Product advertising in the time of COVID-19: Health Canada and the Competition Bureau are on the lookout for misleading claims

March 3, 2021

It’s been more than a year since the COVID-19 pandemic began, and many companies are attempting to market products intended to help consumers deal with the risks associated with COVID-19. Some of the most common examples of such products include face masks, testing devices, hand sanitizers, and hard-surface disinfectants. However, while many of these products can be useful (such as by helping reduce the risk of infection), there remains the question of what COVID-19 related claims, if any, can be attributed to the product (e.g. on the product's packaging or in an advertisement).

An inaccurate or inappropriate statement can garner the attention of both Health Canada and the Competition Bureau. In fact, since the start of the pandemic, the Competition Bureau has been issuing compliance warnings to businesses across Canada regarding potentially false or misleading claims that their products and services can prevent the disease and/or protect against the virus.¹

Accordingly, we have written this newsletter to summarize what Health Canada and the Competition Bureau are looking for when assessing COVID-19-related claims. We also provide examples of the types of statements that have been considered “unacceptable,” as well as a brief description of the consequences of utilizing such unacceptable statements.

Please note that the following does not address which licenses are necessary to sell specific products in Canada, nor does it address which legal requirements apply. For example, hand sanitizers, in order to be sold in Canada, must meet the requirements of the Natural Health Products Regulations (NHPR).

The general principles of the Competition Act and the rules of the Canadian Competition Bureau

With respect to both COVID-19-related claims and product claims in general, the Competition Act prohibits false or misleading claims about any product, service, or business interest. This applies to both the literal meaning of a statement and the general impression it creates. Furthermore, the Competition Act prohibits performance claims that are not backed up by adequate and proper testing. First, such testing must be performed prior to the claim being made and on the actual product being sold, as opposed to a comparable or similar product. Second, they must reflect the product's real-world usage—such as in-home use. Third, the results of the tests must support the general impression created by the claims.

Since as early as May 2020, the Competition Bureau has enforced the above guidelines by issuing direct compliance warnings to a variety of businesses across Canada to stop potentially deceptive claims, including warnings against:

Making claims that certain products (including herbal remedies, bee-related products, vitamins, and vegetables) can prevent COVID-19 infections; and
Making claims—without first conducting the testing required by law—that certain UV and ozone air sterilization systems, as well as certain air filters or air purifiers, will effectively kill or filter out the virus.

Accordingly, the above rules should always be followed when making any COVID-19-related claim about a product.

Examples of advertising incidents addressed by Health Canada

Health Canada has provided a list of more than 400 advertising incidents related to COVID-19.²

The table provided in footnote 2 lists products and corresponding companies or advertising media found to engage in non-compliant marketing, which are currently under review or have been resolved. While many of these incidents have been resolved, it is unclear what resolution occurred. Was the claim modified or removed entirely? Did the company have to pay a fine? Did the company manage to convince Health Canada that their claim was acceptable as is? Nonetheless, it is clear that the statements were questionable enough that Health Canada found it necessary to intervene. The COVID-19-related claims found therein can thus serve as an effective guide of what claims not to use when advertising products. Along with many unauthorized general claims of “preventing” or “treating” coronavirus and/or COVID-19, some interesting examples of statements flagged by Health Canada include the following:

“To protect against Coronavirus” – with respect to a “bandana and protection mask set.”
“Flatten the curve with these on trend Fashion Masks” – with respect to a face mask.
“Anti-Microbial Micropoly Fabric” – with respect to a face mask.
“Ideal for Covid-19” – with respect to a face mask.
“Anti-coronavirus, blocks pollution like: exhaust fume, smog, flu virus” – with respect to a face mask.
“Effectively isolates saliva carrying coronavirus” – with respect to an “Anti-Dust And Anti-Fog Hat Anti Coronavirus Hat.”
“The importance of boosting the immune system during the threat of COVID-19” – with respect to various natural health products.
“Suitable in bathroom, living room, bedroom hotel, flu Covid-19” – with respect to a “UV Disinfection Lamp Steriliser.”
“labeled ‘COVID-19’ under tab” – with respect to a face mask.

As can be seen, some of the statements do not even directly mention COVID-19 or coronavirus, and instead reference concepts such as “flattening the curve” or make general representations about having “anti-microbial” properties. Moreover, many of the claims simply reference COVID-19, without making any representations about treating and/or preventing it.

In addition to consulting the above guidelines and examples, it may be wise to seek out products that have been approved by Health Canada for use against COVID-19. Some examples of such products include the following:

Disinfectants with evidence for use against COVID-19.
Authorized medical testing devices for uses related to COVID-19.
Authorized medical devices other than testing devices for uses related to COVID-19.

Based on the above, products should only bear COVID-19-related claims if they have been approved for use against COVID-19 by Health Canada, and, even then, such claims should be limited to said use and to what the supporting evidence demonstrates.

Some of the links above also contain information on how to obtain the aforementioned approval from Health Canada.

Please note that, as of the date of this newsletter, no hand sanitizers have been approved in Canada with COVID-19-related claims.³ Consequently, although hand sanitizers can help reduce the risk of infection by, or spread of, microorganisms, COVID-19-related claims should not be used with such products. Even so, Health Canada has provided a list of hand sanitizers that they have authorized for sale in Canada.

In general, a sound policy is to thoroughly review your marketing materials to identify any claims related to the prevention or treatment of COVID-19 that may be false, misleading, or unsubstantiated, and immediately modify or remove such claims accordingly.

Penalties for false representations and misleading marketing practices

The penalties for using COVID-19-related claims that do not comply with the law can be quite severe and can include fines and jail time.⁴ In fact, false or misleading representations and deceptive marketing practices, regardless of whether they involve COVID-19-related claims, can be prosecuted under civil law and/or criminal law. As an example, under civil law, the court may order a person to cease an activity, publish a notice and/or pay an administrative monetary penalty. On first occurrence, individuals are liable to penalties of up to $750,000, and corporations, up to $10,000,000. For subsequent occurrences, the penalties increase to a maximum of $1,000,000 for individuals and $15,000,000 for corporations. Under criminal law, a person is liable to a fine of up to $200,000 and/or imprisonment for up to one year. We thus strongly recommend avoiding making false or misleading COVID-19-related claims at all times.

