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Potential Perils of Relying on Unregistered Intellectual Property Rights

May 02, 2017

Companies sometimes decide to forgo registering intellectual property rights and hope that they will have some protection under the law without having formally registered such rights.  A recent case highlighted some of the perils in attempting to rely on unregistered intellectual property rights to protect design features (e.g., features of shape, configuration, pattern, or ornament that appeal solely to the eye in a finished article).

In Corocord Raumnetz GMBH and Kompan A/S v Dynamo Industries Inc, 2016 FC 1369 (“Corocord”), the plaintiffs claimed infringement of copyright and trademark rights relating to playground equipment.   More specifically, the plaintiffs asserted an unregistered trademark in the form of a distinguishing guise, represented by a three-dimensional shape and visible external appearance of the playground equipment. A “distinguishing guise” is a form of protection available under the Trade-marks Act for shaping of goods or their containers that are used for the purposes of distinguishing such goods.  The plaintiffs alleged that their distinguishing guise included elements such as:

• Round arches spanning over an inner net structure;
• Inner net structure comprising a geometry of both vertical and horizontal net arrangements, with net platforms or levels; and
• Various net, pole or rope constructions tensioned onto and/or between the arches

In Canada, a distinguishing guise must meet certain criteria to be afforded protection under the Trade-Marks Act.  Specifically, the distinguishing guise: (1) must have been used in Canada to become distinctive; and (2) must not unreasonably limit the development of an art or industry if used exclusively. These requirements often make it difficult to obtain protection under the Trade-marks Act for distinguishing guises.

In Corocord, the Court was unable to find evidence that consumers begun to recognize the shape of the plaintiffs’ playground structures as having a single source and was unable to find evidence that the plaintiffs used the shaping of the structures for the purpose of identifying and distinguishing its goods from those sold by others. In fact, the plaintiffs’ expert witness acknowledged to have never seen the plaintiffs’ playground structures before being engaged in the present case. The Court suggested that the alleged distinguishing guise cannot be confused with the playground equipment structure itself, and accordingly found that the playground equipment structure could not be an enforceable trademark in the form of a distinguishing guise. The source of the Corocord playground equipment was indicated using logos, rather than the structure of the playground equipment itself. No remedy was available to the plaintiffs under the Trade-marks Act.

The plaintiffs also asserted a copyright in the design and structure of the playground equipment. The defendant acknowledged that copyright existed in the design of the playground equipment and that the copyright works are owned by the plaintiffs. The CEO and owner of the defendant company confirmed that the defendant’s products were engineered to be equivalents of the plaintiffs’ playground equipment. However, the plaintiffs argued that their manufacture of playground equipment did not infringe the plaintiffs’ copyright.

The Canadian Copyright Act includes a provision which limits the scope of protection available for designs.  Specifically, the Copyright Act states that, even if copyright subsists in a design that is applied to a useful article, the copyright is not infringed by a party that reproduces the design if the person who owns the copyright has reproduced the article in a quantity of more than fifty.

In the present case, the Court found that the plaintiffs’ playground equipment was designed and built first as playgrounds for children to play upon, which is clearly useful, and is more than just a work of art to be merely observed and admired. The Court decided that the Copyright Act should be interpreted to find a non-infringing act where copyright applied to a useful article is reproduced in a quantity of more than 50 anywhere in the world. Since the plaintiffs were found to have produced more than 50 playground equipment structures worldwide, the defendant’s production of playground equipment were non-infringing acts under the Copyright Act. Accordingly, no remedy was available to the plaintiffs under the Copyright Act.

The Corocord decision provides a useful reminder that when developing an intellectual portfolio, individuals and companies alike should evaluate the spectrum of intellectual property mechanisms that may be applicable to their business.  Corocord also serves as a reminder that the Copyright Act and the Trade-marks Act often do not provide adequate protection of designs.  The Industrial Design Act often provides more suitable protection for designs but owners of such designs must be proactive and must take steps to register designs for protection to be available under the Industrial Design Act.