April 28, 2016 By: Adam M. Tracey

Your brand is often the most valuable part of your business – particularly in fields where there is no underlying technology that differentiates a company’s product or services from a competitor. Why do we enjoy shopping at some grocery chains rather than others, or purchase one brand of car rather than another?

The reasons why we make our consumer choices are numerous and vary greatly: customer experience, perceived value, aesthetics, quality of manufacture, inherent “coolness” – the list goes on and on. However, the fact remains that many of these concepts are intangible and the only way to truly protect a business in the minds of your customers it to prudently protect the brand, as well as the image and “goodwill” associated with it. This is where trademark law comes in to play.

Under Canadian law, trademark rights are obtained automatically once a trademark is used in commerce; or, in other words, upon displaying the trademark in the sale of goods or the delivery of services. These types of trademark rights are called common law trademark rights. They are denoted by the ™ symbol and provide an initial measure of protection to the brand that has been created.

Common law trademark rights do have some limitations, however: they are limited geographically to where business is actually taking place. Also, they are more difficult to protect as it must first be demonstrated that the common law trademark has a degree of goodwill or reputation associated with it.

There is also no official record of common law trademark rights that puts potential competitors on notice and, further, no legal mechanism permits claiming the benefit of common law Canadian rights in any foreign jurisdictions.

Therefore, in some instances there is clearly a business case that supports registering a trademark to take advantage of a number of the benefits that are conferred by registration. Registered symbols are denoted by the ® symbol. Primarily, a registration clarifies a trademark owner’s rights in a centralized, government-maintained database. Also, registered trademark rights can be defended without having to demonstrate any associated goodwill or reputation.

Moreover, a registration extends trademark rights across the country, regardless of where the owner is conducting business. If the business extends to a foreign country, international treaties facilitate the recognition and enforcement of registered Canadian trademark rights around the world through corresponding international trademark registrations.

Legal jargon aside, what are the advantages of trademark registration from a purely practical (i.e. business-oriented) perspective? First, and as discussed above, a third party cannot subsequently register a confusingly similar trademark to a Canadian trademark that has already been registered.

In effect, this means that the Canadian Intellectual Property Office (“CIPO”) actually somewhat polices the marketplace and prevents third parties from encroaching too closely on a brand without requiring any further effort on the brand owner’s part.

Although it certainly is advisable for all brand owners to be vigilant and to immediately put potential infringers on notice, it is not always possible to be aware of every potential trademark that competitors may be considering. On the other hand, CIPO regularly rejects applications for trademarks that have not yet even been used in Canada! This is a valuable service for a small business who perhaps does not have the resources to monitor their competitors (and the trademarks they are using) closely.

Furthermore, participating in the registration process also provides a degree of confidence that the trademark is not confusing with any competitor’s previously registered trademarks.

Finally, there is no doubt that a registration carries significant weight when matters become contentious. Otherwise, identifying each party’s common law rights during the initial stages of a potential dispute becomes a game of trading allegations regarding reputation, where business (and associated use) is taking place, and how long a contested trademark has actually been in use.

On the other hand, when the trademark in question is registered, the owner has the additional leverage of a government document that clearly evidences the scope of the rights that flow with that particular registration. This can greatly facilitate the process of early settlement rather than protracted litigation, saving time, money and effort. If the matter does in fact progress to litigation, it is far easier to defend a registered trademark in court, for many of the reasons discussed above.

Therefore, it is advisable to always use the ™ symbol in connection with every instance a new trademark is displayed, to notify any potential competitors of the common law trademark rights that are being claimed and to take advantage of this free protection conferred by Canadian law.

In the event that a common law trademark becomes a “core” aspect of your brand (or a potential dispute is on the horizon) it may be time to consider obtaining a registration for this valuable aspect of the brand!

This content is not intended to provide legal advice or opinion as neither can be given without reference to specific events and situations. © 2018 Nelligan O’Brien Payne LLP.