Speaker's Corner: Feds set to discard years of use-based trademark law

Last month, the Canadian government proposed the most important changes to the Trademarks Act since 1953 in its budget implementation bill.

Bill C-31 is omnibus legislation comprising 375 pages that, if enacted, would also amend dozens of unrelated laws.

In effect, the proposed legislation threatens to undo more than 140 years of jurisprudence based on the basic premise that use is a prerequisite to trademark protection in Canada. Trademarks and the goodwill they represent have always inextricably been intertwined in Canadian law. In contrast, trademark rights in Europe are registration-based rather than use-based. The European approach leads to excessive claiming of trademark rights with the resulting crowding of trademark registers with deadwood and concomitant oppositions and litigation.

Why does this matter? It matters because the proposed legislation is likely to affect thousands of Canadian businesses, especially small- and medium-sized ones. If enacted, the legislation would make trademark searching far more expensive and uncertain and oppositions are sure to increase as they have in Europe. During the past five years, oppositions have been filed in Canada with respect to about two per cent of all applications filed whereas in Europe oppositions are filed in more than 15 per cent of all applications filed. The proposed legislation may be a boon for lawyers but bad for businesses that can ill afford the cost and uncertainty of trademark oppositions.

In proposing to grant registrations in the absence of use anywhere and even without a requirement of bona fide intention to use the trademark in Canada, the government has invited a challenge to the validity of the resulting statute on constitutional grounds. It is one thing to have a national system of trademark registration based on use and quite another to permit enforcement of trademark rights anywhere in Canada irrespective of whether someone has used the trademark here or abroad. But that is precisely what the legislation proposes.

Never before has Canadian trademark law conferred rights in a trademark without accompanying goodwill. The proposed legislation arguably constitutes an improper invasion of property and civil rights within a province contrary to the Constitution Act.

Searches before selection and use of new marks will require marketplace investigations to determine when, or if, use of a registered mark commenced in Canada. Similarly, the lack of useful information about use on the register (such as the date of first use in Canada) will force expensive investigations before advising on the chances of success in oppositions or litigation. Costs of both clearance and risk analysis are bound to increase. In addition, choosing a new mark will become more difficult with more of them on the register and actual use in Canada hard to determine. While such registrations might become vulnerable to challenges for non-use, the onus of removing the marks will be on businesses and not the registrant.

Although the amendments purportedly anticipate Canada’s accession to various international agreements, key elements of the proposed legislation have little or nothing to do with these treaties. Improving government efficiency is a worthy objective, but the additional expense and uncertainty for Canadian businesses will more than offset any improvements on that score.

Here are a few of the more important proposed changes:
•    Any applicant, domestic or foreign, can register a trademark in Canada without any need to use it here or abroad prior to registration. Registrations are subject to attack for non-use in Canada after three years from the date of registration, but in the meantime registrations can be issued covering a long list of goods and services without prior use anywhere. This is likely to clutter the register of trademarks as it has done in Europe and make searching and clearance even more difficult and expensive than it is now. There’s not even a requirement to prove use in Canada after a set period, such as five years, to maintain the registration. This puts the onus on others to get rid of deadwood on the register at substantial expense to them rather than the trademark owner.

•    Applications can be opposed inter alia on the basis of prior use in Canada, but a potential opponent won’t be able to determine from the register whether it is a prior user. It will need to engage in potentially expensive investigations to determine relative use dates. It may also need to initiate opposition proceedings without this information.

•    Nice classification, as per the Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks, is imported into the act, and applicants will have to describe goods and services both in ordinary commercial terms, as they do now, and also grouped by the Nice classification with the class identified and in order as set out in the classification system. Existing registrants have to provide the Nice classification for their goods and services with a threat of being expunged for failure to respond. The fact that the Nice classification dates back to the 19th century, long before the invention of computer databases, does not seem to have deterred slavish adherence to a system that has long outlived its usefulness except perhaps as a future government revenue generator.

•    Proof of use following registration is not necessary unless the registration is subject to challenge for non-use. It is not easy and usually expensive to try to prove that a trademark is not in use. It would be far more sensible to require trademark owners to prove actual use in Canada for specified goods and services within a reasonable time following registration as a condition for allowing it to remain in effect.

•    Renewals will now be every 10 years versus the current 15 years. Proof of use is not required upon renewal.
It’s regrettable that the government has seen fit to discard years of use-based trademark jurisprudence without a comprehensive analysis by those the legislation is most likely to affect.

Cynthia Rowden is a partner and head of the trademarks practice group at Bereskin & Parr LLP. She specializes in all areas of trademark and copyright law and manages the international trademark portfolios of large
Canadian companies and the Canadian portfolios of some of the biggest trademark owners in the world. Daniel Bereskin is a founding partner of Bereskin & Parr. As a member of the trademarks practice group, he provides strategic planning and business advice relating to all aspects of intellectual property law.

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