Canada: Court Overturns Online Trademark Infringement Act

On 11 September 2001, the Ontario Court of Appeal in Pro-C Limited v. Computer City, Inc., Docket no. C34719, overturned a trial judgement in which the court awarded the plaintiff CAD 450.000 in general damages and CAD 750.000 in punitive damages for trademark infringement.

The plaintiff was the registered owner of the trademark "Wingen", used in Canada in association with its software products. The defendant had adopted the same trademark for use in the US in association with a non-competitive product (personal computers). The plaintiff used the trademark as its domain name for its corporate web site. When the defendant's American customers sought information on the Internet regarding the defendant's personal computers, they mistakenly visited the plaintiff's website. The plaintiff alleged that its website was so overwhelmed that it could not service its own customers and that its business was damaged.

At issue on appeal was whether the trial judge had erred in deciding that the defendant had "used" the trademark in Canada in violation of the Plaintiff's right to exclusive use under the Canadian Trademarks Act. According to sec. 4 of the Trademarks Act, a trademark is deemed to be "used" in association with wares if, at the time of the transfer of the property in or possession of the wares, in the normal course of trade, it is marked on the wares themselves or on the packages in which they are distributed or it is in any other manner so associated with the wares.

Because the defendant had not actually sold computers marked with the trademark "Wingen" in Canada through its own website (or otherwise), the Court of Appeal held that there had been no "use" of the trademark by the defendant in Canada, and hence no infringement. The appeal thus clarifies the application of local law to a foreign web site operator.

For further information:

MMR 1/2002