Mr. Softee – Canadian Trademark Act – Budweiser Fight – IP Fridays Episode 6

IP FRIDAYS

 

Co-Presenters:

Rolf Claessen and Kenneth Suzan

 

Episode 6 – July 11, 2014

 

RC = Rolf Claessen

KS = Kenneth Suzan

 

 

KS: Hello and welcome to this episode of IP Fridays. Our names are Ken Suzan and Rolf Claessen and this is THE podcast dedicated to intellectual property. It does not matter where you are from, in-house or private practice, novice or expert, we will help you stay up-to-date with current topics in the fields of trademarks, patents, design and copyright, discover useful tools and much more.

 

RC: Thank you very much for tuning in to another episode of IP Fridays. We are very glad that you have tuned in to this episode. First of all, if you are listening to this on an iOS device, please visit www.ipfridays.com/itunes to subscribe to the podcast if you haven’t already done so and give us a review. We would be really grateful if you could do that. Also, if you want to tweet about us, you can tweet easily by going to www.ipfridays.com/love. But now I will tell you what we have in store for you today. We will talk about the latest developments in the Budweiser fight. The worldwide fight over Budweiser trademarks between the Czech Republic and the U.S. and we will have the latest updates about the new Canadian Trademark Act and we will also tell you about Mister Softee and I can hear his ice [cream] truck already….

 

KEN SUZAN’S DISCUSSION REGARDING MISTER SOFTEE

 

KS: The familiar chimes of a Mister Softee truck are a delight to the ears of many. Mister Softee is a well-known ice cream truck business that licenses its various trademarks to franchisees, who then own and operate Mister Softee ice cream trucks using those trademarks. The marks are numerous: the name “Mister Softee” and its logo, the “Mister Softee” ice cream jingle, and the design of the Mister Softee trucks—white trucks with blue horizontal stripes and blue wheels, that include an ice cream cone head with a red bow tie and a blue jacket and various phrases promoting sundaes, shakes, and “the Very Best” ice cream products.

 

Dimitrios Tsirkos is a former Mister Softee franchisee, who operated sixteen Mister Softee trucks within New York City. Tsirkos eventually stopped paying royalties and following the terms of the Mister Softee franchise agreements, and the company decided to terminate his franchises. This didn’t stop Tsirkos from continuing his ice cream sales; he rebranded his trucks as “Master Softee” or “Soft King” trucks, retaining the color scheme, slogans, and similar ice cream cone head character as the official Mister Softee vehicles.

 

Mister Softee is now suing Tsirkos in federal court in the Southern District of New York, claiming that he is not only infringing on their trademarks, but also violating a non-compete provision preventing Tsirkos from competing with Mister Softee for two years after their franchise agreements were terminated.

 

Mister Softee was granted a preliminary injunction on June 5 preventing Tsirkos from operating his trucks within his former franchise territories, as well as any other franchise territory within a five mile radius. Judge Swain, applying an 8-factor test to determine whether the Tsirkos trucks could be confused with Mister Softee trucks, found that all eight factors were met: the Mister Softee logo and the trade dress create a “distinctive and arbitrary” mark, and the Tsirkos trucks were “strikingly similar” to the Mister Softee trucks by using the same color scheme, similar anthropomorphized ice cream character, and identical slogans (“Very Best” and “World’s Best”). Judge Swain also found the non-compete to restrict Tsirkos’s operations, although she limited the scope of the non-compete to cover only Tsirkos’s former territories and other territories within a five mile radius.

 

This injunction has not ended the dispute, as Mister Softee filed a contempt motion against Tsirkos on June 12, a mere week after the injunction was issued. Mister Softee hired private investigators to determine whether Tsirkos would cease his operations, and they found that he has instead continued to sell ice cream from “Master Softee” trucks in prohibited areas. Mister Softee then asked the court to award them the profits Tsirkos has made from those trucks since the injunction was ordered, and to compensate their attorney and private investigator fees in connection with the contempt motion. Tsirkos’s response to this contempt motion had been to remove the word “Master” and the ice cream cone head mascot from his trucks, while still continuing to operate within prohibited areas. A hearing on June 24 in front of Judge Swain determined that Tsirkos’s efforts were not sufficient to avoid being found in violation of the court’s injunction and the court granted the contempt motion filed by the plaintiff.

 

RC: Thank you very much Ken for sharing this with our listeners. If you want to know more about this, you can go to www.ipfridays.com/mistersoftee. As many of our listeners might already know, and some don’t, the Canadian Trademark Act was reformed and we have a new Canadian Trademark Act in the world so we wanted to know more about this and we have asked an expert in this field. Francois Larose is a partner with Bereskin & Parr LLP and I had the chance to interview him.

