Canadian Internet Law Update – 2017 - Advertising, Marketing & Branding

A. Trade-marks

1. Infringing Domain Name and Keyword Advertising

Vancouver Community College v. Vancouver Career College (Burnaby) Inc., 2017 BCCA 41, involved a dispute over the respondent's use of "VCC" in its Internet domain name and the use of "VCC" and "Vancouver Community College" as advertising keywords, which Vancouver Community College alleged constituted passing off and violation of its official marks. The trial court dismissed those claims (see 2015 BCSC 1470). The Court of Appeal allowed Vancouver Community College's appeal regarding the respondent's use of "VCC" in its domain name, but dismissed the appeal regarding the advertising keywords. The Court of Appeal held that the trial judge erred in applying the "first impression" test for confusion by holding that the relevant first impression occurs when an individual using an Internet search site arrives at a listed website. The Court of Appeal held that the proper question was whether there was a likelihood of confusion when the search results, displaying the respondent's "VCCollege.ca" domain name, appeared to an Internet user. The Court of Appeal held that there was a likelihood of confusion because the respondent's domain name was equally descriptive of both the respondent and Vancouver Community College and contained the "VCC" acronym long associated with Vancouver Community College. The Court of Appeal reasoned that there was nothing about the ", 2017 BCCA 41, involved a dispute over the respondent's use of "VCC" in its Internet domain name and the use of "VCC" and "Vancouver Community College" as advertising keywords, which Vancouver Community College alleged constituted passing off and violation of its official marks. The trial court dismissed those claims (see 2015 BCSC 1470). The Court of Appeal allowed Vancouver Community College's appeal regarding the respondent's use of "VCC" in its domain name, but dismissed the appeal regarding the advertising keywords. The Court of Appeal held that the trial judge erred in applying the "first impression" test for confusion by holding that the relevant first impression occurs when an individual using an Internet search site arrives at a listed website. The Court of Appeal held that the proper question was whether there was a likelihood of confusion when the search results, displaying the respondent's "VCCollege.ca" domain name, appeared to an Internet user. The Court of Appeal held that there was a likelihood of confusion because the respondent's domain name was equally descriptive of both the respondent and Vancouver Community College and contained the "VCC" acronym long associated with Vancouver Community College. The Court of Appeal reasoned that there was nothing about the "VCCollege.ca" domain name that distinguished the owner of that name from Vancouver Community College, that the letters "ollege" added to the "VCC" acronym were "equally reminiscent" of Vancouver Community College as the respondent, and there were no words or letters that disclaimed affiliation with Vancouver Community College. The Court of Appeal affirmed the trial judge's decision that bidding on advertising keywords does not constitute passing off because bidding on keywords, by itself, does not deliver a confusing message. The Court of Appeal held that Vancouver Community College was entitled to a permanent injunction restraining the respondent from using "VCC" and "VCCollege" regarding its Internet presence. An application for leave to appeal to the Supreme Court of Canada was refused (Vancouver Career College (Burnaby) Inc., dba Vancouver Career College, also dba CDI College, also dba Vancouver College of Art and Design also dba Eminata Group v. Vancouver Community College, 2018 CanLII 1154 (SCC)). 2. Domain Name Dispute

Boaden Catering Ltd. v. Real Food for Real Kids Inc., 2017 ONCA 248, involved a dispute between competing catering companies over Internet domain names. Boaden registered domain names that were identical or similar to names that RFRK had used for many years. RFRK successfully challenged the domain name registrations in arbitration proceedings under the Uniform Domain Name Dispute Resolution Policy and the CIRA Domain Name Dispute Resolution Policy, and the arbitrators ordered the domain names transferred to RFRK. Boaden then commenced a lawsuit in the Ontario Superior Court for a declaration that Boaden was the lawful owner of the domain names. A motions judge dismissed Boaden's claims on the basis that Boaden had registered the domain names in bad faith for the purpose of exploiting the value of the defendant's trademarks or for illegitimate financial gain, and had engaged in unethical and deceptive conduct (see 2016 ONSC 4098). Boaden appealed and argued that the motions judge erred by failing to apply the test set out in Black v. Molson Canada, 2002 CanLII 49493 (ON SC), which reflects the criteria for a successful domain name dispute under the Uniform Domain Name Dispute Resolution Policy. The Court of Appeal rejected that argument, and dismissed the appeal, on the basis that the motions judge had applied that test and had considered all of the evidence provided by Boaden.

