Wilson Lue LLP Patent & Trademark Agents, Intellectual Property Counsel

Coping with clutter and trademark squatters under the new Canadian Trademarks Act

The changes coming in 2019 have the potential to escalate conflicts in the Trademarks Office

PUBLISHED December 2018 IN Trademarks, For Entrepreneurs, For Established Businesses
Samuel Zeller via Unsplash

Canada has introduced significant changes to the Trademarks Act and Trademarks Regulations, scheduled to come into force in June 2019. Hopefully, trademark squatters will not be the only ones celebrating.

Some of the changes to Canadian trademark law will liberalize procedures and, initially, businesses can expect their trademark applications to proceed to registration faster. However, these changes also come with significant risks. Brand owners should prepare to encounter more trademark “squatters” and conflicting trademark applications that could challenge brand clearance strategies.
The current Canadian trademark regime typically ties registration of trademarks to their use in Canada. The Trademarks Office only registers a trademark if the applicant declares that it has used it for all listed goods and services. Currently, every trademark application includes:

  • a statement listing the goods and services in association with which the applicant has used or intends to use the trademark;
  • a statement indicating whether the applicant has used or intends to use the trademark with the listed goods and services; and
  • a statement that the applicant is satisfied of its entitlement to use the trademark in Canada with the listed goods and services.

    Currently, a misstatement can jeopardize the application if a third party brings opposition proceedings to challenge the trademark application. Third parties have successfully challenged trademark applications on the basis that applicants did not actually use or intend to use their trademarks with the listed goods and services. Further, even if the applicant states an intent to use, a declaration of use eventually must be filed before the Trademarks Office will register the trademark. In this way, the use requirement in Canadian trademark law has discouraged applicants from listing goods and services that are unlikely to launch.

    This will change on June 17, 2019.

    As a result of amendments first proposed years ago, applicants will no longer need to state that they have used their trademarks for the listed goods and services, or that they are satisfied of their entitlement to use their trademarks. This will make it easier to register a trademark that lists goods and services that an applicant has no real intention of using – eventually leading to more clutter on the Trademark Register. Latecomers who delay filing applications for their trademarks can expect to encounter more obstacles to registration. Trademark clearance searches to assess the risks of adopting a brand may become more challenging and expensive as the Register becomes more cluttered with trademarks that list unused goods and services.

    These changes could encourage trademark squatting. Like domain name squatters, trademarks squatters do not use their applied-for trademarks for actual goods or services. Instead, they aim to sell or license their trademarks to businesses that want to use those trademarks. Squatters and trolls are relatively rare in Canada, though they do exist. In a series of decisions between 2007 and 2013 by Canada’s Trademarks Opposition Board, the owners of famous brands successfully opposed registration of a series of trademark applications by one applicant for CORONA, BEEFEATER, JACK DANIEL’S, L’OREAL PARIS, BAYER, HEINEKEN, FINLANDIA, DOM PERIGNON and CHANEL. In several of those cases, the Opposition Board refused registration of the trademarks because the applicant’s pattern of applying for well-known trademarks raised doubts that he stated in good faith that he was satisfied of his entitlement to use the marks. Even without third party oppositions, under the current regime that applicant could not have secured registrations without declaring use of the trademarks with their listed products and services; but under the new regime, this barrier to registration will disappear. This may result in more confrontations between brand owners and trademark squatters in Canada.

    On the other hand, some other changes will introduce mechanisms that will help brand owners challenge squatters.

    One mechanism is a new “protest” procedure. Third parties may write to the Trademarks Office to make submissions against a trademark application; the examiner of that application will have the option of using those submissions to raise objections in an office action, i.e., a letter of objection, to the applicant. This protest procedure could be used to bring potential squatting behaviour to light, and may discourage those squatters who are deterred by administrative complexity.

    Two other mechanisms are a new “bad faith” ground of objection, which will be helpful at least where the applicant has a demonstrated pattern of squatter-like behaviour, and a use requirement for the purpose of enforcing trademark rights within the first three years of registration. A new trademark registrant will not be able to enforce its registration during the first three years unless the trademark was in use in Canada at any time in that period, or there are good reasons excusing non-use. The bad faith and use requirements were included in Bill C-86 passed in December 2018, and are intended to fix the problems caused by the removal of the use requirement. All these amendments are expected to come into force together in 2019.

    Still, protest and opposition avenues require businesses to constantly monitor third party filings at the Trademarks Office so they can intervene in time to prevent the registration of problematic trademarks. Many businesses with famous brands already monitor filings in the Trademarks Office. Other businesses should now consider whether to follow suit by engaging a watch service. For example, a business that has already applied for a trademark in the United States could rely on a watch service to detect any trademark squatter that files a copycat application after seeing that business’ public US application. Even if the business is unsure whether to enter the Canadian market, it might decide to file in Canada within six months of the original filing date to take advantage of existing provisions that provide a Canadian filing date equivalent to the to the original US filing date. The Canadian application would then pre-empt the trademark squatter’s filing.

    For most businesses, however, the most effective defence against squatters will be to file trademark applications early, with comprehensive listings of products and services.

    A version of this article was published in The Lawyer’s Daily on November 21, 2017. This version has been updated to include changes introduced by Bill C-86 and the coming into force date.