Royal Canadian Mint demands payment for use of official mark

The Royal Canadian Mint has demanded that the City of Toronto pay royalties for using the image of the Canadian one-cent coin in a campaign.

The city's mayor, David Miller, is campaigning for the return to cash-strapped municipalities across Canada of one cent for every six cents collected by the Canadian federal government under the goods and services tax. The campaign is entitled 'One Cent Now'. The image of the one-cent coin (or penny) appears on the campaign's website and on campaign posters, bumper stickers, buttons and leaflets. Allegedly, the city did not ask for permission to use the penny's image in the campaign; it contends that the penny is in the public domain.

In October 2007 the Mint demanded that the city pay $47,680 in royalties in accordance with IP procedures. The procedures note that the Mint must protect its image; accordingly, when its products are used, it must be done with good taste and in a manner compatible with the public policy objectives of the federal government. The amount demanded generally reflects such factors as the identity of the requesting party and whether the use is for commercial gain.

The Mint's right to claim royalties stems from its ownership rights under trademark and copyright law. The Mint is the owner of an official mark in the one-cent coin design. Sections 9 and 11 of the Trademarks Act prohibit a person from adopting or using a mark - as a trademark or otherwise - that is likely to be mistaken for an official mark. The recognized test is whether a person with an imperfect recollection of the official mark would likely be mistaken or confused when confronted with the second mark.

The Mint also claims ownership of copyright in the one-cent coin design. While the Mint does not have a registered copyright in the coin design, such registration is not required under the Copyright Act. By virtue of Section 3 of that act, the Mint has the sole right to:

• produce or reproduce the coin design in any material form;
  
  
• publish it; or
  
  
• authorize any of the preceding rights.

If the matter is not resolved amicably between the parties, the Mint could seek an injunction or recovery of damages, among other remedies, under Section 53(2) of the Trademarks Act and Section 34 of the Copyright Act.

The city must assess the Mint's request for royalties in the context of potential damage awards for contravention of the Trademarks Act and Copyright Act. It continues to use the one-cent coin design on its website and campaign materials despite notice from the Mint. Considering that Toronto's taxpayers would foot the bill for legal fees and damages for the unauthorized use, the city should be wary of using an image that may cause an outflow (and not the intended inflow) of funds from the municipality.

Airlie McGhee, Osler Hoskin & Harcourt LLP, Ottawa