3. Consumer Criticism Website

United Airlines Inc. v. Cooperstock, 2017 FC 616 and 2017 FC 617, involved a dispute over the defendant's UNTIED.com consumer criticism website that provided disgruntled customers and other website users with information about the plaintiff airline and allowed users to submit and read complaints about the plaintiff. The defendant designed the , 2017 FC 616 and 2017 FC 617, involved a dispute over the defendant's UNTIED.com consumer criticism website that provided disgruntled customers and other website users with information about the plaintiff airline and allowed users to submit and read complaints about the plaintiff. The defendant designed the UNTIED.com website (including graphics, logos, and colours) to have a strong resemblance to the plaintiff's official website and the plaintiff's trademarks. The UNTIED.com website included a disclaimer and a pop-up dialogue box to indicate that it was not the plaintiff's website. The plaintiff sued for infringement of its trademarks and infringement of its copyright in its official website. The court held the defendant liable for trademark infringement, passing off, and depreciating the goodwill attached to the plaintiff's trademarks. The court held that the defendant used the trademarks displayed on the ) to have a strong resemblance to the plaintiff's official website and the plaintiff's trademarks. The UNTIED.com website included a disclaimer and a pop-up dialogue box to indicate that it was not the plaintiff's website. The plaintiff sued for infringement of its trademarks and infringement of its copyright in its official website. The court held the defendant liable for trademark infringement, passing off, and depreciating the goodwill attached to the plaintiff's trademarks. The court held that the defendant used the trademarks displayed on the UNTIED.com website in connection with services (offering information and guidance to disgruntled customers) and those trademarks were likely to cause confusion. The court found that the disclaimers on the ) to have a strong resemblance to the plaintiff's official website and the plaintiff's trademarks. The UNTIED.com website included a disclaimer and a pop-up dialogue box to indicate that it was not the plaintiff's website. The plaintiff sued for infringement of its trademarks and infringement of its copyright in its official website. The court held the defendant liable for trademark infringement, passing off, and depreciating the goodwill attached to the plaintiff's trademarks. The court held that the defendant used the trademarks displayed on the UNTIED.com website in connection with services (offering information and guidance to disgruntled customers) and those trademarks were likely to cause confusion. The court found that the disclaimers on the UNTIED.com website did not avoid consumer confusion, and the pop-up dialogue box did not always function. The court found that the defendant misled users of the ) to have a strong resemblance to the plaintiff's official website and the plaintiff's trademarks. The UNTIED.com website included a disclaimer and a pop-up dialogue box to indicate that it was not the plaintiff's website. The plaintiff sued for infringement of its trademarks and infringement of its copyright in its official website. The court held the defendant liable for trademark infringement, passing off, and depreciating the goodwill attached to the plaintiff's trademarks. The court held that the defendant used the trademarks displayed on the UNTIED.com website in connection with services (offering information and guidance to disgruntled customers) and those trademarks were likely to cause confusion. The court found that the disclaimers on the UNTIED.com website did not avoid consumer confusion, and the pop-up dialogue box did not always function. The court found that the defendant misled users of the UNTIED.com website as to the source of the services available on the website, which tarnished the plaintiff's reputation, causing harm to the plaintiff. The court held that parody and satire are not defences to trademark infringement. The court further held that the defendant had infringed the plaintiff's copyright (see discussion below). The court concluded that the plaintiff was entitled to an injunction restraining the defendant's use of the plaintiff's trademarks. The court allowed the defendant to retain the UNTIED.com domain name, but ordered that the domain name not be used in association with the same services as provided by the plaintiff. For a related case, see Cooperstock c. United Airlines Inc., 2017 QCCA 44.

B. Copyright

1. Scraping Photos from Digital Marketplace

Trader v. CarGurus Inc., 2017 ONSC 1841, involved a dispute between the operators of competing digital marketplaces for new and used vehicles. Trader (the owner of autotrader.ca) provided various services to auto dealers, including taking photos of a dealer's vehicles for use in listings on the , 2017 ONSC 1841, involved a dispute between the operators of competing digital marketplaces for new and used vehicles. Trader (the owner of autotrader.ca) provided various services to auto dealers, including taking photos of a dealer's vehicles for use in listings on the autotrader.ca site and on the dealer's own website. When CarGurus entered the Canadian market to compete with Trader, CarGurus scraped over 150,000 of those photos from dealer websites for use on the CarGurus site. Trader sued CarGurus for infringing copyright in the scraped photos and sought $98 million in statutory damages and a permanent injunction. CarGurus argued that the photos lacked the requisite originality to be protected by copyright, because the photographers were required to take the photos in accordance with Trader's standardized procedures. The court rejected that argument because the photographers exercised skill and judgment in taking the photos. CarGurus also argued that it did not infringe copyright in some of the photos because they were not actually copied and stored on CarGurus' server but rather they were "framed" (i.e., they remained on the dealer's website but were displayed on the CarGurus site). The court rejected that argument because displaying the photos on the CarGurus site constituted making the photos available to the public by telecommunication, which is an infringement of copyright by virtue of Copyright Act s. 2.4(1.1). CarGurus also invoked the defence of fair dealing for the purpose of research. The court accepted that the purpose of the dealing may have been for research, but held that the dealing was not "fair" because CarGurus' purpose was commercial, the photos were displayed in their entirety, the photos were widely disseminated through the Internet for the entire life of the vehicle listing, and CarGurus had alternatives to copying the photos. CarGurus also argued that it was the provider of an information location tool and was therefore protected against liability for damages by Copyright Act s. 41.27(1). The court rejected that argument on the basis that the defence for information location tools applied only to intermediaries that provide tools (e.g., search engines) that enable users to navigate and find information where it is located on the Internet, not to providers that gather information from the Internet and make it available to users on the provider's own website. Trader claimed statutory damages pursuant to Copyright Act s. 38.1(1) calculated at $500 for each infringed photo, and argued that the court did not have discretion to award a lower amount under Copyright Act s. 38.1(3) because the infringement did not involve "a single medium". The court rejected Trader's argument on the basis that the undefined term "medium" includes an electronic medium (i.e. a website), and that desktop and mobile applications were simply two user interfaces for accessing the CarGurus site. The court held that statutory damages of $500 for each infringed photo would be grossly out of proportion, and exercised its discretion to reduce the statutory damages to $2 for each infringed photo, for a total of approximately $300,000. The court found that there was no bad faith on the part of CarGurus, and therefore no basis for an award of punitive damages. The court held that there was no need for a permanent injunction because CarGurus had removed all of Trader's photographs and ceased indexing dealer websites, and had undertaken to not reproduce any future Trader photos from feed providers if Trader identified those photos.

