Do you know your open-source licences?

December 1, 2021

Do you have the right to copy source code written and developed by someone else? The answer to this question depends on the situation; however, even in the context of open innovation, intellectual property rights will be the starting point for any analysis required to obtain such an answer.

In the software industry, open-source licences allow anyone to access the source code of corresponding software, free of charge and with few restrictions. The goal is generally to promote the improvement of this code by encouraging as many people as possible to use it. Linus Torval, the programmer of the Linux kernel (certainly one of the most well-known open-source projects) recently stated that without the open-source approach, his project would probably not have survived.¹

However, this approach has legal consequences: Vizio was recently hit with a lawsuit alleging non-compliance with an open-sourceGPL licence used in the SmartCast OS software embedded in some of its televisions. It is being sued by Software Freedom Conservancy (“SFC”), an American non-profit promoting and defending open-source licences. As part of its lawsuit, SFC alleges, among other things, that Vizio was required to distribute the SmartCast OS source code under the above-mentioned open-source GPLlicence, which Vizio failed to do, thereby depriving consumers of their rights².

In Canadian law, section 3 of the Copyright Act³ gives the author the exclusive right to produce or reproduce all or any substantial part of an original work. This principle has been adopted by all signatories of the 1886 Berne Convention, i.e., almost every country in the world. A licence agreement, which may inter alia confer the right to reproduce the work of another person, can take different forms. It also establishes the extent of the rights conferred and the terms and conditions of any permitted use.

However, not all open-source licences are equivalent. Many allow creators to attach various conditions to the right to use the code that has been made available. Under these licences, anyone may use the work or software, but subject to the following constraints, depending on the type of licence in effect:

Obligation to display: An open-source licence may require disclosure of certain information in the software or in the source code itself, such as the following:
- The author’s name or pseudonym, or even maintaining the anonymity of the author, depending on their wishes, and/or a citation of the title of the work or software;
- The user licence of the redistributed open-source work or software;
- A modification note for each modified file; and
- A warranty disclaimer.
Contribution obligations: Some licences require the sharing of any modifications made to the open-source code, with said modifications being under the same licence conditions. In some cases, this obligation extends to any software that incorporates the open-source code. In other words, code derived from open-source material can itself become open-source. This obligation to contribute can generally be categorized as follows:
- Any redistribution must be done under the original licence, making the result open-source as well;
- Any redistribution of the code, modified or not, must be done under the original licence, but other code may be associated or added without being subject to the open-source licence; or
- Any redistribution is done without any sharing constraints.
Ban on commercialization: Some licences prohibit any use for commercial purposes.

Apache v2
Level of obligation to contribute upon redistribution Any redistribution of the software, modified or not, or with added components, may be done under other terms.	Mandatory elements to display Licence of the redistributed open-source software Identification of any changes made to the code Copyright notice Warranty disclaimer	Commercial use permitted Yes

BSD
Level of obligation to contribute upon redistribution Any redistribution of the software can be done without any obligation to share.	Mandatory elements to display Copyright notice Warranty disclaimer	Commercial use permitted Yes

CC BY-NC 4.0
Level of obligation to contribute upon redistribution Any redistribution of the software can be done without any obligation to share.	Mandatory elements to display Licence of the redistributed open-source software Identification of any changes made to the code Copyright notice Warranty disclaimer	Commercial use permitted No

CC0 1.0
Level of obligation to contribute upon redistribution Any redistribution of the software can be done without any obligation to share.	Mandatory elements to display Licence of the redistributed open-source software	Commercial use permitted Yes

GPLv3
Level of obligation to contribute upon redistribution Any redistribution of the software, modified or not, or with added components, must be done under the terms of the original licence	Mandatory elements to display Licence of the redistributed open-source software Identification of any changes made to the code Copyright notice Warranty disclaimer	Commercial use permitted Yes, but sub-licensing is not allowed

LGPLv3
Level of obligation to contribute upon redistribution Any redistribution of the software, modified or not, must be done under the terms of the original licence. New components can be added, but not integrated, under other non-open-source licences	Mandatory elements to display Licence of the redistributed open-source software Identification of any changes made to the code Copyright notice Warranty disclaimer	Commercial use permitted Yes

MIT
Level of obligation to contribute upon redistribution Any redistribution of the software can be done without any obligation to share.	Mandatory elements to display Licence of the redistributed open-source software Copyright notice Warranty disclaimer	Commercial use permitted Yes

It is important to make programming teams aware of the issues that can arise when using modules governed by what are known as “viral licences” (such as the CC BY-NC 4.0 licence) in the design of commercial software. Such software could lose significant value if such modules are incorporated, making it difficult or even impossible to commercialize said software.

