IP And Advertising: Protecting Your Organization From Litigation

Sharon Groom is an Intellectual Property Partner at McMillan Binch Mendelsohn LLP and is Co- Chair of the Marketing and Advertising Group. Sharon acknowledges the assistance of Jeffrey Levine, student-at-law, in the preparation of this paper.

1. Copyright and Trade-mark Basics

   Copyright

   i. The Nature of Copyright

   Copyright in Canada is a right granted solely by statute. Section 3(1) of the Copyright Act provides in part that copyright means the sole right to produce, reproduce, perform or publish a work or any substantial part of the work.1 The Copyright Act recognizes numerous types of "works" such as an "artistic work", "dramatic work", "literary work" or a "musical work".

   ii. Ownership and Term of Copyright Protection

   In general, the author of a work is the first owner of the copyright in that work.2 In the case of an employee authoring a work within the scope of employment, it is the employer who is the first owner of the copyright.3 Generally, a copyright lasts for the life of the author plus 50 years.4

   iii. Infringement of Copyright

   It is generally an infringement of a copyright to do anything that the Copyright Act provides the owner of the copyright with the sole right to do.5 In other words, without consent of the owner, a person who does not own the copyright in a work cannot, for example, produce or reproduce the work.

   However, there are exceptions to the general infringement rule. Conduct that has no material adverse commercial impact on the copyright holder may be permitted under one of three fair dealing exceptions. For example, fair dealing for the purpose of research or private study does not infringe copyright.6 Furthermore, fair dealing for the purpose of criticism or review does not infringe copyright provided proper credit is given to the source.7

   Note that unlike in the United States, Canada does not provide a copyright exception for parody. In the famous Michelin Man case,8 in which the CAW handed out leaflets showing the Michelin Man stomping on workers, the Federal Court held that criticism was not synonymous with parody and that parody was not an exception to acts of copyright infringement.

   b. Trade-mark

   i. The Nature of a Trade-mark

   A trade-mark is a word, symbol, design, or combination of these, used to distinguish the products or services of one person or organization from those of others in the market place. Three basic categories of trade-marks are: (i) ordinary marks, (ii) certification marks, and (iii) a distinguishing guise.9

   Ordinary marks are words or symbols that distinguish the products or services of a specific firm or individual. Certification marks identify that a product or service meets a set of defined standards. A distinguishing guise identifies a unique shape of a product or its package.

   Coca-Cola Ltd., for example, uses all three types of trade-marks for its products. The familiar Coca- Cola ordinary mark distinguishes its products from the products and services of others. The PAREVE MK certification mark identifies the Coca-Cola product as kosher. Finally, the distinguishing guise of the curvy Coke bottle is unique to Coke products and helps distinguish its products from other products.

   ii. Making a Strong Mark

   The purpose of a trade-mark is to distinguish the products and services provided by one person or organization from the products and services of others. An essential characteristic of a trade-mark is its distinctiveness. The more distinctive a trade-mark, the easier it is to distinguish that product or service from others. In addition, as distinctiveness increases, the protection afforded to the trademark increases.

   iii Scope of a Trade-mark

   Trade-mark rights arise both at common law and under the Trade-marks Act. At common law, the rights of a trade-mark holder are limited to the geographic area in Canada where the trade-mark is used or made known. In contrast, a trade-mark registered under the Trade-marks Act is effective across Canada even if the mark's use is limited to a small geographic area. As such, registration under the Trade-marks Act provides superior protection for the owner of a trade-mark.

   Registering a trade-mark under the Trade-marks Act requires an application to be made to the Trademarks Office of the Canadian Intellectual Property Office. The application may be made by either the applicant or by a trade-mark agent on behalf of the applicant. Once registered, the registration is effective for a term of fifteen years. This term may be extended indefinitely for further fifteen-year terms upon payment of renewal fees.

   iv Entitlements of Trade-mark Holder

   Registration of a trade-mark respecting any products or services provides the trade-mark owner with three basic rights. First, the trade-mark owner has the exclusive right to use the trade-mark throughout Canada in relation to those products or services. Second, the trade-mark owner is entitled not to have someone else use a confusingly similar trade-mark in selling, distributing, or advertising other products or services. The use of a trade-mark or trade-name is confusing with another trademark if concurrent use would likely lead to interference with the manufacture, sale, lease, hire, or performance of the products or services, regardless of whether the products or services are of the same general class.10 Third, a registered trade-mark owner is entitled to be free from having another person use the trade-mark in a manner that is likely to have the effect of depreciating the value of the goodwill attached to the trade-mark.11

2. Canadian Jurisprudence Update

   a. Copyright

   Very few significant decisions were handed down this past year in the Canadian world of copyright. However, the advertising and marketing community should certainly take note of the Supreme Court of Canada's decision in Euro-Excellence Inc. v. Kraft Canada Inc.12 That case dealt with the sale of grey market Toblerone bars in Canada. Euro-Excellence was making legitimate purchases of the famous triangular bars overseas, then distributing the product in Canada...