What You Need To Know About Canada’s New Trademark Laws

As a restaurant owner, you know the strength of a good brand.  A brand is intangible and is the combination of a number of elements, some by design and some by impression.  The strongest expression of your brand is likely your trademark – the name of your restaurant and, in many cases, the logo or other design imagery associated with it.  A trademark can be an incredibly valuable asset for your business as it ultimately serves as an indication to the public of the quality of the goods and services which correspond to the name.

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As a result, I am always surprised when we begin work with a single-unit restaurant or a chain and find out that the owners have never taken the steps to protect that brand and seek federal registration of their trademark.  A trademark is not the same thing as a business name, and a registered trademark is not the same thing as an unregistered trademark.  A registered trademark gives its owner the right to enforce the mark against third party infringers or imitators, no matter where they are located in Canada.  Unregistered trademarks afford their owners a much more limited (likely local) scope of protection.

And, understanding whether your restaurant’s trademark is even registerable at all as early as possible can make the difference between a long and successful life for a brand, or finding yourself on the receiving end of a cease-and-desist letter from the owner of a similar trademark who has priority to it over you.  After all of the blood, sweat and tears you have invested into your brand, this can have devastating consequences for you.

For these, and other reasons, seeking registration for your trademarks sooner than later is vital to your business, and should be considered among your first steps of establishing your business, along with incorporation and signing a lease.

Which is why some major upcoming amendments to Canada’s Trademarks Act are set to have a potentially enormous impact on all brand owners.  The changes are numerous, but I want to highlight two that are likely to resonate with the restaurant industry, which is composed of businesses that are as customer-facing as any and to whom brand protection carries a unique level of importance.

First, the good news – Canada is going to ratify an international trademark treaty (we are one of the only developed nations which has not) which will have the effect of getting trademarks registered in multiple jurisdictions much easier.  As it stands right now, if you have your sights set on international expansion, you have to engage separate trademark agents across Canada, the U.S., Europe, Asia, the Middle East and elsewhere.  Once the Madrid Protocol is ratified by Canada, trademark applicants will be able to apply for protection in multiple countries all at the same time, and as part of the same application.

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Now, the bad news – Canada’s trademark legal regime has been founded on the principle of use – meaning that in order to get a trademark registered, the applicant has to actually be using the trademark in association with its goods and services.  The new amendments to the Trademarks Act will effectively eliminate the use requirement.  This means that anybody can get a trademark registered, whether they are using it or not, or whether they plan to use it or not.  The threshold for registration will be much lower, and ultimately will turn on whether any other similarly confusing trademarks are already registered.

Why should restaurant owners care?  Precisely because of the public profile and unique spotlight that the restaurant industry enjoys, people know restaurant brands well, and know the value of those brands to the restaurant owners.  If actual use of a trademark is no longer required in order to get it registered, it is not a stretch to foresee trademark trolls and squatters snapping up as many trademark registrations for known brands as they can, without any intention of ever actually using them, and then holding them for ransom from the restaurants who are actually using them.

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These amendments to the Trademarks Act are not likely to take effect until some point in 2018, so there is still lots of time to plan for them.  But restaurant owners would be well advised to start planning ahead and protecting their trademark portfolios now, before someone else does it first.

Author

Chad Finkelstein is a franchise lawyer at Dale & Lessmann LLP (www.dalelessmann.com) in Toronto and can be reached at cfinkelstein@dalelessmann.com or (416) 369-7883.