Common IP Issues in Advertising and How to Avoid Them: When Imitation Doesn’t Flatter: Trade-mark and Copyright Issues in Advertising Advertising and Marketing

Common IP Issues in Advertising and How to Avoid Them:

When Imitation Doesn’t Flatter: Trade-mark and Copyright Issues in Advertising

Advertising and Marketing Law Forum

December 10, 2013

Shelagh Carnegie

Partner, Gowling Lafleur Henderson LLP

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Outline

Copyright Understanding when third-party copyright is

an issue New provisions in the Copyright Act

Trade-marks Understanding implied endorsement and

comparative advertising issues

Music Understanding rights-holders in music and

how to protect yourself

Third Party Copyright


Copyright Basics

• Copyright arises automatically upon the creation of an original work in fixed form

• Copyright arises in literary, dramatic, musical and artistic works• There is no copyright in facts but copyright does arise in compilations (i.e.

with regards to selection and arrangement)• Examples of copyrighted works include novels, paintings, photographs,

multimedia works, advertisements, databases, encyclopaedias• Authors have the exclusive right to exploit their works, including the rights to:

(i) Reproduction; (ii) Performance; (iii) Publication; (iv) Communication by telecommunication; (v) Translation; and others

• It is copyright infringement to do these things without being the copyright owner or authorized by the owner to do them

• Liability is found if a substantial part of the work is taken


Copyright Basics

• Copyright protects the expression, not the idea

• No registration is necessary, although registration is possible

• Generally, copyright extends for the life of the author plus 50 years There is a different term of copyright protection in sound recordings, which is 50

years after the end of the year in which the first fixation of the recording occurs Length of protection varies from country to country (e.g. usually life plus 70 years

in the United States)


Copyright Basics

• Authors and artists also have moral rights in their creationsMoral rights provide the right to the integrity of the work and, where

reasonable in the circumstances, the right to be associated with the work as its author by name or under a pseudonym, and the right to remain anonymous

Moral rights cannot be assigned, but they can be waivedNecessary to obtain a waiver of moral rights when using someone else’s

work


Dealing in Copyright Protected Works

• Need to obtain releases or licenses for every use of a copyrighted work in an advertisement Note that rights may be layered – e.g. if clearing a photograph with a person in it,

need copyright license from the owner of the photo and a likeness release from the person in it

• Even if copyrighted work appears only in background of advertisement, still must obtain license or release Applies to art on walls, background music, stationary, posters, logos, t-shirt

designs, etc.• Note that exclusive licenses and assignments of copyright must be in

writing, while non-exclusive licenses do not need to be in writing• Can’t obtain an assignment for a work that does not yet exist

Can agree to execute assignment once work created

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Copyright Exceptions and Reform

Fair Dealing Additions

• Fair dealing is a special exception to copyright infringement It’s effectively a defence to infringement claims, but is considered a “user

right”• Applies to infringements for the purpose of research, private study,

criticism or review, or news reporting (subject to requirements)• Addition of exceptions for education, parody, and satire under recent

copyright reform• Dealing must fall into one of the categories, or the defence does not

apply

Copyright Reform

Fair Dealing Continued

• To be “fair dealing” the dealing must be fair:Whether something is “fair dealing” is an analysis involving factors such

as: (CCH Canadian Ltd. v. Law Society of Upper Canada, 2004 SCC 13)

• how much of the work was used• the purpose of the use• the nature of the work (e.g. confidential, unpublished, published)• alternatives to using a copy• economic impact on rights owners

• Fair dealing should rarely be relied upon in a commercial context• Note that there could still be trade-mark consequences even if there

is fair dealing for the purposes of copyright

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Copyright Reform

New User Generated Content Exception

• Called the “YouTube,” “Remix,” or “Mash-up” exception• Allows individuals to use legally obtained copyrighted material in new non-

commercial works, such as home-made YouTube videos with a musical track Example: NASA uses ‘Gangnam Style’ in a YouTube video

• New work must be solely for non-commercial purposes Would not allow advertisers to use user-generated content for advertising purposes

(e.g. if running a video contest, cannot post winning videos if they contain infringing uses of works)

