Be the Messenger (And Don’t Get Shot)

The #1 cause of claims against Ontario lawyers practising in most areas of law is problems with lawyer-client communication.

Considering lawyers’ reputation for verbosity, this statistic seems counterintuitive, at least until you consider that some things are easier and more fun to talk about than others.

Fun to communicate with clients about: success (and our role in it); progress; winning; good news. NOT fun to communicate: failure (and our role in it); setbacks; losing; increase legal costs; bad news.

The risk: Failing to promptly and appropriately communicate bad news (and therefore, failing to take steps to mitigate setbacks) exposes lawyers to claims.

Uncomfortable delivering bad news? Here are some tips that can make it a little easier:

Do it immediately

When is immediately? The moment you understand the nature and implications of the unfortunate development. Do you now that a prospective client’s claim is unlikely to succeed the moment it’s been described to you at the intake appointment? Say so at that appointment. Have you just heard (or read) the words “motion dismissed”? It’s not going to be any less dismissed three months from now, and no, the client will not just forget you ever brought it… especially if you’ve also heard the words “with costs”.

There’s also a more personal reason to share bad news promptly: Carrying it around, undisclosed, in your own craw quickly accumulates an additional burden of anticipatory dread… it’s like a psychic burden with compound interest. Get it out and over with.

Explain thoroughly

If your client doesn’t understand the bad news, you haven’t communicated it well enough. Do not obfuscate. Do not use words like “obfuscate”. Provide a simple, thorough explanation of the development, the consequences (including economic consequences) and the client’s options for proceeding in the wake of the development.

Be honest about your role

There are two reasons lawyers often hesitate to deliver bad news:

The bad outcome is in no way the lawyer’s fault, but he or she just doesn’t like bringing people down.

While a positive outlook and empathy for the client are laudable, the client has the right to the information, and the lawyer has the responsibility to deliver it promptly. Delivering bad news is difficult. It’s important to remember that internalizing your client’s misfortune doesn’t help anyone. Inform the client immediately.

Much more often, a lawyer delays the delivery of bad news because:

The bad outcome is, at least in part, the lawyer’s fault.

Making a mistake is embarrassing. Covering up a mistake is unethical. When something goes wrong as a result of a decision or action on your part, communication is key.

When communicating about your role in a bad-news outcome, be honest but professional. On the one hand, an effusive apology, especially where you have made an honest error, is over-the-top and may come back to bite you in the event of a claim. On the other hand, a dishonest or incomplete response makes a claim more likely. Consider the following tips:

  • Give a simple, factual explanation of what happened: “we lost the motion, and costs were awarded to the other side.”
  • Do NOT deflect blame: “we would have won if we hadn’t gotten Judge XX. She’s a lunatic.” Or “if you would have remembered to tell me about XX detail, I would have put it in the pleading and we would have won.”
  • If asked why results were different from what you’d hoped for or predicted, give an honest explanation: “My interpretation of XX (point of law, precedent, statutory provision, contract term etc.) was incorrect” or “I believed that we had a reasonable chance of success, because of XX reason, and so I recommended XX course of action. Unfortunately, we were unsuccessful.”

If you describe your choices in clear and objective terms, and you explain why you made the recommendations and choices you did, your actions have a good chance of seeming reasonable to the client. This is especially true if you were careful, before taking action, to explain that success was not guaranteed and to describe all the potential outcomes, positive and negative, including costs consequences.

Provide options

While the client may be upset by the bad news, you should attempt to provide a basic summary of his or her choices and options in light of the development. This will help the client to begin thinking beyond the setback. Let the client know that you will await his or her instructions.

Some people have trouble remembering anything that is said to them immediately after bad news is delivered. Be prepared to explain the client’s options again in a later conversation, after he or she has calmed down and has had a chance to absorb the information.

Await instructions (or worse)

Will your client terminate the retainer? Maybe, maybe not – but you have little control over the client’s reaction. If you made a small or honest error and the client terminates the retainer over it, he or she may be the kind of client who is not worth keeping. If your error could form the basis of a claim, you will also need to report the claim to LAWPRO.

If the client is a major or long-term client, and you have a track record of providing excellent service, appropriate communication of bad news is especially crucial. Long-term clients have a business relationship with you, expect honesty from you, and will often be able to put a mistake into proper perspective if their overall opinion of you is high. Handling setbacks appropriately, including by acknowledging your share of responsibility, may, in the long run, enhance your client’s trust in you instead of threatening it.

Regroup and de-stress

Lawyering is high-stakes, stressful work, especially when things go wrong. Once you have delivered the unpleasant but necessary message, reward yourself for doing the right thing by taking immediate steps to manage your own stress. Internalizing negative events helps no-one. Get out of the office and do something that makes you feel good.

A caveat: Two triple scotches and a pint of Ben and Jerry’s may make you feel good, but they won’t make you feel good about yourself. Lest you want to feel like a crummy lawyer AND a drunken sloth, find a non-destructive form of stress relief. Get some fresh air, play a game of tennis, talk the setback over with a close friend. Put it into perspective and move forward.

Learn from it

Dealing promptly with bad news doesn’t mean forgetting about it. Once the dust has settled, consider whether there are any lessons you might learn from the experience. Then file them away under “older and wiser.”

This article is by Nora Rock, corporate writer/policy analyst at LAWPRO.

LawTechCamp 2014 This Weekend

The fourth annual LawTechCamp takes place this Saturday at Ryerson University’s DMZ building. LawTechComp provides an opportunity to “bridge the gap between the tech and legal communities and encourage the exchange of ideas and knowledge.”