We hope that our newsletter serves as a useful guide regarding what Health Canada and the Competition Bureau consider an “inaccurate” or “false” COVID-19-related claim, and that it has clearly laid out what the consequences of making such a claim in association with a given product can be. However, whether a COVID-19-related claim is appropriate will depend on many factors, such as the exact wording of the claim and the exact nature of the product.

Our intellectual property team would be happy to help you with any questions you may have regarding what COVID-19-related claims, if any, you should use on your products, as well as any other legal requirements that must be met before a specific product can be sold in Canada.

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Written by

James Duffy
Patent Agent and Senior Associate
Chantal Desjardins
Partner, Lawyer and Trademark Agent

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November 27, 2024

Announcement of U.S. tariffs: repercussions and trade strategies for Quebec businesses?

Nearly four years after the Canada-United States-Mexico Agreement (the “CUSMA” or the “Agreement”) came into force, U.S. President-elect Donald Trump announced on November 25, 2024, that he would impose 25% tariffs on all products entering the U.S. from Canada and Mexico, starting on the first day of his presidency, that is, January 20, 2025. Mr. Trump added that the tariffs would remain in effect until Canada and Mexico strengthened their border policies, which he blames for the increase in illegal immigration and the trafficking of devastating drugs in the United States. As a reminder, under the current provisions of the CUSMA, most products made in Quebec and Canada can be sold on U.S. markets without tariffs applying. And so, although we can only speculate and although Mr. Trump did not give details on this subject in his announcement, his future administration could indeed invoke a number of legislative authorities to implement such a measure. In particular, it could invoke the CUSMA’s essential security exception, which allows a party to the Agreement to apply any measure deemed necessary to protect its essential security interests, the national security exception in the Trade Expansion Act of 1962, which President Trump’s first administration used in 2018 to introduce tariffs on U.S. imports of certain steel and aluminum products, or the provisions of the National Emergencies Act. Needless to say, the announcement sent shockwaves through the political and business communities in Canada and Quebec what with the close commercial ties that the U.S. has with Canada, including with Quebec. In the first quarter of 2024 alone, Quebec’s merchandise exports to the U.S. reached CAN$21.2 billion, which accounts for nearly 74.6% of the province’s international merchandise exports and makes the U.S. Quebec’s main trading partner on the world stage. The imposition of 25% tariffs would therefore significantly affect Quebec businesses. It would make them less competitive on the U.S. market, on which they rely heavily to export their products. The measure could be particularly detrimental to the Canadian forestry industry, which is already severely affected by tariffs of nearly 15% on lumber. The U.S. economy would also be considerably affected by such protectionist tariffs. While in the short term, tariffs could benefit certain domestic manufacturers and producers, in the longer term, they are likely to harm the U.S. economy as a whole. Many U.S. manufacturers would face higher costs of inputs, and established supply chains would be disrupted, in particular in the automotive and steel industries. To continue to make profits, many U.S. companies could be forced to pass on the additional costs to their end consumers by raising the prices of their products, which would undoubtedly result in another wave of inflation. Worth mentioning also are the retaliatory measures that the Canadian government may want to implement in response to such tariffs, which could affect certain parts of the U.S. economy. Although the CUSMA provides for dispute resolution mechanisms, they are unlikely to lessen the impact of the measures that the Trump administration is considering in the short term, as a final decision under these mechanisms could take a long time to be issued. The new U.S. administration could use the announcement made on November 25 as leverage in future CUSMA renewal negotiations, the preparatory discussions for which are slated to begin next year, or in negotiations for a separate trade agreement between the U.S. and Canada that would exclude Mexico. Canadian businesses would do well to encourage their various trade associations to take steps to lobby both American decision-makers and their corporate customers in the U.S. and remind them of the harmful effects that the announced tariffs may have on American businesses. While we wait for a more detailed announcement with information concerning specific tariff exemptions in particular, we suggest that businesses choose their future trading partners with great care. In an increasingly protectionist global economic context, a strategy involving the diversification of trading partners is the best way for businesses to offset the risks associated with a particular country’s tariff policies. The Comprehensive Economic and Trade Agreement signed by Canada and the European Union in 2017, which our firm helped to negotiate, may prove to be an interesting solution in this respect. Our team of commercial law and tax professionals is available to help you find solutions to the issues arising from this announcement. With our expertise, we can assist you in your commercial negotiations and help you develop strategies to mitigate the impact that the announced tariff increase may have on your business.