• Other criteria must be met for exception to apply

Copyright Reform

Notice and Notice Regime (not yet in force)• Allows copyright owners to file a notice with ISPs or digital network

operators that copyright infringement is occurring on their servers

• Company must then notify the person who posted the infringing work, and must keep track of information for six months allowing the infringer to be identified in case a court order is received

• Different from US (notice and take down)

Trade-marks & Comparative Advertising

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Trade-marks and Comparative Advertising

Trade-marks Overview

• Trade-mark law protects the use of words, symbols, sounds, designs, or slogans that are used to distinguish the source wares or services of one person from another

• Prevents confusion among customers and protects the goodwill associated with a particular brand from being appropriated

• While some trade-mark rights exist without registration, unlike for copyright, registration provides significantly better and broader protection (including nation-wide rights)

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Trade-mark Rights

• Generally, the Trade-marks Act grants an owner of a registered trade-mark the right to exclusive use of the mark in Canada Courts have limited the right to exclusive use to the right to use of a mark

to distinguish wares or services As a result, the Act does not necessarily prohibit a competitor from using

another’s registered mark in advertising if the use is not to distinguish the competitor’s wares or services

• However, sections 7(a) and 22 of the Trade-marks Act provide significant restrictions on using competitors’ marks


Section 7 of the Trade-marks Act

• s. 7(a) provides that “no person shall make a false or misleading statement tending to discredit the business, wares or services of a competitor.”

• Applies to owners of registered and non-registered trade-marks• There are 3 essential elements to satisfy the provision:

1) a false or misleading statement;

2) tending to discredit the business, wares or services of a competitor; and

3) resulting damage

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Section 22 of the Trade-marks Act

• Section 22 of the Trade-marks Act prohibits a person from using a trade-mark registered by another person in a manner that is likely to have the effect of depreciating the value of the goodwill in the mark

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Trade-marks and Comparative AdvertisingSection 22 considered• In Clairol v Thomas Supply & Equipment, the plaintiff’s Clairol mark was

used by the defendant in hair colour comparison charts located on the defendant’s packages and in a brochure inside packages

• Use of the mark on packages, but not in brochures, was held to violate section 22 because the mark was registered for wares Use in brochures was not prohibited because, according to section 4(1) of the Act,

a mark is only used in association with wares if it is visible to a purchaser at the time of purchase

• Section 22 therefore could be violated by any comparative advertising for services, whereas only violated in advertising at point of sale for goods Uncertain as to whether this is still good law

• Value of the goodwill in the mark was likely to be depreciated given that use of the mark was for “the purpose of facilitating persons familiar with the plaintiffs’ products to switch to using [the defendant’s] products.” In another case, in the context of comparative price ads, the Court held that there

was a violation if the purpose of a comparison is to stress similarities between products; if use stresses differences for the purpose of distancing the wares or services then section 22 is not offended

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Moving Forward

• The Supreme Court recently interpreted section 22, and although the case did not deal with comparative advertising, it “breathed new life” into section 22 and may have opened the doors to more claims even where the strict “use” requirements are not met

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Other issues

• Use of a trade-mark comprising a design element may infringe copyright subsisting in the designThere are no “fair dealing” exceptions in the Trade-marks Act

• Parody of a mark may violate section 22 as likely to depreciate the value of the goodwill in the mark if the parody is used in association with wares or services in the normal course of tradee.g. An injunction was granted against a defendant’s use of a “pierre eh!”

mark on the basis that “the defendant is clearly attempting to cash in on the well-established reputation of Perrier...[which] tends to dilute the quality of its trade-marks, to impair its business integrity established over the years, and to cause injury to its goodwill.”

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Implied Endorsement

Implied Endorsement

Passing Off

• Implied endorsement is based on the tort of passing off• Passing off is trading on the goodwill of another by suggesting a false

connection with that person or organization “The second and, nowadays perhaps more common type of passing off, is where it

is alleged that a defendant has promoted his product or business in such a way as to create the false impression that his product or business is in some way approved, authorized or endorsed by the plaintiff or that there is some business connection between the defendant and the plaintiff. By these means a defendant may hope to “cash in” on the goodwill of the plaintiff.”

