Understanding Unregistered Trademarks In Canada

In Canada, a trademark can either be registered or unregistered. A trademark may consist of letters, words, sounds, textures, designs, colours, scents, or any combination thereof to distinguish one company’s goods and services from another company. A trademark application must be filed with the Canadian Intellectual Property Office and approval must be obtained to become registered. Once registered, the trademark will become protected under the Trademarks Act, RSO, 1985, c. T-13. Alternatively, if a business does not register a trademark for its brand, it may still be able to obtain protection from the common law tort of passing off and section 7(b) of the Trademarks Act, RSO, 1985, c. T-13.^[1] It is important to note that the Federal Court of Appeal has expressly stated that section 7(b) of the Trademarks Act is a codification of the common law tort of passing off, however for the scope of this article, we will discuss the common law tort of passing off.^[2] To obtain protection for an unregistered trademark, the individual or entity claiming ownership of the trademark must show that the trademark has been used for a period of time and that the trademark has developed a reputation and goodwill. Unlike the Canada-wide protections afforded to a registered trademark, an unregistered trademark will typically only be valid within the geographic area where the trademark has developed a reputation and goodwill.

ELEMENTS FOR PASSING OFF

As held by the Supreme Court of Canada in Ciba-Geigy v Apotex Inc, [1992] 3 SCR 120 and reaffirmed in the more recent case of Kirkbi AG v Ritvik Holdings Inc, [2005] 3 SCR 302 (Kirkbi), three elements must exist for the tort of passing off to arise, namely, the plaintiff must have some existence of goodwill or reputation attached to the brand, the public must be deceived by a competitor through misrepresentation, and the plaintiff had suffered actual or potential damage.^[3]

The first element, goodwill and reputation, refers to the reputation and brand name a company has built around its product, that attracts customers to their brand. To satisfy this element, the plaintiff must be able to show that the goodwill or reputation is distinctive to the product or brand, it cannot be attached to a technique or process used to manufacture the product. For example, the maker of clay bowls cannot claim goodwill for the process they use to make bowls if another clay maker makes clay bowls using the same technique. As noted in Kirkbi¸ the tort of passing off did not originate to safeguard companies from monopolizing the industry with their products. The second element, misrepresentation to the public, requires deceit that is reasonably foreseeable in the minds of the public through misrepresentation.^[4] It is not necessary that the misrepresentation be intentional, as an individual or entity may satisfy the element of misrepresentation through negligence or carelessness. For example, if a business mistakenly uses a logo or brand name that is similar to that of a competitor, thereby causing confusion to customers, the business may satisfy the misrepresentation element if the business failed to take reasonable precautions to ensure that the logo or brand name was not already in use.  The final element, actual or potential damage to the plaintiff, does not require the plaintiff to prove financial loss but instead may be established by the plaintiff proving a loss of control over reputation, image, or goodwill.^[5] If the first two elements are satisfied, but the plaintiff cannot prove there is actual or potential damage, then the tort of passing off will fail.

RISKS OF AN UNREGISTERED TRADEMARK

Unlike a registered trademark, which provides Canada-wide protection to the trademark holder, and affords greater remedies under the Trademarks Act, RSO, 1985, c. T-13, an unregistered trademark may only be protected within the geographic area in which the goodwill and reputation have developed. For example, if a natural honey store called Bumblebees, opens in Timmins, Ontario and develops strong goodwill within the community, they may be able to argue they have an unregistered trademark if another natural honey store opens in Timmins, Ontario that uses the same name and logo, but bumblebees will not have a claim for passing off if a similar store that uses the same name and logo opens in Alberta, Canada. Note that proving an unregistered trademark may be difficult and costly for all parties involved as it requires litigation and for the courts to rule on whether an unregistered trademark exists, and if the elements of the tort of passing off are met on a balance of probabilities.

Another risk of unregistered trademarks is that during the trademark application process, trademark examiners from the Canadian Intellectual Property Office do not cross-reference new trademark applications with unregistered trademarks. This opens up the possibility for a business that has developed goodwill for its brand over years of continued use to potentially lose its unregistered trademark if a similar business registers a similar or identical trademark first. Once a trademark is registered it may become very difficult to prove an unregistered trademark existed prior to the registered trademark.

Given the complications that may arise from the use of an unregistered trademark, it may be advantageous for an individual or entity to register a trademark for their distinctive brand as the cost of registering a trademark may be significantly less than the cost of litigation to prove you have an unregistered trademark.

If you are an individual or entity looking to register a trademark, contact us today to set up an initial consultation where a member of our business law team will answer any questions you may have about the trademark registration process.

Disclaimer:

The information contained in this article is not to be construed as legal advice. The content is drafted and published only for the purpose of providing the public with general information regarding various real estate and business law topics. For legal advice, please contact us.

1.  Kirkbi AG v Ritvik Holdings Inc, [2005] 3 SCR 302, at para 25.
2.  Pharmacommunications Holdings Inc v Avencia International Inc, [2009] FCA 144, at para 8.
3.  Kirkbi AG v Ritvik Holdings Inc, [2005] 3 SCR 302, at para 66.
4.  Consumers Distributing Co v Seiko Time Canada Ltd, [1984] 1 SCR 583. 
5.  Sadhu Singh Hamdard Trust v Navsun Holdings Ltd, [2016] FCA 69, at para 31.

About the Author:

Shahriar Jahanshahi is the founder and principal lawyer at Jahanshahi Law Firm with a practice focus on representing business star-ups and investors in the province of Ontario. For further information about Shahriar Jahanshahi, click here.