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Strategy Rethink: Canada’s Changing Trademark Topography

There is good news for brand owners in Canada: important civil, procedural and administrative changes mark a decisive shift in the enforcement of trademarks, providing a broader scope of rights and swifter mechanisms in Canada.

Important changes on the horizon will enable brand owners to secure trademark registrations without having to prove use in Canada.

These new enforcement options, taken together with the fundamental shift in how trademark registrations are secured in Canada, mark a time when filing strategies must now, more than ever, take into account enforcement options.

Expanded Causes of Action

Certain amendments were made to the Trade-marks Act in 2015 which improved causes of actions available to brand owners. These changes expand the definition of "infringement" to capture a broader range of activities beyond mere sale, distribution and advertising of goods to target manufacturing, importing, and exporting activities. In keeping with a newfound focus on the combat against counterfeit products, these changes also aim to capture trading in labels and packaging independent of goods. These new prohibitions are designed to curb the sale of counterfeit goods, which are imported without labels or packaging, and re-constituted as counterfeit goods once in Canada.

The Resurrection of the Interlocutory Injunction

Adding yet more variety to the enforcement landscape, the Federal Court has recently granted the first interlocutory injunction in a trademark case in 20 years, giving hope to brand owners that this remedy, long buried under the onerous standard that irreparable harm was most difficult to establish between two solvent commercial entities, may rise again. This prospect may allow at long last the correction of certain market realities, and be of genuine assistance to brand owners in enforcing their rights.

While the provincial courts have been granting interlocutory injunctions for some time, these orders are limited to the province at issue, and thus less powerful than their federal counterpart, which is enforceable across the vastness of Canada, and its six time zones.

Procedural Changes

The above changes coincide with procedural changes within Federal Court, the main intellectual property court of Canada. It is now open to trademark owners to move forward with a straightforward trademark case, brought by way of application. Such a procedural track is swifter than the tradition track, brought by way of action: there is no discovery, nor is there any option of live testimony at trial. Rather, the proceeding moves forward on an expedition basis, based on sworn affidavits, cross-examination on those affidavits, written arguments and a hearing. In short, it is a strictly documentary record.

This opens the door to a relatively rapid decision. However, as always, care must be taken to ensure that the evidence presented is as thorough and complete as possible. In particular, as there is no opportunity to examine the other side, this track favours cases where the facts necessary to the Plaintiff are within its records to establish, and the recovery of damages are not a significant goal of litigation.

Another new avenue is a change in Federal Court Rules allowing parties to bring a motion for a summary trial between close of pleadings, and the fixing of a trial. As in the case of proceeding by way of application, a summary trial proceeds on the basis of affidavits and admissions, but does allow for the discovery process in the event that damages are material to the strategy.

Naturally the selection of a full action, a summary trial, or proceeding by way of application depend fully on the nature of the case, the strength of the evidence, the importance of credibility and damages, and of course the timing element.

This new array of enforcement options is a most welcome reprieve from the previously very limited landscape available for brand owners in Canada.

Administrative Changes

Canada has now implemented a border mechanism allowing brand owners to register their marks with customs in order to combat counterfeit goods. This was intended to bring Canada up to speed with other trading nations, and to provide a mechanism whereby information, which was previously precluded from disclosure, can now be provided to brand owners. Customs can now detain (but not destroy) goods, and brand owners can extend this detention by commencing court proceedings.

The new regime allows a registered owner to file a Request for Assistance, allowing a customs offer to divulge key information relating to the owner, importer, exporter and consignee, as well as the goods being imported into Canada. This information allows brand owners to pursue trademark and copyright civil remedies.

It is noteworthy that parallel imports, transshipments and goods intended for personal use are exempt from the border requirements.

A great effort is underway to ensure that implementation of these changes are as effective as possible, though these are early days with a new system. For the moment, concerns surround the cost to brand owners, and the number of shipments detained by customs. There is every hope that the Government will continue to monitor the effectiveness of the new regime, and to streamline and improve its implementation over time.

Strategic Implications for Portfolio Management

The above changes present welcome enforcement opportunities for brand owners in Canada who seek a broader range of options in getting expeditious results in Canada.

However, the new enforcement options work best when brand owners rely on rights secured via registration. While it is possible to rely on unregistered common law rights, doing so is inevitably more complex in terms of the evidence which will be required, as well as the damages which must be established.

Trademarks and copyright rights must also be registered so that brand owners can participate in the new border regime. As such, owning registrations is necessary to access the full array of options.

Interestingly, these expanded enforcement options coincide with the upcoming overhaul of Canada's trademark registration regime: one of the most significant changes is the fact that as of 2018 or so (when the new changes come into effect), use will no longer be required to obtain a registration in Canada. The implications for filing strategies are important, as brand owners can potentially protect zones of expansion without having commenced use in Canada.

While these registration will become vulnerable to non-use cancellations on their 3rd anniversary, it seems that a window now exists to carve out (and potentially enforce) a broader footprint for a brand's presence in Canada, even where use is as yet non-existent.

It is indeed a new era for enforcement in Canada, and one which should impact filing strategies for any brand owner with plans in this evolving trademark landscape.