This is an unconference type event organized against the following schedule:

  • Impact of CASL on Lawyers and Entrepreneurs
  • Panel Discussion: Future of the Legal Profession in the Age of Disruption
  • Panel: Alternative Models of Legal Service Delivery
  • Law Technology Retrospective and Future Insights

In addition Chris Bentley, former Attorney General of Ontario, will deliver a lunchtime keynote talk on “Law, Technology and the Public Interest.”

There’s a small registration fee of $25.

Looks like a great group of presenters and an excellent opportunity to learn more about law and technology.

Monday’s Mix


Each Monday we present brief excerpts of recent posts from five of Canada’s award­-winning legal blogs chosen at random* from sixty recent Clawbie winners. In this way we hope to promote their work, with their permission, to as wide an audience as possible.

This week the randomly selected blogs are 1. Rule of Law  2. Combat Sports Law 3. Environmental Law and Litigation  4. Legal Post  5. IP Osgoode

Rule of Law
Can You Revoke a Quebec Notarial Will by Destroying a True Copy?

A notary in Quebec always retains the original of a notarial will and registers it under the Quebec Civil Code. Despite the usual rule in British Columbia that an executor must probate the original will, an exception is made for Quebec notarial wills, in which case, under section 36(1) of the Evidence Act, you may probate a copy that is certified by a notary as a true copy of the original. I have written about this before. …

Combat Sports Law
Minimum Statutory Damages Awarded After UFC 155 Piracy

In my continued efforts documenting prosecutions following alleged Pay Per View piracy, reasons for judgement were released this week by the United States District Court, N.D. California, assessing damages following piracy of UFC 155. In today’s case (Joe Hand Promotions Inc v. Munoz) the Defendant aired UFC 155 without purchasing a commercial sub licence from the Plaintiff. The Plaintiff sued and obtained default judgement….

Environmental Law and Litigation
2014 Pesticide Prosecution “Roundup”

Earlier this summer we reported that Ontario Pesticide Act prosecutions have become infrequent since the Ministry of the Environment and Climate Change (MOE) stopped having specialized pesticide enforcement staff. Now that the season is soon to change over, we decided to take a look at the year’s violation reports to see if MOE’s intentions with respect to pesticide enforcement have changed.,,,

Legal Post
Drew Hasselback: Comparing takeover defences between Canada and the U.S.

The bid by Laval, Que.-based Valeant Pharmaceuticals International Inc. for California-based Allergan Inc. offers Canadian observers a chance to see what hostile takeovers might look like when the target is located in the U.S….

IP Osgoode
African Patent Offices Not Fit for Purpose

Patents are public documents, issued to inventors by individual states, certifying that the named inventor has been granted a limited monopoly to exclude other persons from working, selling or using an identified invention without the consent or permission of the inventor or her/his assignees or successors-in-title during the lifespan of the patent. …

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*Randomness here is created by Random.org and its list randomizing function.

Texan Court Refuses Jurisdiction for Pre-Suit Discovery in Anonymous Blogger Defamation Case

The Supreme Court of Texas has refused to provide the identity of an anonymous blogger, in a 5-4 split decision released this week. The blogger initially claimed to be an employee of the Plaintffs’ company. He created a site in 2007 which targeted a business and its CEO, making a number of disparaging comments about the Plaintiffs and alleging involvement in a Ponzi scheme.

The Plaintiffs sought the identity of the blogger through Texas Rule of Civil Procedure 202, which states,

202.1 A person may petition the court for an order authorizing the taking of a deposition on oral examination or written questions either:

(a) to perpetuate or obtain the person’s own testimony or that of any other person for use in an anticipated suit; or
(b) to investigate a potential claim or suit.”);

202.2(b) “The petition must . . . be filed in a proper court of any county:

(1) where venue of the anticipated suit may lie, if suit is anticipated; or
(2) where the witness resides, if no suit is yet anticipated…

Specifically, the Plaintiffs requested name, address, and telephone number and the identity behind the email address of the owner of the blog, in anticipation of a lawsuit.

The court approved use of the email address for providing notice to the blogger, who defended the petition through counsel anonymously, seeking to quash the petition on the basis that he had minimal contact with the state.

The CEO Plaintiff was a resident and owned a house in Texas. Google, who was also named but did not oppose the petition, was found to be under the court’s jurisdiction. However, due to the anonymous nature of the blogger involved the majority of the court declined to adopt jurisdiction.

The majority decision noted that the pre-suit discovery mechanism appeared to be available since 1879, but has been rarely interpreted. A number of amendments to the statute made subject-matter jurisdiction an explicit requirement through the use of the term “proper court.” The majority concluded that for the court must have personal jurisdiction over the potential defendant, and there was an onus on the Plaintiffs to demonstrate this.

The majority expressed concern that pre-suit mechanisms could be used in Texas to identify information about defendants that the court would not have jurisdiction for the suit proper, and the plaintiffs would then pursue litigation against these defendants elsewhere. They referenced a statement by the Supreme Court, in a more recent case earlier this year. In Walden v. Fiore, 134 S. Ct. at 1123 the Supreme Court qualified the flexible standard for personal jurisdiction of non-residents enunciated in International Shoe Co. v. State of Washington, 326 U.S. 310, stating,

…[d]ue process requires that a defendant be haled into court in a forum State based on his own affiliation with the State, not based on the random, fortuitous, or attenuated contacts he makes by interacting with other persons affiliated with the State.

