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U.S. store wins IP battle over web site

|Written By Daryl-Lynn Carlson

In a recent decision, the Federal Court provided clarity on when and why a company can maintain a trademark for its web site even if it isn’t doing business out of a bricks-and-mortar operation in Canada.

‘The interesting point about this case was that this was a very unusual web site,’ says Mark Evans.

The case, TSA Stores Inc. v. Registrar of Trademarks, dealt with a series of registrations that belonged to the Sports Authority sporting goods stores, which closed their retail outlets in Canada 11 years ago but had retained their trademark for a web site for Canadians.

Mark Evans, managing partner at Smart & Biggar/Fetherstonhaugh in Toronto, along with Jayda Sutton of the same firm, represented the applicant, TSA Stores Inc.

The lawsuit arose after a third party challenged TSA Stores’ ownership of four related Canadian trademark registrations containing the term Sports Authority in relation to its store and web site. The case hinged on whether there was a bona fide use of the trademark in Canada, which the court asserted there was.

Evans notes the Federal Court’s decision presents a significant change in regards to web sites that maintain their trademark in Canada even though they don’t have a physical presence here.

“Traditionally, there had been a series of cases that go back for many decades that essentially said that businesses that weren’t located in Canada weren’t good enough as the services must be performed in Canada to maintain a trademark,” he says.

While the TSA is based in the United States, its web site is very comprehensive and enables users to get an in-depth assessment of any sporting goods they’re interested in.

“The interesting point about this case was that this was a very unusual web site,” says Evans. “It was very informative and, as a result, the court found that this was a legitimate use of the trademark in Canada.”

While the web site didn’t allow consumers to buy goods for shipment to Canada, TSA argued it was performing and providing retail services to Canadians through information on products available at its U.S. stores, which Canadians frequently visit.

Evans also points to two other cases, Saks & Co. v. Canada (Registrar of Trademarks) and Société Nationale des Chemins de Fer Français Sncf v. Venic Simplon-Orient-Express Inc., in which the Federal Court upheld the use of a trademark if the related company receives orders from Canadian customers.

In the Sncf case, the court upheld the trademark due to the fact that many travel agents had clients who booked through them to ride the train in Europe.

Evans says that while the TSA case provides clarity and confirmation on the use of a registered trademark in Canada by a company located outside the country, he wonders whether subsequent proceedings will uphold the Federal Court’s decision in both related cases.

“It could be a situation where a court could decide that a web site is not necessarily a service being provided but an advertising initiative on behalf of a company,” he notes.

“So it will be interesting to see where the courts go from here.”

Mark Hayes of Hayes eLaw LLP agrees that the TSA case provides some degree of certainty for lawyers advising clients from outside the country on their trademark. But he also says that for clients who have a business that spans several countries and who want to register a trademark in Canada, it’s important to do a search of all global trademarks to be certain it’s an original mark.

“For these types of businesses, as a lawyer you would have to do searches and find out whether the trademark is exclusive if a company is seeking to obtain a trademark in Canada,” he says.

There are also companies based in Canada that seek to register their trademark in other countries, which would also require an extensive search, he notes.

“Every country has their own trademark requirements, so again you would have to find out whether there is an issue in any jurisdiction [where] they are seeking to obtain a trademark.”

Hayes adds that for clients who want to obtain trademarks in other countries, it’s important to encourage them to narrow their focus on a limited number of markets at first, such as the United States or perhaps Britain, and make plans to eventually expand their reach down the road.

That’s because companies that have online services or enable customers in other countries to order products through a web site need to become accustomed to and knowledgeable about other jurisdictions’ Internet protocols, practices, and security systems before going ahead, he suggests.

“There are a million specifics when you’re negotiating these types of trademark agreements for a client who has an international business,” he says.

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