Canada: Trademarks And Trade Wars – Developing An International Trademark Strategy

Last Updated: July 3 2018
Article by Cynthia Rowden and Sharyn Costin

Recent news about trade disputes and resulting trade disruptions is a reminder of how businesses may need to adapt to rapidly changing economic and political factors by shifting sales and marketing efforts to new countries, which in turn reinforces the importance of having a global trademark strategy. Brand protection steps that have focused only on current markets may make it difficult to easily and efficiently enter new markets without first investing significant expenses in brand selection, clearance and protection.

Trademark registration can provide numerous advantages – including country-wide rights regardless of where the business operates, notice to third parties of trademark claims, simplified enforcement, and in many countries, eligibility for country code top level domain name registration, plus local Trademarks Office and Customs assistance in policing rights and preventing copycats or counterfeits. In many regions unless a mark qualifies as "famous", enforcement against an infringer or counterfeiter is extremely difficult, if not impossible, until the mark is registered. Further, the sooner rights are secured by applications, the lower the risk of a third party scooping the name, intentionally or otherwise. 

While most businesses initially focus their attention on domestic trademark registration, early development of a global trade and trademark strategy early on is important. For most North American businesses, trade with international neighbors is the most likely first step for business expansion, and trademark protection in those neighboring countries should go hand in hand with such expansion.  However, businesses need to plan for global growth, especially when fast-changing political shifts may compel businesses to consider alternative foreign markets. 

What factors should businesses consider when developing an international trademark strategy? Here are some suggestions:

  1. All businesses own trademarks. If properly used and registered, trademarks will become important company assets, and impact the overall value of the company. Time and energy invested in brand development, clearance, marketing and awareness should be mirrored by legal steps to secure those brands at home and abroad.
  2. Clearly define the business activities, keeping in mind likely future growth. Trademark rights are tied to specific goods and services. Create a list that not only reflects current marketing plans, but also anticipates future growth. While a business might believe that its future lies with T-shirts or pharmaceuticals, plan for a broader list of goods and services that anticipates expansion, as well as the appropriate channels of current and future distribution (i.e. online/e-commerce activity).
  3. Prepare for foreign expansion. Companies don't want to celebrate their first major international contract, only to find that that their marks are not available, and products cannot be sold without risk of infringement litigation, or substantial investment in new branding, packaging and advertising. Identify key foreign markets as early as possible, and choose brands that will be available in local and foreign markets. Your trademark advisor can assist with searching options – even just a "knock out" search on foreign trademark registers may quickly identify future problems.
  4. Start by filing locally, then use international laws to claim rights as of the domestic filing date. Most industrialized countries recognize treaty "priority rights" that permit a company to obtain a filing date for international applications that is the same as home country or other first-filed applications, if foreign filings are made within six months. That gives companies an opportunity to review and prioritize foreign brand protection, and better manage trademark budgeting. The Madrid Protocol, an international filing agreement, permits efficient and cost-effective filing in many jurisdictions (and will become available to Canadian businesses after the coming-into-force date of amendments to the Trademarks Act) also offers cost-savings on international filings, and should be part of an international branding strategy.
  5. Few companies can afford to get "worldwide" trademark rights for a new brand. Rather than aim for global protection right away, base your foreign filing strategy on three criteria: (i) are there any "must do" foreign filings – either for marketing reasons, or branding security?; (ii) where does the business hope to be selling in the next 3-5 years?; and (iii) where is the competition is located?Most trademark advisors will recommend filings in major markets, which for North Americans, would mean their immediate neighbours. However, securing rights in countries that are well known for their aggressive trademark strategy will usually put China at the top of most priority lists. Identifying future markets are key, particularly since in many countries, it will take years to get trademark protection.For existing companies, knowing how business expanded globally should provide a guide for new brands. For new businesses, consider where the market leaders do business, and follow their lead in trademark filings. Finally, while a business might not intend to sell in certain foreign markets, consider where major competitors or counterfeiters are located, since, as noted above, rights in many countries are dependent on registration, and without local filings or registration, you might not be able to prevent registration of similar marks that are used on exported goods, or effectively deter infringing or counterfeit exports.
  6. Take advantage of regional registration systems. The most important is the European Union.  While businesses may secure national rights on a country-by-country basis, filing a European Union trademark application offers the chance of protection in all 28 current members of the EU, with tremendous cost savings and efficiencies. (Note: for now, Great Britain remains a member of the EU, and it is likely that any registered EU marks will obtain protection in Great Britain, after Brexit, without separate registration.)
  7. Anticipate local language and typestyle uses. While English may be the preferred brand use, foreign markets may adapt more easily to a local language version of the mark. In some jurisdictions, local language versions may be used by copycats. Brand protection for obvious translations/transliterations may be a way to deter unfair competition and control the adoption of a translation/transliteration for your brand before the public fills the void and invents an unfavourable one for you.  
  8. In most countries, use is not a prerequisite to registration. Trademark applications can be filed, and rights reserved, before plans to sell goods or offer services are finalized, and the resulting registration may be enforced even before those goods/services are sold locally. At the same time, registrations can be cancelled for non-use. For example, in Canada, any person may request the registrant to prove use of any registration that is more than three years old, and failure to use the mark in the form in which it is registered can result in cancellation. Many other regions have a five-year term – meaning that companies need a way to diarize for use requirements, and take steps to maintain rights, either by commencing use, or refiling.
  9. Be aware of local use requirements. Registration validity and enforcement may be impacted by failure to use proper trademark notices, or follow local licensing requirements – which may require written agreements, notice of license, or government recordal. At the same time, take advantage of local rights that come with registration. For example, many countries permit registered trademark owners to record their marks with customs authorities, which assist with anti-counterfeiting activities.
  10. Update trademark portfolios regularly. Prudent practice would be to review, annually, all pending and registered marks to ensure that the portfolio reflects current and upcoming business activity. That means checking for:
  • marks in use and whether there have been any significant changes to marks
  • new marks, or decisions to drop marks
  • protected goods and services, and looking for any changes in business focus
  • countries of interest – do business plans call for a broader list of country filings?

Above all, a trademark portfolio should reflect current and projected international business activity. Plan far enough in advance to avoid surprises, costs, and unexpected delays. Share your plans with your trademark advisor and make them a part of your business team – they can advise on customized steps and strategy that maximize the value of your trademark rights around the world in the most efficient and cost-effective manner.

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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Cynthia Rowden
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