Beware: There’s a New Target Coming to Town

Bargain hunters must be thrilled with news that the US’ coveted Target stores are set to launch in Canada.  Other brand owners are not as thrilled, specifically Canada’s clothing conglomerate that houses Fairweather Ltd. and International Clothiers Inc.  The parties have been embroiled in a series of legal proceedings over the trade-mark TARGET.  Here’s a breakdown of what’s been happening:

The Parties

Target Brands Inc., as we all know, is a US retail department store that operates under the TARGET and bull’s eye trade-marks.  It has a significant market presence in the US, with over 1740 stores in 49 states.  Its revenue exceeds $65 billion (US) annually.  Target Brands Inc. does not currently operate in Canada or ship purchases to Canada.  Nevertheless, Target Brands Inc. maintains that it is well-known by Canadians due to significant cross-border advertising and the number of Canadians visiting the US stores.  Target Brands Inc. is looking to enter into the Canadian market with a tentative launch date in 2013.

Fairweather Ltd. and International Clothiers Inc. (we’ll call them “Fairweather” from now on) are related companies that sell private label clothing and accessories.  In 2001, Fairweather bought the trade-mark TARGET APPAREL from another clothing company that went bankrupt (Dylex Limited).  As of 2003, Fairweather operated a clothing store in Toronto under TARGET APPAREL.  Since 2009, Fairweather rolled out a series of stores under the TARGET APPAREL brand across Canada.

Legal Proceedings

It is clear that Target Brands Inc. is not happy with the TARGET APPAREL brand as it has made a number of attempts to oust TARGET APPAREL from the Canadian marketplace.

The first attempt was to invalidate the TARGET APPAREL trade-mark registration on the basis of no use in the marketplace (this is commonly referred to in Canada as a Section 45 expungement proceeding).  Ultimately, Fairweather was able to show that it had continued to use the trade-mark TARGET APPAREL and Target Brands Inc.’s attempt to invalidate the trade-mark registration was unsuccessful.  (In fact, the decision was appealed all the way to the Federal Court of Appeal – but that’s another story).  Not happy with this decision, Target Brands Inc. is trying again and the proceeding is underway. 

What’s On Deck This Time?

Target Brands Inc. also took a more aggressive approach and is seeking a permanent injunction and damages.  Also, Target Brands Inc. brought a motion for an interlocutory injunction.  It’s pretty clear that Target Brands Inc. is not messing around with this and has some money to throw at the problem.

(If you’re scratching your head over injunctions – here’s a quick rundown.  An injunction is a court order to stop someone from doing something.  A permanent injunction stops them from doing something forever.  An interlocutory injunction stops that them from doing it until the final decision is made – basically until the final court decision has been issued.)

Can Fairweather Continue to Use TARGET APPAREL in Canada?

Yes, for now. 

But, keep in mind that this decision only deals with the interlocutory

injunction (or the “in the meantime” injunction). 

The court still has to decide whether it will grant the permanent injunction

which will mean that TARGET APPAREL can no longer be used in Canada.

Target Brands Inc. has taken the position that Fairweather is trading off of its reputation and goodwill associated with its TARGET brand.  Even though Target Brands Inc. has not started trading in Canada, it believes that the TARGET APPAREL brand does not provide the same level of service and will tarnish Target Brands Inc.’s reputation.

Fairweather, on the other hand, believed that if the court granted the interlocutory injunction it would be tantamount to granting a permanent injunction.  Fairweather would be required to pay significant money to re-brand “in the meantime” until the final decision was rendered. 

The court was convinced that even though Target Brands Inc. was not yet operating in Canada, it had developed significant goodwill in Canada and its brand was at risk.  Overall, the court took a pragmatic approach.  Given that Target Brands Inc. will not officially enter the Canadian marketplace until 2013 and that the trial for the permanent injunction was scheduled for November 2012, the coincidental timing didn’t warrant the granting of an interlocutory injunction.

Reaching Out Through Toronto Fashion Incubator

CanadaFashionLaw is delighted to be asked to participate in Toronto Fashion Incubator's Meet and Mingle event tonight.  I have a great amount of respect for this organization and how supportive it is of upcoming designers.  So, I decided to help spread the word. 