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November 22, 2024

Bill C-244: unlocking the right to repair

On November 7, 2024, Bill C-244, An Act to amend the Copyright Act (diagnosis, maintenance and repair)1 received royal assent, adding a new exception to the provisions governing technological protection measures (TPM) in the Copyright Act (CA). This legislative amendment adds section 41.121 to the CA, making it legal to circumvent TPMs for product maintenance, repair and diagnosis. What it means The new section 41.121 is expected to have a limited impact on the Canadian repair market. Although repairers can now circumvent TPMs to diagnose, maintain or repair a customer’s device, it is still forbidden for repairers to use the services of a TPM circumvention specialist, and specialized circumvention equipment is still prohibited. Furthermore, the absence of a fair dealing exception in this amendment poses ongoing risks of copyright infringement for these purposes. A number of questions remain unanswered, including the scope the courts will assign to the terms “maintenance” and “repair.” Does upgrading a device with improved technology fall within the definition of maintenance, or are repairers restricted to servicing devices according to original specifications? For example, if a connected device becomes obsolete after a new security standard is adopted, would replacing its software constitute maintenance? In short, the adoption of Bill C-244 represents but a small step toward the right to repair goods, and it serves as a prime example of how reconciling property rights with intellectual property rights can be challenging. Amendments made by C-244 Section 41.121, as introduced by C-244, has three paragraphs: Diagnosis, maintenance and repair 41.121 (1) Paragraph 41.1(1)(a) does not apply to a person who circumvents a technological protection measure for the sole purpose of maintaining or repairing a product, including any related diagnosing, if the work, performer’s performance fixed in a sound recording or sound recording to which the technological protection measure controls access forms a part of the product. For greater certainty (2) For greater certainty, subsection (1) applies to a person who circumvents a technological protection measure in the circumstances referred to in that subsection for another person. Non-application (3) A person acting in the circumstances referred to in subsection (1) is not entitled to benefit from the exception under that subsection if the person does an act that constitutes an infringement of copyright. Under the new section, the protection afforded to TPMs is set aside for maintenance and repair purposes, including the related diagnosing. Subsection 41.121(2) adds that the exception also applies to a person, such as a professional repairer, who repairs a product for another person. Subsection 41.121(3) further adds that the exception applies only to situations where there is no copyright infringement; for example, copyright infringement would be a person circumventing TPMs to repair a product, but taking advantage of the situation to make an illicit copy of a computer program. Bill C-244 reintroduced certain provisions of Bill C-272,2 which had been tabled in September 2020 but abandoned after the 2021 federal election. However, unlike the original text, the amendment passed on November 7, 2024, does not allow a person to manufacture, import or distribute TPM-circumvention devices to be used to perform repairs. It is rather limited to making the act of circumvention itself legal. Origin of the problem Bill C-272 was partly introduced in response to the decision in Nintendo of America Inc. v. King,3 which had considerably dampened the TPM-containing-device repair industry. In that case, the Federal Court awarded Nintendo of America Inc. $11.7 million in statutory damages following the circumvention of its TPMs, with $20,000 awarded for each of the 585 affected games, and an additional $1 million in punitive damages. Technological Protection Measures (TPMs), also known as digital locks or digital rights management (DRM) technologies, are mechanisms used to safeguard copyrights and sensitive information in the digital domain. They regulate access to or the copying, alteration and redistribution of digital content, such as audio and video files, software and e-books. TPMs can take various forms, including access codes, passwords, encryption keys, watermarks, digital signatures, encryption methods, and integrated hardware-based protections. These measures may be embedded in the files themselves, or in the devices that read, store or distribute them. DVD encryption and video game cartridge protections are well-known examples. The World Intellectual Property Organization (WIPO) first proposed a framework for protecting TPMs in 1996, anticipating that increased internet usage might escalate copyright infringement.4 In 1999, the United States ratified the framework by passing the Digital Millennium Copyright Act (DMCA), followed by Canada’s enactment of the Copyright Modernization Act5 in 2014. This legislative amendment introduced section 41.1 and related provisions to the Copyright Act (CA), prohibiting the circumvention of TPMs. Today, TPMs are ubiquitous, appearing in cars, tractors, medical implants, printer cartridges, game consoles, and various electronic devices. The $11.7 million award to Nintendo of America Inc. pursuant to this provision had a chilling effect on the repair industry.6 In response to the Nintendo decision, Bill C-272 proposed exceptions to the prohibition on circumventing TPMs for diagnosis, maintenance, and repair activities, as specified in paragraph 41.1(1)(a) of the CA. It also included an exception for the manufacture, importation, or distribution of products designed to circumvent TPMs for these purposes, addressing the restrictions noted in paragraph 41.1(1)(c) of the CA. Harmonization with the Canada-United States-Mexico Agreement The scope of the new section 41.121 introduced by Bill C-244 was significantly narrowed to prevent conflicts with the Canada-United States-Mexico Agreement (CUSMA). Article 20.66 of CUSMA requires member countries to enforce three categories of prohibitions related to TPMs: a prohibition on offering TPM circumvention services, a prohibition on the manufacture, import, or distribution of devices intended for TPMs circumvention, and a prohibition on the act itself of circumventing TPMs. Paragraph 5 of Article 20.66 specifies certain exceptions to these prohibitions, particularly for purposes such as interoperability, encryption research (security), and government activities (most of which are addressed under sections 41.11 and following of the CA), but it does not include an exception for the repair of goods. The exception provided in section 41.121 was thus limited to the third CUSMA category which involves the prohibition on circumventing TPMs themselves, as outlined in paragraph 41.1(1)(a) of the CA. As such, the prohibitions on offering TPM circumvention services, and