The issue of when a trade-mark is “used” in association with services on the internet has become an important legal battleground, and may become a critical issue for trade-mark owners in Canada and abroad.

Sufficient “use” was once simple to show—the stamp or mark of a producer on their goods or services that were advertised and provided in Canada. However, the prominence of internet advertising which transcends borders without ever existing in a tangible form creates a difficult problem of when and where an online trade-mark is “used”—a question which stands to affect when a right to register arises, or when a defense to expungement can be established.

The law in Canada as to trade-mark use in respect of services is well settled. There must be advertising in Canada along with services that are performed in Canada, or at the very least, are available to be performed in Canada. Porter v. Don the Beachcomber (1966), 48 C.P.R. 280 (Ex. Ct.) is the leading case on point.

The essential question then becomes: when and to what extent is trade-mark “use” established in association with services by the mere act of people in Canada accessing a website?

This question was the subject of the recent reasons of Hughes J. in HomeAway.com, Inc. v. Hrdlicka, 2012 FC 1467. The subject of internet trade-mark use, and the geographical issues involved, followed not long after the Federal Court reasons in TSA Stores, Inc. v. The Registrar of Trade-marks, 2011 FC 273 (which we reported on in November 2011, here) and suggests that this is a live and developing issue in Canada.

Homeaway Away from Home

In Homeaway, the applicant sought to expunge the registration for the trade-mark VRBO (which stood for “Vacation Rental By Owner”) based on its prior use of an identical trade-mark. The sole issue was whether the applicant had used the trade-mark in Canada in association with its services before the registration was sought by the respondent.

The applicant, Homeaway.com Inc., is a Delaware corporation that existed solely in the United States, and provided services for individuals who wish to rent their vacation property. The respondent, Martin Hrdlicka, was the holder of a Canadian trade-mark registration for VRBO for use in association with “vacation real estate listing service”, and a resident of Toronto.

Homeaway, and a company with which it had merged, VRBO.com Inc., were in the business of providing services to individuals renting out vacation properties, primarily in the United States. While the websites were available anywhere, there was no indication that the business existed in any physical form in Canada.

The difficulty that Homeaway faced was showing that it had used the trade-mark VRBO in association with its services in a manner capable of creating rights in Canada, prior to the date of Hrdlicka's application, which was based on proposed use.

Advertising of services occurs whenever a website is accessed in Canada

To determine when a trade-mark is used in Canada, the Court considered prior judicial interpretation of “use” in the electronic context in Canada. While passing reference was made to the real and substantial connection test applied in the copyright context, the reasons came to the more categorical conclusion, at para. 22, that:

... a trade-mark which appears on a computer screen website in Canada, regardless where the information may have originated from or be stored, constitutes for Trade-marks Act purposes, use and advertising in Canada.

Despite that unqualified conclusion, we do not take the decision as changing the longstanding law first articulated in the Don the Beachcomber decision referred to above, that the services must be performed in Canada or available to be performed in Canada. In this case the court did go on to determine that services were being performed in Canada:

“However, it is most important to know what use was made by HomeAway in Canada of the trade-mark prior to the date when the Respondent Hrdlicka filed an application to register the trade-mark VRBO in his name. That date is September 2, 2009.

I am satisfied, based on the affidavit of Dickey that, prior to September 2, 2009 HomeAway was advertising to and contracting with Canadians to display their premises on the VRBO website, and was displaying those Canadian premises on its website. That website displayed the trade-mark VRBO to Canadians, as well as persons of every other country who wished to visit the website.

I am satisfied, therefore, that prior to September 2, 2009 HomeAway was using the trade-mark VRBO by means of advertising and use on its website in association with vacation real estate listing services.”

This conclusion reaffirms that, in the context of trade-marks used in association with services, the display of the trade-mark on a website, coupled with the performance of the associated services in Canada or at least the availability of the services in Canada, constitutes trade-mark use for such services for the purposes of the Canadian Trade-marks Act.

Homeaway's invitation to foreign trade-mark users

The conclusion in Homeaway has at least three practical effects.

First, for foreign trade-mark owners, use in association with services will now be easier to establish in Canada. While VRBO.com may have seen substantial traffic from Canadians, the decision stands for the proposition that the contested trade-mark need only “appear” on a computer screen in Canada for the advertising component to be satisfied. This will be helpful for foreign trade-mark owners seeking to apply for registration based on use, or for foreign owners of Canadian trade-mark registrations defending non-use cancellation actions.

In either of these cases, a foreign trade-mark owner who can show even minimal access by Canadians to its website displaying the trade-mark, coupled with the availability to perform those services in Canada, will be able to establish use in Canada. As a result, those owners would be well advised to record evidence of internet traffic from Canadian internet users so as to establish entitlement to trade-mark protection in Canada at an early date.

Second, for Canadian businesses, the risk of a foreign trade-mark owner attacking a trade-mark application or registration has likely increased. It will now be helpful for businesses considering a new trade-mark, or for counsel providing advice on trade-mark registrability, to consider any use of similar marks on websites that are accessible in Canada and whether such websites are likely to have been accessed in Canada, coupled with the performance of the services in question, or at least availability of those services to be performed in Canada. Common law trade-mark searches which include the internet may well be recommended. While examiners in the Trade-marks Office do not consider any internet evidence of use, that use could become an issue if an opposition were commenced by a foreign trade-mark owner.

Third, where a registration is challenged based on alleged non-use or alleged prior use, evidence of services advertised on a website accessed in Canada, may be critical.

It is unlikely that Homeaway marks the conclusion to the developing relationship between trade-marks and the internet. However, for now, foreign and Canadian trade-mark owners would be well advised to keep a watchful eye on internet advertising which is accessible in Canada, and consider any potential opportunities or risks that may exist in light of the Homeaway decision.