Red Label Vacations Inc. (redtag.ca) v. 411 Travel Buys Limited (411travelbuys.ca)

Red Label Vacations Inc. (redtag.ca) v. 411 Travel Buys Limited (411travelbuys.ca)
Court (s) Database
Federal Court Decisions
Date
2015-01-07
Neutral citation
2015 FC 18
File numbers
T-1399-09
Notes
A correction was made on January 25, 2016
Decision Content
Date: 20150107
Docket: T-1399-09
Citation: 2015 FC 18
Ottawa, Ontario, January 7, 2015
PRESENT: The Honourable Mr. Justice Manson
BETWEEN:
RED LABEL VACATIONS INC., CARRYING ON BUSINESS AS REDTAG.CA OR REDTAG.CA VACATIONS OR BOTH
Plaintiff
and
411 TRAVEL BUYS LIMITED CARRYING ON BUSINESS AS 411TRAVELBUYS.CA, CARLOS MANUEL LOURENCO
Defendants
JUDGMENT AND REASONS
I. Facts [1] Red Label is a travel business that offers online travel information services and bookings through its website redtag.ca, catering mostly to the Canadian market. It was incorporated in 2004, and is owned and operated by Vincenzo Demarinis.
[2] Content, including metatag content, on the Plaintiff’s website was written by an employee named Robert Gennaro, with some input from Mr. Demarinis.
[3] Red Label has three registered trademarks: “redtag.ca” (TMA657,520), “redtag.ca vacations” (TMA657,750), and “Shop. Compare. Payless!! Guaranteed” (TMA675,219) [the Red Label trademarks]. The Plaintiff has used all three Red Label trademarks regularly as early as 2004.
[4] The Defendant 411 Travel Buys Limited [411 Travel Buys] is an online travel agency offering information to customers through its website, and the availability of agents over the phone to create bookings for travel and travel-related services. It also caters primarily to the Canadian market. Incorporated in 2008, its website went online in January of 2009. Carlos Manuel Lourenco is its sole owner and operator.
[5] In 2009, the entirety of the 411 Travel Buys’ website was designed and written by an employee/intern, Aniema Ntia. Ms. Ntia received some input and instruction from a hired consultant, Nhu Tran, but was otherwise responsible for the content of the website and in the sole possession of its password. Mr. Lourenco had very little input into the content of the webpage and did not have any special knowledge as to the use of metatags on the website.
[6] 411 Travel Buys’ website did not have an online booking option in 2009. For a customer to book using their services, they would have to call the Defendant’s call centre to speak to a representative. The representative would then identify themselves as an employee of 411 Travel Buys, and assist the customer in making a booking.
[7] Online travel sales is an inherently seasonal business in the Canadian market, with sales picking up in the fall and tapering off and dropping in late winter of each year.
[8] In January of 2009 Mr. Demarinis purchased the domain name “411travelbuy.ca” in his wife’s name. He did so with the intention of selling it to the Defendants for a profit. Content was placed on the websites which had the effect of directing visitors to the redtag.ca website.
[9] When the Defendants’ website went online in January of 2009, a number of its webpages included some identical or very similar content to the Plaintiff’s webpages. This information included the title, description and keyword metatags, and the terms “red tag vacations” and “shop, compare & payless”. The content was not visible to customers visiting 411 Travel Buys’ website, and was located only in the webpage’s metadata.
[10] On February 26, 2009, the Plaintiff discovered 411 Travel Buys’ use of these phrases and alleged copyright and trademark infringement by the use of the Plaintiff’s metatags and reference to the Plaintiff’s cascading style sheet [CSS] in a folder. Further, the Plaintiff alleges that the style of the two websites is so similar as to suggest copying.
[11] On March 10, 2009 Mr. Demarinis called Mr. Lourenco to inform him of the allegedly infringing content and demanded that it be removed immediately.
[12] Sometime shortly after the phone conversation, the Defendant’s website was taken down entirely and the allegedly infringing content was removed by Ms. Ntia over the course of two days. The offending content was present on the website no longer than from early January to mid-March of 2009.
[13] Sometime in March 2009, as a consequence of the Plaintiff registering the domain name 411travelbuy.ca, the Defendant registered the domain names “redtagspecials.ca”, “redvacations.ca” and “411redtagbuys.ca”. No content was ever input onto the websites; they were blank domain names, with no capacity to redirect web traffic.
