COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

Vancouver Community College v. Vancouver Career College
  (Burnaby) Inc.,

2017 BCCA 41

Date: 20170126

Docket: CA43111

Between:

Vancouver
Community College

Appellant

(Plaintiff)

And

Vancouver Career
College (Burnaby) Inc., dba
Vancouver Career College, also dba CDI College,
also dba Vancouver College of Art and Design,
also dba Eminata Group

Respondent

(Defendant)

Before:

The Honourable Madam Justice Saunders

The Honourable Madam Justice D. Smith

The Honourable Mr. Justice Savage

On appeal from:  An
order of the Supreme Court of British Columbia, dated August 20, 2105 (
Vancouver
Community College v. Vancouver Career College (Burnaby) Inc.
, 2015 BCSC
1470, Vancouver Docket No. S122258).

Counsel for the Appellant:

C. Wilson
M. Brechtel

Counsel for the Respondent:

W.K. Branch, Q.C.
L. Brasil

Place and Date of Hearing:

Vancouver, British
  Columbia

June 2 and 3, 2016

Place and Date of Judgment:

Vancouver, British
  Columbia

January 26, 2017

Written Reasons by:

The Honourable Madam Justice Saunders

Concurred in by:

The Honourable Madam Justice D. Smith

The Honourable Mr. Justice Savage

Summary:

The appellant, Vancouver
Community College, is a public post-secondary education institution that alleges
passing off by the respondent Vancouver Career College, a private
post-secondary education institute, through use of the appellants official
mark VCC in its Internet advertising and domain name. It alleges, also, that
Vancouver Career College wrongfully used its official mark VCC from 2009 onwards,
contrary to the Trade-marks Act. The action was dismissed. The judge found none
of the three requirements of passing off  goodwill, public confusion and
damage  were established. As to unlawful use of the official marks contrary to
the Act, the judge found Vancouver Career Colleges use of VCC prior to the
marks becoming an official mark in 1999 allowed continued use. On appeal
Vancouver Community College contends that the trial judge erred in his analysis
of each of these issues.

Held: appeal allowed. As to
passing off, the claim is established and the appellant is entitled to an
injunction, with the issue of damages remitted to the trial court for
assessment. VCC was not required to have a secondary meaning, and a
significant body of evidence not referred to in the reasons demonstrates
goodwill sufficient to satisfy the requirement. In respect to confusion, the
moment for assessing confusion was upon the first encounter when search results
appear, not when the searcher arrives at the landing page. In respect to
damage, the findings of goodwill and confusion are sufficient to establish
damage.

As to the claim under the
Trade-marks Act, there are insufficient findings of fact to determine either
the application of the official marks provisions or the application of the
defence of prior use, considering the questions arising, on the record, of the
extent of any use, the lawfulness of such use, and the cessation of use. The
claim of breach of official marks contrary to the Trade-marks Act is remitted
to the trial court for fresh determination.

Reasons for Judgment of the Honourable
Madam Justice Saunders:

[1]

This appeal concerns passing off and the use of official marks registered
to the appellant Vancouver Community College, in the context of Internet
searches. The appellant contends it is entitled to declarations, a permanent
injunction and damages for actions taken by the respondent Vancouver Career
College (Burnaby) Inc. to direct search traffic to the respondents website.

[2]

It is agreed that the relevant date of assessment of the appellants
claim is 2009, the year the respondent adopted VCCollege as a new trade-mark,
adopted VCCollege.ca as a new domain name, and launched a new website using
that domain name. The activity of which the appellant complains connects to the
respondents use of the capitalized initials VCC in its Internet presence and
the respondents bidding on keywords including VCC and Vancouver Community
College. The appellant contends that those phrases have long been associated
with it as a public post-secondary institution, and that the respondents
activity constitutes passing off and infringement of its official marks, in
effect, Internet poaching.

[3]

Mr. Justice Affleck dismissed Vancouver Community Colleges claim.
In this appeal the appellant contends the judge erred in his analysis of both
the claim of passing off and the claim of breach of its official marks.

[4]

As to passing off, the appellant contends the judge erred in his
treatment of the intrinsic concepts of goodwill and confusion, and following on
those errors, erred in finding the appellant had not proven damage.

[5]

As to the appellants official marks, the appellant contends the judge
erred in finding that the respondents use of VCC in 1998, before the
appellant recorded VCC as an official mark, entitled the respondent to use that
acronym, and erred in failing to address the coincidence of its official marks with
the respondents use of them as keywords in Internet searching.

[6]

The appellant agrees that in order to succeed it must either satisfy
this court on each of the three issues engaged in a claim of passing off:
goodwill, confusion and damage; or satisfy this court that the judge committed
a fatal error on the issue of its official marks.

Circumstances

[7]

Vancouver Community College is a college designated under the
College
and Institute Act
, R.S.B.C. 1996, c. 52. Its flagship role in the
modern system of public post-secondary education in British Columbia was
triggered by the release in January 1963 of
Higher Education in British
Columbia and a Plan for the Future
authored by UBC President John B.
Macdonald (Vancouver: UBC Press, 1962), dubbed the
Macdonald Report
. It
is a matter of public record, perhaps rising to the level of notorious fact for
those who watched the post-war explosion of post-secondary education in this
geographically-challenged province, that Dr. Macdonald proposed a plan for
the development of higher education in British Columbia to address expected
population growth and increased participation in post-secondary education, projected
at that time to place unsustainable pressure on our Provinces then two higher
education institutions  the University of British Columbia and Victoria
College. President Macdonald proposed the creation of a college system to
support UBC and any future universities in the Province, which soon included
Simon Fraser University (first students received in September 1965). In
particular, Dr. Macdonald advocated for the creation of two-year programmed
regional colleges that would provide a bridge for students between secondary
and higher post-secondary education. While the
Macdonald Report
suggested
the establishment of regional colleges throughout the Province so as to allow students
to gain post-secondary education without travelling far from their home community,
the first regional college was proposed in Vancouver.

[8]

Largely in response to the
Macdonald Report
, the provincial
legislature immediately amended the
Public Schools Act
, R.S.B.C. 1960,
c-319. The amendments allowed the establishment of public regional colleges
under public school board control.

[9]

Under the
Public Schools Act
a cabinet committee chaired by the
Minister of Education, named the Council on Public Instruction, was responsible
for all education matters in the Province. The powers of the Council included
the power to establish colleges. By a Minute of the Council dated
January 17, 1964, Vancouver City College was created by bringing together
the Vancouver Vocational Institute (established in 1949), the Vancouver School
of Art (established in 1925) and King Edward Continuing Education Centre
(established in 1962).

[10]

In September 1965, Vancouver City College opened at the King Edward
Centre on Oak Street and West 12
th
Avenue, Vancouver, British
Columbia, becoming the first two-year community college in British Columbia and
one of the first in Canada. The name of the new college was officially changed in
1974 from Vancouver City College to Vancouver Community College by Order in
Council 1722-1974. It has operated under that name since.

[11]

Vancouver Community College now has two campuses in Vancouver and nine
satellite learning centers in public libraries in Vancouver and Burnaby. As a
college designated under the current
College and Institute Act
,
Vancouver Community College is a public institution governed in accordance with
the
Act
. It is limited in the programs and level of education it may
offer, and it is charged with obligations of reporting to the minister. The
minister, in turn, is charged with reporting annually to the Legislature on the
state of post-secondary education and training in British Columbia.

[12]

The appellant caused the Registrar of Trade-marks to publish notice of VCC
as an official mark on January 13, 1999, and Vancouver Community College
as an official mark on October 10, 2005, both under the
Trade-marks Act
,
R.S.C. 1985, c. T-13. In referring to the official marks, I use the word
recorded to describe the process by which a mark of a public authority
obtains the protection of the
Trade-marks Act
.

[13]

The respondent Vancouver Career College (Burnaby) Inc. is a private
business. In 1995, a private training school in Abbotsford was purchased, and
after a stop in Richmond, British Columbia, in 1997 the respondent moved to an
office building in downtown Vancouver, operating a private career college under
the name Vancouver Career College. In March 2008, the respondent acquired most
of the business of the much larger CDI College, another private college
operating more campuses than Vancouver Career College, with the intention of
increasing the Vancouver Career College business markedly. It has done so, and
now provides services under the name Vancouver Career College in numerous
locations after what it describes as explosive growth. As a private college,
the respondent was regulated in 2009 by the Private Career Training
Institutions Agency of B.C., a body created by the
Private Career Training
Institutions Act
, S.B.C. 2003, c. 79. It is now regulated by the
Private
Training Act
, S.B.C. 2015, c. 5, a statute that dissolved the Agency,
prohibits the offering of a career-related program of instruction unless the
institution holds the requisite certificate under the
Act
, and assigns
matters of certification and compliance to a registrar appointed under that
Act
.

[14]

Both parties, as is apparent, have as their initials VCC.

