The Differences between Unregistered and Registered Trademarks in Canada
In particular, trademarks are words, symbols, sounds, designs, or a combination thereof that are used to distinguish the goods and services of one business or enterprise from those of another in the marketplace.
Accordingly, trademarks are commonly used to prevent copycats, infringers and counterfeiters. In order to use and enforce trademark rights successfully, the management and implementation of overarching brand and marketing strategies encompass measured trademark consideration. As such, it is important to understand the difference between registered and unregistered trademarks, especially as it pertains to the differences in the scope of protection in Canada.
Think of it as staking your territory. Knowing the similarities and differences between registered and unregistered trademark rights is crucial when it comes to the strategic protection and enforcement of your trademark rights.
Figure 1. Registered and unregistered trademark rights provide overlapping protection. However, there are instances where one does not overlap the other. Moreover, while registered trademarks are presumed to be valid (depicted by the dotted line), the validity and scope of unregistered trademarks rights must be proven in a court of law.
Registered Trademarks under the Trade-Marks Act
Trademarks may be registered under the Canadian Trade-Marks Act. Once the application and registration processes have been completed, a registered trademark owner has the exclusive right to use his or her trademark across Canada in association with the goods and services specified in the registration for 15 years (renewable).
Figure 2. For example, McDonald's Corporation owns a number of registered trademarks, some of which include:
Each registered trademark must be used in association with specifically enumerated goods and services. For example, the word mark McDONALD'S is registered to be used in association with ready to eat hamburgers, cheeseburgers and fish sandwiches, french fried potatoes, hot coffee, fresh milk, milk shakes, hot chocolate, carbonated soft drink beverages, as well as restaurant services, namely the preparation and service of foods and beverages in drive-in establishments.
It is the responsibility of the owner to properly "use" the registered trademark in Canada under the Trade-Marks Act. The public policy rational behind this stipulation is straightforward. Because trademarks function to distinguish the goods and/or services of one merchant from another, the trademarks must be appropriately used to serve this function.
Therefore, a trademark is deemed to be used in association of goods if, at the time of the transfer of the goods, the trademark is indicated on the goods themselves or on the packaging. Similarly, a trademark is deemed to be used in association with services if it is used or displayed in the performance or advertising of those services.
When trademarks are used improperly for other purposes, they are not protectable under the Trade-Marks Act. For example, the internal use of trademarks within a company will likely not constitute "use" under the current legal framework.
The Trade-Marks Act further specifies prohibited marks that are not registrable. For example, misleading the public as to the character quality, quantity or composition, the geographical origin, or the mode of the manufacture, production or performance of the goods or services is prohibited.
Overall, registered trademark protection provides certainty and does not require costly and time consuming enforcement measures.
Unregistered Trademarks at Common Law
Unregistered trademark rights (or non-registered trademark rights) are governed by common law rather than the statutory Trade-Marks Act. On the whole, common law is formed through custom and judicial precedent rather than legislated through statutes.
Although there are no upfront costs associated with "having" unregistered trademark rights, such rights are only conferred upon the owner after use over a period of time and once it has gained sufficient goodwill or reputation. Additionally, the back-end efforts associated with enforcing an unregistered trademark are generally more costly and time consuming than those of registered trademarks.
For instance, a common law claim that protects an unregistered trademark against copycats, infringers and counterfeiters is the tort of passing off. In order to successfully assert this claim, the owner has the burden of proving in a court of law that:
- there was sufficient goodwill or reputation attached to the owner's goods and/or services in association with the unregistered trademark in the mind of the consumer;
- another trader deceived the consumer through its misrepresentation; and
- the owner suffered actual or potential damages.
Each element of the allegation must be proven on a balance of probabilities by the owner of the unregistered trademark. Reputation must be proven to the extent that it identifies the distinctiveness of the source of the goods or services.
Further, the existence of an unregistered trademark right must be proven on a regional basis, which means that protection is not automatically Canada-wide. The scope of unregistered trademark rights also depends on the amount of money spent on marketing, inherent distinctiveness and functionality of a design, acquired distinctiveness, goodwill, reputation, loss of control, market limitations and whether there may be any negative inferences drawn from intentional copying.
