Canadian Internet Law Update - 2014

This paper summarizes selected developments in Canadian Internet law during 2014. This paper is an overview of significant developments rather than an exhaustive review. Reference to current legislation, regulatory policies and guidelines, and case law is essential for anyone addressing these issues in practice.

A. Intellectual Property - Trademarks

1. Trademark Use on Websites

   Unicast SA v. South Asian Broadcasting Corp. Inc., 2014 FC 295, involved an application to expunge the respondent's RED FM trademark registered for use in association with the operation of a radio station and broadcasting services on the basis that the applicant was a prior user in Canada of the ROUGE FM trademark for similar services. The applicant operated a Swiss radio station called ROUGE FM, and streamed its radio broadcast on its ROUGE FM website. Canada became ROUGE FM's third largest audience. The applicant sought to expunge the respondent's RED FM trademark so that the applicant could register its own ROUGE FM trademark in association with Internet radio services and broadcasting services. The applicant, relying on a broad interpretation of HomeAway.com Inc. v. Hrdlicka, 2012 FC 1467, asserted that it had used its ROUGE FM trademark in Canada in association with broadcasting and Internet radio services because the trademark was displayed on the applicant's website accessible to Canadians. The court rejected the applicant's interpretation of the HomeAway decision, and held that website use of a trademark for services was not valid use (within the meaning of Trade-marks Act s. 4(2)) in Canada unless the services were actually provided to Canadians or performed in Canada. The court held that the applicant had failed to prove that it had used its ROUGE FM trademark in association with the provision of Internet radio services in Canada, because the evidence did not establish that those services had been used by Canadians before the respondent began using its RED FM trademark. The court held that the applicant had failed to prove that it had used its ROUGE FM in association with broadcasting services in Canada, as that concept is defined by the relevant CRTC order regarding new media broadcasting, because there was no nexus between the applicant and Canada - the applicant's servers were not located in Canada, the applicant did not have a physical presence in Canada, the applicant did not solicit or have advertisers in Canada and the applicant was not actively targeting Canadian audiences. Further, the court held that the applicant had failed to prove its broadcasting listenership in Canada prior to the date when the respondent began using its RED FM trademark. For those reasons, the court dismissed the expungement application.

2. Ownership of Domain Names

   Mold.ca Inc. v. Moldservices.ca Inc. (10 January 2014, Ont. S.C.J.), involved a dispute over ownership of domain names used in connection with a business operated through various companies by two principals, Dalrymple and Sullivan. The domain names were purchased for use by the business with funds provided by Dalrymple but were registered in the name of Sullivan. When the business relationship between the principals fractured, Sullivan used the domain names and related websites for his new business and transferred ownership of the domain names to a third party, who later transferred the domain names back to Sullivan. The corporate plaintiff applied for judgment regarding ownership of the domain names. The court held that the domain names were the property of the corporate plaintiff, reasoning that "the issue is simply a matter of property law". The court ordered Sullivan to transfer the domain names to the corporate plaintiff and give the plaintiffs administrative control over the domain names.

3. Alleged Infringing Domain Names

   Insurance Corp. of British Columbia v. Stainton Ventures Ltd., 2014 BCCA 296 (leave to appeal refused (2014) S.C.C.A. No. 413), involved claims that the defendant's commercial website called ICBCadvice.com and the associated domain names icbcadvice.ca and icbcadvice.com infringed the plaintiff's official mark ICBC and constituted passing off. The ICBCadvice.com website was a marketing tool for a specific law practice and provided free advice on dealing with the plaintiff. It was readily apparent from the website content, including prominent disclaimers, that the website was not affiliated with the plaintiff. The trial judge dismissed the plaintiff's claims regarding the website and domain names (2012 BCSC 608). The Court of Appeal dismissed the plaintiff's appeal. The court of appeal rejected the plaintiff's argument that the domain names would cause consumers to believe that the website was affiliated with the plaintiff. The court reasoned that the plaintiff's argument failed to give the relevant consumer credit for even the most basic understanding of the function of a domain name. The court noted that Internet users understand that it is necessary to view a website to determine whose site it is, and that a domain name that contains the name of a business will not necessarily be affiliated with or endorsed by the business, and may instead be the subject matter of the website or entirely unrelated to the business. The court cautioned that "one must not proceed on the assumption that average Internet users are completely devoid of intelligence or of normal powers of recollections or are uninformed as to what goes on around them" (para. 37). The court concluded that the domain names would not cause Internet users to mistakenly believe that the website was provided or endorsed by the plaintiff, but rather the use of the ICBC acronym would cause Internet users familiar with the plaintiff to "believe no more than that the website likely had something to do with ICBC" (para. 43).

