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Changing Trademark Use: What to Do as Your Business Evolves

By: Christopher Heer, Dominic Cerilli | Last updated: May 14, 2021

How are Trademarks a Business Asset?

Trademarks derive their value from the exclusivity they afford. Trademark protection provides a domain of exclusivity where only the lawful owner can use the protected marks in association with particular goods or services to distinguish those goods or services from those of others.

The bundle of legal rights that accompany trademarks dissuade would-be infringers from using protected marks or confusingly similar marks and, in the event of infringement, provide a legal cause of action to pursue a remedy against the infringer.

These rights also minimize the likelihood that customers will lose confidence in your brand by accidentally purchasing an inferior product or service from a competing business that is infringing on your trademark rights. Oftentimes, these mistakes occur because the consumer believed the product or service was a genuine purchase from your business when, in fact, it was from an imitator.

Thus, understanding and enforcing your trademark rights reduces the number of sales directly lost to consumers who purchase products or services bearing confusingly similar trademarks. Having a trademark enforcement strategy also prevents downstream loss of sales from the depreciation of your goodwill when clients receive an inferior product from an infringing competitor and falsely conclude that the quality of your products or services has decreased.

As your business evolves, you may begin to use your trademarks in new ways to retain the interest of repeated customers and attract new clientele. If you modify or reengineer a trademark, it is important to ensure that the rights and benefits you previously enjoyed are not lessened or lost.

Whether large or small, changes to any distinguishing word, design, shape, colour, wrapping, or other identifying feature can create confusion among prospective purchasers and jeopardize otherwise valid intellectual property rights.

Thus, when conducting a rebranding effort or new advertising campaign, consulting professionals who specialize in trademarks and brand management is worthwhile to ensure you do not inadvertently harm your legal rights.

Registered and Unregistered Trademark Protection

Trademark protection can arise in one of two ways: either by registration under the Trademarks Act or under the common law against the tort of passing off.

Trademark registration is a proactive approach to brand protection that provides a broader scope of exclusive privilege and a presumption of trademark validity in the event of a dispute. Trademark registration provides the right to exclusive use in association with the goods or services a mark is registered for and prohibits any confusingly similar marks throughout the jurisdiction in which the mark is registered. For example, registering a trademark in Canada protects that trademark throughout all of Canada.

In the event of a dispute, the party opposing the rights afforded to a registered trademark bears the initial burden of proof. Such an opposing party must raise persuasive arguments and evidence in support of their allegations that the registered trademark is invalid and does not deserve legal protection. In view of this onus, some prospectively adverse parties may be dissuaded from contesting registered trademark rights, thereby providing a significant marketing advantage to the registered trademark owner.

Registration is also the only way to acquire a cause of action against the depreciation of a trademark’s goodwill. That is, only registered trademark owners can pursue a remedy from a competitor who uses a registered trademark in a manner that is likely to decrease the value of its lawful owner’s goodwill. Having a cause of action for depreciating the goodwill associated with a trademark compounds the remedies a registered trademark owner may pursue against an infringer, thereby broadening the variety of arguments the owner may raise and strengthening the overall allegations against the adverse party.

By contrast, common law trademark rights only protect against confusingly similar marks and unregistered trademark owners must, in the event of a dispute, furnish evidence to prove entitlement to common law protection against infringers trying to pass off imitations as genuine products or services.

The scope of protection for unregistered trademarks is also limited by the extent the trademark has been used and become known. An unregistered trademark is only enforceable if the owner proves that the unregistered mark has acquired a significant reputation in association with products or services in a particular geographical area. Put another way, if the owner proves the existence of goodwill by evidencing use of the unregistered trademark, the protection afforded is limited to only the geographic areas where goodwill is proven to exist.

