November–December, 2014 Vol. 104 No. 6

TRADEMARK USE ISSUEThe Concepts of Use of a Trademark Under European Union and United States Trademark Law Tara M. Aaron and Axel Nordemann

The Balancing of Fair Use and Exclusivity—Trademark Rights Under the Chinese Trademark Law: A Third Amendment Perspective George Fu and Cathy Wu

Use of Unregistered and Registered Trademarks: The Brazilian System Elisabeth Kasznar Fekete

Proving Ownership Online . . . And Keeping It: The Internet’s Impact on Trademark Use and Coexistence Anne Gilson LaLonde and Jerome Gilson

Exploring the Boundaries of “Use” After the 2014 Amendments to the Canadian Trademarks Act Paul Tackaberry

Why Wait Three Years? Cancellation of Lanham Act Section 44(e) and 66(a) Registrations Based on Non-Use Prior to the Three-Year Statutory Period for Presumption of Abandonment Sandra Edelman

Keyword Advertising in the United States and European Community David Mayberry and Peter Brownlow

Commentary: Fluid Trademarks and Dynamic Brand Identities Lisa Pearson

Commentary: Will There Be Any Repose at This B&B? The Supreme Court Weighs Collateral Estoppel from the TTAB Jonathan E. Moskin

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The Trademark Reporter®

EDITOR’S NOTE

From time to time in the course of human events, The Trademark Reporter (TMR) publishes a theme issue. This is one such time. The theme is trademark use.

As the TMR has become increasingly international in focus in recent years, it gives us special pleasure to include in this issue articles focusing on not only United States law but also European law, Chinese law, Brazilian law, and Canadian law, as well as the unique insights and perspectives that come from comparing and contrasting the differing legal regimes. The issue includes articles addressing practical considerations arising from new methods of using trademarks in new media environments; comparing the differing legal structures (common law and use-based on the one hand and civil law and non-use-based on the other) in the United States and Europe; examining the ways in which these differing legal systems have regulated (or not) often highly controversial keyword advertising that forms the backbone of Internet commerce; describing emerging trends in China, particularly regarding what is fair use; elucidating use and registration requirements under Brazilian trademark law (including new developments there); defining trademark use and how the manner of use affects registration, enforcement, and cancellation in Canada (again including new legal developments); analyzing the leveling effects of the Internet in establishing trademark use and trademark rights under U.S. law and the consequences of non-use—namely, abandonment. How “use in commerce” is treated by the Trademark Trial and Appeal Board as distinct from the United States district courts is even at the heart of a case currently pending before the United States Supreme Court.

This summary barely scratches the surface of the use-related issues presented on these pages. On behalf of all of the editors, I hope it sparks timely and topical insights and is, of course, eminently useful. Jonathan E. Moskin Editor-in-Chief

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EXPLORING THE BOUNDARIES OF “USE” AFTER THE 2014 AMENDMENTS TO THE

CANADIAN TRADEMARKS ACT

By Paul Tackaberry∗

I. INTRODUCTION While the concept of trademark1 use is not absent from civil

law systems, its role is greatly reduced relative to common law systems such as Canada, where use of the trademark is paramount, particularly in the continued preservation of trademark rights within the country. Use is so integral to the Canadian trademark system, the Supreme Court of Canada described “use” in its 2006 decision in Mattel, Inc. v. 3894207 Canada Inc.2 as “the gravamen of trade-mark entitlement.”3 The court contrasted trademarks with patents and copyright, which are afforded protection regardless of exploitation. The Supreme Court of Canada’s 2011 decision in Masterpiece Inc. v. Alavida Lifestyles Inc.4 reinforced the significance of “use” in the country’s trademark system by underscoring the first-to-use basis of Canada’s trademark registration system,5 which was left intact after the substantial amendments to the Canadian Trademarks Act6 in 2014 (the “2014 Amendments”).7

Trademark use is ubiquitous in the Canadian Trademarks Act; it is mentioned over 150 times in 78 sections, subsections, and paragraphs dealing with registration, maintenance, opposition,

∗ Counsel, Ridout & Maybee LLP, Toronto, Associate Member, International Trademark Association. 1. “Trademark” and “trade-mark” will be used interchangeably. Prior to 2014, the Canadian system used “trade-mark” in format. 2. (2006), 49 C.P.R. (4th) 321 (S.C.C.). 3. Id. ¶ 5. 4. (2011) 92 C.P.R. (4th) 361 (S.C.C.) ¶¶ 35-38. 5. For a discussion of Masterpiece, see Paul Tackaberry, Masterpiece v. Alavida: Supreme Court of Canada Clarifies Likelihood of Confusion Test and Role of Expert Witnesses, 101 TMR 1546 (2011). 6. R.S.C., 1985, c. T-13 (the “Act”). Unless otherwise stated, all references to “Sections” and “Subsections” are references to the Act as amended by the 2014 Amendments (see note 7 infra). References to “old Sections” and “old Subsections” are references to the Act as it read immediately prior to the 2014 Amendments. 7. The 2014 Amendments were effected by Division 25 of Part 6 of Bill C-31, formally called Economic Action Plan Act, 2014, No. 1, 1st reading, March 28, 2014, 41st Parliament, 2d Session, 2013-2014. The 2014 Amendments were enacted into law on June 19, 2014. At the time of writing, the date of the coming into force of the 2014 Amendments had not yet been set; coming into force was expected to occur in late 2015 or early 2016.

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cancellation, and enforcement and has been a requirement of the Canadian courts in additional situations.

Merely conceptual intellectual property does not enjoy protection under the Canadian law. Copyright is afforded to expressions rather than ideas, and protected expressions must satisfy the fixation requirement, namely that the work for which copyright protection is sought must be in a fixed, tangible medium, such as on paper, magnetic tape, or photographic film or their digital equivalents. Patents are refused for mere scientific principles or abstract theorems; to be patentable, an invention must at the very least have utility. To be registrable, an industrial design (design patent) must be embodied in a finished article that is made by hand, tool, or machine.8 It is arguable that the requirement for use is the comparable threshold under trademark law. Because trademarks are symbols of source and/or quality, they do not exist in the abstract, but only in the marketplace (that is, as a result of use in Canada or, in the case of former Subsection 16(2), outside Canada).

This article initially discusses the definition of trademark use, as well as the manner in which use affects registration, enforcement, and cancellation, both before and after the 2014 Amendments. Subsequently, this article considers four developing areas of trademark use, namely: (1) applications filed prior to the 2014 Amendments coming into force based on use and registration abroad (former Subsection 16(2)) when the use abroad commenced after the original Canadian filing date; (2) use in association with primary services as a result of use in association with ancillary services; (3) use on services in Canada as a result of activities conducted outside Canada; and (4) the impact that Canada’s adherence to the Madrid Protocol—which appears imminent at the time of writing9—will have on the treatment of trademark “use” under Canadian law. In his 2010 decision in Diamant Elinor Inc. v. 88766 Canada Inc.,10 Justice Shore of the Federal Court noted that “the concept of use is crucial in Canadian trade-mark law: it gives rise to ownership of the mark. It is through use that rights to 8. Industrial Design Act (R.S.C., 1985, c. I-9), Section 3. 9. On January 27, 2014, the Canadian government tabled the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks, the Singapore Treaty 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, which is the first step toward implementation. After the 2014 Amendments come into force, for the first-time applicants in Canada will be required to group goods and services according to Nice. The Madrid Protocol aims to strike a balance between civil law and common law approaches. Section 65 authorizes the new, yet-to-be-published Trademark Regulations to carry into effect the Madrid Protocol and the Singapore Treaty. Implementation of the Madrid Protocol is addressed in Part 2 of the Canadian Intellectual Property Office’s discussion document entitled Proposed Amendments to the Trade-marks Regulations 2014 (see note 32, infra). 10. (2010), 90 C.P.R. (4th) 428 (F.C.).

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a mark are obtained and preserved against third parties.”11 After the 2014 Amendments, this statement is not entirely accurate, as it is now possible to obtain a registration, and keep it in place for at least three years, without any trademark use.12

II. STATUTORY DEFINITIONS OF USE In the Canadian Trademarks Act, “use” has two distinct

meanings.13 In Section 2, “trademark” is defined as “a mark that is used by a person for the purpose of distinguishing or so as to distinguish goods or services manufactured, sold, leased, hired or performed by him [that person] from those manufactured, sold, leased, hired or performed by others.” Section 4 describes the type of activities that constitute use of a trademark in association with goods (Subsection 4(1)14) and services (Subsection 4(2)15). The practical effect of Section 4 is that in order for a trademark to be “used” on goods, it must be affixed to the goods themselves or the packaging, or otherwise associated with the goods when the purchaser takes possession of the goods. Examples of use that is otherwise associated with the goods include use on invoices or other documentation accompanying the goods, or on point of purchase materials displayed in proximity to the goods at the time of purchase. Use in an advertisement does not constitute “use” for goods, but it does constitute “use” for services even if the services are not actually provided,16 assuming the trademark owner is willing and able to provide the services at the time of advertisement. There is also use if the mark is displayed in the performance of the services.17 The bulk of the jurisprudence that considers “use” focuses on Section 4 use as opposed to Section 2 use.

Subsection 4(1) requires that use of a trademark in association with goods be “in the normal course of trade.” It is incumbent on 11. Id. ¶ 1. 12. Subsections 30(1) and 45(1). 13. The distinction between Section 2 use and Section 4 use is discussed in detail in Clairol International Corp. v. Thomas Supply & Equipment Co. Ltd. (1968), 55 C.P.R. 176 (Ex. Ct. C.) 189-193. 14. Subsection 4(1) states “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.” Subsection 4(3) states “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.” 15. Subsection 4(2) states “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.” 16. Subsection 4(2). 17. Id.

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the party attempting to establish use to explain the normal course of trade for the goods in issue.18 For example, the normal course of trade might involve the sale of manufactured goods to distributors who then sell the goods to retailers from whom end users purchase the goods. In such circumstances, a sale by the trademark owner’s office manager to his sister would not constitute use in the normal course of trade for goods typically sold in retail stores.

