How has Canada’s trademark landscape changed and what lies ahead?
Kwan Loh and Jamie-Lynn Kraft of Smart & Biggar review the changes made to Canadian trademark law and offer tips on how to navigate the road ahead
Almost a year has passed since sweeping changes to Canada's trademark law came into force. With the amendments announced more than five years before, trademark holders and practitioners had ample time to prepare for them, resulting in significant operational shifts for law firms and a rethink of portfolio management for brand owners.
While most of the changes were anticipated, their implementation has led to some surprises. This article explores how international trademark practitioners and owners can leverage Canada's new trademark law and practice to develop an efficient and cost-effective filing and prosecution strategy, create a powerful brand portfolio, and avoid unexpected traps and pitfalls along the way.
Madrid Protocol and correspondence issues
On June 17 2019, Canada acceded to the Madrid Protocol, providing international trademark owners with a convenient mechanism to file in Canada and providing Canadian owners with easier access to the rest of the world.
However, when considering whether to designate Canada through the Madrid system, rather than filing directly, international trademark agents should be wary of an unusual rule of Canadian practice.
For Madrid Protocol applications, if no Canadian agent has been appointed, the Canadian Intellectual Property Office (CIPO) is only authorised to send correspondence to the applicant. Notably, CIPO will not send correspondence to any non-Canadian representative. CIPO will also send some – but not all – communication to the International Bureau (WIPO). Thus, where a Canadian designation identifies a non-Canadian representative before WIPO in respect of an international application or registration, CIPO will issue a "courtesy letter" to the non-Canadian representative informing them that all future correspondence will be sent directly to the applicant, unless a Canadian agent is appointed.
This rule comes as a surprise to many practitioners familiar with the Madrid system. It also has some alarming implications. Firstly, there are important communications which CIPO will not send to WIPO, and which it will only send to the applicant (or its appointed Canadian agent). These important notices include subsequent examiner's reports (i.e. where a refusal has been maintained but the applicant has a further opportunity to respond), notices of default, and refusals (with an appeal deadline). This means that in many cases, an administrative or statutory deadline will be set, but WIPO (and therefore the non-Canadian representative) will not be informed.
Secondly, applicants who have appointed a representative to manage an international application or registration might be confused to receive notices which they may have expected their representative to handle and therefore might be unsure what they should do about them.
For those opting to proceed with Madrid filing over direct filing, the solution to the correspondence dilemma is relatively simple: appoint a Canadian agent as soon as the "courtesy letter" is received to ensure that all correspondence issued by CIPO is handled in a timely manner.
Nice classification and fee calculation
Another significant change to Canada's trademark law this past year was the official adoption of the Nice classification system. As of June 17 2019, all new applications, all applications not yet published, and all registrations upon renewal must be classified.
The adoption of Nice also led to the introduction of per-class filing and renewal fees. While per-class fees are not unique to Canada, Canada's calculation of those fees is unexpected.
Specifically, the filing fee is calculated based on the number of classes appearing in the application when the application is filed. If, for example, an application is filed in one class of goods but CIPO is of the view that the goods fall into two classes, the applicant must pay for the additional class even if it deletes the goods belonging to the extra class after filing. This is unlike many other jurisdictions where applicants can file broadly and then limit their applications after the fact to avoid paying additional class fees.
To avoid unexpected filing fees in Canada, applicants should ensure they are reasonably certain of the number of classes to which the goods and services belong before filing their applications.
Similarly, the renewal fee is calculated based on the number of classes appearing in the registration upon renewal. Of course, if a registration is already classified, there should be no surprise fees because a registrant can choose to renew (and pay) for only the classes of interest.
However, the trouble for the foreseeable future is that virtually all existing registrations in Canada are not yet classified. As a result, many trademark owners do not know the number of classes to which the goods and services in their registrations relate. If a registration is renewed before it is classified, and if CIPO determines that the goods and services fall into multiple classes, the registrant must pay the additional per-class renewal fee for all the classes and cannot avoid paying the fee by deleting goods or services after renewal.
