Canada: Ready To Launch: Considerations In Selecting Your Cannabis Brand

With the legalization of recreational cannabis set for October 17, 2018, cannabis companies are flooding the Canadian trademarks register with an array of new trademark applications.

In 2018 alone, over 1700 trademark applications were filed in the Canadian Intellectual Property Office (CIPO) in association with goods and services containing the word "cannabis" and/or "marijuana". This dwarfs the 847 such applications filed in 2017.

This rush to register names, slogans and logos has run parallel with the disclosure of branding requirements under the Cannabis Act and Cannabis Regulations. At last, companies have some preliminary guidance on the strict limitations that will be imposed on brand selection and use. And many of the trademarks for which registration has been sought may be precluded from ever being used.

The restrictions in the Cannabis Act and Cannabis Regulations must also be read together with the Trademarks Act, which has its own registration regime limiting what trademarks can be registered in Canada.

Set out below are key steps that cannabis companies can follow in choosing and ultimately protecting their cannabis brands in Canada.

1. Choose a Brand Element

"Brand elements" are defined in the Cannabis Act as a brand name, trademark, trade name, distinguishing guise, graphic arrangement, design or slogan that is reasonably associated with, or that evokes (a) cannabis, a cannabis accessory or a service related to cannabis; or (b) a brand of any cannabis, cannabis accessory or service related to cannabis.

The key to any successful brand strategy is choosing a brand element(s) that differentiates your brand from competitors in the same space. Where your brand is distinctive and allows for customers to be loyal to you as a brand owner, it can become one of the most valuable assets of your company. Aside from all the techniques marketers use to put a successful branding strategy into action, we see that often the most successful brand elements are those that are unique to the industry, easy to pronounce, and memorable. For example, consider the well-known brands of APPLE, FACEBOOK, IKEA, NIKE and UBER.

A company typically starts by choosing its trade name and its house brand name followed by choosing a distinctive logo, slogan and product names. The choice of each brand element is often a creative and iterative process.

Once you make a choice, the next considerations can serve to winnow out certain options.

2. Consider how your Brand Element will be Displayed in Promotional Activities

The Cannabis Act defines the term "promote" as follows:

in respect of a thing or service, means to make, for the purpose of selling the thing or service, a representation – other than a representation on a package or label – about the thing or service by any means, whether directly or indirectly, that is likely to influence and shape attitudes, beliefs and behaviours about the thing or service.

It is vital to understand whether you will be allowed to actually use your chosen brand element(s) in your advertising and promotional activities based on the restrictions to "promotion" found in the Cannabis Act and Cannabis Regulations.

For example, it is prohibited to promote cannabis or a cannabis accessory or any service related to a cannabis by doing so in a manner that there are reasonable grounds to believe could be appealing to young persons, by means of testimonials or endorsements, by means of the depiction of a person, character or animal (whether real or fictional) or by presenting it or the brand element(s) in a manner that evokes a positive or negative emotion about or image of, a way of life such as one that includes glamour, recreation, excitement, vitality, risk or daring.

Additional specific restrictions to promotion relevant to choosing your brand element(s) include not promoting cannabis in a manner that is false, misleading or deceptive or that is likely to create an erroneous impression about its characteristics, value, quantity, composition, strength, concentration, potency, purity, quality, merit, safety, health effects or health risks.

Care should thus be taken to ensure that the brand element(s) you intend to use to advertise your cannabis products is chosen in a way that does not violate the above restrictions. This does depend on your company's risk tolerance, as it remains to be seen how ambiguous provisions such as "appealing to young persons" and evoking "a positive or negative emotion about or image of a way of life such as one that includes glamour, recreation, excitement, vitality, risk or daring" will be interpreted. We do anticipate, however, that the above restrictions will be applied by government in a manner similar to the treatment of tobacco products in Canada.

3. Consider how your Brand Element will be Displayed on Packaging

Consideration of the packaging and labelling restrictions in the Cannabis Act will also govern the choice of brand element(s).