There are instances where unregistered trademarks provide relevant protection. For example, if a particular mark is not registrable under the Trade-Marks Act, common law trademark rights may still be a useful tool to provider limited protection. Moreover, where a registration is later found to be defective, common law trademark rights, if established, may still be used.
In certain instances, some rights granted to unregistered trademark owners at common law may be different from rights granted to registered trademark owners under the Trade-Marks Act. For example, in the landmark case between Orkin Exterminating Company (American) and Pestco (Canadian), the court ruled that the non-resident company is able to successfully obtain a remedy in a passing off action without establishing elements of use (defined under the Trade-Marks Act).
Although the demonstration of reputation without use in Canada may require considerable effort and cost, it remains possible to protect unregistered trademarks at common law, especially where there is willful copying by the infringer.
Summary Chart – Difference between Registered and Unregistered Trademarks
|Validity is presumed to exist upon the registration of a trademark with the Canadian Intellectual Property Office. Actual use of the trademark is required.||The owner must prove that there is goodwill or reputation attached to its unregistered trademark used in association with goods or services sold to consumers. Moreover, reputation must be proven to the extent that it identifies the distinctiveness of the source of the goods or services.|
Burden of Proof
|The initial burden of proof lies with the opponent when the validity of a registered trademark is challenged.||The burden of proof lies with the owner of the unregistered trademark when the validity is challenged. Generally, the process tends to be lengthy and costly.|
|The trademark registration lasts for 15 years from the date of registration and may be subsequently renewed multiple times.||The owner of the unregistered trademark must prove the length of time for which goodwill or reputation exists or has existed.|
|The region of protection under the Trade-Marks Act is Canada-wide.||An unregistered trademark may only be enforceable when the owner proves the geographic area in which it has gained goodwill or reputation.|
Goods and/or Services
|A registered trademark is presumed to be valid as long as it is used in association with the goods and/or services specified in the registration.||The owner must prove unregistered trademark rights in association with the goods and/or services sold or offered for sale.|
|The owner may allege that its registered trademark has been infringed, or may oppose the registration of a confusing trademark. The registered trademark is presumed to be valid.||The owner may allege that its unregistered trademark has been infringed, or may oppose the registration of a confusing trademark. However, the owner has the burden of establishing the scope and validity of the unregistered trademark.|
|Registration provides certainty. The registration lasts for 15 years (renewable) and provides Canada-wide protection. Once a trademark is registered, validity is presumed. Opponents have the initial burden of proof.||Passing off may protect an unregistrable mark or a registered mark that has been later invalid. In one case, an owner successfully obtained a remedy in a passing off action by establishing reputation without use when there was intentional copying by an infringer.|
|Goods and services outside the scope of the trademark registration are not protected. Owners must properly use the registered trademark.||Unregistered trademark rights may only be conferred to the owner after use over a period of time and once the mark has become gained sufficient goodwill or reputation. The owner of the unregistered trademark has the burden of proving the validity and scope of its rights when attempting to prevent copycats, infringers and counterfeiters. This process is often time consuming and costly.|
How to Decide Which Trademarks to Register
Trademark registrations will be among a business's most valuable intellectual property assets. Registering trademarks has been shown to, on average, raise firm profitability by 1.7% and firm value by 11.9%.
Yet it may not be worthwhile for a business to expend financial resources to register every trademark it will use in every jurisdiction the trademark will be used. In deciding which trademarks to register and where, the extent of use of the trademark which has occurred or will occur in that country or region and the goodwill developed or which will be developed are primary considerations. The more positive goodwill a trademark has, the more the trademark's use can be leveraged for commercial gain and the more valuable the exclusive rights conferred by a corresponding trademark registration are.
If you would like our help with developing your trademark registration strategy or to work with us to apply for a trademark registration in Canada or the United States (or elsewhere), please contact us for a complimentary and confidential initial telephone appointment.