The Toronto Fashion Incubator is a non-profit organization that launched in 1987.  At that time the fashion industry was booming in Canada and was a significant employer in Toronto, which some believed warranted special consideration.  The City of Toronto supported the creation of a business incubator targeted toward the fashion industry and, thus, the Toronto Fashion Incubator was created. 

Funded largely in part from government grants, the Toronto Fashion Incubator seeks to encourage, educate and support emerging Canadian fashion designs launch their fashion lines.  Here fashion designers learn about the business of fashion: marketing, sales, export, manufacturing, accounting, law and strategic business planning.  The Toronto Fashion Incubator also offers the opportunity for designers to rent workshop space and design studios to assist with starting up the business.

The Toronto Fashion Incubator hosts a wide variety of events, one of which is today's event that I have been asked to participate in: Meet & Mingle.  This event is geared toward enabling fashion designers exchange information in an informal setting.  The Toronto Fashion Incubator provides many substantive events as well as networking opportunities such as Trend Forecasts, and Press and Buyers Breakfast.  Arguably its most notorious event is the TFI New Labels show, which showcases emerging Canadian talent.

Updates on Christian Louboutin v. Yves Saint Laurent

There have been some interesting developments in the Christian Louboutin v. Yves Saint Laurent case (first reported here).  Hold on to your seat because it turns into a bumpy ride.

Louboutin is claiming trade-mark infringement and seeking an injunction and damages against Yves Saint Laurent’s use of red shoes with red soles.  

Yves Saint Laurent has come back hard seeking to cancel Louboutin’s trade-mark registration upon which the trade-mark infringement claim is based.  Yves Saint Laurent is claiming that Christian Louboutin’s trade-mark registration was fraudulently obtained. Yves Saint Laurent claims that as part of the trade-mark registration process Christian Louboutin included a false statement that its use of red soled shoes was substantially exclusive.  Yves Saint Laurent claims that this was a false and misleading statement, given that the marketplace demonstrates that other companies use the red soled shoe. 

Christian Louboutin sought to dismiss Yves Saint Laurent’s counter-claim to cancel Christian Louboutin’s trade-mark registration on the basis of fraud. 

Christian Louboutin then proceeded to seek to obtain a preliminary injunction against Yves Saint Laurent.  (A preliminary injunction is a court order that restrains a party from continuing its questionable conduct until the case has been decided.  In this matter, Christian Louboutin is asking the court to force Yves Saint Laurent from selling its allegedly infringing shoes until the case has been decided).  

As part of its submissions to obtain the preliminary injunction, Christian Louboutin took an interesting position.  Christian Louboutin concedes that it is not claiming a monopoly over the color red for soles of shoes, but rather exclusivity over “lacquered red” soles:

“Louboutin’s trademark covers a specific red for outsoles, not the broad spectrum of red hues.  Many shades of red and other colors are available for use by any party who wants to produce a shoe, “monochrome” or otherwise, without infringing [Christian Louboutin’s] Red Sole Mark. Even Louboutin’s red color is available for competitors on other, more visible, parts of the shoe”.

This is interesting as Christian Louboutin seems to paint its circle of exclusivity very thinly. 

Christian Louboutin also maintains that its red lacquered soles are well-known in the marketplace and have acquired significant secondary meaning through its substantially exclusive use in the marketplace for 19 years and extensive media coverage and celebrity endorsement.  Christian Louboutin maintains that competitors in the marketplace that also use red soled shoes are “copyists”, that should not be recognized as legitimate actors that diminish the success of Christian Louboutin’s trade-mark.  

Ultimately, Christian Louboutin is pressing the court to grant a preliminary injunction as it sees this case as a possible “flood gate” for other infringers:

“Louboutin actively polices the Red Sole Mark to shut down copyists.  This task will become impossible if competitors can copy the Red Sole Mark at will, as YSL has done here.  Already another competitor has signaled its intent to follow suit.  A flood of red soles in high fashion women’s footwear creates the danger that Louboutin’s goodwill, market prominence and fame will be destroyed, thus threatening its entire goodwill.”