They also expressed concerns that Texas already had the broadest pre-suit discovery mechanisms in the entire country, and referred to the United States Supreme Court’s comment in Chick Kam Choo v. Exxon Corp., 486 U.S. 140, 145 (1988),

…it is possible that Texas has constituted itself the world’s forum of final resort, where suit for personal injury or death may always be filed if nowhere else

The minority decision stated that the approach of the majority effectively abolished a cause of action against anonymous online defamation. No authority was found from any state requiring “a trial court to establish personal jurisdiction over an anonymous party before compelling revelation of his identity from another source.”

They pointed out that the court had no ability to actually ascertain the connection of the defendant to the state while he continued to obscure his identity. The effect of this ruling is that even anonymous bloggers in Texas would successfully be able to repeal the court’s jurisdiction.

The dissent also made some very pointed comments about the effects of online defamation,

The ever-rising cost of litigation impacts the ability of ordinary citizens to access our courts to pursue justice. Today the Court misinterprets our rules of civil procedure to create a quagmire for persons injured by anonymous Internet bloggers by forcing them to either file potentially fruitless lawsuits in an attempt to determine the identity of the alleged wrongdoer or waive redress. At best, this unnecessarily increases litigation costs for those persons injured by online defamation, while imposing additional burdens on our already overloaded court system. At worst, it deprives injured parties of reparation.

For all its virtues as a forum for communication, the Internet also presents many dangers. This is particularly true when speech is published anonymously.

As such, modern technology has made the ability to seek redress for injury due to defamation that much more important, and that much more difficult. In the face of these modern-day realities, today the Court further cripples that ability, effectively extinguishing the claims of those who have the misfortune of being defamed by one who conceals his identity.

Summaries Sunday: Maritime Law Book


Summaries of selected recent cases are provided each week to Slaw by Maritime Law Book. Every Sunday we present a precis of the latest summaries, a fuller version of which can be found on MLB-Slaw Selected Case Summaries at cases.slaw.ca.

This week’s summaries concern:
Barristers and Solicitors/ Courts / Evidence / Torts / Criminal Law

Barristers and Solicitors – Courts – Evidence – Torts

Summary: The plaintiffs hired the defendant lawyer and his law firm to represent them in their lawsuit against HouseMaster Inspection Service for a deficient house inspection. The plaintiffs were partially successful. The plaintiffs made a complaint to the Law Society of Alberta with respect to the defendant’s management of the HouseMaster action. In June 2008, the plaintiffs sued the defendant. After the trial ended, the defendant requested that the court address …

Barristers and Solicitors – Civil Rights – Courts – Criminal Law

Summary: Al-Enzi, Kayem and Abdul-Hussein were charged with the murder of Zalal. Abdul-Hussein gave a statement to the police that Al-Enzi shot Zalal in a car driven by Kayem. The Crown then proceeded jointly against Al-Enzi and Kayem, charging each with first degree murder. Both pleaded not guilty and blamed the other. Midway through the trial, Abdul-Hussein recanted his statement. Al-Enzi’s counsel was allowed to withdraw. Al-Enzi could not …

Summaries Sunday: SOQUIJ


Every week we present the summary of a decision handed down by a Québec court provided to us by SOQUIJ and considered to be of interest to our readers throughout Canada. SOQUIJ is attached to the Québec Department of Justice and collects, analyzes, enriches, and disseminates legal information in Québec.

Énergie, mines et ressources: Le recours de Churchill Falls (Labrador) Corporation Ltd. qui visait à faire modifier un accord conclu en 1969 avec Hydro-Québec sur le prix de l’électricité pour la centrale de Churchill Falls est rejeté.

Intitulé : Churchill Falls (Labrador) Corporation Ltd. c. Hydro-Québec, 2014 QCCS 3590
Juridiction : Cour supérieure (C.S.), Montréal, 500-17-056518-106
Décision de : Juge Joel A. Silcoff
Date : 24 juillet 2014

ÉNERGIE, MINES ET RESSOURCES — électricité — contrat d’approvisionnement — Churchill Falls (Labrador) Corporation Ltd — Hydro-Québec — contrat conclu en 1969 — obligation d’agir de bonne foi — renégociation du prix — théorie de l’imprévision — interprétation du contrat — réparation appropriée — prescription extinctive — fin de non-recevoir — conduite du demandeur — dépens — frais d’expert — «honoraire spécial».

CONTRAT — interprétation — intention des parties — contrat d’approvisionnement — électricité — prix — bénéfices imprévus — partage — théorie de l’imprévision.

PROCÉDURE CIVILE — honoraires judiciaires — «honoraire spécial» — cause importante — contrat d’approvisionnement — électricité — contrat conclu en 1969 — Hydro-Québec — Churchill Falls (Labrador) Corporation Ltd — théorie de l’imprévision.

PROCÉDURE CIVILE — administration de la preuve — production de documents — rapport d’expert — recevabilité de la preuve — qualification de l’expert — pertinence — force probante — nécessité — fiabilité.

Requête en jugement déclaratoire. Rejetée.

