Are trademark trolls a threat to brand owners in Canada? With significant amendments to the Canadian Trademarks Act on the horizon in light of Bill C-31, and in particular the upcoming elimination of the requirement to claim or declare use of a mark before obtaining a registration, these legislative changes may be opening the door to trademark trolls.
Although implementation of Bill C-31 is set for early 2018 (as reported in our October 22, 2015 IP Update), brand owners may wish to take pro-active steps to ensure that their marks are fully protected in Canada before these amendments take effect. What follows are five strategies to assist brand owners in guarding against the threat posed by trademark trolls in light of the upcoming changes to Canada's trademark regime.
Background
A trademark troll (or "trademark squatter") is generally understood as a party who preemptively applies to register a mark used by a brand owner in another country. In doing so, trademark trolls seek to block a brand owner from registering the mark for its goods and services in a particular market. Upon entering that market, the brand owner is then forced to negotiate for the acquisition of its trademark from the troll.
Canada presently has a "use" based trademark system, requiring applicants to formally claim prior use of the mark in Canada or file a declaration confirming that use of the mark has commenced in Canada prior to obtaining a registration (unless the application is based solely on foreign use and registration of the mark, in which case the applicant still needs to have used the trademark in another country). Given that trademark trolls often have no intention of actually using the mark, Canada's present trademark system discourages attempts at trolling by tying registration to use of the mark. However, this will change in light of Bill C-31.
As reported in our June 16, 2014 IP Update, the Canadian government has introduced a number of significant changes to the Trademarks Act through Bill C-31, the Economic Action Plan 2014 Act, No. 1, which received Royal Assent on June 19, 2014. Among other important changes, Bill C-31 removes the current requirement for applicants to either claim or declare use of the mark in Canada before obtaining a trademark registration.
While removing this requirement will likely simplify the application process, trademark trolls will now have the opportunity to obtain registrations for trademarks in Canada without even the pretense of having used the mark in Canada or elsewhere. With limited recourse available to brand owners to cancel registrations for lack of use in Canada until three years after the date of registration (at which time the registration can be challenged for non-use in a cancellation proceeding under section 45 of the Trademarks Act), brand owners may be forced to negotiate with trolls to acquire the trademark by assignment or may even be forced to rebrand, all of which can be costly and time-consuming. While it is possible for brand owners to oppose the troll's application or seek to expunge the registration based on the brand owner's prior use of the mark, such proceedings similarly can be costly, lengthy and uncertain.
Defensive strategies
There are, however, a number of strategies that brand owners can implement in order to protect against the threat of trademark trolls in Canada prior to these new amendments coming into force:
1. Carefully review your trademark portfolio: Brand owners should carefully review their trademark portfolio on a regular basis. This includes reviewing both the scope of the goods and/or services covered by existing registrations and the existence of any brands or sub-brands that are in use in Canada or elsewhere, but not yet registered in Canada. Applications for any such unregistered marks should be promptly filed without waiting for the amendments to the Trademarks Act to come into force.
2. File early: Applications for trademarks should be filed promptly if there is either a reasonable prospect of use of the mark in Canada, or commercial harm will be suffered by a troll registering your mark in Canada. This is especially so if the mark is commercially important in another jurisdiction, including commercial markets that are closely related and for which there is significant spillover advertising, such as Canada and the United States. The trademark troll's leverage comes from obtaining an earlier application filing date than the brand owner. As such, brand owners should seek to minimize this risk by filing early and claiming priority where possible, as discussed below.
3. Claim priority: If possible, brand owners should take advantage of claiming priority to foreign trademark applications and registrations. Under the Canadian Trademarks Act, if an application is filed in Canada within six months of the earliest filed international application, and the applicant has a real and effective industrial or commercial establishment in the jurisdiction where the earliest application was filed, the applicant can claim priority to the earlier application, and the Canadian application will be treated as having the earlier foreign filing date. Claiming priority is helpful in situations where a troll has filed an application in Canada for a mark before the brand owner does, but after the brand owner's priority date.
4. Renew existing registrations: As abandoned registrations can be a source of trolling activity, brand owners are encouraged to ensure timely renewal of existing trademark registrations and to give careful consideration before allowing existing registrations to become abandoned. Brand owners should also keep in mind that pursuant to Bill C-31, the Trademarks Act will be amended to reduce the renewal period for trademark registrations from 15 years to 10 years.
5. Monitor the register: Brand owners should be constantly and carefully monitoring the register for trolling activity. The earlier any such trolling applications are discovered, the better. In many cases, it can be particularly advantageous to identify such applications shortly after they are filed and before they are approved for advertisement by the Trademarks Office, as trademark trolls will often rely on the apparent "approval" of applications by the Canadian Trademarks Office in negotiations with brand owners.
In light of the increased threat that trademark trolls may pose with the upcoming changes to the Canadian Trademarks Act, it is strongly recommended that brand owners implement these steps to maximize the protection for their brands in Canada, and to avoid costly commercial disputes in the future.
For further information regarding the upcoming changes to the Trademarks Act or assistance with obtaining a trademark registration in Canada, please contact a member of our firm's Trademarks group.
The preceding is intended as a timely update on Canadian intellectual property and technology law. The content is informational only and does not constitute legal or professional advice. To obtain such advice, please communicate with our offices directly.
