The Federal Court of Appeal recently provided some guidance on the registrability of trademarks that are geographical place names, thereby reconciling what previously were considered by some to be conflicting judicial approaches. In so doing, the Court distinguished marks that are clearly descriptive of the place of origin of the associated goods/services from those that are deceptively misdescriptive and held that consumer perception of the geographical significance of a trademark is only relevant in the latter instance.

In MC Imports Inc. v. AFOD Ltd., 2016 FCA 60, the appellant, MC Imports Inc., imported and sold fish and seafood products under the trademark LINGAYEN. Lingayen is a municipality in the Philippines known for its bagoong shrimp paste. In the Federal Court, MC Imports Inc. commenced a summary trial for the infringement of its mark by the respondent, AFOD Ltd. By counterclaim, AFOD Ltd. challenged the validity of the LINGAYEN mark.

The Federal Court granted the motion for summary trial, but held the registration of the LINGAYEN mark invalid under paragraph 18(1)(a) of the Trade-marks Act, on the basis the mark contravened paragraph 12(1)(b) of the Act.

Paragraph 12(1)(b) prohibits the registration of a trademark that is clearly descriptive or deceptively misdescriptive of the place of origin of the associated goods or services. The trial judge noted a doctrinal divide alleged by the parties in the interpretation of this provision in two decisions of the Federal Court: Consorzio del Prosciutto di Parma v. Maple Leaf Meats Inc. 2001 F.C.J. No. 89, [2001] 2 F.C. 536 (“Parma”) and Sociedad Agricola Santa Teresa Ltd. v. Vina Leyda Limitada 2007 FC 1301, 63 C.P.R. (4th) 321 (“Leyda”). Specifically, the parties alleged that the divide in these cases was over the role of the ordinary consumer’s perception of the mark in asking whether it clearly described or deceptively misdescribed the place of origin of the goods or services. The trial judge indicated that he was unconvinced that such a divide existed in the jurisprudence and declined to resolve it on the basis that he arrived at the same result following either approach.

MC Imports Ltd. appealed the trial judge’s decision and sought a declaration that its mark was in compliance with paragraph 12(1)(b) and that its registration was valid.

On appeal, the FCA reviewed the problematic cases Parma and Leyda before articulating a novel legal test for determining whether a mark is clearly descriptive of a place of origin under paragraph 12(1)(b).

In Parma, the registered trademark PARMA was used in association with meat products, namely prosciutto. Its validity was challenged by a group of prosciutto producers operating in Parma, Italy. The issue was whether the mark was deceptively misdescriptive of a place of origin since the goods at issue were not actually produced in Parma. The Court adopted the test articulated in Atlantic Promotions Inc. v. Registrar of Trade Marks (1984), 2 C.P.R. (3d) 183 (F.C.T.D.) and held that the determination of whether a mark is deceptively misdescriptive contrary to paragraph 12(1)(b) hinged on whether the general public in Canada would be misled into believing that the goods or services associated with a mark had their origin in the geographical location of the trademark. Since ordinary consumers in Canada were not generally aware of Parma as a region in Italy and did not associate the production of meat products with Parma, the Federal Court held that they would not be misled that the meats sold in association with the PARMA mark had their origin in Parma. Accordingly, the trademark was held to be in compliance with paragraph 12(1)(b) and the registration was valid.

While Parma dealt with the “deceptively misdescriptive” branch of paragraph 12(1)(b), the issue in Leyda was whether the trademark LEYDA was clearly descriptive of wine produced in the region of Leyda in Chile. In Leyda, the Federal Court held that the perspective of the ordinary consumer in Canada was not relevant and stated that “a shrewd trader should not be permitted to monopolize the name of a foreign wine district in Canada by registering it as a trademark”[1] regardless of the knowledge, or lack thereof, of the average Canadian consumer of the geographical significance of a trademark.

In MC Imports, the FCA distinguished Parma and Leyda based on the branch of paragraph 12(1)(b) at issue. In this case, the trademark at issue was also the name of the place of origin of the associated goods and the issue was whether the mark was clearly descriptive. Accordingly, the FCA adopted the approach in Leyda and articulated the following three-pronged test for such instances:

i. Determine whether the impugned trademark is a geographical place name;

ii. Determine whether the goods or services originate from the geographical place used as the trademark; and

iii. Consider any evidence of prior use of the mark and determine whether the mark was distinctive at the relevant time?

