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Important Changes Ahead for Canadian Trade-mark Prosecution, but Many Issues Remain

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Technology and Intellectual Property Bulletin

A Bill that will significantly reform trade-mark prosecution in Canada is making its way through the Canadian Parliament.
Bill C-56, the proposed "Combating Counterfeit Products Act", includes a number of provisions that make important changes to several aspects of trade-mark prosecution. The Bill includes, for example, provisions that allows registration of non-conventional marks (holograms, scents, sounds, moving marks, colour marks, etc.), that reshape the Registrar's powers to object to registration on the basis of a lack of distinctiveness,  excludes from the scope of protection utilitarian functions embodied in a trade-mark, allow the filing of certification marks on the basis of proposed use, allow the division of applications, and provide more flexibility to convention priority claims. With this Bill it has however become clear that adopting the Nice International Classification system and becoming a party to the Madrid system have not been prioritized.

Although some of these changes would bring Canada's regime more in line with United States law and practice, there remain significant differences between Canadian and American practice that make trade-mark filings in Canada a trap for the unwary.  We will address several of these differences.

Non-conventional Marks and Distinctiveness

Bill C-56 would formally open up new avenues for trade-mark protection for non-conventional marks.  Canadian Intellectual Property Office (CIPO) has already accepted registrations for sound marks and moving marks. The amendments will formalize this by changing the definition of a "trade-mark" – which would refer to a "sign or combination of signs". It will also modify the requirements for representing a mark in an application to allow more flexibility. The current act requires that for any mark that is not a word or words depicted in special form the applicant must provide a drawing of the trade-mark and a prescribed number of "accurate representations" of the mark. Bill C-56 would now require either a representation, a description, or both, that permits the trade-mark to be clearly identified. Parliament clearly has in mind a broad scope since this Bill would introduce language specifically referring to sounds, odours, tastes and textures as potential subject-matter for trade-mark protection.

This greater flexibility will, however, come at a price. Bill C-56 proposes to make significant changes to the assessment of distinctiveness. In the current practice lack of distinctiveness may only be raised in an opposition proceeding before the Registrar or in an expungement proceeding before the Federal Court of Canada, except if the mark is a shaping of wares or their containers, or a mode of wrapping or packaging the wares.  The proposed Bill would give much broader authority to Examiners to question the distinctiveness of a trade-mark and force applicants to provide evidence and argue the issue. This does not bode well for applicants given that a fair proportion of Canadian Examiners are currently prone to raising questionable objections to registration. Examiners will now have the authority to force applicants to prove the distinctiveness of the mark as of the Canadian filing date whenever their preliminary view is that the trade-mark is not inherently distinctive.  Providing such evidence will become mandatory for marks consisting exclusively of a single colour or a combination of colours without delineated contours and for marks consisting exclusively or principally of sounds, scents, tastes and textures.  Even if proof of distinctiveness is accepted, registrations will be limited to the geographical areas in which distinctiveness has been demonstrated.

The Registrar's authority to object to registration on the basis that the mark is clearly descriptive of the nature or quality of the products or services, the conditions of their production, of persons who produce them or their place of origin remains untouched.  This maintains a significant distinction between Canadian practice and that of many other countries, including the United States. A common strategy in order to register marks that incorporate clearly descriptive terms is to add a distinctive design. Courts have held that under the Canadian Act such applications may be rejected on the basis that when they are "sounded" only the clearly descriptive words are perceived. This is because the clearly descriptive character is assessed on the basis of how a mark is "depicted, written or sounded".

Utilitarian Function

The current Act does not expressly preclude the registration of functional trade-marks. For marks that are a shaping of wares or their containers, or a mode of wrapping or packaging the wares, authority is given to the Federal Court of Canada to expunge a registration if it has become "likely unreasonably to limit the development of any art or industry". The case law has nonetheless concluded that there is an implied exclusion of trade-mark protection for functional features (with some ambiguity as to the exact scope of this exclusion). Bill C-56 aims to clarify that a mark is not registrable if its features are "dictated primarily by utilitarian function" and providing that in any event a trade-mark registration does not prevent a person from using any "utilitarian feature embodied in a trade-mark".   These provisions clarify that a mark is registrable even if some of its aspects are functional. Examiners will however now have the authority to object to registration on the basis that a trade-mark is primarily functional. The language used does not appear at first blush to be limited to three-dimensional trade-marks, although it is likely that this will be a key area in which this exclusion will apply.