manufacturing, importing or distributing TPM circumvention devices, set out in paragraphs 41.1(1)(b) and 41.1(1)(c), respectively, remain unchanged, even if the purpose of circumvention is to repair a device. Introduction of ambiguous wording Legal professionals may recognize that the changes made to the definitions in section 41 present new challenges. In an attempt to clarify how the new provision’s application, the legislator has added two conflicting expressions to the definitions of “circumvent” and “technological protection measure,” which may not have been necessary. Before After Technical protection measures and information on the rights mechanism Definitions 41 The following definitions apply in this section and in sections 41.1 to 41.21. circumvent means, a) (a) in respect of a technological protection measure within the meaning of paragraph (a) of the definition technological protection measure, to descramble a scrambled work or decrypt an encrypted work or to otherwise avoid, bypass, remove, deactivate or impair the technological protection measure, unless it is done with the authority of the copyright owner; and Technical protection measures and information on the rights mechanism Definitions 41 The following definitions apply in this section and in sections 41.1 to 41.21. circumvent means, a) (a) in respect of a technological protection measure within the meaning of paragraph (a) of the definition technological protection measure, to descramble a scrambled work or computer program, or decrypt an encrypted work or computer program or to otherwise avoid, bypass, remove, deactivate or impair the technological protection measure, unless it is done with the authority of the copyright owner; and b) … b) … technological protection measure means any effective technology, device or component that, in the ordinary course of its operation, a) controls access to a work, to a performer’s performance fixed in a sound recording or to a sound recording and whose use is authorized by the copyright owner; or technological protection measure means any effective technology, device or component that, in the ordinary course of its operation, a) controls access to a work, including a computer program, to a performer’s performance fixed in a sound recording or to a sound recording and whose use is authorized by the copyright owner; b) … b) … In the first instance, the legislator specifies that definition applies to “a work or computer program,” which suggests that a computer program is not considered a work. However, the second definition uses the phrase “a work, including a computer program,” implying the opposite. These clarifications were unnecessary, since the definition of “work” already includes literary works, and section 2 of the CA expressly states that literary works include computer programs. It is unfortunate that the text was adopted in its current form despite the numerous comments on this issue during parliamentary reviews.7 Striking a balance between property rights and intellectual property rights The debates surrounding these legislative changes illustrate the inherent challenges in striking a balance between the reduction of property rights, including the right to repair goods, and the promotion of intellectual property rights. For example, the Entertainment Software Association of Canada has advocated for excluding game consoles from the new exception.8 Paul Fogolin, the association’s Vice President of Policy and Government Affairs, argued that broadly opening the right to repair goods could jeopardize the video game industry by making it almost impossible for rights holders to pursue legal action against those tampering with their protection measures.9 Charles Bernard, Lead Economist for the Canadian Automobile Dealers Association,expressed concerns about increased auto theft risks.10 Catherine Lovrics, Chair of the Copyright Policy Committee, Intellectual Property Institute of Canada, anticipated cybersecurity risks.11 Several industry stakeholders believe that making documents, software, parts, and tools available for repair could elevate the risk of cyberattacks. Industry representatives in the United States have highlighted similar risks. For instance, the Association of Equipment Manufacturerssuggests that enabling the circumvention of TPMs could compromise emission controls on equipment, potentially leading to violations of environmental laws and risks to human life.12 Others have raised concerns about product liability issues.13 According to Apple and Panasonic, today’s electronics are too complex for non-specialists to repair and, thus, broadening the right to repair could compromise consumer safety.14 Concerns about safety, security, and liability are certainly legitimate; however, it is also valid to question whether intellectual property law is the appropriate vehicle to address these issues. During review of C-244, Shannon Sereda, Director of Government Relations, Policy, and Markets for Alberta Wheat and Barley Commissions, highlighted the potential difficulties farmers face when they cannot swiftly repair their equipment. She argued that “[t]he current legislative environment in Canada supports equipment repair monopolies by allowing OEMs to prohibit the bypassing of TPMs.”15 Anthony D. Rosborough, a researcher in the Law Department of the European University Institute, corroborated this viewpoint, stating that TPMs “function principally to protect technologies, rather than works or the rights of authors.” In his view, the industry sometimes relies on copyrights for what should be more appropriately protected with patents or trade secrets.16 The relaxation of TPM rules in Canada aligns with similar measures already implemented in the United States. On October 28, the Librarian of Congress renewed a series of exceptions to section 1201 of the Digital Millennium Copyright Act (DMCA), including provisions that allow the circumvention of certain protection measures for repairs.17 These exceptions are subject to renewal every three years and have so far been renewed twice since 2018.18 Over the past few years, the United States has taken several steps to promote the right to repair goods. In May 2021, the Federal Trade Commission (FTC) filed a detailed report19 on anti-competitive practices related to the right to repair. On July 9, 2021, shortly after the report was released, the U.S. President issued an Executive Order to combat such practices and encourage the development of a third-party or owner repair market.20 Since then, multiple states have enacted laws supporting the right to repair.21 On January 8, 2023, John Deere pledged to enable independent repairers to service its equipment.22 Apple Inc., historically opposed to expanding the right to repair, shifted its stance in 2022 by launching a self-service repair program and publicly supporting California’s new right-to-repair law.23 Last year, WIPO reported that 40 states had introduced legislation in favour of the right to repair.24 Here in Canada, the adoption of Bill C-244 represents another step