On June 19, 2014, the Parliament of Canada completed the final steps to pass Bill C-31, the somewhat cryptically-named Act to implement certain provisions of the budget tabled in Parliament on February 11, 2014 and other measures, or Economic Action Plan 2014 Act, No. 1 for short (the “New Act”). This was a much anticipated “omnibus” bill that included provisions related to pensions, customs taxes, hazardous materials, the Canada Labour Code, and many other amendments to Canadian legislation. Buried within the text of the 362 page bill was an overhaul of the Trade-marks Act, R.S.C. 1985. c.T-13. While the New Act is not yet in force in its entirety, there are many significant changes to Canadian practice that affect practitioners and mark owners, both domestic and foreign.
The New Act contains a number of definitional changes, such as removing the hyphenated form “trade-mark” and replacing it with “trademark,” replacing the word “mark” with the term “sign” (separately defined as “a word, a personal name, a design, a letter, a numeral, a colour, a figurative element, a three-dimensional shape, a hologram, a moving image, a mode of packaging goods, a sound, a scent, a taste, a texture and the positioning of a sign”) and replacing the word “wares” with “goods” to harmonize Canada’s trademark language with most other countries.
Since passage of Bill C-31, the Government of Canada issued a “consultation paper” setting out a number of proposals it intends to include in regulations to implement the New Act. The consultation paper did not contain a full draft set of regulations, although there were a number of proposed provisions intended to simplify correspondence with the Trademarks Office, streamline opposition timelines, and implement the Madrid Protocol (discussed below). Various stakeholders including industry organizations and individual firms all submitted comments on the suggested regulations and now that the consultation period has closed, we expect the government to issue a draft set of regulations in due course.
The main provisions of the New Act are clear: Canada is one step closer to fully implementing the Nice and Singapore treaties and adopting the Madrid Protocol, which will be complete once the government passes the necessary implementing regulations (likely late 2016). It also modernizes many structural aspects of the Canadian trademark application process in keeping with international standards. What is less clear, however, is what strategic implications the new law may have for trademark owners and applicants seeking protection in Canada, and the cost of that protection (as we have yet to see draft regulations and a government fee schedule for filing, registration and intermediate steps).
To further complicate matters, on December 9, 2014, the Government of Canada passed Bill C-8, An Act to amend the Copyright Act and the Trade-marks Act and to make consequential amendments to other Acts, or the Combating Counterfeit Products Act (the “CCPA”), for short. The CCPA contains some important provisions related to border enforcement of intellectual property laws.
Most recently and as discussed further below, the 2015 Federal budget tabled by the Government of Canada on April 21, 2015, introduced further changes, including revisions to the law of privilege for intellectual property professionals.
A discussion of some of the key effects that several of these amendments will have on Canadian trademark practice is set out below.
Under the old Trade-marks Act, goods and services descriptions in Canadian applications only needed to be worded in “ordinary commercial terms” without regard to the classes of the associated goods and services. When Canada fully implements the Nice Agreement (1957) as part of the New Act, the listing of goods and services in Canadian trademark applications will follow the Nice classification codes.
This change will have less of an impact for international applicants, most of whom will already have Nice-compliant applications in other countries. Canadian applicants, however, may face a slightly more complicated process at the application drafting stage, because their goods and services will now have to be classified according to the applicable Nice codes. All applicants, however, will have to ensure that the goods and services listed in their applications are phrased in “ordinary commercial terms” in addition to being properly classified.
The Nice classification codes will have an impact soon. Transitional provisions in Bill C-31 give the Registrar the authority to require applicants to amend certain applications to be Nice-compliant even before the New Act comes into force. This transitional provision applies only to an “application for registration that has been advertised under subsection 37(1) before the day on which section 342 of the Economic Action Plan 2014 Act, No. 1comes into force,” so arguably, marks that were registered before that date may be exempt. To date, we are unaware of any instances where the Registrar has exercised this transitional authority.
Whether the new law will lead to a per-class filing fee structure will become clear over the coming months, as the Government of Canada intends to conduct a “fee consultation” process to obtain stakeholders’ views on the various filing fee changes that will accompany the New Act.