Whether the Impugned Trademark is a Geographical Place Name

When assessing the registrability of a mark under the “clearly descriptive” branch of paragraph 12(1)(b), the perspective of the ordinary consumer is generally irrelevant. This approach was also adopted by the FCA late last year in Lum v. Dr. Coby Cragg Inc., 2015 FCA 293, where the court held that a trademark that is a geographical place name is not registrable when the associated services originate from that geographical place, regardless of whether the place is known for such services. However, in MC Imports, the FCA noted that resort to consumer perceptions may be necessary where a geographical place name has other meanings. For example, “Sandwich” is a geographical place name in the United States and the United Kingdom, but it is also a food product. Accordingly, the primary meaning of the word to the average Canadian consumer must be considered. In such instances, the relevant ordinary consumer is the ordinary consumer of the goods or services with which the mark is associated. The FCA cautioned that this approach should only be used where a mark has multiple meanings, not all of which are geographical, and that it was not intended to exclude trademarks composed of geographical place names not widely known by Canadians from the ambit of paragraph 12(1)(b).

Whether the Goods or Services Originate from the Geographical Place Used as the Trademark

If the goods or services originate from the geographical place which is used as a trademark, then the mark will be considered to be clearly descriptive of the place of origin. The FCA stressed that an applicant of a trademark registration should not be allowed to benefit from a consumer’s lack of knowledge in geography[2] and that it should remain open to all producers of goods and services to describe the origin of what they are selling[3].

Alternatively, if the goods or services do not originate from the geographical location used as a trademark, then the mark is misdescriptive and its registrability must be determined under the “deceptively misdescriptive” branch of paragraph 12(1)(b). Since the case at issue concerned the “clearly descriptive” branch, the FCA considered it unnecessary to set out the analytical approach for determining whether a trademark was “deceptively misdescriptive” under paragraph 12(1)(b).

Whether the Trademark’s Prior Use is Relevant

A determination that a trademark is clearly descriptive of a place of origin does not automatically preclude the registration of a mark. Subsection 12(2) provides an exception to paragraph 12(1)(b). Despite being clearly descriptive or deceptively misdescriptive, a trademark is nonetheless registrable if it has acquired distinctiveness as of the filing date of the application. To demonstrate that a trademark has become distinctive of the associated goods or services, evidence of both prior use and acquired distinctiveness as a result of that use must be presented. The relevant perspective is that of the ordinary consumer of those goods or services.

Application of the New Legal Test Under Paragraph 12(1)(b)

It was established that LINGAYEN is the name of a municipality in the Philippines and that the goods associated with the LINGAYEN mark originated in that municipality.[4] Since no evidence of acquired distinctiveness was provided by the appellant, the FCA held the mark to be clearly descriptive of the place of origin and unregistrable. MC Imports Ltd.’s registration was accordingly invalid.

Practical Implications

In the past, some trademarks have been registered where the trademark contained the name of a geographical place name and the goods/services may have originated from that place provided the ordinary consumers of the goods/services were unaware that the trademark referred to a geographical place name or where the geographical place did not have a recognized connection to the goods/services in question. Following MC Imports, it may be more difficult to register such trademarks moving forward. Of significance, it is no longer relevant whether the ordinary consumers are aware that the trademark referred to a geographic place and that the place is recognized as having a connection to the goods/services in question.

[1] See Leyda at para. 9.

[2] See MC Imports at para. 65.

[3] See MC Imports at para. 68.

[4] No evidence was presented by the appellant to suggest that the ordinary meaning of “Lingayen” was anything else but the Philippine municipality.

Recently, there has been much publicity around self-declared ‘free’ TV streaming devices. The websites selling these devices such as http://www.freetvbox.ca/ and http://androidtvboxescanada.com/ allege that receiving an unauthorized stream of copyrighted material is legal in Canada. But is using these devices really legal? The answer raises complex questions of both law and fact. As a matter of fact, what are these devices actually doing? Do they download files only temporarily, or in some more enduring way? Do the devices only download files, or do they upload them as well? As a question of law, is it only an infringement of copyright to download a file that persists in some way? Or is downloading a stream also an infringement of copyright?

 How TV Streaming Devices Work

TV streaming devices such as those sold from the websites above are small computers that come preloaded with software like the Android™ operating system, Kodi™ media server, and one or more Kodi™ plugins. These plugins are what connect to various media sources over the Internet, download files, and manage files on the device. These plugins may use one of two different distribution models, and one of two different consumption models.

Distribution

Distribution is how a user receives a file. There are two commonly employed methodologies used to distribute files over the Internet: centralized distribution, where users connect to a single file hosting service and each download a copy of a file, and peer-to-peer distribution, where a network of users connect to one another, and share a file amongst themselves.

File hosting services, often referred to as file-lockers, are dedicated file servers, generally accessible to anyone over the Internet. A user connects directly to a file-locker, and downloads a file directly from it.

Peer-to-peer file sharing networks use a communications protocol like BitTorrent. There are three key principles to these protocols. First, every user downloading a file simultaneously uploads the file. Second, every file is split into small parts. And finally, a file is downloaded from multiple users concurrently, by receiving different parts of the file from different users. The protocol connects all users together in a network, who all simultaneously upload and download a file from each other. This design provides massively increased speed and reliability over centralized distribution.

