The Canadian Government recently introduced Bill C-31, the Economic Action Plan Act 2014, No.1. This omnibus bill includes changes to a wide variety of laws in Canada. The potential amendments to Canada’s Trade-marks Act will have a significant impact on brand owners, as well as intellectual property practitioners worldwide. The bill is intended to ensure that Canada meets its international trademark obligations outlined in the Singapore Treaty on the Law of Trade-marks, the Nice Agreement, and the Madrid Protocol. Although the bill is still moving through the legislative process, the essence of the changes that will impact brand owners will likely remain unchanged and become law in Canada. It will be important to monitor the legislation because, once implemented, the changes will be far-reaching.
Notably, C-31 radically changes trademark use requirements. Presently, Canada, like the U.S., is a use-based jurisdiction, meaning a party can only register a trademark if it has been used in Canada, or if it has been both used and registered outside of Canada. Bill C-31 eliminates this requirement. Brand owners doing business internationally are likely quite familiar with the potential issues that arise when a country does not require use of a mark prior to registration. A party may register your mark—even a famous mark—and try to keep you from doing business in that country, claiming infringement, absent what often may be a high payment to purchase the registration and to use the mark. The Apple iPad situation in China is a classic example. Apple had to pay $60 million to resolve the dispute concerning use of its mark in China because another party had obtained a registration for that mark in China.
Because of such issues in many other countries, Canada, with its use-based system similar to ours, may not have been as high a priority for brand owners international trademark portfolio registration strategy. Use alone provided protection of the mark under the law. This all changes with C-31. Consequently, brand owners who have relied on common law rights should, given the anticipated influx of marks on the Canadian Trade-Marks Register, take steps to secure registration rights in Canada now.
There are other matters/potential action items brand owners doing business in Canada should now consider as well:
1. A surge in the number of filed oppositions to trademark applications is anticipated given the absence of a need to file proof of use—more applications means more oppositions, so budget accordingly.
2. If you own sound and other non-traditional marks consider filing applications to register these marks now because if C-31 is implemented, evidence of distinctiveness as of the date of filing will be required for all non-traditional marks, including sound marks.
3. The absence of a declaration of use requirement opens the doors for owners to file applications that claim goods and services beyond those actually in use now (similar to an Intent to Use Application in the U.S. but without the ultimate use requirement). If you have proposed use applications, but no use, consider whether it would be advantageous to keep the cases alive. Once C-31 comes into force, no Declaration of Use will be required. Ultimately, however, non-use based applications may be subject to challenge at a later date if use has not occurred.
4. If you don’t monitor or have a watch service alerting you to new, relevant Canadian trademark applications, consider budgeting for such monitoring following implementation of C-31.
5. The current renewal term in Canada is 15 years. After C-31 is adopted, this term will be reduced to 10 years. Therefore, some Canadian counsel advise that brand owners should consider trying to secure their renewals now to gain the added renewal time and resulting cost savings. Other counsel are of the view that the renewal now may not ultimately extend the term. Therefore, seek advice of counsel at this point.
6. If you are combatting counterfeiting, a registration will be imperative for the new Canadian border regime. You then will be able to lodge a “Request for Assistance”, which will allow brand owners to receive sample and source/destination information, which can be essential to pursuing civil remedies.
Now is a good time to review your Canadian trademark portfolio and work with your counsel to make sure your brands are protected!