Two Words Don't Make a Right - The Use of Two Consecutive Descriptive Terms for Goods not Distinctive as a TM

Many good things come in pairs, for example, shoes, ear plugs and twins, but sometimes even the best pairing won't be enough. This is the case even with trademarks, where the use of two terms that name or describe goods will be difficult to register. A recent case in the Canadian Trade-Marks Opposition Board considered this issue, and further highlighted that, even though a very novel argument, the marks themselves might not be as novel.

The case of Molson Canada 2005 v Drummond Brewing Company Ltd concerned a registration for the trademark "BEER BEER" (TM 1619343) for beer by the Drummond Brewing Company. Due to the quite clear descriptive nature of the mark, Molson Canada opposed the registration, even though it has been used for the goods in Canada since 2009.

The mark was opposed under sections2, 16, 12 and 30 of the Canadian Trade-Marks Act.

The Trade-Marks Opposition Board first considered the grounds under section 30(i), which requires a statement by the applicant that they are satisfied that they are entitled to use the mark in Canada in association with the relevant goods and/or services. The courts will only reject an application under the section if it has been applied for in bad faith. What plays a part in this is an earlier rejection for an application in 2009 for "BEER BEER" by Drummond Brewing due to the descriptive nature of the mark, which potentially indicates an element of bad faith for the new registration.

Donald's new beer brand: BEER BEER BEER BEER

Board Member Kathryn Barnett rejected this argument, as the provision only looks for an entitlement to use the mark, rather than any claims on rights to it. The Applicant's witness statements also indicated a clear belief in the entitlement to use the mark in Canada.

The Board then moved onto matters relating to section 12 of the Act, which prohibits the registration of mark if it, among other things, contains the name of the goods or services or that it clearly is descriptive of the quality of the goods or services relating to the mark.

The first ground under section 12(1)(c) for containing the name of the goods, i.e. beer, based on "…the immediate and first impression of the everyday user of the goods and services". This can include composite marks, including both a word and design element, if the portion of the word in the mark is dominant. The Board rejected this argument, as the mark is "BEER BEER", and not simply just 'BEER'. The name of the goods is simply the single use of the word, not double, and therefore escapes the remit of section 12(1)(c).

The Board then moved onto section 12(1)(b), which prevents the registration of clearly descriptive or deceptively misdescriptive marks from the point of view of the average consumer. The mark has to be assessed in its entirety as a matter of immediate impression to the aforementioned consumer. This is to prevent the registration of a common trade term for goods or services, placing legitimate traders at a disadvantage.

What lies at the heart of this decision is Pizza Pizza v The Registrar of Trade-marks, where the mark 'PIZZA PIZZA' was deemed to not be descriptive of the goods, namely pizza. Molson Canada contested that the phrase 'BEER BEER' would indeed be descriptive, which was, as discussed above, deemed so when applied for previously. The phrase would, in their view, describe a "…“real” or “prototypical” beer, or as a generic marking, or both".

The Board ultimately sided with the opponent, Molson Canada, and decided that the mark was indeed descriptive of the character or quality of the goods, and rejected the application. Due to this the Board deemed it unnecessary to consider the rest of the grounds of opposition.

The decision was an interesting one, and something this writer has never thought about; distinctiveness through the use of 'descriptive' terms in a novel way. While the decision makes perfect sense, it still shows that when you're creative with your marks, even the simplest thing could potentially (although not very often) be distinctive.

Source: JDSupra

Hidden Benefit - Use of Trademarks as Google AdWords Allowed in Australia

There are many aspects of the Internet that most of its users are blissfully unaware of, including mountains of code and infrastructure that goes unseen. This is important, since seeing every aspect of a web browsing experience would cause information to be muddled and hard to digest, if not impossible to handle properly, so this 'invisible' network is necessary for the modern experience. Even so, the hidden layers of the Internet could be used for nefarious purposes, or possibly to try and take advantage of the goodwill of businesses or their trademarks, which puts it in a position of some scrutiny. While this blog has discussed metatags before (in a Canadian context), a similar question arose yet again, only this time all the way across the world in Australia.