Consumption

Consumption is how a file is used once a user has received it. Regardless of which method is used to distribute a file, there are two ways for an end user to consume it: downloading a durable copy of the file for asynchronous consumption, or receiving a stream of the file for concurrent consumption. Even when a stream is received, it is technologically necessary for the user’s computer to make at least a temporary copy of portions of the file.

The differences between downloading a durable copy and receiving a stream relate to what order the parts of the file are delivered in, and what happens to those parts after they have been watched. When downloading a durable file, a user receives all the parts of the file in any order, and watching the file does not delete the parts of the file. When receiving a stream of a file, a user receives all the parts of the file roughly in the order they are watched, and parts are downloaded just prior to watching them. The parts of the file are then deleted once they have been watched. Thus, although the user does not retain a durable copy of the file when receiving a stream, there is at least a temporary reproduction of the file, or parts of the file, made on the user’s computer while consuming the stream.

What do the Plugins do?

What is problematic about many TV streaming devices is that it is not always clear which distribution and consumption model they are employing. The most common and free media player, Kodi™, has a library of plugins including Popcorn Time™, Pheonix™, Genesis™ and Pulsar™. These plugins use different distribution and consumption methods, in part based on how they are configured.

One of the most popular plugins, Popcorn Time™, uses a peer-to-peer network to download a complete copy of a file, which by default is deleted not as it is watched, but only when the application is closed. Popcorn Time™ also has an option to keep the downloaded files. So while purporting to be a streaming service, Popcorn Time™ downloads a durable copy of every file that is fully watched, which exists in its entirety on the user’s device, and at best is deleted sometime after watching.

Another common plugin, Genesis™, downloads files from file-lockers. By default it is configured to download parts of a file in the order they are watched, and delete the parts after they are watched. However, it can also be configured to download and store an entire file in advance of watching it.

Thus, how a plugin operates can depend on both the plugin and how the user has configured it. This complicates the legal analysis of copyright infringement.

Canadian Copyright Law

Sub-section 3(1) of the Copyright Act, R.S.C. 1985 c. C-42 (the “Act”) defines copyright as “the sole right to produce or reproduce the work or any substantial part thereof in any material form whatever, [and] to perform the work or any substantial part thereof in public”, including the right in paragraph 3(1)(f) “to communicate the work to the public by telecommunication”. Sub-section 27(1) of the Act makes it an infringement to do anything that only the owner of the copyright has the right to do. The Supreme Court of Canada (the “SCC”) has decided several cases in recent years that provide some guidance as to what activities carried out over the Internet infringe copyright under these provisions.

In Entertainment Software Association v Society of Composers, Authors and Music Publishers of Canada, 2012 SCC 34, the SCC ruled that downloading a video game containing musical works is not a communication to the public of those musical works by telecommunication under paragraph 3(1)(f) of the Act. The court held that communication to the public under paragraph 3(1)(f) does not include delivering a durable copy of the work, because this paragraph is merely an example of the right to perform the work in public. Thus, while the download of a durable copy of a work implicates the right to reproduce the work, it does not implicate the right to perform the work in public.

In the companion case Rogers v Society of Composers, Authors and Music Publishers of Canada, 2012 SCC 35, the court held that paragraph 3(1)(f) can include a series of repeated point-to-point transmissions of a stream of the same work to numerous different recipients. Thus, the right to perform a work in public includes the right to post files to the Internet so that third parties can stream those works. This is so even where the individual transmission of each stream is triggered by individual users rather than the person who made the file available for streaming. Such communications can be viewed as “pull” communications initiated by individual users, rather than “push” communications more traditionally associated with the right to perform the work in public, such as radio or television broadcasts. That communications where a user pulls the communication to themselves, rather than having the person who made the work available push the communication out to the user, fall within the scope of paragraph 3(1)(f) has been further reinforced by the coming into force of the Copyright Modernization Act, S.C. 2012, c. 20, which added sub-section 2.4(1.1) to the Act. This sub-section clarifies that communication of a work or other subject-matter to the public by telecommunication includes making it available to the public by telecommunication in a way that allows a member of the public to have access to it from a place and at a time of their choosing.

Thus, uploading a copyrighted work for download by members of the public over the Internet, or making a copyrighted work available over the Internet so that members of the public can receive a stream of that work over the Internet, infringes copyright. The entity that provides members of the public with unauthorized access to copyrighted works, whether by making those works available for download or for streaming, infringes copyright. A member of the public who downloads a durable copy of a copyrighted work from such an unauthorized service provider also infringes the copyright owner’s exclusive right to reproduce that work.

