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Are You Ready for Some New Sort-of Good, Sort-of Awful Trademark Laws?

June 10, 2014

Brand owners and brand users, be on alert – big changes may be coming to Canada’s trade-marks laws and some of them aren’t pretty. Some of them are really good developments, as well, that will put us in step with international intellectual property law norms, but all of them are going to dramatically alter the way we view trade-mark protection in this country from now on.

This will resonate particularly loudly for businesses in the franchise industry. If you are a franchisor, you need to understand not only how your (old) trade-marks are protected and rights to them enforced, but also how your (new) trade-marks will be applied for and registered in the future. After all, these marks are your notice to the world that you are doing business under them and that they are not available for use in connection with similar products and services. If you are a franchisee, you are likely spending a lot of money to buy into a brand, and name recognition is a big part of that. You certainly want to know that your franchisor has exclusive rights to those marks and that they won’t be vulnerable to modifications as a result of improper use or infringement allegations.

These changes are coming by way of a federal government bill to make major amendments to Canada’s Trade-marks Act to prepare Canada for a likely ratification of a number of international intellectual property treaties, which itself was largely a step towards preparing for a Canada-European Union free trade agreement. While some of the changes are superficial and overdue (e.g. replacing the spelling of “trade-mark” with the more universal “trademark”; replacing the antiquated term “wares” with “goods”), some of the more substantive proposed changes to be aware of are as follows:

  • Classification of goods and services – rather than drafting a description of goods and services in trade-mark applications in “ordinary commercial terms” only, Canada will adopt the Nice Classification system which divides goods and services into prescribed classes. While the predictability and consistency will be nice, it remains to be seen whether application fees will be charged on a per-class basis, as is the case in some jurisdictions, which would make Canadian trade-mark applications costlier. 
  • International registration of trade-marks – currently, trade-mark owners in Canada need to make separate applications for their marks here and any other country where they are seeking trade-mark protection. Under the new regime, Canada would keep up with international filing norms and permit applicants to file in numerous international jurisdictions at the same time. 
  • Eliminating the requirement that a trade-mark be used – currently, you can apply for a trade-mark in Canada on the basis of “proposed use” and will then have 3 years to demonstrate actual use before obtaining registration. The proposed changes will eliminate this ‘use’ requirement and permit registration so long as the applicant is the party entitled to the trade-mark (i.e. no other confusing marks exist) and there is an intent to use the mark in the future. This will need to all sorts of predicable and not-so-predictable issues relating to squatters of certain trade-marks and domain names, and would be a terrible result for current and future brand-owners. 
  • Term – the current trade-mark registration term of 15 years would be reduced to 10. This may weed out trade-marks that have fallen out of use, but is also an acceleration of the payment of government renewal fees by 5 years.

The modernization of Canada’s trade-mark laws to better facilitate international commerce and intellectual property protection should be welcomed by the franchise industry. However, certain of these changes may be catastrophic in their implementation and enforcement and will hopefully not be enacted with the balance of the amendments.

Tags: Intellectual Property