Trade-Marks Act Amendments of 2014… “Useless”?

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Trade-Marks Act Amendments of 2014… “Useless”?

The 2014 amendments to the Trade-Marks Act [1], expected to take effect in 2019, reflects numerous changes made as part of Bill C-31 – the Harper Government’s omnibus budget bill.[2] The government’s stated objective for these amendments was to “reduc[e] costs and red tape for all Canadian businesses by harmonizing Canada’s trademark framework with international norms”.[3] Specifically, these amendments were made to prepare Canada for accession to the Nice Agreement, the Singapore Treaty, and the Madrid Agreement, all of which seek to standardize international trademark rules and simplify trademark registration procedures among its signatories.[4] One of the most controversial amendments in Bill-31 is the overhaul of s. 30, which removes the proof of use as a precondition to trademark registration. This paper will discuss the current use-based trademark registration regime, the criticisms of the upcoming changes, and how this topic connects to the overarching themes in intellectual property law.

Current Trademarks Registration Regime

As s. 30 of the Trade-Marks Act currently stands, an applicant for a trademark must provide evidence of the trademark’s use in Canada, evidence of the trademark being “made known” in Canada, evidence of registration or use of the trademark in a WTO country, or a statement of proposed use.[5] Applicants that have filed an application and paid the $250 application fee will be issued an application number and the application will be deemed “Formalized”.[6] A trademark examiner will then review the application and either approve or deny it based on whether it complies with s. 30; this decision is appealable to the Federal Court of Canada.[7] If the application is approved, the Trademarks Board publicly advertises the application in the Trade-Marks Journal.[8]

A third party – such as a company that owns an unregistered trademark in common law through longstanding use[9] – has two months from the advertisement to file a statement of opposition and pay a $750 opposition fee.[10] Non-frivolous oppositions will adjudicated by the Trade Marks Opposition Board, with the applicant and opponent as parties to the proceeding.[11] The opponent bears an initial burden of “adducing sufficient evidence” to support its grounds of opposition, after which the burden shifts to the applicant.[12] The available grounds of opposition are listed in s. 38 and while there is no explicit catch-all ground for denying bad faith applications, recent jurisprudence has found that “the statement provided by s. 30(i) purports to be evidence of the applicant’s good faith in submitting its application” such that evidence to the contrary can be used to successfully oppose.[13]

If there is no opposition or if the opposition fails, the applicant pays an additional $200 to have the trademark registered.[14] This usually occurs within ten to fourteen months of the initial application and, if the applicant filed a statement of proposed use, it must now submit a declaration of use attesting to the current use of the trademark.[15] If the Registrar discovers that the trademark has not been used for three years after registration, the Registrar can expunge it.[16] According to ss. 4(1) and 4(2) of the Trade-marks Act, “use” occurs if the trademark is marked on goods at the time they are traded or displayed in the performance or advertisement of services.[17] The Federal Court is also given broad discretion to cancel registered trademarks under s. 57(1), either on its own initiative or at the request of third parties,[18] and existing brand-owners can choose to sue trademark registrants in extracontractual liability for infringement.[19]

Criticisms of C-31

According to the many critics – including the Canadian Bar Association – the abolishment of use-based registration weakens the trademark regime against abuse by “squatters” or “trolls” who accumulate trademarks in order to resell them or prevent legitimate brands from using them.[20] These squatters are effective because they register common words or names and existing but unregistered trademarks.[21] Although there are still recourses for the Registrar, the Federal Court, and third parties to contest bad faith applications using ss. 38(2), 45(3), 57(1), and 7 of the Trade-Marks Act, such proceedings are costly and time-consuming alternatives to simply screening out suspected squatters in the first place.[22] Existing brand-owners would need to vigilantly monitor the Trademarks Journalto catch squatters attempting to steal their marks. As well, the resultant cluttering of the trademarks Register makes it a less useful tool for looking up what trademark owners actually sell and the likelihood of conflicts with squatters disincentivizes brand creation.[23] Furthermore, since s.30(i) of the Trade-Marks Act has also been removed in the amendments, it would become less tenable to deny applications based on bad faith.[24]

Despite the widespread criticism of the change in the law, it remains to be seen what the new trademark registration process will look like in practice. Perhaps the Registrar’s discretionary and investigatory powers will be augmented such that it will be easier to deny suspected squatters; the source of discretion may be s. 30(2)(d) of the amended Trade-Marks Act, which requires an applicant to submit “any prescribed information or statement”.[25] The federal government has also proposed measures such as IP “SWAT teams”, IP legal clinics, and public education campaigns to help small- and medium-sized businesses protect themselves against squatters.[26] After all, even the current use-based registration is not completely squatter-proof. For instance, there were recent filings for pre-existing trademarks such as Budweiser, Chanel, Evian, Heineken, Jack Daniels, Loreal Paris, Nestlé, and Tim Hortons under the proposed use requirement in s. 30(e).[27] Some of the applicants abandoned their applications, but in some of the cases – namely, Evian, Heineken, Jack Daniels, and L’Oréal Paris – they were not screened out by the trademarks examiner and the brand-owners had to step in to oppose.[28]

Overarching Themes

The proposed amendments and related discussion on trademark squatting calls back to the idea that intellectual property is supposed to be, at its core, a facilitator of creation and commerce. It operates on a delicate balance of incentives and disincentives such that an overly onerous trademarks registration regime can create too many obstacles and a regime that is not onerous enough is ripe for abuse and anti-competitive behaviour by squatters. Either extreme can have a chilling effect on legitimate brand creation.

