Trademarks Office Practice and Legislative Developments – What to Look for in 2018

This year will be a busy one for trademark owners and professionals, both as they prepare for the significant changes that will accompany implementation of the amendments to the Trade-marks Act, now predicted for early 2019, and  because of other Canadian legislative developments impacting trademarks.  The following reviews both practice and regulatory issues that will impact trademark owners and procedures in 2018. 

I. Trademark Practice Developments

Nice Classification: The amendments to the Trade-marks Act will require any application that is pending and not advertised at the implementation date to include classification details that comply with the interpretation by the Canadian Intellectual Property Office (“CIPO”) of the Nice Classification of Goods & Services. Ultimately CIPO will be able to require class information from all registrants. As such, it is advisable to address classification now.

Since September 2015, CIPO, through its online e-filing system, has been accepting applications grouped by Nice Classes (however, if the Office disputes the classification, it will be omitted from the application particulars). In 2017, CIPO began inviting registrants with upcoming renewal dates to voluntarily classify their goods and services. Many registrants, particularly those that are not yet certain of renewal of their marks, have deferred classification, but for those who are certain of renewal, classification now can save time and inconvenience later.

Increased Filings:  A review of CIPO’s “Monthly production statistics” for the past several years shows an increase in trademark filings (while patent filings during the same time are shown to have decreased).  During the period of April 2017 through November 2017, 40,187 trademark applications were filed.  This is up 8% from the same period in 2016, and 15% from the same period in 2015.

There are likely a number of factors fuelling this increase, many linked to the upcoming changes to the Act, including:

• Canadian companies may be preparing for the possibility of broader global trademark protection available through the Madrid Protocol, which necessitates either a Canadian application or registration;  
• applicants, particularly those with broad-based interests that may require higher class fees upon implementation of the amendments, may be taking advantage of the fact that there are currently no class fees; and
• in anticipation of elimination of use as a requirement for registration, applicants may be expanding their trademark rights in Canada, knowing that, once the changes to the Act come into force, they will be able to obtain registration of their marks for a wide range of goods and services, regardless of whether the marks have been used for those goods and services.

Increased Number of Classes per Application: In addition to an increase in the number of trademark filings during 2017, there has been an increase in the number of classes per application, as well as in the number of goods and services per class per application.  In 2013, prior to the amendment to the Trade-marks Act, the average number of classes per application was at about 1.87, whereas by 2017 (between January-July), that number had almost doubled (even excluding an unexpected 45-class filing phenomenon, discussed below).  One explanation may relate to the coming ability to acquire broader coverage once use as a registration requirement is eliminated.  

45-Class Applications:  Until 2017, the phenomenon of 45-class filings was virtually unheard of in Canada, presumably related to the current “use” requirements. The number of such applications annually never exceeded 8 in the period 2012-2016.   In 2017, 453 45-class applications were filed, the majority of which — 412 — are associated with an apparently related group of companies that have launched widespread filing programs in several countries covering many pages of goods and services.   

These 45-class applications are starting to show up in clearance searches and CIPO Examiner’s reports, and are perhaps providing a sneak peek at some of the challenges that applicants may face once use is no longer required as a pre-requisite to registration, including:

• clearance will become much more difficult — applicants will have to comb through very long goods and services descriptions looking for overlap, and because there will be no indication in the application or registration as to whether and for what the mark is in use, there will be increased need for marketplace investigations. 
• prosecution will be longer and more costly — there will likely be multiple rounds of Office Actions and responses, extensions of time, oppositions, and Section 45 proceedings.

Examination Timing: Under the Madrid Protocol, examination of an international registration designating Canada must be completed within specific time limits, failing which, the registration will be deemed to be extended to Canada. However, examination of Canadian applications has been slow. The 2017 IP Canada Report shows that in 2015 and 2016, the average processing time from filing through to registration was 27.4 months, and in late 2016 to early 2017, time to first examination was averaging 9-10 months.  This timing would pose significant difficulties under the Madrid Protocol system.  CIPO’s published “2017–2018 Service Commitments” suggests that it expects to issue a first Office Action (either an approval notice or an Examiner’s report) within 7 months of the filing date.  Anecdotal observations suggest that for marks filed since the summer of 2017, examination timing has improved.

Declarations of Use: Although there has been no official policy change, in keeping with CIPO’s commitment to reduce application inventory, practitioners have noticed that discretionary extensions of time to file declarations of use in Canada have become subject to more scrutiny.  Declarations are required for applications based on proposed use in Canada, (reflecting the current “use” based trademark registration system).  CIPO has set guidelines for extensions, which generally will not be granted beyond 6 years from filing or 3 years from allowance unless there are special circumstances.  It now appears that such discretionary extensions may only be granted where the failure to use the mark results from delays in regulatory approval, or if non-use is clearly beyond the applicant’s control.