[14] Over the period of February to November 2009, the Plaintiffs experienced a lull in web traffic and revenue to a higher degree than in previous years. The estimated period of negative effect or impact on the Plaintiff’s business created by the Defendants’ alleged infringement is from March to November of 2009.
[15] The Plaintiff commenced this action for copyright infringement, trademark infringement, passing off and depreciation of goodwill in the Plaintiff’s Red Label trademarks against the Defendant on August 20, 2009. The Plaintiff seeks Judgment for:
a. A declaration that the Defendants, have:
i. Directed attention to 411Travelbuys’ services in such a way as to cause or be likely to cause confusion between 411Travelbuys’ services and the services of the Plaintiff contrary to the law and section 7(b) of the Trademarks Act;
ii. Passed off 411 Travel Buys’ services as and for those of the Plaintiff contrary to law and section 7(c) of the Trademarks Act;
iii. Infringed the exclusive rights of Plaintiff’s trademarks as defined below contrary to section 20 of the Trademarks Act;
iv. Used the Red Label trademarks in a manner that is likely to have the effect of depreciating the value of goodwill attached thereto contrary to section 22 of the Trademarks Act; and
v. Reproduced segments of the Plaintiff’s website (as defined below) and infringed the copyright in the Plaintiff’s website contrary to law and section 27 of the Copyright Act.
b. A permanent injunction restraining the Defendants, their officers, directors, shareholders, agents, servants, employees, successors, assigns and those in privity with or directly or indirectly controlled by the Defendants from:
i. Directing public attention to 411Travelbuys’ services in such a way as to cause or be likely to cause, confusion between the services of the Plaintiff and those of the Defendants;
ii. Passing off 411 Travel Buys’ services as those of the Plaintiff and/or sanctioned, approved or authorized by the Plaintiff;
iii. Infringing Red Label trademarks;
iv. Using the Red Label trademarks in a manner that results in the depreciation of the goodwill attaching thereto;
v. Infringing the copyright in the Plaintiff’s website, including the Plaintiff’s exclusive right to reproduce same; and
vi. Authorizing, inducing or assisting others, to do any of the aforesaid acts.
c. A mandatory order directing the Defendants to transfer or cause to transfer to the Plaintiff any domain names owned or controlled by the Defendants which are likely to be confusing with the Red Label trademarks, including but not limited:
i. redtagspecials.ca;
ii. 411redtagbuys.ca; and
iii. redvacations.ca.
d. With respect to the cause of action based upon the Trademarks Act, damages against the Defendants of $760,000.00 (seven hundred and sixty thousand dollars) suffered by the Plaintiff in 2009 as a result of the Defendants’ unlawful activities and a further sum for damages suffered by the Plaintiff for the period of time following 2009;
e. With respect to the cause of action upon the Copyright Act, damages against the Defendants of $760,000.00 (seven hundred and sixty thousand dollars) as a result of the Defendants’ unlawful activities; and a further sum for damages suffered by the Plaintiff for the period of time following 2009;
f. Damages against the Defendants in the sum of $760,000.00 (seven hundred and sixty thousand dollars) suffered by the Plaintiff in 2009 as a result of the unlawful activities of the Defendants and a further sum for damages suffered by the Plaintiff for the period of time following 2009;
g. Dismissal of the counterclaim of 411 Travel Buys Ltd (Plaintiff by Counterclaim) against the Plaintiff, (Defendant by Counterclaim) with costs payable by 411 Travel Buys Ltd (Plaintiff by Counterclaim) to Plaintiff, (Defendant by Counterclaim), including disbursements and HST on a full indemnity basis;
h. Pre-judgment and post-judgment interests;
i. Cost of this action payable to the Plaintiff by the Defendants on a full indemnity basis plus, disbursements and HST; and
j. Punitive and exemplary damage against the Defendants.
[16] On October 6, 2009, the Defendant filed a defence and counterclaim for passing off against the Plaintiff.
II. Issues A. Plaintiff’s Claim A. Copyright
i. Does copyright subsist in the Plaintiff’s metatags?; and
ii. If so, did either of the Defendants infringe the Plaintiff’s copyright in the metatags by using same on the Defendants’ website;
iii. Did either of the Defendants infringe the Plaintiff’s copyright by using the Plaintiff’s cascading style sheet(s) or by copying the “look and feel” of the Plaintiff’s website?;
iv. If either of the Defendants’ infringed the Plaintiff’s copyright in the metatags, was that infringement innocent?
v. What remedy or remedies is the Plaintiff entitled to as a result of any copyright infringement as alleged?
