Trademarks 101: Five Reasons to Register Your Trademark

This post was written prior to our January 2017 merger, under our previous firm name, MacPherson Leslie & Tyerman LLP.

The best trademark advice we can give a client is this: register your trademarks. In case that is not enough to convince you, we have written this article to provide you with an extensive list of the benefits of registering trademarks – many of which you may not yet have considered – with a brief explanation of each advantage.

TM 101 Register

1. Registering Your Trademarks Enhances Protection in Canada

To understand the value of a registered trademark, one needs to appreciate that trademark rights in Canada are acquired by actual use in the marketplace – no actual registration is required. Unregistered trademarks are often called “common law” trademarks. Relying on common law trademarks alone is rarely advisable, particularly when trademark registrations are readily available and provide so many benefits for brand protection.

Registered Trademark Rights are National.

Registered trademarks are enforceable anywhere in Canada. This means that if your business is in Red Deer, Alberta, you can sue an infringer in Halifax, Nova Scotia. Common law protection extends only to the local, geographic area in which the trademark is used and known, meaning that the Red Deer business has no remedy against the Halifax infringer.

Registered Trademarks are Easier to Enforce.

There are several legal reasons why registered trademarks are advantageous, including the presumption of validity and the right to sue for trademark infringement anywhere in Canada. When it comes to stopping trademark infringement, these advantages cannot be understated.

There are also practical reasons why registered trademarks are easier to enforce. Infringers tend to take cease and desist letters more seriously when reference can be made to a registered trademark (or, preferably, several registered trademarks).

Perhaps more importantly, the lack of a registered trademark opens the door for a bad faith infringer to create a lot of problems. When faced with a cease and desist letter demanding that they stop using your unregistered trademark, an infringer can attempt to register the trademark themselves. This puts you in the position of having to go through costly trademark opposition proceedings.

Due to the risk of an infringer attempting to register your trademark, we generally recommend filing a trademark application prior to sending a cease and desist letter. However, you will usually be in a better position if you have already registered your trademark. Waiting to register until you have an infringer is a poor strategy, particularly when it can take a minimum of 14 – 24 months to get a trademark registration.

Protection Against Future Third Party Registrations.

During the examination of a trademark application, the Registrar of Trademarks assigns an examiner who searches all applied-for and registered trademarks to ensure the proposed trademark is not confusingly similar to an existing trademark application / registration. This means that your application / registration will act as a block to anyone who subsequently attempts to register the same mark or a confusingly similar mark.

No such search is conducted by the examiner to determine if there are pre-existing common law rights owned by third parties. This means that even though you were the first to use a mark in Canada, if you do not register it, a secondary user can resister the trademark themselves. If a secondary user beats you to the Trademarks Office, you will have to endure the resource-intensive processes of opposing their trademark application or, if you do not catch them before their trademark registers, apply to Federal Court to have it cancelled. If you do not catch them within five years after their trademark registers, that good faith secondary user’s registration will become unchallengeable. If that happens, unless you can prove they knew about your use before applying to register their mark, your only recourse is to try to reach a settlement with the secondary user or to apply to the Federal Court asking for an order that you be allowed to keep using the mark in your limited geographic region.

Protection From Trademark Squatters.

As we have previously discussed, it may soon be possible for squatters to register trademarks. Essentially, this would involve a squatter applying to register your unregistered trademark(s), then selling or licensing the registration back to you at an inflated price. A registered trademark will protect you from this type of squatting.

Protection for Disparagement (Deprecation of Goodwill).

Registering your trademark does more than protect your trademark from infringers and squatters: it also provides added protection from certain forms of disparagement because the Trademarks Act confers the right to sue for depreciation of goodwill. This means that if someone else uses your trademark in a way that is likely to depreciate the goodwill you have developed in your trademark, you improve your case against them by having a registered trademark.

2. Registered Trademarks Enjoy Enhanced Protection Online

Easier Enforcement Online.

A registered trademark is generally more likely to produce successful outcomes against online infringers. Infringers rely on neutral third parties like social networks and online directories to advertise their infringing goods / services. These intermediary third parties generally respect intellectual property rights and will take down infringing content. However, it is more difficult to demonstrate the existence of those rights with a common law trademark. A registered trademark gives third party publishers the ability to review the Trademarks Database record themselves, allowing them to confidentially remove the infringing content.

