A Question of Use: TMOB Begins Pilot Project for Registrar-Initiated Trademark Expungement Proceedings

Starting in January 2025, Canada’s Registrar of Trademarks (the “Registrar”) will begin to proactively send Section 45 expungement notices against existing trademark registrations, requiring owners to take steps to prove their mark is actively in use.

This article provides an overview of the project alongside suggestions on how one can take steps to insulate a trademark portfolio in Canada.

Section 45 Proceedings: Clearing ‘Deadwood’ From the Register

As is the case in many other jurisdictions worldwide, Canada is largely considered a “use-based” country wherein “use” is the predominant consideration when it comes to entitlement to use or registration of a trademark. “Use” is a defined term under section 4 of the Trademarks Act (the “Act”). According to subsection 4(1) of the Act, a trademark is deemed to be used in association with goods if, at the time of the transfer of the property in or possession of the goods, in the normal course of trade, it is marked on the goods themselves or on the packages in which they are distributed, or it is in any other manner so associated with the goods that notice of the association is then given to the person to whom the property or possession is transferred. With respect to services, subsection 4(2) of the Act states that a trademark is deemed to be used in association with services if it is used or displayed in the performance or advertising of those services.

Given the paramountcy of “use” under Canadian trademark law, the purpose of Section 45 proceedings is to provide a simple and expeditious method of removing from the Register trademarks which have fallen into disuse, with such trademarks often referred to colloquially as “deadwood.”^[1] The proceedings are governed by section 45 of the Act, which provides the Registrar with the authority to dispatch a notice (“Notice”) to the owner of a registered trademark (either of its own volition or at the request of a third party) requiring that the owner furnish an affidavit or statutory declaration showing, with respect to each of the goods or services specified in the registration, whether the registered trademark was in use in Canada at any time during the three-year period immediately preceding the date of the Notice and, if not, the date when it was last so in use and the reason for the absence of such use since that date. Given the three-year relevant period set out in subsection 45(1), a Section 45 proceeding cannot be commenced against a registration which has been registered for less than three years. In addition, registrations which existed on the Newfoundland Register prior to April 1, 1949, are also exempt.

Overview of the Registrar’s Pilot Project

Although the Registrar has had the power to commence expungement (i.e., cancellation) proceedings under section 45 of the Act, the Registrar rarely (if ever) took steps to initiate a proceeding of its own volition. As a result, Section 45 proceedings would typically only be initiated at the request of a third party, most often at the request of a prospective applicant whose pending application or proposed use of a trademark was blocked by an existing registration. In such cases, the interested third party would file a request with the Registrar to dispatch a Notice to the owner of a registered trademark, initiating the Section 45 proceeding.

Starting in 2025, however, the Trademarks Opposition Board (“TMOB”) will begin issuing Notices on the Registrar’s own initiative (“Pilot Project”). During Phase 1, the Registrar will issue monthly batches of Section 45 Notices against randomly selected registrations, with 100 Notices beginning in January, then 50 during February and March respectively. The TMOB will publish relevant data about the results of the proceedings on a monthly basis. Once a statistically significant number of proceedings are concluded, the TMOB will move to Phase 2 and organize consultations to garner the public’s feedback on whether the Pilot Project should continue.

The TMOB has stated that registrations will be randomly selected, though registrations that have been on the Register for less than three years or which existed on the Newfoundland Register prior to April 1, 1949, remain exempt from the initiative. The Registrar may also decline to issue a Notice if there are “good reasons,” which are assessed on a case-by-case basis. Examples of “good reasons” include cases where the Registrar has determined that issuing the Notice would be frivolous, where the mark is already subject to a pending or appealed Section 45 proceeding, or where initiating a new proceeding would fall within three years of the date of issuance of a previous Section 45 proceeding of which a final decision had already been rendered.

The TMOB has stated that its goal in initiating this new project is to ensure that the Register accurately reflects only those marks which are in use in Canada in association with the goods and services listed in their registrations, which in turn will promote fair competition, maintain the integrity of the trademark system and make trademark examinations more efficient by removing unused marks or claims from the Register.

What Can Owners of Registered Trademarks in Canada Do to Prepare?

With the initiation of the new Pilot Project, owners of registered trademarks in Canada need to be aware of the heightened risk that the validity of their Canadian registrations may be questioned. Consequently, it would be prudent for all owners of registered trademarks in Canada to take steps now to review and protect their portfolio. Such steps may include:

1. Conducting an audit of their registered trademark portfolio in Canada to review which registrations may potentially be vulnerable under the Pilot Project (i.e., it only applies to registrations which have been registered in Canada for at least three years). Registered owners are encouraged to reach out to their Canadian trademark agent to obtain a full overview of their trademark portfolio in Canada.
   
2. In respect of any in-scope registrations, confirm whether all such trademarks are currently in use in Canada with each of the goods/services listed in the registration (as “use” is defined pursuant to the Trademarks Act). Trademark owners should also take care to confirm that “use” of the trademarks is being made by the registered owner or being made by another entity pursuant to a licence granted by the registered owner which licence includes appropriate quality control provisions.
3. In respect of trademarks for which there is “use” with all the goods and services, we encourage trademark owners to keep an ongoing record of any such “use” made of the trademark in Canada to ensure that a record of “use” is readily available should a registration become subjected to a Section 45 proceeding.
4. In respect of any trademarks which are not in use, are only in use with some of the associated goods/services or, in the case of design marks, if a variation of the design is in use, owners should consider whether the trademark remains of interest to the business and, if so, brand owners should work with their Canadian trademark agent to discuss what steps can be taken to preserve their rights in any such trademark in Canada. Such steps may include filing a new application to cover goods/services for which there is no use, filing a new application to cover the modified version of any design mark then in use, revising packaging to ensure that the trademark as registered appears in association with all relevant goods sold in Canada, etc.
   

The Trademarks & Branding Group at Aird & Berlis LLP is made up of experienced trademark experts available to provide tailored advice and guidance. Please contact a member of the group if you have any questions or require assistance regarding the Registrar’s new Pilot Project for Section 45 Proceedings.

[1] Meredith & Finlayson v. Canada (Registrar of Trade Marks) (1991), 40 CPR (3d) 409 (Fed CA) at 412.