Les parties ont conclu un contrat d’électricité le 12 mai 1969. En vertu de celui-ci, la demanderesse acceptait de fournir à la défenderesse substantiellement toute l’électricité provenant de la station hydroélectrique de la demanderesse pendant un terme initial de 44 ans et pour un terme additionnel de 25 ans se terminant en 2041. La demanderesse souhaite que le tribunal déclare que, dans les circonstances de l’espèce, le principe de droit civil de la bonne foi exige une modification pour l’avenir du prix établi dans le contrat afin que le prix payé à la demanderesse soit juste et équitable. Elle affirme que, pour que le prix soit juste et équitable, il faut au minimum que la valeur commerciale future de l’électricité produite par le projet Churchill Falls soit partagée entre la demanderesse et la défenderesse d’une manière raisonnable et conforme aux réalités actuelles ainsi qu’au contrat d’électricité. Selon la demanderesse, en raison de l’augmentation importante et totalement imprévisible des prix de l’énergie dans les années qui ont suivi la signature du contrat, dès le début des années 1970, contrairement aux attentes des parties, de la forte concurrence sur les marchés énergétiques qui a suivi, des modifications législatives survenues au Québec qui ont donné à la défenderesse un accès total aux marchés de l’exportation et des règles de libre-échange avec les États-Unis, qui ont permis à d’autres parties d’accéder au réseau de transmission de la défenderesse, le principe de la bonne foi dans les négociations et l’exécution des contrats, particulièrement dans des contrats à très long terme, exige une modification des modalités de l’entente concernant les prix. Elle fait valoir que le refus de la défenderesse de convenir d’un prix juste et équitable pour l’avenir constitue un abus de droit nécessitant une modification du contrat. Elle réclame une ordonnance de modification à compter du 30 novembre 2009 du taux payable par la défenderesse. Subsidiairement, elle demande que le contrat soit résilié à compter de six mois suivant la date du jugement. La défenderesse demande le rejet de cette requête, affirmant que ce que la demanderesse recherche, en fait et en droit, est une réparation fondée sur la «théorie de l’imprévision», soit un concept juridique qui a été expressément rejeté par le législateur à la plus récente réforme du Code civil du Québec.

Décision
Les critères applicables à la recevabilité des rapports d’expert ont été énoncés dans R. c. Mohan (C.S. Can., 1994-05-05), SOQUIJ AZ-94111042, J.E. 94-778, [1994] 2 R.C.S. 9, soit: a) la pertinence; b) la nécessité d’aider le juge des faits; c) l’absence de toute règle d’exclusion; et d) la qualification suffisante de l’expert. Dans Abbott and Haliburton Company v. WBLI Chartered Accountants (C.A. (N.-É.), 2013-05-24), 2013 NSCA 66, SOQUIJ AZ-50969245, le juge a ajouté des critères quelque peu controversés, soit l’impartialité, l’objectivité et l’indépendance de tout parti pris. Ces critères additionnels revêtent une importance dans les présentes procédures, particulièrement en ce qui concerne la preuve offerte par l’expert Massell, un spécialiste en histoire de l’hydroélectricité présenté par la demanderesse. La Cour suprême doit se saisir prochainement de ce dossier et se prononcer sur ces critères additionnels. Le rapport de cet expert ne remplit pas celui de la pertinence, de sorte qu’il devrait être exclu du dossier. Par ailleurs, il est utile, mais non nécessaire. Son analyse comporte des erreurs et des omissions. Enfin, cet expert n’a pas la qualification suffisante. Le rapport de l’expert en analyse du marché de l’électricité de la demanderesse, Dalton, remplit les critères de recevabilité, mais son objectivité et sa compréhension de faits importants posent problème. Par conséquent, ce rapport n’a pas la force probante nécessaire pour être retenu par le tribunal afin de l’aider à déterminer la justification de la réparation réclamée par la demanderesse ou les conséquences financières de celle-ci. Le rapport de l’expert en économie et en finance retenu par la défenderesse remplit les critères de recevabilité et était à la foi utile et nécessaire à la Cour en ce qui a trait aux enjeux dont elle doit décider, de sorte qu’il doit être retenu comme crédible et convaincant. En ce qui concerne le rapport de l’expert en histoire politique du Québec retenu par la défenderesse, comme celui-ci visait uniquement à répondre au rapport de l’expert Massell et que ce dernier ne satisfait pas aux critères de recevabilité et qu’il manque de force probante, il n’est pas nécessaire de se pencher sur la nécessité, la fiabilité ou la valeur probante de ce rapport.

En ce qui concerne le fond, l’objectif que la demanderesse semble poursuivre est en fait une modification des modalités quant au prix sur la base de faits imprévisibles survenus après la signature du contrat et des conséquences inéquitables qui en ont résulté. Or, il semble être fondé sur le concept qui est l’élément fondamental de la «théorie de l’imprévision». Le législateur québécois a rejeté l’introduction proposée dans le droit du Québec de cette théorie, laquelle est également rejetée par les tribunaux québécois. La demanderesse n’a pas convaincu la Cour que, dans le contexte de la nature et de l’équilibre de la relation ainsi que des expectatives légitimes des parties reflétées dans le contrat d’électricité, en refusant de renégocier les modalités du prix du contrat, la défenderesse a violé son devoir de droit civil d’agir et de collaborer de bonne foi et d’exercer raisonnablement ses droits. En faisant référence à la «vraie nature de la relation», la demanderesse semble inférer que la nature de la relation a été cristallisée ou définie dans la lettre d’intention ou ailleurs que dans le contrat d’électricité et qu’elle est en droit de recevoir une part équitable des bénéfices imprévus dégagés par la défenderesse. Or, cette inférence n’est pas supportée par la preuve. La demanderesse tente de faire en sorte que la Cour décrète et impose un nouvel équilibre aucunement fondé sur les modalités du contrat d’électricité existant, mais plutôt reflété dans un nouveau contrat plus favorable à ses objectifs et à ceux que recherchait avant elle le gouvernement de Terre-Neuve-et-Labrador. Il serait inapproprié pour la Cour de considérer le contrat comme s’il incluait une stipulation implicite, au moment où il a été négocié et signé, fondée sur les principes de la bonne foi, exigeant des parties qu’elles renégocient les modalités du contrat relatives au prix advenant des modifications imprévisibles des circonstances. Les parties ont expressément tenu compte d’une telle stipulation et l’ont rejetée. Elles ont plutôt convenu d’un barème de prix en vertu duquel la défenderesse paierait initialement un prix fixe, lequel diminuerait ultérieurement selon des montants prédéterminés sur une période de 65 ans. Il y a présomption que les deux parties considéraient ce contrat comme équitable à l’époque pertinente. Si les tribunaux accordaient à la demanderesse la réparation recherchée, ils feraient abstraction de l’un des principaux avantages négociés et reçus par la défenderesse en contrepartie de la prise en charge des divers risques et coûts financiers liés au projet, soit la certitude des coûts futurs et la protection de l’inflation quant aux coûts d’exploitation des installations.

