On March 28, 2014, the Government of Canada proposed the most substantial changes to Canada’s Trade-marks Act since the existing legislation came into force in the 1950s. The most significant of these proposed changes will be the elimination of the requirement that a mark be used in Canada or abroad before registration. Many of the other proposed changes will make Canadian trade-mark law and practice more consistent with the laws in many other countries, and will allow Canada to accede to certain international treaties relating to trade-marks.

The proposed changes to the Trade-marks Act are subsumed in an omnibus budget implementation bill, theEconomic Action Plan 2014 Act, No. 1 or Bill C-31, which proposes changes to over 60 Canadian statutes. The placing of the proposed changes to Canada’s trade-mark laws in a budget bill suggests that the Canadian government is committed to its rapid passage into law.

Bill C-31 is not the only set of proposed amendments to the Trade-marks Act. Last October, the Canadian government introduced Bill C-8, the Combating Counterfeit Products Act, which primarily dealt with measures to curtail commercial activity involving counterfeit goods and proposed updates to certain aspects of the Trade-marks Act unrelated to counterfeiting. Bill C-31 repeats many of the non-counterfeit-related changes in Bill C-8 and introduces several other important changes to trade-marks law and practice.

ELIMINATION OF USE REQUIREMENT

Under the changes proposed by Bill C-31, at the time of filing applicants will no longer be required to specify grounds for filing, such as use in Canada, proposed use in Canada, or use and registration abroad. Instead, an applicant will be able to file an application and obtain a registration as long as it is using or proposing to use a mark and is entitled to use the mark in Canada. No date of first use will be required and the applicant will never have to actually use the mark before securing the registration. This change is certainly notable since use has been the cornerstone for trade-mark rights in Canada for well over 100 years. Canada is not required to eliminate the use requirement in order to comply with the international treaties, including the Madrid Protocol. The proposed removal of the requirement for use of the trade-mark prior to registration in Canada is likely to have numerous effects.

One of the effects of not requiring use before registration is the potential for parties acting in bad faith, who have never used a trade-mark and have no intention of using it (in Canada or elsewhere) registering trade-marks adopted by others, with a view to enforcing rights in such trade-marks in Canada. Until now, there really was no significant problem in Canada with such trade-mark “trolls” since it is not possible to obtain a trade-mark registration in Canada without use. By way of analogy, the relatively low cost of obtaining domain name registrations and the absence of a use requirement for a domain name registration has arguably facilitated the bad-faith registration of domain names in what is commonly referred to as cybersquatting.

Another consequence will be the need to be even more vigilant in monitoring the Canadian Trade-marks Journalfor advertisements by third parties of trade-marks that are potentially confusing with those of existing trade-mark owners or users, whose trade-marks are not the subject of a registration or pending application in Canada.

There are other noteworthy changes proposed under Bill C-31, including the following:

NICE CLASSIFICATION

Canada will adopt the Nice Classification system (NCS), which groups goods and services into approximately 50 different classes. Applicants will have to continue to describe the goods and services in “ordinary commercial terms” and will also be required to use the NCS. As well, the registrar will have discretion to require existing registrants to classify the goods and services in their registrations according to the NCS. In many countries that use the NCS, additional government fees are payable for each class of goods or services covered by a trade-mark application or registration. Although the proposed legislative amendments are silent on whether additional fees will be charged for each set of classes covered by an application or registration, it is possible that there would be added fees per class. Charging fees per class may somewhat temper the scope of rights claimed by trade-mark trolls and is likely to favour larger businesses which can more easily bear the additional cost of securing rights for additional goods and services.

TERM

The term of Canadian trade-mark registrations will be reduced to 10 years from the current 15. The shortening of the term of registration could have the effect of allowing dead registrations to be removed from the register more quickly without the need to bring summary cancellation or expungement proceedings. However, absent a requirement to show use of the trade-mark at registration or renewal, so long as the cost of registration remains modest, there will be little incentive for trade-mark owners to not renew registrations, if only for defensive purposes.

DIVISION OF APPLICATIONS

Applicants will be able to divide trade-mark applications so that issues with some goods or services will not delay registration of the trade-mark for the others. This feature will be beneficial to applicants who seek to register a trade-mark with several goods and services but against whose application is cited a third party’s trade-mark that raises issues with only a subset of the goods or services covered in the application.

PROPOSED CERTIFICATION MARKS

Applications to register certification marks based on proposed use will be permitted. Currently, such applications in Canada must be based on use. Given the ability to apply to register trade-marks based on proposed use and with the elimination of the use requirement, the ability to file an application to register a certification mark based on proposed use would appear to be logical.

NON-TRADITIONAL TRADE-MARKS

Canada will now explicitly recognize non-traditional marks such as three-dimensional shapes, sounds, scents, tastes and textures. There had previously been some question as to whether Canadian law allowed registration of non-traditional marks – other than so-called “distinguishing guises” relating to the appearance or packaging of products, which were specifically allowed. This change makes it clear that registration of such trade-marks in Canada will be permitted. Regulations governing the specifics of how applications for non-traditional trade-marks will be handled are still to be drafted. However, the proposed legislation makes it clear that trade-marks whose features are dictated primarily by a utilitarian function are not registrable and a registration will not prevent a person from using any utilitarian feature embodied in a registered trade-mark.

CORRECTION OF ERRORS

The registrar will have increased powers to correct errors in registrations, including the ability to order the re-advertisement of an application and even to remove a registration within three months after registration if it failed to consider a previously filed request for an extension of time to file a statement of opposition. These changes are meant to address situations where, due to obvious errors that were not the fault of the trade-mark owner or potential opponent, a trade-mark application was incorrectly allowed or registered. Until now, the registrar of trade-marks took the position that it was without specific jurisdiction to change incorrectly allowed or registered trade-marks and that the aggrieved trade-mark owner or potential opponent’s sole remedy was to apply to the Federal Court of Canada for relief.

SYNTAX

The unique Canadian hyphenated spelling of “trade-mark” will be replaced by the single word “trademark” and the term “wares” will be replaced by the more common “goods.”