Breaking News for Online Businesses

There have been some recent court decisions that will be of interest to online businesses. Once an “online” business is successful, it is just a matter of time before competitors try to divert traffic intended for the successful business to their own competing websites.  One way of diverting traffic is through the use of websites with similar names.  With the rapid rise of social media, such as FACEBOOK, aggressive competitors are also establishing social media accounts with similar names.   Another way, a more legitimate way, is through the acquisition of “sponsored” links, such as GOOGLE ads.   These sponsored links appear in the search results whenever keywords associated with the successful business are entered into the search engine.

The old news is that in the case Michaels v. Michaels Stores Procurement Co, decided March 15, 2016, Canada’s Federal Court of Appeal stated that the Federal Court had jurisdiction to order the transfer of a confusing domain name.  The new development is that in the case of Thoi Bao Inc v. 1913075 Ontario Ltd, decided December 7, 2016, Madam Justice McDonald of the Federal Court went a step further and ordered the defendant to transfer to the plaintiff his FACEBOOK account, his TWITTER account and “any other social media accounts under his ownership or control” that were confusing with the business of the plaintiff.   In light of this decision, a successful business now has a remedy to use against competitors who are diverting traffic through the use of confusingly similar social media account names.

The other development relates to “passing off”, the court-created protection against trade misrepresentations.  In order to be successful in an action for “passing off”, among other things, the plaintiff must show that there has been misrepresentation creating confusion in the public.  The old news is that purchasing sponsored links, in and of itself, does not constitute “passing off”.   This was established in the Federal Court decision in Vancouver Community College v. Vancouver Career College (Burnaby) Inc., in which the Trial Judge held that the time frame for determining whether there was confusion was when the consumer reached and viewed the defendant’s website.   The Trial Judge found that there was nothing confusing at the defendant’s website and thus that any confusion was not sufficient to meet the requirements for “passing off”.  The new development is that on January 26, 2017 the Federal Court of Appeal reviewed the Trial Judge’s decision.  The Appeal Court determined that the Trial Judge had erred and that the correct time to assess confusion was when the consumer viewed the search engine results page.  The Court of Appeal noted that the sponsored link merely indicated VCCollege.ca, without any content that would distinguish the defendant’s business from that of the plaintiff.  In the circumstances, the sponsored link was confusing and constituted passing off.  If your successful business has been the target of intentionally confusing sponsored links, you now have a remedy.  Conversely, if your business pays for sponsored links, you must ensure that your sponsored links identify your business and are not confusing.

Copyright, Design and Trademark – A Cautionary Tale

There is a relationship between copyright, design and trademark as they apply to physical products.  Copyright protects “works of artistic craftsmanship”.   Design protection can be obtained for features of shape, configuration, pattern or ornament of useful articles.  Trademark rights may extend to the shaping of wares (products) with such unique shapes being referred to as “distinguishing guises”.  (The old-style glass bottle used by Coca Cola is a good example of a distinguishing guise trademark; the consumer knows what the product is merely from the container.)   It is possible for a product to be subject to all three, copyright, design and trademark at some time during the product’s life cycle.  However, copyright, design and trademark each have their limitations.

When an entrepreneur launches a new product, he or she does not know how successful the product may become.  Sometimes public apathy toward a new product is deflating.  At other times, the response exceeds even the entrepreneur’s expectations.  For that reason, it is not unusual for an entrepreneur to introduce a product into the marketplace and to wait and see how the product sells before seeking protection.

The Court decision rendered on December 14, 2016 in the case of Corocord Raumnetz v. Dynamo Industries is a cautionary tale that helps explain aspects of the relationship between copyright, design and trademark.  Corocord is a manufacturer of playground equipment. Some years ago, Corocord introduced into the market a new playground structure.  Under Canadian law, the playground structure was protected by copyright as a work of artistic craftsmanship at the time of introduction into the marketplace.  Copyright protection does not require any active steps to file paperwork with a government office, although there are advantages in doing so.

