Trademark Disputes

Generally, Canadian trademark law and procedure is governed by federal legislation – namely:

• the Trademarks Act (RSC 1985, c T-13); and
• the Trademarks Regulations (SOR/2018-227).

Under Canada’s common law system (federally and in all provinces/territories except for Quebec), a continually expanding body of case law from the Supreme Court of Canada, the federal courts and the provincial courts provides guidance and commentary on the application of trademark law.

In some instances, bringing a trademark dispute in the provincial/territorial superior courts will incorporate provincial/territorial laws regarding practice and procedure (see questions 1.3, 2.1 - 2.3, and 5.2 below).

Canada is a party to:

• the Madrid Protocol;
• the Singapore Treaty; and
• the Nice Agreement.

Canada is also a party to the following agreements which impact trademark law more broadly:

• the Canada-United States-Mexico Agreement;
• the Agreement on Trade-Related Aspects of Intellectual Property Rights; and
• the Convention Establishing the World Intellectual Property Organization
• the Canada-European Union Comprehensive Economic and Trade Agreement

Within the Canadian Intellectual Property Office, the registrar of trademarks:

• receives trademark applications;
• corresponds with the applicant; and
• determines whether to approve or refuse registration.

An application to register a trademark may also be subjected to opposition proceedings. If opposed, the Trademark Opposition Board, on behalf of the registrar of trademarks, will review evidence and hear arguments from the applicant and the opponent before issuing a decision on whether registration of the subject trademark should be allowed.

The Federal Court has jurisdiction to hear any action or proceeding, other than those brought under Section 51.01 of the Trademarks Act, relating to any right or remedy available to a party as provided by the Trademarks Act. The Federal Court has exclusive jurisdiction to hear appeals from a decision by the registrar of trademarks under Section 56 of the Trademarks Act. Appeals of Federal Court decisions may be made to the Federal Court of Appeal.

Of note, appeals of the registrar’s decisions are managed according to the Federal Courts Rules (SOR/98-106) Part 6, “Applications”. They are not brought under Part 5, “Appeals”.

Provincial/territorial superior courts: The provincial/territorial superior courts have jurisdiction to hear most actions or proceedings except those for which the Federal Court has exclusive jurisdiction (Section 56 of the Trademarks Act). Appeals of provincial/territorial superior court decisions may be made to the respective appellate court.

Generally, trademark litigation that involves infringement, passing off and depreciation of goodwill may be heard in either the Federal Court or the provincial/territorial superior courts. As indicated above (see question 1.3), appeals from a decision of the registrar of trademarks (eg, appealing the refusal of registration or filing opposition proceedings) can only be made to the Federal Court. Trademark infringement and validity issues may be decided by the same forum, often:

• as part of the same proceeding as an element of passing off claims for unregistered trademarks; and
• in the context of the alleged infringer’s defence or counterclaim.

Trademark disputes may be heard by various adjudicators or panels, depending on the forum.

Opposition proceedings and Section 45 requests to expunge a registrations for unused trademarks are heard and decided by the Trademarks Opposition Board, on behalf of the registrar of trademarks.

Trademark matters before the Federal Court or the provincial/territorial superior courts are decided by a single judge. Jury trials are rare in Canada in the context of civil litigation. Section 49 of the Federal Courts Act (RSC 1985, c F-7) requires all matters before the Federal Court to be heard and decided without a jury. Provincial/territorial superior courts allow a party to a civil proceeding to request a jury only under limited circumstances (eg, Section 17 of the Jury Act, RSA 2000, c J-3). These limited circumstances, combined with the specialised area of trademark law, make jury trials extremely unlikely at the provincial/territorial superior courts.

Appeals are generally heard by a panel of three judges and further appeals to the Supreme Court of Canada are heard by up to nine judges.

While the Federal Court and the provincial/territorial superior courts have concurrent jurisdiction regarding some matters, issues around forum shopping are relatively rare in the context of trademark law. Most trademark disputes are brought in the Federal Court due to its national jurisdiction and the greater likelihood that a judge will be familiar with the specialised subject matter of trademark law.

The owner of a trademark has standing to initiate proceedings for:

• passing off;
• infringement; and
• depreciation of goodwill.