Malgré ces conclusions, la Cour s’est penchée sur la question en litige portant sur le remède approprié. Le principal remède demandé par la demanderesse consiste en une ordonnance modifiant les modalités de prix du contrat au 30 novembre 2009, selon une formule qu’elle propose. Sur ce point, il y a lieu de retenir l’opinion de l’expert en économie et en finance de la défenderesse, selon laquelle le remède demandé compromettrait le paradigme contractuel en accordant à la demanderesse l’avantage de la résolution favorable a posteriori des risques que la demanderesse n’a jamais supportés et de retirer à la défenderesse la certitude quant aux coûts et à la protection contre l’inflation pour lesquels elle s’est battue si le prix du contrat se révèle inférieur aux autres solutions. Selon l’expert, la réparation demandée nuirait à la capacité d’appliquer une allocation appropriée des risques dans les contrats à long terme. Par ailleurs, la réparation proposée serait également inadéquate, compte tenu du traitement comptable et des incohérences dans le calcul de certains éléments de la formule proposée. La réparation subsidiaire n’est pas non plus appropriée. Enfin, la prétention de la demanderesse selon laquelle le refus de la défenderesse de renégocier serait une faute continue constituant une cause d’action continue n’est pas supportée en fait et en droit. La défenderesse a fait valoir à bon droit que le point de départ de la prescription correspond au premier moment où le droit d’action aurait pu être exercé, soit la connaissance par la demanderesse de l’événement générateur de son droit. Les arguments de la défenderesse selon lesquels la conduite de la demanderesse constitue une confirmation du contrat et représente une fin de non-recevoir ne sont pas non plus fondés en fait et en droit. Il n’y aucuns dépens fondés sur les requêtes incidentes et les objections à la preuve. Quant au fond, la demanderesse doit payer les dépens, y compris les honoraires des experts retenus par la défenderesse, soit 1 010 233 $ pour les services de l’expert en économie et en finance et 143 331 $ pour l’expert en histoire. Il y a également lieu d’accorder un «honoraire spécial» de 250 000 $ aux procureurs de la défenderesse puisque le dossier se qualifie de «cause importante».

Le texte intégral de la décision est disponible ici

Summaries Sunday: OnPoint Legal Research


One Sunday each month OnPoint Legal Research provides Slaw with an extended summary of, and counsel’s commentary on, an important case from the British Columbia, Alberta, or Ontario court of appeal.

Insurance Corporation of British Columbia v. Stainton Ventures Ltd.,
2014 BCCA 296

1. CASE SUMMARY

AREAS OF LAW: Intellectual property law; Official marks; Passing-off

~It is not a violation of the Trade-marks Act nor does it constitute passing-off to create a webpage or Internet domain that pairs an official mark with a non-distinctive word such as “advice”~

BACKGROUND: The Appellant, the Insurance Corporation of British Columbia, has adopted the acronym “ICBC” as one of its official marks. The Respondent, Stainton Ventures Ltd., operates a commercial website called “ICBCadvice.com”, and owns the Internet domain names icbcadvice.ca and icbcadvice.com. The Appellant brought an action in the BC Supreme Court seeking a declaration that the Respondent was using its official mark without authorization, and seeking several orders including one requiring transfer of the domain names to it. At trial, the judge granted the Appellant the order it sought with respect to restraining the Respondent from distributing its booklet entitled “ICBC Claim Guide” or using that term as a mark, but otherwise dismissed the claim. He found that the Respondent had not adopted and used the Appellant’s mark in contravention of the Trade-marks Act, concluding that no one ever communicated any confusion or mistake as to whether the website belonged to the Appellant. There was no evidence to suggest that the Respondent had intended or accomplished the redirection of Internet traffic looking for the Appellant’s site to its own site instead. While it was likely that anyone familiar with driving in BC would assume the Respondent’s site had something to do with the Appellant, it was unlikely that they would confuse it for the Appellant’s official mark. Although the Respondent used the acronym “ICBC” throughout its website, this was not use as a “trade-mark or otherwise” in the sense required by the Trade-marks Act. The trial judge also found no evidence of passing-off. He did not think there would be any likelihood an average consumer would be deceived into thinking the website was somehow associated with or approved by the Appellant.

