Docket: A-46-15
Citation:
2015 FCA 290
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CORAM:
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DAWSON J.A.
RYER J.A.
WEBB J.A.
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BETWEEN:
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RED LABEL
VACATIONS INC., carrying on business as REDTAG.CA or REDTAG.CA VACATIONS or
both
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Appellant
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and
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411 TRAVEL BUYS
LIMITED carrying on business as 411TRAVELBUYS.CA and CARLOS MANUEL LOURENCO
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Respondents
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REASONS
FOR JUDGMENT
WEBB J.A.
[1]
This is an appeal from the decision of Manson J.
dated January 7, 2015 (2015 FC 19). The Federal Court Judge dismissed the
claims of Red Label Vacations Inc. (Red Label) under the Copyright Act,
R.S.C. 1985, c. C-42 and the Trade-marks Act, R.S.C. 1985, c. T-13 and
he also dismissed the counterclaim of 411 Travel Buys Limited (411 Travel Buys)
under the Trade-marks Act. Red Label has appealed the dismissal of its
claims. 411 Travel Buys has not appealed the dismissal of its counterclaim.
[2]
For the reasons that follow I would dismiss the
appeal of Red Label.
Background
[3]
Both Red Label and 411 Travel Buys are in the
business of offering travel services to customers primarily in Canada. Red
Label is owned by Vincenzo Demarinis and started carrying on business in 2004.
It has used three registered trade-marks: “redtag.ca”;
“redtag.ca vacations”; and “Shop. Compare. Payless!! Guaranteed” since then. Customers
could either book online or call to speak to an agent.
[4]
411 Travel Buys was incorporated in 2008 by the
respondent, Carlos Manuel Lourenco. Mr. Lourenco had worked in the travel
industry for several years, but he was not experienced in designing or creating
a web page. He hired Aniema Ntia as a student intern and later as an employee
to create the website for 411 Travel Buys and keep it up to date. Mr. Lourenco
directed Ms. Ntia to a number of websites as examples of what he thought worked
well, including itravel2000.com and redtag.ca. Mr. Lourenco eventually hired
Nhu Train to assist and instruct Ms. Ntia on how to improve the website to
increase the number of visitors to the site.
[5]
This case arises because metatags from Red Label’s
website were copied into 411 Travel Buys’ website. In British Columbia
Automobile Association v. Office and Professional Employees’ International
Union, Local 378, 2001 BCSC 156, Sigurdson J. described metatags as
follows:
Meta Tags
32 A meta tag is part of a website
not automatically displayed on the user's computer screen in the normal course
of viewing a website. A meta tag is put on the website by the website owner to
provide key information about the website. Through the use of meta tags, a
website creator can describe what is available at that particular site or
insert any other information. A meta tag is written in HTML.
33 When search engines gather
information they seek out and obtain the information in the meta tags. Meta
tags are used by most search engines and directories to gather information,
index a website and match the website to the key words in a user's query. This
generates search results corresponding to the user's query. It is common to use
meta tags to specify key words that will be matched to key words entered by
someone conducting a search
[6]
When the website for 411 Travel Buys went online
on January 5, 2009, metatags in 48 pages of the 411 Travel Buys website had
been copied from the website of Red Label, which consisted of approximately
180,000 pages. The copied metatags included “Red Tag
Vacations” and “shop, compare, & pay less”.
None of the copied metatags appeared on the visible pages of 411 Travel Buys
website once a person went to the 411 Travel Buys website. At the hearing Red
Label focused on a copy of a page from a Google search for “site://411travelbuys.ca/”. This excerpt was from page
7 of the Google search, which identified the websites that ranked 61st to 70th
in relation to this search. The website for 411travelbuys.ca ranked 70th and
the description for this website stated in part as follows:
Save on your Hola Sun Holidays Packages from
Canada. Book Online with Red
Tag Vacations & Pay Less Guaranteed!
[7]
While “Red Tag
Vacations” and “Pay Less Guaranteed”
appeared in this description, there was no evidence that these words appeared
in this form on any of the webpages that would be viewed by any person who went
to the 411travelbuys.ca website. Also, it should be noted that in referring to “Red Tag Vacations” the description directs
individuals to “Book Online with Red Tag Vacations”,
which would indicate to any potential customer that he or she would have to go
to another website to do the booking.