Subject to the terms of agreement between the owner and licensee, the licensee of a trademark may also initiate proceedings. To do so, the licensee must first call upon the owner to initiate proceedings. If, within two months of being called upon, the owner refuses or neglects to do so, the licensee may initiate proceedings in its own name as if it were the owner (Section 50(3) of the Trademarks Act).

Yes. A trademark infringement suit may be brought against a foreign defendant if the infringement occurs in Canada.

Yes. If multiple defendants are to be named in a proceeding, the party bringing the proceeding must plead and establish the necessary materials facts necessary to make out the claims against each named defendant.

Yes. Under Section 45 of the Trademarks Act, any person that pays the prescribed fee may initiate the process to expunge (cancel) a registered trademark. Notice is provided to the owner of the trademark. If the owner cannot show use of the trademark with respect to all the goods or services specified in the registration during the three-year period immediately preceding the notice, the trademark is liable to be expunged or amended accordingly.

An application can also be brought to the Federal Court under Section 57 of the Trademarks Act to strike out or amended a trademark registration on the grounds that, at the date of the application, the entry as it appears on the register does not accurately express or define the existing rights of the person listed as the registered owner of the trademark. In order to have standing, such an application must be brought by a ‘person interested’, defined in the act as any person that is affected or that reasonably apprehends that it may be affected by any entry in the register.

Yes. If named as a defendant in an action for infringement, a party may:

• argue non-infringement as a defence; and
• initiate a counterclaim alleging invalidity.

Similarly, in terms of invalidity, a third party may initiate opposition proceedings against an applicant to prevent registration of the applicant’s trademark. In this manner, the third party will likely raise invalidity arguments, among other grounds.

Section 19 of the Trademarks Act grants the owner of a registered trademark the exclusive right to use its trademark throughout Canada in respect of the goods or services claimed. A claim under Section 19 has a narrow ambit and only covers use by a defendant of a trademark that is identical to the plaintiff’s registered trademark in association with the identical goods or services for which that mark is registered.

Infringement under Section 20 is broader in scope and can be established against a defendant that uses trademarks or trade names that are confusingly similar to the plaintiff’s registered trademark.

To establish a claim of infringement, the plaintiff must demonstrate a likelihood of ‘confusion’ between the impugned trademark and the owner’s registered trademark. ‘Confusion’ is defined under Section 6 of the Trademarks Act. Broadly, the test is whether the use of the trademarks or trade names in the same area would be likely to cause consumers, on first impression, to believe that the related goods or services have a common origin. In determining whether trademarks or trade names are confusing, the court or the registrar or trademarks will have regard to all the surrounding circumstances, including those set out in Section 6(5) of the Trademarks Act.

The infringer’s conduct may be relevant in assessing a damages award after the trademark owner is successful at trial. In Canadian law, punitive damages are exceptional and are only used to accomplish the objectives of ‘retribution, deterrence and denunciation’. Although rare, punitive damages have been awarded for trademark infringement where the infringing party’s conduct:

• was deemed outrageous or highly reprehensible; or
• amounted to a callous disregard for the rights of the trademark owner (Louis Vutton Malletier SA v Singga Enterprises (Canada) Inc, 2011 FC 776 at 168 and 178).

While wilful infringement does not necessitate punitive damages, it may be a factor in the court reaching such a determination.

Trademark infringement proceedings may be brought in the Federal Court by way of either an action or an application. The choice often depends on the amount of fact-finding that is required to show infringement.

An action involves:

• detailed pleadings;
• oral and written discovery; and
• oral evidence from witnesses at trial.

This entire process can take between two and five years, if not longer, and is best suited where the factual underpinnings are unclear or contentious and a thorough discovery process is needed.

An application is a summary process which may allow for judgment within eight to 10 months of filing notice. This process is made available to trademark owners and is described under Rule 300 of the Federal Courts Rules. While the court may order additional materials to be filed, evidence is adduced by way of affidavit only and there is no requirement to provide an affidavit of documents. This process is more suitable if:

• the trademark owner is concerned with receiving a prompt injunction; and
• there exists little to no factual dispute, with a thorough discovery process being unnecessary.

Within the category of an action:

• the parties may agree to proceed with a simplified action; or
• it may be required where one or more criteria under Rule 292 of the Federal Courts Rules are met.

