Trademarks and Trademark Protection.

V. Trademarks and Passing Off

LUCIE GUIBAULT

A. Introduction

1. Legislative history

Trademark protection has a long history in Canada. It commenced prior to Confederation with the passage on May 19, 1860 by the Legislative Council and Assembly of Canada of An Act respecting Trade-Marks. That Act made it a misdemeanour to use the known and accustomed trademark, name, package or device of any manufacturer with intent to deceive, so as to induce the belief that the goods so marked were manufactured by the owner of the mark. Section 2 contained a definition of fraudulent use of trademarks, names, packages, or devices, as being a use identical with or so closely resembling another trademark as to be calculated to be taken for the true trade-mark by ordinary purchasers. Provision was also made for actions by the owner of a mark for damages. Shortly after the enactment of An Act respecting Trade-Marks of 1860, the Act was repealed and replaced by the Act of 1861. The new Act broadened the definition of trademark and created the first system of registration. Section 2 defined trademarks as including all marks, names, brands, labels, packages, or other business devices adopted for the purpose of distinguishing any manufacturer, no matter how applied. A system of registration was created and it was enacted that the person registering the trademark should be entitled to its exclusive use.

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Contrary to matters concerning ‘Patents of Invention and Discovery’ and ‘Copyrights’, the Constitution Act, 1867 is silent in respect of trademarks. Legislative competence in the area of trademarks and unfair competition can just as easily fall within the provincial power over ‘Property and Civil Rights’, pursuant to s.92(13) of the Constitution Act, 1867 or within Parliament’s power over ‘Trade and Commerce’ pursuant to s. 91(2). After Confederation, however, Parliament enacted the Act of 1868, entitled the Trade Mark and Design Act. Over time Parliament’s competence over trademarks has been discussed occasionally, but was never seriously contested. Trademark protection is generally seen as being intra vires the power of Parliament since it has the power to adopt general regulation of trade affecting the whole country. This Act repealed the prior trademark legislation. It was periodically amended, until it was subsumed in the Unfair Competition Act, 1932. This Act was passed as an attempt to take a broader approach to acts of unfair competition. The Act proved unsuccessful: it had many contradictions, was difficult to interpret, and resulted in some unforeseen complications in jurisprudence. The Unfair Competition Act remained in force for just over twenty years, when it was replaced by the Trade Marks Act, 1953. For more than sixty years, the Trade-marks Act [r.s.c. 1985, c. P-4] remained relatively unchanged since its passage in 1953. During this period, the only international convention to which Canada was a party in the field of trademark law was the Paris Convention of 1883. It allowed Canada to maintain a number of particular features of its trademark registration system, some of which were inspired from the U.S. system, like the use-based registration. Starting in 2014, the Canadian government passed a flurries of amendments to the Trademarks Act. Some of these were rendered necessary as a consequence of Canada’s decision to (finally!) accede to international treaties in the area of trademark protection, while others were required as measures of implementation of the trade agreements signed with South Korea, the European Union, and the

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United States and Mexico. The changes brought about a major, long overdue, overhaul of Canadian trademark law. The acts amending the Trademarks Act are the following: • • • • • • • • Bill C-8 – Combating Counterfeit Products Act [S.C. 2014, c. 32, ss. 7-57] Bill C-31 – Economic Action Plan 2014 Act, No. 1 [S.C. 2014, c. 20, ss. 317-370] ◦ Acceding to the Nice Agreement ◦ Acceding to the Singapore Treaty ◦ Acceding to the Madrid Protocol Bill C-41 – An Act to implement the Free Trade Agreement between Canada and the Republic of Korea [S.C. 2014, c. 28] Bill C-59 – Economic Action Plan 2015 Act, No. 1 [S.C. 2015, c. 36, ss. 66-72] Bill C-30 – Canada-European Union Comprehensive Economic and Trade Agreement Implementation Act, [S.C. 2017, c. 6, ss. 60-79] Bill C-79 – An Act to implement the Comprehensive and Progressive Agreement for Trans-Pacific Partnership [S.C. 2018, c. 23, ss. 17-18] Bill C-86 – Budget Implementation Act, 2018, No. 2 [S.C. 2018, c. 27, ss. 214-242] Bill C-4 – An Act to implement the Agreement between Canada, the United States of America and the United Mexican States [S.C. 2020, c. 1, ss. 108-110] The most comprehensive modifications were brought through Bill C-31, The Economic Action Plan Act 2014, No. 1, and Bill C-30 aiming to implement Comprehensive Economic and Trade Agreement (CETA). The revised Trademarks Act and Trademarks Regulations align Canadian trademark law with that of Canada’s major international trading partners including the United States and the European Union. In particular, under the new legislation, Canada adopted the standard procedures of the Singapore Treaty 504 | V. Trademarks and Passing Off

on the Law of Trademarks and the Nice Agreement concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks and ratified and implement the Madrid Protocol concerning the International Registration of Marks. Adhering to these internationally used conventions make is easier for Canadian businesses to protect their trademarks internationally and expand their businesses beyond Canada’s borders. Canadians are now able to file a single application and pay one set of fees to apply for protection in over 100 countries. Adoption of the standardised international procedures also make it easier for international companies to seek trademark protections for their businesses and marks in Canada, comparable to the mechanism put in place by the PCT in the area of patent protection. The Trademark Regulations have been modified accordingly. Both the Amended Act and the Regulations came into force on June 29, 2019. Among the most outstanding changes are the broadening of the definition of ‘sign’ for what is considered eligible for trademark registration purposes, the possibility to obtain registration on proposed marks without having to prove the use of the mark, the shortening of the term of protection from 15 to 10 years, as well as the harmonised spelling of the word ‘trademark’ (which lost its hyphen).

