Apple in Trade-mark Purgatory

The Apple dispute is a reminder that in the Chinese market, strict compliance with the law is necessary, but is not sufficient. 

Apple thought it had purchased the worldwide rights to the iPad trade-mark. The original owner, Proview, maintains that it still owns the mark within China. The courts and the Chinese government are caught between not wanting to put Proview out of business, and not wanting to embarrass Apple and face the resulting consumer anger and loss of tax revenues if Apple withholds its new products from China. On the other hand, China is a huge market for Apple, and it would be a significant cost to Apple if they limit sales there. Both of the parties are presumably furiously lobbying the government. While the courts, government and Proview would clearly be happiest with an out of court settlement, it is not clear if this is going to be acceptable to Apple. It is also not clear what the dollar amount of any settlement might be: Apple had paid about $55,000 for the mark and Proview is now claiming about $1.5 Billion in damages. 

 The Apple case is a good illustration of some of the issues that can arise in Chinese legal disputes. Courts in China are very much a part of the government bureaucracy, and any legal dispute can have a political dimension. Having good relationships with local authorities and decision makers can be critically important, both to avoid serious disputes, and also to find a liveable solution to any disputes that may arise. Even when one party seems to be clearly in the right, there may be political reasons why a court wants to force a settlement rather than decide against one party or other. The authorities routinely launch campaigns to showcase their efforts against IP infringement (amongst other things), and whether you become a target or a beneficiary of those campaigns may depend on who your friends are. China has mandatory government approval processes that may involve significant amounts of discretion, corruption is a well known problem, officials may be poorly trained, and regulatory processes are often far from transparent. Doing business there can have more than its share of hidden dangers. 

None of this means that the law is irrelevant. A party that does not comply with applicable laws and regulations is going to have a hard time arguing its case. If you show up at the local IP administration office asking for help against infringers and it turns out that you haven’t registered your trademark, and didn’t get the necessary government approvals for your business, you are not going to get much sympathy and your friends are going to find it very difficult to help you. 

Apple clearly think they took all the right legal steps to purchase the iPad mark in China, but they are still dealing with huge mess. How the dispute gets resolved is going to depend on more than just whether they have the right bits of paper.

By: Euan Taylor

Google Copyright Test Case draws much attention in clarifying responsibility of Video Sharing Websites

On April 20, 2012 a German court in Hamburg ruled on a case initiated by GEMA, a performance rights organization in Germany representing over 60 000 artists collectively, alleging copyright infringement of 12 separate music clips hosted by Google’s YouTube. GEMA alleged Google of not taking the requisite amount of care to prevent the illegal sharing of copyrighted material. 

What the court said 

The issue at bar was whether Google had effective mechanisms in place to prevent the illegal sharing of copyrighted material on its video sharing website. The court found in favour of GEMA, stating Google had not satisfied the required diligence to prevent the spread of such material. 

However, this case should not be viewed as a resounding victory for GEMA, as one should interpret the comments made by presiding judge Heiner Steeneck: 

But Google isn't the perpetrator here, it's those people who illegally upload songs,…that's why Google doesn't have to search all videos uploaded in the past. It only has to help detect videos from the moment it is alerted about possible violations. 

Google maintained that it provides satisfactory mechanisms to detect violations of copyrighted material, while GEMA argued these mechanisms should be expanded. The court ruled that Google must add a “word search” in addition to the already existent “ContentID search” which allows searches for audio content in greater detail. This additional search will give rights holders a more effective way to search and determine if their work is being illegally distributed. 

Why it’s important 

One of the drawing features of this case is that it will likely serve as a heavy precedent, in Europe especially, with respect to the framework used for copyright infringement analysis of video sharing websites. The main question answered was not whether Google is responsible for the content its users post; but rather how much responsibility falls on Google’s shoulders, and how prudent their actions must be to satisfy copyright law. 

Furthermore, international parties are keenly interested for their own vested interests in determining whether precautions should be implemented to guard against potential findings of copyright infringement with respect to their actions. In Canada specifically, with the impending release of the Copyright Modernization Act Bill C-11, this may become a live issue sooner rather than later for both rights holders groups and video sharing websites.

By: Kamaldeep Sembi 

Louis Vuitton’s Trademark Dilution Win vs. Hyundai - a Canadian Perspective

A number of trademark bloggers south of the border, including Eric Goldman, Techdirt and Citizen Media Law Project, have commented on the surprising decision of a US court in which a one-second appearance of a Louis Vuitton esque basketball in a television commercial was found to violate Louis Vuitton’s trademark rights.

The ad for the Hyundai Sonata showed various images of luxury goods juxtaposed into everyday situations.  The scene in dispute showed a basketball covered in a pattern that looked very similar to Louis Vuitton’s registered trademark known as “toile monogram”. No, Louis Vuitton does not make basketballs (yet).

