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Changing Trademark Use: What to Do as Your Business Evolves

By: Christopher Heer, Dominic Cerilli | Last updated: March 26, 2020

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 and services.

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 clients 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 because the consumer believed the product or service was a genuine purchase from your business.

Thus, enforcing your trademark rights reduces the number of sales directly lost to consumers who purchase products or services bearing confusingly similar trademarks and prevents downstream loss of sales from the depreciation of your goodwill when clients receive an inferior product from an infringing competitor.

As your business evolves, you may begin to use your trademarks in new ways to retain the interest of repeated customers and attract new audiences. In the event of modification or reworking of a trademark, it is important to ensure that the rights previously associated with your mark are not lost.

Whether large or small, changes to any distinguishing word, design, shape, 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 commercial branding is worthwhile to ensure you do not inadvertently weaken 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 it is registered for and prohibits any confusingly similar marks throughout all of Canada.

In the event of a trademark dispute, the initial burden of proof lies with the opposing party to prove that the registered trademark is invalid and does not deserve legal protection. 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 market competitor who uses a registered trademark in any manner that is likely to have the effect of depreciating the value of its lawful owner’s goodwill.

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 when the owner proves that the unregistered mark has acquired a significant reputation in association with products or services in a particular geographical area. That is, 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.

Understanding Trademark Use

When applying for a trademark 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.

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 with a product or service will provide sufficient notice of the association to the purchaser or if the product bearing the 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.

Growing Your Business? We Can Help.

Over time, clients of a business become familiar with the quality and characteristics of the products or services they purchase and develop corresponding expectations.

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 a change 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 where your trademarks are used in a new way, you ought to revisit your 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 interacts with marketing and branding and how to get the most value out of your intellectual property 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.