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Intellectual Property

Trademark trolls will be stymied by new legislation

Amendments to Canada’s Trademarks Act are bad news for trolls, Toronto intellectual property lawyer John Simpson tells AdvocateDaily.com.

The changes are contained in Bill C-86 — the omnibus budget implementation legislation recently introduced by the federal government — and follows a previous round of legislative amendments that eliminated the traditional requirement that applicants show use of a trademark before registration.

Simpson, principal of IP and new media law boutique Shift Law, explains that the removal of the use requirement created an opportunity for trademark trolls to register marks without any intention of using them commercially, only to prey on genuine users by selling them rights or suing them for the use of the same or similar marks.

He welcomes C-86 for redressing the balance.

“The new amendments will address concerns voiced by trademark practitioners regarding the earlier amendments and their enabling of trademark trolls,” Simpson says. “We look forward to seeing them proceed through the legislative process and come into force as soon as possible.”

Should it pass, C-86 will make a number of significant amendments to the Trademarks Act, including:

  • prevent owners of registered trademarks from obtaining relief for infringement or depreciation of goodwill during the first three years after registration, unless the trademark was used in Canada during that period or there are special circumstances that excuse the absence of use
  • add “bad faith” as a fresh ground for opposing or invalidating the registration of a trademark
  • add new powers to grant confidentiality orders, award costs, and provide case management deadlines to the Registrar of Trademarks
  • clarify the existing prohibition against using “official marks” that have been adopted by public authorities

Simpson says the three-year infringement relief will ensure that defendants to infringement lawsuits retain the right to expunge the registration for non-use under s. 45 of the Trademarks Act if the registrant has not yet used the trademark in commerce.

“Section 45 would not otherwise be available to a defendant if they were sued for infringing a trademark that had been registered for less than three years,” he adds.

The new “bad faith” ground for opposing a trademark registration will also allow potential opponents to challenge applications covering goods and services where the applicant has no intention of ever using it, Simpson says.

“Together, both of these measures will mitigate the potential negative consequences of the earlier amendments that removed the requirement to use a trademark before registering it,” he says.

Simpson says the changes are intended as a complement to the previous Trademarks Act revamp, which is scheduled to come into force in early 2019, and form part of the government’s IP Strategy with the aim of helping Canadian businesses, creators, entrepreneurs and innovators understand, protect and access intellectual property.

To find out why Simpson describes the strategy as a boon for small and medium-sized enterprises, click here.

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