The US District Court for the Southern District of New York granted Louis Vuitton’s motion for summary judgment, stating that Hyundai had violated both federal and state trademark dilution laws. Dilution legislation protects owners of famous trademarks from having their trademarks used in a manner that weakens the distinctiveness of the mark.  Unlike infringement, dilution can exist even in absence of confusion and where the goods and services are completely different than those of the trademark owner.  

So, how would this case have been handled in Canada, you ask?  

Canada does not have an equivalent to US trademark dilution legislation, nor any specific legislation directed to “famous” trademarks. The closest comparison and most likely cause of action in Canada would be under Section 22 of the Trade-marks Act, which states “no person shall use a trade-mark registered by another person in a manner that is likely to have the effect of depreciating the value of the goodwill attaching thereto.”

The scope of Section 22 remains somewhat unclear as its boundaries have yet to be truly tested by the courts.  However, the Supreme Court of Canada’s decision in Veuve Clicquot Ponsardin v. Boutiques Cliquot Ltée, [2006] 1 S.C.R. 824 offers some clarity.  In Veuve, Justice Binnie set out the four-part test for proving depreciation of goodwill under Section 22: 

1. the plaintiff’s registered trademark must have been used by the defendant in connection with wares or services;
2. the plaintiff’s registered trade-mark must be sufficiently well known to have significant goodwill attached to it;
3. the plaintiff’s mark must have been used in a manner likely to have an effect on that goodwill (i.e. linkage); and 
4. the likely effect would be to depreciate the value of its goodwill (i.e. damage).

In expanding on the first element, Justice Binnie references the definition of use under Section 4 of the Act, which reads as follows:

 4.  (1)  A trade-mark is deemed to be used in association with wares if, at the time of the transfer of the property in or possession of the wares, in the normal course of trade, it is marked on the wares themselves or on the packages in which they are distributed or it is in any other manner so associated with the wares that notice of the association is then given to the person to whom the property or possession is transferred.
 (2) A trade-mark is deemed to be used in association with services if it is used or displayed in the performance or advertising of those services.

This seems to support the definition of use adopted by the court in Clairol International Corp. v. Thomas Supply & Equipment Co., [1968] 2 Ex. C.R. 552.

Referring to the facts of Louis Vuitton v. Hyundai, the image of a fictitious Louis Vuitton basketball in a television commercial for a car does not appear to meet the definition of use under Section 4.  Accordingly, if the court restricts itself to the Section 4 definition of use, it is likely that a claim such as Louis Vuitton’s against Hyundai would be rejected in Canada for failing to meet the first element of the test.  

In terms of the fourth element, although the meaning of depreciation has not been fully explored by the courts, Justice Binnie clarified that at least some evidence will need to be adduced in order to infer not just a possibility of depreciation but a likelihood of depreciation.  Thus, depreciation should not automatically be inferred just because elements 1-3 are met.  

In Hyundai’s case, it is not apparent what, if any, damage they have done to the goodwill in Louis Vuitton’s trademark.  The companies are not competitors, and there is no reason to believe that Hyundai’s use of Louis Vuitton’s mark in this context would draw consumers away from the luxury brand.  The ad does not disparage or imply anything negative about the toile monogram trademark or the Louis Vuitton brand as a whole, and in fact holds the Louis Vuitton brand up as a symbol of luxury.   

If anything, judging from the online reactions to the ad, it may have actually created a market for a possible expansion into basketball sales for Louis Vuitton.  [I am willing to bet that Twitter users @kailanhindsman (“I think a Louis vuitton football or basketball would be gangsta”) and @Dhat_Kid_DiCE (“Dyd yall See tht Louis Vuitton Basketball? Lols iWant 1 ^___^”) had no idea they would be quoted in a trademark dilution judgment.]

That being said, the US court managed to find justification for dilution in the facts of this case, and it remains to be seen how broadly Canadian courts will interpret the concept of “depreciation”. 

Given the limited run of the advertisement at issue (it aired a total of 5 times), and the questionable damage caused to the Louis Vuitton brand, this lawsuit may be more about protecting Louis Vuitton’s reputation as a trademark enforcer than it is about protecting the goodwill in its trademark. 

By Jennifer Dove

Canadian Patent Practice Changes in view of the Amazon Decision

In view of the decision of the Federal Court of Appeal in Canada (Attorney General) v Amazon.com Inc. 2011 FCA 328 Amazon FCA], the Canadian Intellectual Property Office (CIPO) has released for public consultation documents relating to patent office practice with respect to inventive concept, statutory subject matter and claims to diagnostic methods and medical uses. The consultation period is April 2, 2012 to May 2, 2012. View the CIPO page for this consultation here.

Are you interested in discussing your Canadian intellectual property needs further?