The case of Veda Advantage Limited v Malouf Group Enterprises Pty Limited dealt with Veda, who are a big credit reporting organization in Australia. Among providing consumer credit reports, they also offer a credit repair service, expunging incorrect or otherwise erroneous listing on a consumer's credit report, therefore improving their credit score (although Veda do not do this proactively, only responding to customer's notices on this information). Malouf Group offer a similar service, although liaising with Veda on their customers behalf (in the process acquiring a copy of their report from them). Veda are also in possession of several registered trademarks over its name, or variants of it, including VEDA, VEDA ADVANTAGE and VEDACHECK. In advertising their business online, Malouf used the name Veda in 86 Google AdWords keywords, which were targeted at those wanting to contact Veda and would be directed to Malouf's services. They were subsequently sued by Veda for trademark infringement for their use of the name (or its variants) in their Google AdWords campaigns, potentially contravening section 120 of the Australia Trade Marks Act 1995.

Under the section above a trademark is infringed when a sign is "...use[d] as a trade mark... that is substantially identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered". The key questions therefore are whether the name "Veda" was used 'as a trade mark' and whether this was done 'in relation to services' that the marks were registered for.

Judge Katzmann, handing down the Federal Court's judgment, first dealt with the issue of whether the name Veda was used as a trade mark by Malouf in their use of it in their Google AdWords advertising. The use would have to be "...as a “badge of origin” in the sense that it indicates a connection in the course of trade between goods and the person who applies the mark to the goods". This has to be done objectively, including taking into account the nature and purpose of the use.

Google AdWords can be questionable at times

She rejected the notion that Malouf were using the signs as trademarks, as, in her mind, the selection of marks used in the Google AdWords platform does not create a connection with the services of the marks' owner, but act as a way to direct possibly interested parties to your own services. They can equally be acquired by any business, including Malouf's competitors, which would add further links in the search results. The marks are also invisible to the user, who will not see them outside of the results and their search query itself.  The invisible nature of the marks would not create an impression on the user that that specific word is what brought up the results, and therefore would not confuse them as to their indication of origin. She distinguished Google AdWords from metatags, which function differently and are possibly visible to the user (although, this writer will contest that many will ever see them), being therefore used as a trademark in the context of the Act. She concluded that "...the use of a sign which is invisible to the consumer is [not] use as a trade mark within the meaning of the Trade Marks Act".

Judge Katzmann then moved onto discussing the marks' use in the sponsored links that appear at the top of results when a keyword or words are searched. What is worth also noting is the use of the name Veda (and other words) in custom headings that appear within these sponsored results. Judge Katzmann saw that in the majority of the instances (all but one) the use of Veda was not a use as a trademark. In her view the use was to "...describe the object to which its services are directed — fixing, cleaning or repairing Veda credit files or reports — not as a badge of the origin of its business and therefore not as a trade mark". To put this into slightly different terms, this meant that the mark was used merely to describe a specific service, and not as an indication that it originated from Veda.

The final point in relation to infringement was whether the marks were used in relation to services in respect of which the trade marks were registered. As the marks were registered for several different classes they encompassed a wide array of services, including consultation, advice and analysis in relation to financial services (with plain financial services not being offered by Malouf). Judge Katzmann rejected Malouf's assertion, and accepted that the marks were used in relation to the services they were registered for, even if the services offered by Malouf were not identical to Veda's. After a very brief discussion, Malouf was also deemed not to have a defence under section 122 of the Act through a use in good faith. In the end Judge Katzmann saw that Malouf only infringed the marks in respect of two search queries (specifically "The Veda Report Centre" and "The Veda-Report Centre"), with the rest deemed not to infringe under the Act.

What was curious in the case is the discussion surrounding the European or UK position in relation to this type of meta-information and infringement of trademarks. Judge Katzmann distinguished both Google France SARL v Louis Vuitton Malletier SA and Interflora Inc and Anor v Marks & Spencer, determining that the wording used in the EU legislation was not an equivalent to the Australian wording, especially with the difference in 'using in the course of trade' (per Article 5 of the first Trade Mark Directive) and 'used as a trademark' under section 120 of the Australian Act. In her view, the use would have to be, contrary to the aforementioned judgments, as a 'badge of origin' and not merely in the course of trade (whether used as a badge or not). The invisibility of the use seems to be key here in an Australian context, whereas in Europe this seems to be mostly irrelevant under previous considerations.