In the context of open innovation where developers want to share their code, in particular to encourage collaboration, it is important to understand the scope of these different licences. The choice of the appropriate licence must be made based on the project’s objectives. Also, keep in mind that it is not always possible to change the licence used for the distribution of the code once said distribution has commenced. That means the choice of licence can have long-term consequences for any project.

David Cassel, Linus Torvalds on Community, Rust and Linux's Longevity, The NewStack, Oct. 1, 2021, online: https://thenewstack.io.
See the SFC press release: https://sfconservancy.org/copyleft-compliance/vizio.html.
RSC 1985, c. C-42.

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Written by

Eric Lavallée
Partner, Lawyer and Trademark Agent
Sylvain Pierrard
Partner, Lawyer and Trademark Agent
Catherine Voyer
Lawyer

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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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July 23, 2024

Sponsorship agreements in the sports world: the promise of fame and exposure

“I was outraged!” “It beggars belief!” “It’s ridiculous!”1 These are just a few of the comments heard in connection with a controversial clause in Neymar’s contract with the Saudi Arabia-based Al Hilal soccer club, which he signed in August 2023. It provided for a payment of approximately $500,000 for each Instagram post promoting Saudi Arabia... In stark contrast, other observers applauded this initiative, viewing Neymar as the harbinger of an era in which sports talent would finally be valued for its true worth. Even before he’d laced up his cleats for his new team, Neymar was already shining a warm spotlight on the Saudi kingdom. At a press conference on September 7, 2023, the Brazilian forward cheekily likened France’s League 1, in which he used to play (it is ranked the fifth-best soccer league in the world) to Saudi Arabia’s (ranked 36th): “Considering all the big names in this League, this championship may well be better than League 1.”2 Needless to say, his comment sparked a tidal wave of reactions. For comparison purposes, Major League Soccer (MLS), CF Montreal’s home league, is ranked #29 in the world. Thriving on competition, passion and adrenalin, the sports world is fertile ground for sponsorship agreements. These arrangements serve as strategic alliances that capture the essence of contemporary sports and transcend the limits of the games involved. In our last two articles, we took a look at issues surrounding the naming of sports teams, followed by agreements governing the naming of stadiums and arenas. This time around, we will delve into the topic of sponsorship agreements. In addition to defining what they are, we will focus on how these agreements are used and structured, including their objectives and associated risks. WHAT ARE SPONSORSHIP AGREEMENTS? Sponsorship agreements, also known as sponsorship deals, are commercial agreements entered into by a beneficiary (an organization, individual or event) and a sponsor (a company or brand). As a general rule, these agreements provide financial compensation, goods and/or services in return for visibility, promotional impact or the sponsor’s association with the beneficiary. To be sure, such deals are not exclusive to the sports world. However, sports have definitely played a key role in how these agreements have evolved, transforming them into tools at the forefront of commercial progress. In this article, we will focus on how these agreements are used in the sports world. THE POWER OF SPONSORSHIP AGREEMENTS In essence, sponsorship agreements enable a sponsor to benefit from the exposure, fame and/or positive image associated with an athlete. At the same time, they may allow athletes to boost their own visibility and develop their own brands in partnership with the sponsor. The film Air, initially released in cinemas in 2023 and now exclusively available on the Prime Video streaming platform, depicts the dynamic of sponsorship agreements. It retraces the origins of the emblematic partnership between Nike and basketball legend Michael Jordan, which ended up redefining how athletes approach business partnerships. The Nike partnership gave rise to Air Jordan, the world-famous line of basketball shoes, marking an initial milestone in the history of sponsorship deals. In April 1985, the first series of Air Jordans came onto the market (see Figure 2); Nike was aiming for $3 million in sales over an initial three-year period. However, by the end of the first year alone, sales topped an impressive $126 million. In 2022, it was reported that Michael Jordan had earned between $150 million and $256 million just from his contract with Nike. KEY OBJECTIVES OF SPONSORSHIP AGREEMENTS FOR ATHLETES Main objective: financial gain Quite often, the main objective is financial gain. In addition to Michael Jordan, other star athletes have signed agreements with Nike. LeBron James’ and Cristiano Ronaldo’ own deals with Nike are reportedly valued at US$1 billion. Meanwhile, Argentina’s Lionel Messi, the eight-time Ballon d’Or winner, entered into a similar agreement with the brand Adidas. The case of Michael Jordan, however, is unique insofar as a family of strong and distinctive brands was developed, including Air Jordan and various logos representing Michael Jordan playing basketball. This brand family is owned by Nike, although it is inherently linked to the athlete reaping its benefits. In Quebec, tennis player Félix Auger-Aliassime, a victim of his recent success, signed agreements with Dior and Renault in early 2023 as these companies added