B. Trademarks
vi. Did either of the Defendants’ use of the words or trademarks redtag.ca, redtag.ca vacations or Shop. Compare. Payless!! Guaranteed and Trademark registrations TMA657,520, TMA657,750 and TMA675,219 in respect thereof, on the Defendants’ website constitute trademark infringement, passing off or cause depreciation of goodwill, contrary to section 7(b), 7(c), 20 or 22 of the Trademarks Act?; and
vii. If so, what remedy or remedies and costs is the Plaintiff entitled to as a result of such infringement?
C. Defendants’ Counterclaim
viii. Did the Plaintiff’s use of 411 Travel Buys in the text or metatags of any websites constitute passing off contrary to section 7(b) or 7(c) of the Trademarks Act?; and
ix. If so, what remedy or remedies are fair and available to the Defendants as a result of that infringement?
[17] For the reasons that follow, I find:
A. Copyright
i. Copyright does not subsist in the Plaintiff’s combination of the title, description and key word metatags used by the Defendants;
ii. The Defendant 411 Travel Buys’ use of the Plaintiff’s metatags does not constitute copyright infringement. The individual defendant Carlos Lourenco did not personally infringe any rights of the Plaintiff;.
iii. If there had been infringement of the Plaintiff’ copyright by 411 Travel Buys, it would have been innocent infringement. Consequently, only injunctive relief would have been available to the Plaintiff;
iv. The Defendants did not infringe the Plaintiff’s copyright on the cascading style sheet(s) or in the look and feel of the website;
v. No remedy is necessary.
B. Trademarks
vi. Use of the Red Label trademarks by the Defendant 411 Travel Buys does not constitute trademark infringement under section 20 of the Trademarks Act, or passing off or depreciation of goodwill, contrary to section 7(b), 7(c) or 22 of the Trademarks Act. Given my findings on copyright and trademark rights of the Plaintiff, there are no damages or other remedies available to the Plaintiff;
vii. Costs to the Defendant awarded under Tariff B column III.
C. Defendants’ Counterclaim
viii. The Defendants’ counterclaim is dismissed. There is insufficient evidence to establish a reputation that would entitle the Defendants to relief in a passing off claim for the Defendants in respect of the Plaintiff’s use of 411 Travel Buys, in the relatively short period the Defendants’ website has been in existence, or having regard to the limited use of the words 411 Travel Buys by the Plaintiff. Further, no evidence of damages resulting from the alleged misuse of 411 Travel Buys by the Plaintiff has been provided by the Defendants for the Court to consider;
ix. The Plaintiff’s misappropriation of the Defendants’ business name for the improper purpose of selling it back to the Defendants for a profit shows a course of bad conduct by the Plaintiff that further negates any claim by the Plaintiff for enhanced, punitive or exemplary damages.
III. Evidence A. Plaintiff’s Witnesses (1) Vincenzo Demarinis (a) Evidence in Chief [18] Mr. Demarinis has been the President and CEO of Red Label Vacations Ltd [Red Label] since its incorporation in 2004. Red Label is an online travel business that allows customers to purchase travel and related services online through their website redtag.ca, and by phone, by directing them to a call center to speak with an agent. Red Label owns 3 registered trademarks: “redtag.ca” (TMA657,520), “redtag.ca vacations” (TMA657,750) and “Shop. Compare. Payless!! Guaranteed” (TMA675,219).
[19] In order to remain informed about the website’s performance, Red Label contracted ComScore in 2008-2011 to provide reports which were accessed monthly. Mr. Demarinis was also in the habit of regularly searching his website on Google to monitor its rankings. When performing one of these searches in February of 2009, he noted a number of the Defendants’ webpages appearing, showing similarities to redtag.ca in their metatags (including content, ordering and misspellings). It was Mr. Demarinis’ belief that the similarities constituted copyright and trademark infringement.
[20] In early March 2009, Mr. Demarinis phoned Mr. Lourenco to inform him of the infringement, to which Mr. Lourenco replied he knew nothing about it, but would look into the allegation. Sometime shortly thereafter 411travelbuys.ca was taken down and the offending content was removed. Later that same month, Mr. Demarinis learned that Mr. Lourenco had registered the following three domain names: “redtagspecials.ca”, “411redtagbuys.ca” and “redvacations.ca”.