However, whether a member of the public who merely receives a stream of a copyrighted work from such an unauthorized service provider infringes copyright is less clear. Under sub-section 3(1), including paragraph 3(1)(f), the exclusive right granted to the copyright owner is to perform the work in public, including by communicating it to the public. The copyright owner is not granted an exclusive right to control who receives a performance of the copyrighted work. Thus, a user who merely receives a stream of a copyrighted work could argue that they do not directly infringe copyright, because they are not engaging in any act that the copyright owner has an exclusive right to do.

This analysis is complicated by the practical realities of how TV streaming devices operate. In practice, when content is streamed over the Internet, a user’s computer will make a local copy (i.e. “reproduction”) of that file on the user’s computer. This local copy could be considered to be a substantial reproduction of the copyrighted work, which would infringe the copyright owner’s sole right to reproduce the work, unless some exception to infringement provided by the Act applies.

The SCC has also considered the issue of whether temporary copies infringe copyright, albeit in the context of broadcasting operations. The court held in Bishop v Stevens, [1990] 2 SCR 467, that the right to broadcast a performance under sub-section 3(1) of the Act does not include the right to make ephemeral recordings beforehand for the purpose of facilitating the broadcast. Thus, the public performance right and the reproduction right granted under sub-section 3(1) of the Act had to be separately licensed to carry out the broadcasting without infringing copyright. This proposition was recently affirmed in Canadian Broadcasting Corporation v SODRAC 2003 Inc, 2015 SCC 57. These rulings mean that even non-permanent reproductions, like those made while streaming a file, could constitute copyright infringement, unless there is a specific provision in the Act that authorizes such reproductions.

There are numerous exceptions to infringement included in the Act, including section 30.71 covering temporary reproductions necessary for technological processes. Section 30.71 reads:

30.71 It is not an infringement of copyright to make a reproduction of a work or other subject-matter if

• (a) the reproduction forms an essential part of a technological process;
• (b) the reproduction’s only purpose is to facilitate a use that is not an infringement of copyright; and
• (c) the reproduction exists only for the duration of the technological process.

This is most likely the section that many commentators and device providers are relying upon to support the assertion that streaming of copyrighted content is legal in Canada, since any temporary copy of a streamed work on a user’s local computer is arguably made as part of the technological process of streaming the work. However, there are three requirements that a user must meet to rely on section 30.71, including that the only purpose of the reproduction is to facilitate a non-infringing use.

As discussed above, the activities of the entity making copyrighted works available for streaming by members of the public are an infringement of copyright. An end user viewing the stream might be able to argue that they are not personally engaged in an act of copyright infringement by receiving the stream. However, because the entity that made the copyrighted work available does infringe copyright, it is arguable that the use being facilitated by the user’s temporary reproduction is in fact an infringement of copyright, in which case the exception provided under section 30.71 would not appear to be available to exempt the temporary reproduction made on the user’s computer. The user might therefore be liable for directly infringing the copyright owner’s exclusive right to reproduce the work by making a temporary copy on their local computer for the purpose of facilitating the stream.

In other words, contrary to what is suggested by those promoting free TV streaming devices, it is not entirely clear that receiving an unauthorized stream of a copyrighted work in Canada does not infringe copyright. At best, this activity could be said to fall within a grey zone.

Enforcement Considerations

Another point relied on by those touting the legality of free TV streaming devices in Canada is that it would be difficult for copyright owners to enforce their rights against individual users. In practice, given the cost of taking legal action and the damages potentially available, it is not economical for a copyright owner to sue each and every individual infringer. However, copyright owners have and likely will continue to take legal action against individual end users, if only in an attempt to deter others from engaging in similar activities.

In practice, copyright owners can determine the identity of individuals who are engaged in copyright infringement on the Internet, and can initiate legal action against those individuals. Because peer-to-peer networks work by sharing a file among a large group of people, it is easy for copyright owners to discover who is using them. All a copyright owner needs to do is connect to a peer-to-peer network and log the IP addresses of everyone else sharing the file. IP addresses are allocated by internet service providers (ISPs), so a copyright owner can take the list of IP addresses and obtain a court order for the ISP to disclose which account holder was using each IP address at that time, as was ordered in Voltage Pictures LLC v. John Doe, 2014 FC 161. The copyright owner may then sue the identified alleged infringers for copyright infringement, which would result in significant costs to those individuals to defend the action (or alternatively a payment to settle the action). Thus, while requiring the involvement of the ISP, tracking unauthorized sharing over a peer-to-peer network and enforcing IP rights against infringers is relatively straightforward.

Copyright owners now also have the option of having the ISP send individuals who have allegedly engaged in copyright infringement a notification through the notice-and-notice regime established under sections 41.25 and 41.26 of the Copyright Modernization Act. The receipt of such a notification can be distressing to the user, and, although not an intended function of the notice-and-notice regime put in place by the Copyright Modernization Act, in practice such letters often include an offer that the copyright owner will not pursue legal action if the user pays a modest sum of money to the copyright owner. Thus, the end user may feel pressured to settle and avoid the possibility of legal action being taken against them.