in establishing the right to repair goods. This measure builds on another federal bill, C-59,25 which also received assent last June and amended the Competition Act to empower courts to compel suppliers to sell diagnosis or repair tools. At the provincial level, Quebec became the first province to enact right-to-repair legislation last year. 26 In the coming months, it remains to be seen whether the new section 41.121 of the Copyright Act (CA) will unlock the repair market. For the moment, the measure strikes us as somewhat timid.27 Parliament of Canada, LEGISinfo: C-244: An Act to amend the Copyright Act (diagnosis, maintenance and repair), Parliament of Canada, online: https://www.parl.ca/legisinfo/en/bill/44-1/c-244. Parliament of Canada, LEGISinfo: C-272, An Act to amend the Copyright Act (diagnosis, maintenance and repair), Parliament of Canada, online: https://www.parl.ca/legisinfo/en/bill/43-2/c-272. Nintendo of America Inc. v. King, 2017 FC 246, [2018] 1 FCR 509. WIPO Copyright Treaty, December 20, 1996, article 11, online: https://www.wipo.int/wipolex/en/treaties/textdetails/12740. Copyright Modernization Act, S.C. 2012, c. 20, assented to on 2012-06-29, online: https://laws-lois.justice.gc.ca/eng/AnnualStatutes/2012_20/FullText.html; Canada Gazette, Vol. 146,No. 23 – November 7, 2012, SI/2012-85 Order Fixing Various Dates as the Dates on which Certain Provisions of the Act Come into Force, P.C. 2012-1392, October 25, 2012, online: https: //canadagazette.gc.ca/rp-pr/p2/2012/2012-11-07/html/si-tr85-fra.html. Graham J. Reynolds, “Of Lock-Breaking and Stock Taking - IP, Climate Change, and the Right to Repair in Canada,” in 2023 101-1 Canadian Bar Review 32, 2023 CanLIIDocs 1144, p. 54, online: https://canlii.ca/t/7n4cj. Committee on Industry and Technology, 5 December 2022, Catherine Lovrics, Open Parliament, online: https://openparliament.ca/committees/industry/44-1/49/catherine-lovrics-2/; Committee on Industry and Technology, 15 February 2023, Viviane Lapointe, Open Parliament, online: https://openparliament.ca/committees/industry/44-1/59/viviane-lapointe-5/; Committee on Industry and Technology, 15 February 2023, Andy Fillmore, Open Parliament, online: https://openparliament.ca/committees/industry/44-1/59/andy-fillmore-6/; Committee on Industry and Technology, 15 february 2023, Patrick Blanar, online: https://openparliament.ca/committees/industry/44-1/59/patrick-blanar-1/. Entertainment Software Association of Canada, Bill C-244 – An Act to amend the Copyright Act (diagnosis, maintenance and repair), online: https://www.ourcommons.ca/Content/Committee/441/INDU/Brief/BR12209146/br-external/EntertainmentSoftwareAssociationOfCanada-e.pdf. Committee on Industry and Technology, February 8, 2023, Paul Fogolin, online: https://openparliament.ca/committees/industry/44-1/57/paul-fogolin-1/. Committee on Industry and Technology, February 8, 2023, Charles Bernard, online: https://openparliament.ca/committees/industry/44-1/57/charles-bernard-1/. Industry and Technology Committee, December 5, 2022, Catherine Lovrics, online: https://openparliament.ca/committees/industry/44-1/49/catherine-lovrics-2/. Emma Fillman, “Comprehensive Right to Repair:The Fight Against Planned Obsolescence in Canada,” (2023) 32 Dalhousie J Legal Stud 123, p. 145. online https://digitalcommons.schulichlaw.dal.ca/djls/vol32/iss1/5/. Irene Calboli, “The right to repair: Recent Developments in the USA,” World Intellectual Property Organization Magazine, August 2023, online: https://www.wipo.int/wipo_magazine_digital/en/2023/article_0023.html. Emma Fillman, “Comprehensive Right to Repair:The Fight Against Planned Obsolescence in Canada,” (2023) 32 Dalhousie J Legal Stud 123, pp. 142 and following, online https://digitalcommons.schulichlaw.dal.ca/djls/vol32/iss1/5/. Committee on Industry and Technology, February 8, 2023, Shannon Sereda, online: https://openparliament.ca/committees/industry/44-1/57/shannon-sereda-1/. Committee on Industry and Technology, February 8, 2023, Anthony D. Rosborough, online: https://openparliament.ca/committees/industry/44-1/57/anthony-d-rosborough-1/. Copyright Office, Library of Congress, Exemption to Prohibition on Circumvention of Copyright Protection Systems for Access Control Technologies, Federal Register, October 28, 2024, online: https://www.federalregister.gov/documents/2024/10/28/2024-24563/exemption-to-prohibition-on-circumvention-of-copyright-protection-systems-for-access-control. Copyright Office, Library of Congress, Exemption to Prohibition on Circumvention of Copyright Protection Systems for Access Control Technologies, Federal Register, October 26, 2018, online: https://www.federalregister.gov/documents/2018/10/26/2018-23241/exemption-to-prohibition-on-circumvention-of-copyright-protection-systems-for-access-control. Federal Trade Commission, Nixing the Fix: An FTC Report to Congress on Repair Restrictions, May 2021, online: https://www.ftc.gov/system/files/documents/reports/nixing-fix-ftc-report-congress-repair-restrictions/nixing_the_fix_report_final_5521_630pm-508_002.pdf. The White House, Executive Order on Promoting Competition in the American Economy, July 9, 2021, online: https://www.whitehouse.gov/briefing-room/presidential-actions/2021/07/09/executive-order-on-promoting-competition-in-the-american-economy/. X, Jon Campbell, December 29, 2022, online: https://twitter.com/JonCampbellNY/status/1608327624526548993; Colorado General Assembly, Consumer Right to Repair Agricultural Equipment, April 25, 2023, online: https://leg.colorado.gov/bills/hb23-1011; Minnesota Legislature, Minnesota Session Laws, 93rd Legislature, Chapter 57 – S.F. No. 2744, online: https://www.revisor.mn.gov/laws/2023/0/Session+Law/Chapter/57/; Sidley, “California Becomes Third U.S.State to Join the Right-to-Repair Movement,” October 24, 2023, online: https://www.sidley.com/en/insights/newsupdates/2023/10/california-becomes-third-us-state-to-join-the-right-to-repair-movement. John Deere, Memorandum of Undestanding, January 8, 2023, online: https://www.fb.org/files/AFBF_John_Deere_MOU.pdf. The Verge, “Surprise:Apple now supports California’s right to repair,” August 23, 2023, online: https://www.theverge.com/2023/8/23/23843506/apple-california-right-to-repair-sb-244. Irene Calboli, “The right to repair: Recent Developments in the USA,” World Intellectual Property Organization Magazine, online: https://www.wipo.int/wipo_magazine_digital/en/2023/article_0023.html. Parliament of Canada, LEGISinfo: C-59: An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 21, 2023 and certain provisions of the budget tabled in Parliament on March 28, 2023; Parliament of Canada, online:https://www.parl.ca/legisinfo/en/bill/44-1/c-59. Québec National Assembly, Bill 29, An Act to protect consumers from planned obsolescence and to promote the durability, repairability and maintenance of goods, online: https://www.assnat.qc.ca/en/travaux-parlementaires/projets-loi/projet-loi-29-43-1.html. The author would like to thank Laura Trépanier-Champagne for her work in supporting the writing of this publication.

