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A step forward or new concerns? Examining the proposed Trade-marks Act

On June 17, Canada is set to implement an act relating to trademarks and unfair competition, aka the Trademarks Act and the new trademarks regulations. The new act and regulations align Canada’s trademark policies with other jurisdictions’ policies. Additionally, this new act will allow Canada to accede to the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (as amended on Nov. 12, 2007), a system through which one can obtain an “international trademark” registration that has effect in designated contracting parties. The act also accedes to the Singapore Treaty on the Law of Trademarks, which harmonizes administrative policies pertaining to trademarks and the Nice Agreement, which establishes a classification system for goods and services that trademarks cover.

The proposed Trademarks Act is a significant departure from the current Trade-marks Act. Trademark lawyers in Ontario should realize how it will impact their practice and subsequently how they advise their clients. For example, the new Trademarks Act shortens a trademark’s lifespan to 10 years from 15 and mandates the use of Nice Classifications. Additionally, it extends trademark registrability to “signs” instead of just “marks,” which include personal names, letters, tastes and texture.

As one might expect of proposed legislation, there is usually both support and opposition. Some Canadian business owners might be happy that they can register signs. Some individuals may believe these amendments will result in more trademark applications. All the same, the act presents unforeseen challenges. For example, is there a distinction between an upper-case “A” and a lower-case “a”? 

It seems to the author that the Trademarks Act is problematic because of the broader array of registrable characteristics, the abolishment of the declaration of use requirement for proposed trademarks and its provision that enables the governor in council to make any changes to Canadian trademark law for carrying the Madrid Protocol and Singapore Treaty into effect.

Broader array of registrable characteristics

The proposed Trademarks Act defines a trademark as “a sign or combination of signs” that distinguish goods or services. This contrasts with the current definition of a trademark as a mark that distinguishes goods or services. As previously noted, signs are much broader than marks. One might wonder how a greater number of registrable traits is worrisome. However, if one examines some of the future signs that can be registered, such as scent, concerns do arise.

Some research has shown that scent is highly subjective. A 2013 study from Duke University showed that no two people perceived the same smell the same way. While this might seem more theoretical, it has real-world ramifications for determining trademark confusion.

The proposed Trademarks Act, like the current Trade-marks Act, bars the use and registration of confusing trademarks. For designs or words, there is more likely to be consensus on what constitutes confusion. Since scent is quite subjective, consensus might be rarer. Indeed, functioning language with which to discuss the issue might be difficult. This might make it easier for owners of scents to unscrupulously send cease-and-desist letters. Additionally, if such cases ever went to court, it could be easier for parties to appeal these decisions because of the subjectivity of scent.

Potential abuse of intellectual property laws and possible prolonged litigation are not something Canada would want to encourage. However, by letting scent be registrable, these two trends might become more common.

Abolishing the declaration of use requirement

Currently, the owner of a trademark application that is based on proposed use must submit a declaration of the trademark’s use in Canada prior to registration. However, the planned Trademarks Act abolishes this requirement. Some might argue that this could make business easier and thus attract businesses to Canada. However, there is a real fear about an increase in trademark squatters. With no obligation to prove actual use, a party could more easily register a trademark with the primary intention of sending abusive cease-and-desist letters. Small businesses could be hit particularly hard.

One could argue that fears of trademark squatting are overblown. In support of this argument, they could say that the new Trademarks Act permits statements of opposition to advertised trademarks based on the grounds that the trademark application was in bad faith. This argument is flawed though because there is no definition of bad faith. Even if trademark squatting is considered bad faith in the future, an individual cannot know if an applicant is registering a trademark for the predominate purpose of squatting.

Permitting significant changes to Canadian trademark law

One of the oft-cited criticisms of international treaties is that they impair national sovereignty. Some provisions of the Trademarks Act seem to give credence to this view. The act specifically states, in the proposed s. 65.1, that the governor in council can “make regulations for carrying into effect despite anything in this Act . . .” the Madrid Protocol and the Singapore Treaty.

From an accountability perspective, this section is concerning. The Madrid Protocol lets member states vote on matters. There is a possibility that Madrid Protocol contracting states could approve a policy that would vastly change Canada’s trademark landscape. The governor in council could pass new regulations to comply with these approved matters without parliamentary debate and consultations with the public. Since such changes would affect the public, many would feel that they or their elected representatives should provide input. The act does not allow that opportunity.

Legislation should change and evolve with the times. However, changing legislation should not pose new concerns and problems. Unfortunately, the proposed Trademarks Act is doing just that.

Margot Mary Davis was called to the bar in 2018. She practises at Innovate LLP, an intellectual property law firm in Toronto.