The Act distinguishes between (1) “use” and “making known”; and (2) “use” and “adoption.” Generally, making known occurs when a mark becomes well known in Canada as the result of the mere distribution of goods in Canada or advertisement outside Canada. Section 519 sets out the basic requirements for establishing that a mark has been made known.20 A trademark is deemed to have been “adopted” when the mark is used or made known in Canada or when an application for its registration is filed in Canada.21 Subparagraph 9(1)(n)(iii) grants protection to official marks that have been “adopted and used” by a public authority.22

“Use” has a significant impact on all aspects of trademark registration, maintenance, and enforcement, which will be discussed, in turn, below. “Use” is also a factor in assessing the

18. Institut National des Appellations d’Origine des Vins et Eaux-De-Vie v. Registrar (1983), 71 C.P.R. (2d) 1 (F.C.T.D.) 4-5. 19. Section 5 states “A trademark is deemed to be made known in Canada by a person only if it is used by that person in a country of the Union, other than Canada, in association with goods or services, and

(a) the goods are distributed in association with it in Canada, or (b) the goods or services are advertised in association with it in

(i) any printed publication circulated in Canada in the ordinary course of commerce among potential dealers in or users of the goods or services, or

(ii) radio broadcasts ordinarily received in Canada by potential dealers in or users of the goods or services,

and it has become well known in Canada by reason of the distribution or advertising.” 20. A full discussion of making known is beyond the scope of this article. Suffice it to say that the jurisprudence sets the bar quite high. For example, in Robert C. Wian Enterprises, Inc. v. Mady (1965), 46 C.P.R. 147, the Exchequer Court of Canada concluded it was insufficient if the mark had been made known in a local area; rather, the mark must have become well known across Canada such that knowledge of the mark pervades the country to a substantial extent. In Valle’s Steak House v. Tessier (1980), 49 C.P.R. (2d) 218, the Federal Court, Trial Division, considered it sufficient if the mark had been made known within the province of Quebec. The evidence required to establish making known in a substantial part of Canada can be significant. 21. Section 3. 22. Because official marks are not trademarks, the meaning of “adopted” in the context of Subparagraph 9(1)(n)(iii) is unclear. The Federal Court has found that the adoption and use of an official mark requires some form of public display; internal discussion and memoranda is insufficient. See You In–Canadian Athletes Fund Corp. v. Canadian Olympic Committee (2007), 57 C.P.R. (4th) 287 (F.C.) ¶¶ 47-49, aff’d, (2008), 65 C.P.R. (4th) 421 (F.C.A.).

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likelihood of confusion between two marks,23 an issue that arises in various aspects of registration and enforcement. The more a trademark has been used, the broader its ambit of protection. In today’s marketplace, it is common for trademarks to be used by related companies, distributors, franchisees, and licensees. The courts and Trademarks Opposition Board (the “Board”) are frequently asked to consider whether such use complies with Section 50 of the Act. Bearing in mind the many ways in which “use” affects trademark rights in Canada, every Canadian trademark practitioner must develop a thorough understanding of its treatment by the jurisprudence.

III. REGISTRATION In Masterpiece,24 the Supreme Court of Canada explained the

importance of “use” in the context of trademark registration. The Court noted that, at common law, trademark rights arise as a consequence of use. Accordingly, “registration itself does not confer priority of title to a trade-mark.”25 At common law, it was use of a trademark that conferred the exclusive right to the mark. There are additional rights arising from a registration over and above those provided by the common law; however, as stated by the Supreme Court of Canada back in 1886, “[i]t is not the registration that makes the party proprietor of a trade mark; he must be proprietor before he can register.”26 These long-standing tenets of Canadian trademark law have been altered somewhat by the 2014 Amendments that now allow a trademark registration to be obtained and maintained for three years without any use of the mark.27

A. Bases of Application Before 2014 Amendments Prior to the 2014 amendments to the Act, the most common

bases for a Canadian trademark application were: (1) use in Canada prior to the filing of the application (old Subsection 16(1)); (2) use and registration in the applicant’s country of origin, which must have been a Paris Convention country (old Subsection 16(2)); 23. Subsection 6(5) states, in part, “In determining whether trademarks or trade names are confusing, the court or the Registrar, as the case may be, shall have regard to all the surrounding circumstances including

(a) the inherent distinctiveness of the trademarks or trade names and the extent to which they have become known;

(b) the length of time the trademarks or trade names have been in use . . .”. [emphasis added]

24. See supra note 4. 25. Id. ¶ 35. 26. Partlo v. Todd (1888), 17 S.C.R. 196, 200. 27. Subsections 30(1) and 45(1).

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and (3) proposed use in Canada (old Subsection 16(3)).28 It will be noted that all of the bases of application were rooted in use in one way or another.

Applications based on proposed use had to contain a statement that the applicant, by itself and/or through a licensee, had a bona fide intention to use the trademark in Canada.29 Before an application based on proposed use could proceed to registration, a declaration of use had to be filed.30 It was not necessary to file specimens of use.31 An application could not be amended from one not alleging prior use to one alleging use.32 After publication in the Trademarks Journal, an application based on actual use could not be amended to claim proposed use.33 If an applicant filed a false declaration of use (i.e., the mark was not in use when the declaration was filed), the resulting registration could be declared void ab initio;34 neither fraud nor intent to deceive was a necessary element.35

When an application was based on actual use in Canada, a date of first use had to be provided.36 Use had to be continuous from the alleged first use date to the date of filing.37 No specimens

28. These bases could be combined in one application. For example, an application could claim prior use in association with certain goods and proposed use in association with other goods (but not the same goods). Also, the same goods or services could form the basis of a proposed (or actual) use claim and a claim based on use and registration abroad. 29. Old Subsection 30(e). 30. Old Subsection 40(2). 31. If, at the time of allowance, the mark had been used on only some of the goods/services in the application as originally filed, the applicant had two choices: (1) submit a declaration of use for the used goods/services and drop the application for the unused goods/services; or (2) request an extension of time to file the declaration of use in the expectation that the unused goods/services will be used before the new deadline. Generally speaking, the deadline could be extended for three years after allowance, six months at a time. 32. Trademarks Regulations, SOR/96-195 (“Old Regulations”), Subsection 31(d). At the time of writing, the regulations that were to replace the Old Regulations (“New Regulations”) had not been published. On October 1, 2014, the Canadian Intellectual Property Office published a discussion document entitled Proposed Amendments to the Trade-marks Regulations 2014, which is available at http://www.cipo.ic.gc.ca/eic/site/cipointernet-internetopic.nsf/eng/h_wr03851.html. The discussion document is confined to procedural and technical issues. 33. Old Regulations, Subsection 32(c). 34. Marchands Ro-Na Inc. v. Tefal S.A. (1981), 55 C.P.R. (2d) 27 (F.C.T.D.). 35. Unitel Communications Inc. v. Bell Canada (1995), 61 C.P.R. (3d) 12 (F.C.T.D.). 36. Prior to the coming into force of the 2014 Amendments, old Subsection 30(b) stated “An applicant . . . shall file with the Registrar an application containing[,] in the case of a trade-mark that has been used in Canada, the date from which the applicant . . . [has] so used the trademark in association with each of the general classes of wares or services described in the application.” 37. In Corporativo de Marcas GJB v. Bacardi (2014 FC 323), a three-and-a-half–year gap in use formed the basis of a successful opposition based on non-compliance with old Subsection 30(b).

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of use were required. Detailed rules governed when the date of first use could be amended.38 Unlike in the United States, a proposed use application could be opposed on the basis that the mark was actually in use in Canada when the application was filed.39 An application could also be opposed on the basis that the applicant did not use the mark from the date of first use alleged in the application. Similarly, a registration based on an incorrect date of first use was vulnerable to cancellation.40 It was permitted to allege a date of first use more recent than the actual date of first use.41 Because of these complex rules, it was important that an applicant accurately ascertained the actual date of first use (if any) prior to filing, and reflected that date in the application.

Applications based on use and registration in the applicant’s country of origin (old Subsection 16(2)) needed only to provide particulars of the foreign registration (or application, if the registration had not issued) and assert use of the mark abroad.42 Again, no specimens of use were required. Prior to publication in the Trademarks Journal, an application could be amended to claim use and registration abroad.43 As discussed below in Part VI.A, it was unclear whether the use abroad must have commenced prior to the original Canadian filing date when the use and registration abroad claim was added after filing.

These bases of application have been replaced with a single basis: proposed or actual use in Canada. Nevertheless, the complex requirements for asserting use in place prior to the 2014 Amendments will remain relevant with respect to applications that are published before the 2014 Amendments come into force, with one notable exception: no Declaration of Use will be required

38. For example, under Subsection 31(c) of the Old Regulations, an application could not be amended to allege an earlier date of first use, except with the Registrar’s permission. Under Subsection 32(b) of the Old Regulations, after publication in the Trademarks Journal, the date of first use could not be amended in any way. 39. Craft Paints Ltd. v. Du-Chem Paint Co. (1969), 62 CPR 283 (T.M.O.B.); Nabisco Brands Ltd v. Cuda Consolidated Inc. (1997), 81 CPR (3d) 537 (T.M.O.B.). 40. Rainsoft Water Conditioning Co. v. Rainsoft (Regina) Ltd. (1987), 14 C.P.R. (3d) 267 (F.C.T.D.). 41. Marineland Inc. v. Marine Wonderland and Animal Park Ltd. (1974), 16 C.P.R. (2d) 97 (F.C.T.D.). 42. Prior to the coming into force of the 2014 amendments, old Subsection 30(d) stated “An applicant for the registration of a trademark shall file with the Registrar an application containing[,] in the case of a trademark that is the subject in or for another country of the Union of a registration or an application for registration by the applicant . . . on which the applicant bases the applicant’s right to registration, particulars of the application or registration and, if the trademark has neither been used in Canada nor made known in Canada, the name of a country in which the trademark has been used by the applicant . . . in association with each of the general classes of goods or services described in the application.” 43. Old Regulations, Subsection 32(d).

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for such applications based on proposed use.44 During the two months following the coming into force of the 2014 Amendments, such applications may be opposed on the old bases, for example, an incorrect date of first use or actual use when proposed use was alleged.45 Moreover, all registrations issued under the old law (including registrations to issue from applications that are published before the 2014 Amendments come into force) will continue to be vulnerable to cancellation on the basis of material misstatements in violation of the old law.46

B. New Simplified Basis of Application As a result of the 2014 Amendments, the Canadian application

process has been drastically simplified. Canada has now adopted an approach similar to the Office for Harmonization in the Internal Market (OHIM),47 Australia,48 New Zealand,49 and many other countries; applicants in Canada no longer need to specify a date of first use, or even state whether the trademark has been used in Canada. Moreover, it is no longer necessary to file a Declaration of Use prior to the issuance of a registration, even for applications filed before the coming into force of the 2014 Amendments. Once the 2014 Amendments come into force, a person may file a trademark application if they are “using or propose to use, and are entitled to use, the trademark in Canada.”50

Nevertheless, the Supreme Court of Canada’s statement in Masterpiece—that “the Act recognizes the right of a prior user against any application for registration based upon subsequent 44. Subsection 70(1). 45. While this is not explicitly set out in the 2014 Amendments, it follows from the transitional provisions in Section 70(a). 46. While this is not explicitly set out in the 2014 Amendments, it follows from the transitional provisions in Section 70(a). 47. International Trademark Association Country Guides, European Union, Section III.A. Filing Requirements, http://www.inta.org/CountryGuides/Pages/CountryGuides.aspx [March 2014]. 48. International Trademark Association Country Guides, Australia, Section III.A. Filing Requirements, http://www.inta.org/CountryGuides/Pages/CountryGuides.aspx [March 2014]. 49. International Trademark Association Country Guides, New Zealand, Section III.A. Filing Requirements, http://www.inta.org/CountryGuides/Pages/CountryGuides.aspx [March 2014]. 50. Subsection 30(1). Subsection 30(2) states that an application for a trademark other than a certification mark must include merely the following, which is a much shorter list than existed prior to the 2014 Amendments: a statement of goods or services in ordinary commercial terms, a representation of the trademark and “any prescribed information or statement.” The New Regulations (which had not been published at the time of writing) may proscribe such additional information or statements. The Canadian Intellectual Property Office’s discussion document entitled Proposed Amendments to the Trade-marks Regulations 2014 (see supra note 32) is silent on such “additional information or statements.”