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August 2, 2024

Publication of the Regulation clarifying the obligations of Bill 96: Impacts on trademarks for products, advertising, and public signs and posters

The Regulation1 specifying the new obligations of Bill 962 was published in the Gazette officielle du Québec on June 26, 2024. It modifies the current Regulation respecting the language of commerce and business.3 These changes were expected considering the questions raised by the passage of Bill 96 in June 2022, which required clarification. In this bulletin, we will discuss issues related to the use of trademarks in connection with products, commercial publications, public signs and posters, and commercial advertising. Exception for recognized trademarks Good news! The Regulation reintroduces the exception for “recognized” trademarks,4 within the meaning of the Trademarks Act. Common law trademarks and trademarks registered with the Canadian Intellectual Property Office (“CIPO”) may be used without a French version, provided that no French version of the trademark appears in the Register. By regulation, the government has extended the scope of the exception to trademarks. Under Bill 96 it was to apply only to CIPO-registered trademarks. It has been extended to also cover common law trademarks. With this amendment, the government has made the rules around trademarks more consistent, whether they are used in connection with products, commercial publications or public signs and posters. It is still recommended to register your trademarks to protect your rights, but registration is no longer a condition for compliance with applicable regulations. Obligation to translate generic and descriptive terms included in trademarks The Charter of the French language5 (the “Charter”) stipulates that any inscription on a product, its container or its wrapping must be in French, and that no inscription in another language may be given greater prominence than that in French or be available on more favourable terms. The Regulation confirms that the term “product” includes its container, packaging and any accompanying documents or objects.6 The Regulation also clarifies the scope of the obligation to translate descriptions and generic terms included in trademarks: “Description” and “generic term”: A description refers to one or more words describing the characteristics of a product, while a generic term describes the nature of a product, excluding the name of the enterprise and the name of the product as sold.7 Designations of origin and distinctive names of a cultural nature are not considered a description or a generic term. In all likelihood, the reference to the “name of the product as sold” refers to the product’s main trademark. The obligation to translate generic terms or descriptions contained in the trademark would not apply to the main trademarks under which the product is sold. Thus, according to the example provided by the Quebec government, there would be no need to translate into French the descriptions or generic terms included in the main trademark BestSoap, as illustrated below. The question also arises regarding secondary trademarks, which are often used to designate a specific product within a range of products. Can we say that such a secondary trademark qualifies as a "name of the product as sold," in addition to the main trademark? Unfortunately, the guide published by the Office québécois de la langue française ("OQLF") does not provide any clarity on this matter, while the text of the Regulation appears broad enough to allow for such an argument depending on the circumstances. In our opinion, such an argument could be made in some cases, but we will need to await the position of the OQLF (or a court decision) for more certainty on this issue. The Regulation specifies that the French translation of the generic terms or descriptions included in trademarks must appear in French on the product or on a medium permanently attached to the product.8 However, it does not provide a definition of “a medium permanently attached to the product.” It will be interesting to see how practice develops in this area, and how the OQLF interprets this notion. Keep in mind the Charter’s principle that no inscription in another language should be available on more favourable terms. Companies opting for the medium option will need to ensure not only the permanence of the medium, but also its availability, under conditions that are at least as favourable. It should also be noted that the size of the French translation of generic terms and descriptions included in a trademark is not specifically addressed in the Regulation. However, the OQLF website specifies that no generic term or description in another language should take precedence over that appearing in French; the OQLF thus seems to apply the general rule contained in the Charter.9 This means that the French text must be at least equivalent in size and appearance to that in another language, so that the latter is not predominant. Transitional period: The Regulation allows a two-year grace period to give businesses time to comply with the above requirements. Until June 1, 2027, any product that does not comply with these new requirements may continue to be distributed, retailed, leased, offered for sale or lease, or otherwise offered on the market, whether in return for payment or free of charge, provided (i) it was manufactured before June 1, 2025, and (ii) no corresponding French version of the recognized trademark has been registered in the Canadian trademark register by June 26, 2024.10 Although it will still be necessary to make every effort to comply with obligations, this measure ensures that existing non-compliant products can be liquidated. Commercial publications The Regulation makes no changes to the rules governing commercial publications, such as catalogues, brochures, folders, commercial directories and other similar publications. The exception applicable to “recognized” trademarks, which had not been amended in Bill 96 or in the draft regulations, remains unchanged. Common law trademarks and trademarks registered with CIPO may be used without a French version, provided that no French version has been registered. Contrary to what had been envisaged in the draft regulations, websites and social media are not expressly named as commercial publications whose French version must be available on terms that are at least as favourable as any version in another language. To date, the interpretation adopted and applied by the OQLF and the courts is that websites and social media are considered commercial publications and must therefore follow the