[15]

Although the passing off claim encompassed allegations of improper use
of both VCC and Vancouver Community College, it has resolved to a claim of
passing off with respect only to VCC. The claim of breach of the official
marks, on the other hand, encompasses not only complaint of the use of VCC
but also the respondents behaviour in respect to bidding on both VCC and Vancouver
Community College as keywords to direct searches towards its website.

[16]

The reasons for judgment touch only lightly on the educational programs
offered by the appellant as a publicly regulated institution and the respondent
as a private business. The judge referred to the appellant as a career
training college with a high reputation and success in placing students with
employers for practical training. He recited:

[64]      In January 2013,
Catherine Clement became the plaintiffs Executive Director of Marketing and
Communications. She describes the plaintiff as a public institution controlled
by the Ministry of Advanced Education with about 22,000 full and part-time
students. It attempts to keep its tuition low to enable a wide variety of
students to attend to get a skill.

[17]

The programs offered by the appellant and the respondent are, at least
in some measure, in the same fields of learning. Examples come from programs
pursued by witnesses referred to in the judges reasons: paralegal training,
culinary programs, medical laboratory work, licensed practical nurse training,
and hospitality management.

[18]

The appellants complaints focus on the steps taken by the respondent in
2009 in respect to keywords used in Internet searches, and the establishment of
its domain name and website. The judge discussed the issue in terms of Google
searches because Google is the dominant search engine in use today. Recognizing
that other search engines exist, he used the common expression keyword, not a
word now used by Google, to describe the advertising aspect of the case. The
judge largely adopted the parties description of the keyword advertising in
issue, set out in the notice to admit, with minor modifications.

[19]

The mechanism of Internet advertising, keyword searching, the bidding
process to tie a website to a keyword, and the manner in which searches are
made efficacious from the advertisers point of view is technical and not
easily summarized. What is important for this case is that a bid on a keyword
will make it more likely that the bidders advertisement with its domain name,
linking to its website, will appear on the first search page revealed to the
searcher. A searcher may then click (with touch screens, tap) the address in
order to travel to the bidders landing page which will contain more
information and directions for navigating the website.

[20]

The technical how of this advertising design relevant to this case, in
the admitted facts adopted by the judge, is appended to these reasons as Appendix
A. The judge also adopted the description of the import of keywords to Internet
searching written by Mr. Justice Gaul in
Private Career Training
Institutions Agency v. Vancouver Career College (Burnaby) Inc
., 2010 BCSC
765, a case in which the Agency unsuccessfully sought an injunction to restrain
the respondent from using certain of the keywords at issue in this appeal, and
he appended portions of
Interflora Inc. & Anor v. Marks and Spencer PLC
& Anor
, [2013] EWHC 1291 [Ch] as a schedule to his reasons. I attach the
excerpts from those cases as Appendices B and C, respectively.

[21]

It is agreed the respondent bid on many keywords including: generic
terms such as practical nursing; various acronyms, including VCC; and competitors
names including not only Vancouver Community College but also the names of
other educational institutions. The object was to attract traffic to the respondents
website VCCollege.ca. Attracting traffic is an objective generally well within
the proper activity of a competitive market place. The question here is whether
the respondents behaviour crossed from the permissible to the impermissible.

[22]

The judge did not direct himself to the evidence as to the relative
efficacy of the respondents bids on keywords bearing similarities to the
appellants name, as demonstrated by evidence of click frequency. It appears
to be undisputed that VCC was the keyword that generated the most clicks to
the respondents website, such that the respondents advertisements appeared
almost always in searches for VCC (over 97% of the time), and the respondents
text advertisements always displayed VCCollege.ca in the web address line of
the advertisement. In the main, the address VCCollege.ca was displayed with bold
capitalized letters, thus:
VCC
ollege.ca, and www.
VCC
ollege.ca.

[23]

To address the issue of goodwill the appellant adduced evidence of its
history, evidence of surveys taken in 2005, 2006, and 2012 that included
questions on name recognition, newspaper articles, evidence that a SkyTrain
station bears the acronym VCC, and printed material produced by it over the
years. It called evidence to the effect it established its website in 1998
using the letters vcc.bc.ca, subsequently changed to vcc.ca by November 2002.
The appellant also relied on the examination for discovery of the respondents
representative and
viva voce
evidence.

[24]

To address the issue of confusion, the appellant relied upon the search
results recorded for the keywords, and led evidence from several students to
the effect that they were confused, or misdirected to Vancouver Career College,
when seeking Vancouver Community College on the Internet, consequent on the
respondents use of VCC in its advertising and its appearance in
advertisements when searching for their intended college. The appellant also
adduced evidence of certain employees with student contact that students had reported
instances of misdirection and confusion between the college of their choice  Vancouver
Community College  and Vancouver Career College, because of the appearance of
the latters name on an Internet search for the appellant. The judge identified
that evidence as hearsay and accorded it no weight.

This Courts Role

[25]

This appeal largely concerns the principles of law applied in the judges
analysis of passing off and breach of official marks. On these issues the
question for us is whether the judge was correct. The appellant also challenges
certain conclusions of fact. As we are not a trial court, these challenges will
only succeed if, as stated in
Housen v. Nikolaisen
, 2002 SCC 33 and
re-stated in
Benhaim v. St. Germain
, 2016 SCC 48, there is an error of
fact that is both obvious (palpable) and material in the sense that a correct
appreciation of the factual matter may well have altered the result.

[26]

In this case I conclude the judge erred in law in respect to passing off
and official marks. I conclude, as well, the judge erred in fact within the
Housen
v. Nikolaisen
parameters when discussing passing off by failing to have
regard to a substantial body of evidence as to the identification in the public
mind of VCC with Vancouver Community College by holding in respect to the
issue of goodwill that VCC was largely abandoned between 1990 and 2013, by misstating
the year the appellant established its domain name, and by holding that the
requisite connection of VCC to the appellant necessary to establish it had
goodwill in the acronym was not established.

Discussion

I.   Passing off

[27]

The common law developed the tort of passing off. The
Trade-marks Act
also prohibits passing off. Section 7 of the
Act
provides:

No person shall

(b) direct public attention to his
goods, 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 goods, services or business and goods, services or business of
another;

[28]

It is settled law that s. 7(b) is a statutory enactment of the
common law tort of passing off:
MacDonald v. Vapor Canada Ltd.
, [1977] 2
S.C.R. 134.

[29]

The leading authority in Canada on passing off is
Ciba-Geigy Canada
Ltd. v. Apotex Inc.
, [1992] 3 S.C.R. 120. Justice Gonthier, for the Court,
discussed passing off in the context of the similar visual presentation of different
pharmaceutical products. He said:

33        The three necessary
components of passing-off action are thus: the existence of goodwill, deception
of the public due to a misrepresentation and actual or potential damage to the
plaintiff.

[30]

In
Greystone Capital Management Inc. v. Greystone Properties Ltd.
,
87 C.P.R. (3d) 43 (B.C.S.C.) Madam Justice Stromberg-Stein accurately
summarized the three components at para. 27:

1.         The existence of reputation or goodwill at the
relevant time. This includes consideration of whether the plaintiff was
recognized by the trade name and whether the trade name was distinctive within
the relevant field of activity.

2.         A misrepresentation leading the relevant public to
believe there is a business association or connection between the parties. This
includes consideration of whether the defendants use of the trade name is
likely to deceive the relevant public. Any misrepresentation need not be
deliberate and proof of intent is not necessary. Evidence of likelihood of
confusion, leading to the possibility of lost business opportunity is relevant.
However, the establishment of actual confusion is not required.

3.         Damage or potential
damage flowing to the plaintiff as a result of any misrepresentation due to
loss of control over its reputation is presumed.

[31]

The appellant contends that the judge erred in respect to each of these
components. The nuances of the first two components is at the heart of the
appeal in respect to passing off, as the error alleged in respect to damages is
said to follow from errors in consideration of goodwill and deception of the
public (confusion).

1. Goodwill

[32]

The first of the three components required for a claim of passing off is
goodwill.

[33]

The issue of goodwill proceeded on the basis that in 2009, when the respondent
assumed its Internet nomenclature, the appellant had goodwill in the words Vancouver
Community College. What was in issue was whether the appellant had goodwill in
the acronym VCC. The judge found the appellant did not have goodwill in VCC.

[34]

In reaching his conclusion on goodwill the judge reviewed briefly the
history of the appellant and evidence of historical advertising in which VCC
was displayed prominently. He found that the documents showed that the practice
of using VCC had continued until 1990, after which the use of the initials
VCC was largely abandoned until 2013. He found that in 2013 the initials
were again prominently displayed on the literature, and then said:

[50]      The plaintiffs annual
budget for online advertising at the time Ms. Chandler was hired was only
about $60,000. By contrast, the defendants budget at that time was about $2
million annually. This disparity helps to explain the plaintiffs realistic
view that it was not able to force its identity with the initials VCC.
There is no basis on the evidence to find that by 2009 this view had changed.