Downloading files from file-lockers is potentially more difficult for copyright owners to track. Since there is no peer-to-peer sharing, the copyright owners would have to force a file-locker to log and share the IP addresses of whoever accesses their content. This may be difficult, as file-lockers can be located in jurisdictions outside of Canada, and therefore it may be difficult for copyright owners to obtain information from such entities. However, where such services are within the jurisdiction of the Canadian courts or are located in a jurisdiction that would enforce a Canadian court order, copyright owners may be able to obtain such information.

As another practical consideration, whether a user is downloading and storing or just streaming a file would not be discernable from the file sharing protocol employed. From the perspective of a peer in a peer-to-peer network, or a file-locker, an entire file is transferred to the user. Therefore even if a copyright owner wanted to only pursue people downloading a durable copy of a file, there would be no way to distinguish them from those receiving a stream of a file. This means that even if a user does not infringe copyright by streaming a file, users could still be contacted or sued by copyright owners, and would be required to establish in a legal action that they were merely streaming and not downloading a durable copy of the file.

Conclusion

Whether or not the use of TV streaming devices is legal is a complex question. Many who believe streaming to be legal employ simplified understandings of both the technology and the law. What each device actually does is not always apparent, and can differ based on its specific configuration. How copyright law will apply to the different configurations is also unclear. And finally, viability of enforcement is sometimes conflated with legality of the activity. This all means that the legal implications of receiving unauthorized streams of copyrighted content are not clear, and users should be cautious in relying on claims that the use of TV streaming devices to access unauthorized copyrighted content will not result in any adverse consequences for the user.

 

Last month, the U.S. Court of Appeals for the Federal Circuit overturned a decision of the United States Patent and Trademark Office (“USPTO”) which was based on a law that bars the registration of “disparaging” trademarks.1

Simon Tam, member of the rock band The Slants, sought to register the band’s name as a trademark in the U.S. for “entertainment, namely, live performances by a musical band.” The trademark was deemed by the USPTO to be disparaging to people of Asian descent and registration was refused. The Federal Circuit held that the USPTO’s refusal, done pursuant to Section 2(a) of the Lanham (Trademark) Act 2, constituted a violation of the First Amendment to the United States Constitution (i.e. free speech rights).3

This decision is likely to have repercussions for other owners of controversial trademarks in the U.S., including the Washington Redskins.

In a well-publicized June 2014 ruling, the District Court for the Eastern District of Virginia granted summary judgment in favour of several individual defendants seeking affirmation of the USPTO’s decision to cancel six registrations of the Washington football team’s “Redskins” trademarks on the grounds that the marks may be disparaging to Native Americans and thus do not qualify for federal registration under Section 2(a) of the Lanham Act.4 The District Court held that cancellation of the “Redskins” registrations did not impinge on the trademark owner’s First Amendment rights since its use of the marks was not precluded.

The Washington Redskins have appealed this decision to the U.S. Court of Appeals for the 4th Circuit. Since the football team is defending its registrations in a different appellate circuit, the ruling of the Federal Circuit that decided the Slants case is not binding. However, the reasoning applied in the Slants case may warrant additional consideration. In the Slants case, the Court found that the denial of the (significant) benefits of registration would have the effect of forcing people to refrain from using certain terms in trademarks, for fear that registration would be denied. Thus, even though Section 2(a) does not prohibit use, the prospect of refusal of registration has a chilling effect on speech that was held to violate the First Amendment.

These decisions raise interesting questions for owners of Canadian trademark rights. For example, there are Canadian “Redskins” registrations; could they face similar challenges in Canada?5

In Canada, similar “policy-type” limits to an applicant’s ability to register a trademark are provided by Section 9(1)(j) of the Canadian Trade-marks Act, which prohibits any person from adopting “in connection with a business, as a trade-mark or otherwise, any mark consisting of, or so nearly resembling as to be likely to be mistaken for any scandalous, obscene or immoral word or device.” However, this provision is distinguishable from Section 2(a) of the Lanham Act.

In the United States, only registration is prohibited by Section 2(a).6 However, in Canada, Section 9(1)(j) prohibits any adoption of the offending mark, be it registered or unregistered. Other provisions of the Trade-marks Act prohibit both the registration (section 12(1)(e)7) and the use (section 118) of such marks. Since it is the adoption, use, and registration of “scandalous, obscene or immoral” marks that are barred under the Canadian Trade-marks Act, the Canadian legislation seems even more restrictive than the United States legislation (though there is very little Canadian jurisprudence relating to what is deemed in Canada to be unacceptable). Thus, some commentators speculate that similar freedom of expression issues9 may arise in Canada to those raised in the U.S. cases above.10

Canada’s Charter of Rights and Freedoms permits reasonable limits to be placed on rights so long as they are demonstrably justified in a free and democratic society.11 Thus, denial of adoption of a trademark under Section 9(1)(j) may potentially be seen as an acceptable limitation on free speech rights in Canada.12

