*This is a guest post by Gab Goldenberg*

[This is a slightly adapted excerpt from a much longer law school essay I wrote this past summer for on the issue of rebills, those affiliate marketing 'offers' that trick people into signing up for products that will bill them on a recurring basis without their knowledge. The excerpt deals with Canada's Trademarks Act and how the rebills may/not fit under its provisions.

I referred to rebills as 'manufactured consent scams' since they make false claims, such as endorsement or association with well known people or organizations, which lead people to give "consent" which they would not otherwise give. ]

As I explained earlier, the scammers promoting the tangible-product [as opposed to intangibles like money-making schemes such as Google Cash, known colloquially in the affiliate industry as 'biz opps'] offers like acai berry pills, colon cleanse products, resveratrol and so on are notorious for their shameless abuse of others’ trademarks.

They display the names, images and logos of famous people like Oprah, Dr. Oz and other famous personalities and brands to imply or even explicitly claim endorsement.¹ This exposes the affiliates, merchants and affiliate networks involved to liability under the Trade-marks Act, as well as the common law of passing off.²

The relevant sections of the Trade-marks Act are 7 (b) – (e), 8, 9.1 (d), 9.1 (k), 9.1 (l) and 9.1 (n), which read as follows.

Prohibitions

7. No person shall
(a) make a false or misleading statement tending to discredit the business, wares or services of a competitor;
(b) direct public attention to his wares, services or business in such a way as to cause or be likely to cause confusion in Canada, at the time he commenced so to direct attention to them, between his wares, services or business and the wares, services or business of another;
(c) pass off other wares or services as and for those ordered or requested;
(d) make use, in association with wares or services, of any description that is false in a material respect and likely to mislead the public as to

1. the character, quality, quantity or composition,
2. the geographical origin, or
3. the mode of the manufacture, production or performance of the wares or services; or

(e) do any other act or adopt any other business practice contrary to honest industrial or commercial usage in Canada.

Warranty of lawful use

8. Every person who in the course of trade transfers the property in or the possession of any wares bearing, or in packages bearing, any trade-mark or trade-name shall, unless before the transfer he otherwise expressly states in writing, be deemed to warrant, to the person to whom the property or possession is transferred, that the trade-mark or trade-name has been and may be lawfully used in connection with the wares.

Prohibited marks

9. (1) No person shall adopt in connection with a business, as a trade-mark or otherwise, any mark consisting of, or so nearly resembling as to be likely to be mistaken for,
any word or symbol likely to lead to the belief that the wares or services in association with which it is used have received, or are produced, sold or performed under, royal, vice-regal or governmental patronage, approval or authority;
(k) any matter that may falsely suggest a connection with any living individual;
the portrait or signature of any individual who is living or has died within the preceding thirty years;
(n) any badge, crest, emblem or mark

[...]
(iii) adopted and used by any public authority, in Canada as an official mark for wares or services,
in respect of which the Registrar has, at the request of Her Majesty or of the university or public authority, as the case may be, given public notice of its adoption and use; [...]

What the provisions mean in [almost] plain English

In summary, these provisions codify the prohibition against the common law tort of passing off, and expand upon the tort to prohibit dishonest commercial practices connected to both trademarks and passing off.³ Where others’ trademarks are displayed on the packaging of goods sold, the seller warrants that they have the right to use the trademarks, or else must disclaim [e.g. reject any claim to] such a right explicitly. Finally, section 9 prohibits the unauthorized use or words or graphics that imply a connection to or the approval of living people or the recently dead, as well as to the government.

Passing Off

Pritchard and Vogt write about passing off that it “arises when Party A uses without permission, Party B’s name, design or other trademark, or one so closely resembling it as to be mistaken for it and causes consumers to think that Party A’s product or service is actually that of Party B.”⁴ The essence of the tort is that the tortfeasor confuses consumers as to the origin of the goods or services.⁵ This tort and its Trade-marks Act codification apply neatly to the resveratrol scams and certain other scams marketed by those claiming to be Dr. Oz, WebMD and so on, but also to the “business opportunity” scams using names like Google Cash, Google Money Tree etc.⁶ Similarly, those scams may fall under section 8, which limits the use of trademarks to their owners or others authorized to use them.

Section 7

However, since this is a paper on manufactured consent scams in general, subsection 7 (e) carries greater interest. By using broad, general language prohibiting dishonest commercial representations (which Eldon limits to the “genus of acts prohibited by section[s] 7(a) to (d),” the Trade-marks Act potentially opens the door to liability for any misleading use of Trade-marks. This means that the “As seen on” claims and video footage of various shows used by virtually all the tangible-product scams can be targeted.