APPELLATE DECISION: The appeal was dismissed. The Appellant argued that the trial judge failed to apply the correct tests for determining breaches of ss. 9 and 11 of the Trade-marks Act and with respect to passing-off. The Appellant further argued that the judge erred in mixed fact and law in finding that the use of the ICBCadvice.com domain name did not violate the Trade-marks Act or amount to passing-off. The Court of Appeal began its analysis by determining that because the resolution of issues raised involved the legal effect of undisputed facts, the appropriate standard of review was correctness. The Appellant submitted that ICBCadvice.com so nearly resembled its mark as to be likely mistaken for it. In particular, it pointed to the fact that its official mark comprises the first and, arguably, dominant part of the domain name. The Appellant went on to argue that its rights to the mark could not be circumvented by adding a non-distinctive word such as “advice” after its official mark, as the consumer would likely be led to believe the Appellant itself was offering advice on its business and services. The Court of Appeal disagreed, commenting that the argument failed “to give the ‘relevant consumer’, i.e., an Internet user, credit for even the most basic understanding of a domain name.” The Appellant submitted that the Court of Appeal must take care to avoid failing to differentiate the test applicable to official marks from the test applicable to trade-marks. While the Court acknowledged the difference between the tests, it found that official marks like any others serve an identification function, and it could not accept that the average Internet user would mistakenly think ICBCadvice.com referred to advice provided or endorsed by the Appellant. Therefore, the Court of Appeal held that the website and the related domain names did not contravene the Trade-marks Act. The Court rejected the Appellant’s passing-off argument for the same reasons.

2. COUNSEL COMMENTS:

Comments by Karen MacDonald:

“The Court of Appeal in this matter was asked to consider the proper test and application of law around unique trademark rights given to public authorities in Canada, called “official marks”, as well as the question of whether the Defendant “passed-off” on the goodwill of ICBC’s well-known trademarks, mainly in the context of domain names and online advertising.

The Trade-marks Act confers special rights to certain public institutions, such as ICBC, for protecting “official marks” adopted by such entities. Prior jurisprudence holds that the rights granted to the owners of such “official marks” are distinct from the usual rights granted to trademark owners, and depend on whether the mark used by the defendant is “likely to be mistaken for” the official mark, as opposed to the passing-off analysis which depends on whether or not there is a “likelihood of confusion” and involves a consideration of the goods and services, channels of trade and public recognition of the respective marks involved.

Unfortunately, the Court of Appeal’s reasons suggest a desire to judicially reduce the protection afforded to official mark owners, going beyond the limitations imposed by prior jurisprudence in this area: from the initial and repeated characterization of ICBC’s motives as “seeking to gain control of the…website and…domain names” (a characterization not adopted by the trial judge nor supported by the evidence) to the commentary surrounding the ease with which official marks can be obtained and apparent judicial notice of numerous other official marks on the Register (not in evidence or relevant to either legal analysis), the reasons reflect a significant dislike of the official mark regime.

While appearing to blur the line between the established test of whether the Defendant’s marks ICBCAdvice and icbcadvice.com “so nearly resembled” ICBC’s official marks “as to be likely mistaken for” them, and the test for likelihood of confusion, the Court gave the “relevant consumer” (defined as the “Internet user”), credit for knowing that a domain name containing a business name or acronym wouldn’t necessarily be associated with that business and that “it is necessary to view a website to determine whose site it is”.

Even ignoring the fact that the established test for official marks does not call for a likelihood of confusion, as appears to have been applied by the Court, the reasons also fail to address the clear and unequivocal language in the Supreme Court of Canada’s decision in Masterpiece v Alavida Lifestyles Inc. that states that likelihood of confusion is to be assessed at the time the consumers encounter the trademark, and while research or follow up might later remedy the initial confusion (for example, but going to and reading the website) that research or follow up does not mean that no confusion ever existed or does not exist in the minds of consumers who did not carry out that research or follow up, i.e. it is the initial confusion or mistake that counts.

Under the Masterpiece reasoning, there is no room for disclaimers or website content to correct initial mistake or confusion resulting from the initial trademark or domain name use, as the Court of Appeal in this decision appears to have allowed. And when a domain name and webpage title contain a business’s name or trademark without any additional words that act to distinguish that domain name from the business name or trademark, it is difficult to understand how that initial confusion would be avoided.

Admittedly, the “official mark” regime, which is unique to Canada as was pointed out by the Court, has been subject to some criticism over the years, and courts have generally interpreted the relevant provisions with a view to ensuring that the rights are not unfairly overreaching. However, the Court of Appeal in this case seems to have gone beyond prior jurisprudence in its attempt to limit the rights granted to ICBC, drawing conclusions that appear out of line with other jurisprudence from the Federal Court. Given that the Federal Government very recently made significant amendments the Trade-marks Act – indeed, the most significant changes to the Act since 1956 – and specifically chose not to make revisions to the official mark provisions despite this criticism, perhaps one should question whether such official mark rights should be so significantly limited judicially.

The Court of Appeal was also tasked with reviewing ICBC’s allegations of passing-off, in a consideration of whether or not the Defendant’s actions were likely to cause a misrepresentation to the public that constituted “passing-off” of ICBC’s well-known trademarks. Interestingly, instead of applying the distinct likelihood of confusion analysis, the Court simply relied on its conclusion on the official marks question. The failure to review and apply the appropriate test is disappointing, and compounds the appearance that the Court may have conflated the two analyses.

Hopefully this decision will be limited to its specific facts and given a narrow interpretation, both with respect to its application to official marks and passing-off, as otherwise it potentially has broad reaching implications which would significantly affect not only official mark owners but also general trademark owners in the context of domain names and trademark use on the Internet, where initial confusion may be rampant but easily remedied by “research” in the form of a click of the mouse.”
Comments provided by Wes Mussio, counsel for the Respondent:

“This is one of the first cases out of the appeal courts in Canada dealing with website names and the use of those names particularly where the company owns an official Mark.

