by admin | Sep 29, 2016 | Charity & Not-for-Profit Law, Intellectual Property Law
The July 11, 2016 decision of Starbucks (HK) Limited v Trinity Television Inc. (“Starbucks”) provides a helpful reminder to charities holding official marks to file regular trademark applications in order to mitigate the potential risk of official marks being challenged and invalidated.
Official marks are a unique and powerful form of intellectual property right. Although similar to trademarks in some respects, official marks (often referred to as “section 9 marks” as they are protected under section 9 of the Trademarks Act) are only granted to “public authorities” and owners of official marks are given extraordinary protection. Most importantly, an official mark can prevent any person from registering a trademark that is likely to be mistaken for the official mark, regardless of the associated goods or services. Prior to 2002, Canadian registered charities were generally able to obtain official marks. However, due to the broad powers that are provided to owners of these marks, there was considerable litigation in 2002 to determine the type of entity that qualifies as a “public authority”, thereby being entitled to obtain an official mark. As a result of this litigation, the ability for registered charities to obtain official marks was generally curtailed. The Federal Court held that to qualify as a public authority: (1) a significant degree of control must be exercised by the appropriate government over the activities of the body; and (2) the activities of the body must benefit the public, and as a result, status as a registered charity alone, is insufficient to constitute an organization as a public authority for the purpose of obtaining an official mark. Most recently in Starbucks, the Federal Court relied on the 2002 cases and again confirmed that status as a charity does not, in and of itself, mean that the organization is a public authority.
In this case, Starbucks (HK) Limited (“Starbucks (HK)”) filed an application for the trademark NOWTV & DESIGN on October 24, 2013. The Trademarks Office objected to the application and cited NOWTV, an official mark granted to Trinity Television Inc. (“Trinity”) in 2001 against the Starbucks (HK) application. In 2001 when the official mark was granted, Trinity was a registered charity, producing and distributing programs conveying Christian teachings. In order to get around this official mark objection, Starbucks (HK) brought an application in the Federal Court for judicial review challenging the 2001 decision to grant Trinity the NOWTV official mark based on the argument that Trinity was not a public authority. In coming to the Starbucks decision, the Federal Court relied on the 2002 cases and the public authority test and as a result, the Court invalidated the official mark, thereby allowing Starbucks (HK) to move forward with its application to register NOW TV & Design.
It is important to note that Starbucks was an uncontested decision. However, it appears unlikely that Trinity’s participation would have changed the decision given that the Federal Court did not hesitate in coming to the conclusion that Trinity is not a public authority and stating that “it would be patently unfair and completely contrary to the interest of justice if an entity that is not a public authority was permitted to enjoy the exceptional rights conferred on the holder of an official mark.”
Many charities are surprised to learn that an official mark obtained in the past is not in fact a registered trademark, and may not be enforceable if challenged. Based on the recent reminder by the Federal Court in Starbucks, charities would be well advised to take immediate steps to ensure brands are adequately protected by registering regular trademarks for all official marks.
For further information on the difference between trademarks and official marks see Charity Law Bulletin No. 18 and Charity Law Bulletin No. 43.
by admin | Sep 29, 2016 | Charity & Not-for-Profit Law
On September 1, 2016, the Canadian Radio-television and Telecommunications Commission (“CRTC”) released a statement indicating that from October 2014 to December 2014, Kellogg’s Canada Inc. was alleged to have sent or caused to be sent by its third party service provider(s), commercial electronic message to recipients from whom they had not received the necessary consent in contravention of section 6(1) of Canada’s anti-spam legislation (“CASL”). Paragraph 6(1)(a) of CASL states that it “is prohibited to send or cause to be sent to an electronic address a commercial electronic message … unless the person to who the message is sent has consented to receiving it, whether the consent is express or implied.”
As a means of resolving the matter, Kellogg’s Canada Inc. voluntarily entered into an undertaking with the Chief Compliance and Enforcement Officer of the CRTC whereby they have agreed to pay a sum of $60,000 in addition to agreeing to review and update their compliance program(s). Kellogg’s Canada Inc. has also undertook to ensure that their third party services provider(s) are also in compliance with the CRTC.
The statement released by CRTC provides an important reminder to all entities, including registered charities and not-for-profits, concerning the significance of ensuring they have the requisite consent prior to sending commercial electronic messages. Of note in this undertaking is that third-party service providers were also alleged to have sent commercial electronic messages on behalf of Kellogg’s Canada Inc. which were not in compliance with CASL. In this regard, charities and not-for-profits that make use of third-party service providers that send commercial electronic messages on their behalf are encouraged to determine that they are doing so in compliance with CASL, otherwise they risk the possibility of facing hefty penalties, as was the situation for Kellogg’s Canada Inc. in this case.
by admin | Sep 29, 2016 | Charity & Not-for-Profit Law, Employment Law
On August 30, 2016, the Ontario Court of Appeal released its decision in Donaldson Travel Inc. v. Murphy (“Donaldson”). This decision provides an important reminder to charities and not-for-profits of the care that must be taken in preparation of non-solicitation clauses and non-competition clauses in employment agreements, in order to increase the likelihood of enforceability and to ensure that these clauses are not made overly broad in restricting the actions of former employees. At issue in the appeal was whether the motion judge erred in dismissing the action, by way of summary judgment, on the basis that a restrictive covenant contained in a former employee’s employment contract was unenforceable. The motion judge held that the restrictive covenant, described in the employment contract as a non-solicitation clause, was in fact a non-competition clause.
