Photo of Sam KhajeeiBy Sam KhajeeiJuly 26 2019
Business Law

On Your Marks! A Reminder to Register Your Trademarks

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On June 17, 2019, a number of significant amendments were made to the Trademarks Act (Federal) (the Act). As an example, amendments were made to permit:

  1. the registration of a trademark in respect of not only words, designs and other distinguishing guises but also new categories which include scent, tastes, textures, holograms, colour (by itself) and moving images; and

  2. the filing of one international application for the registration of a trademark which can cover up to 121 countries throughout the world rather than undertaking separate applications in each of those jurisdictions. The applicant would need to rely on their base Canadian application for such a trademark and then pay the additional fees to have the application extend to such additional jurisdictions.

Notwithstanding the sweeping changes made to the Act, one aspect remains starkly unchanged: the benefits of applying for and obtaining a trademark registration continue to exceedingly outweigh any of the perceived disadvantages of not so doing.

Canada-wide protection

A registered trademark grants the owner the right to exclusively use such a trademark across Canada in connection with its listed goods and/or services. The owner can simply point to its registration as a means of prohibiting or significantly restricting the use by others of such a trademark along with any trademarks that may be confusingly similar.

In practice, registration of a trademark also effectively puts the Canadian Intellectual Property Office (CIPO) to work for you. After registration, the CIPO will use the registered trademark as a reference point and may actually oppose a future trademark application from a third party on its own if the CIPO believes that the application is confusingly similar to that which has already been registered.

In contrast, in order to protect an unregistered trademark, the owner must generally prove that the unregistered trademark has gained significant reputation for its applicable goods and/or services. If it desires to have Canada-wide protection, the owner must demonstrate that this reputation spans across Canada. In practice, this is very difficult to prove and can be extremely expensive. Can it be said, for example, that a popular start-up chain of restaurants in British Columbia is instantly recognized in Alberta, Ontario or in the Maritime provinces? There are a number of very successful businesses that focus their operations in specific geographic regions. Without registration, the scope of trademark protection available to them likely extends only to the limited scope of their geographic operations.

Exclusive use across Canada

Unlike unregistered trademarks, registered trademarks are afforded the statutory protection of the Act. Registration of a trademark creates greater visibility of that trademark, including through searches on the CIPO, and will discourage third parties from applying for or operating businesses with confusingly similar trademarks. In the event that a confusingly similar trademark is used, the owner of a registered trademark can turn to a number of provisions in the Act for a remedy.

In contrast, the owner of an unregistered trademark may only enforce its common law trademark rights through the tort of "passing off". This is a time consuming exercise and may ultimately not grant the owner of an unregistered trademark with an effective and persuasive tool to use in disputes with third parties. Further, litigation of a "passing off" claim can easily cost hundreds of thousands of dollars.

Enhanced value in M&A and commercial transactions

Registered trademarks provide enhanced valued in the context of M&A and commercial transactions. A registered trademark is a distinct intangible asset that is readily identified as a material right held by its owner. As such, it is easily distinguished in M&A transactions and readily available to be licensed by either franchisors or licensors.

Customary representations and warranties relating to intellectual property contained in M&A documentation and/or franchise or license agreements may cause the registered trademark owner far less concern than an unregistered trademark owner. Further, the vendor of a business holding a trademark registration may find it much easier to overcome difficult questions in the due diligence stage of a transaction than if the same trademark were not so registered. A prospective purchaser is also provided substantial comfort knowing that the trademarks underlying the business to be purchased are protected by legislation.

Of particular importance is the registration of a trademark for established and emerging franchisors. Given that a franchise system's value is inherently linked to the exclusivity and distinctiveness of its brand then the registration of its underlying trademarks becomes that much more critical.

Social media take-down requests

Advertising on social media has become a powerful marketing tactic employed by thousands of businesses each day. Social media giants such as Instagram and Facebook have implemented complaint protocols to be followed in the event that a user alleges that the advertising content of a third party infringes their trademark rights. Instagram, for example, requires that the complainant provide the following information:

The owner of an unregistered trademark will not be able to populate the above fields. Although the owner of an unregistered trademark may be able to adequately explain its rights to one of these social media companies, without an underlying registration, it will be a difficult and time consuming process.

International trademark applications

Application of a trademark in Canada under the Act now allows the applicant to rely on the "Madrid System" in order to make multiple applications for the same trademark in multiple jurisdictions. Although there are advantages and disadvantages to this, application for a trademark in Canada opens up a number of options.

The owner of an unregistered trademark has no such options. They would be forced to make separate applications in each of their proposed international jurisdictions which would likely require retaining local counsel in those jurisdictions and may require compliance with bureaucratic and costly local formalities such as translation, legalization and/or notarization of application materials.

Conclusion

There are convincing advantages to proceeding with trademark registration in Canada. Given the relatively insignificant costs in applying for registration, it becomes even harder to explain non-registration. Apart from standard legal fees, the CIPO fee to proceed with an online trademark application starts at $330 for one class of goods or services. Once registered, the registration is valid for 10 years and can be renewed thereafter. The realization of even one of the benefits of registration more particularly described above will immediately offset the costs to register in the first instance.

Invitation for Discussion:

If you would like to discuss this article in greater detail, or any other business law matter, please do not hesitate to contact one of the lawyers in the Business Law group at Nerland Lindsey LLP.

Disclaimer:

Note that the foregoing is for general discussion purposes only and should not be construed as legal advice to any one person or company. If the issues discussed herein affect you or your company, you are encouraged to seek proper legal advice.

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