The Canadian government has made changes that will impact almost every aspect of trademark practice in Canada. These changes are contained in two pieces of legislation, Bill C-31 and the Combatting Counterfeit Products Act.
The changes make it important to protect through registration any key trademarks in Canada.
Amendments to the Trade-marks Act
Bill C-31 significantly amends the Canadian Trade-marks Act. The Bill was introduced on March 28, 2014 and received Royal Assent on June 19, 2014 but has not yet been proclaimed in force. As this Bill was introduced as part of an omnibus budget bill, the Economic Action Plan 2014 Act, No. 1, it passed quite quickly and without advance public consultation. The legislation addresses Canada’s obligations under the Comprehensive Economic and Trade Agreement (“CETA”) between Canada and the European Union and harmonizes and simplifies Canada’s trademark system.
Regulations are currently being drafted to address the procedures related to the changes to the Trade-marks Act. There will be a fee consultation in 2016 relating to new fees for the filing and renewal of trademarks. Once the regulations have been finalized, Bill C-31 will be proclaimed in force and the amendments will be implemented. The Canadian Intellectual Property Office (“CIPO”) has recently indicated that this will likely occur in early 2018. CIPO had previously indicated that implementation would occur in 2016 or 2017, but the effective date of the amendments is now estimated to be in 2018.
The amendment that has caused the most concern and that is likely to have a negative impact on trademark owners is the elimination of the requirement that there be use of a trademark, in Canada or elsewhere, before a registration can be obtained. Applications will no longer have to specify a date of first use and declarations of use will no longer have to be filed.
As this change has the potential to result in increased cost, complexity, and uncertainty associated with obtaining, maintaining and enforcing trademark rights in Canada, trademark owners should conduct an audit of their Canadian trademark portfolio and protect key marks now through registration and watch service subscriptions as the amendments to the Trade-marks Act will fundamentally alter the trademark regime in Canada. Under the new regime:
- Trademark clearance will be more difficult, costly and less certain as use information will not be readily available on the Trademarks Register and independent investigations will be necessary.
- Assessment of potential opposition and infringement proceedings will be more of a challenge as the test for entitlement depends on the first use date.
- There will be a flood of registrations following the legislation coming into force, as all of the currently pending applications that have been allowed will be able to proceed directly to registration.
- Applicants will file overly broad applications covering numerous goods and services that they have no intention to offer in Canada in association with the applied for trademark.
- There will be more opposition proceedings.
- Trademark “trolls” will take advantage of the new system by filing applications with no legitimate interest in the marks but rather an intention to gain an advantage, financial or otherwise.
Trademark use will continue to be important in determining entitlement in opposition proceedings and infringement proceedings, and a registration will continue to be subject to challenge through a Section 45 proceeding on the basis of non-use three years after registration.
It is recommended that any key trademarks in Canada be protected through registration prior to Bill C-31 being proclaimed in force and that monitoring systems be put in place to ensure that timely opposition proceedings and / or infringement actions are initiated.
Other changes that will occur when the legislation is proclaimed in force include:
- The term of registration will be reduced to 10 years.
- Trademark protection will explicitly be available to a broader scope of non-traditional marks, including sound, scent, taste, texture and three-dimensional marks.
- Divisional applications will be permitted, allowing applicants to divide applications to continue the prosecution to registration of part of an application where there has been an objection raised with respect to certain goods and services.
- Madrid Protocol filings will be accepted in Canada.
- Goods and services in trademark applications will be listed and classified in accordance with the Nice Classification system. This can now be done voluntarily, but will be mandatory when the new legislation is in force.
Combatting Counterfeit Products Act – New Criminal Sanctions and Border Enforcement Program
On January 1, 2015, the border enforcement provisions of Canada’s Combating Counterfeit Products Act (“CCPA“) came into force. Intellectual property owners can now record their Canadian copyright and trademark registrations with the customs authorities, the Canada Border Service Agency (“CBSA“), to prevent counterfeit goods from entering the Canadian market. This provides a significant new tool for Canadian intellectual property rights holders to prevent the sale of counterfeit goods in Canada.
The CCPA amendments to the Trade-marks Act have created a new statutory prohibition against importing or exporting goods with trademarks on the goods, their labels or their packaging that are identical to or that cannot be distinguished from registered Canadian trademarks. Unregistered trademarks are not eligible for this protection.
The CCPA amendments to the Copyright Act create a statutory prohibition against importing or exporting infringing copies of a work. The copyright need not be registered in Canada, but it is recommended that registrations be obtained.
The CCPA also created new criminal sanctions. Penalties for offences under both the Copyright Act and the Trade-marks Act include a fine of up to $1 million and / or five years in prison for an indictment and a fine of $25,000 and / or up to six months in prison for a summary offence.
To alert rights holders of possible infringements, the CBSA can now accept Requests for Assistance (“RFA“s) from owners of Canadian copyright protected works and owners of registered Canadian trademark rights. These rights are recorded with CBSA and if suspected counterfeit goods are discovered, the rights holder will be contacted. The rights holder can then pursue remedies under the Copyright Act or the Trade-marks Act.
There is currently no fee to file a RFA and there is no limit on the number of copyrighted works or registered trademarks that can be referred to in an RFA. When an RFA is recorded, it is valid for two years and can be extended for additional two year periods.
The CBSA may seize and detain goods at the Canadian border for a limited time if they are suspected of being counterfeit. CBSA will provide rights holders who have filed RFAs with a sample of the detained goods and information about the goods. Detention of the goods is limited to ten (10) days or five (5) in the case of perishable goods. The rights holder can request an additional ten (10) days, but court proceedings must be commenced in order to detain the goods further.
The rights holders will be liable for storage, handling and destruction of goods and may be required to provide security to cover this liability.
These practical measures significantly enhance the ability of intellectual property owners to protect their rights in Canada. As they apply only to registered trademarks, this is another reason for trademark owners to protect through registration any key marks that are likely to be targeted by counterfeiters. Owners of copyright and registered trademarks should file RFAs and ensure that they are renewed every two years.