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In the Home Stretch? Get ready for implementation of amendments to the Trademarks Act in Canada

In February 2018, plans for implementation of amendments to the Canadian Trademarks Act took a big jump forward with the publication of the latest revisions to the Trademark Regulations in the Official Gazette – a key step towards finalizing the Regulations and ultimate implementation of the amendments to the Act. While the published draft sets February 1, 2019 as the planned coming-into-force date (or CIF Date), the implementation date is not yet caste in stone.

The Regulations are not only a key element of the framework of Canadian trademark registration, opposition and cancellation proceedings, but include the details that will finally permit Canada to become a member of the Madrid Protocol. The latest draft Regulations include significant revisions to earlier versions, and while still provoking debate, there is now a clearer picture of the new Canadian trademark landscape. The Government is following this up with consultations on draft Practice Notices for prosecution, opposition and non-use cancellation proceedings, including detailed guidelines for Madrid filings and opposition.

The Government also announced, at the end of April 2018, that it would pursue a Canadian Intellectual Property Strategy, which aims to improve education on IP, and increase the participation by Canadian businesses in the IP system. The items addressed include specific trademark provisions relating to trademark squatting and enforcement of registrations that are not in use. While details are not yet available, these appear to respond to warnings from brand owners, practitioners and others about abusive filings and practical problems of enforcement of registrations that might never have been used anywhere.

Highlights of the Trademark Act amendments include:

  1. Canadian trademark owners will be able to use the Madrid Protocol to access streamlined international filing, and international applicants will be able to designate Canada when filing for extensions of rights through the International Bureau.
  2. Application requirements will be simplified. Applicants who have used or propose to use a mark may file in Canada, and specific filing grounds will not be necessary, eliminating many formalities.
  3. Use as a prerequisite to registration will be eliminated. NOTE, the Trademarks Act continues to make "prior use" of both trademarks and trade names a ground of both opposition and expungement, so it will still be important to clear new marks by checking not only the Register, but unregistered, or common law, sources. While the current and amended Act do not contain requirements to prove use in Canada after registration or on renewal, non-use in Canada after the third anniversary of registration may result in cancellation. Further, the Government's recent IP Strategy announcement suggested that during the first three years of registration, use will be required before enforcement. Details are not certain – will this mean use in Canada, and how will it be shown? Before a registration issues, an unregistered mark can be enforced with proof of a reputation, which normally required use, and after the registration is three years old, it can be cancelled if not in use in Canada, making it risky for a registrant to rely on unused registrations in any enforcement scenario. The IP Strategy announcement seems to confirm that enforcement will require use (fixing an apparent loophole in the amended Act that could have permitted registrations to be enforced despite the absence of any use, anywhere).
  4. Goods and services must be classified using the Nice Classification, and fees, per class, will apply on filing. The Draft Regulations confirm that fees for a single class, for applications filed online, will be $330 CA for the first class of goods/services, and $100 CA for each additional class. Registration fees will be eliminated, except for applications pending at the CIF Date.
  5. A broader list of non-traditional trademarks (colour, taste, texture) will be registrable, but Examiners will have more leeway to require evidence of distinctiveness.
  6. Amendments, including to a trademark, corrections and recordal of assignments will be simplified.
  7. A system of third-party letters of protest may be implemented, permitting letters to the Registrar before registration that advise of potentially confusing marks, with the intent of encouraging the examiner to object to the pending application. More details will be included in Practice Notices.
  8. Opposition and summary non-use (s. 45) proceedings will have new procedures for the order of written representations, limitations on participation in hearings, and stricter rules on service of documents and timing.
  9. Applications may be divided, with fees applicable for each divided application. This may offer strategies for faster settlement of disputes if parties can divide out non-contentious goods/services.
  10. Renewal terms for all marks issued or due for renewal after the CIF Date will change from 15 years to 10. Renewal fees will also be charged on a per-class basis, namely $400 CA for the first class of goods/services and $125 CA for each extra class if processed online.

Brand owners should have a strategy to both plan for new opportunities, and benefit from current fees and procedures

For example, owners of multi-class marks who have postponed filing in Canada would be advised to consider filing before the CIF Date to take advantage of lower filing costs. Early renewal can also benefit owners of multi-class registrations, who will otherwise pay fees per class. While this won't impact the term of renewal, which will shorten to 10 years for all registrations due for renewal after the CIF Date, benefits of early renewal for owners of multi-class registrations can be significant.

Other impacts

Recently, Canada has experienced an interesting phenomenon – hundreds of 45 class trademark applications, with pages of goods and services, filed by a few applicants. The filed marks include coined words, personal names and well-known brands, and applications are all based on proposed use. If allowed, these will register without ever being used, and will have long-lasting impact on the Canadian Register. While the rationale for these filings is not yet know, they fit the pattern of abuse and squatting identified in other countries.

A combination of several factors makes the Canadian Register particularly vulnerable to abusive filings at this time. First, filing fees are very low ($250 CA regardless of the number of goods/services). Second, up to now, use requirements have effectively put the brakes on over-claiming. However, the publicity relating to elimination of use as a registration requirement means that many applicants know they can file now for long lists of goods/services and as long as the applications are still pending at the CIF Date (and not otherwise refused), the marks can register without any use. Third, applicants can keep applications pending for years (over 6) – and can wait for the change in law at the CIF Date that will permit registration without use. With the CIF date set for 2019, abuse seems likely to continue for another year.

The Government's IP Strategy plans to address this by promising to introduce new "bad faith" grounds of opposition and expungement. It is commendable that some system for objecting to the applications will be available, but as usual, the devil is in the details. Currently, opponents have the onus of proving facts to support any ground of opposition, which sets an evidentiary burden that can be difficult to meet, since intent – and particularly bad faith – will be hard to show. The same applies to bad faith in cancellation proceedings. It may be necessary to wait for the Courts to establish jurisprudence setting guidelines on acceptable evidence of good, or bad, faith for there to be certainty on what amounts to squatting or other unacceptable filing practices.

The next few years promise lots of changes, many that will provide opportunities and cost-savings for brand owners, and others that will need time and experience to evaluate. However, what is clear is that brand owners seeking to ensure their rights are protected in Canada should act now to secure their rights – failing to do so now may mean higher costs, more uncertainty, and exposure to risks from squatting.

© 2018 Cynthia Rowden. Cynthia is Counsel to Bereskin & Parr, Toronto Canada's largest intellectual property firm, and has been a member of the firm's Trademark Group for more than 30 years.