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Initial interest confusion in Canada: recent developments

Back in April, we wrote about the history in Canada of a U.S. trademark infringement doctrine called “initial interest confusion” – see “A brief history of passing off, websites and "initial interest confusion" in Canada”. As we explained there, “initial interest confusion” refers to when customers seeking the plaintiff’s website are initially attracted to the defendant’s website because the defendant has used the plaintiff’s trademark in a domain name or in meta tags embedded in the defendant’s website.

We suggested that, in the Red Label Vacations Case (2015 FC 19), the Federal Court had retreated a bit from what appeared to be a trend towards accepting this as a form of trademark infringement in Canada. Since the decision in Red Label Vacations, two additional decisions have come down that provide further insight into where the law stands, and where it is headed, with respect to initial interest confusion in Canada.

Vancouver Community College v Vancouver Career College (Burnaby) Inc, 2015 BCSC 1470

Following close on the heals of Justice Manson’s decision in Red Label Vacations, in Vancouver Community College v Vancouver Career College (Burnaby) Inc., the BC Supreme Court again noted that initial interest confusion is an American term of art which has not been incorporated into Canadian law (at para 60).

In this case, Vancouver Community College, a 50 year old institutional plaintiff, claimed that the Vancouver Career College misrepresented its educational services as the plaintiff’s and therefore passed off the plaintiff’s services at its own.  The plaintiff argued that by purposefully employing the confusing acronym “VCC” in its advertisements and in the optimization of their Google Ad Words, the defendants attempted to redirect consumers from the plaintiff to the defendant.

Justice Affleck of the British Columbia Supreme Court rejected the plaintiff’s claim for passing off and held that the defendant’s conduct did not amount to a misrepresentation since it did not cause confusion.  In making this decision the Court assessed the keyword advertising practices of the defendant and the resulting impact on the average consumer. The Court held that while optimized keywords may confusingly lead the consumer to the defendant’s page, the relevant time for assessing confusion is when the user lands on the web page rather than when the consumer first encounters the confusing link and clicks on it. 

So, while encountering a confusing optimized word or mark like “VCC” may cause some initial uncertainty, Justice Affleck held that it is insufficient to ground a claim for passing off, the common law cousin of trademark infringement.

On its face, this case seems to close the door on a very common set of facts in which initial interest confusion might actually arise. In so doing, the case follows Justice Manson’s decision in Red Label Vacations in rejecting initial interest confusion as a basis for a passing off or trademark infringement claim - at least with respect to meta tags and Google Ad Words. However, both of these cases appear to leave room for the doctrine to apply in other circumstances.

British Columbia Recreation and Parks Association v Zakharia, 2015 BCSC 1650

The recent decision of British Columbia Recreation and Parks Association v Zakharia sheds light on the sort of circumstances where initial interest confusion may still be alive and well in Canada. The decisions suggests that the doctrine of initial interest confusion may still be applied where the defendant’s actions are particularly egregious.

In Zakharia, the defendant, a personal trainer, accused the plaintiffs of extortion, and used the plaintiffs’ BCFit trademark by registering it as a domain name and maintaining a website at “www.BCFit.ca”.  Furthermore, the defendant used the plaintiffs’ registered mark on his Instagram account and created an e-mail address displaying the plaintiffs’ mark.

The Court found that this use of the plaintiffs’ registered marks amounted to a misrepresentation intended to mislead the average consumer, and that the use was sufficient to establish the tort of passing off (even if the average consumer was no longer confused when they arrived at the defendant's website). While the court did not expressly refer to  "initial interest confusion" by name, the doctrine was clearly applied. 

So where do we stand now?

Initial interest confusion is the sort of mischief that the Supreme Court has said trademark law is meant to prevent. Looking back on Masterpiece, the Supreme Court was very clear that the confusion analysis should be based on the “first impression” the consumer had when first encountering the mark in the marketplace. Whatever the consumer thinks or does after first encountering the mark does not negate the significance of any initial confusion. The Court further stated that [s]uch diversion diminishes the value of the goodwill associated with the trade-mark and business the consumer initially thought he or she was encountering in seeing the trade-mark. Leading consumers astray in this way is one of the evils that trademark law seeks to remedy. 

The Court in Zakharia returns to the Supreme Court’s sentiment in Masterpiece, finding that in the egregious cases initial interest confusion is sufficient to establish a passing off case. The case also suggests that courts are more likely to find that initial interest confusion grounds a passing off action where there is use of confusing domain names than in cases where has been use of meta tags or keywords.

This type of confusion is of particular concern in a world where so much of business, and commerce is now being conducted online. Use of internet-based marketing strategies like search optimization, Google Ad words, use of creative domain names, and meta tagging creates an environment where the likelihood of initial interest confusion is heightened and far more prevalent.

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Toba Cooper was called to the Ontario Bar in June of 2015. She obtained her J.D., with honours, from the University of Ottawa, Faculty of Law. Before entering the profession, Toba worked in the commercial arts sphere. She articled at a major Bay Street Law firm where she focused her work on intellectual property and intellectual property litigation.