During a simplified action:

• evidence is adduced only by way of affidavit;
• the parties may serve a list of documents instead of an affidavit of documents; and
• examinations for discovery are conducted in writing only.

The Federal Court provides a six-year limitation period in respect of trademark infringement actions where the infringing activities occurred in two or more provinces. If the infringement action arose in a single province/territory only, the Federal Court will apply the limitation period of that province/territory (Sections 39(1) and (2) of the Federal Courts Act, RSC 1985, c F-7).

Canadian provinces and territories have the freedom to set their own limitation periods in respect of actions arising within their jurisdiction. The most common limitation period is two years, with some affording up to six years.

It is recommended to seek advice from an IP lawyer within the desired province or territory with respect to limitation periods.

No, the alleged infringer is not entitled to receive notice before the claim is brought. However, honest attempts to settle the dispute prior to engaging the court system (eg, a cease and desist letter) are looked upon favourably by the courts.

Once an action is commenced by filing the necessary pleadings with the court registry, the filing party must serve a copy of the pleading on the alleged infringer within the prescribed time period.

The originating pleading must set out, as clearly as possible, the claim for trademark infringement. At minimum, the trademark owner must allege facts with sufficient detail such that, if deemed to be true, there is a likelihood that the defendant has infringed its rights to the trademark.

Yes, interim remedies are available for the purpose of settling a variety of issues that arise during the proceeding.

An interlocutory injunction is a common interim remedy sought in trademark infringement proceedings to restrict the activities of allegedly infringing party until the conclusion of the proceeding. For example, such a motion may seek an order preventing the alleged infringer from carrying on the sale or advertising using an allegedly confusing trademark. The moving party must meet a high threshold to receive this remedy, since a determination must be made by the court prior to any liability findings. The following three-step test must be met:

• The moving party must demonstrate that there is a serious question to be tried;
• The court must be satisfied that the moving party will suffer irreparable harm (ie, which cannot be compensated by payment of money) if the motion is not granted; and
• The balance of convenience must favour the moving party.

While this motion is commonly brought, the Federal Court has historically been reluctant to grant such a remedy due to the difficulty of establishing irreparable harm. In most cases of alleged trademark infringement:

• any ongoing infringement during the proceedings could be accounted for; and
• the trademark owner, if successful at trial, could be compensated financially.

A Mareva injunction and an Anton Piller order are two extraordinary interim remedies that may be sought against the alleged infringer for the purpose of freezing a party’s assets and preserving evidence, respectively. Both are sought without notice to the other party.

The availability of security for costs is contemplated by Rules 416 and 417 of the Federal Rules of Court. Specifically, an order for security for costs may be awarded only if the defendant can establish one of the prescribed circumstances provided in Rule 417.

Damages are a common remedy for:

• passing off;
• trademark infringement; and
• depreciation of goodwill.

Under Rules 222 and 223 of the Federal Courts Rules, each party must serve an affidavit of documents on every other party that lists and describes all relevant documents. For all documents that are in the serving party’s possession and for which no privilege is claimed, a time and place must be provided for the receiving party to inspect said documents.

Rule 222(2) states that a document is ‘relevant’ if:

• a party intends to rely on it; or
• the document tends to adversely affect the party’s case or to support another party’s case.

Rules 224–233 further address the discovery process, while Rules 234–248 outline examinations for discovery.

Rule 233 permits a party to file a motion for a court order requiring the production of any document by a non-party to the action. In doing so, the court may permit the non-party to provide a certified copy of the document in place of the original.

When preparing an affidavit of documents, a party must only list and describe the documents for which no privilege is claimed. However:

• a claim to privilege with respect to any document must state the grounds of privilege; and
• this declaration may be contested by the opposing party and, if necessary, an ultimate determination will be made by the court.

The most common grounds of privilege include:

• solicitor-client privilege (or ‘legal advice privilege’), for communications between a lawyer and client for the purpose of giving or obtaining legal advice;
• litigation privilege, where litigation was the dominant purpose of the communication or document; and
• settlement privilege, for communications between parties for the purpose of reaching a settlement, provided that:
• • litigation exists or is in contemplation between the parties;
  • the communication was made with the express or implied intention that it would not be disclosed to the court in the event that negotiations failed; and
  • the purpose of the communication was to effect settlement

On a motion, the court may determine whether privilege is warranted outside of the above criteria on a case-by-case basis, as directed by the Supreme Court of Canada in R v Gruenke, [1991] 3 SCR 263.

