How will changes to Canada’s trademark laws affect your franchise?
Big changes may be coming to Canada’s trademark laws. Some of them are really good developments that will put us in step with international intellectual property law norms, others are not so good, but all of them will dramatically alter the way we view trademark protection in this country.
The changes will resonate particularly loudly for franchise businesses. If you are a franchisor, you need to understand not only how your existing trademarks are protected and rights to them enforced, but also how new trademarks will be applied for and registered. After all, these marks are your notice to the world you are doing business under them and that they are not available for use in connection with similar products and services.
If you are a franchisee, you are likely spending a lot of money to buy into a brand, and name recognition is one of the main reasons. You will want to know your franchisor has exclusive rights to those marks and that they won’t be vulnerable to modifications as a result of improper use or infringement allegations.
The federal government bill to make major amendments to Canada’s Trade-marks Act comes as Canada prepares for a likely ratification of several international intellectual property treaties, which itself was largely a step toward preparing for a Canada-European Union free trade agreement. While some of the changes are superficial and overdue (e.g. replacing the spelling of “trade-mark” with the more universal “trademark”; replacing the antiquated term “wares” with “goods”), some of the more substantive proposed changes to be aware of are as follows:
Classification of goods and services
Rather than drafting a description of goods and services in trademark applications in “ordinary commercial terms” only, Canada will adopt the Nice Classification system which divides goods and services into prescribed classes. While the predictability and consistency are welcome, it remains to be seen whether application fees will be charged on a per-class basis, as is the case in some jurisdictions, which would make Canadian trademark applications costlier.
International registration of trademarks
Currently, trademark owners in Canada need to make separate applications for their marks here and in any other country where they are seeking trademark protection. Under the new regime, Canada would keep up with international filing norms and permit applicants to file in numerous international jurisdictions simultaneously.
Eliminating the requirement a trademark be used
Currently, you can apply for a trademark in Canada on the basis of “proposed use” and have three years to demonstrate actual use before obtaining registration. The proposed changes will eliminate this “use” requirement and permit registration so long as the applicant is the party entitled to the trademark (i.e. no other confusing marks exist) and there is an intent to use the mark in the future. This will lead to all sorts of predicable and not-so-predictable issues relating to squatters of certain trademarks and domain names, and would be a terrible result for existing and future brand-owners.
The registration term would be reduced to 10 years from 15. This may weed out trademarks that have fallen out of use, but is also an acceleration of the payment of government renewal fees by five years.
The modernization of Canada’s trademark laws to better facilitate international commerce and intellectual property protection should be welcomed by the franchise industry. However, certain of these changes may be catastrophic in their implementation and enforcement and will hopefully not be enacted with the balance of the amendments.