1 — Canadian Trademark Reform

The Conservative Government has been increasing its efforts to amend the provisions of the Trade-

marks Act. Presumably this is being driven by the negotiation of the Comprehensive Economic and

Trade Agreement (CETA), the free trade agreement between Canada and the European Union.

Bill C-8

This Bill was first introduced in March 2013 as Bill C-56 but that Bill died on the order paper. It was

subsequently reintroduced as Bill C-8 in October 2013. The short title of the Bill is the Combating

Counterfeit Products Act1 since the first portion of the Bill deals with counterfeit products and border

protection measures. However, the Bill also includes a number of amendments to the Trade-marks

Act. The amendments include the following matters, among others:

• A new definition of a certification mark which would allow an applicant to apply on the basis

of proposed use;

• Deletion of the term "mark" and its replacement by the term "sign" which would be defined to

include "a word, a personal name, a design, a letter, a numeral, a colour, a figurative element,

a three-dimensional shape, a hologram, a moving image, a mode of packaging goods, a

sound, a scent, a taste, a texture and the positioning of a sign." This would significantly

broaden the scope of the scope of what could be registered as a trademark;

• An express right to deny the registration of a trademark if, in relation to the goods or services

in association with which it is used or proposed to be used, its features are dictated primarily

by a utilitarian function;

• During the examination of a pending application an examiner would be entitled to consider

the inherent distinctiveness of the applied for trademark, to request that evidence be filed to

show that the trademark is distinctive and to refuse the application if not satisfied the

trademark was distinctive;

• It would be possible to divide an application so that a divisional application could be

prosecuted separately;

• Opposition procedures would be amended to attempt to speed up the process;

• The Federal Court would have jurisdiction to expunge the registration of a trademark, on the

application of any interested person, if the court decided that the registration was likely to

unreasonably limit the development of any art or industry;

• The limitations on the assignment of associated trademarks contained in the Act would be

removed;

• The Registrar would have jurisdiction, on application by the registered owner of a trademark

made to make amendments to the register to a) merge divisional registrations of the

trademark that stem from the same original application, b) within six months after an entry in

the register is made, correct any error in the entry that is obvious from the documents relating

to the registered trademark.

The Five IP Treaties

On January 27, 2014 the Minister of Foreign Affairs tabled five IP treaties in the House of Commons:

• the Protocol Relating to the Madrid Agreement Concerning the International Registration of

Marks;

• the Singapore Treaty on the Law of Trademarks;

• the Nice Agreement Concerning the International Classification of Goods and Services for

the Purposes of the Registration of Marks;

• the Geneva Act of the Hague Agreement Concerning the International Registration of

Industrial Designs ("Hague"), and

• the Patent Law Treaty.

This is the first procedural step towards ratification and implementation of these treaties. However, it is

indicative of fairly significant changes to Canadian IP laws and a harmonization of those laws with the

laws of a considerable number of countries. The Treaties can only be ratified after the changes have

been made to the relevant legislation.

Bill C-31

The Government next introduced Bill C-31, to implement certain provisions of the budget tabled in

Parliament on February 11, 2014 and other measures.2 This Bill includes division 25 of Part 6 which

will amend the Trade-marks Act to in broad terms to, among other things:

• change the name of the Act to the Trademarks Act;

• make that Act consistent with the Singapore Treaty on the Law of Trademarks;

• add the authority to make regulations for carrying into effect the Protocol Relating to the

Madrid Agreement Concerning the International Registration of Marks;

• simplify the requirements for obtaining a filing date in relation to an application for the

registration of a trademark;

• eliminate the requirement to file a declaration of use of a trademark before registration;

• reduce of the term of registration of a trademark from 15 to 10 years; and

• adopt the classification system established by the Nice Agreement Concerning the

International Classification of Goods and Services for the Purposes of the Registration of

Marks.

