The Canadian Trade-marks Act provides that trade-mark owners may bring actions for infringement, depreciation of goodwill and passing off.
Section 19 - Imitation
Section 19 of the Trade-marks Act provides the owner of a registered trade-mark the right to its exclusive use throughout Canada in respect of the wares and services for which it is registered. This section does not require that a likelihood of confusion be established. However, its scope is narrow, applying exclusively to the use of identical marks and only when the subject mark is used in association with the wares or services in the registration.
Section 20 - Infringement
If the impugned mark is not identical to the owner's registered trade-mark, and the wares or services are not the same as those associated with the registration, recourse can be had to the broader section 20 of the Trade-marks Act . Pursuant to this section, the right of the owner of a registered trade-mark to its exclusive use is deemed to be infringed by a person who uses a confusing trade-mark or trade name in association with the sale, distribution or advertising of its wares or services.
Establishing that trade-mark use has occurred is critical to a claim under sections 19 and 20. The Trade-marks Act defines "use" in association with wares and services differently. A trade-mark is deemed to be "used" in association with wares if, at the time of the transfer of wares in the normal course of trade, the trade-mark is marked on the wares or packaging, or in some other way brought to the attention of the purchaser. A trade-mark is deemed to be used in association with services if it is used or displayed in the performance or advertising of those services.
The use of a trade-mark causes confusion with another trade-mark if the use of both trade-marks in the same area would likely lead to the inference that the wares or services associated with the trade-marks are manufactured, sold, leased, hired or performed by the same person, whether or not the wares or services are of the same general class. As such, a trade-mark causes confusion with another trade-mark as long as the inference of a common origin is likely.
In order to determine whether there is a likelihood of confusion, the Court shall have regard to all of the surrounding circumstances, including those described in subsection 6(5) of the Trade-marks Act: (i) the inherent distinctiveness of the marks and the extent to which they have become known; (ii) the length of time the marks have been in use; (iii) the nature of the wares, services, or businesses; (iv) the nature of the trade; and (v) the degree of resemblance between the marks in appearance or sound or in the ideas suggested by them.
In considering whether the use of a domain name constituted infringing use, the Court in ITV Technologies v. WIC Television (2003), 29 C.P.R. (4th) 182 (F.C.T.D.) applied the test for confusion as set out in Subsection 6(5) of the Trade-marks Act . The Court held that it was appropriate to apply traditional trade-mark principles to the novel Web environment.
Initial Interest Confusion
The doctrine of initial interest confusion has received limited attention from Canadian courts. Initial interest confusion refers to the use of another's trade-mark in a manner reasonably calculated to capture initial consumer attention even though no actual sale is completed as a result of the confusion (Brookfield Communications Inc. v. West Coast Entertainment Corp., 174 F.3d 1036 (9th Cir. 1999). This test of confusion carries with it a lower threshold than the traditional test of confusion captured by subsection 6(5) of the Trade-marks Act. In cases where a domain name functions merely as a surrogate for an Internet IP address, or where confusion as to source is not likely, initial interest confusion merits consideration.
In Law Society of British Columbia v. Canada Domain Name Exchange Corp.,  B.C.J. No. 1909 (B.C.S.C.), the Defendant resolved the domain names lawsocietyofbc.ca and lsbc.ca to websites displaying adult content. The Court held that the Defendant had used the disputed domain names to attract members of the public to its websites for the purpose of generating income. The Court found passing off. Although there was no mention of initial interest confusion, the Court did find that the disputed domain names were being used to divert Internet traffic to the Defendant's websites, the contents of which were likely to result in the immediate dispelling of confusion among Internet users looking for the Plaintiff. This finding appears to be compatible with the doctrine of initial interest confusion.
Certain Courts have expressed dissatisfaction with initial interest confusion, holding that it leads to a finding that trade-mark holders have an exclusive right to their marks irrespective of the manner in which the domain name is used, a notion which is incompatible with traditional trade-mark principles (Hasbro Inc. v. Clue Computing Inc., 66 F. Supp. 2d 117 (D. Mass. 1999), affirmed  U.S. App. Lexis 27856 (1st Cir. 2000); The Network Network v. CBS Inc., CV-98-1349 (C.D. Cal. 2000).
A passing off claim can be asserted as a common law tort or by virtue of the statutory codification of section 7 of the Trade-Marks Act . In both instances, the foundation of an action for passing off is the protection of the plaintiff's goodwill or reputation that has come to be associated with the mark. The three necessary components of a passing off action are the existence of goodwill, deception of the public due to a misrepresentation and actual or potential damage to the plaintiff.
In a case that has become widely recognized as the leading Internet-related case in Canada, the British Columbia Supreme Court in British Columbia Automobile Assn et al. v. Office and Professional Employees' International Union, Local 378 et al.,  B.C.J. No. 151 (B.C.S.C.) applied the principles of passing off to the Internet.
The Defendant was a trade union that represented some of the Plaintiff's employees in various service centres throughout British Columbia. In January 1999, the BCAA employees, represented by the Defendant, began a lawful strike action. The Defendant established three successive websites to publicize the strike by employees. The first website, located at bccaonstrike.com and picketline.com, was similar in look and feel to the Plaintiff's website, utilizing the same colours, frames and toolbars, while also including the Plaintiff's metatags on its website, as well as the trade-marks of the Plaintiff and the Canadian Automobile Association ("CAA").
