Unlike many other jurisdictions, in Canada, use of a trade-mark
by a subsidiary or another closely related company does not
necessarily enure to the benefit of the parent company by virtue of
the relationship between the two companies.
This consideration is important where a trade-mark is either the
subject of a pending application for registration or registered in
the name of a parent company, but used in Canada only by a
subsidiary or another closely related entity.
The issue of who owns the rights in and to a trade-mark in
Canada may arise in a variety of situations including the
Opposition proceedings: A trade-mark
application that is filed on the basis of use in Canada may be
opposed on the ground that the applicant has not used the
mark since the date indicated in the application.
Assertion of rights: When a parent company
attempts to rely on the use of a trade-mark or the reputation
acquired by its subsidiary or another closely related company in
Canada in order to assert its trade-mark rights, which entity has
actually used the trade-mark in this country becomes
Cancellation proceedings: A trade-mark may be
cancelled from the register if it has not been used in Canada by
the registered owner in association with the registered
wares/services for three (3) or more years.
In order for use of a mark by a subsidiary or another closely
related company to enure to the benefit of the parent company,
there must be evidence that the parent company trade-mark owner
maintains control over the character or quality of the wares and/or
services provided in association with the trade-mark. The fact that
the company under which use is claimed is a wholly-owned subsidiary
of, or is otherwise closely related to the trade-mark owner, is not
enough on its own to prevent expungement or to benefit a party
claiming use. Likewise, the fact that a parent company can
control its subsidiary is not sufficient to prove that it actually
For a trade-mark owner to prevent the cancellation of a
trade-mark registration or assert its rights thereto, a license
agreement, either oral or written, must exist between the
trade-mark owner and the user of the mark in Canada. Common
corporate ownership is not in itself sufficient. However, even
where there is evidence of a license agreement establishing that a
subsidiary has the right to use a trade-mark in Canada, Federal
Tribunals, like the Trade-mark Opposition Board in Sobeys
Capital Inc v Edrnred, a société anonyme,2012 TMOB 86, have consistently found that
"organizational structure, in itself,...does not support a
deduction that the owner of [the] trade-mark controls the character
or quality of the wares and services used in respect of such a
Rather, there must be factual evidence that the trade-mark owner
directly or indirectly controls the character or quality of the
wares/services used in respect of the trade-mark. In Canada, the
nature of the evidence sufficient to establish that the parent
company trade-mark owner has the requisite control is inconsistent
and is highly dependant on the specific facts of any case.
Therefore, it is advisable to have a simple written license
agreement in place between the parent company trade-mark owner and
its subsidiary or another closely related company that demonstrates
the nature and extent of the control that the parent company has to
ensure the character or quality of the wares/services provided.
Such an agreement should provide: (a) that the wares/services
offered by the licensee conform to the standards, specifications,
or instructions approved of by the parent company, and (b) a right
to regular inspections of the licensee's actual premises and/or
of samples of the product sold, to ensure compliance with such
standards, specifications or instructions, which the owner would
A properly drafted license agreement can be relied on in an
expungement or opposition proceeding thereby reducing the costs and
risks associated with attempting to later prove that the parent
company trade-mark owner has the requisite control over the use of
its trade-mark in Canada, and can assist to effectively maintain
the focus of any such proceedings on the key issues.
Protecting trade-marks can involve complex legal analysis. As
such, businesses with complicated corporate structures, which
include use of a trade-mark by a subsidiary or another closely
related company, should seek the advice of experienced Canadian
counsel, who can draft license agreements to appropriately reflect
those corporate structures and that protect trade-mark
The preceding is intended as a timely update on Canadian
intellectual property and technology law. The content is
informational only and does not constitute legal or professional
advice. To obtain such advice, please communicate with our offices
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
A recent Saskatchewan Court of Queen's Bench decision allowed a court-appointed receiver to sell and transfer intellectual property rights free and clear of encumbrances, finding that a license to use improvements of an invention was a contractual interest and not a property interest.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).