Canada: Canada’s New Trademarks Act: What It Means For You

As reported in our previous e-lert, the Parliament of Canada passed Bill C-31, the Economic Action Plan 2014 Act, No. 1 on June 19, 2014. This has been a much anticipated omnibus bill, which introduces sweeping changes to Canadian trademark law.

The bill contains a number of definitional changes, such as removing the hyphenated form "trade-mark" from the statute and replacing it with "trademark," replacing the word "mark" with the term "sign" (separately defined as "a word, a personal name, a design, a letter, a numeral, a colour, a figurative element, a three-dimensional shape, a hologram, a moving image, a mode of packaging goods, a sound, a scent, a taste, a texture and the positioning of a sign"), and replacing the word "wares" with "goods" to harmonize Canada's trademark language with most other countries.

The main provisions of this bill are clear: Canada is one step closer to fully implementing the Nice and Singapore treaties and adopting the Madrid Protocol, which will be complete once the government passes the necessary implementing regulations (likely later this year or in early 2015). It also modernizes many structural aspects of the Canadian trademark application process in keeping with international standards. What is less clear, however, is what implications the new law may have for trademark owners and applicants seeking protection in Canada, and the cost of that protection (as we have yet to see draft regulations and a government fee schedule for filing, registration and intermediate steps). A discussion of some of the key effects that several of these amendments will have on Canadian filing strategy is set out below.

Nice Classification

When Canada fully implements the Nice Agreement (1957), the listing of goods and services in Canadian trademark applications will follow the classification codes (set out here). Under the old Trade-marks Act, Canadian applications only needed to be in "ordinary commercial terms" without regard to the classes of the associated wares and services.

This change will have less of an impact for international applicants, most of whom will already have Nice-compliant applications in other countries. Canadian applicants, however, may face a slightly more complicated process at the application drafting stage, because their goods and services will have to be classified according to the applicable Nice codes in addition to being phrased in "ordinary commercial terms."

The Nice classification codes will have an impact soon. Transitional provisions in Bill C-31 give the Registrar the authority to require applicants to amend certain applications to be Nice-compliant even before the new Trademarks Act comes into force. This transitional provision applies only to an "application for registration that has been advertised under subsection 37(1) before the day on which section 342 of the Economic Action Plan 2014 Act, No. 1 comes into force," so arguably, marks that were registered before that date may be exempt. To date, we are unaware of any instances where the Registrar has exercised this transitional authority.

The full impact of this change and whether the new law will lead to a per-class filing fee structure as in other countries will only become clear when the Government of Canada releases implementing regulations. That said, its implications are clear: if an applicant wishes to file an application without having to include Nice classification codes (and any resulting increase in filing fees), he or she should file sooner rather than later.

Removal of the Use Requirement

Under the current Canadian trademark regime, an applicant must either identify when its mark was first used in Canada or file a declaration post-application stating that a mark is in use before it will issue to registration. In what is widely regarded as its most controversial aspect, the new law removes this requirement. While this may simplify the application process - as applicants will no longer have to identify the date of first use of the mark in association with each of the listed goods and services - it will likely require incumbent trademark registrants to be especially vigilant in watching and monitoring their marks and potentially confusing interlopers in Canada because non-practicing entities may have an easier time securing registrations than under the old Act.

The removal of the requirement to identify a date of first use will complicate the opposition process. Under both the old and the new trademark regimes, an application could be opposed on the basis that a third-party had use of a confusingly similar mark in Canada before the applicant. This ground of opposition remains available, but under the new Act, a potential opponent will have no clear way of knowing whether he or she actually is a senior user since there will be no indication of the applicant's date of first use in the application. Seniority of use will have to be determined through investigations and the exchange of evidence in an opposition proceeding, which could lead many mark owners to "oppose now, ask questions later." At the very least, there will likely be an increase in the number of proposed oppositions, or requests for extensions of time to oppose an application in order to give an opponent and owner of a (potentially) senior mark the time to conduct investigations and determine who is, in fact, the most senior user.

