Docket: T-2496-14
Citation:
2016 FC 223
Ottawa, Ontario, February
18, 2016
PRESENT: The
Honourable Mr. Justice O'Reilly
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BETWEEN:
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SPECIALTY
SOFTWARE INC.
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Applicant
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and
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BEWATEC
KOMMUNIKATIONSTECHNIK
GMBH
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Respondent
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JUDGMENT AND REASONS
I.
Overview
[1]
In 1992, Specialty Software Inc registered the
trade-mark “MEDINET” in association with
computer software programs. Specialty registered its mark in relation to wares
rather than services.
[2]
In 2011, Specialty assigned its mark to Medinet
Health Systems Inc.
[3]
In 2013, Bewatec Kommunikationstechnik GMBH
initiated proceedings before the Registrar of Trademarks to expunge Specialty’s
mark from the register. In order to avoid expungement, Specialty was asked to
show evidence of its use of the mark for the period between November 22, 2010
and November 22, 2013. Specialty failed to file any evidence and, accordingly,
the Registrar granted Bewatec’s application.
[4]
Specialty now appeals the Registrar’s decision
and has presented fresh evidence of use. The parties do not dispute that
evidence. It is clear that Specialty and Medinet have used the mark during the
relevant period, particularly in relation to software used by hospitals and
physicians to track patients’ medications. However, Bewatec argues that the mark
has been used in relation to services, not wares. This means, according to
Bewatec, that Specialty is no longer entitled to its mark.
[5]
At its heart, this dispute arises as a result of
technological change. Specialty used to sell its software in a tangible form on
disks. This is no longer necessary. Clients can now obtain access to the
software over the internet from Specialty’s computer server after installing an
icon on their computers. Bewatec argues that this change means that Specialty
is now providing a service in the form of access to a website. Specialty has
not proved, Bewatec submits, that any transfer of property or possession has
taken place, as is required by s 4 of the Trade-marks Act, RSC 1985, c
T-13 (all provisions cited are set out in an Annex).
[6]
I disagree with Bewatec’s argument. In my view,
there has been no real change in what Specialty is selling. The change relates
to the means by which the software is transferred to clients, not to the actual
nature of Specialty’s use of its trade-mark. Specialty has shown compliance
with its legal requirements. Therefore, I must grant Specialty’s appeal and
order the Registrar to maintain its registration.
[7]
The issue is whether Specialty has shown any
transfer of the property in, or possession of, a ware, as required by the Act.
(The word “wares” has since been replaced with the word “goods” in the Act.
Nothing turns on this change and I will use the words “goods” and “wares”
interchangeably).
II.
Has Specialty shown any transfer of the property
in, or possession of, a ware?
[8]
Bewatec argues that Specialty’s mark is
associated with data and software available only through an internet browser.
Specialty has not met, in its view, its burden of demonstrating that there has
been a transfer of ownership or possession of any goods. It points out that
Specialty’s clients do not download or install or physically acquire anything.
In reality, Bewatec says, clients merely obtain access to a service that
Specialty provides over the internet.
[9]
Bewatec relies on MyLife.com Inc v Grbic,
2014 TMOB 175. There, the Board concluded that providing free access to a
website, without any evidence of any form of transfer of software to users, was
a service. It struck the trade-mark owner’s registration in relation to wares,
but maintained it in respect of services.
[10]
Bewatec argues that Specialty’s online software
is also situated on a website and that Specialty has failed to show an actual
transfer to users, whether in the form of installation or registration of the
software, during which the MEDINET mark is visible.
[11]
I disagree.
[12]
According to s 4 of the Act, a “trade-mark is deemed to be used in association with goods
if, at the time of the transfer of the property in or possession of the goods,
. . . it is marked on the goods themselves or on the packages in which they are
distributed or it is in any other manner so associated with the goods that
notice of the association is then given to the person to whom the property or
possession is transferred”.
[13]
Even though Specialty used to sell its software on
disks – which are obviously tangible and easily identified as wares – it was always
really selling a license to use the software, which is an intangible good. Specialty
did not actually sell the software itself; it sold an entitlement to obtain access
to it by way of licenses. The disks merely represented the means by which the
transfer of the goods occurred. The real goods were, and are, the licenses.
[14]
The evidence demonstrates that Specialty’s trade-mark
has been used in a manner that shows an association between the mark and the
goods that are sold – the licences themselves:
- The software is
sold to health care workers, including doctors, clinicians, and hospital
staff, on an annual subscription basis.
- The software is
situated on Medinet’s server, and purchasers obtain access to it by way of
a web browser on their own computers.
- After the sale,
purchasers receive an invoice showing the MEDINET mark. They then receive
a license agreement by e-mail.
- When purchasers
log on to the software, they are linked to a screen showing the MEDINET
mark.
- If a purchaser
chooses not to renew a subscription, the purchaser’s license to access the
software is cancelled.
[15]
In my view, this evidence shows that the mark is
used in a manner that gives notice to purchasers of software licenses of an
association between those goods and the registered mark and therefore, the
requirements of the Act regarding use have been met.
[16]
Specialty’s operations closely resemble those
carried out by companies selling software and whose trade-marks have been
upheld in respect of wares. For example, the Board has accepted that a mark
could be considered to have been used in association with software if there was
evidence that purchasers would have seen the mark at the time the software was transferred
to them, that is, when it was installed on their computers: Brouillette
Kosie Prince v Axon Development Corp (2005), 50 CPR (4th) 273. The
Board struck the trade-mark in that case because there was no actual evidence
of any transfers during the relevant period.
[17]
Similarly, the Board found an association
between the mark in question and wares based on evidence of sales and renewals
of software, including evidence of licensing agreements: Baker &
McKenzie LLP v Genesistems Inc (2009), 74 CPR (4th) 75. In
another case, dealing with the same mark, the Board found the required
association existed based on the appearance of the mark on license agreements
that customers would see before installing the software, and on the
installation screens themselves: Clark Wilson LLLP v Genesistems Inc,
2014 TMOB 64. In the latter case, the Board observed that “institutional computer software is not a physical object,
and thus a computer software company experiences unique difficulties when
attempting to associate a trade-mark with its software” (at para 10).
[18]
Certainly, Specialty has experienced those
difficulties in this case. However, as the President and CEO of Medinet, Ms
Katherine Linda Culter, put it: “License agreements for
software products are license agreements for software products, however you
want to provide access”.
[19]
I am satisfied that the evidence before me meets
the fairly low threshold that a registered owner must meet to demonstrate that
its mark is not merely “deadwood” on the
register: Performance Apparel Corp v Uvex Toko Canada Ltd (2004), 31 CPR
(4th) 270 (FC), at 282.
[20]
The Applicant has demonstrated that there has
been a transfer of property in a ware. The ware in question is the license to
use the software. The property is the entitlement to enjoy the use of the
licence. The transfer has occurred through the granting of access, on payment
of a subscription fee, in the form of login credentials. The mark is visible to
purchasers before, during and after the transfer. Accordingly, the requirements
of s 4(1) of the Trade-marks Act have been met.
III.
Conclusion and Disposition
[21]
Specialty has demonstrated an association
between its mark and the transfer to purchasers of the means to acquire access
to and make use of its software. I must, therefore, allow this appeal, with
costs.
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