Boaden Catering Limited v. Real Food for Real Kids Inc. – Some IP with your lunch?

Boaden Catering Limited v. Real Food for Real Kids Inc. is a recent decision from the Ontario Superior Court that includes a healthy plateful (pun intended) of intellectual property related issues, both substantive and procedural. Shift Law obtained summary judgment in this case on behalf of the successful defendants, dismissing the plaintiff’s action in its entirety.

The plaintiff, Boaden Catering Limited (d.b.a. “Organic Kids Catering”) (“OKC”), had registered a number of domain names that included elements that were the same as or similar to the trademarks and trade name of the defendants, OKC’s direct competitors in the market for healthy food catering for children. After the defendants initiated arbitration proceedings to recover the domain names, the arbitrators found that OKC had registered the domain names in bad faith and that it had no legitimate interest in them. OKC responded by bringing this action, seeking a declaration that it was the lawful and rightful owner of the domain names at issue and a variety of other relief based on allegations that the defendants were defaming OKC, misappropriating its menu and passing themselves off as OKC, etc.

The Court’s reasons for dismissing OKC’s action include some interesting takeaways, particularly regarding: (i) the distinction between mere “trade banter” and unlawful defamation/ injurious falsehood; (ii) the Court’s approach to reviewing domain name arbitration decisions; and (iii) the use of a competitor’s trademarks as meta tags on a commercial website.

i. “Trade banter” vs. defamation/injurious falsehood

The defamation allegations concerned statements that the defendants allegedly made at various times, to various people, that OKC was a “bottom feeder”, that “you should see their kitchen” and “they are not who they say they are”.

The Court considered these statements in light of the defendants’ evidence of how the statements, in context, were really meant. The Court cited an earlier case where the judge had distinguished between unlawful defamation and injurious falsehood on the one hand and mere “trade banter” or “trade rhetoric” on the other. It found that the statements attributed to the defendants here, when considered in context, fell into the latter category. As such, they were not unlawful.

The Court went on to say that even if the statements were defamatory, OKC could hardly complain since the circumstances of the lawsuit “suggest to me that [OKC] brought this litigation to intimidate a smaller business competitor, and has adopted a number of dubious tactics to gain advantage…”

ii. Judicial review of domain name arbitration decisions / use of mini trial procedure

The decision is also notable for how the Court approached the issue of who is entitled to the domain names that were the subject of the arbitration proceedings. By seeking a declaration from the Court that it was the lawful and rightful owner of these domain names, OKC was effectively asking the Court to overturn the arbitrator’s decision that OKC had registered the domain names in bad faith.

In most cases where a prior administrative or judicial decision is at issue, the Court will consider the standard on which it should review the decision – e.g. must the Court find a legal error in the earlier decision in order to interfere with it? Can the Court consider new evidence that was not before the original decision-maker?

In this case, there was no discussion of these issues. But the decision now stands as authority that Court can decide entitlement to a domain name that was the subject of an arbitration decision on a “de novo” basis (i.e. without deferring to the arbitrator’s decision) and it can also consider new evidence that was not before the arbitrator.

The Court not only considered the new affidavit evidence that OKC had submitted to support its claim for entitlement to the domain names, but it also ordered a “mini trial” relating to this issue. Specifically, OKC’s representative was required to answer questions in direct and cross-examination relating to whether the “rfrk.ca” domain name at issue was an acronym for OKC’s alleged advocacy initiative, “Real Food Real Knowledge”, or was a reference to the corporate defendant. None of this was in evidence before the arbitrators.

Ultimately, the Court found that “[t]he evidence before the court strongly supports the conclusion reached by the United States and Canadian arbitrators that [OKC] registered the domain names in bad faith for the purpose of exploiting the value of [the defendants’] trademarks or otherwise for illegitimate gain. I reach the same conclusion.”

iii. Using a competitor’s trademarks in your website’s meta tags

 While the use of meta tags has previously been considered in a handful of cases, it is still not entirely clear whether or when incorporating another’s trademark or works into meta tags on your website, without permission, constitutes trademark or copyright infringement.

In this case, the Court considered evidence that OKC had embedded the defendants’ trademarks as meta tags on its website. The Court did not have to decide whether this was “strictly legal” because only the action before the Court was OKC’s action against the defendants (i.e. not the defendants’ counterclaim against OKC). The Court did, however, describe OKC’s use of the defendants’ trademarks as meta tags as “certainly unethical, deceptive and the antithesis of “open, honest and fully transparent” [i.e. the plaintiff’s motto]”.

While the legality of OKC’s meta tags was not at issue, the ethics of it was still relevant for three reasons:

First, OKC was seeking an injunction against the defendant which is an equitable remedy available only to those (unlike the plaintiff with its meta tags) who come to the Court with “clean hands”.

Second, as noted above, OKC was asking the Court to overturn an arbitrator’s decision that OKC had registered domain names in bad faith. The Court found that OKC’s use of the defendants’ trademarks as meta tags in bad faith supported the arbitrator’s conclusion that the domain names were also registered in bad faith.

Third, the Court cited OKC’s “reprehensible conduct” in its costs endorsement where it ordered OKC to pay all of the defendants’ costs - something that happens only in exceptional cases.

OK, who wants dessert?