Divisional Applications

The new Trademarks Act will permit applicants to file divisional applications to separate or "carve out" certain goods and services. Previously, applications that encountered registrability issues with respect to only some of the listed wares or services during examination would be completely stalled until those issues were resolved, either through argument or amendment. The new regime will permit the non-contentious portions of the application to proceed to registration while the remainder of the application undergoes further examination. Strategically, this may permit applicants to file more broadly than before, since an applicant can obtain even a partial registration without having to hold up the application in view of only a few problematic goods or services.

Term Reduction

The term of a trademark registration in Canada has been shortened from 15 to 10 years, which is similar to the terms in the United States and Australia. This will undoubtedly result in increased costs, as applicants will be required to more frequently renew their registrations to maintain validity. As a result, if mark owners are in a position to renew their registrations now, they should do so immediately to claim benefit of one more 15 year renewal period before the new Act comes into force.

Madrid Applications

Arguably the most anticipated aspect of the new law is Canada's adoption of the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks, or the "Madrid Protocol." In a scheme similar to that provided by the Patent Cooperation Treaty, the Madrid Protocol allows applicants to file a single, "international" application with a centrally administered system and then select the member states in which they wish to obtain national protection. It should be noted that an applicant must already own a domestic registration or pending application for an identical trademark in order to file an international application.

The obvious advantage to the Madrid Protocol is cost savings, since applicants can manage their international trademark portfolios through a centralized system. These costs savings will be less apparent to applicants who only file in one or two jurisdictions, since these applicants will already have to obtain a domestic application or registration before proceeding with the Madrid application.

Ultimately, the adoption of the Madrid Protocol is unlikely to have a significant impact on substantive Canadian practice – it simply provides applicants another avenue through which to obtain registered trademark rights in Canada. When Canada will begin accepting Madrid applications is not yet known, as the new Act simply provides the government with the power to make regulations in respect of it.

Distinguishing Guises - No Longer a Separate Category of Mark or Sign

As noted above, the definitional term for a "mark" is transitioned to the wider encompassing term "sign" which comprises a word, a personal name, a design, a letter, a numeral, a colour, a figurative element, a three-dimensional shape, a hologram, a moving image, a mode of packaging goods, a sound, a scent, a taste, a texture and the positioning of a sign. Thus the former classification of "distinguishing guise" no longer exists as a standalone trade-mark category. Distinguishing guises were trademarks that comprised the shaping of wares or their containers, or the mode of wrapping or packaging wares, the appearance of which distinguished the source or origin of those wares. However, the new Trademarks Act provides that a trademark registration will not prevent a third party from using any utilitarian features embodied in a trademark, thus applying to all trademarks a former requirement of distinguishing guises and expanding the grounds upon which the Court may expunge a trademark registration by including as a ground for cancellation that the trademark registration is likely to unreasonably limit the development of an art or an industry.

Only time will tell to what extent this utilitarian feature infringement exemption and new cancellation ground will impact upon applicants and registrants and their respective brands, especially in emerging industries in which product design may not have historic alternatives and instead be dictated by intended utility.

Examination for Distinctiveness

The new Act also empowers Canadian trademark examiners with the ability to object to an application on the basis that the applied-for mark is non-distinctive. Previously, the scope of the examiners' search was limited to the Canadian Trade-marks Register for confusingly similar marks and a general search for assessing descriptiveness. Now, however, an application can be rejected if the examiner's "preliminary view is that the trademark is not inherently distinctive." How this change will impact the examination of trademark applications will only become clear over time, but it is almost certain that this change will lead to more substantive objections raised during examination than in the past, especially in cases in which an applicant chooses to file an application for registration of a mark that draws similarities to a famous or well-known mark in the same or different classes of goods and services.

Conclusion

The overall impact of the Bill C-31 on Canadian trademark practice will not be entirely clear until the government releases revisions to the Trade-marks Regulations, SOR /96-195, a process which could be completed before the end of 2014. Once the regulations are complete, the majority of the provisions of C-31 will likely come into force and the new Act will be fully implemented. One thing is certain, however - the provisions of the new Trademarks Act have serious implications for any trademark applicants and owners in Canada, and regardless of the size, scope, and nature of the business, mark owners will likely have to be increasingly vigilant in monitoring their marks and securing protection in Canada.

The full text of Bill C-31 as passed is available here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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