Trademark Applications in Canada - An Update on the Use Requirement
Back in 2014, the government of Canada introduced significant changes to trademark law. One significant change has the potential to significantly impact how businesses protect their trademarks in Canada. That change relates to the use requirement in trademark applications.
The Use Requirement
It is a fundamental principle of trademark law that a trademark identifies the good will of the owner of the business which uses the identified trademark to promote the products and services of the owner’s business. For this reason, the trademark applicant (owner) was required to declare that the trademark was actually used in Canada by the applicant before the trademark would be registered. The trademarks act required the trademark applicant to actually make sales in Canada of the wares and services listed in the application. This has been the law for decades and it conformed closely to similar legislation in the United States, our principle trading partner.
The New Law Does Away With the Use Requirement
The long standing practice of requiring the trademark applicant to declare the basis upon which the trademark application was based, either prior use or intention to use in the near future, is being removed. Under the previous regime, if the application was based on the intention to use the trademark in the near future, then the trademark’s office would require the applicant to eventually file a document wherein the applicant solemnly declares that they have commenced use of the trademark in Canada. If the applicant had not commenced use of the trademark in Canada, the applicant could extend the deadline to file the declaration of use; however, the trademark would never become registered until the applicant finally commenced use of the mark in Canada and filed a sworn declaration of use.
In a sharp departure from the previous law, the requirement for use is being removed, along with the practice of filing declarations of use. When the law comes into effect, an applicant will simply be able to file a trademark application without declaring either use of the trademark or even an intention to use the trademark, and the application will proceed without requiring a declaration of use to be filed. It is possible that trademarks will be registered without the applicant ever being able to demonstrate that the trademark has in fact been used.
Some have argued that this represents a potential for the rise of “Trademark Trolling”, wherein an individual or company registers a trademark without the intention of actually supplying products or services using the trademark, but instead to extract a fee from other companies who do provide products or services using a similar mark. From personal experience, I think this is a legitimate concern. Early on in my career I was approached by several people who wished to register trademarks in Canada with the expressed intention of extracting fees from foreign manufacturers of goods who might sell their products into Canada. When the law changes, the foreign manufacturer, wishing to register the trademark in Canada, would have to go through several additional steps before being granted a registration for their trademark, namely investigating if the previously registered (in Canada) trademark was actually used, and the additional costs of a section 45 proceeding to expunge the improperly registered trademark. This, in my opinion, needlessly complicates the matter of searching for and registering trademarks.
Apart from the potential problem of “trademark trolls”, there is the significant issue of “wares and services inflation”, a process whereby the applicant lists every conceivable product or service which the applicant may hope to sell using the trademark. Instead of restricting the list of wares and services to those things which the applicant can practically implement in the short term, the list of wares and services becomes a kind of “wish list”. It has been my practice to advise clients to be conservative with the wares and services listed in the application if the mark is based on proposed use because, unless the applicant actually sells all of the wares and services listed, the registration would be delayed or the application would have to be amended to remove the unused wares and services listed. With the removal of the use requirement, applicants will no longer have this motivation to prune their “wish list” of goods and services. Therefore, when reviewing a potentially problematic registration or application from a competitor, a would be trademark applicant would not know which products or services listed in the registration or application are actually being used or likely to be used in the near future.
This change also makes it much more complicated to render opinions on the registrability or use of a trademark in Canada. Presently, I and other trademark practitioners can have a certain degree of certainty that a trademark registration (or even application) on the register is a legitimate attempt by someone to register a trademark they are using or are taking vigorous steps to use. After the changes come into force however, providing that clarity will become much more difficult. If I see a registration for the mark ABC by company X, the additional step of researching the use of the mark ABC by company X will now be required before we can be certain that a similar mark cannot be registered and/or cannot be used without infringing company X’s trademark rights. This change has the potential of diluting the certainty of the trademark register.
While the removal of the use requirements in the trademark legislation may streamline the process of registering trademarks, the net effect of these changes may negatively impact the practice of trademark registration as well as the business of carrying on businesses in Canada. In my opinion, this is not a good change in the law and is likely to result in increased legal costs to clients and decreased certainty.
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