Bill C-31 covers all of the amendments introduced in Bill C-8 and adds additional provisions. It is not

clear why the two Bills were introduced so closely in time to each other and why the potentially

significant changes of Bill C-31 would be included in an omnibus Bill implementing a budget. The

trademark provisions of each Bill are not completely consistent so we will have wait until the intentions

of the Government are clarified. There are 101 subsections in Bill C-31 which coordinate amendments

contained in Bill C-8.

Unfortunately, Bill C-31 contains provisions which will allow an applicant for a trademark to obtain a

registration without any requirement to specify a date of first use of the trademark in Canada. There

are significant concerns with respect to the potential negative impact that such a change will have on

the Canadian trademark system.

It seems there is a lengthy history in the part of the government in not agreeing to changes to Bills

implementing a budget, so we may be stuck with these changes.

I.2 — All-important IP Audits3

It is now well established that the most valuable assets of a twenty-first century business consist of its

intellectual property, including its trade marks, copyrights, patents or confidential information. An IP

audit helps in identifying, protecting and managing these assets.

In broad terms, an IP audit is conducted to identify the company's IP assets and ensure that the assets

are being appropriately protected, managed and valued. An audit is a useful management tool at any

time, but may be prompted by a significant financing, the recognition that IP assets are not sufficiently

protected, or a recognized management need to develop strategies that will maintain and improve the

company's market position.

In order to carry out an IP Audit, a systematic review is conducted of the IP assets owned, licensed or

used by a business. In many cases it will be found that some of those assets are not protected

appropriately and are also under-utilized. An assessment may also reveal whether a business's

current activities infringe the rights of third parties.

In some cases businesses lack the necessary resources to undertake a complete and exhaustive

audit. In such cases, the review can be more limited. But the need to do one cannot be safely ignored.

The IP Audit process can also determine the value of IP assets. Financial value provides a signal for

how to manage various IP assets in the future. As it is said, if you don't measure it, you can't manage

it.

Once the audit has been completed, a strategy can be developed to ensure that IP assets are

appropriately protected and utilized. For example, if the company's primary asset is confidential

information and know-how, then essential steps should be taken to ensure that such material is

protected within the company and in the hands of business associates, suppliers and customers.

Frequently, businesses lose sight of how important their intellectual property is, or they may never

have developed an appreciation of it in the first place. Trade marks are a case in point. For a company

selling its goods in association with a trade mark, the trade mark may be the key asset of the business.

It needs to be registered, used and monitored for potential infringements. Registration and continuous

monitoring give a company more freedom and ease in protecting and leveraging its trade marks. IP

Audits are more than just legal or financial exercises. In some instances business and marketplace

input concerning brand management or valuation of IP assets may be required. We are well positioned

to co-ordinate such input.

This is just a very brief overview of the IP Audit process. Every business should consider implementing

one.

I.3 — Declarations of Non-infringement

The Facts

The Parties

Thomas Pink limited ("Thomas Pink") is a part of the Louis Vuitton Moet Hennessy group ("LVMH").

Thomas Pink is an international luxury shirt brand. Thomas Pink sells shirts for men and women and

silk ties, tailoring, knitwear and accessories.

Thomas Pink's branded goods are sold in Canada and it owns a number of registered trades marks

the majority of which include the word "PINK" in a block-letter design format or in combination with

other words such as THOMAS PINK.

Victoria's Secret Stores Brand Management Inc. and Victoria's Secret (Canada) Corp. (collectively

"Victoria's Secret"), sell women's intimate and other apparel, beauty and personal products and

accessories in association with the trade mark VICTORIA'S SECRET in Canada.

Victoria's Secret owns a number of Canadian registered trade marks and applications, some of which

are for VICTORIA'S SECRET alone; some include the word PINK in addition to other words such as

VICTORIA'S SECRET. One of the applications is for the word PINK alone in a block-letter design for

use with a broad range of products; including personal care products and clothing - including shirts.

The examiner in that application issued a report taking the position that the applied for mark was

confusing with Thomas Pink's registered mark consisting of the word PINK.

