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Tuesday April 30, 2019

Canadian Trade-mark Law is Losing the Hyphen!

Posted in: Intellectual Property

On June 17, 2019, five years after the Harper government made countless amendments to the Trade-marks Act (the “Act”) in omnibus budget legislation (Bill C-31 of 2014), the famous Canadian hyphen (inside the word “Trade-marks” of the Act’s title) will become a thing of the past.

Although the first trade-mark laws in Canada were enacted in 1868, the hyphen was only introduced in 1954, in a revamped modern legislative model. It set Canada apart from the American spelling of “trademark” (one word) and the British spelling of “trade mark” (two words) for the last 65 years. From now on, we must get used to the new word: trademark!

Joking aside, most Canadians are not aware of that “hyphen” distinction and will not even notice this latest US linguistic intrusion into Canadian intellectual property laws. Turning to the more serious changes made to the Act, here are the big legal issues now coming into focus.

Abolishing “Use” as a Pre-Condition to Registration

The most fundamental change arriving June 17 is the elimination of “use” as a basis of trade-mark registration. This is huge. Currently, a trade-mark registration applicant must claim some use of the trade-mark, whether prior or proposed use, in order to obtain all the exclusivity and enforcement rights under the Act.

Use has been the existential underpinning of trade-mark law for several centuries; why eliminate it? No one knows, as there was no consultation with Canadian trade-mark experts or the business community in the lead up to the amendments.

The Canadian Intellectual Property Office (CIPO) claims that the amendments were needed to bring Canada in compliance with certain international treaties; however, none of those treaties required abolishing use as a basis for registration. Some jurists have argued that this legislative change is unconstitutional (beyond the powers of the Federal government) and will eventually be struck down. Time will tell whether anyone will bring that argument before the courts.

Availability and Clearance Searches will be More Expensive

With the trade-marks database no longer disclosing the use claim details associated with applications and registrations, availability and clearance searches will not only be less reliable (because of the reduced usage information disclosed on the public register), they will also be more expensive (because they will have to be supplemented with common law searches).

In addition, the absence of a use claim requirement has opened the door to trade-mark “trolls” and “pirates” who apply to register un-used marks much in the way “cyber-squatters” used to hijack internet domain (URL) names and hold them hostage for ransom. That problem did not previously exist under the Act and will lead to both a less reliable public register to advise brand owners and a flood of lawsuits involving illegitimately registered trade-marks.

Higher CIPO Fees for Less Legal Protection

Canada is also dramatically increasing its trade-mark filing fees and significantly reducing the duration of the statutory protection. Fees (both to apply and to renew) will now be based on the number of “classes” of goods and services claimed in an application (or registration, in a renewal context). Higher government fees may discourage small and medium sized businesses wishing to protect their brands from infringement via registration. The “per class” fee structure may lead applicants to claim only some and not all of their brand’s goods and services.

The term of protection is dropping from 15 years to 10 years, a 33% reduction. A higher cost for less IP protection is not something anyone would have reasonably asked for or expected! In contrast, copyright law is regularly receiving longer terms of statutory protection (e.g. life of the author plus 50 years, plus 70 years, plus 100 years, etc.) and cheaper enforcement mechanisms (e.g. technological protection measures, notice and notice, etc.). The different policy treatment between trade-marks and copyright is not reconcilable or rationally justifiable in the context of intellectual property laws generally.

Trade-mark Registration is Still A Good Thing

Despite the new complexities, costs, uncertainties and potential litigation, it remains an excellent idea to register your brand as a trade-mark in Canada. The Act provides the best and broadest enforcement rights and remedies for trade-mark infringement, depreciation of goodwill and passing off. A registered trade-mark: (a) is a must for franchise operations; (b) is required for domain name arbitrations; (c) shows potential investors that your business duly protects its valuable assets; and (d) provides additional collateral for debt financing.

A trade-mark does not have to be registered to be used; however, the legal advantages and significant benefits of registration are worth the investment. Brand owners increase the value of their trade-marks by obtaining protection under the Act. As such, applying for trade-mark registration is an excellent business decision and a key priority for any marketing strategy.

For information about trade-marks, please contact our Trade-mark Agent Marc Belliveau.

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