Fast forward ahead several years.  By that time, Corocord’s playground structure had become quite successful.  The law suit against Dynamo Industries was triggered when Dynamo introduced a similar product into the marketplace and they ended up bidding against each other on a contract for a playground installation. Corocord sued Dynamo.

Corocord tried to enforce their copyright against Dynamo.  Unfortunately for Corocord, copyright is only intended to protect “works of artistic craftsmanship” that are sold in limited quantities.  The right to sue Dynamo under copyright law was lost, due to the fact that the playground structure had been reproduced in quantities exceeding fifty (50).  Corocord had been too successful to continue to rely upon copyright.  Corocord could have sued Dynamo under design law.  Unfortunately for Corocord, an application must be filed with the Canadian Intellectual Property Office for design protection within 12 months of the playground structure being introduced into the marketplace.  The time had passed, Corocord had waited too long. Corocord tried to sue Dynamo under trademark law, which does not have a time deadline. In order to succeed Corocord had to establish that their playground structures had become so well known that the relevant market would automatically associate the distinctive shape of the playground structure with Corocord.  Unfortunately for Corocord, they had not, as yet, become successful to the extent that the distinctive shape of the playground structure was associated with them.

What could have or should have Corocord done?  It was okay for Corocord to rely upon copyright in the beginning.  Within 12 months Corocord knew that their playground structure was achieving success in the marketplace.  It was a fatal error of Corocord to not apply for design protection before the 12 months deadline for doing so expired.  With design protection, Corocord could have stopped similar products from entering the market.  Subsequently, when design protection was about to expire, they could have applied for trademark protection  in the hope of extending their protection indefinitely on the basis that the distinctive shape of the playground structure had become well know and is associated solely with Corocord.  However, now their ability to obtain trademark protection in future is doubtful.  The distinctive shape of the playground structure will no longer be associated solely with Corocord.  Dynamo is in the market providing playground structures with the same distinctive shape and other competitors may soon follow.

Attention Entrepreneurs!

I want to make entrepreneurs aware that they do not have to struggle alone, they can obtain assistance from VIATEC’s accelerator programs in order to fulfill the mission of increasing the number of successful technology companies that start and grow in the Greater Victoria area.

RevUP Program
Their RevUP Program focuses on the business challenges that technology companies with rapid-growth issues in British Columbia often encounter. By participating in RevUP, companies will be able to get personalized help with some of the common issues that hinder business growth: building scalable revenue and customer acquisition models, ensuring efficient operational processes and accessing capital opportunities. Individualized action plans, personal leadership coaching and targeted skill development are what make RevUP effective when it comes to addressing these needs. The benefits of the RevUP program include: Individualized action plans, Personal leadership coaching from Executives in Residence (EiRs), Targeted skill development, Professional support services from experts in marketing, sales, & IT, and Networking opportunities.

Venture Acceleration Program
Their venture acceleration program is designed to guide, coach and grow ambitious early-stage technology entrepreneurs. It is delivered by a team of Executives in Residence (EIRs) and supported by a province-wide network of mentors. The benefits of the Venture Acceleration Program include: Biweekly 1-on-1 coaching by Executives in Residence, Holding companies accountable to meeting goals, Personal experience running successful businesses, connections to networks (If I can’t help I know someone who can), broad reach to EiR network in BC, Reviews of proposals, pitch decks, etc, Exposure to mentors with diverse knowledge base, Networking with other startups to promote sharing of knowledge, talent, & resources, potential collaboration, Accelerator-only workshops targeting specific skills, Member only discounts on events, services (legal counsel, accounting, SEO), & partner programs, Connections to Accelerators across BC, Quarterly Reviews & ad-hoc meeting with full EiR panel & select mentors, Access to VIATEC’s job board & company listings, Promotional opportunities to be Tectorian of The Week, online News Releases, etc.

Entrepreneurship@Program
Similar to the venture acceleration program, their Entrepreneurship program is offered at no charge for a period of 6 months! This is perfect for the entrepreneur who expects to ramp their venture to a position of revenue and/or investment within the 6-month period.  The benefits of the Entrepreneurship Program include: Ensuring that the business basics have been established, Assisting with market definition, product fit and early adopter identification, Providing support and direction on business strategy, sales, marketing, Determining actions for market entry, including channels to market, partnership opportunities, key influencers, decision-makers and demand drivers, Leveraging existing relationships and knowledge to accelerate business development and help gain early traction.

