Canada officially took the step towards the implementation of the Madrid Protocol when it introduced Bill C-31, the Economic Action Plan 2014, No. 1 (Bill). The Bill received Royal Assent on June 19, 2014, and is now the law in Canada (New Act). The ratification and implementation of the Madrid Protocol and other IP treaties have taken more time than expected initially, however, the rollout of the New Act and regulations is expected to occur in 2019. This will bring Canada in line with the rest of the developed world after having been long-criticized for maintaining an antiquated system of filing trademark applications. 

This article will summarize the most important changes to the Trade-marks Act, and discuss the challenges and opportunities of which companies should be aware. It will also discuss the early impact of the Combating Counterfeit Products Act (CCPA), and additional border and enforcement remedies available to trademark owners.

1. Removal of "use" as a requirement for registration

This revision is by far the most significant one, as it changes what has been a fundamental requirement under Canadian trademark law for many decades. Under prior Canadian law, no registration could be issued until the applicant claimed or declared that it had "used" the trademark in Canada. Applications based on use in Canada had to contain a date of first use, and applications based on proposed use could not proceed to registration until a Declaration of Use was provided (the one exception to this requirement is an application based on "use and registration abroad" under Section 16(2) of the current Trade-marks Act, although that filing basis will no longer exist once the revisions come into force). Now, the use requirement will be removed, and an applicant will be able to file for and obtain a trademark registration in Canada without ever having used that mark anywhere in the world.

While this may simplify the application process, it will likely require trademark registrants to be especially vigilant in monitoring their marks against pirates in Canada, because non-practicing entities may have an easier time securing registration.

The removal of the requirement to identify a date of first use will also complicate both the searching and opposition processes. Under both regimes, an application can be opposed on the basis that a third-party had use of a similar mark in Canada before the applicant. This ground of opposition will remain available under the New Act, but a potential opponent will have no easy 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. Priority of rights will have to be determined through investigations and the exchange of evidence in an opposition proceeding. As a result, 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 time to conduct investigations.

This change also impacts trademark availability searches in Canada, since search reports will only indicate whether marks filed under the new regime have been used—or are proposed to be used—with no further information about the length of time the mark has been in use. This increases the cost of searches, as further investigations into potentially problematic registered marks will be required to identify the "senior" marks, and in some cases, such identification may not even be possible if there is no presence online.

The impact of this major revision will not fully be known until after its implementation, but it is likely to result in a dramatic rise in trademark squatters and pirates, and will put legitimate trademark owners in a position of having to litigate to defend their marks. It should be noted that "use" will still be an important consideration under Canadian trademark law, and prior use of a mark will still give a trademark owner priority over a subsequent user. However, due to the fact that applications will no longer contain an indication of when a mark was first used, if at all, this information will not become known unless and until the mark is opposed or the subject of litigation. Under this new trademark regime, being the first to file an application will be extremely important.

Any owner of a trademark (foreign or Canadian) who wishes to protect their mark in Canada, should consider filing an application in Canada before the regulations are implemented. Whether your trademark is already the subject of a foreign registration, or an application for the mark has not yet been filed in any country, it would be prudent to be the first to file in Canada before the law permits others to file applications for your trademark(s) without having to claim use. While you could litigate later over who is entitled to priority for the mark, it would be far more cost-effective to avoid this potential litigation by being the first to file.

2. International classification (Nice) system

Under the current Trade-marks Act, goods and services descriptions in Canadian applications only needed to be worded in "ordinary commercial terms" without regard to the classes of the associated goods and services. When Canada fully implements the Nice Agreement (1957) as part of the New Act, the listing of goods and services in Canadian trademark applications will follow the Nice classification codes, and will also need to be phrased in "ordinary commercial terms".

Many other jurisdictions, including the United States, require applicants to separate the descriptions of goods and services according to the Nice International Classification System, and pay a fee for each class of goods or services that is claimed. One of the significant advantages of the Canadian regime was the ability to file with respect to an unlimited range of goods and services, and still only pay a single application fee. This enabled trademark owners to claim very broad descriptions and increase the scope of protection of their marks without paying any additional fees.

Trademark owners should consider filing applications in Canada before the implementation of the Nice Classification system, to obtain the broadest scope of protection possible and avoid the anticipated increased fees for filing on a per-class basis.

3. Renewal period shortened

Currently, trademark registrations must be renewed every 15 years. The revisions will reduce this renewal period to 10 years.

