Transcript Part 1 Security Interests in Personal Property: The PPSA

Trade-marks
Trade-marks

A trade-mark is any mark which identifies the
source of the wares
Trademark in the US
 Trade mark in the UK

Trade-marks

Trade-marks are protected by

The common law of passing off

Passing off was once known as unfair competition


And still is in the US
The Trade-marks Act
The Act applies only to marks which are registered
 Unfair Competition Act was predecessor of Trade-Marks
Act


Hence trade-marks may be registered or
unregistered
Passing Off & Trade-marks

Passing off and the Trade-marks Act offer very
similar protection


It is very common to allege both passing off and an
infringement of the TMA in the same action
Differences are procedural

Territorial extent
PO is limited to region in which the mark is actually known
 TMA protection it national on registration


Establishing of reputation
PO requires reputation be established by evidence
 TMA requires only use as prerequisite to registration

Principles

Trade-marks law protects an association between a mark
and the source of the wares


Contrast trade-marks with patent and copyright in which the
wares themselves are protected
The operation of the market relies extensively on brands
The goodwill associated with them is considered to be a
most valuable form of property However, despite its
connection with a product, a mark must not be confused
with the product – it is something else, a symbol of a
connection between a source of a product and the
product itself.

Kirkbi v Rivtik SCC
Principles

Corollary

Functionality is not protected by trade-marks law

To achieve protection for functional aspects of a work,
copyright or patent protection must be sought
Principles


Why is it important to protect the association
between the mark and the wares?
In many cases the quality of the wares cannot be
determined by direct inspection at the time of
the purchase


Only experience – and hindsight – tells the quality of
the goods
Reputation is the basis of the sale
Principles

A good reputation sets up a virtuous circle
Consumers buy the manufacturer’s goods because of
the reputation
 The manufacturer keeps up its reputation because
this leads consumers to purchase


Note that it is expensive to produce high quality
wares

A good reputation allows a provider to charge
commensurately more for their wares
Principles




Once the reputation is established a forger can
exploit the mark by selling inferior quality goods
at the same price as is commanded by the
owner’s higher quality goods
The forger could choose to offer high quality goods
But it won’t
The forger can make extraordinary profits by
offering inferior goods at the same price
Elements

Trade-marks law protects reputation by protecting
the link between the source and the wares





The mark may be a manufacturer’s mark
A distributor’s mark
A retailer’s mark
A service mark
This allows the reputation of the source to develop
through consumers’ experience with wares
associated with the mark
Elements


Because trade-marks law is aimed at protecting
reputation the key element is confusion in the mind
of the consumers as to the source of the wares
The mark must be
Confusingly similar, and
 Confusing as to the source of the wares


Using the mark to refer to the source of the wares is not
confusing

Eg “I own a Honda™”
“Source Theory”


This is encapsulated in the traditional “source
theory”
The function of a trademark is to impart
information as to the source or sponsorship of
the product.

Singer Mfg Co v Loog (1880) 18 ChD 395
“Source Theory”

In other words, what the registered mark does
nowadays is to ensure that the wares or services are
the wares and services of a particular person and no
one else, that is, the source of the goods is
guaranteed.


United Artists Corp v Pink Panther Beauty Corp 80 CPR (3d) 247
(FCA) at 256
[T]he traditionally accepted premise that the only
legally relevant function of a trademark is to impart
information as to the source or sponsorship of the
product.

Smith v Chanel, Inc, 402 F2d 562 (9th Cir 1968) at 566:
Source Theory


Contrast source theory with
Guarantee theory


The function of the mark is to guarantee the quality
of the goods
Property theory
Ownership of the mark
 Dilution theory

Ciba-Geigy v Apotex



Gontier J suggests that “the passing-off action is
intended to protect a form of ownership”
“the passing off injures the right of property in the
plaintiff, that right of property being his right to the
goodwill of his business”
The suggestion that trade-marks are a form of
property is dangerous, as it suggests that the owner
can control any use of the trade-mark, even those which do
not cause any confusion

Eg What’s in Jeremy’s wallet
Ciba-Geigy v Apotex

The suggestion that trade-marks law protects the property
of the owner stems from the fact that the owner of the
mark, not the consumer, brings the action

[i]t should never be overlooked that unfair competition cases
are affected with a public interest. A dealer's good will is
protected, not merely for his profit, but in order that the
purchasing public may not be enticed into buying A's product
when it wants B's product.


Ciba-Geigy
But if the law is really about protecting the consumer,
why is the T-M owner given the right of action?
Ciba-Geigy v Apotex

The interests of the owner and the consumer are
aligned when a forger uses a confusing mark


Since the owner has more at stake than any
individual consumer, the owner brings the action
But the interests of the owner and the consumer
are not aligned in the case of non-confusing uses

This is when it is necessary to determine who the
law is really intended to protect
Dilution and Passing Off


Trade-mark ‘dilution’ has been recognized in the
US
Arises when defendant “blurs” or “tarnishes” a
mark
Dilution

Blurring applies to famous marks
Kodak bicycles would blur the distinctiveness of
Kodak film, even without confusion
 An extension of traditional source theory

Dilution

Tarnishment

Derogatory use of a mark


“Enjoy Cocaine”
Dallas Cowboys Cheerleaders, Inc v Pussycat Cinema, Ltd, 604 F2d
200 (2d Cir 1979)


Pillsbury Co v Milky Way Prods, Inc, 215 USPQ 124 (ND Ga 1981)


Plaintiff's trade characters "Poppin" Fresh" and "Poppie Fresh" diluted by
depiction of them engaged in sexual acts
MTD v John Deere



Plaintiff's distinctive uniform diluted by defendant's use of a similar uniform
in an X-rated movie
John Deere lawn tractor being chased by MTD tractor
“Nothing runs like a Deere”
Much closer to property right in the mark itself
Google AdWords

Use in Commerce?
In Canada “sells, distributes or advertises wares or
services in association …”
 Yes

Google France v Louis Vuitton, A-G ECJ Sept 2009
 Rescuecom Corp. v. Google, Inc., (2009, 2nd Cir.)


Confusing Use?
No – Google France
 Maybe - Rescuecom

Passing Off – Elements

Despite some waffling, the traditional elements
of passing off remain:
 (1) A reputation
 An
association in the mind of the public
between the mark and the source
 (2)
A misrepresentation leading or likely to
lead to confusion in the mind of the public
 (3) Damage to the plaintiff
Passing Off – Intent

Intent to confuse is not an element
For this reason it is sometimes said that the right is
“proprietary”
 This does not mean that the owner owns the mark
in the sense that they can prohibit any use
whatsoever of the mark
 Confusion remains a requirement

Passing Off – Elements

Intent to confuse is not an element
For this reason it is sometimes said that the right is
“proprietary”
 This does not mean that the owner owns the mark in the
sense that they can prohibit any use whatsoever of the mark

Trade-marks & Passing Off

Differences between registered and unregistered
marks relate to reputation

Not necessary to prove a reputation


Registration is permitted upon use
Nationwide protection

Passing off protects only in the geographical areas in
which a reputation has been gained