Industry Committee on May 12th, 2014

[Michel Gérin, Executive Director, Intellectual Property Institute of Canada]

Thank you, Mr. Chair.

Good afternoon and thank you for inviting us to appear before you today.

My name is Michel Gérin, and I am Executive Director of the Intellectual Property Institute of Canada. With me today is Mark Eisen, one of our past presidents, who has returned to our board of directors because our former treasurer has just been appointed to the Federal Court.

The Intellectual Property Institute of Canada is the professional association for trademark agents, patent agents and intellectual property attorneys. It has over 1,700 members.

Mr. Eisen will now present our views on this bill.

[Mark Eisen, Treasurer and Past President, Intellectual Property Institute of Canada]

Thank you, Michel.

Thanks for the opportunity to speak today.

My background is as a lawyer, called in the province of Ontario in 1985. I am certified by the Law Society of Upper Canada as a specialist in intellectual property. I am a registered patent and trademark agent and have been filing and prosecuting trademark applications in the Canadian trademarks office since 1985.

We've reviewed this bill, and find it contains many positive aspects. A number of them are really quite detailed, and today's time doesn't permit me to review any in detail, but things like correction of obvious errors on the register, simplification of procedures for recording transfers of title, and so on, are all very good things.

I'm here primarily to discuss one large concern, which is abolishing the requirement that a trademark be used before a Canadian trademark registration can be granted. The concern is cluttering the register with deadwood. Primarily, the Intellectual Property Institute believes that more consultation is required and that the amendment should not proceed in a bill such as this without further consultation. However, if the amendments are going to proceed, IPIC recommends that further amendments be introduced to put safeguards in place to avoid cluttering the register with trademarks that are not in use in Canada.

Today a proposed applicant who ends up not using their trademark, and who therefore can't file a declaration of use, abandons their application. Under the proposed amendments, that trademark will be registered.

Why do we care about cluttering the trademark register?

Well, here's what a typical day looks like in my office. A client comes into my office. Their business has a new product they would like to introduce. They've selected one or a few possible trademarks for this product. The trademark they choose will be used in their promotion and in their advertising. It will be used on their packaging. They may acquire a domain name. Ultimately they're going to apply to register this trademark.

Before they do any of these things, this trademark has to be cleared. The first place we go to clear a trademark is to the Canadian trademarks register. We have professional trademark searchers who review similar trademarks in related product areas for anything that might pose a conflict. I get the results of this search, and I determine whether in fact there is a trademark in there that may be confusing. If I render a favourable opinion, the business goes ahead with the trademark. If I say, “Sorry, there's something in there that conflicts”, they go back to the drawing board and have to start again. Sometimes it takes quite a number of these searches before a business can arrive at a trademark that both satisfies their business needs and does not conflict with an existing trademark.

This gives rise to a lot of costs. There's the attendant cost of clearing the trademark, which increases with the number of trademarks on the register. That's fine if we're busy and our economy is flourishing, and all these trademarks are in use. But the proposed amendments, unfortunately, will result in a number of trademarks on the register that are not in use in Canada. In IPIC's view, this puts an unnecessary burden on Canadian businesses seeking to launch new products.

We have proposed three recommendations to reduce or alleviate this problem.

The first, which is in our submission, is to provide a definition of “propose to use”. What does an applicant mean when they say they intend to use this trademark? Does this mean “we might use it someday in Canada”, or does this mean “we have a bona fide intention to use this trademark in Canada in the imminent future”?

The second and related recommendation is just that. The applicant should be declaring their bona fide intention to use this trademark and commit to and put some teeth in what they're actually stating when they say they have that intention to use.

Finally, as a safeguard, post-registration, registrants should be required to periodically file evidence that the trademark is in fact in use in the Canadian marketplace. In the United States, they do this with what's called a section 8 declaration between the fifth and sixth anniversaries and then again at every renewal, at 10-year increments.

Those are our proposals for further implementation of legislation if these provisions are passed.

