Canada
Is Canada going to join the Madrid system, and what needs to be done before it can? Ashley Dumouchel of Shapiro Cohen takes a look

Canada recently took a significant step towards implementation of the Madrid Protocol when Bill C-31, the Economic Action Plan 2014, No 1, received royal assent in June 2014. After having tabled five intellectual property treaties in January 2014, the government moved swiftly with the introduction of implementing legislation in parliament in March.

The ratification and implementation of the Madrid Protocol and other IP treaties will bring Canada into line with the rest of the developed world. For years, Canada has been the only developed country not party to the Madrid system, and its IP system has been criticised as being both archaic and stifling economic growth.

The Madrid Protocol allows trademark owners to register their marks in one or more of its more than 90 contracting parties by filing a single international application. With the implementation of the protocol in Canada, Canadian applicants will be given the right to file an international application using the Canadian IP Office (CIPO) as the office of origin, and foreign brand owners will be given the opportunity to choose Canada as a designated contracting party.

Despite the call for reform by trademarks professionals, Bill C-31 was tabled without much notice to or consultation with the profession. The legislative amendments have been widely criticised as being overly broad and unnecessary to bring Canada into line with its international obligations. Among other changes, the Canadian Trademarks Act will be amended to remove all use requirements at the time of registration. When combined with the expected increase in trademark filings from the international system, the lack of requirement to use a trademark prior to registration is expected to lead to a considerable increase in contentious proceedings among brand owners.

While such legislative changes were touted as being part and parcel with Canada’s international obligations and aligning its trademark regime with best practices, it is to be noted that none of the ratified treaties require such drastic changes be made to local law.

Despite criticism, the bill received royal assent, and is expected to be proclaimed into force by mid-2015. CIPO has advised that the coming-into-force date of the amended legislation will only be determined once the trademark regulations have been revised, and relevant IT systems have been updated.

It is suggested, however, that changes to the Canadian trademark system that go beyond mere ‘technical’ requirements are needed prior to implementation. Of course, the regulations accompanying the amended legislation will significantly affect the impact of the bill.

The role of CIPO as an office of origin and as an office of a designated contracting party must be clarified, and provisions relating to the payment of fees, deadlines and other practical matters must be set. The successful implementation of the Madrid Protocol, however, will likely need to involve the opening of pocket books on the part of government bodies as well as brand owners.

At CIPO, a significant sum will need to be spent on staffing and training to ensure not only that the office is able to comply with the tight timelines mandated by the Madrid Protocol, but also that domestic and international applicants are treated fairly. As an example, the time limit under the protocol for a designated contracting party to refuse registration may be up to 18 months. On the other hand, the office is currently taking eight to 10 months to examine applications.

When the burden of international applications is added to an already overloaded system, there is concern that the prosecution timeline for domestic applications will be significantly increased in order to meet the strict time limits set by the protocol.

The courts also need to prepare for an onslaught of complex new litigation. Canada’s legal system has traditionally been ‘underdeveloped’ due to the relatively small volume of litigation and corresponding lack of jurisprudence on many topics.

The implementation of the Madrid Protocol and other IP treaties could give Canadian litigants and the courts the opportunity to look to other jurisdictions for legal guidance.

However, the path that the government has chosen regarding use requirements will mean that the existing jurisprudential system, which is built on use-based rights, will now have decreased precedential value.

This, combined with the expected increase in contentious proceedings due to trademark ‘squatting’, may critically burden the court system if additional funding is not provided.

Finally, successful implementation of the Madrid Protocol from a brand owner’s point of view will be dependent on their ability to continue to successfully protect their brands in Canada. The changes will bring both opportunity and risk to businesses. In tough economic times, IP protection and enforcement is often the first item on the budgetary chopping block, but it is suggested that in order to maintain a competitive edge, Canadian businesses and foreign investors in Canada must fully consider the implications of the new legislation for their brands and act quickly to register key trademarks.

On the whole, the Canadian government is moving towards a modern trademark regime. It remains to be seen, however, what the practical effects of such modernisation will have on brand protection.

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