(b) Evidence in Cross-Examination [21] Mr. Demarinis established that the majority of redtag.ca’s total advertising budget was spent on advertising with Google Ad Words. He further confirmed that the “online sales” portion as identified on a spreadsheet breaking down redtag.ca’s sales by category in January of 2009, accounted for $6,535,601 in revenues. He clarified though that sales generated by someone visiting the website then deciding to call in to the center would not be accounted for in that figure.
[22] Mr. Demarinis was also questioned about his registration of the domain name “411travelbuy.ca” through his wife’s name in early 2009, prior to Mr. Lourenco’s registration of the above three domain names, and stated that he had personally purchased the name with the intention of selling it to Mr. Lourenco for a small profit.
(2) Robert Gennaro (a) Evidence in Chief [23] Mr. Gennaro has been a Red Label employee since 2005. He began in a data entry role for the red tag website, which evolved to become Search Engine Optimization [SEO] director. He estimated that 95% of Red Label’s business is online, despite their call center handling much of their bookings. Since Red Label does not advertise their phone number, customers must visit the website to find out how to call to make travel, hotel and vacation reservations.
[24] Much like Mr. Demarinis, Mr. Gennaro checks redtag.ca’s online performance regularly. He primarily uses Google Analytics to establish where redtag.ca’s traffic comes from and attempts to streamline metatags, to attract more organic keyword searches.
[25] Mr. Gennaro estimated that in early 2009, redtag.ca had approximately 180,000 webpages associated with the website and approximately 70,000-80,000 of those were core pages (though he could not be certain), which required his personal attention to write the content (as much as one day’s efforts per page). His evidence on this front lacked credibility, given that the time frame he estimated to create the web pages is unrealistic. He continued to recognize some content in webpages put before him as his own writing, which he estimated to have been written at some point in 2007.
[26] In February 2009, Mr. Gennaro noticed some irregularities in the website’s Google Analytics and did a search for the redtag.ca website, discovering the same allegedly infringing content of the Defendant as Mr. Demarinis. He also noted the presence of the redtag.ca CSS in the Defendant’s website, and believes that the two websites resembled each other in style as well as the infringing metatag content.
(b) Evidence in Cross-Examination [27] Mr. Gennaro clarified on cross examination that of the 180,000 pages on redtag.ca’s website, many that refer to car rentals or hotels do not require much time to fill with content, whereas others require more attention. He estimated he had personally written the content for between 4,000 and 15,000 of the more content-heavy pages by 2009. He had trouble explaining the time frame he allegedly used to create the core web pages and content, as well as the specific number of pages he created personally, and lacked credibility on this point.
[28] With respect to Mr. Byers’ opinion that the similarities in style between the Plaintiff’s and Defendant’s websites were typical of industry-wide websites in 2009, he disagreed.
(3) Aniema Ntia (a) Evidence in Chief [29] Ms. Ntia was retained by Mr. Lourenco and by 411travelbuys.ca as an intern in September 2008, to complete her placement requirement for Humber College’s Advanced Web Development for E-Commerce Business program. She testified in court that while her placement ended in January of 2009, she did not officially become an employee of 411travelbuys.ca until February of 2011. The transcript of her interview for discovery however confirmed that she had previously agreed her employment with 411 Travel Buys began in November 2008.
[30] In July and August of 2008, she met a handful of times with Mr. Lourenco, in order to discuss her placement and what it would entail. It was clarified that Ms. Ntia’s role was to set up the entire 411travelbuys.ca website. At these meetings, Mr. Lourenco showed her a number of example websites of what he liked in terms of function and flow, though she did not recall specifically if he showed her redtag.ca in these meetings.
[31] She made a number of attempts at coding the Defendants’ website from scratch, but eventually purchased a template from Joomlashack. She did most of her work on her personal laptop, which already had the necessary software, until October 2011, at which time she gave the laptop to her son in Nigeria.
[32] While she eventually had help from others in developing the website, she was the administrator and sole password-holder. The only specific instruction Ms. Ntia received from Mr. Lourenco about the content of the webpages was not to be afraid to use the word “cheap” throughout their content. Beyond this input, he did not limit or tell her what to include. In the first year of the website, Ms. Ntia testified that she created all of the approximately 100 pages of 411travelbuys.ca herself.