Significant restrictions impact the packaging containers of cannabis products, including the prohibitions of displaying brand elements or images, having metallic or fluorescent properties in the ink, including hidden features such as heat-activated ink or fold-out panels or having the capabilities of emitting scents or sounds. These restrictions also include specific requirements for colour, finish and texture.

With respect to labelling, where the brand name and only one other brand element can be displayed, many restrictions also apply to the display of these brand elements, such as frequency of display, surface size, type style/size, colour, metallic properties, fluorescent properties, pigment, and ability to absorb ultraviolet energy.

In short, the above restrictions may significantly curtail the natural creativity in designing packaging and labelling of any product. These restrictions also amplify the importance of selecting a brand element which truly differentiates your brand from those of others, in what is anticipated to be a crowded marketplace.

4. Conduct a trademark clearance search

Once you have settled on a short list of brand elements based on marketing strategies and the restrictions imposed by the Cannabis Act, it is prudent to conduct a "clearance" search to understand the risks associated with use and registration of each of the brand elements on your cannabis products or in association with cannabis services. Ideally, this search identifies obstacles to registration prior to investing the resources into filing and prosecuting a trademark application with CIPO.

A trademark agent or trademark lawyer can assist you with performing a clearance search to ensure that the brand element is available and protectable under the Trademarks Act. A full clearance search should reveal any potential 3rd party obstacles to the use and registration of a trademark in Canada, and allow the risks to be quantified in the context of the overall state of the Register and marketplace.

It is also important to note that certain trademarks will be met with inherent objections to registration from CIPO itself based on, for example, whether the mark is "primarily merely" a surname, clearly descriptive or deceptively misdescriptive, or barred by the Plant Breeder's Act.

CIPO's examination of applications is also expected to become more stringent when the new trademarks regime comes into effect sometime in 2019, as the Registrar will be able to object to the registration of a mark on the basis of non-distinctiveness alone. This underscores the importance of selecting a unique and original mark from the outset.

5. Register Your Trademark

Once you have chosen brand elements that meet all of the statutory restrictions, and has been cleared from a from a trademarks perspective, it is vital to seek to register these as trademarks with in the Canadian Intellectual Property Office.

Happily, the range of marks which are registrable under the new Trademarks Act has broadened to include a word, personal name, design, letter, numeral, figurative element, three-dimensional shape, hologram, moving image, mode of packaging goods, sound, scent and taste.

A trademark registration is an important business asset, which confirms your rights, gives public notice of ownership of the trademark, and provides the exclusive right to use the trademark across Canada for 15 years (to be reduced to 10 years under the amended Act), on a renewable basis.

A trademark registration is also a vital tool in the enforcement of a brand in Canada, and will serve to block confusingly similar trademarks from becoming registered.

The legislative framework for cannabis brands is indeed fairly complex, as companies must take into account the requirements under both the Trademarks Act and the Cannabis Act outlined above.

Compliance with the Trademarks Act is necessary for successfully registering a trademark in Canada. However, at the time of writing, we do not anticipate that CIPO will object to the registration of cannabis trademarks on the basis of non-compliance with the Cannabis Act and the Cannabis Regulations. We cannot rule out that this argument is deployed during opposition proceedings but the law has simply not yet evolved on this front.

Additionally, Canada's new trademark regime anticipated to take effect in spring 2019 will enable marks to be registered without use. Read together with the "saving" provisions under the Cannabis Act which prevent cancellation proceedings due to non-use as a result of compliance with the Act, an overcrowded trademarks register is anticipated.

The value of a registered trademark that cannot be used may lie in defensive purposes only, or be aligned with a broader global branding strategy.

Ultimately, companies will be rewarded for a careful selection and planning of their cannabis marks, which will result in strong branding elements which comply with both the Trademarks Act and the Cannabis Act. This should assist in smoother registration and enforcement of these valuable brands in Canada.

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