Protecting Brands in North America

The USMCA, which is yet to be ratified, would affect several significant aspects of Canadian copyright, patent and trademark law and practice

When and if the United States-Mexico-Canada Agreement (USMCA) is ratified by all parties, US attorneys and in-house counsel seeking to prosecute or enforce their clients’ intellectual property rights in Canada will notice its impact immediately.

The agreement, which is yet to be ratified, affects several significant aspects of Canadian copyright, patent and trademark law and practice.

In the copyright arena, the USMCA will align the minimum duration of copyright in Canada (and Mexico) with the “life plus 70 years” term that currently exists in the US.

Until the USMCA comes into effect, then, the current rules stay in place.

“If the work is being used in Canada, then life +50 applies,” says Tara Parker of Goodmans LLP in Toronto. “If the work is being used in the US, then we start with life plus 70.”

The USMCA also changes how internet service providers (ISPs) deal with users’ copyright infringement. Here, Canada will keep its “notice and notice” system under which the ISP forwards to its subscribers any notices of alleged infringement that it has received from a rights holder.

The USMCA also provides ISPs with a “safe harbour.” ISPs who remove material they know to be infringing and cooperate with copyright owners to deter illegal storage and transmission of copyrighted materials will be protected from liability for infringement.

Under the agreement, Canada must also provide protection against the circumvention of digital locks and watermarks on copyrighted material and make those who engage in such behaviour subject to civil and criminal sanctions.

Otherwise, despite the similarities in US and Canadian copyright law, differences remain that have not been covered by the USMCA.

“Although both Canada and the US are parties to the Berne Convention, there are little differences that can trip people up,” Parker says.

While the Convention, an international agreement covering copyright, protects copyright in the original work, the US and Canada differ on who is considered the author or owner of the right.

“Under the US ‘work for hire’ concept, the employer can be both the author and the owner of the work,” Parker says. “In Canada, however, the work becomes one that was created in the course of employment unless there is an agreement to the contrary. The employer, then, is considered the first copyright owner but not necessarily the author — and that’s important because the duration of the right is keyed off the author’s life in both countries.”

There are also differences in the moral rights regimes. In the US, moral rights apply only to visual artists; in Canada, the authors of all works have moral rights.

And while the concept of “fair use” and “fair dealing” are used interchangeably in Canada, legal advisers need to understand that they are distinct concepts for the purpose for comparing Canadian and US copyright law.

“The US concept of fair use is more flexible than the statutory concept of fair dealing found in our Copyright Act,” Parker says. “Fair dealing is an exception to copyright infringement and is limited to certain purposes under the statute, whereas fair use in the US is not so restricted.”

However that may be, copyright owners in Canada are asserting their rights more aggressively than ever.

“Historically, copyright owners have been reluctant to go after consumers, because they didn’t want to alienate their customer base,” says Andrew Bernstein in Torys LLP’s Toronto office. “But that’s changed, and we see it in cases like Voltage [Rogers Communications Inc. v. Voltage Pictures, LLC] where the copyright holder is seeking the identities of thousands of consumer infringers from the ISP.”

On the patents landscape, December 2018 saw the implementation of important changes to Canada’s Patent Act.

One of the most important changes is the expansion of the prior user rights doctrine found in section 56 of the statute.

Previously, this section provided that anyone who “purchased, constructed, or acquired” the subject matter of a patent before the priority date had the right to “use and sell” the patented matter to others without liability to the patentee.

By way of contrast, the amendments allow anyone who, before the priority date and acting in good faith, did anything that would have amounted to infringement of the patent, to commit the same act after the priority date without being liable for infringement.

Doug Deeth of Deeth Williams Wall LLP in Ottawa believes that the new iteration of prior use could have a significant impact in the e-commerce arena.

“When you think about it, a lot of patent claims nowadays are directed to activities which in the absence of a computer would be exactly the same activities that have been carried on in the past,” he says. “The amendment would let the people who have been doing things in the old way off the hook for infringement.”

The amendments also allow the use of prosecution history in claim construction. This includes all written communications between an applicant and the Patent Office, and not only to written communications from the applicant to the Patent Office.

“For the past 30 years, we’ve had to figure out the intention of the inventor from the objective point of view of a skilled person,” Deeth says. “Now, we can have direct evidence of what the applicant for the patent meant.”

Finally, the amendments provide that any licensing commitment from a patentee regarding a standard-essential patent (a patent that claims an invention that must be used to comply with a technical standard) is binding on any subsequent assignees of the patent.

“We’re just catching up to the rest of the world with this one,” Deeth says.

Turning to trademarks, a brand-new Trademarks Act came into effect on June 17, 2019.

The key changes will affect applications, changes, registrations and renewals.

So far as applications are concerned: applicants will no longer have to state a basis for their filing or the dates and details of use; the Nice Classification system  and Madrid Protocol have been adopted; filing fees have increased and are now based on the number of class registrations sought; and the definition of “trademarks” will now cover anything that functions as an indicator of source such as scent, taste and texture.

On the renewals front, all renewals will have to be amended to conform with the Nice Classification System; the term of new renewals is not 10 years, as opposed to the previous 15 years; and fees have increased.

Other changes mandate that the Canadian Intellectual Property Office no longer requires documentary proof of assignments and associated marks have been deleted from the register. There are also numerous changes to examination, opposition and technical requirements.

Still, perhaps the most important thing that foreign trademark holders should know is that Canadian courts have consistently fixed on delays in enforcing rights as a reason to deny them.

The high-water mark, perhaps, is in the Federal Court of Appeal’s (FCA) January 2019 decision in Sandu Singh Hamdard Trust v. Navsun Holdings Ltd.

The case involved parties who both published Punjabi language newspapers called AJIT.

The plaintiff Hamdard Trust’s publication was famous in India and had been distributed in Canada since 1968. But its peak distribution in Canada was no more than 29 annual subscribers, achieved between 1990 and 1993.

In 1993, the defendant Navsun began distributing a weekly publication in Vancouver and Toronto. It garnered many more followers, boasting a circulation of 11,000 per week in Vancouver and 13,000 per week in Toronto by 2010.

That year — some 42 years after it began distribution in Canada — Hamdard sought registration of its trademark AJIT. Navsun opposed it, arguing that Hamdard’s mark was not distinctive because Navsun was using the same name.

Although the parties acknowledged that Punjabi readers in Canada likely associated AJIT with the Indian publication, the Opposition Board held that Navsun’s much greater readership negated the distinctiveness of Hamdard’s mark.

Hamdard appealed unsuccessfully to the Federal Court and then took the matter to the FCA, where the Indian publisher lost again.

“Whether or not the appellant was the first to use the mark in Canada and whether or not the respondent’s subsequent use was infringing are of no consequence where, as here, the parties have used the mark concurrently for over a decade, and, in that time, the respondent has successfully acquired notoriety in the mark in Canada sufficient to negate the distinctiveness of the appellant’s mark,” wrote Justice Donald Rennie for the court. “As noted by this Court in Farside Clothing Ltd. v. Caricline Ventures Ltd. . . .  infringing prior use may cause a mark to lose its distinctiveness, although the extent or degree to which distinctiveness is eroded by infringing use remains a question of fact to be considered in each case. The allegation of passing off does not preclude a party from relying on the alleged infringing use to challenge distinctiveness.”

And a final word of warning: “It is incumbent upon a trader to protect the distinctiveness of its mark, even in the face of infringing use,” Rennie wrote.

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