A metatag is the information contained in the source code of a website document, and is specifically designed to be machine readable by search engines. The information generally appears at the beginning of the source code, and is not seen by Internet users unless they view the source code of the page. Many web pages include these metatags as key word summaries of the contents of a document to increase its searchability by search engines, thereby making it easier for users to locate the sites on the Internet.
Faced with objections from the Plaintiff, the Defendant redesigned its website twice. The second website was similar in appearance to the Plaintiff's website, but removed references to the CAA logo and other marks owned by the Plaintiff. The third website, which could be accessed at bcaabacktowork.com, as well as bcaaonstrike.com and picketline.com, differed in appearance to the Plaintiff's website.
The Plaintiff claimed that the Defendant's use of the domain names bcaaonstrike.com and bcaabacktowork.com and the metatags in connection with the Defendant's website constituted passing off.
Following an extensive review of U.S. and U.K. jurisprudence, which the Court noted as being of "some guidance" (presumably in light of the dearth of Canadian case law), Sigurdson J. held that the current version of the website, including its domain names, did not constitute passing off, as there was no likelihood of confusion between the competing sites. The Court held that a number of factors obviated a likelihood of confusion, including the addition of "backtowork" or "onstrike" in the domain names and the fact that the Defendant was not competing commercially with the Plaintiff, but rather attempting to communicate its message to the public about its labour relations campaign. However, the Court held that the Defendant's first website constituted passing off, finding the website to be "very similar" to the Plaintiff's website, and demonstrating "an intention to mislead people looking for the BCAA site in order to get the public to read what appeared on its website".
Freedom of speech was invoked as a defence. The Court agreed that the common law should be interpreted in a manner consistent with the Canadian Charter of Rights and Freedoms, stating that when "a website is used for expression in a labour relations dispute, as opposed to commercial competition, there is, I think, a reasonable balance that must be struck between legitimate protection of a party's intellectual property and a citizen's or a Union's right of expression."
A number of decisions rendered by foreign courts reflect a general intolerance for cybersquatters, and provide some guidance, with Courts adopting an expansive view of trade-mark law in order to accommodate the vagaries of domain names. One such case, which was relied upon by the Court in BCAA et al. v. Office and Professional Employees' Int. Union et al., is the widely cited case of British Telecommunications plc v. One in a Million British Telecommunications plc v. One-in-a-Million Ltd; Ladbroke plc v. same; Sainsbury plc v. same; Virgin Enterprises Ltd v. same; Marks & Spencer plc v. same  F.S.R. 265.
In this case, the Defendants were dealers in domain names comprised of well-known trade-marks. The English Court of Appeal held that the mere registration of the disputed domain names constituted "use" and supported a claim for passing off in cases where a Defendant was using a domain name as an "instrument of fraud" by registering it and then offering it for sale to the corresponding trade-mark owner.
In Panavision International L.P. v. Toeppen 945 F. Supp. 1296 (C.D. Cal. 1996), affirmed 141 F. 3d 1316 (9th Circuit, 1998) the Defendant registered the domain names panavision.com and panaflex.com and then attempted to sell them to the Plaintiff trade-mark owner. The Defendant had also registered other third party trade-marks to which he was not entitled, including domain names incorporating marks owned by Delta Airlines, Neiman Marcus and Eddie Bauer. The Court held that for the purposes of trade-mark dilution, mere registration of a domain name without more is not typical commercial use, although in this case the Defendant had gone beyond the mere registration of domain names, as he had registered the domain names with the intention of selling them for a profit to the trade-mark owners. In the view of the Court, such activity constituted a "scheme" qualifying as "commercial use".
The finding by U.S. and U.K. courts that the mere registration of domain names in a cybersquatting context constitutes commercial use may be of some relevance in Canada, where such activity is not captured by the definition of "use" under the Trade-marks Act . Accordingly, depending upon the factual matrix at play, these cases are worthy of consideration.
Section 22 - Depreciation of Goodwill
Section 22 of the Trade-marks Act provides a further remedy in addition to those available under sections 19 and 20, prohibiting the use of a trade-mark registered by another person in a manner that is likely to have the effect of depreciating the value of the goodwill attaching to the mark. Depreciation of goodwill occurs when there has been a reduction of the esteem in which the mark itself is held.
In BCAA et al. v. Office and Professional Employees' Int. Union et al., the Plaintiff alleged that the Defendant's use of its marks depreciated the value of the goodwill attaching to them.
In rejecting the Plaintiff's claim that the Union depreciated the value of its trade-marks, the Court held that the Union was not using the marks in association with an offering of "services" for a commercial purpose. Instead, the Union was using the marks as part of a website that provided services to its members and information to the public. No fees were charged, no services were sold, and no profits were intended to be earned. The Court also concluded that the Plaintiff failed to establish that the Defendant's use was likely to depreciate the goodwill attaching to its registered trade-marks.
The Court's interpretation of section 22 was not entirely accurate. To properly invoke section 22, there is no requirement that a defendant use the trade-mark as a trade-mark, although a commercial context is likely necessary. In other words, there is no need for the Defendant to be using the Plaintiff's trade-mark to indicate falsely the source or origin of the wares or services, which appears to have been the Courts interpretation in this case (Kelly Gill and R. Scott Jolliffe, Fox on Canadian Law of Trade-marks and Unfair Competition 4th ed. (Toronto: Carswell, 2001).
The Court held that the Union was entitled to express its position and speak freely provided it did not violate section 22: "I think that to accept the plaintiff's argument, that the reference to an employer's trade-mark to identify a Union site depreciates goodwill associated with that trade-mark, would be a result that goes far beyond what Parliament intended by s. 22."