If you intend to rely on unregistered trademark protections, it is prudent to first identify any of your business’s branding materials that may be afforded unregistered trademark rights. Understand that because the scope of protection for unregistered trademarks is dependent on how well known the unregistered trademarks are, how you use your unregistered trademarks will greatly affect enforcement options. Consequently, tracking use of your unregistered trademarks and identifying regions within which you have acquired goodwill ought to be done regularly to inform and update your enforcement strategy.

Nonetheless, registration can broaden the scope of protection for your business’s branding materials and provide ample comfort in knowing that your registered trademarks have nationwide protection. While your trademarks portfolio should still be regularly reviewed to understand your trademark rights and to assess if new or updated branding materials should be registered as trademarks, trademark registration can greatly reduce the ongoing burden otherwise associated with collecting evidence in support of unregistered trademark rights. In this regard, trademark registration helps streamline your enforcement strategy by reducing some of the work associated with assessing the goodwill your branding materials have acquired.

Understanding Trademark Use

When applying for a trademark registration the applicant declares the categories of goods and services under the Nice Classification system they wish to claim exclusive privilege over. These selected classes of products and services must be reflective of the proposed or actual use of the applicant’s trademark.

Pursuant to subsection 4(1) of the Trademarks Act, a trademark is deemed to be used in association with goods if, at the time of transfer of the property in or possession of the goods in the normal course of trade, it is marked on the goods themselves or on the packages in which they are distributed or it is in any other manner so associated with the goods that notice of the association is then given to the purchaser. For services, subsection 4(2) of the Trademarks Act deems a trademark to be used in association with services if it is used or displayed in the performance or advertising of those services.

Understanding the technical definition of ‘use’ of trademarks under the Trademarks Act involves a legal understanding of whether attaching a particular image or associating a certain design or phrase with a product or service will provide sufficient notice of the association to the purchaser. One must also assess if a product bearing a trademark is transferred ‘in the normal course of trade’ so as to meet the legal requirements for trademark protection.

For businesses looking to develop a healthy market reputation, revisiting their trademark rights and adjusting their legal protection as the nature and course of their business changes means understanding the legal technicalities of branding.

For example, while the analysis for confusingly similar marks is the same for both registered and unregistered trademarks, whether two trademarks are legally considered to be confusing depends on several factors. These include the extent to which the trademarks have become known, the length of time the trademarks have been in use, the nature of the goods or services or business, the nature of the trade, and the degree of resemblance between the trademarks, including in appearance or sound or in the ideas suggested by them.

Consequently, how you use your trademarks over time will determine not only the scope of your common law trademark rights, but also how a trademark infringement lawsuit is ultimately decided.

As your business grows, consider taking time to review any marketing materials you have and try to identify how their use has transformed. Have some slogans and visual designs been abandoned in favour of newer ones? Has a slogan been stylized into a visual form that is now included on social media pages, posters, or a brick-and-mortar shop? Is your business now making most of its sales online instead of in-person? Asking these sorts of questions can help guide businesses towards identifying new trademark rights worth registering and enforcing against competitors looking to capitalize on your brand awareness.

Growing Your Business? We Can Help.

Over time, customers become familiar with the quality and characteristics of the products or services they purchase from a business and develop expectations about what they will receive.

If those expectations are favorable, clients can develop strong brand preferences which generate recurring customers, a stronger market reputation, and consistent business growth.

As the nature of your business changes, it is important to consider what effect such evolution will have on your intellectual property rights and if any aspects of your marketing strategy need to be revisited. When the use of your trademarks starts to exceed the initial product and service classifications they are registered for or if your trademarks are being used in a new way, you ought to revisit your portfolio of branding materials and trademark rights to identify any gaps in legal protection.

If you believe that your trademark is original and has commercial value, trademark registration is a worthwhile investment. Consulting with intellectual property lawyers is a good way to learn about how the law can be used to facilitate a strong market presence and how to get the most value out of your intangible assets.

To learn more about the steps in applying for a trademark registration in Canada, contact us now for a complimentary and confidential initial telephone appointment.