Removal of the Use Requirement
Under the current Canadian trademark regime, an applicant must either identify when its mark was first used in Canada or file a declaration post-application stating that a mark is in use before it will issue to registration (the one exception to this requirement is an application based on “use and registration abroad” under Section 16(2) of the current Trade-marks Act, although that filing basis will no longer exist once the New Act comes into force). In what is widely regarded as its most controversial aspect, the new law removes the “use” statement requirement. While this may simplify the application process - as applicants will no longer have to identify the date of first use of the mark in association with each of the listed goods and services - it will likely require incumbent trademark registrants to be especially vigilant in watching and monitoring their marks and potentially confusing interlopers in Canada because non-practicing entities may have an easier time securing registration.
The removal of the requirement to identify a date of first use will complicate both the searching and opposition process. Under both the old and the new trademark regimes, an application could be opposed on the basis that a third-party had use of a confusingly similar mark in Canada before the applicant. This ground of opposition remains available, but under the New Act, a potential opponent will have no clear way of knowing whether he or she actually is a senior user since there will be no indication of the applicant’s date of first use in the application. Seniority of use will have to be determined through investigations and the exchange of evidence in an opposition proceeding, which could lead many mark owners to “oppose now, ask questions later.” At the very least, there will likely be an increase in the number of proposed oppositions, or requests for extensions of time to oppose an application in order to give an opponent and owner of a (potentially) senior mark the time to conduct investigations and determine who is, in fact, the most senior user.
This change has an important impact on trademark availability searches in Canada. Because search reports showing New Act marks on the Canadian Trademarks Register will only indicate whether a mark has been used or is proposed to be used in Canada with no further information about the length of time the mark has been in use, searchers will have to undertake investigations into potentially problematic registered marks in order to identify the “senior” marks, and in some cases, such identification may not even be possible if a mark owner has a highly localized business with little to no presence online or in easily accessible public databases.
The new Trademarks Act will permit applicants to file divisional applications to separate or “carve out” certain goods and services. Previously, applications that encountered registrability issues with respect to only some of the listed goods or services during examination would be completely stalled until those issues were resolved, either through argument or amendment. The new regime will permit the non-contentious portions of the application to proceed to registration while the remainder of the application undergoes continued examination. Strategically, this may permit applicants to file more broadly than before, since an applicant can obtain even a partial registration without having to hold up the application in view of only a few problematic goods or services.
The term of a trademark registration in Canada has been shortened from 15 to 10 years, which is similar to the terms in the United States and Australia. This will undoubtedly result in increased costs, as applicants will be required to more frequently renew their registrations in order to maintain validity. As a result, if mark owners are in a position to renew their registrations now, they should do so immediately to claim benefit of one more 15 year renewal period before the New Act comes into force.
Arguably the most anticipated aspect of the new law is Canada’s adoption of the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks, or the “Madrid Protocol.” In a scheme similar to that provided by the Patent Cooperation Treaty, the Madrid Protocol allows applicants to file an “international” application with a centrally administered system and then select the member states in which they wish to obtain national protection. It should be noted that an applicant must already own a domestic registration or pending application for an identical trademark in order to file an international application.
The obvious advantage to the Madrid Protocol is cost savings, since applicants can manage their international trademark portfolios through a centralized system. These costs savings will be less apparent to applicants who only file in a limited number of jurisdictions, since these applicants will already have to obtain a domestic application or registration before proceeding with the Madrid application.
Ultimately, the adoption of the Madrid Protocol is unlikely to have a significant impact on substantive Canadian practice – it simply provides applicants another avenue through which to obtain registered trademark rights in Canada. Advantageously, it will permit Canadian businesses to become the recorded owners of existing international registrations, which is not currently permitted due to the requirement in the Madrid Protocol for recorded owners to be residents of a “contracting state.”
Distinguishing Guises - No Longer a Separate Category of Mark or Sign
As noted above, the definitional term for a “mark” is transitioned to the wider encompassing term “sign” which comprises a word, a personal name, a design, a letter, a numeral, a colour, a figurative element, a three-dimensional shape, a hologram, a moving image, a mode of packaging goods, a sound, a scent, a taste, a texture and the positioning of a sign. Thus, the former classification of “distinguishing guise” no longer exists. Distinguishing guises were trademarks that comprised the shaping of goods or their containers, or the mode of wrapping or packaging goods, the appearance of which distinguished the source or origin of those goods. However, the New Act provides that a trademark registration will not prevent a third party from using any utilitarian features embodied in a trademark, thus applying to all trademarks a former requirement of distinguishing guises and expanding the grounds upon which the Court may expunge a trademark registration by including as a ground for cancellation that the trademark registration is likely to unreasonably limit the development of an art or an industry.