For more information visit the VIATEC website at www.viatec.ca or email Rob Bennett rbennett@viatec.ca

Rapid Proto-typing through 3D Printing

singleright

Sandy Colvine of Revolution 3D printers recently gave me a tour of their premises on Henry Avenue in Sidney, along with a demonstration of their 3D printing capability. As a follow up, Sandy has provided me with some background on the current state of 3D printing which may be of interest to you.

Rapid prototyping technology, like 3D printing, allows creators see their dreams come to life. Advancements in additive manufacturing technology means 3D printers are, reliable enough to be used for manufacturing, and versatile enough to print in a range of materials. Some of these materials include biodegradable plastics, flexible rubbers and high-strength alloys. Now a prototype or part can be made in a matter of days rather than months; designs can literally be changed overnight.

Low volume manufacturing with 3D printers means there is no need to stock thousands of parts made abroad. A 3D printer service, as offered by Revolution 3D Printers can make products to order, when they are ordered. They can also produce a vast library of parts.  At Revolution 3D Printers, we offer a one stop shop prototyping service for people that want to bring an idea to the market. We help creators with conceptual design, turning their idea into a digital model and getting a prototype into their hands. We also help entrepreneurs take the next step into production by preparing their design for the manufacturing method that suits their needs. We help inventors turn their ideas from a sketch to a product sold. To learn more, visit our website Revolution3DPrinters.com or reach us with your questions at sales@Revolution3DPrinters.com

Nagoya Protocol

The other day I was asked a question about the Nagoya Protocol.  In order to answer the question, I had to review the text of the Protocol.  Although the Protocol has been around since 2011, it has recently received attention due to the announcement that the Trudeau Liberal government intends to move forward to implement the Protocol.  The Protocol has as its focus the use of biological systems and living organisms to make products and processes for use.  The Protocol seeks to promote a “fair and equitable” sharing of the benefits arising from utilization of genetic resources.  It also seeks to provide funding for the conservation of biological diversity.  An example of the need for conservation of biological diversity is the rapid rate of destruction of the rain forests and conversion to farmland.   It is hoped that funding can be secured that will provide financial incentives to preserve the rainforests.  The knowledge of genetic resources is often held by indigenous and local communities as “traditional knowledge”, and the Protocol contemplates domestic legislation to establish rights of indigenous and local communities over such genetic resources.  The Canadian government will be seeking prior and informed approval and involvement of our indigenous peoples to the use of their traditional knowledge upon mutually agreed terms that will see the indigenous peoples compensated.  The Nagoya Protocol goes hand in hand with the United Nations Declaration on the Rights of Indigenous Peoples (DRIP).  Article 24 of DRIP provides “Indigenous peoples have the right to their traditional medicines and to maintain their health practices, including the conservation of their vital medicinal plants, animals and minerals. Indigenous individuals also have the right to access, without any discrimination, to all social and health services”. Article 31 of DRIP provides “Indigenous peoples have the right to maintain, control, protect and develop their cultural heritage, traditional knowledge and traditional cultural expressions, as well as the manifestations of their sciences, technologies and cultures, including human and genetic resources, seeds, medicines, knowledge of the properties of fauna and flora, oral traditions, literatures, designs, sports and traditional games and visual and performing arts. They also have the right to maintain, control, protect and develop their intellectual property over such cultural heritage, traditional knowledge, and traditional cultural expressions”.  The passing of a law to implement the Nagoya Protocol in Canada should be relatively straightforward.  Other Countries have already adopted the Protocol and a review of their law should be of assistance in preparing equivalent Canadian legislation.  What may be interesting is the negotiations with our indigenous peoples that will follow the passing of the Canadian legislation into law.  Once a spotlight is placed on the rights of indigenous peoples, there may also have to be put in place protection of the “traditional cultural expressions” of the indigenous peoples as contemplated by Article 31 of DRIP.  I suspect we will discover there are many “traditional cultural expressions” that we have come to take for granted, such as the Cowichan blanket.