2. Objectives of Trademark Protection

The essential function of a trademark is to indicate the source or attest to the origin of a company’s goods or services. In other words, trademarks serve to distinguish the goods and services of one company from those of another. Trademarks contribute to a well working competitive market, by ensuring fair competition between suppliers of goods and services and guaranteeing to consumers the identity of the origin of those goods and services. In Mattel Inc. v. 3894207 Canada Inc., [2006 SCC 22 (S.C.C.) at paras.

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21-22], the Supreme Court discussed the purposes of the trademarks regime in the following words: Trademarks are something of an anomaly in intellectual property law. Unlike the patent owner or the copyright owner, the owner of a trademark is not required to provide the public with some novel benefit in exchange for the monopoly. The trademark owner, by contrast, may simply have used a common name as its “mark” to differentiate its goods from those of its competitors. Its claim to monopoly rests not on conferring a benefit on the public in the sense of patents or copyrights but on serving an important public interest in assuring consumers that they are buying from the source from whom they think they are buying and receiving the quality which they associate with that particular trademark. Trademarks thus operate as a kind of shortcut to get consumers to where they want to go, and in that way perform a key function in a market economy. Trademark law rests on principles of fair commercial dealing. It is sometimes said to hold the balance between free competition and fair competition. Fairness, of course, requires consideration of the interest of the public and other merchants and the benefits of open competition as well as the interest of the trademark owner in protecting its investment in the mark. Care must be taken not to create a zone of exclusivity and protection that overshoots the purpose of trade-mark law. Note that Canadian law protects both registered and unregistered trademarks, albeit in different degrees. Holders of registered trademarks enjoy the full protection of the Act against another’s unauthorized use of an identical or confusingly similar mark, while holders of unregistered trademarks are limited to actions in passing-off. Both registered and unregistered marks may persist for as long as there is commercial use as a trademark, but registration

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E. Concept of Use

The concept of use is the second cornerstones of trademark law, after the concept of distinctiveness. Until the legislative amendments of 2014 [proclaimed in force in 2019], trademarks could only be registered in Canada if the applicant could establish actual ‘use’ of the mark in the course of trade. This meant that no trademark was entered on the Register without evidence being brought either through affidavit or samples that the mark was actually used. This condition for registration has been abandoned, opening the door to registration of future trademarks. Even if the use of a mark no longer plays a role at the registration stage, the continued use of a mark by its owner is still a key element in the mark’s continued protection. For example, use of a trademark reinforces its distinctiveness in the eyes of the public. Use of a trademark by one undertaking can stop the registration of the same or similar mark by another, while failure to use a registered trademark opens the door to its expungement from the Register. The concept of use also underlies any infringement action under ss. 19, 20 and 22 TMA, where the examination of the use of a mark will occur from both the plaintiff’s and the defendant’s perspective. Not all forms of use qualify as a ‘use’ in the sense of the Act, however. In this section, we explore what ‘use’ entails pursuant to s.4 TMA and how such use affects who may be entitled to register the mark under s.16(1) TMA. We also discuss the concept of ‘making a mark known in Canada’, pursuant to s.5 TMA. Finally, we consider the legal consequence of the non-use of a trademark, pursuant to s.45 TMA.

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1. Use in Canada

The definition of ‘use’ laid down in s.4(1) TMA contains several elements which deserve clarification. To qualify as a use in the sense of s.4(1), a mark must be associated with goods in the context of a transfer of property or possession, in the normal course of trade. What constitutes a ‘normal course of trade’? What kind of transfer of property must take place and in whose benefit to count as a use?

When deemed to be used 4 (1) A trademark is deemed to be used in association with goods if, at the time of the transfer of the property in or possession of the goods, in the normal course of trade, it is marked on the goods themselves or on the packages in which they are distributed or it is in any other manner so associated with the goods that notice of the association is then given to the person to whom the property or possession is transferred. (2) A trademark is deemed to be used in association with services if it is used or displayed in the performance or advertising of those services. (3) A trademark that is marked in Canada on goods or on the packages in which they are contained is, when the goods are exported from Canada, deemed to be used in Canada in association with those goods.

Use of a trade mark is deemed to have occurred if, at the time property in or possession of the wares is transferred, in the normal course of trade, it is ‘marked on the wares themselves or on the packages in which they are distributed’. Would the definition

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