The trademark landscape in Canada, which will undergo sweeping changes in 2019, has been altered by a recent and significant increase in multi-class applications which will lead to a crowding of the trademark register. In turn, this will challenge brand owners and the manner in which trademark rights are policed and enforced in Canada. These challenges dovetail with important civil, procedural and administrative developments, providing a broader scope of rights and swifter enforcement mechanisms for brand owners in Canada, particularly those with registered rights. The time is now for brand owners to review their portfolios in Canada to ensure that they are ready for the challenges ahead and that their brands can be effectively enforced.
Trademark Regulations
In order to implement the amendments to the Canadian Trademarks Act, first introduced by the government in 2014 and now predicted to be in force in early 2019, major regulatory change is required. The Trademarks Branch engaged in extensive consultation with stakeholders leading to the release of proposed Regulations for broader consultation. The consultation process has been well received in general.
Having completed the consultation process, the Trademarks Branch will start the formal regulatory approval process in early 2018 with a view to completing the process in late 2018. A key aspect of the proposed Regulations is to streamline and accelerate the opposition process which is critical given that the number of oppositions is expected to increase considerably after 2019. Some key changes to the regulatory process include the following.
Letters of Protest
Brand owners can start the process of protecting their rights when conflicting marks are still in examination. The new Regulations provide for letters of protest with respect to pending applications in order to raise issues against registration. This opens the door for brand owners to take proactive steps ahead of advertisement to raise objections against an application. The proposed Regulations provide that a letter of protest will be acknowledged but "no information may be given as to any action taken" - in other words, there will be no further correspondence with the person filing the letter of protest. Whether or not any action has been taken will, however, be clear from the public record. The introduction of letters of protest rewards vigilance and invites brand owners, particularly those with registered rights, to be more proactive in monitoring applications in order to identify and raise issues at the earliest possible stage.
Changes to Opposition Practice
Oppositions currently take a minimum of two years from start to finish, often longer. Streamlining the process favours brand owners, whether applicant or opponent. The proposed Regulations take aim at several aspects of opposition proceedings:
- Cross-examination. The party conducting a cross-examination often encounters delays in receiving answers to undertakings made during the cross-examination and, until the answers to undertakings are received, the party is not in a position to complete the cross-examination. The responsibility to file the answers to undertakings will now fall on the party that gave the undertakings in the first place which should effectively deter delay in providing them.
- Written Submissions. It has long been a criticism of the current system that written submissions of both the applicant and opponent are exchanged simultaneously. Under the proposed Regulations, there will be a consecutive exchange of submissions. The applicant will be in a position to respond directly to the opponent`s submissions, rather than having to wait for the oral hearing to do so. It is hoped that consecutive written submissions will reduce the need for oral hearings, though lengthy scheduling delays may still compel parties to request a hearing to address any changes in the law since the filing of written submissions.
- Oral Hearings. An interesting change to the oral hearing procedure means that if a party does not submit a request for an oral hearing, it will not be entitled to make submissions at an oral hearing held at the request of the other party. In practice, this will likely lead to both parties requesting an oral hearing, which may have the unintended consequence of clogging the system with superfluous requests for oral hearings.
- Divisional Applications. The changes to the Trademarks Act provide for divisional applications and the proposed Regulations set forth the necessary mechanisms. From an opposition perspective, an applicant may be able to channel non-controversial goods and services into a divisional application, thereby allowing an application to mature to registration with respect to the non-controversial goods and services without being delayed by opposition. The potential to focus disputes on a more narrow range of goods and services could help speed up the opposition process.
While the focus on streamlining the opposition procedure is welcome, many of the details will be spelled out in new practice notices, which are to be drafted in 2018 (see here for more detail).
Enforcement
The proposed Regulations complement important changes to the Trademarks Act already in force which broaden the definition of "infringement", to include activities beyond mere sale, distribution and advertising of goods to target manufacturing, importing, and exporting activities. As well, developments in Federal Court practice mean that Canada now has a positive environment for enforcement of rights.
Interlocutory Injunctions
The Federal Court has altered the enforcement landscape by granting interlocutory injunctions after a drought of 20 years.
Brand owners have long struggled with the onerous standard of irreparable harm. Recent decisions of the Court provide brand owners with better guidance as to what will suffice to meet that standard and have made interlocutory injunctions, which can be enforceable across Canada, a credible tool for dealing with infringers for the first time in decades.
Streamlined Court Procedures
Brand owners can also move forward with a straightforward infringement matter by way of application, a procedural track that is swifter than the traditional track, brought by way of action. There is no discovery, nor is there any option of live testimony at trial. Rather, the proceeding moves forward based on sworn affidavits, cross-examination on those affidavits, written arguments and a hearing. In short, it is a strictly documentary record, with no live evidence. This opens the door to a relatively rapid decision. However, as always, care must be taken to ensure that the evidence presented is as thorough and complete as possible. As there is no opportunity for discovery, the Plaintiff must have all material facts within its own records. The recovery of more than nominal damages should typically not be a significant goal of this streamlined litigation.
Another mechanism to get to a faster decision is a motion for a summary trial between close of pleadings and the fixing of a trial date. As in the case of proceeding by way of application, a summary trial proceeds on the basis of a documentary record that includes affidavits and admissions flowing from the discovery process. This hybrid approach allows brand owners the benefit of discovery, which can be significant with respect to proving damages, as well as the advantage of an expedited trial process.
Naturally, whether to proceed by way of a full action, a summary trial, or application depends on the nature of the case, the strength of the evidence, the Plaintiff's own records, the importance of credibility and damages, and of course timing. However, this array of enforcement options is most welcome to brand owners in Canada when contrasted against the previously very limited enforcement arsenal they had at their disposal.
Administrative Changes
Canada has implemented an anti-counterfeiting border mechanism allowing brand owners to request assistance in detaining goods bearing their registered trademarks or copyright. Customs can now detain (but not destroy) goods, and brand owners can extend this detention by commencing court proceedings in respect of the detained goods. Parallel imports, transshipments and goods intended for personal use are exempt from the border enforcement regime.
Concerns exist relating to the cost to brand owners and the number of shipments detained by customs. There is every hope that Canada will continue to monitor the effectiveness of the new regime, and to streamline and improve its implementation over time.
Strategic Implications
The new enforcement environment is welcome news for brand owners in Canada as they prepare for the sweeping legislative changes coming into force in 2019, but it is important to note that the new environment favours registered rights. While it is possible to enforce common law rights, doing so is inevitably more complex in terms of the evidence that will be required, as well as establishing actual or potential damages. Furthermore, trademarks and copyright must be registered in order to participate in the new border regime.
The expanded enforcement options coincide with the most important change to Canada's trademark registration regime: use will no longer be required to obtain a registration in Canada. The implications of this significant change for filing strategies are important, as brand owners can potentially protect zones of expansion through registrations without necessarily having commenced use in Canada.
Further, trademark trolls have taken notice of Canada's current flat fee structure, and the upcoming elimination of use as a requirement to obtain registration, and have begun to file bloated applications in anticipation of obtaining multi-class registrations once the changes are in place.
In short, the register will soon become crowded: it is time for brand owners to get their house in order and shore up their portfolio of Canadian registrations so that they can take full advantage of the changes on the horizon. These are exciting times for brand protection in Canada, which should impact filing and enforcement strategies for years to come.