Federal Court declares that copyright litigants were not “Competitors” under subsection 7(a) of Canada’s Trade-marks Act in business depot case

F
EDERALCOURTDECLARESTHATCOPYRIGHTLITIGANTSWERENOT
“COMPETITORS”UNDERSUBSECTION7(a)OFCANADA’STRADE-MARKS
ACTINBUSINESSDEPOTCASE

BARRYGAMACHE*
LEGERROBICRICHARD,
LLP
L
AWYERS,PATENT&TRADEMARKAGENTS
Inadecisionthatanalyzesthenotionof“competitor”foundinsubsection7(a)of
Canada’sTrade-marksAct,R.S.C.1985,c.T-13(hereafterthe“Act”),Canada’s
FederalCourthasrecentlyprovidedguidelinesconcerningtheinterpretationofthis
provisionoftheActinacaseallegingcopyrightinfringement(TheCanadian
CopyrightLicensingAgencyv.TheBusinessDepotLtd.,2008FC737(F.C.,de
MontignyJ.,June13,2008)).
In2007,TheCanadianCopyrightLicensingAgency(hereafter:“CCLA”)initiated
proceedingsbeforetheFederalCourtofCanadaagainstTheBusinessDepotLtd.
(hereafter:“BusinessDepot”),aretailersellingofficesupplies,businessmachines
andofficefurnitureandofferingbusinessservices,includingin-storephotocopying
servicestoitsretailandsmallbusinesscustomers.
Initsstatementofclaim,CCLAallegedthatbecauseitofferedphotocopyingservices
toitsclients,BusinessDepothadengagedoveraperiodoftimeinbothdirect
copyrightinfringementandtheauthorizationofcopyrightinfringement.Afterit
commenceditssuit,CCLApostedapressreleaseonitswebsiteinformingvisitors
thatBusinessDepotwas“nodifferentfromthoseorganizationsthatprofitfrom
illegallydownloadingcopyrightprotectedmusicortheunauthorizedsharingofvideos
andpublishedworksontheinternet”.
InitsDefenseandCounterclaimitfiledagainstCCLA,BusinessDepotdeniedany
wrongdoingandalleged,interalia,thatstatementsinthepressreleasepostedby
CCLAwere“falseandmisleading”andtendedto“discreditthebusiness,waresand
services”ofBusinessDepotandthereforeformedthebasisofaclaimfordamages
undersubsection7(a)oftheAct.

©CIPS,2008.*BarryGamacheisamemberofLEGERROBICRICHARD,LLP,amultidisciplinaryfirmoflawyers,
patentandtrademarkagents.PublishedintheAugust2008issueoftheWIPR.Publication142.215.

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CCLAmovedtostriketheCounterclaimsinceBusinessDepot’sallegations,evenif
true,couldnotformthebasisofanyclaimundersubsection7(a)oftheActbecause
ofthefactualcircumstancesbeforetheCourt.CCLA’smotionwasallowedby
ProthonotaryAaltoonApril30,2008.ThisorderwasappealedbyBusinessDepot
beforeajudgeoftheFederalCourt.OnJune13,2008,Mr.JusticedeMontigny
confirmedProthonotaryAalto’sorder;insodoing,hereviewedthevarious
requirementsofaclaimundersubsection7(a)oftheAct.Thisparticularsubsection
providesthat“[n]opersonshallmakeafalseormisleadingstatementtendingto
discreditthebusiness,waresorservicesofacompetitor”.BusinessDepotreliedon
thisprovisiontoattackwhatitviewedasafalseandmisleadingstatementpublished
onCCLA’swebsite.However,asunderlinedbytheCourt,subsection7(a)only
applieswhenafalseormisleadingstatementhasbeenmadebya“competitor”.
Underthecircumstances,wasBusinessDepotacompetitorofCCLA?Howshould
theword“competitor”beinterpreted?Shouldthisissueofstatutoryinterpretationbe
leftwiththetrialjudge?
TheCourtoutlinedeachparty’sactivities:CCLAisanonprofitcorporationthatacts
asacollectivesocietytocarryoutthecollectiveadministrationofcopyrightforthe
benefitofcopyrightownersinvariouspublishedworkswhileBusinessDepotisa
retailerthatprovidesthevariousservicesdescribedearlier.TheCourtalsonotedthat
Parliamentchosenottodefinetheword“competitor”intheAct;underthe
circumstances,accordingtotherulesofstatutoryinterpretation,suchexpression
mustbegivenitsnaturalmeaning,takingintoaccounttheobjectiveofsubsection
7(a).TheCourtthereforereproduceddefinitionsfoundindictionariessuchasWest’s
LawandCommercialDictionaryinFiveLanguages(WestPublishingCompany,
1985)thatdefines“competitors”as“personsendeavouringtodothesamethingand
eachofferingtoperformtheact,furnishthemerchandise,orrendertheservicebetter
orcheaperthanhisrival”andthePocketDictionaryofCanadianLaw(Thomson
Carswell,4
thed.,2006)thatascribestotheword“competition”twomeanings,the
mostrelevantofwhichis“asituationwhentwoormorebusinessesseekcustomers
fromthesamemarket-place”.
TheCourtrejectedBusinessDepot’sargumentthatbothpartieswerecompetitors
becauseeachoneallegedthatitsrevenuewasaffectedbytheotherparty’sactivities;
rather,itacceptedtheargumentthatcompetitors(inordertomeritthisdescription)
mustcompeteforthesamecustomersinthemarket-place.Inthecasebeforethe
Court,thepartiesdidnotsellthesameproducts,norweretheyinthesamemarket.
TheCourtthereforeconfirmedthefindingthatBusinessDepotandCCLAwerenot
competitorsforthepurposeofsubsection7(a)oftheAct.Moreover,thisspecific
issuecouldbedecidedonamotiontostrikeratherthanbeingleftfordecisionattrial.
BusinessDepot’sCounterclaimwasalsodismissedforanotherreason:itcontained
noallegationthatCCLA’sstatementrelatedtoanytrade-markorintellectualproperty
assetofBusinessDepot.Forconstitutionalreasons,anycauseofactionunder

3
subsection7(a)oftheAct,afederalstatute,mustrelatetoafalseandmisleading
statementmadeinrespectofatrade-markorotherintellectualproperty,allareasof
federaljurisdiction;toholdotherwiseandallowasubsection7(a)claimwithouta
referencetoanyI.P.rightwouldbeaninvasionofprovinciallegislativepower(inthe
areaofpropertyandcivilrights)notallowedunderCanada’sConstitutionAct,1867
thatgrantsexclusiveresponsibilitiestoeachofCanada’sfederalandprovincial
governments.
Thiscaseisareminderofthelimitedscopeofthevariousunfaircompetition
remediesfoundintheTrade-marksAct.WhileBusinessDepotcouldnotrelyon
subsection7(a)oftheTrade-marksActinitsFederalCourtCounterclaim,Mr.Justice
deMontignynotedthatithadalsocommencedadefamationactionbeforethe
OntarioSuperiorCourtbaseduponthesamepressreleasestatementsthatformed
thefoundationofitsCounterclaimbeforetheFederalCourt.

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