To avoid unexpected renewal fees, trademark owners should classify their registrations well in advance of the renewal deadline so that by the time renewal is due, the registrant can renew (and pay) for only the classes of interest.
Finally, while trademark owners and practitioners outside of Canada are no doubt familiar with the Nice classification, they should be aware that broad class descriptions are not acceptable in Canada, and CIPO continues to require that all goods and services be described in specific and ordinary commercial terms.
Non-inherent distinctiveness objections
In the months and weeks leading up to the change in Canadian trademark law, a topic of great curiosity and concern among Canadian trademark practitioners was how CIPO would apply its forthcoming power to object to applications on the basis that a trademark lacks inherent distinctiveness.
Almost a year later, practitioners and applicants have learned that CIPO examiners are wielding their new power with fervour. The distinctiveness objection has been raised in a vast range of cases including those where the mark is primarily merely a surname, clearly descriptive, comprised of generic terms, a geographic location, a laudatory term or phrase, the name of a colour common for the goods, a number, comprises only one letter, or a combination of any of these elements. The objection is typically also now raised against applications for most non-traditional trademarks.
To date, there have been ongoing discussions between practitioners and CIPO examiners as both sides learn to adapt to the new law and try to find the line between a mark having "no inherent distinctiveness" and a mark having "low inherent distinctiveness." In the meantime, many applicants find themselves in the crosshairs, having to deal with distinctiveness objections which are sometimes unexpected and unwarranted.
To overcome an objection on the grounds that the mark lacks inherent distinctiveness, an applicant can either file arguments that the mark possesses at least some inherent distinctiveness, or it can file evidence demonstrating that as of the filing date of the application, the mark had acquired distinctiveness (i.e. secondary meaning) in Canada. For applications that were filed without any use of the mark in Canada at the filing date, it will be very difficult (if not impossible) to show secondary meaning. In those cases, the only option is to try to overcome the objection through argument. Based on early experience, arguments against distinctiveness objections have had mixed results.
Should this trend continue, applicants for marks that might lack inherent distinctiveness will be placed in the difficult position of either obtaining an early filing date for which they have no evidence of acquired distinctiveness, or delaying their filing to wait for substantial use of the mark to occur first.
New non-traditional trademarks
While the concept of non-traditional marks is not new to Canadian practice, the new law explicitly provides for the registration of many additional types of non-traditional marks. It is now theoretically possible to register anything that functions as an indicator of source including all of the following: three-dimensional marks, the shaping of goods or their containers or mode of packaging, sound marks, colour applied to the surface of a three-dimensional object, holograms, moving images, scents, taste, texture, colour per se, and the positioning of a sign. Moreover, any mark comprising a combination of non-traditional marks may also be registrable in Canada.
To avoid unexpected filing fees in Canada, applicants should ensure they are reasonably certain of the number of classes to which the goods and services belong before filing their applications
Under the new law, CIPO will request evidence of acquired distinctiveness in Canada for most non-traditional marks. The evidence must establish acquired distinctiveness as of the Canadian filing date. Such evidence would typically describe significant sales, marketing, and advertising of the mark in association with the claimed goods and services.
As it remains to be seen how CIPO will examine non-traditional marks for confusion, there could well be a significant benefit for brand owners to file as soon as possible before the register becomes crowded (bearing in mind the need for acquired distinctiveness as of the filing date).
An effective enforcement strategy
With the elimination of the use requirement to obtain a registration in Canada, the landscape for enforcing trademark rights has evolved. Three noteworthy strategies are discussed below.
Firstly, monitoring of third-party trademarks by brand owners has never been more important. The combination of Canada's accession to the Madrid Protocol with the elimination of the use requirement means that unprecedented numbers of trademark applications are being filed at CIPO. Inevitably, some of those applications are filed by trolls – parties with no legitimate interest in the trademark(s) they are seeking to register in Canada. Such applications affect the ability of legitimate brand owners to register their trademarks. Consequently, brand owners should consider periodic monitoring of both the trademarks register and marketplace to ensure they are in a position to take appropriate steps to protect their rights.