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use”51—continues to apply. In other words, an application can be opposed, and a registration cancelled, unless incontestable under Subsection 17(2),52 on the basis of prior use of or application for a confusingly similar trademark.53 Pursuant to Subsection 17(1), such prior use must be by the opponent or applicant for cancellation, or a predecessor-in-title. The overall effect of these provisions is that the first user of a trademark is still entitled to its registration, unless Subsection 17(2) applies.54

Use comes into play in other areas of the registration process. Paragraphs 12(1)(a) and 12(1)(b) prohibit the registration of trademarks that are primarily merely the name or surname of an individual who is living or has died within the preceding thirty years or that are clearly descriptive. Under Subsection 12(3), such a trademark is nevertheless registrable if it is distinctive55 at the filing date, having regard to all the circumstances56 of the case including the length of time during which it has been used. Subsection 32(1) allows examiners to require proof of distinctiveness (which typically involves evidence of use) in other situations, such as with color, three-dimensional, and non-traditional marks and when the examiner views the applied-for mark as lacking inherent non-distinctiveness.57

51. See supra note 4, ¶ 36. 52. Subsection 17(2) states “In proceedings commenced after the expiration of five years from the date of registration of a trademark . . ., no registration shall be expunged or amended or held invalid on the ground of the previous use . . ., unless it is established that the person who adopted the registered trademark in Canada did so with knowledge of that previous use or making known.” 53. Subsection 16(1) states “Any applicant who has filed an application . . . for the registration of a registrable trademark is entitled . . . to secure its registration . . . unless at the date of filing of the application or the date of first use of the trademark in Canada, whichever is earlier, it was confusing with

(a) a trademark that had been previously used in Canada . . .; (b) a trademark in respect of which an application for registration had been

previously filed in Canada . . .; or (c) a trade name that had been previously used in Canada by any other person.”

54. Since the decision in Effigi Inc. v. Canada (2005), 41 C.P.R. (4th) 1 (F.C.A.), during examination, the Registrar assesses priority on a first-to-file basis. In other words, where two applications are filed for confusing marks, the earlier-filed application will be approved for publication even if the later-filed application claims an earlier first use date. However, in opposition proceedings, Section 16 is applied, with the effect that the prior user prevails. 55. Interestingly, the Act does not state that the mark must have become distinctive in Canada. 56. Trademark owners and practitioners await judicial interpretation of the admittedly vague phrase “having regard to all the circumstances.” 57. Subsection 32(1).

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IV. OPPOSITIONS AND CANCELLATIONS As previously mentioned, the right to register a trademark in

Canada is determined on a first-to-use basis. Therefore, an application can be opposed if a confusing mark was used in Canada prior to the earlier of (1) the date of first use of the mark being opposed; and (2) the date of filing of the application being opposed.58 A registration can be cancelled on the same basis, subject to the incontestable registration exception in Section 17(2).59 Prior to the 2014 Amendments, the relevant dates depended on the basis of the application being opposed or the registration under attack.60 These old entitlement rules will continue to apply in respect of oppositions and cancellations where the underlying application was published before the 2014 Amendments come into force.61

A trademark application can also be opposed—and a registration cancelled (under Paragraph 18(1)(b))—by establishing non-distinctiveness, typically as a result of the use of a confusingly similar mark by an entity other than the owner of the application or registration.62 A common strategy in a distinctiveness challenge is to show unlicensed use of a confusing mark. The party asserting non-distinctiveness must establish that its mark and/or a third party’s mark is known in Canada, at least to some extent―or well known in a specific area of Canada―to negate the other mark’s distinctiveness.63 Use by a single infringer can be sufficient.64 As a result, trademark use is often the focus of a distinctiveness challenge.65 58. Paragraph 38(2)(c) states that “A statement of opposition may be based on . . . the . . . ground[] that the applicant is not the person entitled to registration of the trademark,” which is a reference to Subsection 16(1), supra note 53. 59. See supra note 52 and accompanying text. 60. Where the application being opposed or registration being cancelled was based on use in Canada, the relevant date was the date of first use. Where the application or registration being cancelled was based on proposed use or use and registration abroad, the relevant date was the filing date. 61. There are scenarios where the application of the old entitlement rule would result in a different outcome from the entitlement rules in the 2014 Amendments. For example, under the old entitlement rules, when the challenged application was based solely on proposed use or use and registration abroad, the owner of the challenged application could not rely on pre-filing use. Under the new entitlement rule, such an owner could rely on its prior use. 62. Section 2 defines “distinctive” as “a trademark that actually distinguishes the goods or services in association with which it is used by its owner from the goods or services of others or is adapted so to distinguish them.” 63. Bojangles’ International, LLC v. Bojangles Café Ltd. (2006), 48 C.P.R. (4th) 427 (F.C.A.). 64. Auld Phillips Ltd. v. Suzanne’s Inc. (2005), 46 C.P.R. (4th) 81 (F.C.A.). 65. In assessing whether the non-owner’s mark is sufficiently known in Canada, the decision-maker is not restricted to Section 4 use in Canada; for example, activities outside Canada may be considered, as may activities outside Section 4.

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Canadian trademark registrations must be renewed every ten years.66 Renewal can be achieved without submitting any specimens of use or asserting ongoing use. Accordingly, it is possible to maintain a Canadian registration ad infinitum without actually using the mark.

However, an unused mark is vulnerable to cancellation on two bases: (1) summary non-use cancellation proceedings under Section 45, which are conducted before the Board; and (b) abandonment proceedings before the Federal Court under Paragraph 18(1)(c). Unless the owner can establish special circumstances that excuse the absence of use,67 a three-year period of non-use will result in the cancellation of the registration under Section 45. To establish abandonment under Paragraph 18(1))(c), an intention to abandon must be proven.68 A lengthy period of non-use may support the assumption of an intention to abandon.69 In summary, Section 45 is the less onerous (and usually less expensive) procedure for cancelling a registration.

In the course of assessing whether a mark was in use (e.g., in connection with cancellation or oppositions proceedings), the following scenarios commonly arise: (1) the mark in use differs from the mark as registered; (2) the mark is used by a licensee or related company; (3) the mark is used by a distributor. Decisions considering these issues―together with confusion cases―represent the bulk of the issues addressed in decisions of the Board and trademark decisions of the Federal Court.

A. The Mark in Use Differs from the Mark as Registered Often, trademark owners do not make their marketing

decisions based on the trademarks they have registered. They can quickly forget their lawyers’ advice to use their trademarks as registered. So when it comes time to respond to a non-use challenge under Section 45, the marks appearing on labels and advertisements during the relevant period may differ from the marks as registered. The Federal Court of Appeal’s 1985 decision in Registrar of Trade Marks v. Compagnie Internationale Pour L’informatique CII Honeywell Bull, Societe Anonyme70 is the leading case on the distinction between permissible and impermissible deviations in use:

The practical test to be applied in order to resolve a case of this nature is to compare the trade mark as it is registered

66. The 2014 Amendments reduced this term from fifteen years. 67. See Subsection 45(3). Generally speaking, excusable non-use must be beyond the owner’s control. The jurisprudence has set the bar quite high. 68. Dastous v. Matthews-Wells Co. Ltd. (1949), 12 C.P.R. 1 (S.C.C.). 69. J.A. & M. Cote Limitée v. B.F. Goodrich Co. (1949), 14 C.P.R. 33 (Ex. Ct. C.). 70. (1985), 4 C.P.R. (3d) 523 (F.C.A.).

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with the trade mark as it is used and determine whether the differences between these two marks are so unimportant that an unaware purchaser would be likely to infer that both, in spite of their differences, identify goods having the same origin.71

Applying this test, the court concluded that use of the composite mark CII HONEYWELL BULL did not constitute use of use the registered mark BULL. The “deviations in use” issue is not confined to summary non-use cancellation proceedings; it can arise whenever a party is trying to establish use of a particular trademark.

For example, an application may be opposed based on prior use of a confusing mark. The opponent may want to argue that a particularly similar component of a composite mark was in use thereby lowering the bar for establishing likelihood of confusion. Where composite marks are concerned, the decision-maker will consider a number of factors, such as whether the component appears on a different line or in a different size, font, or color or whether the component is separated spatially from the other parts of the composite mark. The placement of ® and ™ symbols may be relevant. The issue also arises in the case of trademarks that are purely graphic. Applying the principle in Honeywell Bull, the Federal Court of Appeal found that the trademark shown below at the left did not constitute use of the registered mark shown at the right:72

Mark as Used Mark as Registered

B. The Mark Is Used by a Licensee or Related Company Prior to 1954, a trademark’s distinctiveness was threatened if

an entity other than the owner used the mark. In other words, it was not possible to safely license a trademark without jeopardizing the distinctiveness of the trademark and/or the validity of the registration. As a consequence, many foreign companies with Canadian subsidiaries were forced to register their trademarks in the name of their subsidiaries. When the current Act came into force in 1954, it provided for a system of registered users whereby

71. Id. at 524. 72. Promafil Canada Ltée v. Munsingwear Inc. (1992), 44 C.P.R. (3d) 59 (F.C.A.).

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a mark’s distinctiveness was not impaired by a license that was registered in the Trademarks Office. As licensing became more widespread in the 1970s and 1980s, the system became unwieldy. In 1993, the current licensing regime as stated in Section 50 replaced the registered user system. Subsection 50(1) states:

For the purposes of this Act, if an entity is licensed by or with the authority of the owner of a trademark to use the trade-mark in a country and the owner has, under the licence, direct or indirect control of the character or quality of the goods or services, then the use, advertisement or display of the trademark in that country as or in a trademark, trade name or otherwise by that entity has, and is deemed always to have had, the same effect as such a use, advertisement or display of the trademark in that country by the owner.

