There has been a revolution in how software is delivered to
customers. Traditionally software was licensed in a physical form.
The customer traditionally received a copy of the computer program
in a tangible form (disk or downloaded) and installed the software
on its computer and operated the software in that manner. This also
meant that the customer had to obtain and either install updates
from time to time directly, or by virtue of automatic updates
installed by the software supplier.
The revolution is a change to the business model. The new model
has the software supplier maintain the software on its server and
the customer accesses it via a network connection, commonly on the
Internet. The software vendor keeps the software current and the
customer now merely has to use the software. The customer never
gets a tangible copy of the software but merely accesses the
vendor's server to use the software. This business model is
called "software as a service" or cloud computing.
So the issue comes up – if you are a software vendor and
you registered your trademark with software claimed as a good (but
not as a service) then is your trademark registration subject to
This is what happened in Specialty Software Inc. v. BEWATEC
Kommunikationstechnik GmbH, 2016 FC 223, where the Federal Court had to
consider a non-use cancellation action filed against a software
vendor's registration of its trademark registered in relation
to goods and not for services. The opponent argued which the vendor
continued to use the software in the marketplace because its
business model had evolved to a "software as a service"
model, it was no longer using the trademark in association with
goods, as registered.
The opponent argued that use in relation to goods required a
transfer of property to occur under Section 4 of the
Trade-marks Act, RSC 1985, c T-13. The essence of the
argument is well summarized at para. 8:
Bewatec argues that Specialty's mark is associated with data
and software available only through an Internet browser. Specialty
has not met, in its view, its burden of demonstrating that there
has been a transfer of ownership or possession of any goods. It
points out that Specialty's clients do not download or install
or physically acquire anything. In reality, Bewatec says, clients
merely obtain access to a service that Specialty provides over the
The Federal Court did not agree. While the software vendor no
longer sold software on a disk, it is really in effect selling a
license to use the software, an intangible good. The Court saw the
disk as merely the way the software was delivered and the
"real" good was the license.
In this case the Court found that software vendor had provided
evidence that the registered "mark was used in a manner that
gave notice to purchasers of software licenses of an association
between those goods and the registered mark and therefore, the
requirements of the Act regarding use have been met."
Software vendors who migrate their business model to a software
as a service model will find the decision in this case helpful to
support their older good-based registration. However they should
note carefully the difficulties of associating a trademark with a
license and consider whether it may be worthwhile revising their
trademark filings in order to fully reflect how they conduct their
business. Perhaps some aspects of a Software as a Service model may
also be well aligned with a service claim.
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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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.
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