What Business Lawyers Should Know About Trademarks

It is our privilege to work with and refer our clients to numerous fantastic business lawyers when they are thinking about incorporating. We are also very grateful to our corporate law colleagues for referring their clients to us when they are thinking about filing a trademark application or considering a name change.

In the course of working with our trusted referral partners we have identified a few key points about the crossover between trademark law and corporate law. We hope that by sharing these points we can help to clarify how and when we can work together to best serve our clients.

Corporate Names and Business Names are Not Synonymous with Trademarks

When your client incorporates their business, whether provincially or federally, or registers their business, they are required to do so under a business name or corporate name. When their corporate or business name is formally approved, they are allowed to operate a business using that name within the province or territory registered, or across Canada if registered under federal legislation.

However, permission to operate a business under a given name is not equivalent to permission to offer goods or services in association with that name (in other words, to use that name as a trademark). Before adopting and using a name in association with goods or services (i.e., on the packaging of a product, or in the promotion of a service) a prudent individual or business will conduct a trademark availability search and/or consult with a trademark agent, and, preferably, apply to register the trademark with the Canadian Intellectual Property Office. Failure to conduct due diligence before adopting and using a name in association with goods or services could leave your client’s business vulnerable to claims of infringement and passing off (that is, a claim that your client adopted a confusingly similar name in association with goods or services to confuse consumers into believing that your client’s goods or services are associated with the goods or services of a competitor’s).

But Wait, a NUANS (Newly Updated Automated Name Search) Search is Already Part of the Incorporation Process – Doesn’t That Clear the Name for Use as a Trademark?

Although your client’s corporate name is subject to a type of availability search in the course of the incorporation process, a NUANS search only looks at registered corporate and business names and registered trademarks in Canada.

An identical, or confusingly similar, unregistered mark may still prevent your client from adopting and using their corporate name as a trademark and make them liable to the individual or business using the unregistered mark.

A NUANS search also does not account for foreign jurisdictions in which your client may wish to sell their goods and services. So, for example, if your Canadian corporate client plans to develop a mobile application that will be available for download on IOS and Android based devices, their customer base will inevitably extend outside of Canada. Accordingly, a NUANS search will be insufficient to identify potentially confusingly similar trademarks in other key markets.

A trademark availability search performed by an experienced trademark agent or trademark lawyer serves to identify not only registered trademarks but also any common law or unregistered trademarks which may impact your client’s ability to use their name in association with the goods or services their business provides. Moreover, it can include jurisdictions outside of Canada which may be vital markets for your clients’ businesses.

Registration Is Valuable

Although unregistered trademarks exist and are entitled to protection at common law, there are significant advantages to registering a trademark.

Registration of a trademark creates a presumption of validity of the trademark once registered. In other words, upon registration of a trademark, it is presumed that consumers associate the registered trademark with the goods or services with which the trademark is used. Furthermore, a registered trademark is protected across Canada, whereas an unregistered mark is only enforceable in a particular territory and only if the owner proves the mark has acquired significant goodwill in that area (which can be very difficult to prove). Proving goodwill in an unregistered mark can require furnishing evidence, such as surveys and/or sales and advertising data, demonstrating an association in the minds of consumers between the unregistered trademark and the goods or services in association with which the trademark is used.

Enforcing a right to a registered mark is easier overall, as compared to enforcing a right to an unregistered mark. This ease of enforcement can save your client time and money which would be otherwise spent on proving the validity and scope of their unregistered mark, making trademark registration a wise investment.

Registered marks also benefit from greater protection and additional causes of action under which to pursue relief for their unauthorized use. For example, registered trademarks are protected against depreciation of goodwill – this permits an owner of a registered mark to take legal action against a party that is using their mark in a way that is likely to damage the goodwill attaching thereto. Canada’s IP border enforcement program, which monitors for counterfeit products being imported into Canada, also exclusively benefits registered trademarks.

Moreover, a registered trademark is a business asset, and often becomes one of the business’ most valuable, if not the most valuable, assets since the trademark generally holds all the business’ reputation and goodwill. Inviting your client to have a conversation with a trademark agent or trademark lawyer will help them to better understand the value of trademark protection (a conversation they are sure to thank you for down the road).

With Respect to Filing an Application to Register a Trademark - Time Matters!

It is in the best interest of your client to file an application for a trademark as soon as possible. This is particularly important in light of the recent changes to the Trademarks Act which have made the trademark system in Canada operate on a first to file basis. Upon filing an application, the application is granted a filing date which serves to give it priority over applications submitted thereafter. In practice, this means that if someone subsequently files an application for a confusingly similar mark, your client’s mark (if acceptable) will register and prevent the registration of the confusingly similar mark.

This means that if your client’s competitor files for the same or a confusingly similar mark to that of your client before your client applies for a registration, your client will have to fight with its competitor to get its trademark back. This will inevitably be an expensive process that could have been avoided by simply filing as soon as possible.

Filing as soon as possible is also important because trademark registration takes time. From filing to registration, as of the date of this article we estimate the process will take at least 18-24 months in Canada.

Time is Also of the Essence for Trademark Searching

Initiating the process of applying for and registering a trademark can help your client identify early on whether they will be able to adopt, use, and register a particular name, slogan, image, or other branding device.

Ideally, a trademark search is performed before the client has even finished the exercise of choosing a name or logo. This might be at a stage before the client even completes the incorporation process, or after incorporating a numbered company but before finalizing its operating name or the name of goods or services to be offered by the business.

