Summaries Sunday: OnPoint Legal Research

One Sunday each month OnPoint Legal Research provides Slaw with an extended summary of, and counsel’s commentary on, an important case from the British Columbia, Alberta, or Ontario court of appeal.

Insurance Corporation of British Columbia v. Stainton Ventures Ltd.,
2014 BCCA 296

1. CASE SUMMARY

AREAS OF LAW: Intellectual property law; Official marks; Passing-off

~It is not a violation of the Trade-marks Act nor does it constitute passing-off to create a webpage or Internet domain that pairs an official mark with a non-distinctive word such as “advice”~

BACKGROUND: The Appellant, the Insurance Corporation of British Columbia, has adopted the acronym “ICBC” as one of its official marks. The Respondent, Stainton Ventures Ltd., operates a commercial website called “ICBCadvice.com”, and owns the Internet domain names icbcadvice.ca and icbcadvice.com. The Appellant brought an action in the BC Supreme Court seeking a declaration that the Respondent was using its official mark without authorization, and seeking several orders including one requiring transfer of the domain names to it. At trial, the judge granted the Appellant the order it sought with respect to restraining the Respondent from distributing its booklet entitled “ICBC Claim Guide” or using that term as a mark, but otherwise dismissed the claim. He found that the Respondent had not adopted and used the Appellant’s mark in contravention of the Trade-marks Act, concluding that no one ever communicated any confusion or mistake as to whether the website belonged to the Appellant. There was no evidence to suggest that the Respondent had intended or accomplished the redirection of Internet traffic looking for the Appellant’s site to its own site instead. While it was likely that anyone familiar with driving in BC would assume the Respondent’s site had something to do with the Appellant, it was unlikely that they would confuse it for the Appellant’s official mark. Although the Respondent used the acronym “ICBC” throughout its website, this was not use as a “trade-mark or otherwise” in the sense required by the Trade-marks Act. The trial judge also found no evidence of passing-off. He did not think there would be any likelihood an average consumer would be deceived into thinking the website was somehow associated with or approved by the Appellant.

APPELLATE DECISION: The appeal was dismissed. The Appellant argued that the trial judge failed to apply the correct tests for determining breaches of ss. 9 and 11 of the Trade-marks Act and with respect to passing-off. The Appellant further argued that the judge erred in mixed fact and law in finding that the use of the ICBCadvice.com domain name did not violate the Trade-marks Act or amount to passing-off. The Court of Appeal began its analysis by determining that because the resolution of issues raised involved the legal effect of undisputed facts, the appropriate standard of review was correctness. The Appellant submitted that ICBCadvice.com so nearly resembled its mark as to be likely mistaken for it. In particular, it pointed to the fact that its official mark comprises the first and, arguably, dominant part of the domain name. The Appellant went on to argue that its rights to the mark could not be circumvented by adding a non-distinctive word such as “advice” after its official mark, as the consumer would likely be led to believe the Appellant itself was offering advice on its business and services. The Court of Appeal disagreed, commenting that the argument failed “to give the ‘relevant consumer’, i.e., an Internet user, credit for even the most basic understanding of a domain name.” The Appellant submitted that the Court of Appeal must take care to avoid failing to differentiate the test applicable to official marks from the test applicable to trade-marks. While the Court acknowledged the difference between the tests, it found that official marks like any others serve an identification function, and it could not accept that the average Internet user would mistakenly think ICBCadvice.com referred to advice provided or endorsed by the Appellant. Therefore, the Court of Appeal held that the website and the related domain names did not contravene the Trade-marks Act. The Court rejected the Appellant’s passing-off argument for the same reasons.

2. COUNSEL COMMENTS:

Comments by Karen MacDonald:

“The Court of Appeal in this matter was asked to consider the proper test and application of law around unique trademark rights given to public authorities in Canada, called “official marks”, as well as the question of whether the Defendant “passed-off” on the goodwill of ICBC’s well-known trademarks, mainly in the context of domain names and online advertising.

The Trade-marks Act confers special rights to certain public institutions, such as ICBC, for protecting “official marks” adopted by such entities. Prior jurisprudence holds that the rights granted to the owners of such “official marks” are distinct from the usual rights granted to trademark owners, and depend on whether the mark used by the defendant is “likely to be mistaken for” the official mark, as opposed to the passing-off analysis which depends on whether or not there is a “likelihood of confusion” and involves a consideration of the goods and services, channels of trade and public recognition of the respective marks involved.