Secondly, brand owners can now take advantage of the "notification of third party rights" mechanism. Similar to "letters of protest" in the United States, this mechanism allows brand owners to bring information relating to the registrability of a pending application to CIPO's attention prior to the opposition period. However, the scope of this process is relatively limited, and a notification of third party rights can only relate to the following grounds: a) the applicant's trademark is confusing in light of a registered trademark; b) the applicant's trademark is confusing in light of an earlier-filed trademark application; or c) a registered trademark is used to describe goods or services. CIPO will not accept written arguments or evidence of prior use as part of this process. Nevertheless, the new mechanism allows brand owners to bring their rights to CIPO's attention at a relatively early stage, perhaps increasing the chance that CIPO will block the application and thus avoiding the necessity of an opposition.
Thirdly, brand owners can continue to use opposition and non-use summary cancellation proceedings to manage their rights on the Canadian register strategically. Despite the changes to the law, opposition and cancellation practice has not fundamentally changed. There are, however, some noteworthy developments. Perhaps most importantly, bad faith is now an explicitly available ground of opposition – which should come in handy against the troll applications noted above. As for cancellation proceedings, it is now possible to target specific goods or services in the proceeding. In other words, if a party is only interested in having a subset of the goods or services deleted from a registration, it may request CIPO to only require the registrant to prove use of the mark in association with that subset of the goods and services, thus streamlining the proceeding.
With trademark trolls becoming increasingly savvy, brand owners are encouraged to stay vigilant and maintain a proactive enforcement strategy for their trademarks in Canada.
There is no doubt that Canadian trademark law experienced a dramatic shift this past year and practitioners, owners and CIPO continue to adapt to the new landscape.
While many of the changes make obtaining trademark protection in Canada easier (and in some cases cheaper) than ever before, there are also new challenges and unexpected traps to be navigated. Putting in place a thoughtful filing and enforcement strategy which recognises those challenges and traps is a key step in leveraging Canada's trademark law and maximising brand value in Canada.
Kwan Loh, counsel in Smart & Biggar’s Vancouver office, regularly handles a wide range of matters across the trademark life cycle. His solicitor practice focuses on trademark clearance, filing, and prosecuting trademark applications with the Canadian Intellectual Property Office, and trademark portfolio strategy and management in Canada and around the world. Additionally, drawing on more than a decade of experience in litigation and contentious trademark matters, Kwan is able to proactively identify and counsel on potential points of dispute, mitigating risks and unnecessary costs for his clients. Kwan also advises on IP-related contracts including licences, assignments and other commercial agreements.
Kwan is the past chair of the IP & Technology Law Section of the Canadian Bar Association, British Columbia Branch, and a fellow of the Intellectual Property Institute of Canada (IPIC). Kwan is also a member of the International Trademark Association (INTA), and currently serves as a committee member of the Famous and Well-Known Marks Committee; previously, he served on the Anti-counterfeiting Committee (2018-2019), and the Trademark Office Practices Committee, Canada (2014-2017). Kwan is a lawyer and registered trademark agent.
Jamie-Lynn Kraft is a senior associate in Smart & Biggar’s Ottawa office. She has a passion for helping businesses grow and helping clients harness the full potential of their brands. Jamie-Lynn counsels her clients throughout the trademark lifecycle, including clearance, prosecution, opposition and enforcement. She also provides advice on marketing and advertising law, including guidance relating to product packaging and labelling, advertising campaigns, contests, privacy issues, and publicity rights. Her clients occupy a wide variety of fields, from small and medium-sized enterprises to multinational corporations, covering all industry areas including fashion, cosmetics, food and beverage, information technology and manufacturing.
Jamie-Lynn is a frequent speaker on topics relevant to brand owners and trademark practitioners, and a member of the Intellectual Property Institute of Canada, the International Trademark Association (currently serving on the Right of Publicity Committee) and MARQUES (currently serving as a regulatory team member). She is a lawyer and registered trademark agent.