A recent decision of the Federal Court of Canada has highlighted the difficulties in asserting trademark and copyright rights related to the appearance of functional products with unique design elements.

Shapes of Things Come to Court

Corocord Raumnetz GMBH v Dynamo Industries Inc. (2016 FC 1369) involved competing businesses that manufactured and sold playground equipment.

In about 2010, Corocord created a new series of playground structures it called Performer. Corocord claimed that the appearance of its playground structures had a unique and distinctive look that set them apart from their competitors. Shortly after the launch of the Performer structures, Dynamo introduced a line of Nebula playground structures, which Corocord asserted were copied and reverse engineered from the Performer series. Corocord sued Dynamo in the Federal Court of Canada for trademark and copyright infringement.

Successfully asserting trademark rights in a product itself (as opposed to branding attached to that product) is a difficult proposition. For example, in 2005 the Supreme Court of Canada ruled that the appearance of LEGO toy building blocks were functional and did not attract trademark protection; an action to restrain a competitor from selling blocks that would interconnect with LEGO was dismissed. Recently in Europe, courts have declined to recognize trademark rights in the shape of Kit Kat chocolate bars and Rubik's cube puzzles.

The Performer structures met a similar fate. The evidence did not support the claim that there were trademark rights in the appearance of the structures themselves. The Court was not satisfied that the relevant market had begun to recognize the shape of the Performer structures as having a single source. In fact, the plaintiff's expert acknowledged that he had not seen one until his retainer in the case.

War of the Words

Corocord also claimed relief under section 7(a) of the Trade-marks Act, which prohibits a person from making false and misleading statements that tend to discredit the goods, services or business of a competitor. Specifically, it was alleged that Dynamo used comparisons between its products and those of Corocord in promotional materials and in correspondence involved in bid requests which stated that the Nebula structures were of equal and better value. Corocord asserted that these comparisons were biased, inaccurate and/or incomplete and required a reduction of its prices.

This claim was also dismissed. Corocord did not establish that Dynamo's statements were false or that anyone was misled. Moreover, section 7(a) is limited in scope; it only creates a cause of action relating to false and misleading statements made about a trademark or other intellectual property. Dynamo's statements were not directed to Corocord's intellectual property, and in any event, Corcoran won the bid. Corcoran was also unable to prove that any reduction in price was the direct result of Dynamo's statements.

This result can be compared to another recent Federal Court decision in Excalibre Oil Tools Ltd v Advantage Products Inc. (2016 FC 1279), a patent infringement case relating to drilling equipment. There, the plaintiff send demand letters to the defendant's customers asserting infringement and explicitly threatening litigation. The Federal Court determined that the patents were not infringed, therefore the demand letters contained false and misleading statements and were actionable.

Canadian Intellectual Property's Area 51: Copyright and Industrial Design

At trial, Dynamo acknowledged that copyright existed in the design of the Performer structures, but denied infringement.

A useful article may attract both copyright and industrial design protection, the latter being essentially the same as a design patent in the United States. Under Canadian copyright legislation, the ability to enforce copyright can be lost if the useful article is reproduced in a quantity of more than 50. Where 51 or more reproductions have been made, it is generally not an infringement of copyright if another person reproduces that article. By contrast, the enforceability of an industrial design registration is not affected by the number of reproductions that are made.

Until the Corocord decision, there was no judicial determination as to whether the 50 reproductions were limited to Canada, or whether reproductions made anywhere in the world should be included. After a detailed consideration of the Copyright Act, the Court found that the 50 reproductions can be made anywhere. Since Corocord had made more than 50 Performer structures worldwide at the time the action was commenced, its copyright was unenforceable and the infringement claim was dismissed.

In some circumstances, the shaping of goods or their containers can obtain trademark protection as a distinguishing guise. Industrial design protection may also be available for a product with unique design elements.