In RJR-MacDonald Inc. v. Canada (Attorney General)13, the Supreme Court of Canada (“SCC”) considered whether limitations on tobacco companies’ rights to freedom of expression could be justified under section 1 of the Charter. In 1988, the Canadian government enacted legislation to limit the harm caused by tobacco consumption. The tobacco companies challenged, amongst other things, a provision that banned the use of tobacco trademarks on goods other than tobacco products (e.g. t-shirts, etc.). The government conceded that the provision violated the companies’ rights to freedom of expression. The SCC found that no rational connection had been demonstrated between the ban on the use of tobacco trademarks and the goal to reduce tobacco consumption and held the provision to be unconstitutional.

The government of Canada then enacted the Tobacco Act14 to address the same public health goals while remedying the flaws of the previous legislation. Under the Tobacco Act, the display of tobacco-related brand elements15 or corporate names in sponsorship activities, or on permanent facilities was prohibited. The SCC found the provision to violate section 2(b) of the Charter, but held that the limitations were justifiable.16

In view of the Slants and Washington Redskins rulings in the United States, it could be argued that a prohibition on the adoption, use, and registration of a trademark subjectively17 determined to be “scandalous, obscene or immoral” is not minimally impairing and, accordingly, is an unjustifiable limit on free speech rights in Canada.18 No one has yet challenged the “Redskins” or similar registrations in Canada, but it is fathomable that these registrations could be susceptible to a challenge under Section 9(1)(j). It remains to be seen what the approach of the Canadian judiciary to offensive trademarks as free speech will be.

[1] See In re Tam, en banc Federal Circuit, No. 2014-1203 issued 22 December 2015.

[2] Section 2(a) of the Lanham Act, 15 U.S.C. §1052(a) (“Lanham Act”) states: “No trademark by which the goods of the applicant may be distinguished from the goods of others shall be refused registration on the principal register on account of its nature unless it— (a) Consists of or comprises immoral, deceptive, or scandalous matter; or matter which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute . . .”

[3] The United States government has the option to appeal the decision of the Federal Circuit.

[4] Pro-Football, Inc. v. Blackhorse, et al., No. 1:14-cv-01043-GBL-IDD (E.D. Va. 8 July 2015).

[5] The Canadian “Redskins” registrations, owned by Pro-Football Inc., have not, to date, been the subject of a challenge under Section 9(1)(j) of the Canadian Trade-marks Act, R.S.C., 1985, c. T-13 (“Trade-marks Act”).

[6] This was critical to the Washington Redskins’ decision, where the District Court held that cancellation of the “Redskins” registrations did not impinge on the trademark owner’s First Amendment rights since its use of the marks was not precluded.

[7] Section 12(1)(e) of the Trade-marks Act prohibits the registration of a trademark of which the adoption is prohibited by section 9.

[8] Section 11 of the Trade-marks Act prohibits the use “in connection with a business, as a trade-mark or otherwise, any mark adopted contrary to section 9 or 10 of this Act”.

[9] Section 2(b) of the Canadian Charter of Rights and Freedoms, Part I of the Constitution Act, 1982, being Schedule B to the Canada Act 1982 (U.K.), 1982, c. 11 (the “Charter”) guarantees that “[e]veryone has the following fundamental freedoms: freedom of thought, belief, opinion and expression, including freedom of the press and other media of communication.”

[10] David Vaver, Intellectual Property Law: Copyright, Patents, Trade-marks, 2d ed. (Toronto: Irwin Law, 2012, at 483); Teresa Scassa, Antisocial Trademarks, (2003) Trademark Reporter 103(5): 1172-1213.

[11] See section 1.

[12] Freedom of expression challenges to a similar provision in Europe have failed under the European Charter of Human Rights in view of considerations comparable to section 1 of Canada’s Charter of Rights and Freedoms (see note 18).

[13] [1995] 3 S.C.R. 1999.

[14] SC 1997, c. 13 (“Tobacco Act”).

[15] Under section 2 of the Tobacco Act, “brand element” was defined to include “a brand name, trade-mark, trade-name, distinguishing guise, logo, graphic arrangement, design or slogan that is reasonably associated with, or that evokes a product, a service or a brand of product or service, but does not include a colour.”

[16] The SCC found that the limitations were rationally connected to the legislative goal and were minimally impairing.

[17] The Canadian Intellectual Property Office’s Trademarks Examination Manual provides some guidance as to the interpretation of section 9(1)(j). It states: “A scandalous word or design is one which is offensive to the public or individual sense of propriety or morality, or is a slur on nationality and is generally regarded as offensive. It is generally defined as causing general outrage or indignation. A word is obscene if marked by violations of accepted language inhibitions or regarded as taboo in polite usage. This word is generally defined as something that is offensive or disgusting by accepted standards of morality or decency; or offensive to the senses. A word or design is immoral when it is in conflict with generally or traditionally held moral principles, and generally defined as not conforming to accepted standard of morality.”