Moreover, the proposed amendments reflect the degree to which international intellectual property treaties can constrain or otherwise influence the domestic legislator’s choices. Even though none of the treaties Canada sought to join explicitly required the abolishment of use-based registration,[29] the Harper government likely faced pressures to follow the European model, in which the only information required to register are: an application form, the name of the owner, a representation of the trademark, and a list of goods and services.[30] Use-based registration is only one of many compromises that Canada made, given that other countries often call the shots in intellectual property.

[1] Trade-Marks Act, RSC 1985, c T-13.

[2] Philip Lapin, “Signed, sealed and almost delivered – Canada’s new trademark law is in sight” (12 February 2018), online (blog): Smart & Biggar <http://www.smart-biggar.ca/en/articles_detail.cfm?news_id=1356>.

[3] House of Commons Debates, 41-2, No 67 (2 April 2014) at 1710 (Andrew Saxton).

[4] “Trademarks legislative changes and international treaties” (28 February 2015), online: Canadian Intellectual Property Office <https://www.ic.gc.ca/eic/site/cipointernet-internetopic.nsf/eng/wr03964.html>.

[5] Supra note 1 at ss. 30(b), (c), (d), and (e).

[6] “How your trademark application is processed” (8 March 2018), online: Canadian Intellectual Property Office <https://www.ic.gc.ca/eic/site/cipointernet-internetopic.nsf/eng/wr00035.html?Open&wt_src=cipo-tm-main>; “Complete list of fees for trademarks” (28 April 2017), online: Canadian Intellectual Property Office  <https://www.ic.gc.ca/eic/site/cipointernet-internetopic.nsf/eng/wr04194.html>.

[7] “How your trademark application is processed”, supra note 6.

[8] Ibid.

[9] “A guide to trademarks” (9 October 2018), online: Canadian Intellectual Property Office <http://www.ic.gc.ca/eic/site/cipointernet-internetopic.nsf/eng/h_wr02360.html#registeredTMVSUnregisteredTM>.

[10] Trade-Marks Act, supra note 1 at s. 38; “Complete list of fees for trademarks”, supra note 6.

[11] Toni Polson Ashton, “Bad Faith Trade-Mark Filings” (24 July 2013), online (blog): Sim & McBurney – Sim Ashton & McKay LLP <https://www.ic.gc.ca/eic/site/cipointernet-internetopic.nsf/eng/h_wr02360.html#opposition>; “A guide to trademarks”, supra note 9.

[12] John Labatt Ltd. v. Molson Cos., 1990 CarswellNat 1053 at para 11.

[13] Cerverceria Modelo, S.A. de C.V. v. Marcon, 2008 CarswellNat 3399 at para 30; see also Julia Wine Inc. c. Marques Metro, S.E.N.C., 2016 CarswellNat 2801 at para 52.

[14] “Complete list of fees for trademarks”, supra note 6.

[15] “How your trademark application is processed”, supra note 6.

[16] Trade-Marks Act, supra note 1 at s. 45(3).

[17] Ibid at ss. 4(1) and 4(2).

[18] Ibid at s. 57(1).

[19] See T-Rex Véhicules inc v 6155235 Canada inc, 2008 QCCA 947.

[20] Letter from Canadian Bar Association to Mark Schaan (24 May 2017), online: Canadian Bar Association <https://www.cba.org/CMSPages/GetFile.aspx?guid=48f6ce14-56ce-4343-87a9-654694424cd0>.

[21] Cynthia Rowden, “A Perfect Storm Confronts Trademark Owners and the Canadian Trademarks Office” (8 February 2018), online (blog): Bereskin & Parr LLP <https://www.bereskinparr.com/doc/a-perfect-storm-confronts-trademark-owners-and-the-canadian-trademarks-office-45-class-applications>.

[22] Letter from CBA, supra note 20.

[23] Cynthia Rowden, “Canada’s new ‘use-less’ Trademarks Act” (November 2014), online (blog): Bereskin & Parr LLP <https://www.bereskinparr.com/files/file/docs/BER_Canadas_New_Use-less_Trademarks_Act.pdf>; Letter from CBA, supra note 20.

[24] John McKeown, “Bad Faith Trademark Applications” (19 September 2016), online (blog): Goldman Sloan Nash & Haber LLP <http://www.gsnh.com/bad-faith-trademark-applications/>.

[25] “Bill C-31” (19 June 2014), online: Parliament of Canada <http://www.parl.ca/DocumentViewer/en/41-2/bill/C-31/royal-assent/page-4>.

[26] Mark D. Penner, “To Combat Patent Trolls and Trademark Squatters, Canada Proposes IP ‘SWAT’ Teams” (30 April 2018), online (blog): Fasken Martineau DuMoulin LLP <https://www.fasken.com/en/knowledgehub/2018/05/to-combat-patent-trolls-and-trademark-squatters>.

[27] Ashton, supra note 11.

[28] Ibid.

[29] Letter from CBA, supra note 20.

[30] “Registration Process” (22 September 2017), online: European Union Intellectual Property Office <https://euipo.europa.eu/ohimportal/en/registration-process>.

This content has been updated on January 9, 2019 at 20:58.