Beware When You Advertise

A decision rendered by the Ontario Supreme Court on September 26, 2016 in a dispute between Bell Canada (Bell) and Cogeco Cable Canada (Cogeco) could have potential ramifications for your business and the way that you advertise. Bell and Cogeco directly compete for Internet customers in many Ontario communities. Cogeco commenced an advertising campaign in August 2016 using the slogan “the best Internet experience in your neighbourhood”.  Apparently, this slogan had the desired effect with customers gravitating to Cogeco (advertising works).  However, Bell offered packages with internet download speeds of up to 940 megabytes per second (Mbps), whereas the highest download speed offered by Cogeco was 250 Mbps.  Bell commenced legal proceedings under section 52(1) of the Competition Act, which reads:
52 (1) No person shall, for the purpose of promoting, directly or indirectly, the supply or use of a product or for the purpose of promoting, directly or indirectly, any business interest, by any means whatever, knowingly or recklessly make a representation to the public that is false or misleading in a material respect.
Historically, Courts have been slow to intervene in disputes over advertising in part because it is understood that advertising often involves a certain amount of exaggeration, referred to as “puffery”.  Bell argued that the claim of “best Internet experience” required substantiation.  Cogeco argued that there were a number of factors, other than just speed, that go into how a customer experiences their service and the reference to “best” should be considered to be mere “puffery”.   After considering the facts, the Court granted Bell an injunction, which forced Cogeco to discontinue its advertising campaign.  The Court did so on the basis that the public is not sophisticated in these matters.  Cogeco had altered the marketplace by claiming to be the “best”.  The representation made by Cogeco to the public was false and misleading.  There is no question that the strong public response to the advertising campaign was a factor in the Court’s decision to grant the injunction.  If you are launching an advertising campaign, you must be cognizant of the types of representations you are making in your advertising.  If your competitor launches an effective advertising campaign with representations that you consider to be false or misleading in a material respect, you may have recourse.

Myths that drive IP Lawyers Crazy

Clients often have misconceptions about patents and trademarks. For example, a client contacted me the other day and asked that I make every effort to expedite his patent application. He wanted it granted as soon as possible, and pressed me for a best case scenario about how quickly I could obtain his patent. The client was frantic because a competitor was threatening to sue him for infringement of a patent the competitor had obtained. The client thought that obtaining a patent would make him safe from the threatened legal action. Unfortunately, it is a myth that your patent will save you from being sued by a competitor. You can obtain a patent and still be sued for infringing a patent owned by a competitor. For example, it is possible to obtain a patent for an improvement to an existing product or method, if the improvement is new and unobvious. However, if the improvement relates to something that is patented, and if in order to use the improvement it is necessary to use the subject matter of the original patent, then use of the improvement would infringe the original patent unless the owner of the original patent gave permission for such use. Thus, it is possible to obtain a patent for an invention but to be unable to work the patent without the permission of the owner of a patent for some underlying technology. When there is an allegation of patent infringement, you must either negotiate your way out of the problem (perhaps by cross-licensing) or “design around” the problem. Fortunately for my client, the client’s product is in the early stage of development and the allegation of infringement came up at the first tradeshow where the product was displayed. The client is now considering what changes can be made to the product to avoid the competitor’s patent. If the “design around” attempt is not successful or will take too long, the client has patents on some other technologies that can be used as bargaining chips in a negotiation. That same day, one of our Trademark Agents, Laura Duckett, came into my office to discuss two Trademarks a client had asked us to apply for two years previously. The Trademarks had been allowed by the Trademark Office. The problem was that, in the intervening period, the client had changed the Trademarks. With respect to one of the Trademarks, the client had asked us to apply for a Trademark consisting of two words. However, he had dropped one of the words and was now using a single word. To make matters worse, the single word was a “generic” term for the product that we will be unable to register. With respect to another of the Trademarks, the client had also asked us to apply for a Trademark consisting of two words. However, in the intervening period, he had made a substitution replacing one of the words with another word he liked better. Unfortunately (or fortunately depending upon your point of view), the Trademark Office grants you protection for the Trademark you apply for. It is a myth that the Trademark office will accommodate changes should your Trademark “evolve”. If you make material changes to your Trademark, you have to start the Trademark registration process all over again. When you get involved with Intellectual Property issues, instead of relying upon myths communicated to you by well meaning friends, seek the assistance of a Registered Patent Agent or Registered Trademark Agent in your area. A list of licensed agents is maintained on the Canadian Intellectual Property Office website at cipo.gc.ca.

