New Canadian Trademark Requirements Will Create Challenges, Opportunities For Brand Owners

Tuesday, December 09, 2014

Beginning in 2015, significant changes to Canadian trademark law likely will go into effect. Because the United States is by far Canada’s most important trading partner, and Canada is the leading destination for U.S. exports, these changes will have an immediate effect on U.S. companies that operate or distribute goods north of the border. Although many details of the coming changes are not yet finalized, U.S. trademark owners should consider adopting strategies now to protect their brands in Canada.

The Economic Action Plan 2014 Act, No. 1, also known as “Bill C-31,” was an omnibus funding bill enacted in June 2014. The legislation includes several significant changes to the existing Canada Trade-marks Act: 

  • Trademarks may be registered without demonstration of use, either in Canada or in another country. Previously, trademark registration required either actual use or a stated intent to use the mark in connection with goods and services in Canada, or both use and registration in another country.
  • The term of a trademark registration will be shortened from 15 years to 10 years.
  • Canada will adopt the Nice International Classification of Goods and Services for the Purposes of the Registration of Marks, and the Nice classifications will be used to designate use in all registrations.
  • The amendments are designed to permit Canada to accede to the Singapore Treaty on the Law of Trademarks and the Madrid Protocol for the international registration of trademarks.
  • The proposed trade-mark regulations are intended to streamline procedures for trademark opposition and summary cancellation proceedings.
  • The technical requirements to obtain a filing date for an application are relaxed. In addition, applicants will be permitted to file divisional applications to allow non-contentious uses in an application to be registered while examination continues on disputed classes. This will prevent an issue relating to one part of an application from blocking the registration of any portion.

The changes to the Trade-marks Act will be effective when the Canadian Intellectual Property Office (“CIPO”) promulgates new implementing regulations, including new fee provisions, most likely in late 2015 or early 2016.

As a result of these changes, U.S. brand owners with a presence in Canadian markets should re-evaluate their trademark strategies. In the past, many U.S. companies have relied on use to protect their marks in Canada, and have not pursued registration. However, companies should reconsider that strategy since the changes will greatly simplify the registration of marks. Some important considerations include:

  1. File Registrations Early and Often.

The amendments will make it easier for companies to file protective registrations to establish priority for potential expanded use in Canada, since a demonstration of use will not be required. A registration will provide priority over companies that adopt a confusingly similar mark after the effective date of the registration. As a result, U.S. brand owners with established marks that plan to expand Canadian operations into new businesses should consider filing protective registrations.

  1. Consider Registering Now, Rather Than Later

Some brand owners may find an advantage in filing registrations before the new regulations go into effect. Although the CIPO has not established the fees for filing registrations under the revised Act, it is likely that significant fees will be required for each designated class. As a result, some brand owners may obtain an advantage by registering marks used on a range of goods and services before the amendments come into force. In addition, companies using sound or color marks should consider filing applications before the amendments go into effect. Currently, applications for color and sound marks do not require proof of acquired distinctiveness. Under the amendments and proposed regulations, however, it is likely that applicants will be required to prove acquired distinctiveness, generally through use of an affidavit or survey evidence.

  1. Exercise Care When Clearing Marks in Canada.

The new registration system is likely to increase the cost of clearing new trademarks in Canada substantially. Historically, Canada has not been a hospitable jurisdiction for trademark “squatters,” since registration under prior law required actual use. With the removal of that requirement, it is likely that speculative registrations will increase. As a result, companies attempting to clear new marks will have a larger number of registrations to evaluate. While prior use remains a basis for opposing a registration or seeking cancellation, registrations will not contain stated dates of first use. As a result, it will be more difficult for companies to evaluate the merits of challenging marks based on prior use and some companies may need to undertake costly market investigations to assess priority based on use.

  1. Be Diligent in Policing Marks

Finally, with an increase in registrations, it is likely that U.S. brand owners will need to increase their diligence in monitoring and opposing new registrations. An application may be opposed on several grounds, including prior use, a prior application, or the absence of intent to use the trade-mark as of the filing date. However, oppositions based on prior use or on lack of intent to use may prove difficult, especially since the application itself will lack a statement of use. Although the proposed CIPO regulations attempt to streamline cancellation proceedings, they are likely to continue to be time-consuming and expensive.