In addition, the Office has changed its practice regarding extension refusals.  If the Office is not prepared to grant a discretionary extension, its practice has been to issue a letter with that notice, setting a final two-month term to file the declaration of use. Until recently, the practice had been to calculate that 2-month term from the date of the notice refusing the extension request.  However, in recent months, CIPO has been calculating the term from the final extended deadline for filing the declaration of use, effectively shortening the final term for filing the declaration.

The message for brand owners is that they should watch declaration of use deadlines, particularly for applications filed prior to 2014, since they may not be able to keep those applications pending until the implementation of the amendments eliminating use.  If there is any doubt about the right to discretionary extensions of time, it may be wise to refile to preserve trademark rights.  

II. Upcoming Legislation and Regulation Changes

Trademark Regulations: As Canada moves closer to implementing amendments to the Trade-marks Act that were passed in 2014, brand owners and advisors should prepare for final details on the regulatory framework.  In 2017, the Canadian Intellectual Property Office (“CIPO”) released draft regulations for comment, and it is now expecting that regulations will very soon be published in the Official Gazette, a more formal step towards implementation. 

Some of the regulation highlights include:

• fees on filing and renewal — per class filing fees are expected to be CDN $330 for the first class and CDN $100 for each supplemental class, while renewal fees will be CDN $400 for the first class, and CDN $125 for each additional class. For many companies, these fees will not result in significant changes, but for those with broad-based interests, fees, especially on renewal, could rise significantly;
• filing procedure — minimal information will be necessary on filing, and new rules will confirm when a formal filing date will be assigned;
• opposition practice — timing of arguments and cross-examination will change;
• objections — more details on objections to geographical indications (“GIs”), related to the broadening of GI rights contemplated by the amended Trade-marks Act.
• Madrid Protocol filing guidelines for Canadian applicants and registrants seeking international protection, and owners from abroad seeking protection in Canada.  Canadian companies should understand the benefits and disadvantages of the Madrid Protocol, to be able to make strategic decisions on when to start using this system, and which marks to file.
• transitional rules may offer opportunities to take advantage of lower cost renewals now, and avoid class fees.

Practice Notices: CIPO has proposed to create working groups to review and comment on draft Practice Notices that will assist with interpretation of the Trade-marks Act amendments and regulations. Particularly given the significant number of changes and the complexity of many of the new regulatory provisions and transition rules, Practice Notices will be key to interpreting the many technical and practical implications of the new Act. The first sessions could be in February 2018.

Bill S-5, an Act to amend the Tobacco Act and the Non-smokers’ Health Act has been given second reading by the House of Commons (having already been passed in the Senate), and will likely proceed to Royal Assent in 2018.  The Act’s intent is to reduce smoking, and one strategy is to implement “plain packaging” requirements for tobacco products, as well as additional restrictions on sales and advertising of tobacco products in Canada. Details of the packaging limitations will be left for regulations, which have not yet been published.  Trademark owner groups have questioned the impact on consumer choice, and have raised concerns about the impact of plain packaging on lost trademark rights, counterfeiting, and other unauthorized sales. 

Bill S-228, the Child Health Protection Act has also been passed in the Senate, and is now before Parliament. Originally introduced as a private members’ bill by former Olympic skier Senator Nancy Greene Raines, it includes a long preamble on the legislative goals, namely to address children’s weight and obesity issues by restricting advertising and promotion of unhealthy foods and beverages, but the Act itself only contains a very general restriction that no person shall advertise unhealthy food and beverages in a manner that is directed primarily at children.  Specific details are anticipated to be filled in by regulations. As with the Tobacco Act amendments, those details will be key, and brand owners, particularly for products that contain high amounts of fat and sugar, should prepare for regulations that address trademark selection (for example, use of fictional characters and animals), packaging, advertising, and endorsements.

Bill C-45, the Cannabis Act follows the Canadian Government’s commitment to legalize recreational cannabis products by summer 2018.  The Cannabis Act, passed by the House of Commons and now before the Senate, contains general prohibitions on packaging that could appeal to young persons, and specifically disallows testimonials or endorsements, depictions of any real or fictional person, character or animal, or anything that creates an image of glamour, recreation, excitement, vitality, risk, or daring.  Further specifics are expected in the regulations.  The Government has just completed a regulation consultation, one aspect of which posed a scenario of plain packaging guidelines, with limitations on colours, font, size, and other restrictions on “brand elements”, a term that is broad enough to cover regular marks, designs, product and packaging shapes, and even trade names. Even more so than tobacco products, it may be premature to consider plain packaging for newly regulated products that will need some time to develop brand reputation and security.

This year promises to be busy, with many pieces of legislation that will impact the trademark landscape either in 2018, or in early 2019.  Stay tuned for further developments.