same rules. Nevertheless, we will remain watchful to see if the lack of explicit reference in the Regulation to websites and social media is of any significance, and if the OQLF will consider changes to its approach to these two types of communication. Advertising and public signs and posters It is well known that the Charter requires public signs and posters and commercial advertising in Quebec to be in French. They may be both in French and in another language provided that French is markedly predominant.11 The “recognized” trademark exception also applies to public signs and posters and commercial advertising. Thus, common law trademarks and CIPO-registered trademarks may be used without a French version, if there is no corresponding French version in the Canadian trademark register.12 For public signs and posters visible from outside premises, the rule of “sufficient presence” of French gives way to that of the “clear predominance” of French, when the trademark or business name is in a language other than French, in whole or in part.13 Public signage visible from outside premises includes not only the exterior of a building, but also premises inside a shopping centre.14 In such cases, a trademark or company name in a language other than French must be accompanied by a generic term, a description of the goods or services concerned, or a slogan, in French.15 This trademark or company name visible on a storefront or inside a shopping centre will be considered in the overall visual impact of the premises. For the same visual field, text written in French has much greater impact when (i) the French text occupies a space at least twice as large as that devoted to text in another language, and (ii) its legibility and permanent visibility are at least equivalent to that of text in another language.16 Finally, as concerns digital signage with alternating French and non-French text, the French text is considered to have a much greater visual impact when it is visible for at least twice as long as the non-French text.17 Note that there is no grace period for public signs and posters. Companies therefore have until June 1, 2025, to comply with the new rules. The examples below, from the Quebec government, illustrate the application of these rules: Here is a summary of the main changes to the Charter and the Regulation that will come into effect on June 1, 2025: Products (labels, containers, packaging, or any accompanying document or object) A “recognized” trademark (registered or used) may be used in a language other than French, unless a corresponding French version is on the Canadian trademark register. Any description or generic term included in a trademark must appear in French, excluding the name of the company or the name of the product as sold (and other specific exceptions); on the OQLF website, it is stated that no generic term or description in another language may take precedence over that appearing in French. The French translation of these generic terms or descriptions must appear in French on the product or on a medium permanently attached to the product. A grace period until June 1, 2027, is granted for any product that does not comply with these new requirements; such a product may continue to be distributed, retailed, leased, offered for sale or lease, or otherwise offered on the market, whether in return for payment or free of charge, provided (i) it was manufactured before June 1, 2025, and (ii) no corresponding French version of the recognized trademark has been registered in the Canadian trademark register by June 26, 2024. Commercial publications (catalogues, brochures, folders, commercial directories) No change: A “recognized” trademark within the meaning of the Trademarks Act (registered or used) may be used in a language other than French, unless a French version has been registered. It is expected that the rules governing commercial publications will apply to websites and social media, in line with the current interpretation of the OQLF and the courts. Public signs and posters A “recognized” trademark within the meaning of the Trademarks Act(registered or used) may be used in a language other than French, unless a corresponding French version is on the Canadian trademark register. In public signs and posters visible from outside premises, including inside shopping malls, when a trademark or commercial name is in a language other than French, even in part: French must be clearly predominant, taking into account the space allotted to the trademark or company name; and the trademark or company name must be accompanied by French terms, in particular a generic term, a description of the products or services, or a slogan. For the same visual space, the space allotted to French text must be at least twice as large as that devoted to text in another language, and its legibility and permanent visibility must be at least equivalent to that of text in another language. To learn more about this topic or for any questions concerning the Charter of the French language and its regulations, please contact our professionals or consult our previous publications! Regulation to amend mainly the Regulation respecting the language of commerce and business, Gazette officielle du Québec, (the "Regulation"). An Act respecting French, the official and common language of Québec, SQ, 2022, c. 14 (“Bill 96”). Regulation respecting the language of commerce and business, CQLR, c. C-11, r. 9. Regulation, supra, note 1, s. 2 (7.1) and s. 4 (25.1). Charter of the French language, CQLR, c. C-11, s. 51 Regulation, supra, note 1, s. 6 (27.1). Regulation, supra, note 1, s. 6 (27.2). Regulation, supra, note 1, s. 2 (7.1). Charter, supra, note 5, s. 51. Regulation, supra, note 1, s. 7. However, the grace period has been extended to December 31, 2025, for products covered by the new labelling standards set out in the Regulations Amending the Food and Drug Regulations (Nutrition Symbols, Other Labelling Provisions, Vitamin D and Hydrogenated Fats or Oils) (SOR/2022-168) or the Regulations Amending the Food and Drug Regulations and the Cannabis Regulations (Supplemented Foods) (SOR/2022-169). Charter, supra, note 5, s. 58. Regulation, supra, note 1, s. 4 (25.1). Charter, supra, note 5, s. 58.1 and Regulation, supra, note 1, s. 4 (s. 25.1). Regulation, supra, note 1, s. 6 (27.5). Regulation, supra, note 1, s. 6 (27.7). Regulation, supra, note 1, s. 6 (27.6). Components written in French will be presumed to meet these legibility and visibility requirements if they are permanent and are designed, lighted and situated so as to make them easy to read, both at the same time, at all times. Regulation, supra, note 1, s. 6 (27.6).