Christian Louboutin has a lot riding on this case.  It will be interesting to see how this case will unfold.  Stay tuned to CanadaFashionLaw.com for regular updates.

Update From The IDPPPA Trenches: Interview with US Fashion Attorney Charles Colman

The US is looking to revise its copyright act to extend copyright protection specifically to fashion designs, which has been a lengthy and somewhat controversial process.  CanadaFashionLaw.com previously provided a summary of the latest attempts at legislative reform.  The IDPPPA hit parliament hill in July for a congressional hearing, which caused a flurry of commentary from the fashion community. 

Meet Charles Colman, who is a Manhattan-based fashion lawyer.  Charles serves as the Co-Chair of the Fashion Design Legislation Subcommittee at the American Bar Association and recently sponsored the creation of a Fashion Law Committee at the New York City Bar Association.  I wanted to get the inside scoop from Charles on what is happening with the IDPPPA and fashion law in the US.  Here's what he had to say:

1. You have participated in the Fashion Design Legislation Subcommittee of the American Bar Association. What were the major themes of debate between the advocates of legislative change and those that objected?

In true lawyer form, I’m going to begin my answer with a disclaimer: that I’m not authorized to speak on behalf of the ABA, or any subdivision thereof.  The ABA’s official resolution on the Innovative Design Protection and Piracy Act should be released to the public fairly soon.  In the meantime, however, I can say that the Intellectual Property Section of the ABA has actually been on the record as supporting some type of additional IP protection for fashion designs since 2008, when the industry and its lawyers were focused on the now-defunct “Design Piracy Prohibition Act.”  As a result, when I first became involved with the ABA in late 2010, my Fashion Design Legislation Subcommittee wasn’t starting on a blank slate; in other words, it was no longer a question of whether legislative change in this area was desirable or not – though it’s certainly a discussion many others are still having.  Rather, the Subcommittee engaged in a more granular evaluation of the merits and flaws of specific provisions in the latest iteration of the protection-for-fashion bill, the “Innovative Design Protection and Piracy Prevention Act.”  To give you some sense of our discussion, certain Subcommittee members felt it was important to provide further clarification on the scope of immunity for “innocent retailers” under the proposed law.  Some members were troubled by language in the bill – “likely to be mistaken” – that seemed to pull the infringement inquiry back toward trademark law, contrary to its apparent purpose.  We also spent a lot of time examining what might be considered the “core” language of the bill – the threshold requirement that a qualifying design display “a unique, distinguishable, non-trivial and non-utilitarian variation over prior designs” – and whether that requirement was too stringent… or not stringent enough.

2. I understand that there was initially some serious objection from some within the fashion industry (i.e. the American Apparel and Footwear Association). Why? How were their concerns addressed?

I wasn’t involved in the debate at that time, but my understanding is that the AAFA was primarily concerned about frivolous lawsuits.  (Of course, this is a point of controversy anytime proposed legislation would create a new cause of action.)  The bill’s advocates eventually managed to get the AAFA on board, in large part by changing the required showing for liability from “substantial similarity” (the standard applied in copyright infringement lawsuits) to a higher standard that would require a plaintiff to prove that an alleged knockoff is “substantially identical” to her design.

3. How do you think the protection of fashion designs under copyright law will impact the fashion industry in the US? How will it impact the consumer? Will we see any impact to the economy?

I wish I could answer that question with any degree of certainty.  But as I’ve said in the past, I think it’s very difficult to make predictions about the impact of the bill – either on the industry or on consumers.  With that said, I have to imagine the law would have some prophylactic effect on unabashed knockoffs of original designs.  This could be very beneficial for small designers, who frequently can’t make the necessary evidentiary showing to prevail in so-called “trade dress” lawsuits.  But of course, even if the bill passes, it will be just as expensive to bring a lawsuit as it is now, so startup designers may remain vulnerable, even if they have a meritorious claim. 

Some feel the impact of the law will be minimal, speculating that the required showing for liability has become so demanding that only a trivial number of designs will qualify for protection.  Interestingly, this point has been made by both advocates and opponents of the bill: at a House of Representatives subcommittee hearing last Friday, the CFDA (a longtime champion of additional IP protection for fashion designs) and its allies simultaneously stressed that the proposed law is desperately needed and that relatively few designs – only those “that are truly original” – will receive protection, even if the bill passes.  As some observers have pointed out, there’s an interesting tension there.