[The Chair, Conservative, David Sweet]

Thank you very much, Mr. Eisen.

We now go to Ms. Fuhrer for five minutes, please.

[Janet Fuhrer, Second Vice-President, Canadian Bar Association]

Mr. Chair, honourable members, we thank you for the invitation to speak with you today.

The Canadian Bar Association is a national association of 37,500 lawyers, notaries, law teachers, and students. Many of our members are in-house counsel who represent significant stakeholders in the intellectual property system. The CBA national intellectual property law section deals with law and practice relating to all aspects of ownership, licensing, and transfer and protection of intellectual property.

Canadian trademark law is respected internationally as effective in protecting the rights of trademark owners. A fundamental requirement of the trademark system is that the trademark be used before its owner will be granted exclusive rights. This has been a cornerstone of Canadian trademarks law since the statute first was enacted in 1868.

The sections of the bill implementing this change—that is, the elimination of a requirement to declare use—include clause 330, which impacts section 16 of the Trade-marks Act regarding entitlement to registration; clause 339, amending section 30 concerning the contents of applications; and clause 345, removing from section 40 the requirement to file a declaration of use. But this is not just about removing a form. Really, these sections deal holistically with the requirement to use, as has been covered by Mr. Eisen.

One of the points we want to make is that elimination of the use requirement is certainly not a prerequisite of the three treaties that are contemplated to be implemented by Bill C-31—the Madrid protocol, the Nice classification, and the Singapore treaty. In fact the Singapore treaty contemplates the maintenance or introduction of a use requirement in jurisdictions that have adopted that treaty.

The proposed amendments will have a negative impact on Canadian businesses in several respects. We have outlined seven in our submission. First, as mentioned by Mr. Eisen, the trademarks register will be cluttered with registrations that no longer reflect market realities—that is, a ground of use and a date, as currently required if a mark has been used. The lack of useful information will make it more difficult to pre-clear marks, as Mr. Eisen has covered. That makes it more difficult to give meaningful advice on, for example, the chance of success by a business in Canada in an infringement or passing-off type of scenario.

Without the requirement to declare use to keep applicants accountable, more trademark opposition proceedings—these are administrative proceedings that can occur in the course of a trademark application—will be required to protect the interests of trademark owners.

There is real potential for trademark squatters or trolls. Industry Canada recently had a consultation about implementing measures to address patent trolls. This legislation, unfortunately, is introducing the possibility of trademark trolls or squatters. Think about domain names and the initiation of the domain name system and all the difficulty that occurred with cybersquatting. It's a very similar scenario here.

While deadwood registrations can be cancelled or removed summarily, under section 45 of the Trade-marks Act, for non-use, this cannot occur until three years after registration. Nothing prevents the owner of the deadwood registration from re-registering the mark, a direct consequence of the check of having to declare use being eliminated.

We believe these amendments create trademark rights “in gross”—that is, a bare or naked right in a trademark no longer cloaked in use. That jeopardizes the effectiveness of the trademark system.

At the same time that Canadian businesses face these increased costs and uncertainties, they also may face increased filing fees, because of the Nice classification system that requires all goods and services to be classified, and more frequent renewals. The initial period of registration in any renewal period is being reduced by one-third, from 15 years to 10 years, as a result of the adoption of the Madrid protocol.

In addition, Canadian businesses may face increased costs from having to re-register or apply to the Federal Court when they cannot correct errors in the certificate of registration that issues within six months. They have to make that correction within six months under this bill. They should have ample opportunity to correct errors made by the Canadian Intellectual Property Office.

Thank you.

[The Chair, Conservative, David Sweet]

Madam Fuhrer, that's all the time for your opening remarks.

Colleagues, because we have some business at the end, I'm going to stick with the four and a half minutes so we can finish on time. We have to clear the room because we have business to do in camera.

We'll start now with Mr. Braid.

You have four and a half minutes.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Thank you, Mr. Chair.

Thank you, witnesses, for being here today.

I'll start with Ms. Fuhrer from the CBA.