Subsection 50(1) applies to registered and unregistered trademarks. Pursuant to Subsection 50(2),73 if public notice of the license arrangement is given, use in accordance with Subsection 50(1) will be presumed.

Because licensed use is widespread in today’s marketplace―and because trademark use is a central issue in many trademark disputes―the courts have had many opportunities to opine on the application of Section 50, most frequently in the context of summary non-use (Section 45) cancellation proceedings. The following general principles have emerged:

• A licensing agreement may be inferred from the facts.74 • A licensing agreement need not be in writing.75 • The mere fact that there is some common control between

the owner and user is not sufficient to establish that the character or quality of the wares or services is controlled and therefore infer a Section 50 license.76 However, in certain situations, evidence of the interrelationship between the trademark owner and the user (that is, if they have the

73. Subsection 50(2) states “For the purposes of this Act, to the extent that public notice is given of the fact that the use of a trademark is a licensed use and of the identity of the owner, it shall be presumed, unless the contrary is proven, that the use is licensed by the owner of the trademark and the character or quality of the goods or services is under the control of the owner.” 74. Cushman & Wakefield, Inc. v. Wakefield Realty Corp. (2004) 35 C.P.R. (4th) 460 (F.C.) aff’d, 37 C.P.R. (4th) 212 (F.C.A.); 3082833 Nova Scotia v. Lang Michener, 2009 FC 928 (“3082833”); Lindy v. Registrar of Trade Marks (1999), 241 N.R. 362 (F.C.A.). 75. Cushman (2004) 35 C.P.R. (4th) 460 (F.C.); Wells’ Dairy, Inc. v. U L Canada Inc. (2000), 7 C.P.R. (4th) 77 (F.C.T.D.); TGI Friday’s of Minnesota, Inc. v. Registrar of Trade Marks (1999), 241 N.R. 362 (F.C.A.); 3082833, 2009 FC 928; Lindy (1999), 241 N.R. 362 (F.C.A.). 76. Cheung Kong (Holdings) Ltd. v. Living Realty Inc., [2000] 2 F.C. 501, 179 F.T.R. 16; 3082833, 2009 FC 928.

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same controlling mind) will allow a Section 50 license to be implied.77

• Evidence of control has to be adduced.78 • There are three main methods by which owners can

demonstrate control:79 (1) clearly swear to the fact that they exert the requisite control;80 (2) provide evidence that demonstrates they exert the requisite control;81 or (3) provide a copy of a license agreement that explicitly provides for the requisite control.

• The evidentiary threshold to establish a license may be lower in Section 45 proceedings.82

Spirits International B.V. v. BCF S.E.N.C.R.L.,83 a Section 45 case, is the Federal Court of Appeal’s most recent pronouncement on the application of Section 50. BCF, the party seeking to cancel Spirits’ vodka registration for MOSKOVSKAYA on the basis of non-use, argued that Spirits’ evidence did not say specifically that the user (licensee) of MOSKOVSKAYA was licensed to use the mark to make or sell vodka in Canada. However, the Court of Appeal inferred that under the license from the owner, the user (licensee) was acting as the selling agent for Canadian sales of MOSKOVSKAYA-branded vodka. It was irrelevant that Spirits’ evidence did not state the dates of the beginning or end of the license. In response to BCF’s argument that Spirits’ evidence was too vague to establish that the owner exercised sufficient control over the nature and character of the vodka sold under the MOSKOVSKAYA mark, the court characterized Spirits’ evidence as more than a bare assertion that the Section 50 control existed; rather, Spirits described the manner in which the owner exercised the required degree of control.84

77. Enterprise Rent-A-Car Co. v. Singer (1996), 66 C.P.R. (3d) 453 (F.C.T.D.) aff’d, (1998), 79 C.P.R. (3d) 45 (F.C.A.); Simpson Strong-Tie v. Peak Innovations (2007), 62 C.P.R. (4th) 390 (T.M.O.B.), aff’d, (2009) 79 C.P.R. (4th) 79 (F.C.), aff’d, (2010), 90 C.P.R. (4th) 399 (F.C.A.). 78. 3082833, 2009 FC 928. 79. Empresa Cubana Del Tabaco Trading v. Shapiro Cohen (2011), 91 C.P.R. (4th) 248 (F.C.) ¶ 84. 80. Mantha & Associés/Associates v. Central Transport Inc. (1995), 64 C.P.R. (3d) 354 (F.C.A.) ¶ 3. 81. Eclipse International Fashions Canada Inc. v. Shapiro Cohen (2005), C.P.R. (4th) 223 (F.C.A.) ¶¶ 3-6. 82. Bereskin & Parr v. Star-Kist Foods, Inc. (2004), 37 C.P.R. (4th) 188 9 (T.M.O.B.); Gowling Lafleur Henderson LLP v. Croxall, 2013 TMOB 1. 83. (2012), 101 C.P.R. (4th) 413 (F.C.A.). 84. Spirits’ evidence stated that under the license, it set the standards of character and quality of MOSKOVSKAYA-branded vodka that was sold in Canada during the relevant period, which it accomplished by delegating to related companies the conduct of periodic testing for compliance with the standards of character and quality set by Spirits.

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There remains some uncertainty regarding the requirements for compliance with Section 50, in particular where the trademark owner and user are related entities. In addition, the jurisprudence sends conflicting messages with respect to the manner in which the evidence should describe the nature of the control exercised by the owner. Clearly, written license agreements are preferable to oral arrangements. At the very least, the party asserting a license should submit evidence that: (1) the user is licensed by and with the owner’s authority to use the mark in Canada in association with the relevant goods and/or services; (2) under such license, the owner has direct and/or indirect control of the character and quality of the goods/services sold or performed by the user in association with the mark; (3) the owner establishes the quality standards to be met by the user and the owner actively ensures such standards are in fact met. On cross-examination, the party asserting a license should be prepared to tender evidence of communication of the quality standards by the owner to the user and the owner’s efforts to ensure compliance with the standard (e.g., inspection of goods or manufacturing facilities, pre-approval of advertisements). Alternatively, the user can evidence other means by which it maintains de facto control over the licensee’s use of the mark (e.g., participation in the advertisement or performance of the services).

C. The Mark Is Used by a Distributor Canadian distributors sometimes try to register the

trademarks applied to goods by their foreign manufacturers. Prior to the 2014 Amendments, Canadian distributors usually relied on their use of the mark in Canada (either by basing their application on prior use or submitting a Declaration of Use in connection with a proposed use application). In such cases, the courts routinely sided with the foreign manufacturer and refused the Canadian distributor’s application85 or cancelled its registration.86 Sometimes, the courts based their decision on a characterization of the Canadian distributors’ use as “unlawful” or a “misappropriation.” Another approach was to conclude that the Canadian distributor used the mark on behalf of the foreign manufacturer. In one case, the Canadian distributor was found to have breached the fiduciary duty it owed to the foreign manufacturer.87 In an outlying case, the Canadian distributor’s

85. Lin Trading Co. v. CBM Kabushiki Kaisha (1988), 21 C.P.R. (3d) 417 (F.C.A.); McCabe v. Yamamoto & Co. (America) Inc. (1989), 23 C.P.R. (3d) 498 (F.C.T.D.). 86. Manhattan Industries Inc. v. Princeton Manufacturing Ltd. (1971), 4 C.P.R. (2d) 6 (F.C.T.D.); Waxoyl AG v. Waxoyl Canada Ltd. (1984), 3 C.P.R. (3d) 105 (F.C.T.D.); Saxon Industries, Inc. v. Aldo Ippolito & Co. Ltd. (1982), 66 C.P.R. (2d) 79 (F.C.T.D.). 87. Uniwell Corp. v. Uniwell North America Inc. (1996), 66 C.P.R. (3d) 436 (F.C.T.D.).

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sales under its own (and not the manufacturer’s) name―to the manufacturer’s knowledge―permitted the court to conclude that the mark was distinctive of the Canadian distributor.88 As a general rule, a distributor does not “use” a trademark in the context of Section 2, that is, to indicate the distributor as the source of the goods; rather, it is usually clear from the packaging and surrounding circumstances that the distributor is not the source of the goods. It remains to be seen how the courts will deal with a distributor who registers the mark of a foreign manufacturer under the 2014 Amendments now that use of a mark is not required to achieve a trademark registration.

V. ENFORCEMENT With respect to the enforcement of trademark rights (that is,

actions for passing off, trademark infringement and depreciation of goodwill), there are two types of “use”—Section 2 use and Section 4 use—the requirements of which differ depending on the cause of action.89 The breadth of protection enjoyed by a mark depends largely on the extent to which it has been used. Substantial use can overcome inherent non-distinctiveness; eventually, a widely used mark can become “famous,” thereby extending the monopoly into other product categories.90 It is possible to enforce an unregistered trademark that has not been used in Canada, but that is the exception rather than the rule.91

A plaintiff advancing a passing-off claim must first establish that its trademark enjoys a reputation in the geographic region in which the defendant is operating. While a reputation may exist absent use of the plaintiff’s mark in Canada,92 the more common scenario is that the plaintiff establishes its reputation by tendering evidence of the use of its mark in Canada by tendering sales figures or advertising expenditures together with labels, packaging, advertisements, and promotional materials. In the Federal Court of Appeal’s 2007 decision in BMW Canada Inc. v. Nissan Canada Inc.,93 a passing-off action was dismissed for want of Section 4 use by the plaintiff. The court based this finding on the requirement in Subsection 7(b)94―the statutory embodiment of the 88. Sequa Chemicals, Inc. v. United Color and Chemicals Ltd. (1993), 53 C.P.R. (3d) 216 (F.C.A.). 89. See supra notes 13-17 and accompanying text. 90. Mattel, Inc. v. 3894207 Canada Inc. (2006), 49 C.P.R. (4th) (S.C.C.) ¶¶ 27-20. 91. See infra note 92 and accompanying text. 92. Orkin Exterminating Co. Inc. v. Pestco Co. of Canada Ltd. (1985), 5 C.P.R. (3d) 433 (Ont. C.A.); Enterprise Rent-A-Car Co. v. Singer Enterprise Car and Truck Rentals Ltd. (1998), 79 C.P.R. (3d) 45 (F.C.A.). 93. (2007), 60 C.P.R. (4th) 181 (F.C.A.). 94. Subsection 7(b) states “No person shall direct public attention to his goods, services or business in such a way as to cause or be likely to cause confusion in Canada, at the time

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common law action for passing off―that the plaintiff possess a valid and enforceable trademark, whether registered or unregistered. In the court’s view, a plaintiff must demonstrate both Section 2 use and Section 4 use of the mark upon which it bases its passing-off action.95

Subsection 7(b) says a defendant should not “direct public attention” to its goods or services in a way that causes confusion; Subsection 7(b) does not refer to “use.” Arguably, “direct public attention” covers more activities than “use” bearing in mind the technical definitions of “use” in Sections 2 and 4. None of the Supreme Court of Canada’s most recent pronouncements96 mention a requirement for Section 4 use by the plaintiff. Those cases do reiterate the well-settled principle that a plaintiff must prove it enjoys goodwill or reputation through a guise, name, or symbol that identifies the distinctiveness of a source, which is tantamount to requiring Section 2 use. Likewise there has been no requirement for Section 4 use in the foreign goodwill line of cases.97 Query whether the BMW court required Section 4 use because that action was based solely on Subsection 7(b) (as opposed to common law passing off). This explanation is unsatisfactory, however, considering the oft-repeated statement that Subsection 7(b) is the embodiment of common law passing off. If BMW is correct, a plaintiff cannot acquire a reputation in respect of its goods solely as a result of advertising (because use in advertising does not qualify as Section 4 use in association with goods), which seems unduly restrictive. If a reputation can be proven―e.g., through a properly conducted public opinion survey—the goodwill element of the passing-off action should be satisfied; it should not matter how that reputation was established, whether as a result of use outside Canada or solely through advertising.

