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What to watch for in Canadian Trademark Law

Canada's framework for trademark protection continues to change, with plans to implement major amendments now scheduled for early 2019, and several new pieces of legislation that impact tobacco products, foods and beverages for children, and marijuana products. In the Federal Court, the main judicial forum for intellectual property cases, the Court has issued a few interlocutory injunctions in the last couple of years, possibly signaling more leniency in permitting a necessary remedy for trademark infringement.

What's changed so far?

Anti-counterfeiting measures

Following pressure from Canada's trading partners, a new procedure for temporary seizure of suspected counterfeit goods was implemented in 2015. It permits owners of registered trademarks and copyright to request assistance from Canada's border control agents (Canada Border Services Agency, or "CBSA"), by submitting a "Request for Assistance" (RFA). Any goods for which an RFA has been filed that are suspected of being counterfeit can be seized at the border, and the owner of the marks/copyright given information designed to confirm if the goods are in fact counterfeit. Goods will remain in detention for a short period of time (up to 10 days), following which they will be released unless an action for infringement is filed.

In addition, the provisions of the Trademarks Act and the Copyright Act were amended to amplify the definitions of infringement to cover import and export of goods, labelling, and selling.

IP owners with counterfeit problems should ensure that an RFA has been filed, because, apparently due to manpower problems, only goods that are subject to an RFA are being detained. So far, the number of recorded RFAs is modest (despite there being no fee at this time), and the number of seizures is also small, particularly given the estimates of the volume of counterfeiting activity. IP owners have also raised issues such as lack of controls for goods "in transit" through Canada, no statutory damages for trademark infringement, adding to the cost of proving damages, and the absence of a summary inexpensive procedure for dealing with suspected counterfeit goods. In March 2017, the United States government added Canada to a list of countries providing inadequate controls against counterfeits, and it is suspected that additional steps will be an issue in trade negotiations, including revisions to the North America Free Trade Agreement.

Agent Privilege and calculation of deadlines in emergency situations

After years of discussion, amendments were enacted in 2016 to extend to patent and trademark agents privilege in client/agent communications relating to protection of IP equal to that in place for lawyer/client privilege. While questions remain about the circumstances where there may or may not be coverage, the amendment responds to requests made on behalf of IP practitioners for decades.

The amendments were accompanied by clarification that the Canadian Intellectual Property Office has the discretion to extend deadlines to respond to force majeure issues, such as power outages, weather closures, etc., that result in local or national office closures.

Restrictions on Signage in the Province of Quebec

Quebec has passed requirements, effective in November 2016, mandating the display of some French language wording on all business signs in Quebec. Generally, all business materials used in that province, including signs, must comply with the Charter of the French Language. An exception to the Charter exists for "recognized marks", interpreted to include both registered and unregistered marks (although registration is recommended to be certain of reliance on the exception). The exception was used to justify English-only signs. The regulations now require some French presence on all new signs, and all existing signage will have to be changed within 3 years. A word of warning: businesses who sell in Canada must familiarize themselves with the Charter requirements and its exceptions. It is not uncommon for inspections to result in directions to remove goods that do not fully comply.

A change in attitude about interlocutory injunctions?

Traditionally, the Canadian Federal Court, where most IP cases are argued, has only sparingly issued interlocutory injunctions, and only with evidence of "clear and unequivocal" irreparable harm. The implication is that plaintiffs are rarely able to get fast relief, even in cases of apparently obvious infringement or consumer confusion. A few recent cases suggest a softening of this attitude. For example, in Sleep Country Canada Inc. v Sears Canada Inc.(2017), the Court addressed the practical difficulty in proving "irreparable harm", since it would in many cases be a speculative exercise if a plaintiff responded quickly to prevent infringement (speedy action being a requirement for judicial relief). Instead of saying that irreparable harm evidence had to be clear, the Court accepted that if it was impossible to quantify harm, then damage could be irreparable. The Court also voiced the view that survey evidence may be of limited usefulness where damage is speculative only. While the decision is under appeal, if offers some hope for more varied options to deal with infringing behavior.

What's still to come?

Implementation of amendments to the Trademarks Act

Major amendments to the Trademarks Act were passed in 2014, but have not yet been implemented. The amendments will permit trademark registration without use, anywhere, and also confirm adherence to major international treaties, including the Madrid Protocol. Informal consultation has now begun on draft regulations implementing the amendments, with a formal consultation scheduled for late spring. The most recent estimate for implementation of the amendments is early 2019. Other changes will include fees per class on filing and renewals (currently Canada does not use the classification system, offering significant advantages to those filing in Canada for longer lists of goods and services – take advantage of this while you can!).