[35]

The judge found that proof of goodwill required proof that the product
had acquired a secondary meaning or distinctiveness. He referred to a passage
from
Ciba-Geigy
, referring to a statement in
Oxford Pendaflex Canada
Ltd. v. Korr Marketing Ltd.
, [1982] 1 S.C.R. 494, to the effect that a
plaintiff in a passing off action must establish that its product has acquired
a secondary meaning, and to
Molson Canada v. Oland Breweries Ltd.
,
[2001] 11 C.P.R. (4th) 199 (Ont. S.C.J.), to the effect that the plaintiff must
lead evidence of distinctiveness, a concept that requires the product to have
acquired a secondary meaning. He held:

[52]      I accept, and the defendant acknowledges, that the
plaintiff had established goodwill in the name Vancouver Community College in
February 2009, but the evidence does not persuade me that its services had
acquired distinctiveness, a secondary meaning, as defined by the authorities.

[180]    To impose liability on the defendant for the tort of
passing off the plaintiff must satisfy me that:

a)   it enjoys goodwill attached to
the educational services it provides;

b)   its services have acquired a
distinctiveness in the marketplace;

[193]    I find that the
plaintiff enjoys goodwill in the educational services it provides but they have
not achieved a secondary meaning in the marketplace.

[36]

The appellant advances three propositions in its submission the judge
erred on the issue of goodwill. It contends the judge erred: in principle in
requiring it to establish a secondary meaning in VCC as if the acronym was a generic
term used by many firms; in principle in requiring it to acquire a level of
distinctiveness approaching universally known; and in fact in finding it had largely
abandoned the VCC mark between 1990 and 2013 and there was no basis in
evidence to establish the requisite level of goodwill.

[37]

In the 1901 case
IRC v. Miller & Co. Margarine Limited
,
[1901] A.C. 217 (H.L.), Lord McNaughton provided this definition of goodwill at
pp. 223-224:

What is goodwill? It is a thing
very easy to describe, very difficult to define. It is the benefit and
advantage of the good name, reputation, and connection of a business. It is the
attractive force which brings in custom. It is the one thing which
distinguishes an old-established business from a new business at its first
start.

[38]

Justice Binnie described goodwill in
Veuve Clicquot Ponsardin v.
Boutique Cliquot Lt
é
e
,
2006 SCC 23 at para. 50, as [i]n ordinary commercial use, it connotes the
positive association that attracts customers towards the owners wares or
services rather than those of its competitor.

[39]

Where the get-up (mark in issue) is a name of a firm, the plaintiff
must establish that the name is recognized in the marketplace as distinctive of
the plaintiffs goods or services at the time the action arose:
Edward
Chapman Ladies Shop Limited v. Edward Chapman Limited
, 2007 BCCA 370 at para. 41.
Thus to found an action in passing off, the get-up must distinguish the
services of the plaintiff from the services of others. In considering that possibility,
there is no rule as to the proportion of the relevant market necessary to
establish the requisite reputation. A useful explanation is provided in Gill,
K.,
Fox on Canadian Law of Trade-marks and Unfair Competition
(Toronto:
Carswell, 2002, 4
th
edition) at 4.4(h)(ii) p. 4-72-3:

First, the plaintiff need not
evidence the fact that the trade indicia is distinctive to all, or even a
majority, of the relevant market. In fact the question is not really what
proportion of the relevant market must know that the indicia indicate a trade
source, which suggest some minimal percentage threshold for the action to be
successful, but rather how many people recognize it. It is generally
significant and sufficient if even a small percentage of the relevant market
recognizes the indicia such as a trademark. Whether the percentage is one or
five really has little impact on whether the plaintiff has a protectable
reputation, but is relevant to whether there is a likelihood of confusion.

[40]

On my review of the authorities, including
Oxford Pendaflex Canada
Ltd.
, a secondary meaning is an aid to considering the posited attachment
of the product or get-up to the plaintiff in cases of inherently unspecific
language or get-up, where the primary meaning by itself does not point to a
party. That was not the case here. The question in this case was always, in
respect to the acronym VCC, whether it carried sufficient distinctiveness in
its primary sense to be recognized as designating the appellant and the
educational services it provides. As in
Office Cleaning Services Ltd. v.
Westminster Window & General Cleaners, Ltd.
(1946), 63 R.P.C. 39
(H.L.), it was not a condition to success in the action that the [acronym] in
dispute had acquired a secondary meaning. To put it another way, the appellant
simply was required to establish that a sufficient portion of the marketplace in
2009 knew that VCC indicates Vancouver Community College.

[41]

I conclude it was an error in law to require Vancouver Community College
to establish a secondary meaning in VCC.

[42]

Likewise, I consider the judge erred in principle in his view of the
degree of public association between the acronym and the appellant required to
establish goodwill. The judges reasons are somewhat opaque, but it appears he
considered something akin to universally known, or known by a preponderance
of people. I say this because he put reliance upon a newsletter published by the
appellant in 1989 that stated outside the College, what the letters VCC
stand for is not universally known, especially to newcomers, and followed his
replication of that evidence with the conclusion that there was no basis in
evidence to find that Vancouver Community College was able to force its
identity with the initials VCC. This suggests the judge considered that a significant
degree of plurality, approaching ubiquity, was required to establish goodwill.
As
Fox on Canadian Law of Trade-marks and Unfair Competition
noted in
the passage above, this is not correct.

[43]

Apart from these two errors, I consider the judge erred in fact on the
issue of goodwill in ways that are obvious and material to the outcome. Six
features of the case persuade me of this error. First, I consider the judge erred
in making a positive finding that the appellant had largely abandoned VCC
between 1990 and 2013. In so saying the judge gave emphasis to the newsletter mentioned
above, in which the then President explained a change of logo from one bearing VCC
to a rather generic symbol intended to connote mountains. This letter
explaining the change of logo does not mean, however, that VCC was not in
public use by the appellant; the trial record contains a myriad of examples of
use by Vancouver Community College of VCC in the years 1990 to 2013. Not the
least is the appellants selection of its first domain name. Contrary to the
judges finding that the initials VCC became part of the appellants domain
name when Ms. Chandler took over the task of reclaiming the plaintiffs
brand, a hiring he says was in 2013, vcc was in the domain name used in 1998:
vcc.bc.ca, changed by November 2002 to vcc.ca.

[44]

Second, in my understanding of the law of passing off, there is nothing that
requires the plaintiff to establish its continuous and unvarying use of the
indicia. The question is whether the indicia is recognized by members of the
relevant marketplace as designating the plaintiff. This enquiry into goodwill
does not need to engage an enquiry into a plaintiffs advertising campaign, or advertising
budget, and it certainly is
not
an enquiry into the respondents
campaign. Rather, it is an enquiry into perceptions in the relevant
marketplace. While advertising may suggest a level of public awareness, an
absence of advertising using the indicia does not establish a lack of goodwill.
It is for that reason I consider that the judge considered the wrong question in
saying VCC was largely abandoned, in an advertising sense, by the appellant. I
will add, here, that it is perhaps this error, combined with overlooking the
historical seating of public colleges in the legislatively designed system of
post-secondary education, that caused the judge to overlook the other aspects
of the evidence I discuss below. That evidence, in my view, powerfully supports
a conclusion that goodwill is established.

[45]

Third, apart from the multitude of examples in the evidence of the appellants
use of VCC from 1990 to 2013 in brochures, calendars and other documents used
in attracting students and delivering education, the record contains numerous
examples of others using VCC: newspaper reports; media reports; and the name
given to the SkyTrain station near the appellants campus and displayed
prominently for riders, VCC/Grant Station. All of these examples indicate a
level of easy public association of the initials to the appellant.

[46]

Fourth, the appellant led evidence of surveys it had conducted in 2005,
2006 and 2012, that included questions of name awareness. The first two of
these were conducted before the relevant date, 2009, and are evidence that a
percentage of the survey group associated VCC to the appellant. The respondent
is critical of the methods used in the surveys, the reliability of the results,
and the assumption one can project awareness from the 2005 and 2006 surveys to
2009, when the respondent developed its Internet presence under VCCollege.ca. It
is apparent that the 2005 and 2006 surveys were not conducted in expectation of
litigation. While there is room to challenge the methods used in the surveys
and their implications, the 2005 and 2006 surveys are, in the least, some evidence
of goodwill requiring some acknowledgment by the judge, and to the extent they
demonstrate a level of identification of VCC to the appellant in 2005 and
2006, on the premise that public awareness of name brands and local knowledge
does not have tidal action, they are evidence of goodwill at the time material
to this litigation, 2009.