their names to his existing list of sponsors, which included Adidas. The compensation paid by these brands has not been disclosed, but Félix is now displaying the Renault logo on his T-shirts—even more prominently than the brand of the T-shirt itself. Objective: enhanced reputation and greater credibility Reputation and credibility are vitally important in the sports world. Teaming up with a reputable sponsor can boost an athlete’s credibility in the eyes of fans, the media, potential partners and other teams. As with naming rights agreements, upholding the same values and selecting the right sponsor are the key to these agreements. Consider Félix Auger-Aliassime’s remarks after signing his deal with Renault: “I’m proud to be associated with Renault because we share the same ambitions and values […].”3 Chelsea FC, which competes in England’s Premier League, kicked off its 2023-204 season without its main sponsor. In addition, there was no corporate logo displayed on the front of the players’ jerseys, even though that has become the norm in the soccer world. In fact, Chelsea had signed an agreement with Stake.com, an online casino that describes itself as a pioneer in the area of crypto sports betting. As soon as the deal was announced, fans made their displeasure known: Chelsea Supporters’ Trust, which serves as the voice of the team’s fans, declared: “We understand CFC’s desire to maximise revenue streams across the whole club. Whilst we accept that will happen, it must not take place at the expense of the club’s values.”4 Chelsea thus terminated the agreement but appears to have found a new partner, the US-based technology company Infinite Athlete. That deal is valued at around $66 million per year. Objective: an equitable relationship between the parties (student athletes) For some athletes, sponsorship agreements are also a way to establish an equitable relationship between all parties, ensuring that they do not lose out on any benefits derived from their name, image or likeness. This is certainly the case for student athletes competing in the American university system, particularly the National Collegiate Athletic Association (NCAA). In June 2021, the US Supreme Court ruled that the NCAA was not legally authorized to limit payments related to students’ education. This gave rise to what are known as “NIL deals”(name, image, and likeness). Student athletes are now entitled to enter into sponsorship agreements covering their name, image and likeness (the latter term refers to any representations of the athlete, whether in videogames, cartoons, etc.). The champion of NIL deals is undoubtedly Olivia Dunne, a gymnast at Louisiana State University. She is one of the first student athletes to become a millionaire thanks to these deals; she is certainly the best known (Figure 6). Her arrangements with brands such as American Eagle, Forever 21 and Vuori have generated more than $4.7 million. She ranks third in earnings in the list of athletes with NIL deals, just behind quarterback Arch Manning at $5.1 million (nephew of former football players Peyton and Eli Manning) and basketball player Bronny James at $9.7 million (son of LeBron James). Will we ever see NIL deals for student athletes in Quebec? KEY OBJECTIVES FOR SPONSORS As far as sponsors are concerned, their objectives are usually quite similar. They hope to obtain greater visibility and promotion by linking their brand, products or services to a famous professional athlete. This may entail significant media exposure while targeting a specific segment of the public. This was what lululemon had in mind when it partnered with Connor Bedard, the most recent #1 draft choice in the National Hockey League (NHL). The company, which started out selling yoga wear, is now reaching out to hockey fans in a bid to strengthen its reputation as a top-of-the-line sports apparel retailer. In the run-up to the NHL draft, the name of Connor Bedard—a once-in-a-generation talent—was on everyone’s lips. His endorsement deal with lululemon was announced a few days before the draft, thanks in part to a video in which he said: “If I make this shot, I’ll join lululemon as their newest ambassador.” He then executed a perfect shot, adding a dramatic note to the announcement (Video 1). Video 1: Announcement marking the sponsorship agreement between lululemon and Connor Bedard. Following the partnership announcement, Connor Bedard said: “Being from Vancouver, I’ve been a fan of lululemon for as long as I can remember. The gear is so comfortable, stylish, and great for training.”5 Since the company was founded in Vancouver, it is understandable that this partnership is seeking to capitalize on a shared sense of belonging. Obviously, sponsors are also seeking to boost their sales or profitability via increased exposure and visibility derived from a sponsorship deal. Gaining access to a specific target audience heavily engaged in the athlete’s chosen sport can be a major selling point. HOW SPONSORSHIP AGREEMENTS ARE STRUCTURED As regards structure, sponsorship agreements differ in terms of the breadth and scope of the visibility being sought. Structure of local sponsorship agreements Local sponsorship agreements are entered into when: A local company decides to fund an athlete or a sports event. A company sponsors a local athlete or a local sports organization. A local sponsorship agreement does not necessarily mean a smaller-scale deal. RBC’s and Air Canada’s sponsorship arrangements, under which their respective logos are featured on Montreal Canadiens jerseys, are examples of local agreements. Structure of national or international sponsorship agreements Seeking much more extensive visibility, national or international