This post is the first in a series discussing proposed changes to Canadian trademark law.

The Canadian Government dropped a bombshell on the trademark community on March 28, 2014, proposing massive changes to the Canadian Trade-marks Act (the Act), such changes being buried in a budget bill—namely, the Economic Action Plan 2014 Act, No. 1 (Bill C-31).  The immediate response from practitioners and other stakeholders in the trademark space was one of consternation: the changes are extensive, and are being introduced with virtually no notice to stakeholders about these changes prior to the introduction of the bill.

According to Federal Government sources,  the changes  are intended to prepare Canada for accession to the Madrid Protocol, the Nice Agreement and the Singapore Treaty—and Canada has telegraphed its planned accession to these agreements for several years.  However, many of the changes required for this purpose were already contained in Bill C-8, the Combating Counterfeit Products Act, which is expected to be enacted in the next few months.  Bill C-31 contains many other proposed revisions to the Act that go far beyond what is required for accession to the above Treaties, and appear to be directed more at cost cutting for the benefit of the Federal Government.

Rather than simply listing some or all of the proposed changes, we have decided to examine, in some detail, the likely impact of the changes in a series of posts.  In this first post, we examine some of the effects that the changes will have on the clearance of trademarks in Canada.  In future posts we will examine the anticipated effects of Bill C-31 on Applications for Registration of trademarks in Canada, on Opposition practice, and on post-registration matters.  We will attempt to do all of this from the perspective of prospective applicants, current applicants (where applications have been filed prior to Bill C-31 coming into force), existing registrants and other interested parties.

It is important to note that the provisions in Bill C-31 that relate to the Act may not come into force for many months, and could be subject to revision during the different stages that the Bill must go through in the House of Commons and Senate.  Additionally, the proposed legislation contains no Regulations: at some future points, those will have to be drafted and circulated, and they may raise additional issues or provide more clarification.  We also note that there has been no request by the Government for any public input on Bill C-31—though we understand IPIC and INTA nonetheless plan to submit comments.

Bill C-31 and Clearance Searches

The purpose of clearance searches or clearing  a proposed trademark in Canada is to determine whether a mark that a particular person is thinking about using and applying to register in Canada can be used and registered without stepping on the toes of a prior rights holder.  The concept of use is a fundamental tenet of Canada’s trademarks laws: the first person to use a mark in Canada in association with particular wares (goods) and/or services is generally the party entitled to obtain registration of that mark in Canada in association with those wares/services.  Therefore, one of the goals of conducting clearance searches is to attempt to discern whether there are any third parties who enjoy Canadian rights based on their prior use.

Under the current Act, use of a mark, either inside or outside of Canada, is a prerequisite to registration.  The overwhelming majority of applications for registration of trademarks in Canada are presently filed on the basis of:

• prior use in Canada (with a stated first use date in Canada);
• proposed use in Canada (meaning the mark was used in Canada sometime after the filing date but before registration issued); or, less often,
• registration and use abroad (which basis does not require use of the mark in Canada in order for registration to issue).

Quite often one or the other of the first two bases for registration set out above are combined with the third basis.  The net result is that it is currently fairly easy to get at least some idea of whether or not a third party mark has been used in Canada, and when such use commenced, to the extent one is willing to rely on the information provided. Having said that, use of a mark in Canada in a trademark sense is a tricky concept which has become more complex with globalization and the explosion of online and mobile commerce.  Additionally, Canadian case law dealing with what constitutes use of a mark in Canada is often difficult to reconcile, meaning use dates and other use related information provided by applicants can’t always be relied on as being accurate.

Under the proposed changes to the Act, these filing bases will be abolished: there will no longer be a requirement to indicate in an application whether or not a mark has been used in Canada, is proposed to be used in Canada or has been registered or used in another country.  Instead, the Bill contemplates that trademarks will be registrable in Canada, without use in Canada or anywhere else.

The changes will not, however, affect the concept of prior use in Canada when determining which party has the right to use and register a mark.  If Bill C-31 comes into force, clearance searches will likely need to be carried out in two stages in order to be of any real utility.  The first stage will be to identify marks on the Trademarks Register that might be considered confusing with the proposed mark.  The second stage will be to carry out further investigations, including possibly hiring a private investigator,  in an attempt to determine if such a mark is currently in use in Canada and if so, when such use commenced.  While the second stage is sometimes required/recommended even under the current Act, it appears likely that the advisability of conducting such further investigations will be increased under Bill C-31 and therefore it appears that the cost clearing marks for use in Canada could well increase.

The above issues will be compounded where a mark identified in the first stage of a clearance search is registered or applied for in association with a “laundry list” of wares/services, even though the registered owner only uses the mark (if at all) in association with a much shorter list of wares/services.  This could happen more frequently under Bill C-31, as it will no longer be necessary to limit the claimed wares/services in an application/registration to those with which the applicant actually uses or proposes to use the mark.

In our next post, we will examine some of the more significant effects that the changes to the Act could have on the application process.