Obviously, assessing whether a mark is “scandalous, obscene or immoral” is a subjective determination and may be vulnerable to arbitrariness in the absence of clear and detailed guidance.

[18] However, boards in the United Kingdom and Europe that have considered similar freedom of expression issues have found that so long as a trademark registration is denied where “an accepted principle of morality is being offended against”, then any limit on freedom of expression is justifiable: see Ghazilian’s Trade Mark Application, [2002] RPC 33, para. 20; Basic Trademark SA’s Trademark Application, [2005] RPC 25, para. 6; and In the Matter of Registered Trade Mark No. 218549 in the Name of French Connection Ltd. , O-137-06, para. 60.

The sands of patentable subject-matter are shifting around the world, and Canada is no exception. On 29 June 2015, the Canadian Intellectual Property Office (“CIPO”) released a Practice Notice

(Patent Notice: Examination Practice Respecting Medical Diagnostic Methods – PN 2015-02) providing guidance on the examination of medical diagnostic method claims. Since the release of these guidelines, there has been an influx of examiner’s reports from the CIPO rejecting patent applications featuring certain types of diagnostic method claims.

Consistent with the most recent guidance on the examination of computer-implemented inventions in view of the decision of the Federal Court of Appeal in Amazon.com, Inc. v. Canada (Attorney General), 2011 FCA 328, Practice Notice PN 2015-02 provides that the patentability of diagnostic method claims is determined by a purposive construction of the words of the claims. On a purposive construction, the essential elements of the claims will be identified. The Practice Notice instructs that in order to construe the claims, the examiner is to first identify the problem that the inventors set out to solve (in view of the description of the patent application and the examiner’s understanding of the common general knowledge) and the solution disclosed. The Practice Notice contemplates two different types of problems for diagnostic methods: a “data acquisition problem” and a “data analysis problem.  As can be seen from the discussion below, the CIPO will consider a diagnostic method claim to be directed to patentable subject- matter where the problem solved by the invention is a “data acquisition problem”. In contrast, the CIPO will not consider a diagnostic method claim to be directed to patentable subject -matter where the problem solved by the invention is a “data analysis problem”.

Differentiating “Data Acquisition” and “Data Analysis” Problems

Practice Notice PN 2015-02 describes a “data acquisition problem” as being solved by an invention which pertains to a novel structure or method in order to be able to physically acquire data (e.g., an invention that is directed to using novel methods of acquiring data on a known biomarker or one that is directed to the discovery of a new biomarker). Indicia that the problem to be solved is a “data acquisition problem” in the Practice Notice include:

• disclosure of an analyte[1] that does not form part of the common general knowledge, and a method of identifying or quantifying the analyte;

• explicit statements that a specific problem or solution relates to how to identify or quantify a particular analyte;

• a significant level of detail devoted to describing the technical details of how data about a particular analyte is acquired; and/or

• an emphasis on the challenges or deficiencies of prior means to identify or quantify a particular analyte.

In contrast, a “data analysis problem” is solved by an invention which pertains to the analysis of the significance of the acquired data (e.g., the invention is directed to a natural correlation between a medical condition and a biomarker where conventional techniques are used to detect a known biomarker). Indicia that the problem to be solved is a “data analysis problem” in the Practice Notice include:

• explicit statements suggesting the problem to be solved is a “data analysis problem”, or something other than a “data acquisition problem”;

• placing an emphasis on the discovery of a new correlation between a condition and an analyte that forms part of the common general knowledge, with a relative absence of technical details pertaining to how to acquire the data about the analyte;

• indicators or explicit statements that, in order to acquire data about a particular analyte, it is common general knowledge to apply the means contemplated by the application; and/or

• an absence of any explicit indication in the application that any practical problems were overcome relating to how to acquire data about an analyte that forms part of the common general knowledge.

Thus, unless the invention involves a novel molecule, or a new way of detecting or quantifying a new or known molecule, it appears that the CIPO will consider the claimed invention to be directed to a “data analysis problem”.

Practice Notice PN 2015-02 also instructs that if a claim includes a solution to more than one problem, examination should focus on only one solution in performing purposive construction. The effect of this approach as it is currently being applied is to classify all diagnostic claims as being directed to either a “data acquisition problem” or a “data analysis problem”, and to treat these categories as mutually exclusive.

Determination of the Essential Elements of a Diagnostic Method Claim

Under the approach to purposive construction applied by the CIPO pursuant to its previous Practice Notice PN 2013-02, the examiner is to determine the essential elements of a claim as the “element or set of elements that is essential to the successful resolution of the problem”. The CIPO will only consider a diagnostic method claim to define patentable subject- matter if a physical step of data acquisition can be identified as an essential element of the claim.

