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Common Law Trademark Rights in Canada

By: Christopher Heer, Dominic Cerilli | Last updated: March 26, 2020
Trademarks in Canada can be protected in two ways: through registration under the Trademarks Act or under the common law against the tort of passing off.

Registration provides proof of trademark ownership and a presumption of validity until proven otherwise. Registration automatically provides nation-wide protection and lasts for as long as the registration is renewed.

Registered trademarks are further protected against damage to the market reputation of the owner, also known as the depreciation of goodwill. This permits an owner of a registered mark to more effectively control how their brand is perceived in the market because they can take legal action against any adverse party that is using a registered mark in a way that is likely to damage the goodwill of the genuine owner.

In contrast, unregistered marks are afforded a narrower scope of protection and the person asserting ownership of an unregistered mark must meet several threshold tests to have their intellectual property rights recognized.

What Legal Rights Do Unregistered Trademarks Have?

Trademarks that are not registered will nonetheless receive protection if certain conditions are met. This protection is embodied in the tort of passing off, which arose from the Canadian common law (that is, legal disputes that have been decided by courts of law).

Trademarks that are not registered will nonetheless receive protection if certain conditions are met. This protection is embodied in the tort of passing off, which arose from the Canadian common law (that is, legal disputes that have been decided by courts of law).

However, this scope of protection for unregistered trademarks is significantly less than that of registered marks and the statutory remedies available to registered trademark owners under the Trademarks Act are not available for unregistered marks.

Consequently, relying on common law trademark protection can be risky because of the narrower scope of protection and the inability to rely on evidence of registration to prove trademark ownership. However, in the event that a trademark registration is found invalid, the owner of the mark can still assert common law protection using passing off if certain criteria are met.

How do I Protect an Unregistered Trademark?

Canadian law requires three elements to prove a protectable but unregistered trademark.

First, the party asserting trademark protection must have the benefit of a market reputation, also known as goodwill. More particularly, an alleged owner of an unregistered mark must furnish proof (e.g., in the form of surveys) that demonstrates an association in the mind of the consumer between their unregistered trademark and the products or services to which the trademark attaches.

The scope of market reputation defines the scope of protection afforded to the unregistered mark. For example, if the unregistered mark is only evidenced to be known within a specific geographic area, the scope of protection afforded to that mark will be limited to that same geographic area.

Secondly, if an owner of an unregistered mark wishes to enforce their rights against a third party they must prove there has been deception of the public due to a misrepresentation. To prove this element, the owner must show that the public was exposed to a false statement, image, or other identifier that has the capacity to cause confusion.

Lastly, the owner of an unregistered mark must prove that their business has endured actual harm or that there is potential for their business to be harmed as a result of the passing off. Once more, this requires the owner to furnish evidence that proves the adverse party poses a threat to the owner’s business or presents a real prospect of loss.

Considerations for Protecting Unregistered Trademarks

If this test is met, unregistered marks are afforded protection against the tort of passing off by confusingly similar trademarks. However, enforcing unregistered trademark rights can be a complicated exercise since it takes time and effort to gather the required supporting documentation and that evidence may nonetheless be insufficient to support a successful claim. In approaching a dispute involving unregistered trademarks, it is a good practice to review any records and data you have about the marketing impact of your unregistered trademark and to consider how much short term and long term harm will result if competitors freely use your marks. It is also good practice to collect and keep records documenting how you have used your unregistered trademarks and to thoroughly consider if there may be bona fide users of similar marks.

Legal counsel can help unregistered trademark owners conduct a cost-benefit analysis to understand the strength of their claim, compile evidence in support of their unregistered trademark rights, and calculate the costs they will be facing if they choose to pursue legal action against an infringing party.

In general, the validity of your unregistered trademark will carry more persuasive weight the longer it has been known and used and your claim will be more likely to succeed if the defendant to the allegations is using a mark that has only nominal differences, if any at all. Note that unregistered trademarks are not protected against the depreciation of your business’s goodwill, so any unauthorized use of your trademark that devalues your brand will lack legal recourse.

Unregistered trademark owners must be careful when confronting a suspected infringer with legal action. Even if there are multiple similarities between the trademarks at issue, the suspected infringer will argue that any differences found are sufficient in distinguishing their mark from yours and dispel any confusion among prospective clients.

Thus robust surveys and expert testimony in support of the scope of your goodwill, the presence of a deception due to a public misrepresentation, and proof of harm or the potential of loss are important to successfully enforcing unregistered trademark rights.

Being Proactive versus Reactive

Registration can be costly and smaller businesses might be intimidated by upfront expenses, especially when its value will only become apparent at a much later date. However, the costs associated with pursuing or defending against a trademark dispute are, more often than not, substantially higher than the cost of trademark registration.

Legal disputes are inherently costly and asserting legal protection for an unregistered mark requires furnishing multiple types of evidence, which drains time, effort, and money away from your business. Registration avoids many of these costs by providing an evidentiary presumption of trademark validity and ownership.

Once your business develops a market reputation it is important to be proactive in protecting your brand and to identify what steps you should take to keep imitators from diverting customers away from your business or damaging your market reputation.

If you believe that your trademark is distinctive and has commercial potential, trademark registration or speaking with a trademark professional about trademark strategy are worthwhile investments.

To learn more about the steps necessary to apply for trademark registration in Canada or to resolve a dispute involving trademark infringement, contact us now for a complimentary and confidential initial telephone appointment.