Infringement of a registered trademark is prohibited under Section 19 and Subsection 20(1), both of which refer to “use.” Under Section 19, the owner of a registration enjoys the right to the exclusive use of the registered trademark throughout Canada in association with the goods/services specified in the registration. he commenced so to direct attention to them, between his goods, services or business and the goods, services or business of another.” 95. See supra note 93, ¶¶ 16-18. 96. Consumers Distributing Co. v. Seiko Time Canada Ltd. (1984), 1 C.P.R. (3d) 1 (S.C.C.); Ciba-Geigy Canada Ltd. v. Apotex Inc. (1992), 44 C.P.R. (3d) 289 (S.C.C.); Kirkbi AG v. Ritvik Holdings Inc. (2005), 43 C.P.R. (4th) 385 (S.C.C.). 97. See supra note 92. See also Cie Générale des Établissements Michelin-Michelin & Cie v. C.A.W.-Canada (1996), 71 C.P.R. (3d) 348 (F.C.T.D.) where Clairol was applied to dismiss an infringement claim under Section 19 and Subsection 20(1) due in part to the absence of Section 2 use by the defendant union on a website and in brochures criticizing Michelin. In Coca-Cola Ltd. v. Pardhan (1999), 85 C.P.R. (3d) 489 (F.C.A.), Coca-Cola’s infringement action against a gray goods dealer was dismissed because the defendant was not using Coca-Cola’s marks to distinguish the defendant’s goods from those of Coca-Cola.

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Subsection 20(1) extends that right to confusingly similar trademarks. The Clairol court concluded that infringement under Section 19 requires proof of the defendant’s Section 2 use and Section 4 use of a trademark that is identical to the trademark covered by the plaintiff’s registration.98 (By implication, this would also apply to infringement under Subsection 20(1), that is, where the infringing mark is confusingly similar to the plaintiff’s registered mark.) In other words, to infringe a registration for goods, the defendant must (1) use the infringing mark to distinguish its goods from the plaintiff’s goods; and (2) use the trademark on the goods or packaging or in some other manner when the purchaser takes possession of the goods (e.g., on point of purchase materials or printed matter packaged with the goods).

Accordingly, in Clairol, the defendant’s use of the plaintiff’s trademark on a color comparison chart (showing the defendant’s hair color that most closely matched each of the plaintiff’s colors) on the defendant’s packaging and point of purchase materials did not constitute Section 19 infringement because the plaintiff’s mark was used to identify the plaintiff’s products rather than the defendant’s products, resulting in the absence of Section 2 use. Whether the defendant intends the infringing use to constitute Section 2 use is irrelevant99—what matters is the message received by the public. The requirement in Clairol that a defendant makes both Section 2 use and Section 4 use in order to find Section 19 infringement applies by extension to infringement under Subsection 20(1).

The closest that Canada comes to a prohibition on trademark dilution is Subsection 22(1), which states: “No person shall use a trademark registered by another person in a manner that is likely to have the effect of depreciating the value of the goodwill attaching thereto.” Without citing any authority, the Clairol court found that the “use” in Subsection 22(1) means Section 4 use, but not Section 2 use. This aspect of the Clairol decision has been the subject of criticism, with one Federal Court judge describing it as “somewhat bizarre.”100 Nevertheless, Clairol is routinely cited, and was most notably applied by the Supreme Court of Canada in 2006.101

The practical effect of Clairol is two-fold: (1) the use of the plaintiff’s trademark in the defendant’s advertisement does not 98. See supra note 11, at 189-195. 99. Tommy Hilfiger Licensing, Inc. v. International Clothiers Inc. (2004), 32 C.P.R. (4th) 289 (F.C.A.) ¶ 40. 100. Eye Masters Ltd. v. Ross King Holdings Ltd. (1992), 44 C.P.R. (3d) 459 (F.C.T.D.) 463. 101. Veuve Clicquot Ponsardin Maison Fondée en 1772 v. Boutiques Cliquot Ltée (2006), 49 C.P.R. (4th) 401 (S.C.C.) ¶ 89. See also ITV Technologies, Inc. v. WIC Television Ltd. (2005), 38 C.P.R. (4th) 481 (F.C.A.) ¶ 55.

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violate Subsection 22(1) because use in an advertisement does not constitute Section 4 use for goods; (2) the use of the plaintiff’s trademark on the defendant’s packaging for inserts or refills for use with the plaintiff’s product (e.g., ink for printers) would satisfy the Subsection 22(1) use requirement even though it is clear that the plaintiff is not the source of the defendant’s inserts/refills. In other words, the effect of the Clairol decision is both expansive and restrictive. Otherwise permissible uses (e.g., to describe intended function) are caught by the absence of a requirement for Section 2 use in Subsection 22(1), although objectionable uses (e.g., derogatory comparisons in advertisements for goods) fall outside the purview of Section 22(1)).

VI. DEVELOPING ISSUES A. Subsection 16(2)—Registration and Use Abroad

As explained in Part III above, old Subsection 16(2) stated that a Canadian application could be based on use and registration in the applicant’s country of origin (assuming it is a Paris Convention country). By relying on Subsection 16(2), an applicant could avoid having to file a Declaration of Use in order to obtain a registration. Clearly, when a Subsection 16(2) claim was included in the application as originally filed, the mark must have been in use outside of Canada at the time the Canadian application was filed. This provided a practical problem for many foreign applicants because most countries do not require use in order to obtain a registration and applications were often filed long before use of the mark had commenced anywhere in the world. In countries with a civil law background, proof of use of a mark is required only in connection with non-use proceedings, which typically cannot be commenced sooner than three years after the registration issues. In many cases, non-use proceedings are never commenced.

An application could be amended to add a Subsection 16(2) claim up to the date of publication of the Canadian application. If examination was protracted, publication could occur years after the original filing date. It seems certain that the mark must have been in use outside Canada wherever a Subsection 16(2) claim was added. But when a Subsection 16(2) claim was added after filing, must there have been use outside Canada as of the original filing date, or as of the date the Subsection 16(2) claim was added? This question―which has been the subject of debate among Canadian trademark attorneys for many years―was very important to foreign applicants who wanted to obtain a Canadian registration without using their mark in Canada. The Registrar had avoided taking a position on the issue. The issue remains potentially relevant after the 2014 Amendments in at least two scenarios:

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(1) oppositions to applications that were published before the 2014 Amendments come into force; and (2) cancellations of registrations issued from such applications.

Some Canadian commentator’s believe the Federal Court’s 2013 decision in Thymes, LLC v. Reitmans (Canada) Ltd.102 sheds some light on the issue.103 In response to the opponent’s allegation that the applicant had not used the mark in a Paris Convention country as of the filing date of the Canadian application, Justice Manson (a former trademark attorney) said the following:

There is no doubt a proper reading of […] section [16(2)] requires that, at the time of filing the application, if an applicant relies on registration or application and use abroad pursuant to that section, there must have been use of the trade-mark at the time of the application to rely on this section as a valid basis to obtain registration in Canada. [emphasis added]

In the Thymes case, the applicant had included a Subsection 16(2) claim in the application as originally filed asserting use and registration in the United States, although there had not actually been use of the mark made in the United States as of the filing date of the Canadian application. The opponent based its opposition in part on an allegation that the mark was not in use in the United States when the Canadian application was filed. The Board agreed with the opponent and refused the application. On appeal to the Federal Court, the opponent argued that the Board erred in requiring evidence of the applicant’s use in the United States on or before to the Canadian filing date. In rejecting the opponent’s appeal and requiring proof of use of the applicant’s mark in the United States as of the filing date of the Canadian application, Justice Manson opined as follows:

It is clear that section 16(2) of the Act emphasizes that use of the mark in the country of origin of the applicant is a requirement for registration in Canada. Further, the last portion of section 16(2) of the Act, namely: “unless at the date of filing of the application in accordance with section 30”, also supports the view that both section 16 and section 30 requirements must exist and be reviewed as at the date of filing of the application.

While it is arguable that Justice Manson’s broad language could be interpreted to require use outside Canada prior to the original Canadian filing date―regardless of whether the Subsection 16(2) claim was included in the original application or added after filing―Justice Manson did not clearly state that his reasoning 102. (2013), 107 C.P.R. (4th) 319 (F.C.). 103. Canada: Significant Change in Canadian Law . . . or Perhaps Not, 68 INTA Bulletin 13 (2013).

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extended to situations when the Subsection 16(2) claim is added after filing. To the extent Justice Manson’s conclusion is found to extend beyond situations when the Subsection 16(2) claim is included in the application as originally filed, it would be obiter dicta and of no precedential value.

Justice Gleason of the Federal Court refused to apply the Thymes reasoning in her 2014 decision in Coors Brewing Company et al v. Anheuser-Busch, LLC,104 a cancellation case where the Subsection 16(2) basis was added after filing and after use of the mark abroad had commenced. Justice Gleason concluded that Thymes did not require her to cancel Anheuser-Busch’s registration simply because the mark was not in use abroad at the time of the original Canadian filing. This was because “there is no misstatement (let alone a fundamental one) that can form the basis of a ground of invalidity.”105 In other words, because the mark was in use outside Canada when the Subsection 16(2) basis was added, the statement to that effect in the amended application was accurate. Justice Gleason declined to comment on whether Thymes was correctly decided on its facts, or on whether the Thymes decision applies when the Subsection 16(2) claim was added after the original filing.

