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What every Business Owner Must Know About Trade-Marks

Did you know that in 2006 the Coca Cola trademark was worth $67 billion US? The Microsoft trade-mark trailed behind at $56.9 billion US, and the IBM trade-mark came in third at $56.2 billion US. In fact, in 2006, the top 40 global trade-marks were each worth in excess of $8.5 billion US. Successful businesses understand the power of a strong mark and the critical importance of protecting their brand. This article outlines what you also must understand about these significant business assets.

What is a trade-mark?

A trade-mark is a word (e.g., Coca-Cola®), a symbol (e.g., the Nike “swoosh”), or a design (e.g., the familiar “Coca-Cola®” script font), or a combination of these that distinguishes the wares and/or services of one entity from others in the marketplace. In addition to these “ordinary marks”, other types of trade-marks are certification marks (which distinguish wares or services that meet a defined standard from others (e.g., the Woolmark design owned by Woolmark Americas, Ltd.) and Distinguishing Guise (which distinguish an organization’s wares from those of another by using the shaping of the wares or their containers, or a mode of wrapping or packaging wares (e.g., the triangular prism shape of a Toblerone® candy bar). A trade name is the name under which an entity operates and carries on business.

A trade-mark must be distinctive

All trade-marks have the same function: to distinguish the wares/services of one source from others in the marketplace. Therefore, it is critical that your trade-mark provides you with a distinctive identity in the marketplace. For this reason, trade-marks that are merely descriptive (e.g., Calgary Florist), or the name in any language of the wares or services in association with which the mark is to be used, or are confusingly-similar to another trade-mark or trade name in the marketplace are very weak trade-marks as these marks do not provide you with a unique identity in the marketplace.

A trade-mark must not be confusingly-similar

Your trade-mark must not be confusingly-similar to a trade-mark or trade name that is being used in your marketplace. A trademark is “confusingly-similar” to another mark if the use of both trade-marks in the same marketplace would be likely to cause the public to believe that the wares or services associated with those trademarks are manufactured, sold, leased, hired or performed by the same person, whether or not the wares or services are of the same general character. Use of “confusingly-similar” trade-marks for similar wares or services poses many risks. The first owner of the mark has the right to prevent others from using the same or a “confusingly-similar” trademark in the same marketplace, and therefore may be able to initiate legal action against any subsequent users of the same or confusingly-similar marks for imitating their market identity. Also, concurrent use of identical or confusingly-similar marks can negatively affect your business reputation. If you are using a trademark that is confusingly-similar to another person’s trade-mark, and that other person’s business reputation is harmed, or its wares or services are found to be substandard or faulty, your reputation is also likely to be harmed: as the public may not recognize that you are two separate, unassociated entities. Equally, if another person is using a trade-mark or trade name that is the same or confusingly-similar to your trade-mark, the other entity can “piggy back” on your good reputation by being mistaken for the same entity in the public’s mind. Also, you cannot register a trade-mark that is confusingly-similar to a trade-mark or trade name that has been previously used or made known by another person in Canada.

Is trade-mark registration mandatory?

A person acquires rights in a trade-mark by simply using the trade-mark. Therefore, registration is not required to obtain rights to your trade-mark. However, rights in an unregistered (common-law) trade-mark are inferior to those of a registered trade-mark. If you have an unregistered trade-mark, your rights are limited to preventing another trader in the same trading area from causing the public to believe that his wares, services or business are closely associated with or the same as yours. Such rights can only be claimed against traders that are using the trade-mark in the same geographical area in which you have developed a significant business identity or reputation – and only if your trade-mark is distinctive of your wares, services or business. On this basis, if your unregistered trade-mark only enjoys a reputation in Calgary, you cannot prevent another trader in Newfoundland from using an identical or confusingly-similar trade-mark in Newfoundland. Owners of unregistered marks can use the superscript “TM” beside their trade-mark to notify the public that they claim rights in the mark. (Note that only the owner of a registered trade-mark can use the ® designation – and not the owner of a pending trade-mark application or unregistered mark.)

Why register your trade-mark?

Registration has many benefits. The primary benefit is that registration provides the registered owner with the exclusive right to use the trade-mark nationwide in association with the registered wares and services – irrespective of whether the registered owner simply uses the mark in a small geographic area. Therefore, a registered owner can prevent anyone in the country from using an identical or confusingly-similar mark for similar wares and services. The registered owner also has the benefit of a legal presumption that she is the owner of the trade-mark; therefore, a challenger to ownership has the legal burden of proving that the registered owner is not the rightful owner. Trade-mark registration also provides the public with constructive notice of your claim to the mark, and can facilitate obtaining trade-mark registration in other countries. You can apply for registration of your mark on an “intent to use” basis, which provides you with a pre-approval process. However, the mark will only proceed to registration when your mark has actually been used in the country in which you seek registration. I note that registration only provides you with property in the mark in the country in which it is registered. Therefore, registration in Canada does not give you rights in the mark in the United States. Equally, the foreign registration of an identical or confusingly-similar mark does not in itself affect your ability to register the mark in Canada (but if the foreign entity has previously used or
made known its trade-mark in Canada, you may not be the person entitled to register the mark).

Who can register a trade-mark?

The first user of a trade-mark is the person entitled to register the mark. Therefore, you are not the person entitled to register the mark if someone else in Canada has previously used or made known a confusingly-similar trademark, previously used a confusingly-similar trade name, or previously applied for registration of a confusingly-similar mark. If you are not the person entitled to register the mark, you are at risk of the Examiner rejecting your application, a third party opposing registration of your mark when it is published for public opposition, or the rightful owner seeking to expunge your trade-mark registration in Federal Court. 

Use it or lose it!

Once a mark is registered it remains on the Canadian Trademarks Register for fifteen years, and can be continually renewed for additional 15-year periods on payment of a renewal fee. There are no annual fees or declarations required during the 15 year period that your trade-mark remains on the Register. However, at any time, any interested person can ask the Canadian Intellectual Property Office to compel you to produce evidence of your continued use of the trade-mark. If you cannot provide such proof within 3 months of the notice, the Registrar can expunge your trademark registration. Therefore, the mantra of all trade-mark agents is “use it, or lose it!” You can also weaken or lose property in your trade-mark – irrespective of whether the mark is registered or not - by allowing someone to continue to use a confusingly-similar mark or by allowing your mark to become “generic” for your offered wares and services (e.g., “Kleenex” becoming generic for “facial tissues”) – as a mark that is not “distinctive” cannot be protected as a trade-mark. Therefore, all business owners should choose a trade-mark or trade name that is highly distinctive and unique in their marketplace. Such strong marks are far easier to protect, which greatly assists you in safeguarding against infringement, taking action against confusingly-similar marks, and preventing other entities from “piggybacking” on your goodwill and reputation. Moreover, it facilitates building a strong brand that can provide considerable value to your company, and become a significant asset on the financing or sale of your business.

,Lawyer, Trademark Agent