– Justice Hardinge in National Hockey League v Pepsi Cola Canada Ltd

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Implied Endorsement Considered

• NHL v Pepsi casePepsi was not a sponsor of the NHL (Coca-Cola was exclusive sponsor)

and launched “$4,000,000 Pro Hockey Playoff Pool” on pack contest in 1990

Contest used city names and referred to “play-offs” and game numbers• Did not use NHL logos or name,• Pepsi had exclusive broadcast rights during NHL games for soft drinks and ran

ads about the “Pro Hockey Playoff Pool” starring Don CherryNHL sued for passing off, but lost as the court found that no reasonable

viewer would interpret ads as suggesting an endorsement or association Court in NHL suggested that the use of disclaimers to counter

perception of association may be helpful to dispel any possible inference of association by the public

The greater the likelihood of deception the more prominent a disclaimer must be – in some cases no disclaimer will be prominent enough

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Implied Endorsement

Implied Endorsement

Implied Endorsement Considered

• However, in Visa International Service Assn v Visa Motel Corp, the defendant decorated its offices with three horizontal bands of dark blue, white and gold resembling the VISA logo

The Court enjoined the defendant from use of the design on the basis that the use of the plaintiff’s marks would create a false impression that the plaintiff and the defendants were affiliated with each other in the minds of the plaintiff’s customers thereby damaging the plaintiff’s business

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Using Music in Advertising


Copyright exists in two places in recordings of music:

1. Composition• When a songwriter writes a song, copyright immediately vests

in songwriter for the composition

2. Recording• When a song is recorded, there is an additional copyright in

the recording itself, separate from the rights in the composition, which vests in the sound recording maker and performers (typically, a record company takes all of these rights)

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Rights in the Composition

• The songwriter controls rights in the composition initially, but often gives control of these rights to a music publisher

• Three principal rights involved: (1) reproduction rights

(2) right to publicly perform / communicate to the public

(3) synchronization / transcription rights

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Using a Composition in Advertising

• If you use a song in an advertisement, rights in the composition are always implicated, even if you plan on re-recording the song

• Generally, need a synchronization license from owner of the composition for use of music in a video advertisement, or need a transcription license for purely audio advertisingA synchronization or transcription license also covers the reproduction

rightsMust be negotiated directly with the owner of the composition, usually

based on intended use• Remuneration for the public performance / communication to the

public rights is paid to the collective society SOCAN, which distributes it to songwriters and publishersThese are typically paid by the broadcaster in the case of TV and radio,

and/or by the venue where the music is performed under blanket licensesNot typically the concern of the advertiser

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Rights in the Recording

• Copyright in the recording is typically owned by the recording maker - often a record company

• Three principal rights involved: (1) reproduction rights

(2) right to remuneration or publicly performing / communicating to the public

(3) Synchronization rights

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Using a Recording in Advertising

• If you use an existing recording in an advertisement, a license to use the recording must be obtained in addition to a license for the composition These are often owned by two different parties

• The need to obtain a license for the recording can be avoided by creating own recording of the composition (but still need license for composition)

• Generally, need a “master use” or “master synch” license from the owner of the recording Covers the right to reproduce and use the recording in advertising Needs to be directly negotiated with the recording owner

• Remuneration for the right to publicly perform or communicate to the public is paid to the collective society Re:Sound (via sub-collectives) Generally covered by the radio station or venue in other cases under blanket

licenses Not usually the concern of the advertiser

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Protecting Yourself

• When obtaining licenses for either the composition or recording, ensure that the licensor warrants they have all rights necessary to grant the rights for the intended use Obtain an indemnity where possible

• If dealing with an artist directly, make sure there is no publisher or record company that has been granted exclusive rights and ask for a sign-off

• Generally, will need to specify the exact uses of the composition or recording when obtaining a synchronization or transcription license: How much of the composition/recording will be used Term of use Territory in which the advertisement will be broadcast or distributed Media in which the advertisement will appear

• Can use pre-cleared music catalogues to save the hassle of obtaining all rights (CMRRA / AVLA)

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Any Questions?

Shelagh CarnegiePartner, Gowling Lafleur Henderson LLP

THANK YOU!

Documents

Common IP Issues in Advertising and How to Avoid Them: When Imitation Doesn’t Flatter: Trade-mark and Copyright Issues in Advertising Advertising and Marketing