After the Thymes and Coors decisions, the following can be said with confidence: a Subsection 16(2) claim should not be included in a Canadian application unless the mark is already in use in a Paris Convention country. However, further clarification from the courts is required before it can be emphatically stated that the mark must have been in use outside Canada as of the date the Canadian application was originally filed even when the Subsection 16(2) claim is added after filing. Under the reasoning in Coors, as long as an application based on Subsection 16(2) is not opposed, the resulting registration is not vulnerable to attack simply because the mark was not in use abroad when the application was originally filed provided it was in use abroad when the Section 16(2) claim was added. This should give some comfort to foreign applicants who relied primarily on Subsection 16(2) prior to the coming into force of the 2014 Amendments.

B. Ancillary Services The courts frequently state that services are to be given a

broad interpretation. In Gesco Industries Inc. v. Sim & McBurney,106 the Federal Court of Appeal stated as follows:

104. 2014 FC 716. 105. Id. ¶ 39. For a discussion of the general principles regarding cancellation due to material misrepresentation, see the text accompanying supra notes 34, 35, & 40. 106. (2000), 9 C.P.R. (4th) 480 (F.C.A.).

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[7] The appellant submits . . . that the services referred to in subsection 4(2) must be services offered to the public independently of wares. It is said that if the services are an input to wares, then any trade-mark associated with those services must be deemed to be a trade-mark in association with the wares only. [8] We see nothing in section 4 that so restricts the services with which a trade-mark may be associated. In our respectful view, whether the services are applied to a product before it is sold or may be obtained directly at the customer’s option is not a criterion in subsection 4(2). . . . Nothing in subsection 4(2) restricts services to those that are independently offered to the public or that are not ancillary or connected with wares. [9] By contrast, under subsection 4(1), in order to be a trade-mark deemed to be used in association with wares, a number of conditions must be satisfied, i.e. whether the trade-mark is used at the time of the transfer of the property or possession of the wares, whether it is in the normal course of trade, whether it is marked on the wares or packages. Parliament did not impose such restrictions or conditions on when a trade-mark is to be deemed to be used in association with services.107 One practical effect of this broad interpretation of services is

that use of a trademark in association with certain (ancillary) services can constitute use of services in association with other (primary) services. In one case, the Federal Court maintained the registration for ORIENT-EXPRESS for “travel services, namely railway and passenger service” based on use of the mark in association with booking, reservation, and ticketing services by Canadian travel agents who acted as intermediaries between the trademark owner and the Canadian clients who wished to use the rail services.108 In another case,109 SAKS FIFTH AVENUE was used for retail department store services when mail and telephone orders for merchandise were received from Canada. It has been found that a mark was used for retail store services when the mark appeared on the owner’s website where branded goods could be purchased and where branded goods were, in fact, delivered to Canadian purchasers; the absence of physical stores in Canada did not hinder a finding of use in Canada in association with retail store services.110 In a 2012 case, the Board concluded that a mark

107. Id. ¶¶ 7-9. See also Kraft Ltd. v. Registrar of Trade Marks (1984), 1 C.P.R. (3d) 457 (F.C.T.D.). 108. Société Nationale des Chemins de Fer Français SNCF v. Venice Simplon-Orient-Express (2000), 9 C.P.R. (4th) 443 (F.C.T.D.). 109. Saks & Co. v. Registrar of Trade Marks (1989), 24 C.P.R. (3d) 49 (F.C.T.D.). 110. Law Office of Philip B. Kerr v. Face Stockholm Ltd. (2001), 16 C.P.R. (4th) 105 (T.M.O.B.).

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was used for movie theatre services (primary) when it was used in association with the operation of a concession stand (ancillary).111

TSA Stores, Inc. v. Registrar of Trade-marks112 is the most recent pronouncement from the Federal Court on the issue of ancillary services. This summary non-use cancellation case decided in 2011 involved four trademarks composed of SPORTS AUTHORITY, which were registered for retail store services featuring sporting equipment and clothing. The trademark owner conceded there were no retail stores in Canada during the relevant period. However, in connection with the owner’s over 400 stores in the United States, the owner operated a website with various buyers’ guides and the following interactive tools: Help Me Choose Gear, Shoe Finder, and Store Locator. A considerable number of Canadians visited the website. In deciding to maintain the SPORTS AUTHORITY registrations for retail store services, Justice Simpson made the following findings: (1) as long as some members of the public received a benefit from the activity, it was a service; (2) the Help Me Choose Gear and Shoe Finder services provided a significant volume of information and guidance about a vast array of products; (3) visiting these services on the website was akin to visiting a bricks and mortar store and benefiting from a discussion with a knowledgeable salesperson; (4) the Store Locator service allowed Canadians to find a nearby store in the United States; and (5) these services were of benefit to Canadians. Accordingly, even though SPORTS AUTHORITY-branded stores had not operated in Canada for many years, the court concluded that the trademarks were in use in Canada for retail store services.

The TSA case was considered―and distinguished―in the Board’s decision in Lapointe Rosenstein LLP v. West Seal Inc.,113 which, like TSA, involved non-use cancellation proceedings against a registration for retail store services where the owner operated no stores in Canada but many stores in the United States supported by a website with a store locator feature. In concluding that the mark was not in use in Canada, Board Member Bene focused on the trademark owner’s failure to ship114 any goods to Canada and the minimal level of interactivity inherent in the website. Mr. Bene was aware that the decision in TSA was not based on the shipment of goods to Canadian customers:

111. Doctor’s Associates Inc. v. American Multi-Cinema, Inc. (2012), 101 C.P.R. (4th) 253 (T.M.O.B.). 112. (2011), 91 C.P.R. (4th) 324 (F.C.). 113. (2012), 103 C.P.R. (4th) 136 (T.M.O.B.). 114. On this point, Mr. Bene relied heavily on Boutique Limité Inc. v. Limco Investments, Inc.; see infra note 129 and accompanying text.

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Although “services” are to be interpreted generously, common sense must still prevail. It would seem a fundamental aspect of “retail store services” that such services include the ability to purchase and take delivery or possession of such purchases. A customer who walks into a “brick-and-mortar” establishment in Canada, which displays various goods and has staff with whom the customer can speak to about product selection, but ultimately cannot take any purchased products with them or at least have such purchases delivered to them, has arguably not walked into a retail establishment. In a similar vein, with the exception of TSA, the jurisprudence indicates that a retailer who operates a retail website that does not offer to ship goods to Canada cannot be said to be operating a retail store service in Canada.115

Nevertheless, Mr. Bene thought he “need not go so far as to disregard the Federal Court’s decision in TSA, notwithstanding the unintended consequences such a broad interpretation of ‘use’ may have when considering the operation of websites accessible to, but not necessarily directed to, Canadians.”116 Instead, Mr. Bene rested his decision to cancel the registration on a finding that the owner’s website―in particular a Store Locator feature―failed to display the requisite degree of interactivity with the hypothetical Canadian customer.

Mr. Bene’s decision in Maillis v. Mirage Resorts Inc.117 involved summary non-use cancellation proceedings against the BELLAGIO registration for the operation of hotels and casinos. Because the owner did not operate any hotel-casinos in Canada, it relied on its website, which offered hotel and casino reservation services and provided detailed information about the casino and entertainment services. Mr. Bene rejected this argument and cancelled the registration primarily on the basis that the owner had not performed or been prepared to perform hotel services in Canada. TSA was distinguished on the basis that hotel services and retail store services are essentially different; while one can enjoy the retail experience without ever having to leave one’s home, a bricks-and-mortar presence in Canada is required for hotel services. It was said to be “contrary to common sense” to equate the ability to make hotel reservations with the operation of a hotel.

Whether goods have been delivered to Canadians was the deciding factor in MJB Marketing Inc. v. Provide Gifts Inc.,118 another summary non-use cancellation case decided by Board 115. See supra note 113, ¶ 26. 116. Id. ¶ 27. 117. (2012), 107 C.P.R. (4th) 298 (T.M.O.B.). 118. (2013), 113 C.P.R. (4th) 440 (T.M.O.B.).

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Member Bene. The mark in issue was registered for the services: computerized online retail services and mail order services in the field of gifts. Because the owner did not offer shipping outside of the United States, Mr. Bene could not conclude that the mark owner had performed mail order services in Canada during the relevant period.119 The owner’s Email Reminder service―which allowed website users to enter dates of special occasions and to receive email reminders and promotional messages regarding the purchase of a gift for the special occasion―was insufficient to maintain the registration, because it did not meet the standard set by the interactive tools in TSA.120

C. When Do Activities Outside Canada Constitute Use in Canada?

As previously discussed, a trademark can be “made known” in Canada as a result of activities conducted outside Canada. Use outside Canada can impact Canadian trademark rights in at least two other situations: (1) the “foreign goodwill” line of cases provide a basis for a passing-off action when use abroad results in the acquisition of a reputation in Canada; and (2) an application can be opposed or a registration cancelled if the mark at issue has lost its distinctiveness as a result of a confusingly similar mark becoming known to some extent, including becoming known as a result of use abroad. From the perspective of Canadian trademark practitioners, the consideration of use in Canada is far more common, being central to the registration, enforcement, and maintenance of trademarks. When will extraterritorial activities result in a finding of use in Canada?

In a sense, the Saks121 and TSA122 cases are examples of activities outside Canada amounting to use in Canada. In Saks, bricks-and-mortar retail department stores services were not provided in Canada; however, mail and telephone orders were placed by customers resident in Canada. In TSA, when Canadian residents accessed interactive website features, the trademark was used for retail store services, even though there were no retail stores in Canada. While these decisions are based on a finding that services ancillary to the primary (registered) services were provided in Canada, they do, as a practical matter, exemplify situations in which use in Canada has been established when the registered services are, in fact, provided outside Canada.

Traditionally, the courts have strictly required that the primary services be performed in Canada. In Porter v. Don The 119. Id. ¶ 28. 120. See supra note 118, ¶ 31. 121. See supra note 109. 122. See supra note 112.

