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Government Buries Massive Trademark Overhaul in Budget Implementation Bill

It started innocuously enough with the House of Commons Committee on Industry, Science and Technology releasing its long-awaited report on intellectual property in Canada in March 2013. The report included a recommendation that Canada ratify several international patent and trademark treaties, which came as a surprise (particularly to opposition members of parliament) since no witness had raised the issue before the committee.  

Within weeks, the government accepted the recommendation and one year later it moved to ratify the treaties with scant debate or discussion. Yet the ratification of five intellectual property treaties about which few Canadians have ever heard and that seem certain to increase fees for business was only the start.

Indeed, earlier this month, the government quietly included provisions in the budget implementation bill that will radically overhaul Canadian trademark law. My weekly technology law column (Toronto Star version, homepage version) notes those changes have not been subject to any serious debate, discussion or public consultation.  

Unlike copyright and patent laws, which are focused on striking a policy balance between access and protection, the primary purpose of trademark law is consumer protection. Since consumers often rely on trademarks as an easy means of identifying a product or service (prominent examples include the Nike swoosh or McDonald’s golden arches), trademark protection helps limit confusion and potential consumer harm.

Given the link between trademarks and consumer protection, it should come as little surprise to find that a key requirement for trademark protection is “use” of the mark. If a company is not using the trademark, there is little risk of confusion and therefore no need for protection.

Legal cases dating back more than one hundred years have long emphasized the importance of use in order to properly register a trademark. A recent Supreme Court of Canada decision confirmed that “while the Trade-marks Act provides additional rights to a registered trade-mark holder than were available at common law, registration is only available once the right to the trade-mark has been established by use.”

Despite the long legal history requiring use, the Canadian government is planning to drop the need for use in order to register trademark. If the provisions in the budget implementation bill are enacted, trademarks will be available to signs (which the law says includes everything from words and names to sounds and smells) that are either used or proposed to be used.  

The trademark law community has reacted with alarm to the planned changes.

Experts note that the change may be unconstitutional because a system no longer based on use may unduly encroach on property and civil rights, which falls under provincial jurisdiction. Moreover, many believe that the changes will result in sharply increased costs for Canadian business since the reforms will create considerable legal uncertainty, likely causing a spike in challenges to proposed trademarks.  

The reforms also seem to open the door to “trademark trolls”, who could scoop up dozens of unused, proposed trademarks with plans to pressure legitimate businesses to pay up in order to release the trademarks for actual use.

With some in the intellectual property community warning that “instead of simplifying steps for businesses, the Bill proposes a much less useful Register, higher investigation costs, and shifts the onus to police over-reaching to businesses, as opposed to the Trademarks Office”, Industry Minister James Moore has surprisingly succeeded in proposing changes that are both anti-business and anti-consumer.  That may be a boon for a few lawyers, but the business community has been left wondering how trademark reforms that no one seems to have requested found their way into a budget implementation bill.

5 Comments

  1. Corruption
    “wondering how trademark reforms that no one seems to have requested found their way into a budget implementation bill.”
    It is called “lobbying” (i.e. the way politicians earn some extra money to “scrape a living”).

  2. Yes buy by who? Who would pay enough to lobbyists to get this? lawyers? Hopeful trademark trolls?

  3. purplefire says:

    This makes me angry. Watch now the Harper governement is making a new industry: trademark trolls.

    Just another way to take money away from small businesses, right?

  4. Purplefire Hit the Nail on the Head
    Trademark trolls will be drooling over this. So will trademark “squatters”.

  5. Generally I don’t read post on blogs, but I would like to say that this write-up
    very compelled me to check out and do it! Your writing style has been surprised me.
    Thanks, very nice post.

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