Certification Marks

An odd feature of the current Act is that certification marks may only be the subject of an application for registration if they are already in use. The logic may have been at the time that for there should be an existing track record so that the certification standards be properly set. The public interest in developing and protecting certification marks has pushed the Canadian Parliament to finally allow applications for registration of certification marks on the basis of an intent to use. This does not fundamentally alter this regime, but it does avoid having to apply for protection as a standard trade-mark because use had not begun in Canada at the time of filing.

Flexibility in Prosecution: Divisional Applications

This is a first step to provide more flexibility to Canadian trade-mark prosecution. Even more flexibility would be more than welcome for foreign applicants for which the meanders of Canadian trade-mark prosecution may sometimes become insufferable.

This new provision will allow an applicant to limit the original application to some of the goods and services applied for and incorporate the remaining goods and services in a new divisional application while preserving the original filing date and priority.  This may be accomplished at any time after filing and can be helpful to have an application proceed to registration if an examiner's objection or opposition targets only some goods or services. It can also allow an applicant to secure a registration on part of the goods and services while use has not yet begun on other goods and services (since in most cases use in Canada is required to secure a certificate of registration). Divisional applications may later be merged back into a single registration.

A number of irritants nevertheless remain.  Contrary to U.S. practice, it is not possible to obtain a registration solely based on a foreign registration. There must, in addition, be foreign use of the mark in association with the goods and services covered by the Canadian application. Some applicants may take this requirement lightly and end up with a registration that may be vulnerable to cancellation in whole or in part. Another complication is that under the current Act a corporate applicant must be able to show that it is either a "national' of the country where the foreign registration has been secured or that it has a real and effective industrial or commercial establishment in that country. This is similar to a limitation found in United States practice.

Another irritant is that there is no "safe" filing basis because of the rules pertaining to amendments. In U.S. practice an application based on an intent to use may be amended at any time to claim use. This is simply not possible in Canada. Moreover, in Canada the Trade-Marks Opposition Board may refuse an application if an applicant "falsely" declared that it had an "intent to use", when in fact it had already begun using the mark in Canada at the time of filing. There is really no harm suffered by the consuming public or competitors in these circumstances, so it is difficult to understand the rationale. Many foreign applications may confuse U.S. and Canadian practice and mistakenly assume that claiming an "intent to use" the mark is a conservative choice, when it may lead to a rejection of the application in Opposition proceedings.

Convention priority

There is simplification however on the horizon for Paris convention priority claims. One interpretation of the current Act is that the applicant must either be a national of the country in which the priority application was filed or has in that country a real and effective industrial or commercial establishment. There is no such requirement in U.S. practice where it suffices that the application was filed in a country that is a party to the Paris convention. Bill C-56 will clarify section 34 of the Trade-Marks Act so that Canada will adopt the same approach.

Practice before the Canadian Intellectual Property Office, Nice and Madrid

Prosecuting a trade-mark application in Canada is more often than not a painstaking process. One aspect that stands out is the insistence by Canadian examiners to have a very high degree of specificity in the statements of goods and services. In many cases the level of detail required is greater than under U.S. practice, which is perceived internationally as a demanding jurisdiction. This is a source of additional expense for applicants often for no tangible advancement of the public interest. If the Canadian government had thought it wise to adopt the Nice International Classification system perhaps this could have helped make this trend subside. It is however unlikely that such a change will be added as Bill C-56 winds its way through the Canadian Parliament.

The same applies to any hope of adopting the Madrid Protocol and Agreement. These agreements would greatly facilitate filing applications abroad and are currently a popular feature of many foreign systems, including the U.S. Bill C-56 was preceded by public consultations by the Canadian Intellectual Property Office (CIPO) during the course of which the opportunity of joining the Madrid system in particular was discussed. Concerns were expressed that the Canadian register could be flooded by foreign applicants and some trade-mark agents fear that this may reduce their workload because the Madrid system involves direct filings without using local agents. In the current state of Canadian practice, it is unlikely that most foreign applicants will be able to secure a registration without using a local trade-mark agent.

While these views have prevailed in the short term, in our view it is inevitable that in the long term Canada will see the benefit of joining the Madrid system and to adopt the Nice Classification. We should note however that one advantage for foreign filers of the current system is that the CIPO filing fee is the same regardless of the number of international classes, which means that for broad applications filing fees can be significantly lower than in the United States.

What the Future Holds

A greater simplification of the Canadian trade-mark system is long overdue. Trade-Marks are key assets locally and internationally and businesses should not be discouraged by unduly burdensome formalities. While it is always important to consider the public interest, the current Act and regulations err too far from a balanced approach.

Bill C-56 takes a modest, yet very welcome, step in the direction of simplification and international harmonization. It may be unrealistic to expect a complete overhaul of the Canadian system in a single step but pressure will continue to build towards this end.

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