[33] Her initial attempts to design the website involved placing a number of pages for the website under a single “head”. When Mr. Lourenco expressed his disapproval at this design, he hired Mr. Nhu Tran to consult on SEO, as well as oversee Ms. Ntia’s work. While Mr. Tran was consulting about the content of the website, it was ultimately Ms. Ntia who would have to input the information, or grant access for another to do so. In an initial meeting, Mr. Tran used the redtag.ca website to demonstrate the use of metatags in SEO. She admitted it is possible he input content from redtag.ca as a demonstration and she forgot to remove the information before it was saved onto the Defendants’ website.
[34] Ms. Ntia insists that she did not notice the infringing content until Mr. Demarinis called Mr. Lourenco to bring it to his attention in March 2009. After this call, Mr. Lourenco was noticeably upset and asked Ms. Ntia to take the website down and review all its content to ensure there would not be any other issues. She obliged and devoted two straight days to removing and re-writing all the metatags and checking to ensure that the website had original content.
(b) Evidence in Cross-Examination [35] In cross examination, Ms. Ntia confirmed that she had not received any training in trademark and copyright law, and that Mr. Lourenco had never asked her to copy anything from another website. Overall, Ms. Ntia’s position is that writing and ordering of metatags takes little skill or judgment. I found Ms. Ntia to be a credible witness.
[36] She further confirms that in January to March of 2009, there was no way of booking online at 411travelbuys.ca. A customer would have to visit the website and then call in to make a booking by speaking with an agent over the phone.
(4) Nhu Tran (a) Evidence in Chief [37] Mr. Tran was hired by Mr. Lourenco to advise on SEO, as well as to help Ms. Ntia to design the content of the Defendants’ website. For the duration of his association with 411travelbuys.ca, Mr. Tran maintained he did not have access to the servers, and any work he did was sent to 411 employees to be implemented.
[38] He remembered having given advice as to how to improve the site’s rankings on search engines like Google, but when the results were not to Mr. Lourenco’s satisfaction, they parted ways in 2010. He insists that at no time did he suggest another party’s trade names, trademarks, or web content be copied into the Defendant’s website.
(b) Evidence in Cross Examination [39] Despite his insistence that he had no control over the Defendants’ server and that he did not suggest to Ms. Ntia to copy redtag’s website, in referring to Exhibit 33, it was proven that Mr. Tran had shown redtag’s information to Ms. Ntia as an example she could follow.
(5) Ephraim Stulberg [40] Mr. Stulberg is a Senior Manager and VP of Matson, Driscoll & Damico Ltd in Toronto, an international forensic accounting firm. He has 6 years of experience in investigative and forensic accounting, and has focused exclusively on economic damage quantification and business valuations since entering the industry in 2008. He is qualified as a forensic accountant, but the Defendants object to his evidence in paragraphs 40 to 45 of his expert report, as he is not an SEO expert.
(a) Evidence in Chief [41] Mr. Stulberg has calculated the Plaintiff’s lost profits resulting from the Defendants’ alleged infringement at $760,000. Based on his review of their financial records he believes they suffered a loss of profits for longer than strictly the period of the alleged infringement (January to March 2009); specifically, from February to November 2009 [the affected period].
[42] After reviewing the Plaintiff’s financial records for 2008, Mr. Stulberg added a growth rate of 10% (based on the Plaintiff’s historic rate of growth, travel industry data from Statistics Canada, comparable public companies, and analysis of the Plaintiff’s main vendors), to determine their projected revenue for the affected period. He estimated the cost of sales at approximately 93.9%, as well as variable sales commission and bad debt costs of 0.99% of revenue. He also factored in threshold sales commissions of 0.96% of the lost revenue that would have been earned.
[43] According to trends in the Plaintiff’s rate of growth from 2004 to 2008, Mr. Stulberg estimates that the Plaintiff’s revenue in 2009 should have been approx. $120,000,000 and $140,000,000 in 2010. In contrast, their actual revenue in 2009 was $100,000,000 and $131,000,000 in 2010. Looking on a monthly basis, Mr. Stulberg notes strong growth patterns continued for the Plaintiff through January 2009, but from February 2009 to December 2009 revenue growth collapsed.
[44] The Plaintiff’s six top vendors prior to the affected period (Transat Holidays, Sunwing Vacations, Air Canada Vacations, Sunquest Vacations, Signature Vacations, Nolitours), accounted for over 50% of the Plaintiff’s revenue. In Mr. Stulberg’s opinion, when expressed in graph form the decline in revenue from these vendors and the affected period closely overlap, indicating likelihood the two are causally connected.
