Introduction

The 2014 announcement that the Canadian Trademarks Act would undergo a significant overhaul provoked much speculation about how the changes would affect the behaviour of those filing trademark applications in Canada. A prevailing theory was that the removal of the existing requirement to claim or declare use of a mark before registration would lead to an influx of baseless 'trolling' applications by entities seeking to secure rights to trademarks which they have no intention of using.

Background

In some cases, trolls (or 'squatters') apply for trademarks that are used by brand owners in other countries with the goal of forcing those owners to negotiate with the trolls when they enter the new market. In light of Canada's use-based trademark system, this had not previously been viewed as a serious problem. However, the announcement that the trademark amendments will eliminate the use requirements poses the risk of trolls targeting Canada. This was theorised when the initial draft amendments were circulated (for further details please see "Strategies for protecting your brand from trademark trolls in Canada").

While the implementation of the amendments has been delayed – they are now expected to come into force in early 2019 (for further details please see "Signed, sealed and almost delivered: new trademark law in sight") – new data shows that seemingly baseless applications are already on the rise.

What is happening?

As part of the amendments to the act, Canada will adopt the Nice Classification system, which categorises all possible goods and services into 45 separate classes. In 2015 the Canadian Trademarks Office began accepting applications filed by class, although this continues to be on a voluntary basis.

In 2017 there was a sharp increase in the number of applications filed in all 45 classes. Such applications immediately evoke suspicion, since it is unlikely that any one individual or business has a genuine intention of using a trademark in association with every type of good and service.

As of December 2017 there were 427 of these 'all-class' applications on the Canadian database. Of those, four were filed in 2015 and six in 2016. The remaining 417 were filed in 2017, representing a huge increase over the preceding years. The majority of these applications appear to be held by known trademark trolls. Among the suspicious applications are those seeking to monopolise established brand names (eg, EUIPO, Fashion Week and Pan Am), given names (eg, Pedro, Melanie and Claire) and generic words (eg, TAXI, PERK, CHOCOLATE, DEAL and EXCELLENT). These applications are pending.

While these trademark trolls' ultimate intentions are unclear, this activity is troubling and is already creating problems for brand owners. There have been many instances of these troll applications being cited against the legitimate applications of brand owners, and these citations can be difficult to overcome.

Why now?

Since the amendments are not yet in force, it begs the question: why have the trolling activities already started? There are two reasons.

First, all of the applications mentioned above were filed based on proposed use in Canada. Under the existing rules, applicants which file based on proposed use must eventually declare that they have used the mark in Canada before registration can be granted. However, once the amendments are implemented, it will no longer be necessary to file any declarations of use. Both trademark trolls and legitimate brand owners have been employing this strategy in anticipation of the changes.

Second, the fee to file a trademark application in Canada is the same whether it contains one class or 45. However, under the amendments, Canada will adopt a fee-per-class system. As a result, there are significant cost advantages to filing a multi-class application now rather than waiting until the amendments come into force.

Comment

As the implementation of the amendments approaches, trolling activity will undoubtedly increase. Accordingly, companies should review their Canadian portfolios now to ensure that all important marks are protected – whether by filing new applications or maintaining existing registrations. Similarly, foreign brand owners should be proactive in filing applications in Canada as soon as (or even before) they contemplate entering the Canadian market.

It is also important to regularly monitor the Canadian Trademarks Office database so that trolling applications are identified early and more options are available to defeat them. Since the trolls have already arrived and appear to be more sophisticated than the few previously seen in Canada, brand owners should be prepared to engage in oppositions and expungement proceedings in order to protect their trademarks.

For further information on this topic please contact Kohji Suzuki or Jamie-Lynn Kraft at Smart & Biggar/Fetherstonhaugh by telephone (+1 613 232 2486) or email (ksuzuki@smart-biggar.ca or jkraft@smart-biggar.ca). The Smart & Biggar/Fetherstonhaugh website can be accessed at www.smart-biggar.ca.

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