You've outlined your various specific concerns about the sections of the bill. What I didn't hear—at least I don't think I did—was whether or not you support Canada in the adoption of these three treaties, generally speaking.

[Janet Fuhrer]

That's a good question. If use were maintained, I think we could live with the adoption.

Let's put it this way. The treaties provide tools, and Madrid in particular, because what Madrid does is provide a mechanism for obtaining an international registration, but it's not really.... It's a bundle of national registrations. That's the way to think of what Madrid does for owners. But really, that benefits owners who want to register in more than two or three countries. It's really not cost effective to do it otherwise.

Most of our clients, for example, look at the U.S. to register and they look at Europe to register, two jurisdictions. Europe has a unitary system, unlike the Madrid system. You can get one registration that covers 28 countries. Under Madrid, really, you're getting national registrations. You have to designate the countries. There are fees. It's a very complex system. Again, it really will be the more sophisticated businesses and owners with larger portfolios that will use it. It's really not of big benefit to smaller companies or businesses.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

With respect to the declaration of use form, what other countries have this particular form in place? What other countries around the world are using the declaration of use form?

[Janet Fuhrer]

The U.S. in particular....

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

In what cases do they use the declaration of use in the U.S.?

[Janet Fuhrer]

It's very similar to Canada. Once an application has been allowed, if it was based on intent to use there's a requirement to file a statement of use, and not only a statement of use but specimens. Also, as Mr. Eisen mentioned, between the fifth and sixth anniversaries of registration in the U.S., it's required to file an in-use declaration and specimens again. As well, with every renewal, it's required to file a statement of use or an in-use declaration and specimens.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

So other than the U.S. there's no country using the declaration of use form. I presume that in those other countries we need to distinguish between the name of a form and the concept of use.

[Janet Fuhrer]

That's right.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Those are two totally different things, right?

[Janet Fuhrer]

That's correct.

The bill does maintain some aspects of use, but I will say this. Many countries, Europe and the European Union included, did away with use, but I am aware that there may be considerations ongoing at the moment to implement again a requirement to use.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Certainly my understanding with respect to the provisions in this bill is that it does away with the use of the form. It does not do away with the concept of use and any of the important aspects that come with that, and understanding whether use is actually being applied in the marketplace. That's the key, right?

[Janet Fuhrer]

Well, no, not entirely, because what's happening is that registration can be obtained without having to file a declaration of use, yes, but what that does is give someone the right to sue for infringement and passing off. In an infringement scenario, there's no requirement, then, as the act is currently structured, to establish reputation.

So this is what we're giving these trademark squatters, who could be from halfway around the world and with no interest in Canada whatsoever, other than going to businesses and saying, “Okay, I've registered your mark, so if you want it, pay me for it, or if you want to avoid a lawsuit, pay me for that.” These are real risks and real costs that will be faced by Canadian businesses as a result of this change.

[The Chair, Conservative, David Sweet]

Thank you very much.

Now we'll go on to Mr. Masse, for four and a half minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you.

I thank our witnesses.

Unfortunately, this committee cannot make amendments to the bill. It has to be done at the finance committee, but thank you very much for those specific amendments and what they do.

Did the government consult any of your organizations on this bill prior to doing this?

[Janet Fuhrer]

No. Sorry.

[Michel Gérin]

They didn't on the content of this bill.

[Brian Masse, NDP, Windsor West, ON]

That's why you have over 150 lawyers and businesses all up in arms on this issue. If you don't talk to people, then you don't find out the problems.

Do the treaties involved here require us to change our use and the way we've been doing things for about the last 150 years?

[Janet Fuhrer]

They don't require the elimination of a requirement to declare use.

[Brian Masse, NDP, Windsor West, ON]

Okay. So, then the provisions you have would be acceptable to moving forward. I guess the suggestions you're making don't undermine our responsibilities in the treaties. Is that correct?

[Janet Fuhrer]

That's right. The suggestion would be to hive off at least these sections, if not the whole division, for greater consultation.