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A brief history of passing off, websites and "initial interest confusion" in Canada

The Federal Court’s recent decision in Red Label Vacations Inc. (redtag.ca) v. 411 Travel Buys Limited (411travelbuys.ca), 2015 FC 19 is the latest in a series of Canadian cases to address the tort of passing off in the context of website domain names and meta tags. And it is a departure from where things had appeared to be headed, at least with respect to “initial interest confusion”.

“Initial interest confusion” is a concept originating in U.S. trademark law. In the Internet context, it refers to when customers seeking the plaintiff’s website are initially attracted to the defendant’s website because the defendant has used the plaintiff’s trademark in a domain name or in meta tags embedded in the defendant’s website. Any confusion that results in the marketplace is limited to “initial interest” because the customers will know that they are on the defendant’s website (not the plaintiff’s) as soon as they get there. This is different from traditional passing off where customers who are initially misled by the defendant’s use of the plaintiff’s trademark remain misled throughout their dealings with the defendant.

In Red Label Vacations, Justice Manson said that initial interest confusion “has not to my knowledge gained a foothold in Canada”. That he said so is surprising.

As the brief history below shows, initial interest confusion has been considered in a number of Canadian cases since 2001 and has been applied in the plaintiff’s favour to establish passing off in at least a few. To date, it has largely been applied only in relation to domain names and has not quite yet “gained a foothold in Canada” with respect to the use of meta tags (to that extent, Justice Manson was not wrong).

But a legal framework clearly exists in Canada to establish passing off by initial interest confusion in any number of online circumstances, whether through the use of domain names, meta tags or the next trick that a defendant comes up with to use a competitor’s trademark to attract interest on the Internet. The following is a brief history of the cases.

British Columbia Automobile Assn. v. O.P.E.I.U. Local 378, 2001 BCSC 156

Initial interest confusion was first considered in Canada by the British Columbia Supreme Court in 2001 in British Columbia Automobile Assn. v. O.P.E.I.U. Local 378, 2001 BCSC 156. In that case, the defendant union used the plaintiff manufacturer’s trademarks in domain names and meta tags on the union’s website in support of a strike. Justice Sigurdson reviewed a number judicial authorities from around the world relating to passing off on the Internet, where the concept of initial interest confusion was considered in relation to a defendants’ use of a plaintiffs’ trademarks in domain names and meta tags.

For example, the first case he cited was Brookfield Communications Inc. v. West Coast Entertainment Corp., 174 F.3d 1036 (9th Cir. 1999) where a U.S. appeal court had distinguished between the use of domain names and meta tags and concluded that the latter was less likely to cause the traditional form of confusion but could still result in initial interest confusion.

Ultimately, Justice Sigurdson found that initial interest confusion passing off was not established on the facts in British Columbia Automobile Assn. v. O.P.E.I.U. Local 378. He noted, in particular, that the context in which the defendant was using the plaintiff’s trademarks in its domain names (i.e. by adding the words “on strike” and “back to work” to the plaintiff’s trademark) and in meta tags made it immediately obvious to someone searching for the plaintiff on the Internet that the defendant’s website was not operated by or endorsed by the plaintiff. He also considered the fact that union could not reasonably be expected to exercise its constitutional rights to freedom of expression and freedom of association without referencing the plaintiff’s trademarks in its domain name and website.

But for these particular circumstances, passing off by initial interest confusion may well have been established in Canada in this case.

Law Society of British Columbia v. Canada Domain Name Exchange Corporation, 2004 BCSC 1102

Passing off by initial interest confusion was established three years later in Law Society of British Columbia v. Canada Domain Name Exchange Corporation, 2004 BCSC 1102, another decision from Justice Sigurdson.  Here, the defendant had registered the domain names <lawsocietyofbc.ca> and <lsbc.ca> and was using them to re-direct Internet users searching for the Law Society of British Columbia to unrelated websites, including a pornographic site. While the term “initial interest confusion” does not appear in this decision, it is clearly at issue and is what ultimately decides the case in the plaintiff’s favour.

Justice Sigurdson stated at paragraph 24: “I find, hardly surprisingly, that the use of the name "lawsocietyofbc" in a domain name, without additional words or qualified by other words, is a representation that the site and the location to which it is directed is associated with the plaintiff.  That is a misrepresentation.” At paragraph 29 he stated:  “The use of a domain name that is so similar to the name that the plaintiff is known by and has substantial goodwill in (without additional words) would lead a person surfing the web and going to <lawsocietyofbc.ca> to believe, I conclude, that they were going to the plaintiff's web site or one that was affiliated with the plaintiff” [emphasis added]. He found the defendant liable for passing off on that basis.

In other words, the required element of misrepresentation was established by the initial interest confusion resulting from the defendant’s domain name, even if a person searching for the Law Society of British Columbia discovered, upon arriving at a pornographic website, that he or she had been misled.

UFCW International Union et al. v. Sigurdur et al., 2005 BCSC 1904

The issue of passing off by initial interest confusion came before the B.C. Supreme Court once again in UFCW International Union et al. v. Sigurdur et al., 2005 BCSC 1904. The Court held that the element of misrepresentation was established by initial interest confusion resulting from the defendant’s use of the plaintiff’s trademark in a domain name (but not in the defendant’s use of meta tags).