[8]
On February 26, 2009, Red Label discovered that
411 Travel Buys was using metatags that appeared to be copied from its website.
On March 10, 2009, Mr. Demarinis called Mr Lourenco to complain about the use
of Red Label’s metatags by 411 Travel Buys and to demand that 411 Travel Buys
cease to do so immediately. On the same day, the website for 411 Travel Buys
was taken down entirely and it was not reinstated until all of the potentially
infringing content was removed. It should also be noted that during the brief
period when the 411 Travel Buys website was operational from January 5, 2009 to
March 10, 2009, no purchases could be made on this site. Anyone interested in
purchasing any services offered by 411 Travel Buys had to call its call centre
where the individuals answering the phone identified themselves as part of 411
Travel Buys.
Decision of the Federal
Court
[9]
Red Label claimed that copyright subsisted in
its metatags and that 411 Travel Buys infringed this copyright by using these
metatags in its website. Red Label also claimed copyright infringement by 411
Travel Buys when it used Red Label’s cascading style sheets or when it copied
the “look and feel” of Red Label’s website.
[10]
Red Label also alleged trademark infringement,
passing off or depreciation of goodwill contrary to sections 7(b), 7(c),
20 or 22 of the Trade-marks Act by 411 Travel Buys using Red Label’s
registered trademarks (or trademarks that would be confusing with Red Label’s
registered trademarks).
[11]
Red Label sought damages for lost profits as
well as punitive damages and also alleged that Mr. Lourenco was personally
liable for the damages that were claimed.
[12]
The Federal Court Judge summarized the evidence
presented by the various witnesses and then dismissed all of the claims of Red
Label. Red Label has appealed to this Court in relation to the conclusions of
the Federal Court Judge.
Standards of Review
[13]
The standards of review are those standards as
set out in Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235.
Findings of fact (including inferences of fact) will stand unless it is
established that the Federal Court Judge made a palpable and overriding error.
For questions of mixed fact and law, the standard of correctness will apply to
any extricable question of law and otherwise the standard of palpable and
overriding error will apply. An error is palpable if it is readily apparent and
it is overriding if it changes the result.
Issues
[14]
Red Label raised a number of issues in this
appeal, which essentially can be stated as whether the Federal Court Judge
erred in:
(a)
applying the test for infringement under section
20 of the Trade-marks Act;
(b)
applying the test for passing off under
subsection 7(b) of the Trade-marks Act;
(c)
applying the test for depreciation of goodwill
under section 22 of the Trade-marks Act;
(d)
finding that there was no copyright in Red
Label’s metatags, and if so, in his other findings in relation to the copyright
infringement claim;
(e)
failing to find that Carlos Lourenco was
personally liable for the damages as claimed by Red Label; and
(f)
awarding costs to 411 Travel Buys in relation to
the dismissal of Red Label’s claims and not awarding costs to Red Label in
relation to the dismissal of the counterclaim.
Infringement
[15]
Red Label submits that the Federal Court Judge
erred in applying the test for infringement under section 20 of the Trade-marks
Act because, in its view, the Federal Court Judge incorporated the element
of deception from the test for passing off when he determined that 411 Travel
Buys did not infringe the trade-marks of Red Label. This is based on the
Federal Court Judge’s summary dismissal of Red Label’s claim for infringement
in paragraph 121 of his reasons:
121 For
the reasons I have given above with respect to likelihood of deception under
passing off, I do not find that use of the Plaintiff's trade name or trademarks
in metatags constitutes trademark infringement.
[16]
I do not agree with Red Label’s interpretation
of the reasons of the Federal Court Judge. In paragraph 118 of his reasons, the
Federal Court Judge sets out what is required to be established in relation to
an infringement claim under section 20 of the Trade-marks Act as quoted
from Kelly Gill, Fox on Canadian Law of Trade-marks and unfair Competition,
looseleaf 4th ed (Toronto: Carswell, 2014). Red Label does not dispute that
this is an accurate statement of what must be established to succeed on a claim
for infringement.