How Does Your Website Rate?

I like to spread the word when I think someone is doing something right.  Today I am excited about a communication I received from the Business Development Bank of Canada (BDC). I am on the email list for the BDC and receive notices regarding various articles, some of which I download and read.   I received an email offer for a free e-book entitled “Social Media – A Guide for Entrepreneurs”. I know I should improve my knowledge of and activity in Social Media, so I followed a link to the BDC website and signed up for the e-book.   The BDC website confirmed that an email had been sent to me with a link to download my free email.  Then the part I am really excited about occurred.  A message popped up on the BDC website offering a free website evaluation. I always like any kind of objective evaluation.  Your golf score objectively measures whether your golf game is improving.  A metronome objectively measures whether you are keeping time when playing music.  Now here was a tool for objectively measuring the website experience at the Thompson Cooper website.  The resulting report we received from the BDC for the tcllp.ca website was divided into four parts:  Accessibility (to mobile devices), Marketing, Website experience, and Technology (how well designed the website is).  In some areas, such as accessibility to mobile devices and date last amended (currency), the tcllp.ca website scored 10 out of 10.  However, in the Marketing area, the score was a dismal 4.3, with scores of 2 out of ten for meta-tags and 0 out of 10 for feeds (whatever they are).  Clearly there is work to do.  I would like to thank the Business Development Bank of Canada for the free e-book (which I intend to read).  I would also like to thank the BDC for the website evaluation which opened my eyes regarding the shortcomings of our website.   If you like free stuff, as I do, I urge you to go to get on the BDC email list.  For the things that you have missed, articles, social media book, and website evaluation, follow the link to the BDC website and check it out. https://www.bdc.ca/en/articles-tools/entrepreneur-toolkit/business-assessments/pages/free-website-evaluation.aspx

2016 Annual Meeting of the Intellectual Property Institute of Canada (IPIC)

convention-brochureOne can gain an understanding of issues that the profession is wrestling with by reviewing the titles of the presentations from the 2016 IPIC annual meeting.  Continuing Professional Development: “The Skill Set of the IP Practitioner of the Future – Where will IP be in 20 years?”  Trademarks: “Trademarks in Metatags and Keywords – A summary of the Current State of the Law in Canada as Contrasted with the U.S. and Europe”, “Brand Boot Camp”, “Best Practices before the Trademark Office”.  Patent Issues: “Patent Issues that Keep In-House Counsel Up at Night”, “Patentability:  Dealing with Challenges in IT and Life Sciences”, “Best Practices before the Patent Office”.  Online Issues: “Managing Online Content: Tips, Traps, and Tariffs for IP Practitioners”.  Rights Issues: “Publicity Rights: Guidelines for Giving Clients Practical Risk Assessments”.  Litigation Issues: “Remedies – Quick Results in Trademark Cases: Myth or Reality”, “Top IP Cases of the Year”, “Appellate Advocacy in Specialized Area of the Law”.
Many of the above issues I deal with on a regular basis and have written articles about over the past year.  However, the presentation of “Futurist” Jeremy de Beer was of general application and may be useful to the reader.  Mr. de Beer described an approach to predicting the future using a “grid”.  He creates this grid by placing a first line that represents a trend that one can see today, such as automation (self driving cars, smart homes with remotely controlled appliances).  One end of the line represents the present and the other end of the line represents the future, if the trend continues. He then places a second line crossing the first line at 90 degrees to create his “grid” having four quadrants.  The second line represents a second trend that one can see today, such as the increasing capability of smart phones. Again, one end of the line represents the present and the other end of the line represents the future, if the trend continues.  A first quadrant will predict what happens if neither trend continues, a second quadrant will predict what happens if the first trend continues and the second does not progress, a third quadrant will predict what happens if the second trend continues and the second trend does not progress, a fourth quadrant will predict what happens if both trends progress.  Mr. de Beer indicates when you extrapolate what may happen some of your “predictions” (especially in the fourth quadrant) should appear to be ridiculous.  If this does not occur, you are not pushing the trend far enough. Self driving cars and everyone carrying miniature computers that connect to the internet would have sounded ridiculous 20 years ago. It is not viewed as being ridiculous today.