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Beachcomber,123 the Exchequer Court of Canada (the predecessor of the Federal Court) held that:

“use in Canada” of a trade mark in respect of services is not established by mere advertising of the trade mark in Canada coupled with performance of the services elsewhere but requires that the services be performed in Canada and that the trade mark be used or displayed in the performance or advertising in Canada of such services.124 In Marineland,125 a trademark was not used in Canada when

Canada-based travel agents sold entrance vouchers to the owner’s theme park in Florida; as the court noted, “[f]or the customer to enjoy the [owner’s] attraction, that customer is still obliged to attend the [owner’s] premises in Florida.”126 The Board has somewhat relaxed the rule by finding use where an applicant advertises in Canada and is offering and prepared to perform the services in Canada.127 However, as recently as 2005, the Federal Court has stated that mere advertisement is insufficient; the services must be offered/performed in Canada in order for the mark to be used in Canada.128

The Federal Court of Appeal took an even more restrictive approach in Boutique Limité Inc. v. Limco Investments, Inc.129 The case involved a registration for THE LIMITED, which covered women’s clothing and retail women’s clothing store services. It was clear that the mark was not in use in Canada in association with the goods and there were no retail stores in Canada. The trademark owner submitted evidence that (1) Canadian customers regularly phoned THE LIMITED stores in the United States and placed orders for goods that were subsequently delivered to them at their home addresses in Canada; (2) the owner provided credit card services for a number of Canadian customers; and (3) a company related to the owner performed warranty and refund

123. (1966), 48 C.P.R. 280 (Ex. Ct. C.). 124. Id. at 287.

125. See supra note 41. 126. Id. at 108. 127. Wenward (Canada) Ltd. v. Dynaturf Co. (1976) 28 C.P.R. (2d) 20 (T.M.O.B.). The Wenward decision is routinely cited in Board decisions. 128. Express File Inc. v. HRB Royalty Inc. (2005), 39 C.P.R. (4th) 59 (F.C.). The Express File decision was recently applied in Unicast SA v. Asian Broadcasting Corporation Inc., [2014] F.C. 295, where Justice Noël of the Federal Court concluded that Switzerland-based Internet streaming-service provider Unicast had not used its mark in Canada (1) for broadcasting services because it was not licensed as a “broadcasting undertaking” by the Canadian Radio-television and Telecommunications Commission; or (2) for broadcasting music and radio programming by computer considering the “incredibly low number of hits actually resulted from visits [by Canadian residents] on the website by human beings and not by bots.” 129. (1998), 84 C.P.R. (3d) 164 (F.C.A.).

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services for Canadian customers. Regarding (1) and (2), because the owner failed to establish that THE LIMITED-branded goods had been delivered to Canada during the relevant period, the court was prevented from inferring that the use of a phone service had occurred in Canada or that credit had been extended on a THE LIMITED credit card. The evidence of (3) was insufficient to justify a registration for retail women’s clothing store services in Canada. The owner’s advertisements in various well-known fashion magazines were insufficient to maintain the registration for services: “[i]t has been established that advertising the trade-mark in publications which circulate in Canada does not constitute use of the trade-mark in Canada within the meaning of the Act.”130 The Boutique Limité court explained the meaning of Saks:

Saks is a case where the use of wares in Canada was conclusively found to exist. What Saks establishes is that when an owner who does not operate a store in Canada wishes to prove the use of his mark with regard to “retail department store services” he must bring before the Registrar or the judge evidence of a sufficient character so as to allow the decider to determine whether “retail department store services” are offered. We need not rule on whether Saks was correctly decided. As will be explained below, there is simply not enough evidence in this case to attract any comparison with the factual situation in Saks.131 It is not easy to reconcile the ancillary services cases discussed

in Part VI.B above with the Porter/Marineland/ Boutique Limité/Express File line of cases. It may be argued that the TSA case sets a new high-water mark for a relaxed approach to proving use of a service mark in Canada when the primary services are provided outside Canada. A trademark owner wishing to establish use of a mark in Canada when the services have not been performed in Canada should identify ancillary services that have been provided in Canada, and argue that the use of the mark for such ancillary services constitutes use of the mark for the primary services. In doing so, the owner should carefully review the tools provided on its website with a view to identifying those that may be characterized as interactive and simulating the experience of receiving the primary services. As noted in the Maillis decision, it is difficult to simulate some services (in that case, hotel services) through an online experience. Other services (e.g., retail store services) are easier to recreate through a website. Reliance on the

130. Id. ¶ 18. 131. See supra note 129, ¶ 15. In Saks, the trademark owner tendered evidence that goods bearing the mark were delivered to Canadian customers in Canada. In Boutique Limité, the evidence of delivery to Canadian customers in Canada was deficient as a result of lack of precision with regard to the dates and lack of supporting documentation.

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online simulation of services is fertile ground for trademark owners, as most businesses operate a website; the websites of larger businesses often provide interactive tools. Moreover, websites easily extend across international borders, especially in the case of United States and Canada with their overlapping language and culture.

D. Impact of Canada’s Adherence to Madrid Protocol and Singapore Treaty on Treatment of

“Use” Under Canadian Law The Protocol Relating to the Madrid Agreement Concerning

the International Registration of Marks (“Protocol”)―together with the Singapore Treaty on the Law of Trademarks (“Treaty”)―is the main system for registering trademarks in multiple jurisdictions. As of April 15, 2014, there were 91 members of the Protocol132 and 36 members of the Treaty.133 Canada is not a member of either though adherence seems imminent after the 2014 Amendments come into force. In January 2012, the Canadian Intellectual Property Office (“CIPO”) published a report entitled “Legal and Technical Implications of Canadian Adherence to the Madrid Protocol” (the “Report”).134 The acceptability of the then-current Canadian use requirements for the contents of applications was examined in Section IV of the Report. The following changes to the Act as it existed prior to the 2014 Amendments were identified in order to ensure Canadian compliance with the Protocol and the Treaty:

1. Old Subsection 30(b) would be amended so that the date of first use could be provided up to three years after allowance, before which a mere declaration of intention to use the mark would be sufficient regardless of whether the mark was in use at the time of application.

2. The basis of application under old Subsection 16(2) (use and registration abroad) would be abolished.

3. The requirement that a Declaration of Use be filed before a proposed use application may proceed to registration would be dropped.

4. As an alternative to the Section 45 summary non-use cancellation proceedings, Protocol applicants who do not file a Declaration of Actual Use within three years after registration would pay a fee and submit either (a) a

132. See http://www.wipo.int/madrid/en/members/ [August 12, 2014]. 133. See http://www.wipo.int/treaties/en/ip/singapore/ [August 12, 2014]. 134. Available at http://www.ic.gc.ca/eic/site/cipointernet-internetopic.nsf/vwapj/mcProto coleMadrid-tmMadridProtocol-eng.pdf/$file/mcProtocoleMadrid-tmMadridProtocol-eng.pdf [August 12, 2014].

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declaration that the mark is in use; or (b) a declaration establishing special circumstances justifying non-use.

As far back as 2012, when the Report was prepared, the Canadian government realized that Protocol adherence would necessitate dropping most of the use requirements in connection with the trademark registration processes, at least as far as Protocol applications are concerned. The 2014 Amendments went significantly further in that all such use requirements have been dropped for all applicants; Section 45 remains unchanged.

Clearly, the main objective of the 2014 Amendments was to prepare for Canada’s imminent adherence to the Protocol and the Treaty. Indeed, in January 27, 2014 the Canadian government tabled the Protocol, the Treaty and the Nice Agreement, which was the first step toward implementation. Section 65—enacted under the 2014 Amendments—authorizes the new, yet-to-be-published Trademark Regulations to carry into effect the Madrid Protocol and the Singapore Treaty. As a practical matter, how is the treatment of “use” under Canadian law likely to be affected by the adoption of the Protocol and the Treaty?

Even after the 2014 Amendments, “use” remains at the core of Canadian trademark doctrine. The main effect of the 2014 Amendments is to shift the requirements for asserting and proving use away from the initial application process and toward the opposition and cancellation process. Such a shift accords with the basic tenet of a conservative government such as Canada’s to limit the role of government and transfer enforcement to the private sector where possible. As a consequence, the Canadian application process—at least the initial filing—has been drastically simplified. No longer must applicants provide details regarding the prior use of their marks inside and outside Canada. The previous requirement to provide such information frequently delayed the initial filing, and complicated oppositions by requiring proof of the accuracy of the information provided.

A significant increase in oppositions and cancellations (especially summary non-use proceedings under Section 45) is expected in the years following the coming into force of the 2014 Amendments, if only because a registration can now be achieved without use of the trademark inside or outside Canada. It has been argued that such a regime will encourage trademark trolls to target Canada.135 Registrations issued before the 2014 Amendments come into effect will continue to be vulnerable to cancellation on all the old bases. The old law will also apply to

135. Brief, Bill C-31: Proposed Trademarks Legislation, tabled before the Standing Committee on Finance on April 17, 2014, available at http://www.parl.gc.ca/Content/ HOC/Committee/412/FINA/WebDoc/WD6526468/412_FINA_C-31_Briefs%5CLueHenry-e.pdf [August 12, 2014].

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oppositions to applications that are published before the 2014 Amendments come into effect.136

After the 2014 Amendments come into force, most oppositions will continue to be based on confusion with registered, pending or prior-used trademarks; to a lesser extent, oppositions will be based on descriptiveness, non-distinctiveness resulting from third-party and unlicensed use and vaguely worded goods and services. Before the 2014 Amendments, many oppositions also included allegations of non-compliance with the use requirements in Section 30 as it read prior to the 2014 Amendments, including allegations of first use (old Subsection 30(b)), use of the mark abroad (old Subsection 30(d)), bona fide intention to use the mark in Canada (old Subsection 30(e)) and a statement of entitlement to use the trademark in Canada (old Subsection 30(i)).

New Subsection 30(2) does not include provisions that correspond to old Subsections 30(b) and 30(d), which makes sense only since prior use and use and registration abroad are no longer bases of application under the 2014 Amendments. Accordingly, non-compliance with old Subsections 30(b)137 and 30(d) will be unavailable as grounds of opposition to applications that are unpublished on the date that the 2014 Amendments come into force, thereby reducing the Board’s workload. After the 2014 Amendments come into force, such grounds of opposition will still be available for published applications. When such applications issue to registration, they will be vulnerable to cancellation under the material misstatement doctrine.138

Similarly, new Subsection 30(2) does not include provisions that correspond to old Subsections 30(e) and 30(i). However, new Subsection 38(2) provides two new bases of opposition that correspond to the old Subsections 30(e) and 30(i),139 thereby 136. Because oppositions must be lodged within two months after publication, the number of vulnerable applications will be limited. 137. Old Subsection 30(b) required an applicant to provide an accurate date of first use where the application was based on prior use in Canada. New Paragraph 38(2)(e), which is discussed in greater detail in the text accompanying notes 139-142 infra, states: “A statement of opposition may be based on any of the following grounds: . . . (e) that, at the filing date of the application in Canada, the applicant was not using and did not propose to use the trademark in Canada in association with the goods or services specified in the application . . .”. The reference to “was not using” in this provision allows applicants to overcome an opposition based on Paragraph 38(2)(e) by establishing pre-filing use in Canada of the applied-for trademark, thereby rendering moot the applicant’s intention to use the mark in Canada. 138. See text accompanying supra notes 34, 35, & 40. 139. A Statement of Opposition may be based on the following grounds, among others: “that the applicant is not the person entitled to registration of the trademark” (Paragraph 38(2)(c)); “that, at the filing date of the application in Canada, the applicant was not using and did not propose to use the trademark in Canada in association with the goods or services specified in the application” (Paragraph 38(2)(e)); “that, at the filing date of the application in Canada, the applicant was not entitled to use the trademark in Canada in association with those goods or services” (Paragraph 38(2)(f)).

