Don’t Forget to Use Your Mark During the Pandemic

Don’t Forget to Use Your Mark During the Pandemic

If there is one mantra in the Canadian trademark system, it’s “use it or lose it.” With the closure of many physical workplaces during the COVID-19 pandemic, it is important for businesses to keep an eye on how they continue to use their trademarks. Registered trademarks that have not been used for three consecutive years can be expunged under Section 45 of the Trademarks Act absent an acceptable reason for non-use. Businesses that promptly re-open after lockdowns will likely not be at risk for expungement. However, companies should remain cautious as they rebuild and re-establish themselves in Canada.

So how does one go about proving use of their trademark? “Use” carries a particular meaning in trademark law which varies depending on whether it is associated with goods or with services (or with exported goods). A mark is deemed “used” in association with goods if it is marked on the goods at the time of the transfer of the property or the possession thereof in the “normal course of trade”. The mark can be on the goods themselves or on the packaging in which the goods are distributed. Use of a mark in association with goods can also be established if the person buying or receiving the good is given notice of the association between the mark and the good in some manner besides mere advertising. Moreover, the transfer of the marked goods must be in the “normal course of trade,” meaning that the transaction must be for some profit-making purpose. Immediate profit from the transaction is not required but it could help meet the “normal course of trade” requirement. Luckily, these “use” requirements are not too difficult to meet in the modern era of e-commerce. Retail companies can continue to sell their marked goods on digital platforms like Amazon, Etsy, and Ebay. A single sale may suffice as “use” in association with goods.

Businesses that ship products outside of Canada can establish use of a trademark if the goods or the packaging of the goods are marked at the time of export.

However, use in association with services is a completely different challenge. A trademark is “used” in association with services if it is used or displayed in the performance or advertising of those services. In the case of marks associated with services, mere advertising is not enough. Some aspect of the services must be performed or delivered in Canada. But how does a business prove that their service is performed in Canada if they shifted to a digital platform (e.g. online education/consultations over Zoom, online booking/reservations)?

If persons in Canada receive a material benefit from a service, the service will be deemed performed in Canada. There is no strict test for what constitutes a material benefit, but the Federal Court of Appeal in Hilton found that an online booking service created a material benefit in the absence of a “brick-and-mortar” hotel in Canada, based on the following factors:

  • a large number of Canadians (41,000) used the service;
  • the service resulted in significant revenues ($50 million) from Canadians; and
  • Canadians received discount rates and loyalty points from using the service.

Material benefits are determined contextually, so businesses do not have to meet the exact factors or numerical figures listed above. However, it would be prudent to keep evidence demonstrating similar factors to maintain trademark rights. Hilton also affirmed that these material benefits can come from services that are incidental or ancillary to the service(s) listed on a trademark registration.

In conclusion, continued use of a trademark in Canada is required for maintaining trademark rights and “use” is defined differently depending on whether the mark is associated with a good or a service. The current pandemic has pushed many businesses to change the way they operate and it is important for those businesses to ensure their practices still make “use” of valuable trademarks.

Written by David Park. David is a second year JD Candidate at Osgoode Hall Law School. He is an IP Innovation Clinic Fellow.