[17]
In paragraph 119 of his reasons, the Federal
Court Judge sets out section 20 of the Trade-marks Act and in paragraph
120, he states:
120 Section
4(2) of the Trademarks Act provides that a trademark is deemed to be
used in association with services if it is used or displayed in the performance
or advertising of those services
[18]
There is no dispute that the Federal Court
Judge, in paragraph 118 of his reasons, cited the correct test for
infringement, which includes the requirement that, in this case, Red Label
would have to establish that 411 Travel Buys had sold or advertised services in
association with a confusing trade-mark. In paragraph 120 of his reasons, the
Federal Court Judge noted the requirements of subsection 4(2) of the Trade-marks
Act in relation to when a trade-mark will be deemed to be used in
association with services. As a result, in my view, a fair reading of his
reasons would mean that paragraph 121 should be read in light of the
immediately preceding paragraphs. Therefore, the reference by the Federal Court
Judge to the reasons that he had “given above with
respect to likelihood of deception under passing off” would only
incorporate that part of his reasons that related to the use of Red Label’s
trade-marks (or trade-marks that would be confusing with Red Label’s
trade-marks) by 411 Travel Buys in relation to the performance or advertising
of its services. He was not incorporating the element of deception that would
be required for passing off into the test for trade-mark infringement under
section 20 of the Trade-marks Act.
[19]
With respect to use of Red Label’s trade-marks
(or trade-marks that would be confusing with Red Label’s trade-marks), Red
Label argues that, in any event, the use of these trade-marks by 411 Travel
Buys in its metatags would support an infringement claim under section 20 of
the Trade-marks Act and that the Federal Court Judge erred by not so
finding.
[20]
In Compagnie Générale des Établissements
Michelin--Michelin & Cie v. National Automobile, Aerospace, Transportation
and General Workers Union of Canada (CAW-Canada), [1997] 2 F.C. 306, [1996]
F.C.J. No. 1685, Teitelbaum J. explained the meaning of “use” for the purposes of section 20 of the Trade-marks
Act:
26 I
am satisfied that the classic Clairol analysis of use under section 20
is still good law. The test for "use" in section 20 requires two
separate elements of proof from both section 2 and section 4. In effect, the
first element taken from section 4 is: (1) did the defendants associate their
services with the plaintiff's trade-marks? The second element from section 2
is: (2) did the defendants use the mark as a trade- mark for the purpose
of distinguishing or identifying the defendants' services in connection with
the plaintiff's wares or services?
[21]
In this case, the Federal Court Judge found, at
paragraph 116 of his reasons, that “there is no use of
any of the Plaintiff's trademarks or trade names on [411 Travel Buys’] visible
website”. Although Red Label submitted that the metatags were visible,
Red Label did not direct this Court to any evidence to suggest that once a
person went to the website for 411 Travel Buys, that any of Red Label’s
trade-marks (and any trade-marks that may be confusing with such marks) would
be visible. As noted above, with respect to the visible metatags, Red Label
directed this Court to the results of the Google search for “site://411travelbuys.ca/” which showed that the 70th
result of this search was the 411 Travel Buys website.
[22]
In my view it is implicit in the Federal Court
Judge’s reasons that he found that, in this case, 411 Travel Buys did not use
any of Red Label’s trade-marks (or any trade-marks that would be confusing with
such trade-marks) for the purpose of distinguishing or identifying 411 Travel
Buys’ services in connection with Red Label’s services. In the one instance to
which this Court was directed by Red Label, the reference to “Red Tag Vacations & Pay Less Guaranteed!” was in
a phrase which directed interested parties to “Book
Online with Red Tag Vacations & Pay Less Guaranteed!” Since no one
could book online by using the 411 Travel Buys website, this reference would
actually direct potential customers to Red Label’s website. While, in some
situations, inserting a registered trade-mark (or a trade-mark that is
confusing with a registered trade-mark) in a metatag may constitute advertising
of services that would give rise to a claim for infringement, in this case,
this reference to “Book Online with Red Tag Vacations”
cannot be considered to be advertising the services of 411 Travel Buys in
connection with the services offered by Red Label.
[23]
I am not persuaded that the Federal Court Judge
made a palpable and overriding error in implicitly concluding that 411 Travel
Buys did not use any of Red Label’s trade-marks (or any trade-mark that would
be confusing with such trade-marks) in such a manner as would be required to
establish a claim for infringement under section 20 of the Trade-marks Act.
