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Critics worried about ‘trademark trolls’ who would register copyrights they don’t intend to use, or the lack of data for potential businesses. (alexskopje/Getty Images/iStockphoto)
Critics worried about ‘trademark trolls’ who would register copyrights they don’t intend to use, or the lack of data for potential businesses. (alexskopje/Getty Images/iStockphoto)

The trouble with trademark: Rule changes spark worry Add to ...

Critics of changes to Canadian trademark law are asking the federal government to consider regulations that could soften the blow that businesses are anticipating from added costs.

The amendments to Canada’s Trademarks Act were included in the omnibus budget bill, C-31, introduced in March. The bill received royal assent in June, but will not be declared in force until the regulations are finalized, likely late next year or early in 2016.

While the changes to the Act have already been made, Industry Canada is accepting submissions on the regulations through a consultation process until Nov. 30. Business leaders are hoping that regulations could mitigate some of their concerns.

Chief among those is the removal of a requirement that people who want to register a trademark must demonstrate it is actually intended for commercial use.

In the current system in Canada, anyone wanting to register a trademark must have used it in Canada or, for non-Canadian applicants, must have a foreign registration and use somewhere else. Once the amendments to the Act come into effect, that requirement will no longer exist.

The Canadian Chamber of Commerce is just one group that has voiced objections to the change. The group is currently working on a submission as part of the consultations.

“We are concerned from a business owner’s perspective about the potential costs that are being unloaded on to businesses,” said Scott Smith, director for intellectual property and innovation policy at The Canadian Chamber of Commerce.

The fear for many is that without having to prove they are using a mark, “trademark trolls” could apply for registration – similar to what many did with domain registration for website addresses. Those trolls could effectively act as squatters, forcing legitimate businesses to either take them to court, or pay fees to either license or take over the trademark.

Trolling has been a problem in markets such as China, said Cynthia Rowden, a partner at Bereskin & Parr LLP in Toronto and an expert in trademark law. When Ms. Rowden attended a meeting of the International Trademark Association in Hong Kong this year, she asked a lawyer there about trademark trolls, and what trademarks they tend to apply for.

“The answer was very candid: ‘They’re filing your clients’ trademarks,’” she said. It is not unusual for Canadian companies trying to do business in China, for example, to run into this roadblock. She and other lawyers have raised concerns about taking away the condition of use here in Canada.

“To change the system is very substantial. And the government largely did it without consultation [before the bill was tabled],” she said. “There is a concern that if you don’t have to use a trademark, you take the brakes off the system.”

The changes have been presented as part of a process to include Canada in a number of international treaties, including the Madrid Protocol, making it easier for trademark holders to protect their trademarks across international jurisdictions. It is also being pitched as a cheaper solution for businesses, since it will be easier to apply for trademarks without a lawyer.

However, critics caution that those costs could add up elsewhere in the process. One of the benefits of restricting registrations to only trademarks in use is that the Canadian trademark database contains a more accurate reflection of real use on the marketplace. Without that level of clarity, critics say it will be more costly to examine trademarks ahead of time.

Canadian trademark law still provides for a challenge of a trademark after three years if it is not being used; but in the case of trolls, businesses, assuming they can wait that long, would have to decide between a costly legal fight and the cost of a settlement.

Industry Canada declined to comment on the concerns that have been raised. (The Canadian Intellectual Property Office, which oversees trademarks, is an agency of Industry Canada.) The ministry also did not comment on how many submissions have been filed in the consultation process.

Some stakeholders are now suggesting that the government could implement, as part of the regulations, a voluntary statement of use as an option for trademark applicants. That would help the database to remain a useful resource, and could encourage people to be more careful about what they claim.

“There are plenty of other countries who have harmonized [with international treaties] and still have a use requirement. The U.S. still requires use, and they’re quite picky about it because they’re picky about who they give a monopoly to [for use of a mark],” said Donna White, a partner at Osler, Hoskin & Harcourt LLP in Ottawa, who specializes in trademark law. “We really do feel that the change will lead to more disputes, and that’s not good for our clients. This is not good for business.”

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