A non-solicitation clause restricts a party to a contract (e.g. an employee or organization) from soliciting employees, customers, or other business opportunities from the another party to the contract (e.g. an employer), whereas a non-competition clause restricts an employee from entering into, accepting business from, or starting a similar business that is in direct competition with the former employer. Generally, courts have held that non-competition clauses are more difficult to enforce than non-solicitation clauses, as they can represent an undue restriction on trade and the ability of a former employee to earn a living.
The restrictive covenant at issue in Donaldson provided that,
“[The personal respondent] agrees that in the event of termination or resignation that she will not solicit “or accept business” from any corporate accounts or customers that are serviced by [the appellant], directly, or indirectly” (Emphasis added).
The Court in Donaldson found no error in the motion judge’s finding that the clause in question was in fact a non-competition clause. Both the motion judge and the ONCA’s decisions were based primarily on the words “or accept business,” which made the clause a non-competition clause rather than a non-solicitation clause. As such, the Court agreed that as the clause contained no temporal limitation and was overly broad, there was no reason to interfere with the motion judge’s conclusion that the restrictive covenant was unreasonable, and therefore unenforceable against the former employee.
Based on Donaldson, and cases like it, it is apparent that Courts will closely scrutinize restrictive covenants and will not enforce clauses that unduly hamper a former employee’s ability to earn a living, and exceed what is reasonable to protect the employer’s legitimate interests.
by Dev User | Sep 29, 2016 | Charity & Not-for-Profit Law, Counter Terrorism Law, Expertise
Public Safety Canada Report on Terrorist Threat in Canada
On August 25, 2016, Public Safety Canada released its 2016 Public Report on the Terrorist Threat to Canada (the “Report”). The Report covers the principle terrorist threat to Canada, recent domestic and international terrorist attacks, the National Terrorism Threat Level, the global terrorism threat, emerging issues and how Canada is responding to the threat. The National Terrorism Threat Level at the time that the Report was published was at “Medium”. The Report says that the primary terrorist threat to Canada remains “violent extremists”, both those inspired by a terrorist ideology and those directed by a terrorist group. Daesh (a.k.a. the Islamic State of Iraq and the Levant (“ISIL”); a.k.a. the Islamic State of Iraq and Syria (“ISIS”)) and al-Qaida are listed as specific terrorist groups that pose a threat to Canada.
The Report also raises the issue of extremist travellers; those who travel to conflict areas in order to join terrorist groups. The Report discusses ISIS as a global terrorism threat, detailing actions in specific areas of the world. Emerging issues include advances in technology, participation of women in terrorism-related activities, and the use of chemical weapons. The Report details that Canada is responding to threats through arrests and convictions, terrorist listings, the Global Coalition to Counter ISIS, military efforts, stemming the flow of foreign terrorist fighters, supporting stabilisation, exposing and countering ISIS ideology, counter-terrorism capacity building programs, gathering research to deepen understanding, and eliminating ISIS’s sources of funds. When moving to eliminate any terrorist organization’s sources of funds, there is always a focus on improperly diverted charitable funds, and therefore charities working in conflict zones or in communities where “extremism” has been identified need to be aware of the ongoing and increasing government oversight.
Significant Changes to FATF Recommendation 8 and Interpretive Notes
As reported in our June 2016 Charity & NFP Law Update, the Financial Action Task Force (“FATF”) revised FATF Recommendation 8 and its Interpretive Note (“INR8”), which are now part of the FATF’s main Recommendation Document. The FATF is an inter-governmental body responsible for setting and monitoring international standards to combat money laundering and the financing of terrorism. Recommendation 8 deals specifically with combating the abuse of non-profit organisations, on an international scale. The revised INR8 contains many changes that have resulted from the call for public consultation on the INR8 in November 2015 and the April 2016 consultation and dialogue meetings with non-profit organisations in Vienna.
For the balance of this Alert, please see Anti-Terrorism and Charity Law Alert No. 46.
by admin | Aug 25, 2016 | Charity & Not-for-Profit Law
Terrance S. Carter, Theresa L.M. Man and Jacqueline M. Demczur of Carters Professional Corporation
were again recognized as leaders in the area of Trusts and Estates Law in the Charity and Not-For-Profit
Law subspecialty by the 2017 edition of The Best Lawyers in Canada. Terrance S. Carter has been
recognized since 2006, Theresa L.M. Man has been recognized since 2011, and Jacqueline M. Demczur
has been recognized since 2014.
by Dev User | Aug 25, 2016 | Charity & Not-for-Profit Law, Faith-Based Organizations
FCA Holds That Prevention of Poverty is Not a Charitable Purpose
CRA News
Legislation Update
Liability for Costs for Taxpayers Involved in Donation Schemes Capped by Tax Court
Remember to Keep Consent Records-A CRTC Enforcement Advisory
Unfair Proxy Form for Members’ Meeting Revised by Ontario Court
Future Benefit to Charity Not Pertinent to Determination of Taxpayer Advantage
Workplace Sexual Harassment Laws Soon To Be In Force
Ongoing Conflicting Decisions in Trinity Western Cases
Anti-Terrorism and Money-Laundering Update
Best Lawyers in Canada 2017
July/August 2016 Charity & NFP Law Update