Conducting a search at such an early stage will give your client evidence-based assurance that it may adopt, use and register its desired mark without exposing itself to the risk that the mark will not be registrable. It also avoids the risk of facing claims of passing off or trademark infringement.

If a client has already settled on a trademark, it is still better to complete the search in advance of spending the money to file an application to register the mark since searches help identify registered and unregistered trademarks with which a proposed mark may be confusingly similar. If such marks are identified, your client will have saved the time and money they might have otherwise spent investing in a mark that they, in fact, cannot use. Furthermore, a trademark availability search can help your client identify and avoid any potential litigation over the use of their mark.

A Trademark Application Should Not Be a D-I-Y Project

While in theory there is nothing stopping your client from filing for their trademark on their own, in practice, it is not advisable.

Working with a registered trademark agent or trademark lawyer in the preparation and filing of a trademark application ensures that your client doesn’t waste time and money on an application for a mark that will not be registrable.

Further, the registration process can be lengthy and complex. Working with a knowledgeable and experienced trademark agent or trademark lawyer ensures that your application abides by deadlines and other formal requirements. Moreover, the trademark agent or trademark lawyer is the individual best equipped to correspond with the trademark examiner at the Trademarks Office when facing questions pertaining to the application or objections to a proposed mark, if raised.

Not All Trademark Applications Will Succeed

Another reason to work with a qualified professional is that your client cannot trademark everything and anything. Identifying what is and is not registrable as a trademark is directly within the scope of a trademark lawyer and trademark agent’s expertise. Before spending time and money to apply to register a mark, your client will certainly want an opinion on registrability, distinctiveness and confusion.

While some limitations on registrability are relatively straightforward, others, like the prohibition on marks that are clearly descriptive of the goods or services with which they are associated or marks that offend section 9 of the Trademarks Act, are much more difficult to navigate.

A trademark agent or trademark lawyer can help your client identify risks of adopting and using certain signs, words, images etc. as a mark and ultimately advise your client on adopting, using and applying for a mark that is likely to succeed to registration.

Protection is Territorial – Especially in the Case of Non-Registered Marks

Trademark protection is territorial. A trademark registration only protects a mark in the territory in which it was registered. The territoriality of trademark protection is even more relevant in the case of unregistered or common law trademarks.

While registered marks in Canada are protected across Canada for 10 years, unregistered marks are only protected in the region in which they can prove they their marks have acquired distinctiveness – i.e., a reputation. As stated above, if your client’s business involves international markets, they may want to consider applying for international protection. Given the time involved in preparing and prosecuting a trademark application, this is yet another reason to file as soon as possible.

A Registered Trademark’s Protection is Limited to a Set of Goods and/or Services

A trademark registration gives its owner the exclusive right to the use of the registered trademark in association with the goods and services enumerated in the registration. What this means is that use of an identical trademark by a third party is not necessarily an instance of trademark infringement. If the first trademark is registered in association with car parts and accessories, and the second is being used in association with fast-food restaurant services, it is entirely possible that the registered trademark is not being infringed. This, however, is not to say that a trademark must be used in association with goods and services identical to those in association with which a trademark is registered in order to infringe that trademark. Further, nor does the trademark need to be identical to the registered mark to infringe the owner’s trademark rights. Substantial similarities may be sufficient to make out infringement.

Owners of Registered Trademarks Must Themselves Police Their Marks

A common misconception surrounding trademarks is that registered marks are somehow policed by the Canadian government, perhaps particularly the Canadian Intellectual Property Office (CIPO). This is not the case. It is the responsibility of the owner of a registered mark to identify instances of infringement and enforce their rights. The role that CIPO plays in protecting registered trademarks is limited. CIPO will cite a registered mark against an application for a trademark if it considers that the applied-for mark is confusingly similar to the registered mark. Owners of registered trademarks may, however, not always agree with CIPO as to whether an applied-for mark is of concern. For this reason, a mechanism exists which allows owners of registered trademarks to identify marks the registration of which they oppose and take action accordingly.

Owners of Registered Trademarks Could Have Their Trademark Expunged

Trademark registration is not absolute. That is, the Trademarks Act provides avenues for trademarks to be expunged (i.e., removed) from the Register of Trademarks. A registered trademark may be expunged, for example, for non-use. Known as section 45 proceedings, the Registrar of Trademarks may give notice to a registered trademark owner, either by request of any interested party upon payment of the prescribed fee or by the Registrar’s own initiative, requiring the owner of the registered trademark to furnish evidence demonstrating the mark was used in Canada at any time during the three-year period immediately preceding the date of the notice. Section 45 proceedings can only be initiated once three years have elapsed from the date of registration of the trademark. If, for example, a trademark was registered on January 1, 2021, then an interested party can initiate section 45 proceedings on January 1, 2024. Section 45 proceedings can be an effective mechanism for challenging, and possibly expunging, the trademark registration of competitors. For this reason, it is important your client only obtain registration for trademarks that they plan on adopting and using in association with goods or services within three years from the date of registration of the trademark, otherwise your client’s registration could be vulnerable to a challenge by a competitor.

Canada’s Trademark Regime Recently Underwent Big Changes

On June 17, 2019, significant amendments to Canada’s Trademarks Act finally came into force. These included the elimination of the use requirement for trademark registration in Canada, changes to the examination of trademarks, which now includes examination for distinctiveness, as well as substantial changes to the term of protection, fees associated with trademark applications, and signs which are eligible for trademark protection.

Give Us a Call – We Are Happy to Help!

Given a trademark’s potential value, and the many particulars involved in successfully protecting that mark, consider referring your clients to experts in intellectual property law to ensure they’re able to build and capitalize on a successful brand.