2. Consumer Criticism Website

3. Unauthorized Use of Facebook Photographs

Saad c. Le Journal de Montréal, 2017 QCCQ 122, involved a dispute over the Journal's unauthorized use of two photographs taken by the plaintiff, a professional photographer, of his friend and posted on the friend's Facebook page with a credit to the plaintiff as the photographer. The Journal published (in print and online) an article about the friend, and with her permission illustrated the article with the photographs taken from her Facebook page. The Journal did not clear copyright in the photographs and did not identify the plaintiff as the photographer. In response to a demand by the plaintiff, the Journal removed the photographs from its website, but refused to compensate the plaintiff for use of the photographs. The plaintiff sued for infringement of copyright and moral rights. The Journal argued that it was not liable for copyright infringement because it reasonably assumed that the friend had authority to permit the use of the photographs. The court rejected that argument and held that it was not reasonable for the Journal to rely solely on the friend's permission without contacting the plaintiff. The court noted that the Journal was accustomed to clearing copyright, and the plaintiff was identified in the photo credit on the friend's Facebook page. The Journal also argued that its use of the photographs was fair dealing for the purpose of news reporting. The court rejected that argument because the Journal did not comply with the mandatory attribution requirements (i.e., identification of the source and photographer). The court held that the Journal infringed the plaintiff's copyright and moral rights in the photographs, and awarded the plaintiff statutory damages totalling $2,000. See also Jomphe (Karjessy) c. Société St-Jean-Baptiste de Montréal, 2017 QCCQ 7303.

4. Notice and Notice Regime – Order for Disclosure of Subscriber Information

Voltage Pictures, LLC v. John Doe, 2017 FCA 97, involved a proposed reverse class proceeding against unknown defendants engaged in illegal Internet sharing of the plaintiffs' copyright films. The plaintiffs brought a motion under the "notice and notice" regime set out in Copyright Act ss. 41.25 and 41.26 for an order that Rogers Communications, a non-party Internet service provider, disclose contact and personal information of subscribers associated with identified Internet protocol addresses, so that the plaintiffs could name the subscribers as defendants in the class proceeding. The trial court (2016 FC 881) ordered Rogers to disclose the subscribers' names and addresses, but only after the plaintiffs paid Rogers' fee (calculated at $100 per hour) for the time spent to assemble the subscriber information. The plaintiffs appealed and argued that the trial judge erred in ordering payment of Rogers' fee. The Court of Appeal granted the appeal. The Court of Appeal held that Copyright Act s. 41.26(1) requires an Internet service provider to "maintain records in a manner and form that allows it to identify suspected infringers, to locate the relevant records, to identify the suspected infringers, to verify the identification work it has done (if necessary), to send the notices to the suspected infringers and the copyright owner, to translate the records (if necessary) into a manner and form that allows them both to be disclosed promptly and to be used by copyright owners and later the courts to determine the identity of the suspected infringers, and, finally, to keep the records ready for prompt disclosure" (at para. 40). The Court of Appeal further held that, in the absence of a regulation specifying applicable fees, Copyright Act s. 41.26(2) precludes payment of any fee to an Internet service provider for the work required to comply with Copyright Act s. 41.26(1). The Court of Appeal held that the notice and notice regime does not displace the common law Norwich disclosure order process, which continues to govern an Internet service provider's disclosure of retained records. The Court of Appeal noted that it is reasonable for an Internet service provider to insist that a plaintiff obtain a Norwich disclosure order to protect the Internet service provider against aggrieved customers whose information is disclosed. The Court of Appeal held that a Norwich disclosure order could require payment of the Internet service provider's fee for the costs associated with the act of disclosure, but those fees could not include the work required to comply with the record collection obligations imposed by Copyright Act s. 41.26(1). The Court of Appeal held that the burden was on an Internet service provider to prove its costs of disclosure that should be compensated, and that Rogers had failed to adduce sufficient evidence to satisfy that burden. The Court of Appeal concluded that Rogers was not entitled to any fee for compliance with the disclosure order. The Supreme Court of Canada granted Rogers' application for leave to appeal (2017 CanLII 78701).

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Canada: Canadian Internet Law Update – 2017