4. You recently championed the creation of a fashion law committee within the New York City Bar Association. Why was this necessary? What is the role/function of this committee?

Every bar association has a trademark law committee, a copyright law committee, a real estate law committee, and so on.  But I felt that a central forum was needed for practitioners serving fashion industry clients to come together and share their expertise on fashion-specific issues arising in distinct legal realms.  To illustrate, the pending, highly controversial Christian Louboutin v. Yves Saint Laurent lawsuit raises legal issues that are, at least arguably, unique to fashion.  So the members of a conventional trademark law committee would have little reason to devote extensive time and attention to the case, while every self-professed “fashion lawyer” is watching it like a hawk.  The new Fashion Law Committee can explore and evaluate legal developments of particular concern to fashion industry clients in a way that a more general committee never could.  Because the Committee is still in its infancy, I don’t think anyone knows for sure what it will evolve into, but for now, it is – at the very least – an excellent forum for discussion.

5. Are there any key cases/developments in the US that we should be watching for?

The most important issue on the legislative agenda right now, at least for IP-oriented practitioners, is the “Innovative Design Protection and Piracy Prevention Act,” discussed earlier.  For decades, it’s been gospel that items of apparel are, by and large, “useful articles” and thus ineligible for copyright protection in most instances.  So any change to this legal landscape, even if the real-world impact does turn out to be minimal, would represent a major doctrinal shift.

Certainly the most “colorful” fashion-related case being decided right now is the Louboutin v. YSL dispute mentioned above.  But for reasons I’ve delved into on my blog, the case could also have major repercussions for the fashion industry at large.  YSL seems to have taken the position that trademark protection is never appropriate for “a single color on a portion of an article of apparel.”  If the district court agrees with this argument, there will undoubtedly be an appeal – perhaps all the way to the Supreme Court – and the outcome could be very significant for fashion design and branding.

While less accessible than the Louboutin case, many intellectual property lawyers are closely watching a case called Omega v. Costco Wholesale, currently pending in California federal court after a torturous round of appeals.  This case involves “gray goods” – here, luxury watches – that are sold outside the United States through authorized channels, but find their way back into the U.S., where they are often sold for far less than the brand would like to charge American customers.  The case made it all the way up to the U.S. Supreme Court on a fairly esoteric copyright law issue involving the “first-sale doctrine,” where the Court was poised to declare whether brand owners can exercise border control over gray goods on the basis of copyright.  But the Court ended up in a 4-4 tie (Justice Kagan having recused herself), so we don’t yet have a definitive answer on the crucial issue.  Because Costco lost at the Ninth Circuit (a federal appellate court) on the copyright issue, it’s now pursuing a different argument on remand: that Omega’s use of copyright to control the importation of otherwise non-copyrightable goods is a form of “copyright misuse”.  It will be interesting to see how this specific dispute plays out, and also to see whether other appellate courts side with the Ninth Circuit on the first-sale question.  Though the relevant issues are quite “legalistic” and inaccessible, their resolution has major ramifications for the fashion industry (and many other industries, as well.)

Banking on Patriotism to Help Launch Your Brand?

Emerging Canadian designers oftentimes target the Canadian market before venturing off into more lucrative international pastures.  Pulling on the patriotic heartstrings of Canadian consumers can be a useful marketing strategy: “support Canadian talent, buy Canadian fashion”.  This is all fair and valid…but it is important to know that the Canadian Competition Bureau is watching you.

The Competition Bureau is an independent law enforcement agency that governs competition in the marketplace.  It wants to make sure that everybody is playing fair.  The Competition Bureau has taken it upon itself to ensure that Canadian product claims are valid.  Last year the Competition Bureau issued guidelines (“Made in Canada Claims” and “Enforcement Guidelines Relating to ‘Product of Canada’”).  These guidelines kick in only when you start to claim and promote that your merchandise is from Canada.  If you don't make any country of origin claims, these guidlines do not apply.  Also, these guidelines only relate to non-food products.