[45] While acknowledging that it is possible that a portion of the Plaintiff’s declining revenue can be attributed to negative industry trends, the Plaintiff’s rate of revenue growth prior to 2009 exceeded the industry average; as well, online travel agency revenue declined less overall in 2009 than the rest of the industry, and use of online travel agencies increased in Canada by 4%.
[46] Due to the global client base of comparable public companies like Expedia, their data was limited in relevancy to analyzing the Plaintiff’s situation. This unfortunately makes it difficult to account for any effect the relative growth rates of competitor companies might have had on the Plaintiff during the affected period. Another consideration in calculating the Plaintiff’s loss in revenue was that Conquest Vacations ceased operations in April of 2009 (a vendor who previously accounted for approximately 4% of the Plaintiff’s revenue).
[47] Mr. Stulberg also considered damage to the Plaintiff’s revenue in the form of lowered performance on organic keyword searches in online search engines (derived from Google Analytics statistics). Between November 2008 and January 2009, there was growth in the Plaintiff’s organic keyword searches, and during the affected period, their performance began to slow substantially. Mr. Stulberg opines that this trend was exacerbated by the downgrading in rankings by a search engine when multiple versions of a website are perceived.
(b) Evidence in Cross-Examination [48] In cross-examination, Mr. Stulberg confirmed that he has no background or training in web optimization and that he made assumptions regarding a correlation between web traffic and revenue while relying on the 2008 Google data Mr. Byers had testified was irrelevant due to updates in the Google algorithm around that time. This reliance brings into question his 10% projected growth estimate for the Plaintiff’s revenue.
[49] While he made efforts to incorporate characteristics of the online travel industry in his report, he is not an expert in the field. For example he did not consider the effects of competitor companies increasing their efforts to attract online customers when calculating the Plaintiff’s projected loss, but insists that his 10% projected growth rate included a conservative buffer to account for such eventualities. I find that the lack of a concrete foundation for the assumptions made and calculations of losses due to the Defendants’ alleged infringements render his conclusions on lost profits and damages speculative at best.
[50] He also explained that he had not included the months of August, September and October in some of his calculations due to timing constraints but agreed that their inclusion would produce a better-rounded picture of the Plaintiff’s business.
(6) Barry James Byers [51] Mr. Byers is the founder of Search Engine Academy Toronto (2002), an internet marketing school for business owners and marketing professionals. He is certified as a Neuro Linguistic Programming Practitioner, as well as certified to teach Advanced SEO. It was accepted by the Defendants that Mr. Byers is an SEO expert.
(a) Evidence in Chief [52] Mr. Byers is of the opinion that the Defendants copied the Plaintiff’s website, and that use of the Plaintiff’s metatags and content significantly affected the ranking and web traffic for both parties’ websites. In coming to this conclusion, he reviewed the metadata of each website (typically used to specify page description, keywords, author of document, last modified, etc., by browsers, search engines and other web services), as well as having reviewed their coding.
[53] He noted instances where misspellings in the keyword metatags were identical in sequential order between the websites. While leaving misspellings in such tags is common practice, the level of similarity in this case suggests copying. Further, a number of the Defendants’ webpages contained the Plaintiff’s brand name or registered trademarks, and similar or identical metatags that had only been modified by adding the word “cheap”.
[54] In addition, the CSS (a style sheet language used for describing the look and formatting of a document that facilitates manipulation of a website’s design) titled “stylesRedTag.css”, appears to have been in the Defendants’ website folders at some point, indicating it had likely been copied from the Plaintiff. Despite evidence of copying in metatags and coding, Mr. Byers thinks the broader similarities between the websites are in large part industry-wide and not unique to the parties.
[55] In analyzing the webtraffic to each website, Mr. Byers focused on the ComScore and Korax webtraffic reports and statistics relating to Google (who held 83% of the Canadian market in 2009). Appearing on the first page of a Google search gets approximately 92% of all Google traffic. Between December 2008 and March 2009, redtag.ca dropped from 21st position in Canadian Travel Industry rankings to 26th in April 2009; dropping again to 38th in May 2009; moving up to 36th in June 2009, then dropped again to 44th in July 2009. In August 2009, they began a 5 month climb back up to 19th position in December 2009.