The Proceedings

On May 10, 2013 Thomas Pink sued Victoria's Secret U.K. Limited in the United Kingdom, a company

related to Victoria's Secret Stores Brand Management, Inc. for alleged infringement of its PINK trade

marks. In its defense Victoria's Secret alleged that there had been no instances of confusion between

the Thomas Pink's business and the business of Victoria's Secret in either the United States of

America or Canada.

Shortly thereafter Victoria's Secret brought an action in Canada in the Federal Court for, among other

things:

(1) a declaration that Victoria's Secret's use of PINK, VICTORIA'S SECRET PINK and related

"PINK" trade marks and trade names in association with a specific list of wares and services

was not contrary to the Trade-marks Act, with regard to Thomas Pink's registered Canadian

trade marks, and

(2) an injunction restraining Thomas Pink from instituting, prosecuting or threatening any

action against Victoria's Secret or any of its affiliates with respect to Victoria's Secret's use of

the VICTORIA'S SECRET PINK marks.

Thomas Pink brought a motion for an order dismissing the action on the basis that Victoria's Secret did

not have standing to bring the action since they were not "interested persons" within the meaning of

the Trade-Marks Act.

The Decision4

The Act defines a "person interested" as including any person who is affected or reasonably

apprehends that he may be affected by any entry in the register. Section 53.2 of the Act, which was

the principal focus of the question of law in issue, provides that "any interested person" may seek an

order where it appears that there has been any act (which) has been done contrary to the Act.

The Judge who heard the motion decided that the provisions of the Act should be construed in a

manner which promotes access to it and that the threshold for determining whether a person is a

"person interested" was low. Such a person need only demonstrate a reasonable apprehension that a

commercial interest that it has, or may have, may be affected.

The Judge then concluded that Victoria's Secret had a "reasonable apprehension" that their Canadian

commercial activities may be challenged by Thomas Pink by litigation or otherwise, under the Act.

Comment

The approach taken in this case seems to be influenced by the U.S. practice were the parties rush to

bring the first proceeding. The benefits of such an approach include the following:

a) an opportunity to resolve infringement issues so the plaintiff can resume its normal

business activities;

b) a potentially favourable choice of venue or jurisdiction, and

c) control over the timing of the suit.

It remains to be seen how effective such a strategy will be in Canada where the vast majority of trade

mark litigation is dealt with in the Federal Court. In addition, there are some negative consequences of

this approach including the following:

a) bringing such an action almost certainly guarantees a counterclaim alleging infringement

will be filed by the defendant, and

b) the onus of proof will be on the plaintiff to show that confusion between the parties'

respective marks is not likely.

I.4 — When is an Actor an Author?

A recent U.S. case raises some interesting copyright issues concerning the rights of actors who

appear in a film.

The Facts

The plaintiff, an aspiring actress, answered a casting call for a low-budget amateur film. The working

title of the film was "Desert Warrior" which was to be an adventure film set in ancient Arabia. The writer

and producer cast the plaintiff in a minor role. She was given four pages of the script in which her

character appeared and paid approximately $500 for three-and-a-half days of filming. The producer did

not obtain any formal assignment of copyright or other applicable consent or waivers from the plaintiff.

The "Desert Warrior" never materialized and instead, the plaintiff's scene was used in an anti-Islamic

film titled the "Innocence of Muslims". The plaintiff first saw the "Innocence of Muslims" after it was

uploaded to YouTube.com. She discovered that her performance had been partially dubbed over so

that she appeared to be asking whether the Prophet Mohammed was a sexual deviant.

After the film aired on Egyptian television, there were protests that generated worldwide news

coverage. An Egyptian cleric issued afatwa, calling for the killing of everyone involved with the film and

the plaintiff soon began receiving death threats. She responded by taking a number of security

precautions and asking that Google remove the video from YouTube.

The Takedown

The plaintiff filed a series of takedown notices under the Digital Millennium Copyright Act. When

Google resisted the plaintiff applied for a temporary restraining order seeking removal of the film from

YouTube, claiming that the posting of the video infringed her copyright in her performance.