 

ROLF CLAESSEN’S INTERVIEW WITH FRANCOIS LAROSE

 

RC: I am excited to be joined by Francois Larose of Bereskin & Parr LLP today. He is a partner with the firm and he is a real expert with trademarks. We have known each other for a long time and thank you very much for coming onto the show.

 

FL: Thank you Rolf. Dankeschön. Guten Tag.

 

RC: Why don’t you tell our listeners more about yourself and your practice?

 

FL: As you mentioned, I am a partner with Bereskin & Parr. Bereskin & Parr is one of the most important IP firms in Canada and I have the pleasure of working with Dan Bereskin, who is very well known worldwide, as well as Cynthia Rowden and many others that are really, really important IP lawyers in Canada. I have been with Bereskin for about seven years now and I am working out of the Montreal office, in the Province of Quebec. As you mentioned, I am specialized in trademark prosecutions and litigation and also do some copyright opinions, litigation, as well as IP related agreements, and advertising packaging and most importantly in Quebec the charter of the French language issues. But most of my practice is related to trademarks.

 

RC: Very good. Recently there has been a change in the Canadian Trademark Law. I think you got a new Trademark Act. So, what are the most important changes in your opinion.

 

FL: Yeah, first of all I want to say that it is really funny because the government tabled filed for two bills to amend the Trademarks Act. One of them has been adopted but none of them have been implemented yet so they are not yet in force. What is really funny is that the recent bill to implement new changes, the most important changes since 1953, have been filed through a Budget Implementation Bill which means that very little consultations were made and some of those changes came as quite a surprise. The changes, maybe I could group them into three groups, the first one which are really important to your listeners are that Canada is finally joining Madrid so we are going to adopt their classification system, we are going to be joining the Madrid Protocol, and those agreements have been tabled following, as you may be aware of the negotiations between Canada and Europe, for a free trade agreement. Now the agreement is not yet signed or in force, we are still negotiating some of the details, but as part of those negotiations we have agreed to table those trade agreements.

 

The second group, which is very important and unfortunately very controversial in Canada, is Canada’s Trademark Act, I’m proud to say, is very good. We rely a lot on use of a trademark because a trademark is supposed to be there to protect the public so the public knows a shortcut to get to certain goods and services they can know the source of certain goods and services so a Trademark Act needs to be used in Canada. Unfortunately, the new changes are going to remove that requirement. So, from now on, well as soon as the changes are implemented of course, it won’t be necessary to identify filing grounds. For example, you don’t have to say its use in Canada or its proposed use, and you no longer need to use the trademark to get the registration. So these are pretty big changes.

 

The third group of changes, which are quite significant, for example for the priority claim, the priority application doesn’t need to be in the country of origin of the applicant, it can be anywhere. So that was a difference between Canada and many countries. We will be able to file divisional applications. The term for registrations will be coming from 15 to 10 years as most countries have. The Trademark Office will be able to initiate, on its own decision, expungement proceedings against registrations and so on and also in another bill that is still waiting to be adopted are new stronger anti-counterfeiting measures. It don’t go far enough I don’t think but it will be a lot better for Canada because as you may know we were on the blacklist. The United States put us on a blacklist because we didn’t have strong anti-counterfeiting measures. Now they have removed us from the blacklist because of this bill.

 

So, those are the three groups of important changes that are coming up. There are lots more but we can for now limit ourselves to those.

 

RC: Okay, what would be the biggest impact for your national clients and for the international clients? I see one immediately, of course, that you will join the Madrid Protocol or the Madrid Agreement. That will be a big change for the international clients as well as your national clients. Are there any changes where you see a big impact like financial wise? Do they really have to change their strategy somehow when filing trademarks or can you tell our clients for example in Germany or the clients in U.S. what they would really have to think about?

 

FL: I think I am going to go back again to the use requirement because it is a big, big change for Canada. So it is going to be easier to get a registration in Canada that is for sure. Like you mentioned, because of the Madrid Protocol it is will be easier for people outside of Canada to file applications in Canada, but since applicants won’t need to file a Declaration of Use or to use a trademark anywhere in the world it is going to be easier to get a registration — and not only easier to get a registration but the registration can be broadened because you will be able to file for all the goods and services under the sun and still get a registration without having the real intent of using the mark with all those goods and services. So it is going to be easier to get a registration. Unfortunately, because of that, it is going to be easier for pirates or trademark trolls to also get a registration. So, while the registration process will be easier, some legitimate brand owners coming into Canada might find out that their own trademarks are already registered by trademark tolls or pirates in Canada. So we expect there will be higher and a big increase in oppositions. It will be more difficult and more expensive to do clearance searches to see if a trademark is truly used and if it is not then we are going to have to initiate cancellation proceedings. So, although it might look like it is going to be easier and less expensive, we expect that it is eventually going to be more expensive and more complex for brand owners to get a trademark in Canada. So that is a big impact.