In this case, the defendant was using the domain name <ufcw.net> for a website advocating for union reform. The plaintiff, the United Food and Commercial Workers (UFCW) union, complained that the defendant’s use of the UFCW acronym as a domain name for her website constituted passing off. Justice Beams agreed. She stated at paragraphs 10 to 14:

… In this case, the defendants say that there cannot possibly be any confusion in the public’s mind about the organization Members for Democracy and its independence from the plaintiff union.  They quite rightly claim that as soon as the homepage of the Web site is opened, it is obvious to even the most casual observer that the Web site is not union sponsored, nor union affiliated, but rather that it is a Web site promoting discussion about union reform, not limited to the plaintiff union but to labour unions generally.

… The question then is whether the domain name of the Web site alone, namely ufcw.net, and the use of that name can constitute passing off….

In this case, I am satisfied that the defendants' use of UFCW, without more, in its domain name does amount to a misrepresentation likely to cause at least initial confusion as to an association or affiliation between the Web site and the plaintiff. [emphasis added]

Pandi v FieldofwebsCom Ltd, [2007] OJ No 2739 (S.C.J.)

In Pandi v FieldofwebsCom Ltd, [2007] OJ No 2739, the defendants sold pyjamas online in direct competition with the plaintiff. The defendants had embedded in meta tags on their website the plaintiff’s trademark “Jumpin Jammerz” but had ceased doing so prior to the hearing of the plaintiff’s lawsuit for passing off, among other things.  The court stated that it likely would have granted an injunction restraining the defendants from using “Jumpin Jammerz” in meta tags on their website if they hadn’t already ceased doing so:

… Meta tags associated with a website are capable of bringing members of the internet public to a site who may not have intended to go there…

In the physical world, this might be analogized to misleadingly diverting traffic from one trader's door to that of another. The analogy is necessarily imperfect in that the product of search engines is merely a list, thus leaving the internet traveller with the choice as to which sites on the list to visit and in what sequence, but in my view, the practice of using another trader's domain name, trade name, trade mark or logo as a meta tag for a website selling competing wares is objectionable unless the name or mark itself is merely descriptive of the wares sold…

Had it been necessary, I would have made an order restraining the use of the phrase “Jumpin Jammerz” as a meta tag in association with FOW’s website in these circumstances given that the phrase is not descriptive of the wares and an arguable case could be made that its use as a meta tag was for the purpose of diverting or luring members of the public to a site that was not in fact connected with the business known as Jumpin Jammerz at all. (paras. 36 – 41)

Dentec Safety Specialists Inc. v. Degil Safety Products Inc., 2012 ONSC 4721

In Dentec Safety Specialists Inc. v. Degil Safety Products Inc., 2012 ONSC 4721, the plaintiff and defendant were direct competitors, selling industrial safety products. The plaintiff operated a website at www.dentecsafety.com. The defendant registered the domain name <dentecsafety.ca> (i.e. the plaintiff’s domain name with a .ca instead of a .com) and set it up so that internet users who typed it into a browser would be directed to the defendant’s website.

While this case would likely have been decided the same way on the basis of traditional passing off, Justice Campbell took the opportunity to fashion a unique set of principles to consider in the domain name context. One of the principles he expressed was that that passing off in the domain name context can arise solely from initial interest confusion.

Insurance Corp of British Columbia v Stainton Ventures Ltd, 2012 BCSC 608 and 2014 BCCA 296 

In Insurance Corp of British Columbia v Stainton Ventures Ltd, 2012 BCSC 608 and 2014 BCCA 296, the defendant operated a website located at www.icbcadvice.com which offered advice and resources for dealing with the Insurance Corp of British Columbia (ICBC).

At trial, Justice Grauer dismissed the plaintiff’s allegations that this, alone, constituted passing off. Referring to Justice Sigurdson’s decision in British Columbia Automobile Assn. v. O.P.E.I.U. Local 378, 2001 BCSC 156, he noted that adding the word “advice” to the plaintiff’s trademark in the domain name would make it apparent that the domain name pointed to a website for dealing with the ICBC at arms-length or in adversarial manner.

Had the domain name been <icbc.net> alone, however, Justice Grauer said that passing off would have been established, presumably on the basis of initial interest confusion.

The B.C. Court of Appeal upheld this decision in 2014.

Red Label Vacations Inc. (redtag.ca) v. 411 Travel Buys Limited (411travelbuys.ca), 2015 FC 19

Given all of the cases above relating to initial interest confusion, Justice Manson’s comment in Red Label Vacations Inc. (redtag.ca) v. 411 Travel Buys Limited (411travelbuys.ca), 2015 FC 19, that initial interest confusion has not “gained a foothold in Canada” is surprising – particularly since he actually cited the Jumpin Jammerz and ICBC cases in his reasons.

The defendant in this case did not use the plaintiff’s trademarks in any visible portion of its website (e.g. in domain names). While it did use the plaintiff’s trademarks extensively in meta tags embedded in its website, Justice Manson found that this was not sufficient to establish passing off because a person would not be confused as to the source of the defendant’s website or its affiliation with the plaintiff by the time they got there. In so holding, Justice Manson categorically rejected initial interest confusion as a basis for passing off.

To that extent, this decision from the Federal Court is a departure from where the case law summarized above appeared to be headed, especially since the Jumpin Jammerz case. But don’t count passing off by initial interest confusion out yet. The fact that Justice Manson did not acknowledge the history of the concept in Canada, as set out above, should make any judge reluctant to be bound by his decision, particularly outside of the Federal Court. And, as of the date of writing this, the plaintiff is appealing the decision. So stay tuned!

 

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John Simpson is the Principal of Shift Law. John launched Shift Law in 2011 after eight years working at some of Canada's top intellectual property, litigation and business law firms.