There are two possible patriotic claims, “Made in Canada” and “Product of Canada”, which have different thresholds to satisfy.

Made in Canada:

The requirements to make this claim are easier to satisfy:

a)                 the last substantial transformation of the goods must have occurred in Canada; and

b)                 at least 51% of the costs of producing or manufacturing the goods have occurred in Canada.

If you claim that your product is “Made in Canada”, a qualifying statement must also be included.  For example: “Made in Canada with imported materials”.

If you do not expressly include the term “Made in Canada”, the Competition Bureau may interpret suggestive marketing ploys to insinuate that the product was Made in Canada, such as pictures of the Canadian flag or the maple leaf.  Thus, these criteria apply.

Product of Canada:

This claim has a higher threshold to satisfy:

a)                 again, the last substantial transformation of the goods must have occurred in Canada; and

b)                 at least 90% of the costs of producing or manufacturing the goods have occurred in Canada.  

Breaking This Down

The “last substantial transformation” means that the goods are fundamentally changed in form, nature or appearance so that they appear new.

“Costs of producing or manufacturing” includes labour costs and costs to produce the materials.  It generally does not include overhead costs.

What Happens if you Don’t Comply?

The Competition Bureau can enforce the guidelines.  If you insinuate that your product is Canadian when it does not comply with these guidelines, the Competition Bureau can look to the Competition Act for enforcement.  False or misleading representations in relation to product advertising can elicit substantial monetary fines and, in some instances, criminal liability.  

eBay Irony: Liability in Europe, Anti-Counterfeiting Guru in America

In an ironic twist, the same week that eBay announces its joint anti-counterfeiting awareness and advocacy campaign with the Council of Fashion Designers of America, it was also held to be responsible for facilitating the sale of counterfeit merchandise on its website www.e-bay.co.uk in Europe.  Here’s a summary of the decision.

The case is interesting as eBay plays an interesting role in the dissemination of counterfeit product globally.   

The Parties

L’Oreal SA and its subsidiaries launched a proceeding against individual defendants and eBay Inc. and its subsidiaries with regards to the sale of L’Oreal products on the website www.e-bay.co.uk, without L’Oreal’s consent. 

The Facts

L’Oreal is the owner of a number of UK trade-mark registrations and Community Trade-mark Registrations, which grants Europe-wide trade-mark protection, for a myriad of products. The individual defendants were selling counterfeit L’Oreal products, as well as products intended for markets outside of Europe and products not intended for sale at all, on e-Bay. 

L’Oreal took issue with e-Bay’s capacity of facilitating the sale of counterfeit and unauthorized product in Europe.  Moreover, L’Oreal maintains that e-Bay’s sale of keywords and sponsored links further facilitated the sale of counterfeit product.

Judgment

Given that e-Bay is online, its reach is global.  The Court was clear that just because a website is accessible globally that may not be sufficient to impose liability.  If the website is targeted toward a specific geographic region, and the plaintiff has trade-mark rights in that country that are being infringed, it is appropriate to bring an action against the operator of the website.  In this instance, it was very clear that the website was targeted toward Europe and L’Oreal had trade-mark rights in Europe.  

The Court also held that as L’Oreal had clearly marked some of the product as “samples” or “not for sale”, it was clear that L’Oreal had specifically withheld its consent to allow these products from being sold in the marketplace.  

Some of the products available, although they may not have been counterfeit, were sold without the appropriate packaging.  The court held that especially in respect of perfumes and cosmetics, the packaging of the product is an integral component of the product branding.  The removal of the packaging negatively affects the goodwill and reputation of the brand.  Moreover, there are safety concerns as the packaging oftentimes contains important use guidelines. 

eBay, by selecting search words that corresponded to L’Oreal’s trade-marks to those counterfeit or unauthorized products, elevated the opportunity to buy those products.  The court held that eBay’s actions placed it as an advertiser of the online marketplace, which places eBay in an intermediary position, rather than as a passive by-stander.  I wonder if this decision would have been different if eBay did not provide the opportunity to buy sponsored links or keyword advertising.