Rule 248 prevents a party from introducing information at trial without leave of the court if the party relied on grounds of privilege in refusing to answer a proper question relating to that information during examination for discovery.

At minimum, a trademark owner is encouraged to collect evidence showing proof of:

• registration or rights to the trademark;
• the duration and manner of use of the owner’s trademark;
• the degree to which the owner’s trademark has become known in the market; and
• the infringing activities of the defendant.

In certain cases, this may include surveys and marketplace investigations which may demonstrate:

• the distinctiveness of the trademark in the marketplace; and
• the likelihood of confusion caused by the alleged infringing activity.

The exact form of evidence and presentation thereof may depend on whether a trademark owner brings proceedings by way of an action or application (see question 5.1).

In an action, initial evidence is presented during the discovery stage in the form of an affidavit of documents which:

• lists and describes all relevant documents; and
• states whether the party is in possession of such documents (see question 6).

The evidence will be adduced at trial.

In an application, the parties typically exchange affidavit evidence and the parties are permitted to cross-examine the affiants prior to a hearing. The parties will then rely on the affidavit evidence and cross-examination transcripts at the hearing.

Survey evidence is permitted, but the parties to a trademark litigation dispute generally should not expend considerable resources on the collection of survey evidence. The Supreme Court of Canada has emphasised that such evidence should be admitted sparingly and only when the subject matter is clearly beyond the experience of the court to ascertain.

A trademark owner’s access to criminal evidence for the purpose of supporting its civil proceeding often depends on the stage of the criminal proceedings. Access will almost certainly be denied to criminal evidence before a decision has been made to proceed with charges. On the other hand, once a criminal trial is concluded and final judgment entered, the information available on the public record may be accessed. A grey area exists where the Crown has decided to lay charges (suggesting that it believes a case exists against the accused), but a final judgment has not been entered (the accused is still presumed innocent). In such circumstances, the civil plaintiff may bring a motion to the court requesting access to view the seized materials.

The Supreme Court of Canada, in Juman v Doucette, 2008 SCC 8, confirmed the default rule that evidence obtained during pre-trial discovery from a party to civil litigation can be used only for the purpose of the litigation in which it was obtained. This is referred to as the implied undertaking rule and applies unless:

• the parties consent otherwise; or
• the court rules against its application.

The rule does not apply to:

• information which could have been obtained from some other publicly available source despite being obtained through discovery; or
• information which subsequently becomes part of the public record following the litigation.

Trademark litigation is based on the civil standard of proof, which requires that the elements be proven on a balance of probabilities (ie, a greater than 50% likelihood).

The burden of proof in establishing trademark infringement rests on the party bringing the proceedings.

The most common defence is to argue the absence of a likelihood of confusion. Section 6(5) of the Trademarks Act provides a non-exhaustive list of circumstances that may support a likelihood of confusion. If the plaintiff cannot establish a likelihood of confusion, it will not succeed in proving infringement. For example, the defendant might attempt to establish that the plaintiff’s trademark is not distinctive in the marketplace.

A defendant may also argue that, despite being registered, the plaintiff’s trademark is invalid. A trademark may be invalidated on the following grounds:

• The trademark was never registerable (see Section 12(1) of the Trademarks Act);
• The trademark has lost distinctiveness;
• The trademark was abandoned intentionally;
• The applicant was not entitled to register the trademark; or
• The trademark application was filed in bad faith.

An argument for invalidity, as set out in question 8.1, may also be brought as a counterclaim.

Under Section 21 of the Trademarks Act, if a defendant is found to have used in good faith a confusing trademark or trade name in Canada before the filing date of the application for that registration, and the court considers that this is not contrary to the public interest, it may permit the continued use of the unregistered trademark within a defined territorial area concurrently with the use of the registered trademark.

Yes. Rule 257 of the Federal Courts Rules requires parties to discuss the possibility of settling any or all issues within 60 days of the close of pleadings.

Mediation is not required; however, a dispute resolution conference may be conducted with the assistance of the court.