Where the examiner concludes that the problem solved by the invention is a “data acquisition problem”, the Practice Notice instructs that the solution is provided by those elements that provide a means to acquire data about an analyte. Exemplary data acquisition steps given in the Practice Notice include:

• detecting protein X in a subject sample;

• measuring the concentration of substrate X;

• determining the expression levels of genes A, B and C;

• contacting a urine sample with antibody A and determining optical density; or

• incubating a sample with a nucleic acid probe consisting of SEQ ID NO:1 and detecting hybridization between the probe and target sequence Z.

In contrast, where the examiner concludes that the problem is a “data analysis problem”, the Practice Notice instructs that the solution is provided by those elements that relate to the analysis of acquired data or the purpose of providing diagnostic meaning. Exemplary data analysis steps given in the Practice Notice include:

• relating the presence of protein X from said test sample to a diagnosis of whether the test sample is from a subject suffering from disease Y;

• comparing the expression levels of genes A, B and C to a control standard, wherein a decrease in the levels as compared to the control is indicative of disease Y; or

• wherein hybridization of the probe to a target is indicative of the presence of disease Y.

The Practice Notice asserts that how data is analyzed or interpreted in a diagnostic method generally has no material effect on how the data needs to be physically acquired (and conversely, how data is analyzed generally has no material effect on how the data is acquired). Therefore, the Practice Notice concludes that the data acquisition elements and data analysis elements in the diagnostic method claim likely have a relationship reflecting an aggregation rather than a combination. The practical effect of this analysis is that the examiner will make a determination that a claim is directed to either a “data acquisition problem” or a “data analysis problem”, and, depending on that determination, will conclude that either only the steps that solve the data acquisition problem, or only the steps that solve the data analysis problem, are essential elements of the claimed invention.

Our View of the Practice Notice

The CIPO’s approach to the analysis of the essential elements of a claim as set forth in PN 2013-02 has been soundly criticized, and is not further discussed here. However, Practice Notice PN 2015-02’s bifurcation of patentability based on whether the problem solved is a “data acquisition problem” or a “data analysis problem”, and its characterization of the relationship between the data acquisition steps and the data analysis steps in diagnostic method claims as an unpatentable aggregation, are troublesome developments.

Historically, the subject-matter of a claim has been considered to be an “aggregation” if each of the elements in the claim is known, and each element performs its own individual function as would be expected if it were used on its own[2]. By contrast, the subject-matter of a claim is considered to be a patentable “combination” if the elements in the claim cooperate to produce a unitary result . Practice Notice PN 2015-02 essentially asserts that the CIPO will not consider both the data acquisition steps and data analysis steps of a diagnostic method as a combination that cooperates to produce a unitary result[3].  This is so even though in the absence of either step, the other step cannot function and produce a useful result (or as useful a result) on its own. For example, data acquired from the acquisition step has limited utility unless such data is analyzed using the data analysis step to provide a meaningful conclusion as to the outcome of the diagnostic method. Conversely, without the data acquisition step, there is no data on which to perform an analysis, and therefore no useful information can be obtained about any particular subject who is subjected to the diagnostic method.

The CIPO’s restrictive application of the guidance in Practice Notice PN 2015-02 raises potential concerns for those attempting to obtain patent protection for diagnostic methods in Canada. Many novel diagnostic methods are directed to the discovery of a natural correlation between a medical condition and a biomarker. It is not uncommon that the description of a diagnostic method patent application mentions that the biomarker can be detected using any of a variety of conventional diagnostic techniques.

In the absence of legislative change or further court decisions, applicants seeking to obtain patent protection for a diagnostic method in Canada may need to carefully consider their patenting strategies. Where possible, any novel aspects of the molecule that is assayed or the method that is used to acquire the diagnostic data or quantify the molecule should be emphasized in the description and claims. However, in some cases where the molecule to be assayed and methods to detect and quantify that molecule were known, it may be difficult to frame the claims to conform to the analysis set forth in Practice Notice PN 2015-02. For such applications, it is anticipated that appeals to the Patent Appeal Board, and ultimately the Canadian courts, may be required to clarify the correct approach to be taken to evaluating the patentability of diagnostic methods.

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[1] Practice Notice PN 2015-02 defines the term “analyte” to mean a chemical substance or biomarker that is the subject of analysis.

[2] Crila Plastic Industries Ltd. v. Ninety-eight Plastic Trim Ltd. (1987), 18 C.P.R. (3d) 1 (F.C.A.) at pages 1 and 7 to 9, affirming 10 C.P.R. (3d) 226 (F.C.T.D.); see also Canadian Intellectual Property Office, “Manual of Patent Office Practice” (last update: March 2016) at section 15.02.04 [MOPOP].

[3] See MOPOP at section 15.02.04.