The District Court

The District Court refused to grant the order because the plaintiff failed to show that the requested

preliminary relief would prevent any alleged harm and was unlikely to succeed on the merits because

she had granted the producer an implied license to use her performance in the film.

The Appeal

The plaintiff appealed to the United States Court Of Appeals for the Ninth Circuit. The majority of the

court found that the plaintiff could assert a copyright interest only in the portion of "Innocence of

Muslims" that represented her individual creativity, but even if her contribution was relatively minor, it

was not de minimis. This was sufficient for purpose of seeking preliminary relief.5

The court said nothing in the Copyright Act suggests that a copyright interest in a creative contribution

to a work simply disappears because the contributor doesn't qualify as a joint author of the entire work.

Where the artistic contribution is fixed, the key question remains whether it's sufficiently creative to be

protectable.

Google argued that Garcia didn't make a protectable contribution to the film because the

writer/producer wrote the dialogue she spoke, managed all aspects of the production and later dubbed

over a portion of her scene. The court did not agree and said that an actor does far more than speak

words on a page; he must live his part inwardly, and then give to his experience an external

embodiment. The embodiment includes body language, facial expression and reactions to other actors

and elements of a scene. The court found that Garcia's performance satisfied the minimal degree of

creativity required under U.S. law to obtain copyright protection.

The Court found that the plaintiff granted the producer an implied license to use her contribution to the

film but the license was not unlimited. The plaintiff was told she would be acting in an adventure film

set in ancient Arabia. The "Innocence of Muslims" differs so radically from anything the plaintiff could

have imagined when she was cast that it could not possibly be authorized by any implied license she

granted to the producer.

Finally, the Court found that the plaintiff had shown irreparable harm and if there was any doubt about

it, it was best to err on the "side of life".

The Canadian Position

It is interesting to consider the facts of this case and how a similar case in Canada might be resolved.

There is no equivalent of theDigital Millennium Copyright Act in the sense of there being a takedown

procedure. In Canada takedowns are only possible if the website operator makes provision for

takedowns in the terms of use of the site.

The plaintiff's rights under the Canadian Copyright Act as an author are not clear. The Copyright

Act provides that a "dramatic work" includes any piece for recitation, or acting form of which is fixed in

writing or otherwise. As a result it can be argued that the plaintiff's contribution to the scene resulted in

her being an author of the dramatic work subsisting in her contribution to the scene.

To the extent that the plaintiff could be categorized as author, she would be entitled to moral rights.

Under the Copyright Act an author's right to the integrity of a work is infringed only if the work is, to the

prejudice of the owner or the reputation of the author, distorted or otherwise modified or used in

association with a cause. This right is substantially broader than similar rights available to an author in

the United States.

Comment

The decision of the Ninth Circuit in this case has attracted a significant amount of criticism in the U.S.

A similar result is possible in Canada but not certain. However, there is considerable merit in erring on

the "side of life".

Footnotes

1 As of April 2014 the Bill has been given second reading and the report stage has been concluded. Its

status can be tracked online:

http://www.parl.gc.ca/LEGISInfo/BillDetails.aspx?Language=E&=1&=6266835.

2 As of April 2014 the Bill has been given first and second reading. Its status can be tracked online:

http://www.parl.gc.ca/LegisInfo/BillDetails.aspx?Language=E&=1&=6483626.

3 This article was co-written by Dr. Ruth M. Corbin, Chair of CorbinPartners Inc. and Adjunct Professor

at Osgoode Hall Law School. CorbinPartners customizes IP Audit documents to industry, government

and education sectors, and develops benchmarks for assessing the marketplace value of IP assets.

4 Victoria's Secret Stores Brand Management Inc. v. Thomas Pink Ltd. (2014), 2014 CarswellNat 84,

2014 FC 76, 117 C.P.R. (4th) 83 (F.C.) .

5 Garcia vs. Google Inc et al., 9th U.S. Circuit Court of Appeals, No. 12-57302.