[47]

Fifth, we must recognize that the appellant is a public college long established
in British Columbia. Its public character establishes a level of public awareness
of the role it plays in the community. It is a short step to identifying the
acronym VCC with it, there being no evidence of other public institutions
with those initials, and the practice having been established in the province
of identifying seats of higher learning by initials: UBC; SFU; BCIT. The public
nature is further acknowledged by SkyTrains use of VCC to name a station.

[48]

Sixth, the appellant asserted use of VCC publicly through recording VCC
as an official mark in 1999.

[49]

I conclude the judge erred in fact in misstating the scope of the
evidence, and in failing to relate a significant body of evidence to the issue
of goodwill. This is a factual error that is capable of correction based on the
record. I have no hesitation in finding that as of 2009, the appellant Vancouver
Community College had goodwill in the acronym VCC, which was recognized in
the relevant market-place as a public provider of post-secondary education.

2. Confusion

[50]

The second component of passing off is deception through misrepresentation
to the relevant public, in the sense that confusion in the minds of the public
is a likely consequence of the impugned actions:
Ciba-Geigy
at p. 133.

[51]

The judge found that the appellant had not established this component
and based his conclusion on the time, or stage of transaction, that the
potential for confusion was to be assessed. He observed the critical moment was
when the first impression was formed, which, he said, was
after
the
searcher clicks on a search result to arrive at the landing page. Referring to
the reasons for Mr. Justice Frankel in
Insurance Corporation of British
Columbia v. Stainton Ventures Ltd.
, 2014 BCCA 296, he held:

[183]    The authorities on passing off provide that it is
the first impression of the searcher at which the potential for confusion
arises which may lead to liability. In my opinion, the first impression
cannot arise on a Google AdWords search at an earlier time than when the
searcher reaches a website. When a searcher reaches the website of the
defendant in the present proceeding it is clearly identified as the defendants
website. As was said by Frankel J.A. in
Insurance Corporation of British
Columbia v. Stainton Ventures Ltd.
the relevant consumer will understand
that it is necessary to view a website to determine whose site it is.
In my
opinion that is the point during a search when the relevant first impression is
made
.

[Emphasis added.]

[52]

The judge also commented on the policy issue of constraining competition,
invoking a standard of unreasonableness:

[181]    ... In my view, this
lawsuit, and the previous attempts to enlist this Court and PCTIA in the
plaintiffs struggle to constrain the defendant's ability to compete with it
has been motivated by a concern that its own inability to invest the necessary
funds and expertise to create a sophisticated online advertising program leaves
it at a competitive disadvantage in the marketplace in comparison with the
defendant. Passing off  is not intended to be used by a plaintiff to handicap
a defendant that has developed a more effective means of marketing its goods
and services than has a plaintiff.

And:

[186]    ... It would be
imprudent for this Court to attempt to preclude or even limit that practice in
this jurisdiction unless it can be shown to be an unreasonable constraint on
competition. That has not been shown. To award damages to the plaintiff or to
enjoin the defendant from certain conduct because the defendant bids on the
plaintiffs name for the purposes of keyword advertising would be to
disadvantage the defendant in a way that other online advertisers are not. It
is not the defendant, or another advertiser in its position, which controls the
bidding process, apart from making a decision to bid. A bid on a keyword may
send a searcher to the bidder's landing page, but the process of the search is
controlled by the searcher and the search engine, not by the advertiser. Google
and other providers of search engines generate revenue by offering an efficient
bidding process.

[53]

The judge then observed that a prospective student would have had the opportunity
to avoid the effects of any confusion because that student wishing to enroll
must attend an interview, tour the campus and complete forms for enrollment
that have the respondents name printed on them.

[54]

I will observe that whether the moment at which the confusion component
is to be assessed is when the search results appear, as the appellant contends,
or when the searcher arrives at the landing page, as found by the judge and
contended by the respondent, any evidence of a students opportunity to be set
straight in respect to the college he or she is seeking to enrol in, is not
relevant because those opportunities occur after the later of these two events.
Nor, in my respectful view, do the judges broad statements on constraints on
competition assist in resolving the claim. Both the tort of passing off and the
provisions of the
Trade-marks Act
are directed to behaviour that is
intended by the actor to achieve a competitive edge. The issue is whether the
bounds of appropriate commercial behaviour have been overstepped to the
detriment of a party who has an interest the law protects. While robust
competition is encouraged, this does not mean anything goes.

[55]

The issue before us in relation to the component of confusion is whether
the judge erred in principle as to the moment for assessing confusion. In my
view, while the judge correctly referred to the first impression test, he erred
in delaying its application to the searchers arrival at the landing page, a
moment well past the moment of first impression; the conclusion that the first
impression does not occur until the searcher has reached a website by clicking
on a search result, cannot be sustained on the authorities before us.

[56]

The judge started his discussion of the deceit or misrepresentation
required for passing off with reference to
Ciba-Geigy
and s. 6 of
the
Trade-marks Act
. Section 6 provides:

6 (1)
For the purposes of this Act, a trade-mark
or
trade-name
is confusing with another trade-mark
or trade-name
if the
use of the first mentioned trade-mark
or trade-name
would cause
confusion with the last mentioned trade-mark
or trade-name in the manner
and circumstances described in this section.

(2)
The use of a trade-mark causes confusion with another
trade-mark if the use of both trade-marks in the same area would be likely to
lead to the inference that
the goods or
services associated with those
trade-marks are
manufactured, sold, leased, hired
or performed by the
same person
, whether or not the goods or services are of the same general
class.

(5) In determining whether trade-marks or trade-names are
confusing, the court or the Registrar, as the case may be, shall have regard to
all the surrounding circumstances including

(a) the inherent distinctiveness of
the trade-marks or trade-names and the extent to which they have become known;

(b) the length of time the
trade-marks or trade-names have been in use;

(c) the nature of the goods,
services or business;

(d) the nature of the trade; and

(e) the
degree of resemblance between the trade-marks or trade-names in appearance or
sound or in the ideas suggested by them.

[Emphasis added.]

[57]

Referring to the jurisprudence the judge recognized, correctly, that
whether there is likely to be confusion must be answered in the context of the
circumstances of the case. He referred to these observations by Justice Binnie
in
Mattel Inc. v. 3894207 Canada Inc.
, 2006 SCC 22:

56
What,
then, is the perspective from which the likelihood of a mistaken inference is
to be measured?
It is not that of the careful and diligent purchaser. Nor,
on the other hand, is it the moron in a hurry so beloved by elements of the
passing-off bar:
Morning Star Co-Operative Society Ltd. v. Express
Newspapers Ltd.
, [1979] F.S.R. 113 (Ch. D.), at p. 117.
It is
rather a mythical consumer who stands somewhere in between, dubbed
in a
1927 Ontario decision of Meredith C.J.
as the ordinary hurried purchasers
:
Klotz v. Corson
(1927), 33 O.W.N. 12 (Sup. Ct.), at p. 13. See also
Barsalou v. Darling
(1882), 9 S.C.R. 677, at p. 693.

[58]

The judge referred as well to the judgment of Justice Rothstein in
Masterpiece
Inc. v. Alavida Lifestyles Inc.
, 2011 SCC 27, including:

[70]      The focus of this question is the attitude of a
consumer in the marketplace. Properly framed, consideration of the nature of
the wares, services or business should take into account that there may be a
lesser likelihood of trade-mark confusion where consumers are in the market for
expensive or important wares or services. The reduced likelihood of confusion
is still premised on the first impression of consumers
when they encounter
the marks in question. Where they are shopping for expensive wares or services,
a consumer, while still having an imperfect recollection of a prior trade-mark,
is likely to be somewhat more alert and aware of the trade-mark associated with
the wares or services they are examining and its similarity or difference with
that of the prior trade-mark. A trade-mark, as Binnie J. observed in
Mattel
,
is a shortcut for consumers. That observation applies whether they are shopping
for more or less expensive wares or services.

[Emphasis in original.]

[59]

That passage, as the judge noted, was not written in the context of
passing off, but it is an apt description of the mind a court should ascribe to
the hypothetical relevant consumer.

[60]

To this discussion I would add reference to
Veuve Clicquot
at para. 20:

20
The test to be applied is a matter
of first impression in the mind of a casual consumer somewhat in a hurry who
sees the name

Cliquot
on the respondents storefront or invoice,
at
a time when he or she has no more than an imperfect recollection
of the
VEUVE CLICQUOT trade-marks,
and does not pause to give the matter any
detailed consideration or scrutiny, nor to examine closely the similarities and
differences between the marks
. As stated by Pigeon J. in
Benson &
Hedges (Canada) Ltd. v. St. Regis Tobacco Corp.
, [1969] S.C.R. 192, at
p. 202:

It is no doubt true that if one examines both
marks carefully, he will readily distinguish them. However, this is not the
basis on which one should decide whether there is any likelihood of confusion.

. . . the marks will not normally be seen side
by side and [the Court must] guard against the danger that a person seeing the
new mark may think that it is the same as one he has seen before, or even that
it is a new or associated mark of the proprietor of the former mark.