[56] Total unique visitor traffic to the Plaintiff’s websites followed a similar pattern to their rankings. There was also a decline in the amount of search hits for the top four branded keyphrases associated with the Plaintiff (‘red tag’, ‘redtag’, ‘redtag.ca’, ‘red tag vacations’). Mr. Byers’ opinion is that most, but not all, of this decline in keyphrase searches can be attributed to seasonal trends.
[57] While several updates to Google between April 2008 and August 2009 made requesting ComScore and Korax analytics for 2008 irrelevant, a Google update in February of 2009 should have increased traffic to the Plaintiff’s websites by emphasizing branding, and yet traffic to the Plaintiff’s website decreased after it took effect.
[58] Mr. Byers is of the opinion that the Defendant’s copying of the Plaintiff’s websites had the effect of confusing search engines into thinking the Defendants’ websites were related to the Plaintiff’s, resulting in what appeared to be duplicate documents being filtered out of search results. In his opinion, this process would have begun approximately one month after a website became active and would take another two to three months to complete, and that the original website was more likely to be filtered out. In Mr. Byers’ opinion, effects on traffic of the duplicate content would have started to take place in March to June 2009. Once the duplicate websites were removed, it would take approximately three to six months to un-filter, making it likely to start taking place in June to September of 2009.
(b) Evidence in Cross-Examination [59] Mr. Byers admitted there were significant discrepancies between the ComScore and Korax reports of internet search traffic to the Plaintiff’s website (see table below). He further admitted that he had referred to both sources in creating his expert report (and even compiled a spreadsheet comparing data from each source relating to 2009) but could not explain the discrepancy in numbers, other than to point out they are two different services using different means to compile data. For example, since Korax was the Plaintiff’s hosting server, their data was based on traffic through their own server.
[60] Further, Mr. Byers admitted that he is not an expert in the online travel industry and may have failed to make suitable adjustments for the industry’s inherent seasonality. He also admitted that neither the ComScore nor the Korax statistics on keyword searches would recognize users who arrived at the Plaintiff’s website by a means other than the top 4 keywords he had isolated.
[61] With regards to his report’s statement that Google’s Vince update would reward brand names in their organic keyword search rankings, he admitted he was not certain as to whether Google indeed recognized redtag.ca as a brand at the relevant time. If they did not, it would affect somewhat his opinion about the effect of the Defendant’s alleged infringement. Importantly, Mr. Byers further clarified that Google has not for many years (including in 2008/2009) used metatag keywords in its search rankings.
(7) Scott Green [62] Mr. Green is the Controller at Red Label Vacations Inc. He has been in this position since May 31, 2010, and was responsible for the accounting records for the company for the fiscal year ending August 31, 2010 (September 1, 2009-August 31, 2010). His affidavit evidence was accepted by the Defendants without personal appearance or cross-examination at trial.
[63] Mr. Green prepared the monthly trial balances, the monthly sales analyses, and the general ledger details for the Plaintiff for the fiscal years ending August 31, 2007 to August 31 2010 on his office computer between September 25 and 30 of 2014. His affidavit evidence was accepted by the Defendants without personal appearance or cross-examination at trial.
(8) Jack Massarelli [64] Mr. Massarelli is a partner with Fazzari + Partners LLP, having worked there since 1994. His work there mostly focuses on assurance and audit engagements of private and public companies, Notice to Readers and general business advice, consulting and tax planning.
[65] Mr. Massarelli was responsible for reviewing the file, managing the staff and issuing the Review Engagement Report for the Plaintiff regarding the statements of operations, deficit and cash flows for the year ended August 31, 2005.
[66] Mr. Masarelli was also responsible for overseeing the Auditor’s Reports of the Plaintiff’s business for the years ending August 31, 2006 to August 31 2010. It is his opinion that the financial statements tendered into evidence present the financial position and operations of the Plaintiff fairly. This affidavit evidence was accepted by the Defendants without personal appearance or cross-examination at trial.
(9) Alex V. Bulan [67] Mr. Bulan is the Director and Officer of Korax Inc., a company that provides website hosting, e-mail services, dedicated servers, and domain name registration services, and has been in operation since 1997. It exercises complete control over its network and server infrastructure, and ensures stable, reliable and predictable service through careful monitoring of its equipment.