Only time will tell to what extent this utilitarian feature infringement exemption and new cancellation ground will impact upon applicants and registrants and their respective brands, especially in emerging industries in which product design may not have historic alternatives and instead be dictated by intended utility.
Examination for Distinctiveness
The New Act also empowers Canadian trademark examiners with the ability to object to an application on the basis that the applied-for mark is non-distinctive. Previously, the scope of the examiner’s search was limited to the Canadian Trade-marks Register for confusingly similar marks, a general search for the purpose of assessing descriptiveness, and an assessment for other issues of registrability (i.e., whether the mark is “primarily merely” a name or surname of an individual, whether registration is prohibited by the existence of an official mark or other “Section 9” mark, etc.). Now, however, an application can be rejected if the examiner’s “preliminary view is that the trademark is not inherently distinctive.” How this change will impact the examination of trademark applications will only become clear over time, but it is almost certain that this change will lead to more substantive objections raised during examination than in the past, especially in cases in which an applicant chooses to file an application for registration of a mark that draws similarities to a famous or well-known mark in the same or different classes of goods and services.
The CCPA and Border Enforcement
The CCPA amends both the Trade-marks Act and the Copyright Act by expanding the list of infringing trademark and copyright infringing actions and to further prohibiting the importation or exportation of infringing copies and counterfeit trademarked goods on a commercial scale (import/export for personal use is excepted by the CCPA). As a result of these amendments, there are new civil remedies for knowingly manufacturing, possessing, importing, exporting or attempting to export of goods bearing registered trademarks or labels or packaging bearing registered trademarks. However, import, export and transhipping through Canada do not appear to be caught by these new amendments.
Rights holders may now file “requests for assistance” (“RFAs”) with the government to pursue remedies against infringers at the border. In response to an RFA, a Canada Border Services Agency (“CBSA”) officer may detain goods and provide a rights holder with a sample of or information relating to detained copies/goods (including the name and address of their owner, importer, exporter, consignee and the person who made them) as well as the opportunity to inspect the impounded goods. Even in the absence of an RFA, a CBSA officer may provide samples or limited information in an attempt to determine whether the import/export is prohibited. Detentions are very short-term: five working days for perishable goods and up to 20 working days for non-perishable copies/goods after a sample is made available to the rights holder. Detentions can be continued if court proceedings are filed.
While this new border regime provides rights holders with a powerful tool to combat importation of infringing goods, rights holders will need to be careful though when utilizing it, as filing an RFA may lead the rights holder to liability for storage and handling charges relating to any detention. Rights holders may, in some cases, recover these costs from the owner, importer, or exporter of forfeited copies/goods.
The CCPA also provides a variety of new criminal remedies against infringers. It is now a criminal offence (with significant fines and/or imprisonment attached) to knowingly sell counterfeit goods on a commercial scale and to knowingly manufacture, import or export such goods or to knowingly sell or advertise services in association with an infringing trademark. The manufacturing or trafficking of labels or packaging bearing an infringing trademark also becomes an offence. Moreover, law enforcement has been given a powerful new tool in the battle against counterfeit products.
Canada’s 2015 Federal Budget
The Canadian law of privilege is also set to receive a significant change in the coming months. On April 21, 2015, the Federal Government tabled its 2015 budget, which contained a provision granting statutory protection of confidential communications between intellectual property agents (i.e., patent and trademark agents) and their clients as “privileged,” and thus shielding them from disclosure in IP disputes. This is a marked departure from the current laws, which essentially limit privileged communications in the intellectual property context to lawyers.
The 2015 budget also contains a provision allowing the Canadian Intellectual Property Office to provide parties with extensions of deadlines in the event of force majeure events, including floods and ice storms.
The full impact of these new laws on Canadian trademark practice will only become clear over time, particularly when the government releases the full revisions to the Trade-marks Regulations, SOR /96-195 and the rights and remedies provided by the CCPA have been tested. One thing is certain, however - the provisions of the New Act and the CCPA have serious implications for any trademark applicants and owners in Canada, and regardless of the size, scope, and nature of the business, mark owners will likely have to be increasingly vigilant in monitoring their marks and securing protection in Canada.