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Canada Prepares for 2019

The Canadian Government introduced legislation in March 2014 to modernize the Canadian Trademarks Act ("the Act") – the first significant attempt at modernization since the 1950's. The legislation included implementation of the Madrid Protocol and Nice Classification system and elimination of "use" as a prerequisite to registration in Canada. It received Royal Assent in June 2014 but implementation was delayed to allow the Trademarks Branch sufficient time to deal with the critical regulatory and system changes needed to support the modernization.

To its credit, the Trademarks Branch is actively engaging stakeholders on implementation issues. In particular, extensive consultations were held in 2017 to get stakeholder input on the Regulations needed to implement the new law and consultations are now underway on Practice Notices. However, there is much more to do in the year ahead as the Trademarks Branch and stakeholders get ready for a coming into force date sometime in 2019.

The purpose of this article is to remind readers of some of the key changes resulting from the modernization, provide a roadmap to implementation in 2019 and flag a key legislative change to the Act recently announced by the Canadian government.

Key Changes to the Canadian Trademark System

The changes to the Canadian trademark system are sweeping. Leaving aside the implementation of the Madrid Protocol and the Nice Classification system, some of the more important changes are discussed below.

The most controversial change is that Canada will no longer require use in order to obtain registration. Under the current law, an application must be based on one or more of the following grounds: use in Canada, proposed use in Canada and / or use and registration in another jurisdiction. Use is essential both to obtain and to maintain a registration and use defines scope of protection under the Act. All that changes once the amendments are in force. Applicants will not have to state a basis for the application going forward – nor will use be required in order to obtain registration. A practical effect is that declarations of use will no longer be required and this will apply to all pending applications, regardless of when the application was filed or advertised. Currently there are over 50,000 applications in allowance waiting for declarations of use. They will all issue to registration for all of the goods and services listed in the applications upon payment of the registration fee.

In some ways, this makes sense. It aligns Canada with its trading partners – Canada is one of the few countries that still requires use to obtain registration – and it simplifies the Canadian application process. But the exclusive rights granted under the Act will no longer be defined by use. The immediate concern is that the Canadian register will go from a reasonably clean register to one crowded with registrations for marks not in use in Canada or only used for some of the classes covered by the registrations – and the registrations cannot be challenged based on non-use until after the third anniversary of the registration. As the legislation stands now, a registrant could enforce a registration in the first three years even though the mark is not in use in Canada. This has raised a number of concerns and the Canadian government has recently proposed a solution discussed below prompted by a significant number of applications filed covering all Nice classes.

In particular, the Trademarks Branch is seeing a rise in the number of multi-class applications filed in Canada. It is obvious that some brand owners are taking advantage of the current window of opportunity to file multi-class applications knowing that, by the time those applications are allowed, the requirement to file a Declaration of Use will be dropped. The Trademarks Branch currently charges $250 per application regardless of the number of classes listed in the application and will not move to a per class fee until 2019. This means that there is a significant advantage to filing multi-class applications now before the changes come into force. This will start to crowd the Trademarks Register very quickly.

Other less controversial changes to the system are as follows:

1. The definition of a "trademark" has been updated to reflect modern realities. A "trademark" will include a "sign or combination of signs that is used or proposed to be used by a person for the purpose of distinguishing or so as to distinguish their goods or services from those of others." A "sign" is defined to include "a word, a personal name, a design, a letter, a numeral, a color, a figurative element, a three-dimensional shape, a hologram, a moving image, a mode of packaging goods, a sound, a scent, a taste, a texture and the positioning of a sign". The draft Regulations set out application requirements for various types of marks – three-dimensional shapes, colour and sound. Application requirements for scent, texture, holograms, moving image or mode of packaging will follow by way of Practice Notice.