(Citing in part
Halsburys Laws of England
,
3rd ed., vol. 38, para. 989, at p. 590.)

[
Emphasis
added.]

[61]

The judge relied heavily upon
ICBC
in
reaching his conclusion on confusion. However, in my respectful view,
ICBC
is not determinative of the issue as was said by the judge.
ICBC
concerned
the domain name ICBCadvice. In itself that name distinguishes between the
defendant and ICBC. The trial judge, Mr. Justice Grauer, explained in his
reasons for judgment indexed at 2012 BCSC 608:

[45]      In this way, this case is also distinguishable from
Masterpiece Inc. v. Alavida Lifestyles Inc.
, 2011 SCC 27, [2011] 2
S.C.R. 387, where the Supreme Court of Canada considered trade-mark priorities
between two corporations involved in the retirement residence industry. One
used the mark Masterpiece Living, while the other used the mark Masterpiece
the Art of Living. The context of the industry in which both parties were
active is important. It would be akin to the defendant in this case using the
name ICBCinsurance.com as opposed to ICBCadvice.com.

[48]      In the context of British Columbias universal
automobile insurance scheme,
I am satisfied that the average customer
of
normal intelligence would not be led astray, and
would have no difficulty
recognizing that ICBCadvice.com would probably relate to how to deal with ICBC
in an arms length or even adversarial sense, rather than in a manner endorsed
by ICBC
.

[Emphasis added.]

[62]

On appeal, Mr. Justice Frankel for the court
agreed:

[37]      I am unable to accept this argument
as it fails to give the relevant consumer, i.e., an Internet user, credit for
even the most basic understanding of the function of a domain name.
Even
though there is some resemblance between ICBCadvice.com and ICBCs family of
marks, the average Internet user with an imperfect recollection of ICBCs marks
would not likely be mistaken by the domain name
. They understand, for
example, that a domain name which, in part, contains the name of a business or
its acronym will not necessarily be affiliated with or endorsed by that
business and may, instead, be the subject matter of the website or entirely
unrelated to that business.

[Emphasis added.]

[63]

ICBC
, in both courts,
is consistent with
BCAA v. Office and Professional Employees International
Union
, 2001 BCSC 156, a case concerning the domain name bcaaonstrIke.com,
held not to confuse with any website of BCAA.

[64]

The point of both
ICBC
and
BCAA
is
that the impugned domain names contained information disclaiming attachment to
the plaintiff and were found by the court not to be confusing for that reason.

[65]

In contrast
Law Society of British Columbia v.
Canada Domain Name Exchange Corporation
, 2005 BCCA 535 addressed a contest
between the domain names of the Law Society of British Columbia lawsociety.bc.ca
and lsbc.org, and the names lawsocietyofbc.ca and lsbc.ca. The Law
Society learned that lawsocietyofbc.ca was linking to a website containing
adult content, and possibly to a minor political party. It successfully applied
for relief (2004 BCSC 1102), a judgment upheld on appeal for substantially the
reasons of the trial judge, Mr. Justice Sigurdson. He said:

[29]      Evidence of actual confusion could bolster the fact
that there is a misrepresentation but it is not needed here where the
misrepresentation is so obvious and that it exists is just a matter of common
sense.
The use of a domain name that is so similar to the name that the
plaintiff is known by and has substantial goodwill in (without additional
words) would lead a person surfing the web and going to
<lawsocietyofbc.ca>
to believe, I conclude, that they were going to
the plaintiffs web site or one that was affiliated with the plaintiff
.

[30]      As I noted in
BCAA
,
supra
, at para. 73:

If someone uses a persons trade-mark as the domain name,
such as Marks & Spencers.com or McDonalds.com, without any other words or
letters, that is likely to confuse members of the public who type in the domain
name looking for the website of Marks & Spencers or McDonalds and then come
to something else. They will think the website has some connection with the
site they were seeking.

[31]      Here the use of such a similar name and a name by
which the plaintiff is specifically and commonly known would misrepresent that
the domain name was associated with the plaintiff.

[
Emphasis
added.]

[66]

I consider
Law Society of British Columbia
precludes
the idea one has to arrive at the landing page to assess confusion: the court
did not require the searcher to arrive at the adult site as a condition of establishing
the confusion necessary for passing off.

[67]

What then of the statement in
ICBC
relied on
by the judge that the relevant consumer would understand that it is necessary
to review a website to determine whose site it is, that is, the moment for
assessing confusion is when the searcher arrives at the landing page? I read
that statement as
obiter

dicta
because the case is fully decided
on the conclusion the impugned domain name disclaims association with the
plaintiff. Further, the statement was made without reference to
Law Society
of British Columbia
, which precludes that view, and does not place the
issue in the circumstances of the wide range of websites a searcher can be
taken to with a simple click. As Mr. Justice Sigurdson observed in
Law
Society of British Columbia
:

[41]      Apart from that plan
which the evidence shows was in operation, it appears to me self-evident that
use of lawsocietyofbc as the domain name effectively or potentially causes
the plaintiff to lose control over its goodwill. This is particularly so when a
professional body with the stature of the plaintiff, the governing body for
lawyers, is suggested to be connected to an adult site or a site of a political
party.

[68]

In
Masterpiece Inc.
Justice Rothstein
observed:

[71]      It is not relevant that, as the trial judge found,
consumers are unlikely to make choices based on first impressions or that
they will generally take considerable time to inform themselves about the
source of expensive goods and services (para. 43). Both of these
subsequent research or consequent purchase  occur
after
the consumer
encounters a mark in the marketplace.

[73]      Indeed,
before
source confusion is remedied,
it may lead a consumer to seek out, consider or purchase the wares or services
from a source they previously had no awareness of or interest in. Such
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 trade-mark law seeks to remedy
. Consumers of expensive wares or
services and owners of the associated trade-marks are entitled to trade-mark
guidance and protection as much as those acquiring and selling inexpensive
wares or services.

[74]
For these reasons, it was an error to discount
the likelihood of confusion by considering what actions the consumer might take
after encountering a mark in the marketplace
. The trial judge should have
instead limited his consideration to how a consumer, upon encountering the
Alavida mark in the marketplace, with an imperfect recollection of the
Masterpiece Inc. mark, would have reacted.  in circumstances where a strong
resemblance suggests a likelihood of confusion, and the other s. 6(5)
factors do not point strongly against a likelihood of confusion, then the cost
is unlikely to lead to a different conclusion.

[Emphasis added.]

[69]

The judge discussed
Red Label Vacations Inc. v.
411 Travel Buys Limited
, 2015 FC 18, affd 2015 FCA 290, finding it
supported his conclusion.
Red Label
concerned meta tags, those being text
that is not displayed to the consumer. In her concurring judgment Madam Justice
Dawson explained that the case was one of use of a trademark in a meta tag, and
not one of initial interest confusion. I do not consider it helpful in the
circumstances before us. Further, the majority reasons do not refer to
Masterpiece
,
and to the extent they are not consistent with the views expressed in
Masterpiece
on the temporal issue, I am bound by
Masterpiece
.

[70]

As I consider the judge erred in assessing
confusion at the time of arrival at the website, the question is whether this
case, viewed at the time the search results appear, is akin to
ICBC
and
BCAA
or akin to the
Law Society of British Columbia
. It is apparent that
there is nothing about the domain name VCCollege.ca that distinguishes the
owner of that name from Vancouver Community College. The letters ollege added
to the acronym VCC are as equally reminiscent of the appellant as the
respondent, and there are no words or letters that disclaim affiliation with
the appellant.

[71]

I conclude the second component of passing off,
confusion, is fully established by proof that the respondents domain name is equally
descriptive of the appellant and contains the acronym long associated to it. In
my view, it was an error for the judge to discount the likelihood of confusion
before the searcher arrives at the landing page of the website. Adopting the
language of
Masterpiece
at para. 24, the judge should have limited
his consideration to how a consumer, upon encountering the [VCC] would have
reacted, and on that question, the necessary likelihood of confusion is
established.

[72]

The appellant asks us to go farther and find that
the respondents practice of bidding on keywords, including VCC and Vancouver
Community College is sufficient to satisfy the second component of passing off.
It invokes
Orkin Exterminating Co. Inc. v. Pestco Co. of Canada Ltd.
, 5
C.P.R. (3d) 433 (Ont. C.A.) in support of that proposition.
Orkin
,
however,

is unlike this case in that it was a case of a clear
misrepresentation, wherein Pestco put its telephone number in an advertisement containing
Orkins name. More significantly, the critical factor in the confusion
component is the message communicated by the defendant. Merely bidding on
words, by itself, is not delivery of a message. What is key is how the
defendant has presented itself, and in this the fact of bidding on a keyword is
not sufficient to amount to a component of passing off, in my view.

