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Bulletin

Top Trademark Developments in Canada – Part I

Fasken
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Overview

Intellectual Property Bulletin

With the International Trademark Association (“INTA”) leadership meeting just around the corner, taking place on November 15 to November 19, Fasken’s Intellectual Property team presents to you the first part of a two-part bulletin discussing the top trademark developments in Canada.

1. Detention of In-Transit Counterfeit Goods at the Canadian Border: Have You Registered Your Rights?

The coming into force of the Canada-United States-Mexico Agreement (“CUSMA”) on July 1, 2020, empowered Canada Border Services Agency (“CBSA”) officials to detain in-transit commercial shipments of suspected counterfeit goods that travel through Canada to get to their final destination. To allow the CBSA to detain goods in transit, registered trademark owners must file a Request for Assistance in which they list their registered trademarks, registered or unregistered copyrights and protected geographical indications.

2. Expedited Examination Now Available at the Canadian Intellectual Property Office

Given the significant wait times at the examination stage (24-30 months for national filings), the Canadian Intellectual Property Office (“CIPO”) is now considering requests for expedited examination of trademark applications when certain criteria are met, effective since May 3, 2021. A person wanting to benefit from an expedited examination must submit an affidavit or statutory declaration in which they clearly set out that their situation corresponds to one or more of the following situations: a court action is expected or underway; they are in the process of combating counterfeit products at the Canadian border; a trademark registration is required to protect its rights on online marketplaces; or trademark registration is required to preserve priority rights in a foreign intellectual property office. Examination takes place within 10-14 days if the request is accepted.

3. Renewed Interest in Depreciation of Goodwill Claims

The legalization of cannabis in Canada has had an unintended side-effect on anti-dilution Canadian trademarks law claims. In two recent cases Subway IP LLC v Budway, Cannabis & Wellness Store2021 FC 583 and Toys “R” Us (Canada) Ltd v Herbs “R” Us Wellness Society2020 FC 682, cannabis retailers were successfully sued by owners well-known marks in the food and toy business on the basis of depreciation of goodwill for their tongue in cheek branding heavily inspired by the original brand. These cases are part of a trend of increased reliance on this remedy in litigation, which is the equivalent of the US trademark dilution claim.

4. Legal Headaches for Certain Grey Marketers in Canada

The sale of grey market goods in Canada does not, in itself, constitute trademark infringement. However, two recent cases show that importers of grey goods do not have carte blanche in Canada, and that trademark owners may have more recourses than they think against sellers of grey market goods. In TFI Foods Ltd. v. Every Green International Inc., 2021 FC 241, the Court found that a label falsely stating that the grey marketer is the exclusive distributor can constitute passing off, as the misrepresentation on the label could cause damage to the goodwill of the trademark owner. Second, interference in a contract for exclusive distributorship of branded goods may render a party liable for damages, both actual and punitive. In Costco Wholesale Canada Ltd. c. Simms Sigal & Co. Ltd., 2020 QCCA 1331, the Quebec Court of Appeal found the wholesaler Costco liable for both actual and punitive damages because it sold high-end jeans despite being informed by the exclusive distributor of these jeans of its rights in  Canada. These cases show that it may be worth taking a second look at enforcement strategies against grey marketing in Canada.

5. Objections by CIPO Due to Lack of Inherent Distinctiveness Continue to Multiply

Canadian trademark legislation underwent a major reform in June 2019 which gave Examiners the right to object to registration on the basis of lack of inherent distinctiveness. Examiners have been exercising this new power with considerable vigour since the reform, resulting in increasing numbers of preliminary rejections. Part of the reason for this vigour is the strong consideration given to whether other traders should be able, in the ordinary course of their business, to use the same trademark in association with the same goods or services, even if there is no evidence of any actual interest by other traders. Canadian practitioners must now be even more creative to surmount these objections.

 

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