4. Passing Off - Confusing Domain Name

   Dentec Safety Specialists Inc. v. Degil Safety Products (1989) Inc., 2014 ONSC 2449, involved a passing off dispute between competitors relating to the defendant's unauthorized registration and use of the domain name dentecsafety.ca to redirect Internet traffic to the defendant's competing degilsafety.com website. The trial court held that the plaintiff had satisfied the elements of a passing off claim (goodwill, deception due to misrepresentation and actual or potential damage) and awarded the plaintiff $10,000 compensatory damages but no punitive damages. Both parties appealed. The appeal court affirmed the trial court's finding that the plaintiff had proven passing off, because the evidence supported a finding of both actual and potential damage resulting from redirected Internet traffic. The appeal court also affirmed the trial court's award of $10,000 compensatory damages, even though the plaintiff was not able to prove actual loss, on the basis that an award of $10,000 "general" damages would have been justified (but at the high end of the range of reasonable damages). The appeal court also affirmed the trial court's decision to not award punitive damages.

5. Trademark Infringement - Confusing Domain Name

   Source Media Group Corp. v. Black Press Group Ltd., 2014 FC 1014, involved a dispute over the defendants' unauthorized use of the NEW HOME LIVING trademark and the domain name newhomelivingbc.com for a Chinese-language lifestyle magazine and related website, which the plaintiff claimed infringed the plaintiff's NEW HOME LIVING trademark registered for use in association with a real estate magazine and the plaintiff's related domain name newhomelivingonline.com. After the defendants received a cease and desist letter from the plaintiff's lawyer, the defendants stopped using the NEW HOME LIVING trademark for their magazine but continued for an additional year to use the newhomelivingbc.com domain name for their website. The court held that the newhomelivingbc.com domain name was confusingly similar to the plaintiff's NEW HOME LIVING trademark, because the addition of "bc" to the domain name did not make it distinct from the trademark but rather added to the confusion with the trademark. The court held that the defendants infringed the plaintiff's trademark and passed off their publication, in both print and online form, as being associated with or connected to the plaintiff's trademark. The plaintiff did not present any evidence of actual damage or loss. The court awarded the plaintiff $15,000 general damages and costs.

   B. Intellectual Property - Copyright

1. Disclosure of Copyright Infringers' Identities

   Voltage Pictures LLC v. John Doe, 2014 FC 161, involved claims of copyright infringement for the unauthorized downloading of copyright-protected commercial movies over a peer-to-peer network using BitTorrent software. The plaintiff applied for an order (commonly referred to as a "Norwich Order") that a non-party Internet service provider ("ISP") disclose the names and addresses of 2,000 subscribers (identified by their IP address) who downloaded the plaintiff's movies, so that the plaintiff could pursue litigation against them. The court held that a Norwich Order could be granted if the applicant proved the following: (1) the applicant has a bona fide case; (2) the non-party has information on an issue in the proceeding; (3) the order is the only reasonable means of obtaining the information; (4) fairness requires the information be provided before trial; and (5) the order will not cause undue delay, inconvenience or expense to the third party or other persons. The court held that the plaintiff's copyright interests outweighed the subscribers' privacy interests. The court reasoned that privacy considerations should not be a shield for wrongdoing and must yield to an injured party's request for information from non-parties, irrespective of the type of right the claimant holds, and that the protection of intellectual property (e.g. copyright) was ipso facto assumed to be worthy of legal protection where a valid cause of action is...