The case also dealt with competition issues under the Australian Consumer Law, and Judge Katzmann deemed that the provisions were only contravened under the above two search queries for which the marks were also infringed.

All in all the case is very interesting, and provides some valuable insight into the nuanced world of the Internet and its hidden facets. Australian law seems to diverge, at least for now, from its cousins in Europe and the UK, and this judgment strongly cements it as such.

Source: K&W IP Whiteboard

Retrospective - What is a Trademark?

Image and association through that image is a very powerful thing in the success of a product in addition to its sustainability as a strong brand. Trademarks have always aimed to protect that image, functioning as an indicator of certain qualities, value or consistency, giving the customer or client reassurance as to their expectations. Even though arguably self-explanatory or even obvious, what a trademark truly is is often left in the dark to the layman and even some legal practitioners. Trademarks encompass a wide array of possible marks which can be registered in the common law, yet they all share a common purpose in their registration and existence. This purpose was discussed under current EU, and subsequently applying to UK legislation, after the introduction of the EU's very first Directive dealing with trademarks.

The case in question was Canon v Metro-Goldwyn-Mayer, initially dealt with in the German Federal Court of Justice (Bundesgerichtshof) and then referred to the Court of Justice of the European Communities for further clarification in 1998. The case dealt with the mark "CANNON", which was applied for registration by MGM in Germany in relation to films recorded onto cassettes and their subsequent uses in distribution and production for example. MGM's application was then objected to by Canon under the old German Trademark Law (Warenzeichengesetz), arguing that their registered trademark "CANON" would be infringed should MGM be allowed to register the word "CANNON". Initially MGM's mark was rejected by the German Patent Office (Deutsches Patentamt) due to the marks being analogous; however a second examiner at the Patent Office dismissed the initial decision and rejected Canon's opposition for lack of similarity. The case was further appealed to the German Federal Patent Court (Bundespatentgericht), where the Court rejected Canon's appeal, deciding the two marks were not similar. The case was then ultimately brought to the aforementioned Federal Court of Justice, from where the case was brought to the European Court of Justice.

Tony proudly carried his badge

Under Directive 89/104/EEC the Union sought to unify the Member States' approaches to trademarks, under which the German laws were amended. The Directive also applies to the UK, which enacted the Trade Marks Act 1994 to bring their legislation in-line with the EU regulations. Relating to the case, the Federal Court of Justice referred this question to the European Court of Justice: "May account be taken, when assessing the similarity of the goods or services covered by the two marks, of the distinctive character, in particular the reputation, of the mark with earlier priority (on the date which determines the seniority of the later mark), so that, in particular, likelihood of confusion within the meaning of Article 4(1)(b) of Directive 89/104/EEC must be taken to exist even if the public attributes the goods and/or services to different places of origin?"

The question can be seen in simpler terms: would the judiciary have to take into account the reputation of an earlier existing mark (in this case CANON) when assessing the registerability of a newer mark (in this case CANNON), even if the public would understand the different origins of the two competing items bearing their respectable marks? What the European Court of Justice emphasized was the tenth recital of the Directive, which states that "...the function of [of a registered trademark]... is in particular to guarantee the trade mark as an indication of origin". This, in the Court's decision: "...enabl[es] [the consumer], without any possibility of confusion, to distinguish the product or service from others which have another origin", adding that "...it must offer a guarantee that all the goods or services bearing it have originated under the control of a single undertaking which is responsible for their quality". In the Court of Justice's decision, answering the German Federal Court, the earlier mark's reputation has to be taken into account and just the risk of confusion would mean that there is a likelihood of confusion even if the two products have two distinct origins.