3. Damage

[73]

Damage is the third component of passing off. The
judge held damage was not established. He said:

[193]
Those findings are sufficient to dispose of the
action, but I will add that, in my opinion, it is unlikely that the plaintiff
has suffered damage from the conduct of the defendant of which it complains.

[74]

Passing off requires only that some damage is established,
in which case injunctive relief may be ordered and the trial court will be put
to the task of assessing damages.

[75]

In the trial decision of
Edward Chapman Ladies
Shop Limited
, 2006 BCSC 14, Mr. Justice Shaw admirably described the
jurisprudence on damage, including:

[53]      The defendant argues that no financial loss has
been proven by the plaintiff. In terms of demonstrable loss of business to
date, I agree with the defendant. As I read the case law, however, proof of
actual financial loss is not required; rather,
damage may be inferred from
the unauthorized use of anothers goodwill
.
Damage may also be inferred
from the loss of control over ones goodwill
.

[54]      In
Sir Robert McAlpine Ltd. v. Alfred McAlpine
Plc.
, 2004 EWHC 630 at para. 20 (Ch.), Mann J. said:

When it comes to considering
damage,
the law is not so naïve as to confine the damage to directly
provable losses of sales, or direct sale for sale substitution
. The law
recognises that damage from wrongful association can be wider than that.

[55]      In
Irvine v. Talksport Ltd.
, [2002] 1 W.L.R.
2355, at 2366 (Ch.), Laddie J. said:

But goodwill will be protected
even if there is no immediate damage
....[A]lthough the defendant may not
damage the goodwill as such, what he does is damage the value of the goodwill
to the claimant because, instead of benefiting from exclusive rights to his
property, the latter now finds that someone else is squatting on it.

[56]      In
Visa International Service Association v.
Visa Motel Corporation
(1984), 1 C.P.R. (3d) 109 at 119 (B.C.S.C.),
Proudfoot J. (as she then was) said:

[T]he
lack of power to control
the use of the marks to which goodwill attached by unauthorized users was
recognized as an apprehended form of damage to goodwill
.

[Emphasis added.]

[76]

In this case the interference with the appellants
goodwill is sufficient to establish damage.

4. Conclusion on Passing Off

[77]

As I consider a proper application of the law
and full consideration of the circumstances establish all three required
components, I conclude the appeal must be allowed on the passing off claim, and
judgment entered in favour of the appellant. I will deal with the details of
the appropriate order at the conclusion of these reasons.

II.  Use of
the
Official Marks

[78]

The appellant recorded VCC and Vancouver
Community College as official marks in 1999 and 2005 respectively. Independent
of its claim of passing off, it says the respondent is in breach of ss. 9
and 11 of the
Act
by its business practices. The judge did not agree,
and dismissed the claim of violation of the official marks on the basis the
respondent had used VCC before registration of the official marks and so, as
a prior user, was protected in its use of the mark:

[29]      The evidence satisfies
me that the defendant used the initials VCC to identify itself before the
plaintiff had registered them as its official mark. The provisions of sections
9 and 11 of the
Trade-marks Act
do not operate retrospectively so as to
prohibit a person from continuing to use a mark which is subsequently declared
to be an official mark under the
Trade-marks Act
.

[79]

In having settled on the prior use issue, the judge did not discuss the
several issues that require resolution before one can say with confidence that
the impugned behaviour violates the protections afforded official marks by the
Trade-marks
Act
, and did not make certain factual findings that such an enquiry
entails. Further, the reasons are silent on the scale of and nature of prior
use that the judge found had occurred, did not relate that use to what I have
found was tortious behaviour in passing off in relation to VCC, did not
consider whether any prior use (assuming it is not held as disqualifying
because it was tortious) had so expanded after the recording of the official
marks as to avoid the defence of prior use, and did not consider whether prior
use had already been abandoned at the time the official marks were recorded.

[80]

In my view, this court is not in a position to perform an appellate
review of the order dismissing the claim of breach of official marks; for us to
do so would require us to act as a trial court, and to make conclusions of some
significance to the development of the law in relation to the Internet on an
incomplete record. I consider the order dismissing the claim of breach of
official marks must be set aside and the claim remitted to the trial court for
determination, as I shall now expand upon.

[81]

The official marks provisions of the
Trade-marks Act
provide
broad and enduring protection to the marks recorded. In
ICBC
Mr. Justice Frankel described the system of official marks:

[21]      To my knowledge, Canada is the only jurisdiction in
the world with legislation that grants such a broad power to public authorities
and others to create official marks. While bearing some similarity to
trade-marks, official marks are not governed by the same rules as trade-marks. Indeed,
they are not registered as are trade-marks. However, they are recorded by the
Registrar of Trade-marks and are included in the Trademarks Database found on
the website of the Canadian Intellectual Property Office, an agency of Industry
Canada.

[22]      In her text,
Canadian Trademark Law
(Markham:  LexisNexis Canada, 2010), Professor Teresa Scassa says the
following about the nature of official marks and the process by which they are
created:

At 81:

Any entity which qualifies as a public
authority may request that the Registrar give public notice of the adoption
and use of any badge, crest, emblem or mark adopted by that public authority. Public
notice is not the same as registration; there is no examination process, and
indeed, there is no requirement that official marks conform to any particular
standards. There is thus no requirement of distinctiveness, nor is there any
requirement that the official mark not be confusing with registered trademarks
or marks already used or made known in Canada. They do not need to be renewed,
and can only be challenged through an application for judicial review of the
decision of the Registrar of Trademarks to give public notice of the mark as an
official mark. [Footnotes omitted.]

At 159:

There is no public notice or opposition period for official
marks. There is also no examination requirement for the mark  it may be
identical to or confusing with existing registered trademarks. It is not
necessary for wares or services to be identified with respect to official
marks, although some public notices do provide this information. Even if wares
or services are specified, these do not limit the scope of the mark. An
official mark can be descriptive and is not required to be distinctive. It may
also be confusingly similar to an already existing mark. Once public notice is
given, no one may adopt the mark, or a mark so nearly resembling as to be
likely to be mistaken for the official mark. Official marks do not expire.
They are not registered trademarks, and are not subject to the same proceedings
for examination, opposition, challenge or expungement. As noted by one court, [o]nce
public notice has been given with respect to the adoption and use of an
official mark, the mark is hardy and virtually unexpungeable. Any challenge
to the validity of the mark must be made through the vehicle of an application
for judicial review of the Registrars decision to give public notice of the
adoption and use of the mark. [Footnotes omitted.]

[82]

The
Trade-marks Act
legislates in respect to both trade-marks and
the marks available to public institutions known as official marks.
Trade-mark is defined by the
Act
but official mark is not. Further,
the
Act
addresses the terms adopted and used in reference to trade-marks,
but not official marks.

[83]

The force of an official mark is established by ss. 9 and 11 of the
Act.
Section 9 identifies a list of marks protected from outside
exploitation including emblems, coats of arms and other symbols associated with
the Royal Family, Canada, provinces, international organizations, and other
countries. The list includes marks that are recorded by public authorities, in
these terms:

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,

(n)
any badge, crest, emblem or mark

(i) adopted or used
by any of Her Majestys Forces as defined in the
National Defence Act
(leng/acts/N-5),

(ii) adopted and used
by any public authority, in Canada as an official mark for goods or services,

(iii)
adopted and used by any public authority, in Canada as an
official mark for goods 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;

[84]

Section 11 prohibits use of marks adopted under
s. 9 in these terms:

11

No person shall
use in connection with a business, as a trade-mark or otherwise
, any mark
adopted contrary to section 9 or 10 of this Act ...

[Emphasis added.]

[85]

The two official marks VCC and Vancouver
Community College are registered under s. 9(1)(n)(iii).

[86]

A claim of breach of the official mark
provisions in respect to the two official marks in issue requires consideration
of, first, the provisions to determine whether the impugned behaviour fits
within the prohibited activity described in ss. 9 and 11, and, second, the
application of any positive defence asserted.

[87]

Here the alleged breach of s. 11 was said
to have occurred in respect to both marks, VCC and Vancouver Community
College. The allegation in respect to VCC addressed both the use of that
acronym by the respondent in its Internet presence and bidding on VCC as a keyword.
The allegation in respect to Vancouver Community College addressed only the
bidding on it as a keyword.

[88]

In order for s. 11 to prohibit the impugned
activity, the mark must have been adopted by the defendant for purposes of
s. 9. I question whether the answer to that question is the same for both VCC
and Vancouver Community College, it being clear the latter does not appear in
the respondents domain name and was not used by the respondent as a
description of itself. The issue of adoption must be addressed before any
liability can attach to the respondent but I consider we do not have the
findings of fact that would underpin that determination.

[89]

Second, the respondent must have used the
official mark in connection with its business, as a trademark or otherwise.
Again, it may be that the answers concerning the use of VCC and Vancouver
Community College differ in respect to use as a trademark and use
otherwise. Again, in my view, we are without the factual tools to decide
these questions.

