Canada’s Trademarks Opposition Board has announced a new pilot project according to which it will send non-use cancellation notices to a randomly selected sample of registered trademark owners. The stated purpose of the project is to help ensure that the Canadian trademark register “accurately reflects trademarks that are in use, and in association with the goods and services listed in the registration.”[1]
Non-use cancellations are a well-established part of Canadian trademark practice, but historically they have been used only by private parties, who can invoke administrative non-use cancellation via section 45 of the Trademarks Act. While government has theoretically been able to initiate non-use cancellations, this is the first time that the Canadian Intellectual Property Office (“CIPO”) is proposing to do so.
Owners of Canadian trademark registrations may be wondering what this program means to them in practice. This bulletin addresses those concerns by explaining: (A) the likelihood of receiving a government-initiated cancellation notice, (B) the procedure that applies if a notice is issued, and (C) what steps trademark owners can take to prepare for the implementation of this program.
A. What are the Chances You’ll Receive a Notice?
The program applies only to trademarks which have been registered for more than three years. This is the same three-year restriction which applies to non-use cancellations which are initiated by private parties.
The overall odds of receiving a notice are low, at least in the short run. CIPO has stated that it will send out a total of 200 non-use cancellation notices in the first quarter of 2025. Given that there are several hundred thousand trademark registrations, this means that the odds of any given mark being targeted are well under 0.1%. However, owners of large trademark portfolios will face a non-trivial chance that at least one of their marks will be targeted. Similarly, if the project continues beyond the first quarter of 2025, this will increase the odds of any given mark receiving a notice.
At this time we do not know how long the project will continue, and whether CIPO will increase or decrease the pace of government-initiated proceedings beyond the current 50/month. Certainly, if the goal is to ensure that the register continually reflects the state of actual use in the marketplace, this would imply a much greater volume of filings.
B. What Happens if You Receive a Notice?
The owner of a trademark registration who receives a non-use cancellation notice will have three months to provide proof of use for each good or service listed in the registration.[2] The three-month filing deadline can be extended by two months without cause, or by a longer period upon proof of exceptional circumstances. If the deadline is missed, retroactive extensions are possible, but difficult to obtain.
Thus far, the process for a government-initiated cancellation is the same as for non-use cancellations initiated by private parties. However, the two procedures begin to diverge once the owner’s evidence is submitted.
For government-initiated cancellations, CIPO will review the trademark owner’s evidence. If CIPO is satisfied that the evidence clearly shows use of the trademark in association with all the registered goods and services, it will offer to discontinue the proceeding. The trademark owner can then accept the offer, and the proceedings will come to an end.
Alternatively, if CIPO believes that the evidence shows use of the trademark in association with some but not all of the registered goods or services, a different offer will be made. Specifically, the owner will be offered a chance to end the cancellation proceedings, but only if the owner deletes the goods/services which CIPO believes are not supported by the evidence. There is no option to delete the uncontested items and dispute only the remaining ones; if the owner declines the offer, it will need to defend all of the goods and services at the argument stage.
Finally, if CIPO believes that none of the goods or services are supported by the owner’s evidence, then no offer will be made, and the case will proceed directly from the evidence stage to the argument stage.
If CIPO does not voluntarily discontinue the case, the owner may then choose whether or not to file written argument. The owner may likewise decide whether or not to request an oral hearing. The Trademarks Opposition Board will consider the owner’s arguments (or just the evidence if no argument is submitted) and render a decision. That decision may uphold the mark in its entirety, delete some goods or services, or cancel the mark in its entirety. The Board will likewise consider whether special circumstances excuse non-use of the mark.
At this time, there is no indication that government lawyers will submit legal argument or otherwise participate in hearings before the Trademarks Opposition Board.[3] It is unclear whether that position will change over time.
It is also unclear whether that position will continue to apply if a trademark owner appeals from an unfavourable decision by the Board. Procedurally, the Attorney General of Canada must be named as the respondent to an appeal if there is no other adverse party (which will be the case for government-initiated cancellations).[4] Historically that has meant that government lawyers would appear to defend the challenged decision. It remains to be seen if that approach will be applied here.
C. What Trademark Owners Can Do to Prepare
Trademark owners can help secure their Canadian portfolios by taking a few simple steps in anticipation of CIPO’s new non-use cancellation policy.
- Update address of record and appoint a local agent
CIPO will send the notice of non-use cancellation to the trademark owner’s address and a copy of the notice to the owner’s Canadian trademark agent of record. The correspondence address and other details should be verified to ensure that they are current, and if an agent has not been appointed for some marks in the portfolio, now is a good time to do so.
In the case of trademark registrations based on the Madrid system, CIPO will not send notices to World Intellectual Property Organization ("WIPO") representatives unless they are Canadian trademark agents located in Canada, and will instead send the non-use cancellation directly to the applicant. In our experience, many businesses will miss such notices, or fail to understand their importance. Accordingly, owners of Madrid-based registrations in Canada should ensure that they appoint a Canadian trademark agent for all of the marks in their portfolio, or implement a very rigorous correspondence treatment system at the address listed in their WIPO registration.
- File new applications for key goods, services, and marks
Trademark owners should review their portfolio and ensure that their existing coverage corresponds to the goods and services which they are currently offering or plan to offer in the Canadian market. To the extent that there is a gap between the two, they should consider filing new applications. Since CIPO’s program will not apply to registrations that are less than three years old, there will be a significant grace period before these new applications could be targeted for non-use cancellation, whether by CIPO or by private parties.
Conclusion
This pilot project comes as somewhat of a surprise, given that Canada abolished both the filing basis requirement and the obligation to file declarations of use in 2019. The pilot project effectively reintroduces the use requirement, but only for a randomly selected sample of trademark owners. And in contrast to post-registration requirements to file proof-of-use in countries like the United States, here both the timing of proof and who will be required to provide that evidence are left to chance, rather than fixed rules.
Furthermore, the random selection process might be justified statistically, but it raises public policy concerns. The random nature of the selection may also result in this costly burden falling on small businesses with limited resources, thereby deterring them from further participation in Canada’s IP system. Random selection means that even marks with obvious signs of abuse (i.e. claiming all possible goods and services in every Nice class) will not be prioritized for review.
It remains questionable whether CIPO’s policy objectives of decluttering the register and promoting fair competition will be achieved through the pilot project, and whether such objectives are ones that CIPO should be prioritizing in today’s difficult economic climate.
While the likelihood of receiving a government-initiated cancellation notice is currently low, failure to respond to the notice in a timely manner will result in the cancellation of the targeted registration. Trademark owners should consider implementing the measures discussed above, and for all other questions regarding non-use cancellation proceedings in Canada, consult our Frequently Asked Questions (FAQ) or reach out to one of the authors.
