Sheldon Burshtein and Antonio Turco are partners of Blake, Cassels & Graydon LLP and counsel on branding, copyright, social media and related issues.
Bill C-31, which will legislate the federal government’s recent budget, will amend a number of laws, including the Trade-marks Act. While the Bill will enable Canada to join several international trade-mark treaties and make other welcome changes, the proposed elimination of the requirement to “use” a trade-mark before obtaining a registration for the mark is a significant departure from the foundation of Canadian trade-mark law.
“Use” Now a Cornerstone
Sheldon Burshtein
Now, to acquire rights in a trade-mark in Canada, a person must use the mark. Unregistered rights are obtained by acquiring a reputation in the trade-mark as identifying the source of goods or services with which the mark is used.
To register a trade-mark, use is also a requirement. An application may be based on one or more bases, all of which require use of the trade-mark, in Canada or elsewhere, before a registration is issued.
Elimination of Use as Requirement for Registration
The proposed scheme will permit an application to be filed, and a registration obtained, without any use of the mark having occurred anywhere.
The government says that adherence to the treaties requires this change. This is not correct. The treaties do not preclude requiring use of a trade-mark as a prerequisite to registration. While many countries in the world have a system like the one that is proposed, there are a number of problems with it for legitimate trade-mark owners.
At first blush, one might think that the proposed system would make life easier for Canadian businesses and those in the marketing industry. But it will have the exact opposite effect for a number of reasons.
Increased Clearance Costs, Delays and Uncertainty
Antonio Turco
There will be a significant increase in time, cost and uncertainty in clearing trade-marks for use and registration. There will be more applications and more registered marks and, without investigation, there will be no way of determining from the application or registration information whether such marks have ever been used.
As there will be no requirement to use a trade-mark before registration, applications and registrations will likely cover much longer lists of goods and services for which there will be no use or even any intention to use the trade-marks. For example, a trade-mark that may be used for clothing may now be registered for foods, machinery and furniture without use of the mark.
While this may be attractive for certain companies, it will be problematic when clearing marks. Risk assessments and opinions will take longer and cost more. When faced with these challenges, costs, delays and uncertainties, businesses may choose alternate marks from a smaller available pool.
Increased Litigation
The basic requirement of use prior to registration of a trade-mark will no longer act as a gate to registration. This will lead to more litigation both before and after registration of a mark.
Once a trade-mark application is approved by the Canadian Intellectual Property Office, it is advertised for opposition by other parties. Given the likelihood that marks that have never been used will be the subject of applications covering long lists of goods and services, there will be many more oppositions by parties seeking to prevent or limit such registrations. Even deciding whether or not to oppose will be more difficult as it will not be apparent from an application whether, when or where the applicant has used the mark.
With an increase in the number of registrations, there is likely to be an increase in infringement and related litigation, including non-use proceedings to cancel or limit such registrations. There is also likely to be an increase in expungement litigation to cancel registrations for reasons other than non-use of the marks.
Trolls
The current use requirement has discouraged trade-mark trolls from obtaining registrations in Canada without any investment in a real business. Outside North America, trolls often are able to register in one country a mark used by another elsewhere, without the troll having used the mark before registration. The Bill invites trade-mark trolls to Canada.
Any Advantages for Marketers?
It is not all bad news for marketers. The elimination of the use requirement means that it will be possible to register multiple marks or slogans without ever having to use them, even on spec, thus barring from competitors from adopting them. As well, it will be easier to expand the scope of trade-mark registrations.
However, on balance, the proposed elimination of use as a basis for registration may cause more harm than good to the Canadian trade-mark system.