[90]

After determining the application of s. 11,
comes the issue of prior use. Here the nature of that use, the timing of that
use, the scale of that use and whether there has been expansion, and the degree
to which the respondent had abandoned that use when the marks were recorded may
bear upon the application of the defence. These are aspects not addressed in
the reasons for judgment and they are not without controversy. Further, the
judges decision was made in the context of his order dismissing the claim in passing
off, which I consider was in error. In my view, the disposition of the claim
for breach of official marks is fatally impaired.

[91]

Where it is possible this court provides an
answer for the parties. In this case, however, I do not consider that the claim
of breach of official marks is one we can resolve as there are too many factual
determinations and outstanding issues for us to do so, given our function as a
court of appellate review. Accordingly, and recognizing that this result will
put the parties to yet further litigation, I conclude the appeal from the order
dismissing the claim of breach of official marks must be allowed and that the claim
must be remitted to the trial court for fresh determination.

Conclusion

[92]

In my view, the order appealed must be set aside
in its entirety. For the reasons given, I consider the cause of action in
passing off is established and the appellant is entitled to a permanent
injunction, in terms that may be the subject of further submissions if
required, restraining the respondent from use of VCC and VCCollege in
respect to its Internet presence. It will be necessary to remit the issue of
quantum of damages for passing off to the Supreme Court of British Columbia for
assessment. Further, I would remit the claim of breach of official marks to the
Supreme Court of British Columbia for fresh determination. In my view, costs in
the trial court should be determined by the trial court.

The
Honourable Madam Justice Saunders

I AGREE:

The Honourable Madam Justice D.
Smith

I AGREE:

The Honourable Mr. Justice
Savage

Appendix A

(Admitted
Facts adopted by the judge at para. 33)

2.      Google
AdWords is an online advertising program provided by Google.

3.      Keywords
are words or phrases chosen by the AdWords advertiser that can trigger an
advertisement to appear.

4.      When
someone searches Google using an advertisers keyword, its advertisement may
appear next to the Google search results. Keywords can also trigger
advertisements to show on other sites across the internet which are affiliated
with Google AdWords.

5.      If
multiple advertisers use the same keyword to trigger their advertisements to
appear, Google uses Ad Rank to determine whose advertisements will appear, and
in what order.

6.      An
advertisements Ad Rank is a score based on:

(a)     The
advertisers bid (how much the advertiser is willing to pay for the
advertisement);

(b)     The
advertisements Quality Score, which is based on the expected clickthrough rate
of the advertisement, the relevance of the advertisement to the search terms,
and the quality of the website the advertisement links to; and

(c)     The
impact of the advertisements format.

7.      Advertisements
cycle through the search results pages based on their Ad Rank. The
advertisement with the highest Ad Rank appears in the first eligible position
on the search results page, the advertisement with the second-highest Ad Rank
appears beneath it, and so on down the page.

8.      An
advertiser can use keyword insertion to update the text of an advertisement
to include one of the advertisers keywords that matches a customers search
terms. When a customer uses one of the advertisers keywords in their search,
AdWords automatically replaces the selected portion of the advertisement with
the keyword that triggered the advertisement to appear. This feature allows one
advertisement to appear differently to customers depending on their search
terms.

9.      The
display URL is the webpage address that appears with an advertisement,
typically shown in green text. The display URL is what appears to users who see
the advertisement.

10.    The
destination URL is the URL address for the page in the advertisers website
where people are sent after they click the advertisement. The destination URL
generally isnt visible in the advertisement.

11.    An
ad group is a set of keywords, ads, and bids which are managed together, in
order to show ads to people likely to be interested in them. Separate ad groups
can be used for different types of products or services.

12.    A
campaign is a set of ad groups that share a budget, location targeting, and
other settings. Campaigns can be used to organize categories of products or
services.

Where AdWords
Advertisements Can Appear

13.    The
Google Network is all of the places where AdWords advertisements can appear,
including Google sites, websites that partner with Google, and other placements
like mobile phone apps.

14.    The
Google Network is divided into the Search Network and the Display Network.

15.    The
Search Network is a group of search-related websites where AdWords
advertisements can appear, including Google search sites and non-Google search
sites (like AOL) that partner with Google to show search ads, called search
partners.

16.    An
AdWords advertisement can show on the Search Network when someone searches with
terms related to one of the advertisers keywords.

17.    The
Display Network is a group of more than a million websites, videos, and apps
where AdWords advertisements can appear.

18.    AdWords
advertisements can be automatically matched to websites and other placements
like mobile phone apps when the advertisers keywords are related to the sites
content. An advertiser can also choose to target specific sites, pages about
specific topics, or specific demographic groups.

19.    Display
partners are websites in the Display Network that partner with Google to show
advertisements.

20.    Placements
are locations on the Display Network where advertisements can appear. AdWords
advertisers can choose specific websites on which they want their
advertisements to appear by adding managed placements. Advertisers can also
let Google choose relevant automatic placements based on keywords or other
targeting methods.

21.    AdWords
advertisements in the Display Network may be displayed on Gmail.

Targeting
AdWords Advertisements

22.    There
are a variety of methods an advertiser can use to target AdWords advertisements
on the Search Network and the Display Network.

23.    An
advertiser can use location targeting to show advertisements to customers in a
selected geographic region. For each ad campaign, an advertiser can select
locations where advertisements can be shown. The location may be an entire
country, areas within a country like cities or territories, or a radius around
a location.

24.    An
advertiser can choose targeting settings on the Display Network for each
individual ad group. The advertiser can add a single targeting method, such as
keywords, or more than one targeting method, such as keywords and placements.

Measuring
the Effectiveness of a Google AdWords Advertisement

25.    Analytics
is a Google product that provides in-depth reporting on how people use
websites. Analytics can be used to determine what people do on an advertisers
website after clicking on their advertisement.

26.    AdWords
advertisers can access their AdWords account history online. This history
contains a variety of data, including changes to advertisements, campaign budgets,
bids, network settings, keywords, and campaign targeting.

27.    A
search terms report is a list of search terms that people have used before
seeing an AdWords advertisement and clicking it. This report shows every search
query that resulted in an advertisement being shown and clicked. It can be
accessed online by an AdWords advertiser.

28.    Impressions
are a measurement of how often an advertisement is shown. An impression is
counted every time an advertisement is shown on a search result page or other
site on the Google network.

29.    An
advertisements impression share is the number of impressions the
advertisement has received divided by the number of impressions it was eligible
to receive. Impression share is a way of measuring the share of online
advertising space an advertiser has obtained,

30.    When
someone clicks on an advertisement, such as the blue headline of a text
advertisement, AdWords counts that as a click.

31.    An
advertisements clickthrough rate or CTR is a ratio showing how often
people who see the advertisement end up clicking it. The CTR is calculated by
dividing the number of clicks the advertisement receives by the number of
impressions for the advertisement.

33.    A conversion occurs when
someone clicks on advertisement and
after arriving at the landing webpage
then takes an action that the advertiser has defined as valuable to its
business, such as making a purchase, filling out a form or signing a contract.
An AdWords advertiser can choose what is considered to be a conversion based on
what that advertiser recognizes as valuable.

Appendix B

(From
Private Career Training Institutions Agency v.
Vancouver Career College (Burnaby) Inc
., 2010 BCSC 765)

[14]      Internet search
engines collect and store data about websites, including keywords contained in
the website and the location of the website. When a user enters a query into a
search engine such as Google or Yahoo, the search terms are compared to the
website information stored in the search engine. The search engine then
produces a list of websites, which are ranked according to relevance, as
determined by the search engine.

[15]      One way in which a
website operator can attempt to increase the traffic to their website is
through the use of pay-per-click advertising. The relevant form of
pay-per-click advertising in the case at bar is keyword advertising (Keyword
Advertising). This service allows the website operator to pay search engines
for links to their websites to appear as sponsored links alongside the search
engines normal or organic search results.

[16]      In order to use
Keyword Advertising, a website operator will create an advertisement which
specifies certain keywords to describe their website and set the maximum price
they are willing to pay to use those keywords. The keywords then act as a
trigger causing the advertisement and the associated link to be displayed.
Specifically, when a user enters a search query containing a triggering
keyword, the search engine checks to see which advertisement is most relevant
and has placed the highest bid for the selected keywords. These advertisements
and the associated links are displayed as sponsored links in a prominent
location among the organic search results. If the user selects one of the
sponsored links, that website is charged according to its bid.

[17]      The website operator
will provide instructions to the search engine as to how much money they want
to spend in a particular advertising campaign. Those instructions can be
modified daily, depending on the success of the keywords or campaign. Once the
maximum amount of money to be spent in a campaign is exhausted, including daily
maximums, the online advertisement will stop appearing when the keywords are
searched.