So far, there has been very little appellate-level jurisprudence on the application of 7(e) and only Trudel at the Supreme Court level. So I will limit myself to saying that, if the “genus” of section 7′s prohibited acts is construed liberally, 7(e) may expose the scammers to lawsuits with significant damage claims. These might come on behalf of the persons whose trademarks were used, and perhaps even to class action lawsuits by consumer protection groups for the damage caused to confused consumers.

Section 9

Finally, section 9 likely offers the clearest avenues for litigating against these scams. First, the CBC’s logo has been used on some of the weight-loss product ads.

Similarly, the Prime Minister’s likeness and government-issued cheques are featured in offers for “government grant kits.”

These practices together violate each of section 9’s subsections listed above. And second, the celebrities whose names, images and signatures have been used to promote manufactured consent scams likely have a claim under subsections 9 (k) and 9 (l).

Additionally, the related tort of wrongful appropriation of personality has been recognized in Canada.⁷ To succeed, a plaintiff must demonstrate that they were identifiable in the representations made⁷ and that their personality – and not just their activity (such as playing football)⁹ – was used in association with the product or service being promoted. It’s plausible that Oprah, Dr. Oz and – who knows? – potentially even the Prime Minister might make such claims.

[None of this purports to be legal advice; for that, speak to a lawyer.]

Footnotes

1. Online consumer complaint sites prove that people really believe they are buying products endorsed by Dr. Oz. “Resveratrol Complaints – stealing money from my bank account,” by “Salivini,” features this telling quotation:

“I mistakenly thought that a product connected to Dr. Oz’s name would have high professional standards, but I see that he is just like any other person trying to make a fast buck from some poor sap who actually believed that he was on the level.”

2. Trade-marks Act, R.S.C. 1985, c. T-13.

3 “An act of dishonesty within the meaning of section 7(e) of the Trade Marks Act which does not fall within the genus of acts prohibited by section 7(a) to (d), which does not amount to breach of an express or implied contract, or which does not constitute a tortious act, is not actionable.”
- Eldon Industries Inc. v. Reliable Toy Co., 1965 CarswellOnt 31, at 28. Accessed via Westlaw Canada at Canada.Westlaw.com.
Cited with approval by the Supreme Court of Canada in Trudel v. Clairol Inc., [1975] 2 S.C.R. 236. Also accessed via Westlaw Canada.

4. “Advertising and Marketing Law in Canada,” Brenda Pritchard and Susan Vogt, LexisNexis Butterworths, Markham, Ontario, Canada. Second Edition, 2006, at p 225.

5. “The law on this matter is designed to protect traders against that form of unfair competition which consists in acquiring for oneself, by means of false of misleading devices, the benefit of the reputation already achieved by rival traders. Normally the defendant seeks to acquire this benefit by passing off his goods as and for the goods of the plaintiff.”

- Salmond on the Law of Torts (17th Ed., 1977) at pp. 400-01, cited by Consumers Distributing Co. v. Seiko Time Canada Ltd., [1984] 1 S.C.R. 583 at para 23.

The case discusses at length that the confusion and damage to the goodwill this causes are essential to the tort. The following quotation at para 23 is emblematic.

“Consequently, the trial Judge concluded that, by marketing the bare watch without the other three elements, the appellant was creating confusion in the market place and damage to the goodwill, which the respondant had built on the sale of its complete or composite product through its extensive distribution and service network.”

6. Supra, note 1.

7. Krouse v. Chrysler Canada Ltd. 1973 CarswellOnt 884; Gould Estate v. Stoddart Publishing Co., 1998 CarswellOnt 1901; “The Law of Torts,” by Phillip Osborne, 2nd Ed., Irwin Law, Toronto: 2003, at chapter 4 recognizes the tort, too. This recognition in his book is cited with approval in Bass Clef Entertainments Ltd. v. HOB Concerts Canada Ltd. 2007 CarswellOnt 3101.

8. See Holdke v. Calgary Convention Centre Authority, 2000 CarswellAlta 523. The court rejected the plaintiff’s claims on the basis that the plaintiff was not identified in the ads aired and also on the basis of the [quite tenuous, imho] assertion by the judge that his appearance in the advertising for the Cowboy Festival did not serve to promote the Festival.

9. Krouse, supra note 7.

Gab Goldenberg posted this on behalf of DoneSEO.com, offering numerous SEO services