There was once a day in Canada when, if you were starting a business, you had to be careful about what business name you chose lest some bigfoot with a famous trademark set its lawyers loose on you.
Dare to call your lovingly crafted leather wallets "McWallet" and you'd risk having the mighty McDonald's fast-food empire threatening legal consequences.
Be so bold as to use the name Barbie for your restaurant and you'd have multibillion-dollar dollmaker Mattel, Inc. moving mountains to try to put you and your descendants into servitude paying the lawyers' bills.
Just ask Calgary clothing designer Barbie Anderson-Whalley. The U.S. toy giant claimed in 2004 that her barbiesshop.com website violated its famous trademark.
But Anderson-Whalley's Barbies Shop doesn't make little dolls. It's a bondage-and stripper-apparel store that sells latex and corsets. And last year, a U.S. court ultimately agreed with the small businesswoman, but only after she incurred some serious legal fees.
Mattel's imprecations also didn't faze one Montreal restaurateur.
Spiro Christopoulos, owner of three Barbie's bar-and-grill restaurants, stood his ground when Mattel told him 12 years ago to stop using this name. He continued to hold his ground as he successfully navigated the federal Trademarks Opposition Board, the Federal Court and the Federal Court of Appeal.
Mattel took its case to the Supreme Court of Canada. And it was the justices of that high court who handed down a judgment this past June that brings greater certainty to the somewhat ambiguous federal Trademarks Act - and joy in many cases to long-suffering small businesses whose names have a similarity to famous trademarks.
The Supreme Court allowed the Barbie's restaurant chain to keep its name. The justices based their decision on the eminently reasonable assumption that most ordinary people can discern the difference between medium-priced pubs and plastic dolls for three- to 11-year-olds.
"One doesn't own the word 'Barbie,' " explains University of Toronto law professor Abraham Drassinower, an expert on trademark and intellectual property law. "An owner owns the mark for the purpose of distinguishing his or her products in the marketplace, but not for any other purpose."
The Supreme Court decision goes further than the issue of product confusion in clarifying trademark law.
For example, the judgment notes that a trademark's fame is capable of carrying the mark across product lines where lesser marks would be limited to their traditional wares and services.
The Supreme Court also notes that the name Barbie is a contraction of a common name (Barbara), so is not even an invented word such as "Kodak" or Kleenex."
"A difference in wares or services does not 'trump' all other factors, nor does the fame of a trademark," the judgment says.
The Supreme Court also released a decision the same day in a second case - Veuve Clicquot Ponsardin vs. Boutiques Cliquot - that addresses similar trademark issues and comes to the same conclusions.
In that case, high-quality champagne-maker Veuve Clicquot objected to the use of the word Cliquot by the owner of six women's clothing stores in Ontario and Quebec. The International Trademark Association intervened on Veuve Clicquot's behalf despite the retailer having previously registered the name Cliquot.
Drassinower notes that product confusion is not the only factor in determining the right to a name. For example, the law protects the holders of famous trademarks from other businesses that use the name in a manner that depreciates the goodwill of the mark.
For example, a manufacturer might find itself in hot water if it were to use the trademark Walt Disney for a new line of sex toys. (For that matter, it would have a great deal of difficulty explaining how it legitimately came up with such a choice in name).
Drassinower says the Trademark Act protects famous-trademark owners from businesses that use their mark "in a manner that, while not confusing, nonetheless devalues the mark."
In its judgment, the Supreme Court quoted, with approval, the comments of a Federal Court of Appeal justice who wrote the following about trademark litigation: "The totality of the circumstances will dictate how each consideration should be treated."
This clarifies previous Federal Court of Appeal judgments. In one such case - United Artists Pictures vs. Pink Panther Beauty - the appellate court ruled that owners of famous trademarks only very rarely should be excused from having to establish a connection between its goods and services and those of the other party.
The Supreme Court's Barbie judgment noted that the Pink Panther decision placed undue weight on the similarity or dissimilarity of goods and services.
In the wake of the Supreme Court's trademark ruling, businesses that are less omnipresent than famous trademark holders will have a clearer picture of where they stand when confronted with the chest-beating antics of a multinational's lawyers.
"The questions are, 'Did you use the mark in a manner that represented you as if it were me in the marketplace?' " Drassinower says. " 'Did you try to appropriate my goodwill?' " To illustrate his point, Drassinower said anyone trying to use the Michelin Man logo for a new line of motor oil likely would lose any legal action by Michelin because the tire-maker could argue that the public would assume that it is diversifying.
"But if I were to make another product under the Michelin name - like chewing gum - there's likely no confusion."
Drassinower pointed out that Olympic trademarks are different from regular commercial trademarks, so are not affected by the Supreme Court judgments. They're known as "official" trademarks because they are created by public authorities.
(Brock Ketcham is an Edmonton-based writer who specializes in consumer and public policy issues. He can be reached at brock@businessedge.ca)