European Union and Louis Vuitton Pledge to Break Through Gender Glass Ceiling

On March 1, 2011, the European Union Justice Commissioner issued a challenge to publicly traded European businesses in an effort to create gender equality:

increase women's presence on corporate

boards to 30% by 2015 and to 40% by 2020

Companies can support this initiative by voluntarily signing the "Women on the Board Pledge for Europe".  Acknowleding the influence that government guidance (or intervention, depending on your political leanings) has on encouraging (or mandating) gender equality in the workforce, the Commissioner also saw great value in encouraging companies to voluntarily institute programs to facilitate gender equality.  This Board Pledge is the first step.  

The Commissioner advised that she would use the 2012 International Women's Day as a marker for progress.  If there has not be sufficient progress relying on the corporate world's initiative, she would be happy to intervene in a regulatory capacity.  

Frankly, the facts are a little depressing and there is room for improvement.  Today, only 12% of board members are women and 97% of the time, the board is chaired by a man.  

Louis Vuitton is the most signatory to the Pledge, which is reflective of its corporate policy to support gender equality in the corner offices. 

LVMH: je voudrais dire, merci!

Fashion Industry Takes a Stand Against Counterfeiters

As Canada's largest anti-counterfeiting damages awards was issued this month (reported here), we are reminded that counterfeit products are rampant in the market.

In addition to pursuing legal protection, as demonstrated by Louis Vuitton and Burberry, it is also interesting to see how the fashion industry is taking matters in to its own hands to combat counterfeiting. 

Here are a couple of anti-counterfeiting campaigns out there that are note-worthy:

1.  Harper's Bazaar's "Fakes are Never in Fashion" Campaign

This powerhouse magazine has turned its mind to educating consumers about the perils of anti-counterfeiting.  There is more at stake when buying a counterfeit purse than shoddy workmanship and cheaper prices.  Although the Fakes are Never in Fashion campaign focuses almost exclusively on the American industry, the impact is astounding.  The global loss of sales to companies is in the hundreds of billions of dollars.  The economic loss is not constrained to businesses, loss of tax revenue is also a significant economic burden, in addition to the loss in employment opportunities.  The impact also extends beyond money.  Anti-counterfeiting revenue helps to fund criminal activities and even terrorism. 

The Fakes are Never in Fashion campaign's website is very comprehensive, providing updates and news that touch upon the counterfeiting world.  Also, the Fakes are Never in Fashion campaign hosts annual anti-counterfeiting conferences.  In its 7th year, the focus was on the impact of the internet on global counterfeiting.

2.  Christian Louboutin's Stop Fake Campaign

Christian Louboutin has has launched its own anti-counterfeiting campaign, which is an interesting comparison to other brands that are happy to have their anti-counterfeiting activities conducted behind closed doors.

At the close of its one year anniversary, Christian Louboutin proudly boasts that it has shut down 180,000 auctions selling counterfeit shoes, conducted numerous successful raids of counterfeiting factories, exploited customs seizures, tackled unauthorized domain names and launched a number of actions protecting its red sole (click here for a summary of Christian Louboutin's attack on Yves Saint Laurent).

Interestingly, Christian Louboutin publicly sets out its plan of attack to execute its zero-tolerance policy against counterfeit products, identifying both collaborators and avenues of legal attack.  Such full disclosure is not often seen outside of corporate and law offices.

3.  CFDA and e-Bay combine forces

The Council of Fashion Designers of America, along with e-Bay, recently launched a joint venture: "You Can't Fake Fashion".

CFDA member designers, such as Diane von Furstenberg, Tommy Hilfiger, Tory Burch, Jason Wu, Kenneth Cole etc., have each designed one-of-a-kind tote bags emblazoned with the slogan "You Can't Fake Fashion", in an effort to raise awareness of the perils that counterfeiting poses to the fashion industry.

It is interesting to see e-Bay so publicly involved as this medium has oftentimes been criticized as being a key vehicle of distribution for counterfeit product.

Opportunity for Yves Saint Laurent To Go On Offensive

A previous article by CanadaFashionLaw discussed the pending trade-mark infringement case in the US between Christian Louboutin and Yves Saint Laurent.