ICBC was attempting to argue that any website with the acronym, ICBC, in it is a copyright infringement. The Court of Appeal made it clear that where the website is not trying to confuse web browsers, there is no copyright infringement. It opens up the door to allow a wider reaching use of website names.

If the Court of Appeal would’ve allowed the appeal, ICBC could’ve gone after dozens and dozens of websites that use the acronym ICBC In it. For that reason, the case is very important to law firms and other companies marketing in the area of ICBC Claims.”

Best of Breed v. Integrated v. Piecemeal v. Outsider


Just as the business of law is at the start of a revolution, the platforms supporting firms, Practice Management Systems (PMS), are facing similar challenges. There are the traditional PMS brands that have been around for decades, and others that seem to have sprung up almost overnight.

Some with many thousands of users, and a maturity that deserves more attention than a feature checklist comparison typically provides. Just this week I received a phone call from a firm that has tried/used 4 PMS’s in the last few years. Experience ranged from “awful” and “incomplete” for two local under-capitalized products, to “not locally compliant” for the two well funded international options. All lacked refinement that comes with maturity.

A feature that has 10 years of refinement from user feedback based on frustration and insight is likely to be superior to the new release even if it is an attempt at copying the established feature. Too often, the subtlety in the superior user experience is lost on the imitator. It might only be longtime users of the established product who find issue with the new product. Too often it is an unsophisticated user with a new vendor and product who embark on the same user experience journey others have well and truly travelled.

Testimonials are important, but their value increases with the experience and sophistication of the user. I have recently seen the release of a “world first” module, as proclaimed by the PMS vendor, and extraordinarily, the editor of a legal tech publication supported the claim. Yet, there are thousands of users of a more established PMS who have had the benefit of that feature for a decade, albeit under a different name. I suspect it was because the editor had a BigLaw background, and that segment of the market has only relatively recently discovered the matter/case management component of a PMS.

There are a few types of PMS “options”. These might include:

  1. Best of Breed: mature, feature-rich products that work together. They allow you to pick and choose, and are typically built around a favorite product such as Outlook, document assembly or document management. They are often found in the large firms.
  2. Integrated: Traditional off-the-shelf/shrinkwrapped PMS which try to do everything, with mixed success across a range of modules. They are typically in small firms. What you see is what you get, like it or not, but if you are prepared to compromise, it can be good value.
  3. Piecemeal (App bag/bundle): This could be a range of apps for the desktop, and also on the tablet and smartphone. Solos can be a big user of this approach. The problem with the piecemeal approach, is that it is difficult to scale beyond the power solo user. It is, however, a useful research lab for other PMS developers.

An advantage of the truly integrated PMS is that not only does the application share data, but it also “knows” what you are doing regardless of the module in use. Too often lawyers talk about the burden of time recording. That is because they use the wrong PMS.

Better systems capture time effortlessly as a by-product of the system helping you do the work. Regardless, contemporaneous file notes should never be viewed as a burden. Their completion after the task has been done, helps you remember the details, and might save your skin in court. Having the system automatically record the meta data about the file note and time record (matter, contact, date, time and duration), allows you to focus on the important details of the record.

The de-emphasis of time billing with alternative fee arrangements, and the unnecessary perception of the burden of time recording, undermines a strength of the integrated PMS. This is exasperated by changing behaviour towards file notes. One lawyer recently told me how he uses email to the relevant person as a form of file note. That has some attractions, as long as there is a system than allows others in the firm to see the chronology of a matter at a glance. However, not all of what you need to record in a file note might be included in an email.

To make life easier when choosing a PMS, and to keep up with the changing legal landscape, speed is of the essence. It is best to use as much of an integrated PMS as you can. If a general component/module is not up to scratch then replace it with a “best of breed” application. Document assembly is one such area where the system’s “dumb merge” might not be sufficient for all users and you need a dedicated document assembly program to do more sophisticated tasks such as IF/THEN logic. Nevertheless document assembly within PMS’s is improving.

Such an approach means that you can extend each lawyer’s capabilities as their specialty, or individual matters require with a growing wealth of apps, content and legal products. These extras can act as satellites to supplement the main platform’s features.

Like the new business of law, your apps need to be very “social” and talk to each other preferably via an API in the PMS. This ability to link all sorts of other programs to the base platform might be where the traditional legal PMS is lacking, and where non-legal systems have an advantage. Too often, the API for the legal PMS is lightweight, vapourware or incomplete.

As law becomes increasingly business-like, and more professional management and marketing people move in to run these service providers, they will bring with them non-legal systems such as SalesForce and Filemaker. Such platforms excel at integrating with third party applications. This will turn these outsiders into powerful PMS platforms, and, as with lawyers themselves, provide a new level of competition to the “legal establishment”.

The Friday Fillip: Shoes That Talk


Now, if shoes could tell where they’ve been
When you say you’ve been visiting a friend
dot_clear.gifAin’t you glad?
Hey hey hey, ain’t you glad?
But ain’t you glad, glad that shoes don’t talk?
Ry Cooder, “If Things Could Talk”

Trouble is, it turns out that things can talk — in a manner of speaking. Seems that when a sound is emitted the vibrations of the air don’t rest when they’ve hit our eardrums but continue radiating out, causing, well, most everything to oscillate in sympathy. This isn’t — or shouldn’t be — exactly news to anyone, certainly anyone who’s danced too close to the speakers at concert and felt various internal organs rocking out, as it were. And the glass shattering soprano isn’t entirely a myth.

