The Differences between Unregistered and Registered Trademarks in Canada

Building a brand is crucial to the growth and sustained success of a business or enterprise. Accordingly, some aspects of a brand may entail valuable and protectable forms of intellectual property, namely, trademarks.

Canada recently expanded its definition of a trademark, and today a trademark can consist of any of:

• a word,
• a personal name,
• a design,
• a letter,
• a numeral,
• a colour,
• a figurative element,
• a three-dimensional shape,
• a hologram,
• a moving image,
• a mode of packaging goods,
• a sound,
• a scent,
• a taste,
• a texture,
• the positioning of a sign

or a combination thereof 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. 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 for these marks in Canada.

There is no requirement to register trademarks in Canada, however, registration creates a presumption of validity and ownership with respect to the mark and can facilitate enforcement down the line. While no official rules exist, ®, or the French equivalent “MD”, are symbols used to indicate a trademark has been registered, whereas ™ may be used in association with unregistered marks to signify ownership. Please see our dedicated article for additional information regarding the use of trademark symbols in Canada.

Since trademarks may or may not be registered, understanding 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 (also referred to as common law) 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. This can be a costly and time-consuming first step to enforce your trademark rights.

Registered Trademarks under the Trademarks Act

Trademarks may be registered under the Canadian Trademarks 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 10 years beginning on the day of registration, and for subsequent periods of 10 years each upon payment of a renewal fee prior to or shortly after the expiry of the preceding 10-year period.

One advantage of registering a trademark in Canada is that registration will block any subsequent applicants from registering a confusingly similar mark, as the Trademarks Office will cite the prior filed or registered mark against applicants who attempt to register the confusingly similar mark. As the Trademark Register is public, an applied-for or registered mark should appear in an availability search conducted by a potential applicant for a confusingly similar mark and may serve to deter this party from filing for or adopting the mark at all.

For a detailed look at the benefits of registering a trademark, see our article “11 Benefits of Registering Your Trademark in Canada”.

Figure 2. For example, McDonald's Corporation owns several registered trademarks, some of which include:

Each registered trademark must be used and is protected 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 Trademarks 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. Thus, the Apple logo is used in association with cellphones because it is featured on the back of every iPhone. 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. The McDonald’s golden arches logo is used in association with restaurant services because it is displayed on every McDonald’s restaurant.

When trademarks are used improperly for other purposes, they are not protectable under the Trademarks Act. For example, the internal use of trademarks within a company will likely not constitute "use" under the current legal framework.

It is not just any mark which may be registered under the Trademarks Act, the Act sets out several conditions for registrability. Brand owners looking to register trademarks in the future, may wish to refer to these conditions in advance to avoid investing time and energy into a brand that includes a non-registrable trademark. If your proposed trademark is descriptive of the goods or services you provide, or features the name of a person, you may want to consult the Trademarks Act or, preferably, a trademark professional, to gauge the likelihood you’ll be able to register the mark. The Trademarks Act further specifies prohibited marks that are not registrable and prohibited uses of select indications as trademarks or otherwise which might mislead 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. For example, the use of the word “champagne” in association with wine not originating from Champagne, France.

Overall, registered trademark protection provides certainty and does not require the same costly and time-consuming enforcement measures that unregistered trademarks do. That said, trademark registration isn’t free, however, the benefits of registration tend to outweigh the costs for growing businesses.

Unregistered Trademarks at Common Law

Unregistered trademark rights (or non-registered trademark rights) are governed by common law in Canada rather than the statutory Trademarks Act. Common law in Canada 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 a period of use and once the mark has acquired a certain level of 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. To successfully assert this claim, the owner has the burden of proving in a court of law that:

1. 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;
2. another trader deceived the consumer through its misrepresentation; and
3. 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. In the case of a registered mark, on the other hand, the plaintiff need not prove the validity of the mark. It is instead up to the defendant to prove its invalidity if this is alleged. The plaintiff need only show that the defendant has done or is doing something that is within the exclusive rights of the plaintiff.

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 Trademarks Act, common law trademark rights may still be a useful tool providing the mark with some albeit limited protection. Moreover, where a registration is later found to be defective, common law trademark rights, if established, may still be relied on.

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 Trademarks Act. For example, in the landmark case between Orkin Exterminating Company (American) and Pestco (Canadian), the court ruled that the non-resident company can successfully obtain a remedy in a passing off action without establishing elements of use (defined under the Trademarks 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.

Further, unregistered trademarks do not benefit from being cited against applications for marks which might be confusingly similar to the unregistered marks. A trademarks examiner reviewing an application for a trademark does not compare the applied-for mark with unregistered marks--a confusingly similar mark may therefore be allowed registration. Unregistered trademark owners will need to monitor the applied-for trademarks advertised in the Trademarks Journal to identify such marks. Should an owner of an unregistered mark take issue with an advertised mark, they may oppose the mark by filing a statement of opposition on the ground that the person is not entitled to the registration (section 16(1) of the Trademarks Act states that a person is not entitled to the registration of a mark if it is confusing with a trademark that has been previously used in Canada or made known in Canada by any other person).

Summary Chart: Differences between Registered and Unregistered Trademarks

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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. Following Canada’s recent accession to the Protocol relating to the Madrid Agreement concerning the International Registration of Marks, registering trademarks in multiple jurisdictions has been substantially simplified. Canadians can now file a single international application, pay a single set of fees, and designate numerous jurisdictions in which they would like to have their applied-for mark considered for registration. See our resource on Madrid applications for more information.

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), contact us now for a complimentary and confidential initial telephone appointment.