Passing Off
[24]
While Red Label acknowledges that the Federal
Court Judge correctly stated the elements of passing off under section 7(b)
of the Trade-marks Act, it disputes the finding
by the Federal Court Judge that there was no likelihood of deception. This
finding, however, is a finding of fact and Red Label has not demonstrated that
the Federal Court Judge made any palpable and overriding error in making this
finding.
Depreciation of Goodwill
[25]
In paragraph 123 of his reasons, the Federal
Court Judge sets out the test for depreciation of goodwill. Red Label does not
dispute that this is the correct test. Red Label, in its memorandum, states
that:
76. The
Trial Judge also dismissed the Plaintiff’s claim for depreciation of goodwill
on the basis that the Plaintiff’s trade-marks were not “visible”, and therefore
the Defendants’ use could not affect the Plaintiff’s goodwill.
[26]
In paragraph 124 of his reasons, the Federal
Court Judge dismissed Red Label’s claim for depreciation of goodwill. This
paragraph is as follows:
124 “Use”
under section 22 requires use of the plaintiff's trademarks, as registered. There
has been no such use here and accordingly, section 22 does not apply. Moreover,
even if it could arguably be said that there is at least some use of redtag.ca
by use of red tag, that use was not in any visible portion of 411 Travel Buys'
website, it was in the metatags. There is no connection between the online
services of 411 Travel Buys on their website and the services of the Plaintiff
as offered on 411 Travel Buys' website.
[27]
The Federal Court Judge dismissed Red Label’s
claim for depreciation of goodwill on the basis that 411 Travel Buys did not
use Red Label’s registered trade-marks. In the alternative, he dismissed the
claim on the basis that “red tag” was not
visible. Since Red Label has not challenged the primary basis on which the
Federal Court Judge dismissed Red Label’s claim, Red Label cannot succeed in an
appeal in relation to this issue and there is no need to address the
alternative basis to which the Federal Court Judge referred. In any event,
these would be findings of fact and Red Label has not established that the
Federal Court Judge made any palpable and overriding error.
Copyright
[28]
Red Label does not dispute that copyright
protection will only be available if skill and judgment were required to
produce the work. However, Red Label disputes the following finding made by the
Federal Court Judge:
101 In
this case there is little evidence of any sufficient degree of skill and
judgement in creating these metatags, as is required by the test set out by the
Supreme Court of Canada in CCH, above, or for the originality required
in compiling data or other compilations, as discussed by the Federal Court of
Appeal in Tele-Direct. While in some cases there may be sufficient
originality in metatags to attract copyright protection when viewed as a whole,
the substance of the metatags asserted by the Plaintiff in this case does not
meet the threshold required to acquire copyright protection in Canada.
[29]
This is a finding of fact and Red Label has not
established that the Federal Court Judge made any palpable and overriding error
in making this finding. Since this is sufficient to dismiss Red Label’s appeal
in relation to copyright infringement, it is not necessary to address the other
reasons given by the Federal Court Judge for dismissing Red Label’s claim for
copyright infringement.
Personal Liability of
Carlos Lourenco
[30]
Since I would dismiss the appeal of Red Label in
relation to its claims under the Trade-marks Act and the Copyright
Act, there would be no liability of 411 Travel Buys and hence no personal
liability of Carlos Lourenco.
Costs Awarded by or Not
Awarded by the Federal Court Judge
[31]
Costs are within the discretion of the Federal
Court Judge and I am not persuaded that the intervention of this Court is
warranted in the awarding of costs against Red Label in relation to its claims
and not awarding costs against 411 Travel Buys in relation to its
counterclaims.
Disposition
[32]
As a result, I would dismiss the appeal, with
costs.
"Wyman W. Webb"
“I agree.
C. Michael Ryer
J.A.”
DAWSON J.A. (Concurring Reasons)
[33]
I would also dismiss the appeal with costs. I
reach this conclusion for the following reasons.