A trademark therefore offers a guarantee of quality and origin to the consumer, and has to be protected as such to prevent any confusion to the consumer as to this fact; a badge of origin, as it is often referred to as. Should other marks be allowed to be registered the consumer could be confused, at a quick glance at least. This position has been fully accepted in the UK under the Trade Marks Act 1994, and even in Canada the Canadian Supreme Court in Kirkbi AG v Ritvik Holdings saw that a trademark is "...a symbol of a connection between a source of a product and the product itself"; creating a similar description to what the European Court of Justice did.

As one can clearly see, trademarks offer a unique type of protection and a specific function. The origin of a product or services can be the deciding factor between the consumer purchasing your product rather than the other, and enabling that consumer to fully understand what they are buying is imperative. Trademarks offer this guarantee, protecting both the consumer and the owner of the trademark, making them incredibly valuable to all parties involved.

Retrospective - Passing Off in the United States

The tort of passing off has been discussed on this blog before, yet the tort primarily exists in that form in some common law countries, such as the United Kingdom and Australia, but takes a different form in the US. The term more commonly used in America is not 'passing off', but 'misappropriation'. Misappropriation falls under the tort of unfair competition in the US, made even more complex through the existence of varying laws in all US States pertaining to unfair competition. The common law origins of misappropriation stem from a decision in the early 20th century.

The milestone case concerning misappropriation was International News Service v Associated Press, decided in 1918 by the US Supreme Court. Both parties in the case dealt with the distribution of news in the US, both of which exist even today as independent news agencies or having merged with others. The Associated Press at the time of the case was a representative organization of 950 newspapers all over the US. News items were shared between its members through a bulletin boards, some of which were taken by the International News Services (in addition to news from early editions of newspapers), rewritten and published in different parts of the US for sale, fully utilizing the time differences in the vast country. The Associated Press did not take to this kindly and took the International News Services to court, finally reaching the US Supreme Court.

The Supreme Court had to look at whether International News Services infringed the Associated Press' property rights in their literary work, and whether this amount to unfair competitive practices in business. The Court shortly touched on the existence of copyright in news, and saw no breach of it in International News Services' practices; however what was paramount to the Supreme Court was whether this would be unfair competition. The Court admitted there was no breach of confidence, although it was speculated that some of the news published by International News Services was obtained through paying some of Associated Press' employees to obtain early copies of news articles.

The work put into news can sometimes be extraordinary

The Court's focus turned to the effort and expenditure used by the Associated Press to acquire their news, stated by Justice Pitney: "Not only do the acquisition and transmission of news require elaborate organization and a large expenditure of money, skill, and effort; not only has it an exchange value to the gatherer, dependent chiefly upon its novelty and freshness, the regularity of the service, its reputed reliability and thoroughness, and its adaptability to the public needs; but also, as is evident, the news has an exchange value to one who can misappropriate it". News as a copyrighted work has very little value, but its main value is in its initial delivery and punctuality; one which was clearly abused by International News Services by obtaining and publishing the Associated Press' news. Due to this expenditure and labor which has been placed into the collection of the current news, and without International News Services actually contributing to it and still using it, they are "...endeavoring to reap where it has not sown", which amounts to "...an unauthorized interference with the normal operation of [Associated Press'] legitimate business precisely at the point where the profit is to be reaped". To further his point, Justice Pitney saw that this was underpinned by the equitable consideration of consideration, or in other words: "...he who has fairly paid the price should have the beneficial use of the property". Clearly the Associated Press should be able to enjoy the fruits of their labor, whereas if International News Services were allowed to swoop in and utilize that work and benefit, it would undermine the Associated Press' equitable interest; making International News Services' actions unfair competition.

Although news in itself is not the property of anyone or any entity, the Court saw it akin to quasi-property through its use. Justice Pitney summarized this well:

"Regarding news matter as the mere material from which these two competing parties are endeavoring to make money, and treating it, therefore, as quasi property for the purposes of their business because they are both selling it as such, defendant's conduct differs from the ordinary case of unfair competition in trade principally in this that, instead of selling its own goods as those of complainant, it substitutes misappropriation in the place of misrepresentation, and sells complainant's goods as its own". 