 

RC: So one question related to this I mean this sounds similar to the system in Europe where you can get a registration without really using the trademark but the registrations in Europe can be cancelled if they are not used within five years from registration. Is there a similar clause in the new Trademark Act in Canada?

 

FL: Yes. The actual statute already has an administrative cancellation proceeding that says that if you don’t use a trademark within three years, or if you haven’t used a trademark in the past three years, then you can be asked to provide evidence of use of the mark on each of the goods and services. Now it’s three years instead of five so it is even shorter which I think is good to get rid of the dead wood, but unfortunately, people will be able to get a registration with all of the benefits for any goods or services they want for trademarks that they don’t even use for three years so it’s going to be…I foresee a lot of useless trademarks on the register and it’s going to be more difficult for legitimate brand owners to get their registrations. Of course, eventually they will get rid of those with cancellation proceedings but for three years or more they are going to be stuck with those trademarks.

 

RC: I see that there may be some very interesting case law developing when trademark filers will file every three years for some trademark trolls or pirates.

 

FL: Absolutely, and I believe in Europe you have more opposition proceedings than you would have in a country which might require use for example as a requirement for registration and we will have a lot more oppositions.

 

RC: That is our bread and butter.

 

FL: Yes but it’s not very fun for our clients.

 

RC: Of course. So are there any best practice procedures that you have developed for your clients or anything that they have to change immediately?

 

FL: We don’t think the changes are going to be implemented before Spring 2015 so we still have a few months ahead of us to get ready but we never know. We have some recommendations for clients. First would be file now if you want a trademark because we expect the filing fees to increase. Is it going to be a three-for-one, three classes in one application for one price or is it going to be one price per class…we don’t know yet. The government doesn’t know yet. But we foresee that there are going to be higher filing fees, the more classes you, have the more expensive it will be so if you have a trademark that you would like to get in Canada, I would suggest you file now.

 

The renewal terms are going to decrease from 15 to 10 years so if a trademark registration in Canada is set to expire within one year, I strongly suggest you file to renew the application asap to get a longer term for the registration because after that, like I said, after that you will be losing five years.

 

As well, we have common law trademarks in Canada which means that if you use a trademark without registrations you can still have some rights just because you are using it in a specific territory. However, if these are important, I would suggest you file applications before the changes are implemented because after that, pirates are going to be able to file trademark applications for those common law trademarks and then the clients will have the burden of opposing those applications and that can be expensive. So I suggest that if you have common law marks, now is the time to file applications.

 

Other changes, I didn’t mention those, but we are going to have new types of trademarks. Signs, they are going to be called. Like nontraditional trademarks like smells, taste, all those kinds of three-dimensional trademarks. We already have the places to register those under the current Act, but with the new statutes you are going to need to file probably distinctiveness evidence. So if a client has a nontraditional mark now it might be good to consider registering an application now before having to file acquired distinctiveness evidence.

 

Maybe a last advice, since it won’t be necessary to file a declaration of use for a trademark that is not yet in use in Canada, as have lost over 40,000 pending applications in Canada that are just waiting for a declaration of use to issue to registration. With the new changes, it won’t be necessary and those applicants will be invited to just file to pay a registration fee and get the registration right away. But there are going to be so many that will want to file at the same time that I recommend to clients that they make sure they review their pending applications and prioritize the most important ones to make sure that as soon as the changes are implemented request registrations for those marks and avoid the huge traffic of applicants that will want to get their registrations issued because there are going to be a lot of busy examiners at the Trademarks Office for the first few months and it is going to delay registration certificates for sure.

 

RC: I understand. I have one question regarding the Canadian Trademark Law. In the past, you wouldn’t be able to get a trademark registered if so and so many people would be called with their last name. Will that still be there?

 

FL: I don’t think I have seen a change regarding name and surnames, but you can still get those registrations under certain circumstances. For example, if you file evidence of acquired distinctiveness, if a name has become so well known that it has become a trademark in the mind of customers, then it is possible with some evidence to get a registration. Another possibility is that if it is a name or surname that is not very common, and the Trademarks Office will use a test of looking through the phone book and if they find less than 25 persons with the same name, then they won’t consider it as merely a name or surname. So that is how we got some registration for some famous brand designers like clothing designers. We can get a registration if we can show the Trademarks Office that there are less than 25 persons in Canada with the same name or surname. So it is still possible to get a registration for a name or surname under certain circumstances and I will have to look through the Bill but I don’t think there are any changes regarding that.

 

RC: So, if people want to get in touch with you, what would be the best way to reach you?

