Homeaway.com Decision Threatens to Re-write Trade-mark Law in Canada (But Is it for the Better?)

December 14th, 2012 by Dan Glover Leave a reply »

In a case that could have major ramifications for trade-marks law in Canada, Justice Hughes of the Federal Court has concluded that, when a trade-mark appears on a computer screen website in Canada, regardless where the information may have originated from or be stored, constitutes for Trade-Marks Act purposes, use and advertising in Canada.

This strong conclusion comes from Homeaway.com, Inc. v. Martin Hrdlicka, 2012 FC 1467, a decision released December 12, 2012. In this case, the Applicant sought to expunge a trade-mark registered in 2010 by the Respondent Hrdlicka. On the Application, the Respondent represented himself.

In concluding that the mark VRBO should be expunged because of prior use in Canada, Justice Hughes transplanted the concept that a given activity can be both “here and there” from three significant cases: Libman v. The Queen, [1985] 2 S.C.R. 178 (involving criminal charges for telemarketing fraud where phone calls were made to the United States from Toronto), Society of Composers, Authors and Music Publishers of Canada v. Canadian Assn. of Internet Providers, 2004 SCC 45 (a case on whether a copyright “communication to the public” implicates Canadian law when it comes from a foreign server), and eBay Canada Limited v Canada (Minister of National Revenue), 2007 FC 930 (a decision of Justice Hughes concluding that information on a U.S. server is “both here and there” when it is “readily and instantaneously available to those within the group of eBay entities”).

On the facts of the new Homeaway.com case, the conclusion that the Applicant’s activities were a use in Canada was a reasonable conclusion, as the Applicant was indeed targeting and servicing a Canadian audience in advertising, on its website, homes, apartments and the like owned by third persons who wish to rent them out to others, such as vacationers. However, the statement of law made by Justice Hughes appears to go beyond these activities to state a general concept that is hard to reconcile with volumes of Canadian trade-mark case law on what constitutes “use” in Canada:

I find, therefore, that a trade-mark which appears on a computer screen website in Canada, regardless where the information may have originated from or be stored, constitutes for Trade-Marks Act purposes, use and advertising in Canada.

If taken out of the context of the specific facts of this case and given the status of a general principle of trade-marks law, this statement could have powerful and potentially undesirable implications for trade-marks law in Canada.

Examples of undesirable implications abound. For example, a foreign rightsholder that is not actively using its mark to deliver services in Canada would be able to overcome a s. 45 “deadwood” notice by showing a mark appeared on a Canadian screen in the past three years, even if it did not or could not perform a service. Likewise, a foreign rightsholder could seek to expunge a bona fide trade-mark in Canada on the grounds of “prior use” via the Internet, even if it had never been “prepared to perform” its services in Canada (see, e.g., Bedwell v. Mayflower, (1999), 2 C.P.R. (4th) 543; Société Nationale des Chemins de Fer Français SNCF v. Venice Simplon-Orient-Express, Inc., (2000), 9 C.P.R. (4th) 443 (F.C.T.D.) aff’g 64 C.P.R. (3d) 87 (“SNCF”)). Such a result would appear to be inconsistent with the well-known statement of the Supreme Court in Mattel, Inc. v. 3894207 Canada Inc., 2006 SCC 22 that “the gravaman of trade-mark entitlement is actual use”, with the Supreme Court connecting use to Canada. The result would also appear to be inconsistent with the longstanding distinction between actual use in Canada (s. 4) and “making known” in Canada (s. 5). Last, if taken out of context, the statement begs the question of whether a given Internet display truly is an “advertising of those services” in the meaning of s. 4(2) of the Trade-Marks Act.

As other courts have realized, the question of whether a given activity can be “here and there” is context specific. In the case Sirius Canada Inc. v. CMRRA/SODRAC Inc., 2010 FCA 348 (in which Andrew Reddon and I represented Sirius Canada), the Federal Court of Appeal recognized that, despite the SOCAN case at the Supreme Court, not all copyright activities taking place across a border with a Canadian impact are governed by Canadian law. In that case, as an example, a reproduction taking place on a U.S. server could not give rise to authorization liability in Canada, even if it supported a transmission that reached Canada. Why? Since the primary activity (the reproduction) took place on U.S. soil and was governed by U.S. law, any authorization of that activity was also governed by U.S. law.

Likewise, in trade-marks law, under venerable cases such as HRB Royalty, Inc v Express File, Inc, 2002 CanLII 61428 (CA TMOB), Porter v. Don the Beachcomber, (1966), 48 C.P.R. 280  (Ex. Ct.) and Marineland v. Marine Wonderland and Animal Park Ltd. (1974), 16 C.P.R. (3d) 97 (F.C.T.D.), an important distinction was drawn between services performed in Canada and services performed outside Canada, perhaps for Canadians. The former category should amount to “use in Canada”; the latter category should not, even if an advertisement trickles across the Canadian border.

So even if the right result was achieved in this case (because the Applicant was targeting and serving Canadians consistent with cases like SNCF), it would be dangerous to treat the Homeaway.com statement as a stable or unassailable principle of trade-marks law. The safer approach is to restrict the case to its facts while remaining skeptical of its general pronouncement.

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