[34]
The appellant asserts that the Judge erred by:
i.
dismissing its claim for trademark infringement;
ii.
dismissing its claim for passing off;
iii.
dismissing its claim for depreciation of
goodwill;
iv.
dismissing its claim for copyright infringement;
v.
failing to find the individual defendant
personally liable;
vi.
failing to award punitive damages; and,
vii.
awarding costs in the main action to the
defendants, while failing to award costs to the appellant (the plaintiff below)
in respect of the defendants’ counterclaim that the Judge dismissed.
[35]
With respect to trademark infringement, at
paragraph 118 of his reasons the Judge correctly set out the test for
establishing infringement under section 20 of the Trade-marks Act,
R.S.C. 1985, c. T-13.
[36]
On the evidence before him, the Judge found that
the use of the plaintiff’s trademarks in 411 Travel Buys’ website metatags
would not give rise to confusion with respect to the source of the services
provided on 411 Travel Buys’ website. The Judge went on to find, on the
evidence before him, that the use of the plaintiff’s trademarks would not give
rise to confusion because their use did not entice a consumer to visit 411
Travel Buys’ website. Rather, a consumer maintains a choice over which website
he or she wished to visit (reasons, paragraphs 115 and 116). The appellant has
not shown any error of fact or law that vitiates the Judge’s findings. These
findings are not dispositive of the appellant’s claim to trademark
infringement.
[37]
With respect to passing off, at paragraph 108 of
his reasons the Judge correctly set out the three elements required to ground
an action under subsection 7(b) of the Trademarks Act.
[38]
At paragraph 115 of his reasons, the Judge wrote “use of a competitor’s trademark or trade name in metatags
does not, by itself, constitute a basis for a [finding of] likelihood of
confusion, because the consumer is still free to choose and purchase the goods
or services from the website he or she initially searched for.” In the
following paragraph, the Judge found there to be no likelihood of deception as
to the source of the services provided on the 411 Travel Buys’ website “and the consumer is free to redirect his or her search to
the Plaintiff’s website.” This finding has not been shown to be vitiated
by any palpable and overriding error; it is determinative of the passing off
claim.
[39]
At paragraph 123 of his reasons, the Judge
correctly articulated the four elements that must be established when alleging
depreciation of goodwill under section 22 of the Trade-marks Act.
[40]
At paragraph 124 of his reasons, the Judge found
the plaintiff had failed to establish the use of its trademarks in a manner
likely to have any effect on the goodwill associated with the trademarks. This
finding was fatal to the plaintiff’s claim and it has not been shown to be
palpably and overridingly wrong.
[41]
At paragraph 91 of his reasons, the Judge quoted
from CCH Canadian Ltd. v. Law Society of Upper Canada, 2004 SCC 13, [2004]
1 S.C.R. 339 to the effect that for the expression of an idea to attract
copyright protection the expression must be the result of an exercise of skill
and judgment.
[42]
At paragraph 100, the Judge then found that the
plaintiff’s metatags allegedly copied by the defendants
“were substantially derived from a list of Google key words which are then
incorporated into short phrases descriptive of travel industry types of travel,
locations, and discounts or deals for consumers”. He went on to find
insufficient evidence of any sufficient degree of skill and judgment in the
creation of the metatags at issue and insufficient evidence of the originality
required when compiling data or other compilations. No error has been
established in connection with these findings which are dispositive of the
claim to copyright infringement.
[43]
It follows from the above reasons and the
conclusion that the appeal should be dismissed that it is not necessary to
consider the appellant’s submission that the Judge erred by failing to find the
individual defendant to be personally liable for any wrongs and by failing to
award punitive damages.
[44]
Costs generally follow the event and no error
has been shown in the Judge’s award of costs to the successful defendants in
the main action. The Judge dismissed the counterclaim summarily, in eight lines
in his reasons, stating that the defendants failed to adduce any evidence of
damages and led insufficient evidence of goodwill to found a claim for passing
off. In this circumstance, the appellant has not shown any error in the Judge’s
failure to award costs in respect of the counterclaim.
[45]
To conclude, the decision of the Federal Court
must be read in light of the facts before the Court. The extent to which a
trademark may be used in metatags without infringing the trademark is, of
necessity, fact specific. These reasons ought not to be read as endorsing the
Judge’s remarks relating to “initial interest
confusion” or as endorsing every alternate basis on which the Judge
dismissed the action.
"Eleanor R. Dawson"
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