Significant changes coming to Canadian trademark law: plan ahead

January 2017  |  SPECIAL REPORT: INTELLECTUAL PROPERTY

Financier Worldwide Magazine

January 2017 Issue

In 2014, Canada made some significant amendments to its Trademarks Act. The amendments are intended to allow Canada to accede to three international trademark treaties: the Nice Agreement, the Madrid Protocol and the Singapore Treaty. These changes are not yet in force, and will not be implemented until the existing Trademark Regulations have been updated, likely by the end of 2018.

This article highlights the most significant changes and offers some practical tips to trademark owners in anticipation of the implementation of the new regime.

In brief, the new regime will introduce new costs and concerns for trademark owners. Planning ahead, trademark owners should carefully review their trademark portfolio and promptly file for any unregistered marks and take advantage of the benefits offered by the current regime, such as a single government filing fee covering all goods and services.  Trademark owners should also consider setting up a trademark monitoring system for their most valuable marks, which will become especially important under the new regime when the threat of trolls and squatters is a real concern.

Elimination of ‘use’ as a filing basis and a precondition for registration

This is perhaps the most significant change, especially in a country where use has been the basis for trademark rights both under the common law and since the enactment of the first statute close to 150 years ago.

At present, a trademark application in Canada must be based on one or more of four filing bases: (i) actual use in Canada since a specified date; (ii) ‘made known’ in Canada since a specified date; (iii) foreign application or registration in the applicant’s country of origin coupled with use in any country; and (iv) proposed use in Canada. Where an application is filed on the basis of proposed use in Canada, it will not proceed to registration until a declaration of use is filed attesting that the mark has been used in Canada for the applied-for goods and services.

After the amendments are implemented, a trademark application will no longer need to identify a filing basis and the mark will not need to be used anywhere in order for it to be registered. As a result, it is possible for an applicant to apply for, and obtain, a trademark registration in Canada without having used the mark. Proponents have argued that the elimination of use as a precondition for registration will speed up the registration process because an application can proceed straight to registration upon expiry of the opposition period. The concern, however, is that it will likely attract applications from applicants who have no bona fide business interest in the applied-for marks (known as trademark trolls and squatters), a common occurrence in first-to-file countries.

Under the new regime, the Canadian trademark register would no longer contain valuable information about marks such as their filing bases or their claimed date of first use in Canada. This will make it very difficult for trademark owners to search and clear marks as they would not be able to quickly assess who has senior rights based on use. The removal of the requirement for applicants to identify a filing basis could also lead to more oppositions, as trademark owners would now have to rely on this procedure in order to prevent applicants from registering marks for which they have no prior use or bona fide intention to use at the time of filing.

This change to the Trademarks Act means that being the first to file an application will be critical. Trademark owners should consider defensive registrations in cases where their marks may be vulnerable to being hijacked by squatters. Further, trademark owners should carefully monitor the Canadian Trademarks Journal to identify and oppose conflicting marks filed by potential trolls.

Adoption of the Nice Classification system

At present, goods and services in a Canadian trademark application do not need to be classified. There is a single government filing fee, regardless of the breadth of goods and services claimed in an application. This single filing fee structure will change once Canada implements the Nice Classification system. The amended Trademarks Act will require applicants to describe goods or services in ordinary commercial terms and to classify them according to the Nice Classification system.

The Canadian Intellectual Property Office (CIPO) recently sought consultation on a proposal for a fee-per-class structure at filing and at renewal. The argument is that a fee-per-class system would deter applicants from filing trademark applications for goods and services for which they do not intend to use the mark. No final decision has been made on the fee structure.

Assuming that CIPO adopts a fee-per-class system, this change to the Trademarks Act means that trademark owners can expect higher filing costs for Canada. To control costs, trademark owners will need to be more selective in the range and classes of goods and services that they include in their applications.

Non-traditional marks and examination based on distinctiveness

The amendments will expand the types of marks that can be registered in Canada to include non-traditional marks such as three-dimensional shapes, holograms, moving images, modes of packaging goods, sounds, scents, tastes and textures or positioning of a sign. The amendments will also allow CIPO to refuse marks based on lack of distinctiveness. Trademark owners may be able to overcome this objection by filing evidence of acquired distinctiveness. At present, it is not clear what the test for acquired distinctiveness will be. Regardless, obtaining evidence of acquired distinctiveness can be expensive.

Reduced term of registration

Currently, a Canadian trademark registration must be renewed every 15 years. The new regime will shorten the term to 10 years. Registrations issued before the amendments come into effect will continue to have a 15-year term until their next renewal date. In addition to a shorter term, with CIPO’s proposed fee-per-class renewal structure, trademark owners can expect higher renewal costs under the new regime.

Elimination of the ‘associated marks’ provision

Under the current regime, confusing trademarks are registrable if the applicant is the owner of all such trademarks. These trademarks are then ‘associated’ and cannot be assigned to another person unless all associated marks are also assigned to that same person. The amendments will remove the provision requiring the association of marks. This means that a registrant may find it possible to split ownership of their registered confusing marks and assign them to different entities.

However, Canadian trademark law continues to be premised on the basis that a trademark functions as a single source indicator. If confusing marks can be owned by and indicate multiple sources, the mark will no longer be distinctive of one source. Thus, although the provision dealing with ‘associated’ marks may disappear under the new regime, trademark owners should not forget the importance of, and rationale for, the common ownership rule.

Partial non-use cancellation permitted

Under the current regime, it is not possible for third parties to request cancellation of only certain registered goods or services based on non-use. A cancellation notice is issued for the entire registration. The amendments will allow requesting parties to limit their non-use cancellation proceedings to specific goods and services that are of interest to them.

Divisional applications permitted

Under the new regime, applicants will be permitted to divide trademark applications, which is currently not available. Applicants may want to divide their application when they are faced with a citation for only certain goods or services and wish to continue with the divided application for the remaining goods or services without delay. Applicants may also rely on divisional applications when they want to assign their application for certain goods or services only.

 

Junyi Chen is an associate and Hung Nguyen and Kavita Ramamoorthy are partners at Deeth Williams Wall LLP. Ms Chen can be contacted on +1 (416) 941 8262 or by email: jchen@dww.com. Mr Nguyen can be contacted on +1 (416) 941 9289 or by email: hnguyen@dww.com. Ms Ramamoorthy can be contacted on +1 (416) 941 9607 or by email: kramamoorthy@dww.com.

© Financier Worldwide

BY

Junyi Chen, Hung Nguyen and Kavita Ramamoorthy

Deeth Williams Wall LLP

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