To quickly recap, Christian Louboutin, a luxury brand notorious for its shoes that have red soles on the exterior of shoes, is suing Yves Saint Laurent in New York for trade-mark infringement, based upon Yves Saint Laurent inclusion of red shoes with red soles in a fashion show earlier this year.  At the time the action was commenced, Christian Louboutin was the owner of a registered trade-mark in the US for the red soles, however, trade-mark applications were still pending in Canada and Europe.

Interestingly, Christian Louboutin's trade-mark application has progressed in Canada to the advertisement stage, which signifies the start of the opposition period. 

This is significant as it may provide an opportunity for

Yves Saint Laurent to go on the offensive and attack the registrability

of Christian Louboutin's trade-mark.

In Canada, in order for a trade-mark to register, the trade-mark application is subjected to a rigorous and lengthy process.  At first, the trade-mark is filed with the Canadian Trade-marks Office.  The trade-mark application is examined by the Canadian Trade-marks Office for substantive and administrative issues.  Substantive objections may be raised at this point, for example the trade-mark may be "clearly descriptive or deceptively misdescriptive", the trade-mark is confusingly similar and therefore conflicts with a previously registered third party trade-mark etc.  Once (or if) the trade-mark application moves beyond the examination stage, the application is then advertised in the Canadian Trade-marks Journal.  This signifies the start of the opposition period. 

The opposition period places the onus on other brand owners to protect their own brand as it affords "any interested party" the opportunity to police third party trade-marks that may register in Canada.  If a brand owner wishes to contest the registrability of the trade-mark, it may oppose the trade-mark application.  An opposition is essentially a tribunal that has been set up within the trade-mark registration process.  It is akin to court in that pleadings are submitted, evidence is compiled, arguments are put forth.  There is also an opportunity for cross-examinations and oral hearings.  The Trade-marks Opposition Board determines whether the trade-mark application is registrable or not.  It can pose a significant obstacle to the trade-mark applicant. 

There a number of possible grounds of opposition identified in the Trade-marks Act.  Yves Saint Laurent may be most interested in the following:

a) the trade-mark is not registrable; and/or

b) the trade-mark is not distinctive.

If Yves Saint Laurent wishes to act, it must do quickly.  A statement of opposition must be filed with the Canadian Trade-marks Opposition Board within two months of the date of advertisement of the trade-mark application.  (However, there is always the possibility of requesting a limited extension of time). 

It will be interesting to see whether anything will materialize or is Christian Louboutin's exclusivity over its red soles will be statutorily recognized in Canada.

Below is a summary of Christian Louboutin's Canadian trade-mark application:

Trademark	App. No. & Date	Wares	Description
	1,469,797 February 17, 2010	Footwear namely shoes, ballet flats, boots, ankle boots, thigh boots, pumps, sandals, sneakers, clogs	The trade-mark consists of the colour red applied to the entire outer surface of the sole, as shown in the drawing.

Crunching Numbers on Ontario's Fashion Industry

On today, which is Canada Day, let's reflect on the Canadian fashion industry.  Or, more importantly, what does it mean to Canada's purse strings? 

The Ontario government released a report that looks at the economic contributions of the fashion industry to Ontario's economy.  Here's a quick look:

- Toronto's fashion industry employs more than 50,000. 

- Fashion designers generally live where they work: a survey indicates that 73% live in Toronto.

- Toronto is home to 550 apparel manufacturers that bring in $1.4 billion annually.

- Shopping opportunties abound in Toronto.  There are 4,600 retail stores in Toronto, which generate $2.6 billion in revenue.

- Toronto's LG Fashion Week draws crowds.  Almost 35,000 people attended the fashion week that debuted Fall 2011 fashion lines.  Given that the LG Fashion Week occurs twice annually, that's a lot of tourism.

- A survey indicates that Canada's fashion industry will need to hire 7,000 more people over the next 2 years.

Makes you proud to be a Canadian, eh? 

Sting Like a Bee: Federal Court Awards $2.5 million for Trade-mark and Copyright Infringement

On June 27, 2011, Canada’s Federal Court issued the largest anti-counterfeiting damages award for trade-mark and copyright infringement $2.5 million, in Louis Vuitton Malletier S.A. et al. v. Singga Enterprises (Canada) Inc.