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facilitating the continued application of the pre-2014 jurisprudence regarding (1) the requirement in old Subsection 30(e) that a proposed use application include a statement that the applicant “intends to use the trade-mark in Canada”140 and (2) the requirement in old Subsection 30(i) that an application include a statement that the applicant “is satisfied that he is entitled to use the trade-mark in Canada in association with the wares or services described in the application.”141 This may allay some of the 140. More often than not, oppositions based on non-compliance with old Subsections 30(e) and 30(i) were summarily dismissed. The following is a sampling of cases where oppositions based on non-compliance with old Subsection 30(e) prevailed: Mueller Industries, Inc. v. Mueller International, Inc. (2009), 77 C.P.R. (4th) 354 (T.M.O.B.) (application not filed by entity that owned existing similar marks); Dollar General Merchandising, Inc. v. Steinberg (2009), 74 C.P.R. (4th) 341 (T.M.O.B.) (applicant acting simply as straw man for husband’s company); Hola, S.A. v. Pereira (2008), 72 C.P.R. (4th) 416 (T.M.O.B.) (applicant admitting mark in application not mark to be used); Toronto Dominion Bank v. e-Funds Ltd. (2008), 71 C.P.R. (4th) 22 (T.M.O.B.) (applicant admitting no intention to use mark for goods); Molson Canada 2005 v. Cardoso (2007), 64 C.P.R. (4th) 215 (T.M.O.B.) (mark in use differing from mark applied for, and user differing from applicant); Alltemp Products Co. v. Bit Holder Inc. (2007), 63 C.P.R. (4th) 112 (T.M.O.B.) (applicant intending to use mark through licensee); Intel Corporation v. Emeny (2005), 49 C.P.R. (4th) 459 (T.M.O.B.) (applicant admitting his primary intent of including long list of goods to prevent others from using mark); Beiersdorf AG v. Mitsubishi Gas Chemical Co. (2012), 110 C.P.R. (4th) 363 (T.M.O.B.) (applicant’s website showing it did not deal in products listed in application); Cellular One Group, a Partnership v. Brown (1996), 69 C.P.R. (3d) 236 (T.M.O.B.) (applicant’s company, not applicant using mark); Mirabel Fisheries Ltd. v. Hydroserre Inc. (1994), 55 C.P.R. (3d) 567 (T.M.O.B.) (name of applicant changed other than by assignment); Atlantic Queen Sea Foods Ltd. v. Frisco-Findus S.A. (1992), 44 C.P.R. (3d) 261 (T.M.O.B.) (applicant intending to use mark through licensee, registered user agreement not filed in timely manner); Canadian National Railway v. Schwauss (1991), 35 C.P.R. (3d) 90 (T.M.O.B.) (applicant was “idea man” who promoted advertising concepts, not manufacturer, distributor or retailer); Green Spot Co. v. John M. Boese Ltd. (1986), 13 C.P.R. (3d) 206 (T.M.O.B.) (applicant intending to resell opponent’s products). For a discussion of the treatment of “bona fide intention to use” under Canadian and U.S. law, see Sandra Edelman, Proving Your Bona Fides—Establishing Bona Fide Intent to Use Under the U.S. Trademark (Lanham) Act, 99 TMR 763 (2009) and Daniel R. Bereskin, Q.C., Miles J. Alexander, & Nadine Jacobson, Bona Fide Intent to Use in the United States and Canada, 100 TMR 709 (2010). See also SmithKline Beecham Corp. v. Omnisource DDS, LLC, 97 U.S.P.Q.2d 1300 (T.T.A.B. 2010). Also potentially relevant is the treatment of bad faith trademark registration by the Office for Harmonization in the Internal Market (see Guidelines for Examination in the Office for Harmonization in the Internal Market (Trade Marks and Designs) on Community Trade Marks, Part D, Cancellation, section 2 “Substantive Provisions,” available at https://oami.europa.eu/tunnel-web/secure/webdav/guest/document_library/contentPdfs/trade_marks/Guidelines/18_part_d_cancellation_section_2_substantive_provisions_en.pdf. 141. The Board has routinely relied upon Sapodilla Co Ltd v. Bristol-Myers Co (1974), 15 C.P.R. (2d) 152 (T.M.O.B.) as support for the principle that where an applicant has provided the statement required by Subsection 30(i), a ground of opposition based on non-compliance with Subsection 30(i) should succeed only in exceptional cases, such as where there is evidence of bad faith on the part of the applicant. Board decisions have repeatedly held that mere awareness of the opponent’s trademark prior to filing an application is not inconsistent with the statement the applicant is satisfied that it is entitled to use the trademark. In recent years, it has been common practice for opponents to allege non-compliance with Subsection 30(i) on the basis of prior knowledge of the opponent’s confusing mark; typically, the Board has summarily dismissed such allegations. The handful of cases in which a Subsection 30(i) ground of opposition has succeeded include: People’s Drug Mart

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concerns of the Canadian trademark practitioners who were opposed to the elimination of “use” as a prerequisite for obtaining trademark rights in Canada on the basis that the system contemplated by the 2014 Amendments “is sure to clog the Trademarks Register with speculative marks that have never been and are unlikely ever to be used in Canada or elsewhere, covering unrealistically long lists of goods and services.”142

VII. CONCLUSION The concept of trademark “use” extends to all aspects of

Canadian trademark law. For this reason, a comprehensive understanding of “use” is imperative for any Canadian trademark practitioner. Use has always been the very foundation of trademark rights under Canadian law. Before the 2014 Amendments, there were requirements for claiming use in applications and restrictions on modifying such claims after filing; applications could be opposed, and registrations could be cancelled, when “use” was improperly claimed. The abolishment in 2014 of the requirements for asserting use during the registration process has shifted proof of use to after the registration issues (typically, in Section 45 non-use cancellation proceedings). Because a registration can now be obtained and maintained for three years without any use, it is no longer accurate to say that registration is merely a formalization of rights arising out of use. That being said, use remains an ongoing requirement for validity, and a prior user is generally entitled to register a trademark as against a subsequent user/applicant.

In the real world, the mark in use in the marketplace often differs from the mark as it is registered. As a result, a body of law has developed to determine whether such deviations in use are significant or inconsequential. Trademark owners often permit others to use their marks without maintaining sufficient control, resulting in a loss of distinctiveness. This can occur when even a single infringer uses a confusing trademark to a considerable extent.

Several issues involving trademark “use” are unsettled under Canadian law. A body of law has evolved to determine whether

(B.C.) Ltd. v. Asklepios Pharmaceutical Co. (1991), 37 C.P.R. (3d) 179 (T.M.O.B.) (unregistered licensed use of applicant’s mark prior to filing date); Tower Conference Management Co. v. Canadian Exhibition Management Inc. (1989), 28 C.P.R. (3d) 428 (T.M.O.B.) (prior dealings between applicant and opponent); E. Remy Martin & Co. S.A. v. Magnet Trading Corp. (HK) Ltd. (1988), 23 C.P.R. (3d) 242 (T.M.O.B.) (use of mark would contravene Copyright Act); Canada Post Corp. v. Metromail Corp. (1997), 84 C.P.R. (3d) 511 (T.M.O.B.) (use of mark would contravene Canada Post Corporation Act); Institut National des Appellations d’Origine v. Brick Brewing Co. (1995), 66 C.P.R. (3d) 351 (T.M.O.B) (use of mark would contravene the Food and Drugs Act (R.S.C., 1985, c. F-27). 142. See supra note 135.

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deviations in use as a result of changes in the marketplace are significant or inconsequential, although there is no definitive rule, especially when dealing with trademarks that consist solely of a design. For applications based on use and registration abroad (old Subsection 16(2)), it has been unclear whether use outside Canada must have occurred as of the original filing date, even when that basis was added after filing. The 2014 Amendments have reduced the practical significance of this issue. Another area of uncertainty involves demonstrating use of a mark for primary services by evidencing use of the mark for ancillary services. In the recent TSA decision, such an approach was effective in overcoming the Federal Court’s strict requirement that the services be actually provided in Canada. As Canada prepares to join the Madrid Protocol, the requirements for asserting use during the application process have been dropped. It is anticipated that the courts will continue to require applicants to establish a bone fide intention to use their marks (for example, in opposition proceedings), perhaps based on the pre-2014 jurisprudence.

With a view to maximizing the strength and enforceability of Canadian trademark rights, owners and practitioners should consider the following best practices:

Registration • Before applying to register a trademark in Canada before

the 2014 Amendments come into force, determine whether the applicant is already using the mark in Canada and select a first use date that can be supported by evidence of such use.

• When adding a “use and registration abroad” claim prior to the coming into force of the 2014 Amendments, ensure that the mark is in use outside Canada and exercise caution if the mark was not in use outside Canada as of the original Canadian filing date.

• Before filing a new application, or before an opposition or a cancellation is lodged, assess the extent to which the 2014 Amendments apply.

Maintenance • Maintain extensive archives of trademark usage, including

sales figures, advertising/promotional expenditures, packaging, advertisements and promotional materials, and website printouts.

• Exercise caution when using a mark that deviates from the mark as registered.

• Require all users of trademarks (even related companies and corporate officers) to enter into written trademark

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license agreements that include quality-control provisions. If a license agreement does not set a quality standard, trademark owners should do so in writing. Owners should regularly inspect the quality of the licensee’s goods/services and document such inspections in writing.

• When proving use of a service mark in Canada based on activities conducted abroad, consider focusing on (1) the ancillary services that are actually provided in Canada; and (2) the interactive features of the owner’s website that have the effect of simulating the primary service.

Enforcement • When opposing a use-based application that is published

before the 2014 Amendments come into force, investigate whether the applicant’s first use date in accurate.

• When opposing a proposed use application that is published before the 2014 Amendments come into force, investigate whether the applicant’s mark was in use prior to the filing date.

• After the 2014 Amendments come into force, when opposing an application for a mark that has not been used in Canada, investigate whether an applicant has a bona fide intention to use the mark in Canada.

Depending on the cause of action (passing off, trademark infringement, or depreciation of goodwill) assess whether the infringer has used its mark under Section 2 and Section 4.