[18]      Assuming there are
funds available in a campaign, all bids on keywords will result in the online
advertisement being displayed if those keywords are used in conjunction with an
online search. The higher the bid, the higher the placement of the online
advertisement. Bids that are not high enough will result in online
advertisements that do not appear on the first results page, which is the most
desirable placement.

[19]      Typically, Keyword
Advertising is purchased in a campaign where keywords are grouped around themes
aimed at specific marketing goals. For example, an advertising campaign built
around online degrees could include keywords such as online, online
degrees, online education, online studies, online training and internet
training. The idea is to try to predict what terms the searcher will use when
looking for a product or service.

[20]      The keyword does not
need to match the exact search term entered by the internet user in order to
trigger the occurrence of a sponsored link. For example, if one bids on the
keyword college and the user searches Vancouver colleges, the results could
include the sponsored link.

[21]      In addition,
keywords are not case sensitive, so if a user searches Business, it may
trigger the occurrence of a sponsored link where the word business was bid
on.

[22]      The actual online
advertisement that appears as a part of Keyword Advertising typically consists
of a title, a description and a URL, and have to fit within the following
prescribed limits:

·

For Google online advertisements,
the title line is limited to 25 characters; the two description lines are
limited to 35 characters; and the URL is limited to 35 characters;

·

For Yahoo online advertisements,
the title line is limited to 40 characters; the two description lines are
limited to 70 characters; and the URL is limited to 40 characters.

[23]      In the context of
the present dispute between the parties, it is important to note that the
advertisements that are listed in the search results as sponsored links do
not displace or replace the organic search results that typically appear free
of charge when a user conducts an online search. The sponsored links are
displayed along with the organic search results and appear either to the right
of the organic search results, separated by a vertical line, or above the organic
search results, within either a yellow or blue shaded box. In both cases, the
sponsored links are clearly designated as such or as sponsor results.

[24]      It is also important
to note that the person who has conducted a search and who has chosen to
examine a sponsored link can always click on the back button on their browser
and return to the original search results page to locate other sites of
interest.

[25]      Website operators
will sometimes specify trademarks or operating names of their competitors as
triggering keywords, since these terms are often not bid on, even by their
rightful owner. If the owner of the trademark or operating name has not
specified their trademark or operating name as a triggering keyword in
conjunction with Keyword Advertising, or if their bid for these keywords is too
low, other advertisements may appear as a sponsored link and can outrank the
rightful owner of the trademark or operating name. Again, it is important to
remember that the rightful owner of the trademark or operating name will still
appear as part of the organic search results; they will simply not be
positioned in the sponsored links area of those results.

Appendix C

(From
Interflora Inc. & Anor v. Marks and Spencer
PLC & Anor
,
[2013] EWHC 1291 [Ch])

89.       The principal way in
which Google provides advertising is by means of a service Google calls
AdWords. It is important to note that Google constantly refines the way in
which its search engine operates and that Google regularly changes the way in
which AdWords operates. There have been a considerable number of such changes
in the period from April 2008 to now which are potentially relevant to the
issues in the present. I cannot hope to describe all these changes. Accordingly
I shall first attempt to describe the common features of AdWords over this
period, and then to indicate some of the principal changes that have occurred
during this time.

90.
Common features.
When a user of the Google search engine carries out a search, the SERP
presented to the user usually contains three main elements. The first is the
search box, which displays the search term typed in by the user. This may
consist of one or more than one word. The second element comprises the natural'
or organic results of the search, consisting of links to websites assessed to
be relevant to the search term by the search engines algorithm, accompanied in
each case by some text derived from the website in which the search term
appears, sorted in order of relevance. Typically, there is a large number of
natural results, the listing of which continues on succeeding pages. Although
there are various ways in which website operators can and do seek to influence their
position in the natural search results, a process known as search engine
optimisation or SEO, in principle the ranking is an objective one based solely
on relevance. The third element comprises advertisements containing links to
websites which are displayed because the operators of those websites have paid
for them to appear in response to the search term in question. The
advertisements are generally displayed in one or more of three sections of the
SERP, namely (i) in a shaded box at the top of the SERP (often referred to
as the golden box) which contains up to three advertisements, (ii) in a panel
on the right-hand side of the SERP and (iii) a panel at the bottom of the SERP
after the first ten natural results.

91.       The display of such
advertisements is triggered when the user enters one or more particular words
into the search engine. These words, which are referred to as keywords, are
selected by the advertiser in return for the payment of a fee calculated in the
manner described below. This is often referred to as bidding on or
purchasing the keywords.

92.       The advertisements
consist of three main elements. The first is an underlined heading (consisting
of a maximum of 25 characters) which functions as a hyperlink to a landing page
specified by the advertiser. That is to say, when the user clicks on the link,
the users browser is directed to that page on the advertisers website. The
hyperlink may consist of or include the keyword or it may not. The second
element consists of two lines of promotional text (with a maximum of 35
characters for each line), which may or may not include the keyword. The third
element consists of the URL of the advertisers website (maximum of 35
characters). It should be noted that the URL does not function as a hyperlink
(although the user could type it or cut-and-paste it into his or her browser
and access the website in that way).

93.       The way in which the
advertiser pays for this form of advertising is that the advertiser pays a
certain amount each time a user clicks on the hyperlink in its advertisement
and thus is directed to the advertisers website (known as click through).
Accordingly, the advertiser does not pay for the display of advertisements to
users who do not click through. The amount the advertiser pays is calculated as
the cost per click or CPC for each keyword purchased subject to a maximum
daily limit specified by the advertiser. If the daily limit is exceeded, the
advertisement will not be displayed.

94.       More than one person can
purchase each keyword. Where more than one person purchases a particular
keyword, there is an automated auction process whereby, subject to the
influence of the Quality Score discussed below, the advertiser who bids the
highest maximum CPC has its advertisement displayed in the highest position and
so on. This means that popular keywords are more expensive than unpopular ones.

95.       In addition to the CPC,
the positioning of advertisements is influenced by the Quality Score or QS
which Google ascribes to the advertisement. Google does not publish all the
factors it takes into account in determining the QS, and I believe that this
has changed over time, but they include the relevance of the promotional text,
the click through rate or CTR and the relevance of the landing page. An
advertiser whose advertisement has a high QS, but low maximum CPC, can appear
higher in the ranking than one whose advertisement has a lower QS but higher
maximum CPC.

96.       Google offers advertisers
the facility to match a keyword to the users search query so as to trigger an
advertisement in various different ways. An exact match is where the search
term entered by the user must be the same as the keyword selected by the
advertiser in order for the advertisement to appear, with no additional words,
A phrase match requires the search term to contain the same words as the
keyword in the same order, but it may include additional words before or after
the phrase. A broad match enables the search term to be matched to variants
of the keyword such
as plurals. By May 2008 Googles broad
match included a facility referred to by practitioners (but not Google) as
advanced broad match, namely for a search term to be matched to a different
keyword which was nevertheless relevant. For example, this enabled M & S to
display advertisements associated with the keyword florists when the search
term flowers was entered. Negative match enables advertisers to prevent
advertisements from appearing when the search query includes a particular word
or phrase. Negative matching is a straightforward and routine process.

97.       Google
enables advertisers to organise their keyword advertising in various ways. An
advertiser may have one or more accounts, which may be categorised by reference
to product or service. Within each account, advertisers can have various
campaigns. Each campaign is subject to settings determined by the advertiser
that dictate the manner in which advertisements are displayed e.g. in which
geographical area, on what devices, at what times of day and in what sequence.
Within each campaign, there can be various groups. Each group contains a list
of keywords and the promotional text, URL and match type associated with it.
The process of creating a keyword advertising campaign as at April 2009 is
illustrated in Annex 1 to my first judgment.

98.       Google
enables advertisers to assess and manage their keyword advertising campaigns by
means of Search Query Reports or SQRs. Depending on how they are set up and
used, SQRs can produce information on a variety of performance measures for
keywords, as follows:

i)          Impressions
 how many times the advertisers advertisements appeared following a search
which has been conducted against a search term which, in some way, matches the
keyword bid on.

ii)         Clicks
 how many times the advertisers advertisements were clicked on by users who
had searched for a particular search term and had been presented with an
advertisement.

iii)        CTR
 the proportion of clicks to impressions.

iv)        CPC
 on average, how much the advertiser had to pay to Google per click on the
advertisement.

v)         Cost
 how much in total the advertiser spent on bidding for that search term.

vi)        Conversions
 how many tracked events were recorded from the keyword if Google AdWords
tracking is implemented on the site.

vii)       Revenue
 how much revenue has been generated from the keyword if this facility was
implemented as part of setting up Google AdWords tracking on the site.

viii)       Conversion
Rate  the rate at which conversions (sales) are made to the number of clicks
generated. A 50% conversion rate would indicate that one in every two people
that clicks on the advert purchases from the website.