 

Comment:  I received some comment from Keith Sketchley that I felt should be shared.  He indicated that one should beware of overly simplistic methodologies.  He identified two fundamental flaw, in the futurists approach that he described as follows:

1. Trends do not continue indefinitely, in part because people change behaviours. In technical things that’s called “feedback”.  For example, increasing prices of a product will be met by reduced consumption in response to prices, demand drops, suppliers lower their prices.
2. It is difficult to predict new products and services, and some predictions fall far short. For example, a professor gave a Mr. Smith a C, sneering at his idea that people would pay a premium for assured delivery timing of documents. Mr. Smith went on to start an industry, he called his company “Federal Express

Rules for settling legal disputes

Some time ago, I travelled to Calgary to try to settle a legal dispute through mediation.  In mediation, a mediator attempts to guide the parties to a negotiated settlement. However, in this case the arrangement was that if the parties could not arrive at a settlement, the mediator would change roles and become an arbitrator, that is, authorized to impose a settlement upon the parties. My client and I travelled to Calgary for the weekend, in the expectation that we would fly back Sunday night having resolved the dispute.  My client’s view was the same as mine, that even a poor settlement would be better than a great lawsuit.  Time was also important, as my client had to resolve the dispute with the Calgary Company, before he would be free to enter into a new agreement with another company that was waiting in the wings for the dispute to be resolved. The mediation did not go well.  Every time we made progress, the opposing lawyer would inflame the discussions with allegations of “facts” that my client strongly disputed.   The point was reached where my client told me that he had had enough and he wished to move on to the arbitration phase. The matter then took an unexpected turn.  Instead of hearing submissions and rendering a prompt decision, the arbitrator  required a “Statement of Claim” to be prepared and served by a first date, a “Statement of Defence” to be prepared and served by a second date, an exchange of relevant documents to take place by a third date, examination of the parties under oath by a fourth date, and a “trial” at the Alberta Law Society Offices in Calgary on a fifth date, and indicated that a written decision would be rendered by him by a sixth date.  Under the schedule set forth by the arbitrator, it took another 11 months for the dispute to be resolved.  In another matter, I attended a settlement meeting in Edmonton with the General Manager of a biotech company.  The General Manager had to report to a wealthy individual who was the major shareholder and financial backer of the biotech company.  On the other side of the negotiating table was a person from the University’s commercialization office and a person heading up a biotech research team.   The person from the University’s commercialization office had to report to a University oversight committee.   The people in the room rapidly had a meeting of the minds and reached agreement on all issues, subject to approval of the persons to whom we reported.  It was in the reporting back that the agreement fell apart.  The major shareholder and financial backer, and the University oversight committee repeatedly came back with further conditions which made the job of settling the matter more difficult.  The first settlement meeting gave rise to a second and then a third settlement meeting, as each side tried to cope with shifting and evolving instructions.  I recently read an article regarding Federal Court Prothonotary (type of judicial officer) Mireille Tabib’s experiences as a mediator, which inspired this commentary.  The article, along with my own experiences, provides the following “rules” to follow when entering into negotiations of a legal dispute.  The first rule is to start at an early stage, where the focus is still on business concerns and has not yet shifted to “winning” the legal case at all costs.  The second rule is to focus on commercial realities, that is, what will “work” as a settlement and not the details of the claim that are often in dispute.  The third rule is that everyone doing the actual negotiating must have full authority to settle.