Unfortunately, the Court of Appeal’s reasons suggest a desire to judicially reduce the protection afforded to official mark owners, going beyond the limitations imposed by prior jurisprudence in this area: from the initial and repeated characterization of ICBC’s motives as “seeking to gain control of the…website and…domain names” (a characterization not adopted by the trial judge nor supported by the evidence) to the commentary surrounding the ease with which official marks can be obtained and apparent judicial notice of numerous other official marks on the Register (not in evidence or relevant to either legal analysis), the reasons reflect a significant dislike of the official mark regime.

While appearing to blur the line between the established test of whether the Defendant’s marks ICBCAdvice and icbcadvice.com “so nearly resembled” ICBC’s official marks “as to be likely mistaken for” them, and the test for likelihood of confusion, the Court gave the “relevant consumer” (defined as the “Internet user”), credit for knowing that a domain name containing a business name or acronym wouldn’t necessarily be associated with that business and that “it is necessary to view a website to determine whose site it is”.

Even ignoring the fact that the established test for official marks does not call for a likelihood of confusion, as appears to have been applied by the Court, the reasons also fail to address the clear and unequivocal language in the Supreme Court of Canada’s decision in Masterpiece v Alavida Lifestyles Inc. that states that likelihood of confusion is to be assessed at the time the consumers encounter the trademark, and while research or follow up might later remedy the initial confusion (for example, but going to and reading the website) that research or follow up does not mean that no confusion ever existed or does not exist in the minds of consumers who did not carry out that research or follow up, i.e. it is the initial confusion or mistake that counts.

Under the Masterpiece reasoning, there is no room for disclaimers or website content to correct initial mistake or confusion resulting from the initial trademark or domain name use, as the Court of Appeal in this decision appears to have allowed. And when a domain name and webpage title contain a business’s name or trademark without any additional words that act to distinguish that domain name from the business name or trademark, it is difficult to understand how that initial confusion would be avoided.

Admittedly, the “official mark” regime, which is unique to Canada as was pointed out by the Court, has been subject to some criticism over the years, and courts have generally interpreted the relevant provisions with a view to ensuring that the rights are not unfairly overreaching. However, the Court of Appeal in this case seems to have gone beyond prior jurisprudence in its attempt to limit the rights granted to ICBC, drawing conclusions that appear out of line with other jurisprudence from the Federal Court. Given that the Federal Government very recently made significant amendments the Trade-marks Act – indeed, the most significant changes to the Act since 1956 – and specifically chose not to make revisions to the official mark provisions despite this criticism, perhaps one should question whether such official mark rights should be so significantly limited judicially.

The Court of Appeal was also tasked with reviewing ICBC’s allegations of passing-off, in a consideration of whether or not the Defendant’s actions were likely to cause a misrepresentation to the public that constituted “passing-off” of ICBC’s well-known trademarks. Interestingly, instead of applying the distinct likelihood of confusion analysis, the Court simply relied on its conclusion on the official marks question. The failure to review and apply the appropriate test is disappointing, and compounds the appearance that the Court may have conflated the two analyses.

Hopefully this decision will be limited to its specific facts and given a narrow interpretation, both with respect to its application to official marks and passing-off, as otherwise it potentially has broad reaching implications which would significantly affect not only official mark owners but also general trademark owners in the context of domain names and trademark use on the Internet, where initial confusion may be rampant but easily remedied by “research” in the form of a click of the mouse.”
Comments provided by Wes Mussio, counsel for the Respondent:

“This is one of the first cases out of the appeal courts in Canada dealing with website names and the use of those names particularly where the company owns an official Mark.

ICBC was attempting to argue that any website with the acronym, ICBC, in it is a copyright infringement. The Court of Appeal made it clear that where the website is not trying to confuse web browsers, there is no copyright infringement. It opens up the door to allow a wider reaching use of website names.

If the Court of Appeal would’ve allowed the appeal, ICBC could’ve gone after dozens and dozens of websites that use the acronym ICBC In it. For that reason, the case is very important to law firms and other companies marketing in the area of ICBC Claims.”