sponsorship agreements are typically larger-scale initiatives. More sophisticated and with farther-reaching ramifications, these types of agreements must also take into account issues spanning multiple jurisdictions. Compensation structure In certain major agreements, the athlete’s financial compensation structure may vary widely. Fixed and pre-determined compensation is typically the norm. Understandably, agreements in which a trademark linked to an athlete is used for a specific product line may include royalties or tiers (thresholds) associated with the products’ commercial performance. Duration impacts the structure of sponsorship agreements Sponsorship agreements also vary in terms of their duration. A company may decide to sponsor an athlete for a lengthy period or for a one-time event or competition. On September 13 2023, the new Professional Women’s Hockey League (PWHL) announced its very first sponsor: Canadian Tire Corporation (CTC). Strictly speaking, this is an international agreement because the PWHL operates in both Canada and the US. At the time, Sarah Nurse, a forward with PWHL Toronto, said: “Through numerous conversations with their key leaders, it has always been clear that [CTC was] committed to supporting a women’s hockey league. It is no surprise that CTC is an inaugural partner now that we have launched the PWHL. With our shared values and vision, I know that CTC will continue to put women’s hockey at the forefront”6. RISKS OF SPONSORSHIP AGREEMENTS: WHAT YOU NEED TO KNOW There are also a number of risks associated with signing a sponsorship agreement. Professional athletes are continually being placed under a microscope. Everything they do has a potential impact on their sponsors. Morality clause Consider the case of golfer Tiger Woods, who was embroiled in a personal scandal back in 2010 that left his reputation in tatters. Seeking to avoid being associated with this loss of reputation, various companies and organizations terminated their deals with him (Table 1). Table 1: List of sponsors that terminated or continued their involvement with Tiger Woods in the wake of his scandal. Today, Nike and Upper Deck are still associated with Tiger Woods, along with 10 new sponsors. To enable the parties to terminate agreements easily and at no charge should any situations akin to that of Tiger Woods arise, sponsorship agreements typically include a morality clause (also known as a “morals clause”). Morality clauses impose “good conduct” obligations on athletes and stipulate that if they engage in any actions that could tarnish or harm their own reputation or that of their sponsor, the sponsor has the right to suspend or unilaterally terminate the agreement. It was thanks to this clause that Gatorade and Gillette, to take only two examples, ended their agreements with Tiger Woods. The first morality clause in the sports world was included in the employment contract of Babe Ruth, the renowned baseball player with the New York Yankees in the 1920s. Reciprocal clause One might think that certain athletes would prefer to have a reciprocal clause in place enabling them to cut ties with any sponsor whose reputation is marred by scandal (inhumane work conditions, pollution, financial wrongdoing, etc.). Although less frequent, these clauses could still prove useful, especially now that society is calling on the corporate world to conduct itself more ethically. On the credit side of the ledger, an athlete who stands out positively off the playing field may end up attracting new sponsors. On September 24, 2023, the pop singer Taylor Swift was spotted at a Kansas City Chiefs game, cheering on tight end Travis Kelce (Figure 9). Given Taylor Swift’s unprecedented levels of public adulation, Travis Kelce saw his social networks explode with 500,000 more followers; sales of his jerseys soared by 400% in less than a week. Sponsors are well known for appreciating the value of athletes associated with another celebrity, e.g. Tom Brady and Gisele Bündchen, or David and Victoria Beckham. Kelce, who is already pocketing $3 million annually from his sponsorships, now has the door wide open for some shiny new deals. Conclusion All in all, sponsorship agreements play a pivotal role in the sports world. Above and beyond the financial benefits they generate, they reflect the values and identity of the partners involved. Transcending transactional considerations, these deals have turned into alliances that stimulate growth, emotional engagement and long-term viability. They embody shared passions for sports and an ongoing quest for excellence. As the sports world evolves and new opportunities emerge, we should continue to question how these agreements align with our collective values. In the future, these partnerships will not just be a critical component of commercial strategies; they will also be statements of principle. And they will continue to shape how sports are lived, perceived and experienced. Chronique de Ray Lalonde, August 16, 2023 Link. Ouest-France, Neymar: “Peut-être que le championnat d’Arabie saoudite est meilleur que la Ligue 1”, September 8, 2023 Link. QMI Agency, Nouvelle alliance entre Félix Auger-Aliassime et Renault, TVA Sports, January 25, 2023 Link. Ryan Dabbs, Why don't Chelsea have a sponsor for their new kit?, FourFourTwo, July 19, 2023 Link. Matt Carlson, Conor Bedard signs… with lululemon, The Hockey News, June 28, 2023 Link. News release, Professional Women’s Hockey League, Canadian Tire Corporation joins the PWHL with a landmark multi-year agreement, September 13, 2023 Link.

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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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