What might be news, however, is that recordings of these tattling things abound. Some folks at MIT have discovered that plain old videos of otherwise innocent objects can be mined for the sound vibrations in the things filmed. Recognizable tunes can be recovered fairly easily from high speed videos and can also be recovered at a lesser quality from ordinary garden-variety vids. Unlike Ry Cooder’s feared shoes, however, the filmed vibrations only occur simultaneously with the sound being emitted from the source. That is, the vibrations aren’t persistent or latent — which will be something of a relief, perhaps. Even so, it’s remarkable to see a video of a garden plant or an empty potato chips bag “decoded” to reveal a tune — or human speech.

(Those who would like to pursue this, can read the paper behind the video here.)

Having opened with a snippet from a Ry Cooder song, I can’t let you go without offering you a video of him performing that song in the studio back in 1974. It’s a good performance and a particular treat to see the great back up singers, Bobby King, Gene Mumford, and Cliff Givens doing their fabulous thing. (The lyrics are available at MetroLyrics.)

Alternative Business Structures and Access to Justice … for Whom?

The Canadian legal profession is currently engaged in a much-needed debate about the future of legal services in general and whether to allow the use of so-called alternative business structures (ABSs) more particularly. Thankfully, the issue of access to justice is figuring prominently in the general debate, as evidenced by the recently released CBA Legal Futures report and the ongoing work of the Action Committee on Access to Justice. Beyond that, the potential for ABSs to improve access to justice is being put forward as a key reason for allowing them, as can be seen in Slaw columns of Malcolm Mercer and in the work of the Law Society of Upper Canada’s Working Group on ABSs that he co-chairs. However, in relation to the ABS debate, it is necessary to ask: access to justice for whom? The answer is: mostly, the middle class – which, in my view, is good, but not quite good enough.

Briefly put, ABSs involve either non-lawyer ownership of entities providing legal services, or provision of non-legal services along with legal services, or both. ABSs are currently allowed in some comparable common law jurisdictions, namely, Australia and the UK, but are not (yet) allowed in the United States. The potential for ABSs to improve access to justice lies in the likelihood that the new forms of financing and management expertise that they can attract will spur efficiencies and innovations in the design and delivery of legal services (and ‘products’). ABS entities such as Slater & Gordon (in Australia) and The Cooperative Legal Services and Quality Solicitors (in the UK) are cited as the exemplars of the newly affordable, and otherwise better accessible (non-intimidating, technologically-adapted), legal services that are possible in Canada. Indeed, some new entrants into the Canadian legal services market, such as Axess Law, seem already to be learning from and applying the business techniques of ABSs.

An important point needs to be noted though about the potentially new and improved legal services that ABSs can be expected to offer – they don’t and won’t come for free. To the extent that ABSs can improve access to justice, they will only do so for those who can afford to pay for legal services. Hopefully, in an ABS-world, many people will find themselves newly able to take advantage of legal services, but still, payment will be required – and it is in this sense that ABS-led access to justice is about, mostly, the middle class. For people living on low income, ABSs may have little to offer, both because lack of money will still be a barrier and because there is more to taking advantage of legal services than just money (a point recognized by the CBA’s Envisioning Equal Justice project and report).

But does it necessarily have to be that way? Perhaps not. Perhaps it is possible to identify and apply regulatory tools or programs to ABSs in such a way as to harness any accessibility-improving changes they produce in the user-pays private market for the benefit of those who would still lack the means to pay. Unfortunately, however, this possibility is not presently part of the ABS debate. The LSUC ABS Working Group itself has recognized [at para. 118 of its February report] that “it would be wrong to suggest that ABSs are a panacea” for access to justice, but does not yet seem inclined to go further. More promisingly, the CBA has suggested [at p. 36 of its report] that governments might consider financially partnering with it, and private industry, in a legal services innovation incubator fund and that governments could then put their share of resulting innovations to use in publicly provided legal services programs. But there is much more territory that could be explored, for instance: redistributive licensing fees for ABS (and other) legal services entities; vouchers for ABS legal services ‘products’; and, compulsory licensing of ABS technological innovations. Numerous other regulatory tools and programs might be mentioned – some already available to provincial self-regulators, others probably requiring legislative collaboration or empowerment – and all would come with advantages and disadvantages that would need to be identified and assessed. Exploring this added territory should, in my view, be part of the debate on allowing ABSs. To conclude, I offer three reasons for that view.

First, as a matter of normative priority, where regulatory change is sought to be justified by potential for improvements in access to justice, it is arguable that it is the needs of the more disadvantaged and impoverished (people living on low income) that ought to be given priority consideration. More moderately, it might at least be argued that their needs ought to be given no less consideration. Second, and now as a matter of practical policy-making reality, at a time when governments seem unwilling to devote more attention or expenditure to public provision of legal services for people living on low income, exploring ways to harness private sector innovations may be the most realistic avenue for improving access to justice for that segment of the population. Relatedly, the reality may also be that it will be too late to try to harness private sector innovations after the ABS horse has been allowed to leave the regulatory barn. Third, and bringing together normative and pragmatic angles, not only has the Canadian legal profession in general, and many of the provincial self-regulatory organizations more particularly, opened up a policy-making space for considering how to reformulate the future of legal services to improve access to justice, but also, the provincial self-regulators all have an implicit and, sometimes, as in the case of Ontario, an explicit duty to facilitate access to justice in their regulatory activities. In my view, that duty ought to be understood to at least require that the debate on ABSs and access to justice include consideration of possible means for ensuring that the new and improved services ABSs are expected to develop will benefit not just the middle class, but people living on low income as well.