Trademark Terms in the Comprehensive Economic and Trade Agreement (CETA)

Canada and Europe's trade negotiations have resulted in draft legislation that extends the range of protected geographic indications (GIs) beyond wine and spirits to cheese, meats and spices. The procedure for entry on the list of protected GIs, objections and removal are clarified. Use and registration of marks identical to GIs will be prohibited if related to protected food/beverage products, with exceptions for GIs used with consent, words that are personal names, and certain uses in comparative advertising (however comparative advertising on labels and packaging is not permitted). Other exceptions include words that are already customary terms or common names, and covered by existing applications or registrations. In line with amendments to the Trademarks Act that broaden the definition of "infringement" to cover acts involving labels and packaging as well as both import and export activities, the GI prohibitions address similar activities. Also, the anti-counterfeiting Customs RFA procedure will be extended to protected GIs. The CETA discussion documents require special protection for famous marks, but the draft legislation does not specifically address this.

Plain Packaging for Tobacco and Vaping Products

Bill S-8, An Act to amend the Tobacco Act and the Non-smokers' Health Act and to make consequential amendments to other Acts, fulfils the government's campaign promise to bring in plain packaging on tobacco and related products. The details will be in regulations, which have not yet been released. However, the clearly stated intent of the Bill is to implement restrictions in line with those of other jurisdictions, such as Australia, with likely prohibitions on any design features, plus restrictions on the size, typestyle and coloring of labels. There are also restrictions on how tobacco brands may be advertised and promoted, with special attention to venues that attract younger consumers. To address concerns from trademark owners raised in initial consultations, the Bill includes protection from non-use challenges for any registered mark that may no longer be legally used (in s.42.3 of the Bill). However, they do not address potential damage to common law rights, or likely impediments to enforcement of registered and unregistered marks that cannot be used due to the amendments. Tobacco brand owners have also questioned the impact on counterfeiting and other illegal sales if brand usage is limited. Despite these concerns, the Bill has widespread support in the government, and is expected to become law in 2017.

Labelling and Advertising of Foods and Beverages Focused on Children

Bill S-228, An Act to amend the Food and Drugs Act (prohibiting food and beverage marketing directed at children) was introduced in 2016 by Senator Nancy Greene Raine, a former Olympic skiing champion. The Bill's intent is to prevent labelling and advertising of foods directed primarily to children. It defines "advertising" to include sponsorship of both children's events and educational facilities where a brand element appears. Brand elements include brand names, trademarks, trade names, distinguishing guises, logos, graphic arrangements, designs or slogans that are "reasonably associated with or that evokes a food or a brand of food". A number of issues have been identified as problematic, including the broad definition of products directed "primarily at children", the lack of any distinctions between "healthy" and alleged "unhealthy foods", and a definition of "branding elements" that is broad enough to curtail not only word and design marks, but also trade name uses. The province of Quebec already has specific restrictions on advertising to children – Bill S-228 would expand those to have national application, and to deal with packaging as well.

Legalization of Marijuana and Trademarks

The government has just introduced Bill C-45, the Cannabis Act, to legalize certain cannabis sales in answer to an election campaign promise to legalize marijuana. The Bill contains provisions dealing with labelling and advertising, specifically with a view to limitations that impact the appeal of such products to young persons. While full details will be left for regulations, examples of limitations on "branding elements" include packages that depicts real or fictional persons, characters and animals, or any image that evokes a positive or negative emotion or image of glamour, recreation, excitement, vitality, risk or daring (Bill C-45, s. 26). It is expected that the Bill will be subject to detailed scrutiny and probably many revisions as it makes its way through the parliamentary process.

A Canadian IP Innovation Strategy

The most recent Federal Government budget in March 2017 announced a commitment to develop a new intellectual property strategy. No details have yet been announced, but it appears that it may focus on helping inventors get their products to market in a way that supports Canadian knowledge-sharing and job growth, while offering financial incentives for successful innovations.

What to expect?

After decades of minor changes to Canadian trademark law, the last 3 years have seen an avalanche of new developments bringing challenges related to different practices and costs, and uncertainty about the effect and interpretation of new laws. The only certain prediction: expert IP advice is now necessary more than ever!