Bill C-31, which received Royal Assent in June 2014, brought about significant changes to Canadian trade-marks law. One of these changes was the introduction of the Madrid Protocol into Canada. This protocol established an international trademark registration system. These changes are expected to provide numerous benefits. However, one must also be aware of the potential challenges Canadian business owners may face as a result of this new system.
Major revisions to the Trade-mark Regulations are required before Canada can fulfill its promise to enter into this international treaty. In order to make international registration possible, Canada also acceded to the Nice Agreement and the Singapore Treaty. These treaties help to create uniformity in the application process. The Nice Agreement, in particular, requires that significant changes be made. All previously-filed marks have to be classified according to the Nice classification system, which outlines 45 classes of goods and services.
On June 6, 2016, the Canadian Intellectual Property Office ("CIPO") provided the latest update on implementation of the Madrid Protocol. This update explained the proposed fee structure for the new system. The most significant changes to the trademarks fee structure will be the merging of the filing fee and registration fee, in order to make Canada's trademark fee structure the same as nearly all Madrid Protocol member countries. Like the United States and most other Madrid Protocol member countries, Canada will be charging an extra fee per international class of goods and/or services. Further, in order to reduce unused marks in the system, the renewal period will now be every 10 years, rather than every 15 years.
Trade-mark Regulations have not changed so significantly since the 1950s. The latest update from the CIPO suggested that the office will be prepared to accept international trademark applications in early 2018.
The CIPO's position is that by participating in this international treaty, Canada will be modernizing its intellectual property system. The previous system had a reputation for being outdated, as Canada was the only developed country that had not joined the international treaty. In comparison, the United States has been a member of the international treaty since 2003.
The only way one can currently file for trademark registration in Canada, is by submitting a separate Canadian application. Similarly, Canadian businesses seeking trademark protection in other countries have to file a separate domestic application in each designated country. A European Union Trademark (formerly the Community Trademark) is one of the few exceptions.
Simplifying the process for foreign trademark owners to obtain trademarks in Canada may also have adverse effects on Canadian business owners. Canadian businesses using a common law trademark will be forced to take legal action to oppose applications by foreign companies filing under the international system. Opposing marks can be a costly process. Thus, it may be recommended for businesses currently using marks at common law to register their marks before the international system comes into effect.
The Madrid Protocol requires that trademarks offices comply with a strict 12 or 18 month objection time limit. If no objection is raised within the time limit, the mark will automatically proceed to registration. The result of this, combined with an expected increase in applications, is that prosecution of domestic applications will take longer.
Arguably one of the greatest areas of concern regarding the adoption of the Madrid Protocol is the removal of the 'use' requirement. Under the national registration system, a mark must be in use before it can be registered. With adoption of the international registration system, the 'use' requirement is expected to be removed.
Requiring only 'intention to use' rather than proof of use for registration can be problematic. It is believed that examination will be minimized if use is not required. There are concerns that this would encourage trademark "squatting" - registering trademarks just to sell them afterwards. The burden would shift to individuals and business owners to police and protect their own marks by launching costly proceedings to protect their brands. A lack of use requirement combined with a greater number of filings would likely result in an increase of traffic in the court system.
Currently, national trademark applications are rejected if the mark is confusingly similar to a previously registered trademark. Two marks are considered confusingly similar if use of both marks would lead an average consumer to believe that the two products or services come from the same source. Therefore, a trademark application will be rejected if there is a previously filed application for a mark which is the same or similar, used in association with the same kinds of goods or services.
Opposition may occur if a third-party was using a confusingly similar mark before the applicant's first use. After implementing the international registry system, removal of the use requirement will mean that applicants do not have to specify a filing basis or a date of first use. Therefore, potential opponents will have to decide whether to oppose an application for a confusingly similar mark without information on how long the applicant has been using the mark. This will complicate the opposition process and could result in incurring opposition costs, only to later find out that the applicant was first using the mark.
In order to be eligible to file internationally, an individual must be a national of or be living in a member territory, or have a real and effective commercial establishment in a member country.
Once an application is submitted through the international system, it goes through three stages before registration may be completed in all the requested territories. First, the application is reviewed by the "Office of Origin" (the office of the applicant's home territory). This first step is known as a "basic application" and it is required to ensure the application complies with the Office of Origin's filing requirements and validates the date of receipt.
Once an application passes the first stage, it is sent to the World Intellectual Property Office's International Bureau for second review. The review at this stage checks to ensure that the application meets Madrid Protocol requirements. Once it is approved by the International Bureau, the mark is registered in the International Register and published in an online Gazette.
Afterwards, a certificate of registration is issued and the "designated contracting parties" (the offices of territories where the applicant seeks protection) are notified. The final stage requires substantive review by each contracting party to ensure it complies with the requirements of that territory.
If a basic application is rejected, cancelled or withdrawn at the Office of Origin within the first five years of international registration, the entire international application will be cancelled. This has dampened the enthusiasm for using the Madrid Protocol. Failed international applications may be converted into separate national applications within three months of cancellation. This will allow the applicant to maintain any priority claimed but the applicant would be required to pay additional filing fees. Five years after the date of filing has passed, the application at the Office of Origin becomes independent from the international applications.
The Madrid Protocol will impact an individual or business's filing strategy. Filing can be done easily in multiple different territories. The use of one language and one currency greatly simplifies the process. Business owners will no longer need to convert currency, translate documents or hire agents in other countries. Everything will be done through the CIPO and can be done in either English or French.
With the international system, filing costs will vary based on the number of classes of goods or services the mark will be used in association with. Furthermore, some categories are broader under domestic systems than under the international system. Therefore, a business filing under the international system will likely have to file for a more narrow scope of protection than if the business files under the domestic system of each country.
When deciding whether to file for trademark protection separately under the national system of each territory or together under the international system, there is no strategy which is appropriate for all businesses, in all situations. For some businesses, the best strategy may be to use a combination of the two systems. Each business must weigh its need for a broad scope of protection against the needs to control the costs involved and maintain efficiency.
Implementation of the international registration system involves significant changes and there are great costs involved in order to prepare for these changes. The financial effects of implementing the international registration system were felt in the United States for many years afterwards. The expectation is that implementation of the international registration system will lead to an increase in international filings in order to make the implementation worthwhile.
In the years following implementation of the Madrid Protocol, the number of trademarks filed in the United States under the international system was significantly less than those filed under the national system. For example, in 2004, only 7,110 applications were filed under the Madrid Protocol, compared to 241,296 applications filed domestically. The number of Madrid Protocol applications filed from the United States peaked in 2013 with 17,360 applications, compared to 306,548 filed nationally.
Few businesses sell goods or provide services in multiple international countries when compared to the number of companies that conduct their business within their home country only. Companies which have benefitted from using the international filing system include Pepsico Inc, Wal-Mart Stores Inc, and Ford Motor Company. Large businesses appear to be the ones which have benefitted most from the United States' implementation of the international trademark registration system.
The overall impact of the Madrid Protocol on Canadian businesses will vary based on the size of the business and extent of their work internationally. Most businesses would likely still file for protection domestically since most Canadian businesses do not require international protection. Large companies that conduct business in many countries will benefit from the lower costs of filing trademarks and the ease by which they can file for trademark protection internationally. Nonetheless, new or small companies will still be affected as they may have difficulty responding to oppositions from multiple countries.
It will become even more important for brand owners to file for protection quickly with the new trademark filing system. Filing for trademark protection sooner rather than later can alleviate issues relating to trademark squatters. As well, this can save brand owners from launching costly opposition proceedings and challenging confusingly similar marks.