If a proceeding is under the direction of a case management judge, then Rule 390 of the Federal Courts Rules provides that the case management judge may order the proceeding to be stayed for up to six months if the parties have undertaken to refer the subject matter of the proceedings to alternative dispute resolution.

If a settlement of all or part of a proceeding is reached, the parties must file a notice of settlement with the court.

In an action, the parties must be prepared to address the possibility of a settlement at a pre-trial conference.

Generally, Canada’s open-court principle ensures that all levels of court are open and accessible to the public. However, several options are available to parties wishing to prevent certain confidential or sensitive information from being shared publicly.

The court may grant two types of orders to protect confidential information:

• confidentiality orders, which protect confidential documents and material that is filed with the court; and
• protective orders, which apply to confidential documents and material exchanged between the parties but not filed with the court.

A protective order is most often used to protect documents exchanged and transcripts recorded during the discovery process.

The court may also recognise protective agreements, which serve the same purpose as a protective order but are entered into by the parties without the court’s involvement. However, due to its implicit jurisdiction over the proceedings, the court may intervene or make further orders regarding the subject matter of a protective agreement.

Finally, the parties may seek a hybrid order encompassing provisions that combine both a confidentiality order and a protective order.

Yes.

Trademark infringement actions in Canada typically begin with the trademark owner filing and serving detailed pleadings on the alleged infringer. The parties then continue to exchange pleadings, followed by:

• the exchange of affidavits of documents;
• oral and written discovery; and
• eventually, progress to trial.

Proceedings may include several motions asking the court to settle procedural or substantive issues as they arise.

Trademark validity may be considered together with infringement proceedings or separately. If named as a defendant in an action for infringement, a party may initiate a counterclaim alleging invalidity. Alternatively, validity proceedings may be initiated as a distinct proceeding by a third party against the owner of a registered trademark. In either circumstance, the same statutory grounds of invalidity are available to argue under the Trademarks Act.

A trademark infringement dispute that proceeds as an action under Part 4 of the Federal Courts Rules can take between two and five years, if not longer, to reach its conclusion.

A party may alternatively initiate its claim as an application under Part 5 of the Federal Courts Rules. This may allow for judgment within eight to 10 months of filing notice. While the court may order additional materials to be filed:

• evidence is adduced by way of affidavit only; and
• there is no requirement to provide an affidavit of documents.

An application is useful when:

• the trademark owner is concerned with receiving a prompt injunction; and
• little to no factual dispute exists.

The court maintains the ability to convert an application into an action if this is deemed necessary – for instance, where the factual dispute is more prominent than initially thought. Such a conversion risks merely adding to the already protracted timeframe of an action, so parties are discouraged from trying to cloak a proceeding as an application when it should have been brought as an action from the outset.

The exclusive right to use a registered Canadian trademark does not extend outside of Canada. Similarly, the Canadian courts do not have jurisdiction concerning trademark infringement outside of Canada. However, in exceptional circumstances, a Canadian court may issue an extraterritorial injunction to prevent a foreign party from continuing infringing activities that take place in Canada (ie, from importing goods into Canada under a confusing trademark).

Decisions from the national or foreign courts applying the common law are not binding on the Canadian courts but may be persuasive. This is especially true regarding areas of Canadian trademark law with a relative lack of case law precedents.

A trademark owner that brings a successful trademark infringement claim will typically receive a permanent injunction against the defendant. This may be accompanied by the delivery up or destruction of the infringing goods by the defendant.

The successful plaintiff may also elect to receive either damages or an accounting of the defendant’s profits. Damages are a common law remedy and are available as of right; they amount to the total losses suffered by the trademark owner resulting from sales made by the defendant.

Alternatively, the successful plaintiff may seek the equitable remedy of an accounting of profits. This remedy may be preferred if the trademark owner is unable to establish that it would have made certain sales but for the infringing activities of the defendant (the critical piece for an award of damages). As an equitable remedy, an accounting of profits is reserved only for plaintiffs that come to the proceeding ‘with clean hands’ or in good faith.

The court will also be inclined to award nominal damages in situations where the defendant refuses to participate in the proceedings, making it difficult for the plaintiff to show evidence of the loss suffered.

Punitive damages are rare but may be awarded in cases where the defendant’s conduct:

• is deemed outrageous;
• is highly reprehensible; or
• amounts to a callous disregard for the rights of the trademark owner.

