An extract from The Franchise Law Review, 7th Edition

Intellectual property

i Brand search

Canada is a first-to-use as opposed to first-to-file jurisdiction: trademark rights can be acquired through use, as well as through registration. Therefore, a search in the trademarks database alone is not sufficient; a broader search, including business names, corporate register and domain names, is recommended.

Given that Canada has two official languages, French and English, an English language trademark may be confused with a trademark in French and vice versa. Canadian courts held that the likelihood of a trademark being confused with another mark must be assessed through the eyes of an average francophone consumer, an average anglophone consumer or, in some instances, an average bilingual consumer. A trademark that is likely to be confused with another trademark in English or French will not be registered by the Canadian Intellectual Property Office.

ii Brand protection

Even though common law rights in unregistered trademarks can be enforced in Canada, registration of a trademark significantly strengthens the level of protection and the value of the mark. Registration provides nationwide protection regardless of whether the mark is actually used in all parts of Canada.

Applicants from a World Trade Organization or a Paris Convention country can claim as a priority filing date the filing date of a foreign application if it was filed within six months prior to the Canadian application.

In June 2019, Canada acceded to the Madrid Protocol, the Nice Agreement and the Singapore Treaty. Franchisors from other Madrid Protocol countries are now able to file Canadian applications using the Madrid system. Foreign applicants are required to appoint a local agent to communicate with the Canadian Intellectual Property Office. The term of trademark registrations has been reduced from 15 to 10 years and colours, sounds, scents and textures are now registrable as trademarks if the applicant can show their distinctiveness. Canada no longer requires use of the trademark as a prerequisite to registration.

The process of registering a trademark can take approximately one year to 24 months if no oppositions are filed and the examiner does not raise significant objections. Oppositions and examiner's objections may delay registration significantly. It is therefore recommended to file trademark applications in advance of entering the Canadian market.

As Canada has two official languages, French and English, the registration or use of a mark in one language will to some extent protect the equivalent in the other language. However, translations may vary considerably according to a variety of factors. Where protection of the mark in the other language is clearly desired, it is prudent to apply for and register the mark in both official languages.

Starting from June 2019, when the 2014 amendments to the Trade-marks Act will enter into force, Canadian law will be harmonised with the Madrid Protocol, the Nice Agreement and the Singapore Treaty. Franchisors from other Madrid Protocol countries will be able to file Canadian applications using the Madrid system. Filing fees will be charged per class; therefore, franchisors with goods or services spanning a number of classes should take advantage of the current flat-fee structure. Among other significant changes, the term of trademark registrations will be reduced from 15 to 10 years and colours, sounds, scents and textures will be registrable as trademarks. The new law will eliminate the requirement that the trademark must have been used in Canada or abroad before registration.

On 5 November 2018, Canada acceded to the Hague Agreement Concerning the International Registration of Industrial Designs (also known as the Hague System) and harmonised its industrial design law with other jurisdictions.

Canada is a party to all major international treaties on copyright. Copyright can be registered, although it is not required. Registration of copyright will serve as evidence of ownership and will preclude an infringer from relying on a defence of 'innocent infringement' in court.

Canadian residents and corporations may register a '.ca' top-level domain. Non-resident owners of Canadian registered trademarks may also register a .ca domain name that represents or includes the exact word component of their Canadian registered trademark.

iii Enforcement

Trademark rights can be enforced against an infringer by filing a lawsuit in the Federal Court or a provincial superior court. Common law rights in an unregistered trademark can be enforced by a common law claim of passing off, as codified by Section 7(b) of the Trademarks Act. Preliminary injunctions can be applied for, but are rarely granted. A successful party in the lawsuit may be awarded a permanent injunction, damages or an accounting of the infringer's profits from the infringement, the delivering up or destruction of infringing goods and litigation costs (to a certain extent).

The downside of trademark enforcement in Canada is that the judicial process is slow and expensive. The World Bank Group's Enforcing Contracts ranking puts Canada in 100th place, well behind Australia, China, the United States and the United Kingdom. In Quebec, the rules of civil procedure codified in the Code of Civil Procedure are different from those in common law provinces but generally would be more familiar to a common law practitioner than a civil lawyer, because of availability of discovery and other rules of common law civil procedure.

The Trademarks Act also establishes criminal liability for knowingly infringing a trademark on a commercial scale, punishable by a fine of up to C$1 million and imprisonment for up to five years.

Similarly, claims of copyright infringement can be filed with the Federal Court or, in some instances, a provincial superior court. It is not necessary to register copyright before filing a lawsuit. It is a criminal offence to knowingly infringe copyright, including by making copies, selling or distributing infringing copies, etc.

Know-how and confidential information should be protected by a contract between the parties.

iv Data protection, cybercrime, social media and e-commerce

Canada was an early adopter of privacy legislation that meets standards similar to those of the European Union. The Federal Personal Information Protection and Electronic Documents Act and provincial privacy statues in Alberta, British Columbia and Quebec regulate the collection, use and disclosure of personal information in Canada. The EU Commission has determined that Canada meets the 'adequate level of protection' standard for cross-border transfer of personal data between Canada and the EU.

Generally, non-governmental organisations in Canada are not required to store personal information within the country. The transfer of personal information abroad for data management or processing purposes is permissible if the transferring organisation retains control of personal data. In Alberta, the transfer of personal information abroad for processing requires prior notification to the individual; the federal Office of the Privacy Commissioner recommends that organisations advise their customers that their personal information can be processed in another jurisdiction.

In 2010, Canada adopted a federal anti-spam law (CASL) that requires organisations that send 'commercial electronic messages' within, from or to Canada to obtain a prior consent from a recipient. CASL also prohibits false or misleading online promotions and the installation of computer programs without consent. CASL establishes sanctions for non-compliance, including a charge of criminal offence for obstructing an investigation, administrative penalties of up to C$10 million and personal liability for an organisation's officers and directors. CASL's right of private action has been temporarily delayed.

Every province in Canada has adopted electronic commerce legislation that regulates transactions that occur in electronic form. Provided that certain requirements are met, online transactions and contracts concluded electronically are enforceable.