As such International News Services, by using the quasi-property of the Associated Press, misappropriated that property, and although they did not show any misrepresentation, prevented the Associated Press from enjoying the benefits of their work. International News Services' appeal was therefore unsuccessful.

The current form of misappropriation is slightly more developed since its inception. The requirements were well set-out in the case of National Basketball Association v Motorola, where Circuit Judge Winter set them out as:

"(i) the plaintiff generates or collects information at some cost or expense; (ii) the value of the information is highly time-sensitive; (iii) the defendant's use of the information constitutes free-riding on the plaintiff's costly efforts to generate or collect it; (iv) the defendant's use of the information is in direct competition with a product or service offered by the plaintiff; (v) the ability of other parties to free-ride on the efforts of the plaintiff would so reduce the incentive to produce the product or service that its existence or quality would be substantially threatened... rend[ering] [the] publication profitless, or so little profitable as in effect to cut off the service by rendering the cost prohibitive in comparison with the return".

As one can observe, misappropriation is a much looser, more flexible doctrine than that of passing off. The attitude of both judiciaries is the same however, preventing others from using the work or labor of another for their own benefit.

Retrospective - Sweaty brows, no reward?

One of the most influential cases formulating our understanding of what can be protected by copyright all over the World was the US case of Feist Publications Inc v Rural Telephone Services Co. The case concerned a telephone service provider, Rural Telephone Services. As the company provided said services, it had to collect and compile listing information, publishing the collection in a directory annually. The directory was in itself an alphabetical listing of people, their numbers, addresses and so forth, much like the Yellow Pages. Rural Telephone Services was one of over a dozen phone services providers in Kansas. Feist Publication sought to publish an area-wide directory, having bought the data and required rights from the other providers in order to do so, falling short when Rural Telephone refused to sell them their data. Not being ones to fail, Feist Publication took Rural Telephone's data anyway and used it without their consent, utilizing roughly 3% of their data without any modifications and a substantial part more with some amendments and changes. Upon noticing this Rural Telephone proceeded to sue Feist Publication for infringement.

The question falling ever so graciously on the US Supreme Court's lap was whether there was a copyright work to protect to begin with, without which the case would fall flat. The Supreme Court did consider other matters, such as fair use, substantiality (amount copied) etc., but the most influential of which was the consideration over the existence of copyright.

All that work for naught

In their decision the Supreme Court saw that the directory in itself, should it show sufficient originality, could potentially be protected by copyright as a whole; however the raw data - phone numbers, addresses etc. - could not be protected as it isn't an original work. If there is no originality, the work cannot fall under the protection of copyright and is thus free for all to use. To put it in simpler terms, the presentation of the facts is something that can be protected, but not the information. What the case changed significantly was the "sweat of the brow" or "industrious collection" test used by lowers courts which extended protection of compilations from only its presentation to the data as well, which the Supreme Court subsequently repealed. The Court in its decision saw that the test had wrongly interpreted the 1909 Act and thus skewed the main principle of copyright: one cannot copyright ideas or facts.

Sweat of the brow has been used by the courts prior as a means to extend copyright to collections of data purely through the laborious efforts of the person compiling the information, creating value in that work through the sheer efforts they have put into it. English courts have accepted the notion of sweat of the brow, although not in the same fashion as its counterparts over the pond.

Essentially what the Court iterated in its decision was the fact that there was no element of creativity. No work will attain copyright protection, regardless of the amount of work put into it. The compilation of lists, directories or other factual information, with no element of creativity in its presentation, will not be protected under copyright. As said, the presentation, layout of information for example, could be protected, but the information presented will not be a copyright work. It could've taken you decades of meticulous work, however that it itself doesn't not make it protectable.

The law has moved on from Feist, often taking smaller or larger leaps, but the case still remains at the heart of copyright law, having influenced both US and foreign cases even today. If monopolies were allowed in raw data, a lot of the things we have right now could not be possible, and this would clearly impact modern applications of phone directories and such on the Internet. The disapproval of the sweat of the brow principle was a logical change in the law going forward and has enabled innovation through the use of data in other applications.