[68] Its web hosting services include a traffic log maintained for each website it hosts which are available to each customer for download for thirteen months, after which they are automatically purged from Korax’s servers. They also generate monthly analytics reports for each hosted website summarizing the data contained in the traffic logs, which are available for a limited period (thirteen months between February of 2009 and 2010) after which they are also purged.
[69] In Mr. Bulan’s words, “the analytics reports typically include indicators such as the most popular pages, the total number of pages requested, and the total volume of data transferred. In addition… [they] include unique visitors, number of visits, visit duration, and search engine keyphrases and keywords.” “Unique Visitors” refers to the number of distinct IP addresses requesting pages from a website.
[70] Korax was hired to provide web hosting to the Plaintiff’s website from June 2004 to present. This affidavit evidence was accepted by the Defendants without personal appearance or cross-examination at trial.
(10) Brent Bernie [71] Mr. Bernie is the President of ComScore Media Metrix Canada [ComScore], and has been since 2002. ComScore provides market research through data related to online audience measurement, e-commerce, advertising, search, video and mobile. The Plaintiff was a subscriber to ComScore’s Media Metrix database from December 2008 to March 2011. This service allows clients to access a database using a web interface protected by password, enabling them to access different levels of data depending on their subscription.
[72] Reports are not typically included in this service, however customers can access the database to run their own searches to compile their own report. Some reports are available through the database, including a Key Measures report which “provides traffic measurements for a selected list of websites during a selected timeframe”.
[73] ComScore’s data comes primarily from panel and consensus data. Panel data is compiled from approximately two million people worldwide who have agreed to allow ComScore to measure their internet behaviour. Census data is collected through websites and advertisers who place “tags” on their pages and ads allowing ComScore to measure visitors. Mr. Bernie is not aware of any issues affecting the operation and maintenance of the ComScore servers during the relevant period of December 2008 to March 2011.
[74] This affidavit evidence was accepted by the Defendants without personal appearance or cross-examination at trial.
(a) Unique Visitor Data to redtag.ca per the ComScore and Korax reports submitted by the Plaintiff in their Affidavit of Documents covering the period of February 2009 to February 2010
Month
ComScore Date – Unique Visitors
Korax Data – Unique Visitors
Difference
February 2009
541,000
560,571
19,571
March 2009
562,000
548,481
13,519
April 2009
399,000
459,825
60,825
May 2009
270,000
370,987
100,987
June 2009
303,000
369,819,
66,819
July 2009
282,000
425,337
143,337
August 2009
386,000
424,747
38,747
September 2009
345,000
421,547
76,547
October 2009
342,000
500,144
158,144
November 2009
432,000
550,498
118,498
December 2009
489,000
582,147
93,147
January 2010
581,000
813,420
232,420
February 2010
757,000
690,433
66,567
B. Defendants’ Witnesses (1) Marco Braggio (a) Qualifications [75] Mr. Braggio has been a Product Manager in SEO and Web Accessibility and Performance for Walmart Canada Corp since June 2013. Prior to that, he was Lead SEO Specialist at DAC Group (March 2011 - June 2013), Search Engine Marketing Lead for Critter Search Inc (March 2009 - February 2011), and SEO Analyst for Cryptologic Inc (January 2008 - March 2009). He has an Attestation of Collegial Studies in Network and Internet Support from CDI College Montreal. He is qualified as an SEO expert, but not in respect of the industry.
(b) Evidence in Chief [76] Mr. Braggio is of the opinion that having duplicate content on a website is a disadvantage rather than an advantage, and could make it more difficult to achieve a high search ranking and relevance. His report states that search engines can time stamp websites to determine which was the original website, thereby penalizing the duplicate website in rankings.
[77] He states that a website’s Google ranking depends on how competitive an industry is. Since the travel industry is one of the most competitive online markets, it would take a new website at least a year to catch up to more established websites. Since the Plaintiff’s website has consistently rated in the top five for many industry related keywords, the Defendants would have a particularly hard time catching up in rankings to the Plaintiff.
[78] Regarding the domain names the Defendants registered sometime in March 2009, they never had a physical website and served only to redirect traffic. In Mr. Braggio’s opinion, these domain names had little to no value, since they had no prior webtraffic history or online search engine equity, resulting in no significant ranking or web traffic implications. By using an internet archive called the WayBack Machine, Mr. Braggio was able to find only two instances where traffic was captured from the Plaintiff’s website and brought to the Defendants’ website, evidencing ne