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June 27, 2024

Misuse of the complaints mechanism on an e-commerce platform

At a time when Canada and many other countries are taking steps to protect users from harm online,1 a decision was handed down by the Supreme Court of British Columbia (the “Court”) on January 15, 2024, regarding the conduct of a competitor with respect to complaints about intellectual property infringement made on Amazon’s e-commerce website. Amazon’s platform is similar to many other e-commerce platforms that have a complaint mechanism for third-party use of intellectual property in violation of the rights of the real owners thereof. The complaint mechanism makes it possible for a complainant to submit an intellectual property infringement claim regarding content to which it has a good faith right in order to partially or fully remove the content in question from the pages of the alleged infringing party published on Amazon’s platform. Such a mechanism has its purpose, as it is an effective way of tracking down counterfeiters. As we will see in Keezio Group, LLC v. The Shrunks' Family Toy Company Inc.,2 the mechanism can also be used maliciously. The facts and the plaintiff’s allegations In this case, complaints were lodged by a competitor of the company that was the subject of the complaints, with both entities operating in the inflatable bed industry. Keezio Group, LLC (“Keezio”) markets the “Hiccapop Inflatable Toddler Travel Bed” (the “Hiccapop Bed”), while The Shrunks’ Family Toy Company Inc. (“The Shrunks”) offers inflatable beds consisting of a mattress placed in an inflatable bed frame. Both companies primarily sell their products on the Amazon retail platform. In February 2017, Amazon informed Keezio that it had received a report of trademark infringement regarding the Hiccapop Bed, the complainant being identified as Mr. Cirjak of The Shrunks. Subsequently, in accordance with the applicable process, Amazon removed the product from Keezio’s product-listing pages on its website. It is worth noting that assessing the substantive validity of a complaint is not part of Amazon’s complaints handling process. On or about April 17, 2017, Keezio received another notice. The complaints of 2017 were eventually withdrawn and the page featuring the Hiccapop Bed was restored. In November 2019, Keezio received two more notices of complaints from Amazon regarding violations similar to those received about two years prior. The first of these two notices, sent on November 22, 2019, referred to trademark infringement. Amazon thus removed the page in question, which contained a chart comparing Keezio’s products with The Shrunks’ products. Keezio asked for clarification of this alleged infringement but received no response from The Shrunks. Having received no details about the infringement from The Shrunks, Keezio ultimately changed its webpage to remove all mentions of “The Shrunks”, replacing them with “Rhymes with Skunks”. Although Amazon informed Keezio in a message in November 2019 that it would restore its content, the evidence does not clearly establish whether this was done. The second notice of infringement, dated November 28, 2019, concerned an allegation of copyright infringement on six webpages for the Hiccapop Bed. The pages were delisted on or about November 28, 2019, and eventually reinstated on December 2, 2019. The Shrunks denied having filed the complaints of 2019. However, the Court did not hesitate to conclude that The Shrunks was also behind these complaints. Issues at bar about the complaints There were many issues in this case, and some claims were eventually withdrawn. We will focus on the two complaints made in 2019. Specifically, Keezio argued that the complaints that The Shrunks had lodged with Amazon were unfounded, resulting in a loss of business for Keezio. In particular, the Court analyzed section 7 of the Trademarks Act.3 To succeed in such a claim, the plaintiff must prove (i) that a false or misleading statement was made (ii) that tends to discredit the business, goods or services of a competitor, (iii) resulting in damages. The Court held that the person making the statements need not know of their falsity in order to satisfy these criteria. Findings of the Court (i) The allegation of trademark infringement in the comparative chart The trademark infringement complaint concerned a comparative chart featuring both Hiccapop Bed and The Shrunks products, with comparative data on the features of both products. The data itself was not challenged. The complaint related to the unauthorized use of The Shrunks’ registered trademark in the chart. Basing itself on the landmark decision in Clairol International Corp. et al v. Thomas Supply and Equipment Co.,4 the Court concluded that Keezio’s comparative chart did not amount to “use” of The Shrunks trademark pursuant to s. 4(1) of the Trademarks Act, and that therefore said chart did not constitute trademark infringement. Accordingly, the Court determined that The Shrunks’ complaint that Keezio infringed its trademark was unfounded. The Court further concluded that the comparative chart was not contrary to section 22 of the Trademarks Act:5 The mere depiction of a competitor’s trademark in comparative advertising does not in itself depreciate the value of the goodwill attached to a product. (ii) The allegation of copyright infringement The copyright infringement notice contained six Amazon Standard Internal Catalog Identification Numbers (ASINs), which identified six webpages that were sales pages for the Hiccapop Bed. The Court ruled that the allegation of copyright infringement in question was unfounded, as it related to a bed, which is a useful article sold in a quantity of more than 50. The reproduction of the bed design was therefore not covered by subsection 64(2)6 of the Copyright Act. The Court found The Shrunks liable for the two complaints made in November 2019, which it determined to be false or misleading as the allegations of trademark and copyright infringement were unfounded. The Court stated that the complaints tended to discredit Keezio’s business because they misled Amazon into removing Keezio’s product listing pages. On this point, the Court referred to a passage from the Federal Court decision Yiwu Thousand Shores E-Commerce Co. Ltd. v. Lin.7 With regard to damages, the Court determined that Keezio’s evidence regarding the calculation of damages was inadequate on several counts, but nonetheless awarded damages based on a decrease in Keezio’s sales on the dates of delisting. The Court did not hold The Shrunks’ principal personally liable and did not grant a permanent injunction or punitive damages. It also dismissed The Shrunks’ counterclaim for copyright infringement, and ordered The Shrunks to pay Keezio costs, excluding taxes and disbursements. Comments This decision highlights how crucial it is for complainants to be serious when filing complaints. The complaints mechanism on platforms such as Amazon is an extremely useful and effective tool for reporting rights violations, provided that use of such mechanisms is made in good faith and based on solid legal foundations. Although such a mechanism is easy to use, the rights involved must absolutely be analyzed in advance, as an ill-founded complaint can result in harm—which can be considerable—especially when the platform has a global reach. In such a case, the removal of a webpage can result in significant damages. It is therefore essential to exercise due diligence, as a country-by-country analysis of rights can reveal different legal situations and rights holders from one country to another. Not only must competitors carefully consider and weigh their actions, but e commerce website operators must also be vigilant and respond promptly to requests for removal and geographic restrictions. Amazon recently experienced a situation like this when a UK court ruled against it.8 The decision dealt with a targeting operation on Amazon’s website, where sales offers or advertisements were intentionally directed at consumers in the UK where the trademarks were not owned in that country by the same company offering the products for sale. A word to the wise! See Bill C-63, the Online Harms Act, which establishes a regime to address such harm. Keezio Group, LLC v. The Shrunks' Family Toy Company Inc., 2024 BCSC 64. Section 7 of the Trademarks Act: Prohibitions 7. No person shall - make a false or misleading statement tending to discredit the business, goods or services of a competitor; - direct public attention to his goods, services or business in such a way as to cause or be likely to cause confusion in Canada, at the time he commenced so to direct attention to them, between his goods, services or business and the goods, services or business of another; - pass off other goods or services as and for those ordered or requested; or - make use, in association with goods or services, of any description that is false in a material respect and likely to mislead the public as to (i) the character, quality, quantity or composition, (ii) the geographical origin, or (iii) the mode of the manufacture, production or performance of the goods or services. Clairol International Corp. v. Thomas Supply & Equipment Co. 55 C.P.R. 176, 1968 CanLII 1280. Section 22 of the Trademarks Act: 22.Depreciation of goodwill - 22 (1) No person shall use a trademark registered by another person in a manner that is likely to have the effect of depreciating the value of the goodwill attaching thereto. Subsection 64 (2) of the Copyright Act: 64 (2) Non-infringement re certain designs Where copyright subsists in a design applied to a useful article or in an artistic work from which the design is derived and, by or under the authority of any person who owns the copyright in Canada or who owns the copyright elsewhere, - the article is reproduced in a quantity of more than fifty, or - where the article is a plate, engraving or cast, the article is used for producing more than fifty useful articles, it shall not thereafter be an infringement of the copyright or the moral rights for anyone, - to reproduce the design of the article or a design not differing substantially from the design of the article by (i) making the article, or (ii) making a drawing or other reproduction in any material form of the article, or - to do with an article, drawing or reproduction that is made as described in paragraph (c) anything that the owner of the copyright has the sole right to do with the design or artistic work in which the copyright subsists. Yiwu Thousand Shores E-Commerce Co. Ltd. v. Lin, 2021 CF 1040. See paragraph 58 of this decision: [58] I agree with ThousandShores that the Respondent made false allegations and misstatements to Amazon.ca in the Takedown Requests, at least one of which was made after the Respondent’s receipt of the October 2020 Letter. ThousandShores had no ability to respond directly to his allegations. The absence of any evidence of use of the OHUHU trademark by the Respondent and the likelihood of confusion between the parties’ marks means the Impugned Registration is invalid. Accordingly, the Respondent’s statements regarding the Impugned Registration, the inauthenticity of ThousandShores’ OHUHU Goods and its infringement of the Respondent’s rights were false. The statements clearly tended to discredit ThousandShores’ business, the OHUHU Storefront, and the OHUHU Goods. They misled Amazon.ca, causing it to remove ThousandShores’ listings for the OHUHU Goods with a resulting loss of profits. ThousandShores’ only recourse was to provide evidence of authorization or license by the Respondent, or to challenge the validity of the Impugned Registration. Lifestyle Equities CV and another v Amazon UK Services Ltd and others [2022] EWCA Civ 552, upheld by the Supreme Court on March 6, 2024 ([2024] UKSC 8).

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