Advantages Against Cyber Squatters.

When it comes to “cyber-squatting” or “domain name squatting,” registered trademarks are advantageous. Domains can be recovered from cyber squatters using a dispute resolution process. One step of the process requires that the complainant prove that they have rights in the relevant trademark and having a registration is sufficient to show those rights. Once again, proving ownership of a common law trademark is much more difficult and costly.

Better Access to Website Domains.

Lastly, a registered trademark can give you better access to domain names. For example, one way non-Canadians can meet the Canadian presence requirement needed to obtain a .ca domain name is to own a Canadian registered trademark that corresponds to the domain.

3. Registered Trademarks Assist with Access to Foreign Markets

Applying to register a trademark in Canada also makes registration easier in other countries that are signatories to the Paris Convention for the Protection of Industrial Property. The Paris Convention allows trademarks to be registered on the basis of an application / registration and use in the owner’s home country. Use of the mark in the foreign country will not be required to successfully obtain a registration in that other jurisdiction.

4. Registered Trademarks Deter Infringement

Much of the protection provided by a registered trademark goes unseen. They prevent infringement before it happens because innocent potential infringers will know that the mark is not available.

Registered trademarks are more visible than common law ones. Registered trademarks appear in the Canadian Intellectual Property Office (CIPO) database and Industry Canada’s NUANS Corporate Name Search. Those thinking of adopting a trademark or business name often check these databases first and when they see a similar registered mark, will know not to adopt that trademark. Some jurisdictions in Canada will even prohibit businesses from adopting a registered trademark as part of their business name without consent of the trademark owner. This saves registered trademark owners significant costs in trademark enforcement (and they typically do not even know it). This is particularly true when the potential infringer uses a trademark professional to do a proper search.

Additionally, other websites use data from these official databases to create their own unofficial databases. While official databases are not always actively advertised by the government agencies that maintain them, unofficial databases are often intentionally optimized for search engines. This extends the visibility of registered trademarks to less sophisticated parties who use public search engines to check for trademarks.

5. Registered Trademarks can Provide Financial Advantages

Registered trademarks are of value to third parties evaluating the value of the brand for purchase or licensing purposes.

Avoid Issues During Sale of a Business.

Common law trademarks can create unnecessary points of contention in business purchase and sale agreements. Prospective buyers want to be certain of what they are buying, including the branding. The fact that you have not registered your trademarks can become an issue in the due diligence phase of the sale of all or part of your business or prior to an initial public offering.

Avoid Losing Potential Licensees.

Successful brands can produce additional profit through licensing, such as through merchandising and franchise agreements. Like potential purchasers, trademark licensees want to ensure that they are getting what they are paying for. Sophisticated licensees will want this issue addressed before licensing a trademark.

Registered Trademarks as a Security Interest.

Registered trademarks can also be used as collateral for loans. Notice of the lender’s secured interest can be placed on the file at the publicly-available Canadian Trademarks Database, providing notice of the lender’s interest to the general public.

Key Takeaway: Go get your trademarks registered now. “Register your trademarks” is advice every business needs to hear. It is one of the best ways to prevent costly, time-consuming and avoidable trademark problems in the future. The risks of not registering are almost never outweighed by the relatively inexpensive and easy process of obtaining a registration.

About the Trademarks 101 Series

MLT’s Trademarks 101 is a series of posts about trademark law designed to provide a plain-language overview of trademark law for businesses, marketing and adverting professionals, and in-house counsel. Trademarks 101 comes from MLT’s trademarks team: Chris Woodland and Kursty Peterson. These posts are intended to be a supplement to – not a replacement for – the advice of an experienced trademark professional.

The five posts in this series include:

  1. Start Smart by Developing a Strong Trademark
  2. Pre-screening and Searches – Ensuring Your Trademark is Available
  3. Five Reasons to Register Your Trademark
  4. Use it or Lose It – Eight Tips for Keeping Your Trademarks Strong
  5. Going Global – Protecting Your Trademark Abroad