Trademark owners can do two things as a result of these revisions. First, for any existing Canadian registration that may be coming up for renewal in the next few years, trademark owners can obtain early renewal before the implementation of these changes, and thus obtain additional years of registration before the renewal period is reduced. This strategy would only apply to marks that have a few years or less remaining before renewal. Second, if trademark owners file an application prior to the implementation of changes, and it proceeds to registration before the changes are in effect, the renewal period will remain at 15 years.

4. Colour and sound marks

Under the current Trade-marks Act, it is not necessary to prove that a colour or sound mark has acquired distinctiveness to obtain registration. This is likely to change once the regulations are put in place.

Owners of trademarks that consist of colours or sound should consider filing applications in Canada now before these more stringent requirements become law, so as to take advantage of the more lenient regime.

5. Divisional applications

The new Trade-marks Act will permit applicants to file divisional applications. Previously, applications that encountered registrability issues with respect to only some of the listed goods or services during examination, would be held up until those issues were resolved. The new regime will permit the non-contentious portions of the application to proceed to registration while the remainder of the application undergoes continued examination.

6. Madrid Protocol

The most important 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 an "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 to file an international application.

The advantage to the Madrid Protocol is cost savings, since applicants can manage their international trademark portfolios through a centralized system. It will permit Canadian businesses to become the recorded owners of existing international registrations, which is not currently permitted due to the requirement in the Madrid Protocol for recorded owners to be residents of a "contracting state."

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

7. Examination for distinctiveness

The New Act 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 examiner's search was limited to: 1) the Canadian Trademarks Register for confusingly similar marks; 2) a general search for the purpose of assessing descriptiveness; and, 3) an assessment for other issues of registrability (i.e., whether the mark is "primarily merely" a name or surname of an individual, whether registration is prohibited by the existence of an official mark or other "Section 9" marks, etc.).

Under the New Act, an application can be rejected if the examiner's "preliminary view is that the trademark is not inherently distinctive." It is likely this change will lead to more substantive objections raised during examination than in the past.

8. The CCPA and border enforcement

The Royal Canadian Mounted Police (RCMP) estimate that the annual overall cost to the Canadian economy from counterfeiting and piracy is in the billions of dollars. In addition, the retail value of counterfeit goods seized by the RCMP has increased by 500 percent in the last decade. Canada has long faced criticism for its outdated and ineffective anti-counterfeiting laws.

The Combating Counterfeit Products Act (CCPA) aims to combat two types of intellectual property infringement: copyright piracy and trademark counterfeiting.

The CCPA amends both the Trade-marks Act and the Copyright Act by expanding the list of infringing trademark and copyright infringing actions, and to further prohibit the importation or exportation of infringing copies and counterfeit trademarked goods on a commercial scale (import/export for personal use is excepted by the CCPA). Rights holders may now file "requests for assistance" (RFA) with the government to pursue remedies against infringers at the border. In response to an RFA, a Canada Border Services Agency (CBSA) officer may detain goods and provide a rights holder with a sample of or information relating to detained copies/goods. However, detentions are very short-term: five working days for perishable goods and up to 20 working days for non-perishable copies/goods after a sample is made available to the rights holder. Detentions can be continued if court proceedings are filed.

The CCPA provides that it is a criminal offence (with significant fines and/or imprisonment attached) to knowingly sell counterfeit goods on a commercial scale; manufacture, import or export such goods; or sell or advertise services in association with an infringing trademark. The manufacturing or trafficking of labels or packaging bearing an infringing trademark also becomes an offence.

To take advantage of the RFA procedure, trademark owners must have their trademarks registered. Rights owners should review their portfolios to ensure they obtain registrations for their core trademarks and others that could be targeted by counterfeiters.

9. Trademark portfolio review

Given these significant amendments, and the fact that it is still possible to take steps before they are implemented, we highly recommend that all trademark owners carefully review their trademark portfolio and consult with their trademark advisors to ensure they are protected to the fullest extent possible in Canada prior to these amendments taking effect.

Whether trademark owners have registered or unregistered marks, it is possible to file in the near future and obtain filing priority over applicants who will undoubtedly commence filing applications in Canada once the requirement of use is removed. Taking steps now increases the likelihood of avoiding costly opposition proceedings and litigation in the future relating to trademark squatters and pirates. You can also take advantage of the current system, which allows unlimited descriptions of goods and services before the Nice Classification system and increased fees are implemented, and early renewals can add extra years to your registrations.

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