2. The examination process will be the same for domestic and Madrid Protocol applications. The grounds for refusal of a trademark application have been expanded to include distinctiveness and functionality. The Examiner may require evidence of distinctiveness where:

  • The Examiner is of the view that the mark is not inherently distinctive.
  • The mark consists exclusively of a single colour or a combination of colours without delineated contours.
  • The mark consists exclusively or primarily of one or more of the following signs:
  • Three-dimensional shape of any of the goods specified in the application, or of an integral part of the packaging;
  • A mode of packaging goods;
  • A sound, a scent, a taste, a texture, or any other prescribed sign.

The Examiner can also object on the basis of functionality – i.e. the features of the mark are dictated primarily by a utilitarian function.

3. The draft Regulations contemplate the use of Letters of Protest at any time before the registration of the mark. Specifically, the draft regulations provide that a letter that is or appears to be against the registration of a trademark must be acknowledged by the Registrar but the Registrar may not provide any information as to any action taken.

4. Applicants will be able to file divisional applications with respect to any goods or services that were within the scope of the original application on its filing date. Divisional applications will be useful for dealing with examination issues and oppositions – applicants will have the ability to move forward with certain goods and services that may not be the subject of examination issues or oppositions. A divisional application may itself be divided. Divisonal applciations and registrations that issue from divisional application may be merged provided that they all stem from the same original application.

5. We will see a streamlining of procedures for opposition but one key change to note is that extensions of time to oppose Madrid Protocol applications will be limited to 4 months – an opponent cannot obtain a cooling off extension for settlement purposes which is available for an opposition to a domestic application.

6. The term of registration has been reduced from 15 years to 10 years. The 15-year registration period under the current Act will continue to apply to a registration registered before the changes come into force until that registration is renewed. Thereafter, the new 10-year term will apply.

These are just some of the changes that will come into force in 2019.

Roadmap to Implementation

The regulatory changes required to implement the changes to the Act are significant and, rather than simply tweak the existing regulations, the Trademarks Branch embarked on a wholesale rewrite to deal with everything from application formalities, through to divisional applications, opposition procedures and the rules required for processing of Madrid Protocol applications. Stakeholders were impressed and pleased that the Trademarks Branch engaged in very broad consultations on the new Regulations throughout 2017. Now that the consultation has ended, the Trademarks Branch has embarked on the formal steps required to put the new Regulations into place, following the official Canada Gazette procedures.

The process started with the publication of the new regulations in Canada Gazette, Part I on February 10, 2018 which started a thirty day time period ending March 11, 2018 within which stakeholders could submit comments on the regulations. Now that the period for consultation is complete, the regulations will be amended as needs be before being enacted and published in Canada Gazette Part II. The Trademarks Branch anticipates publication in Canada Gazette Part II in October 2018.

While the new regulations work through the Canada Gazette process, the Trademarks Branch has started work on new Practice Notices both for examination issues and for opposition and cancellation proceedings and is engaged in an extensive consultation process.

Once the Trademarks Branch is ready to implement the changes to the Act (i.e. the regulations have been enacted and the Practice Notices are ready), the Canadian government will deposit instruments of accession for the Madrid Protocol, the Nice Classification system and the Singapore Treaty with the World Intellectual Property Organization ("WIPO"). The coming into force of the changes will be three-months after the instruments of accession are deposited which will bring us into early 2019.

Additional Changes Announced by the Canadian Government

As noted above, concerns have been raised as a result of hundreds of applications filed in Canada over the past year by one applicant covering all Nice classes. The government has responded to those concerns and, as part of its recently announced Intellectual Property Strategy, the government will introduce legislation to further amend the Act:

"To prevent the cluttering and misuse of the trademark registration system, notably what is sometimes referred to as "trademark squatting," new bad faith trademark opposition and invalidation grounds will be introduced. Use will also be required to enforce a trademark within the first three years after registration."

The details of the legislation and the timing are not yet known.

Conclusion

Accordingly, 2018 promises to be a very busy year for both for the Trademarks Branch and stakeholders as they work through the consultation process on the Regulations and the drafting of the Practice Notices. In the meantime, brand owners should take the opportunity to review their portfolio and make sure that they are ready for implementation of Canadas modernized trademark system in 2019.