Proposed Amendments to the Canadian Trade-marks Act: Rethink your Budgets

Published May 12th, 2014

Canada and the United States enjoy one of the world’s largest, strongest and most comprehensive bilateral trade relationships in the world.  Every minute, $1.2 million worth of goods and services cross the world’s longest undefended border.  Over the years, through deliberate and concerted efforts in both countries, we have harmonized our regulatory environments to encourage and reduce barriers to trade.  Also, for years both countries have shared a regulatory framework for trade-marks built on the fundamental concept of “use”.

Trade-marks are an important consumer protection device and a key component of an efficient market economy — “a kind of shortcut to get consumers to where they want to go”.[1]  Both Canada and the United States tie their trade-mark registration systems to the marketplace by requiring commercial use as part of the quid pro quo for owners to enjoy exclusive rights.  In some cases, the United States goes as far as to require trade-mark owners to provide physical specimens of use rather than relying on a statement of the owner.  Tying trade-mark rights to “use” allows both countries to provide consumers and businesses trade-mark registration systems that mean something.  With some assurance that many unused marks are removed from the active registers before or after registration, decisions to invest in trade-marks can be made with a degree of certainty.

The Canadian government is poised as part of an omnibus budget implementation bill to dismantle this use-based system on the premise that doing so will increase the speed and efficiency of the registration process.  The bill introduces other worthwhile changes, but we view it as a mistake to:

  • remove the requirement for Applicants to identify a date of first Canadian use;
  • remove the requirement for Applicants to provide details for foreign use and registration; and
  • remove the requirement for Applicants to file a declaration of use before obtaining registration for applications filed on the basis of proposed use.

We appreciate the need to position Canada to adhere to significant international trade-mark treaties.  However, surrendering the use requirements is false economy and furthermore, is not necessary to adopt the treaties at issue.  If this bill passes in its present form, those with no legitimate interest in trade-marks will be able to obtain enforceable rights to the detriment of others who have built goodwill through actual use or who have a genuine intention to use a mark in Canada.  We shall trade yet to be measured efficiencies for less certainty, more oppositions, more litigation, and a less meaningful trade-mark register.  Trade-mark owners can also expect to face additional investigations to evaluate risks in clearance searching for new marks.  Costs will increase for business.

Canadian and foreign owners of Canadian trade-marks should urge the federal government to undertake further study with input from relevant user groups before pulling the use linchpin from our system.

[1] Mattel, Inc. v. 3894207 Canada Inc. [2006] SCJ No. 23

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