The courts may consider different factors depending on the type of award sought by the plaintiff. However, the court will often pay attention to:

• the extent or duration of infringing activities;
• general principles of:
• • remoteness;
  • foreseeability; and
  • mitigation; and
• whether the parties have conducted themselves in good faith.

Decisions of the Federal Court or the provincial/territorial superior courts (ie, court of first instance) may be appealed to the Federal Court of Appeal or the provincial/territorial appellate court, respectively. The party appealing the decision must take the appropriate steps within the timeframe prescribed. For example, appeals to the Federal Court of Appeal must be initiated by filing a notice of appeal within 30 days of the Federal Court releasing its judgment.

On appeal, the court of first instance is given considerable deference on findings of fact and the appellate court will only substitute its own findings if a ‘palpable and overriding error’ is identified. Errors of law are held to a standard of correctness. Errors of mixed fact and law are held to the standard of a ‘palpable and overriding error’. New evidence is allowed on appeal:

• only in very rare instances; and
• only with leave of the court.

Appeals from the Federal Court of Appeal and provincial/territorial appellate courts are directed to the Supreme Court of Canada by filing an application for leave to appeal. The Supreme Court of Canada is reserved for dealing with issues of national importance and most applications are in the areas of public and criminal law. For these reasons, trademark disputes are rarely heard at this level. If the Supreme Court refuses to hear an appeal, the decision of the appellate court stands.

A decision of a court of first instance may be appealed within one year of it being issued and the reasons for judgment are often provided within one year of the hearing.

A successful party is entitled to recover a costs award from the unsuccessful party. This will often include:

• the entirety of the party’s reasonable disbursements (eg, expert fees); and
• a portion of its legal fees.

The parties are encouraged to discuss and agree on costs without the court’s intervention, failing which the court will review written representations from each party arguing its position on costs and come to a final decision. There has been a trend in IP litigation towards awarding costs as a lump-sum cost equalling a percentage of legal fees. While more common in patent litigation, lump-sum costs have been granted in trademark proceedings.

A costs award may also follow an appeal decision.

Canadian law firms are permitted to arrange alternative fee structures such as flat fees, fixed fees or contingency fees. There is also a growing trend in billable hour variations such as capped fees or sliding scale fees.

Yes.

Yes, the common law tort of passing off is available to owners of an unregistered trademark and prevents a party from deceiving the public as to the source of their own goods by using a trademark that is likely to cause confusion with the trademark of another. However, protection is only available in the geographical area in which the trademark has acquired a reputation or goodwill. Three elements are required to establish a claim for passing off:

• goodwill or reputation attached to the mark;
• deception of the public by a competitor through misrepresentation; and
• actual or potential damage suffered by the plaintiff.

The common law tort of passing off is also codified in Sections 7(b) and (c) of the Trademarks Act, making it equally available to owners of unregistered and registered trademarks. Unregistered trademark rights may also be used to prevent another party from registering a similar mark.

An unregistered foreign trademark may be enforced under the common law tort of passing off if the foreign owner can satisfy the three elements listed in question 14.1.

Canada offers numerous pathways and forums for trademark owners to enforce their rights under both the Trademarks Act and the common law. A trend towards the more streamlined applications process, instead of an action, offers trademark owners greater access and more efficient use of the legal system. However, with multiple options available comes the need to fully understand and weigh the risks and benefits of each. IP professionals can guide a trademark owner or prospective litigant to find the most suitable path forward.

While Canada operates under a ‘first to use’ system, evidence of actual use of a trademark is not a precondition to registration. However, non-use of a trademark over a three-year period leading up to a third-party challenge may be grounds to remove a previously registered trademark from the register, along with a loss of the associated rights.

Parties should not discredit the role and impact of unregistered trademarks in Canada. Despite the relatively limited avenues of enforcement, even an unregistered trademark may prevent registration of another party’s trademark if it can be shown that the unregistered trademark:

• was in use from an earlier date; and
• has become distinct in the marketplace.

Generally, a successful party at trial is entitled to a costs award. If the parties cannot agree on the amount, the court will receive arguments from both sides and make its own determination. The court has full discretion in making a costs award and parties should inform themselves of the many factors that might impact on the court’s analysis. Costs awards can be significant, so parties must take this stage of the litigation seriously.