 

FL: You can look up our Website at bereskinparr.com or they can use Google to find my name – Francois Larose. I think my name is one of the first names on Google. I have to look on Bing also. But look on our Website and I will be happy to attend to any of your listeners needs.

 

RC: Thank you very much for this very helpful interview and dear listeners please contact Francois if you have any questions regarding the Canadian Trademark Act.

 

FL: Thank you Rolf. Dankeschön.

 

RC: So if you want to know more about Francois you can go to www.ipfridays.com/larose.

 

Coming up next is the latest development in the Budweiser fight. As you might know, there is a Czech Republic company called “Budweiser” and the U.S. company called “Budweiser” and Ken all the latest about this.

 

KEN SUZAN DISCUSSION ABOUT THE BUDWISER CASE

 

KS: Rolf, Anheuser-Busch InBev is the world’s largest brewing company, making 400 hectoliters of beer annually while employing 150,000 workers. The multinational company was formed from the 2008 merger of Anheuser-Busch, America’s largest brewer, with InBev, a similarly gigantic brewing company with roots in Belgium and Brazil. Anheuser-Busch InBev, or AB InBev for short, now brews many of the most well-known beers from around the world: Corona, Stella Artois, Beck’s, Michelob, Rolling Rock, Löwenbräu, Modelo, and many more. Their most conspicuous product is the self-proclaimed “King of Beers,” Budweiser, which Anheuser-Busch has been brewing since 1876.

 

Unknown to many in the United States, there is a challenger to the throne occupied by the “King of Beers:” another beer named “Budweiser,” brewed by a Czech Republic company named Budweiser Budvar. The company is based in a town formerly known as “Budweis” when the Czech Republic was a part of the Austrian Empire. The name “Budweiser” is derived from this town—“Budweiser” means “from Budweis” in German. The Czech company began brewing their “Budweiser” in 1785 and started exporting to America in 1871, five years before Anheuser-Busch began production of its “Budweiser” beer. The company, which to this day remains owned and operated by the Czech government as a relic of communism, is very small in comparison to the Anheuser-Busch InBev global conglomeration, with only 600 employees and a beer production that totals 0.35% of the amount of beer produced by AB InBev.

 

Both companies export and sell their “Budweiser” products throughout the global market, leading to numerous, country-by-country clashes over which company gets local trademark rights in the “Budweiser” name. The issue appears settled, for now, in the companies’ respective home markets. American tourists visiting Europe may be surprised to discover that the “Budweiser” they are familiar with is actually sold as “Bud” in many European countries, and Budvar sells its product as “Czechvar” in U.S. and Canada while retaining the “Budweiser” name throughout much of Europe.

 

However, the issue of who gets to use the “Budweiser” name remains a live controversy throughout much of the world. While the relative sizes of the two companies appear to put the Czech brewer at a disadvantage, Anheuser-Busch has lost several key cases recently. In Portugal last month, the trade courts prevented Anheuser-Busch from registering its “Budweiser” name in that country. In Italy, Budvar had been forced to use the “Czechvar” name since 2002, but last year secured a ruling rejecting Anheuser-Busch’s trademark and allowing Budvar to once again use the “Budweiser” name. Also, interestingly enough, the United Kingdom Supreme Court decided that there is no confusion between the two beers in the English marketplace, and has allowed both companies to use the trademark throughout the United Kingdom.

 

There are signs that AB InBev will eventually get its way. In 2012, the conglomerate purchased a small Czech competitor of Budvar also located in historic Budweis for the trademark rights owned by that brewery. That same year, Anheuser-Busch made a global settlement offer to Budvar for the rights to the “Budweiser” name. A similar settlement was reached between the two in 1939, which gave Anheuser-Busch the right to use the name in Central and North America before globalization led both beer makers to expand worldwide. However, this most current offer was rejected by Budvar and those negotiations are now over. Another potential end to this dispute would be the long-rumored sale of Budvar by the Czech government through a public stock sale. For now, though, the century-old battle over the trademark rights to a Czech town-turned-beer name continues.

 

RC: Thank you very much Ken and if you want to learn more about this case and the recent developments please visit www.ipfridays.com/budweiser.

 

KS: That’s it for this episode. If you liked what you heard, please show us your love by visiting ipfridays.com/love and tweet a link to this show. We would be so grateful if you would do that. It would help us to get the word out. Also, please subscribe to our podcast at ipfridays.com or on iTunes or Stitcher.com. If you have a question or want to be featured in one of the upcoming episodes, please send us your feedback at ipfridays.com/feedback. Also, please leave us a review on iTunes. You can go to ipfridays.com/itunes and it will take you right to the correct page on iTunes. If you want to get mentioned on this podcast or even have comments within the next episode, please leave us your voicemail at ipfridays.com/voicemail.

 

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