The Players 

Louis Vuitton Malletier S.A. and Burberry Limited, the intellectual property owners and only authorized manufacturers and distributors of Louis Vuitton and Burberry products, respectively, along with their exclusive Canadian distributors, Louis Vuitton Canada, Inc. and Burberry Canada Inc., combined forces to launch a suit for trade-mark and copyright infringement.

The defendants are a mélange of corporations and individuals whose illegal activities were interwoven throughout Canada.  Singga Enterprises (Canada) Ltd., along with the officer and director and principal, operated a warehousing, importation distribution and online business that imported, sold and distributed counterfeit goods from Burnaby, B.C. 

Altec Productions, along with its directing minds, operates out of Markham, Ontario.  Singga referred customers interested in bulk purchase to Altec for a commission. 

Carnation Fashion Company, along with its owner, also operates out of Burnaby, B.C.  Although no direct connection was found between Carnation and the remaining defendants, Carnation operated a warehouse that was located directly behind Singga.

The Sting

Louis Vuitton and Burberry became aware that from at least as early as January 2008 that Singga manufactured, imported, advertised and sold counterfeit products throughout Canada on a large scale.  The plaintiffs hired a private investigator who posed as as interested bulk buyer.  Compiled evidence indicated that the defendants imported the counterfeit products from China and warehoused them throughout Canada (Vancouver, Edmonton, Toronto and Halifax).  The defendants preferred to deal in bulk orders and also made the products available for sale online.  On several occasions the defendants acknowledged that the products were counterfeit.  The defendants even offered up services to custom-make counterfeit goods, as long as a photograph of the original product was provided. 

The Decision

Without a doubt, the evidence demonstrated that the defendants knowingly infringed the plaintiffs’ intellectual property rights.  The defendants’ sale of substantially inferior quality products caused irreparable harm and damage to the plaintiffs’ goodwill and reputation. 

The plaintiffs were awarded injunctive relief, delivery up, damages for both trade-mark and copyright infringement, statutory damages, punitive and exemplary damages and costs on a solicitor and client basis via a summary trial. 

The court found that the individual defendants were culpable and could not use their respective corporations as a shield from liability.  There were individually fined, in addition to their companies. 

All in all, cumulatively the defendants were ordered to pay $2.5 million to the plaintiffs. 

How Did it Reach $2.5 Million?

Allocating damages awards in anti-counterfeiting cases is challenging because of the unknowns: 

How can you quantify the depreciation of goodwill? 

Do the diverted profits to the counterfeiters actually reflect lost profits for the brand owner? 

Is it likely that the plaintiffs and the defendants would have the same consumers? 

Is it possible to obtain evidentiary documentation that supports all of the anti-counterfeiting activities, sales and profits? 

Bottom line: accurate quantification of damages in anti-counterfeiting cases is difficult. 

In 1997 the Federal Court devised a scale of quantification that could be applied in determining damages awards in anti-counterfeiting cases to overcome the quantification hurdles: $3,000 for flea markets, $6,000 for retail stores and $24,000 for manufacturers/distributors for each single count of infringement.  Recently the court has adjusted these amounts to account for inflation. 

In this instance, the court recognized that the infringement was on a large scale, was well-orchestrated, continued over a long period of time and involved the importation of counterfeit goods from China.  The court determined that the damages needed to be considered at a high level.  Moreover, damages should be awarded to each plaintiff individually. 

The court held that damages should be assessed at the importer/distributor level and, accounting for inflation in 2009, an award of $30,384.11 should be granted per each trade-mark infringing activity to each of the four plaintiffs. 

The court determined that the defendants’ conduct demonstrated that they were dismissive of the rule of law and clearly could benefit from deterrence, which is the goal of awarding statutory damages.  As such, the court also awarded statutory damages for copyright infringement at the highest end of the scale for each instance: $20,000.  

Deeming the defendants’ conduct egregious, outrageous, reprehensible, the court did not shy away from awarding punitive and exemplary damages.

Solicitor and client costs were also awarded.