Law Times

lAw Times • April 14, 2014 Page 7 www.lawtimesnews.com COMMENT Feds set to discard years of use-based trademark law ast month, the Canadian government proposed the most important changes to the Trademarks Act since 1953 in its budget imple- mentation bill. Bill C-31 is omnibus legislation comprising 375 pages that, if enacted, would also amend dozens of un- related laws. In eff ect, the proposed legislation threatens to undo more than 140 years of jurisprudence based on the basic premise that use is a prerequisite to trademark protec- tion in Canada. Trademarks and the goodwill they rep- resent have always inextricably been intertwined in Ca- nadian law. In contrast, trademark rights in Europe are registration-based rather than use-based. e European approach leads to excessive claiming of trademark rights with the resulting crowding of trademark registers with deadwood and concomitant oppositions and litigation. Why does this matter? It matters because the proposed legislation is likely to aff ect thousands of Canadian busi- nesses, especially small- and medium-sized ones. If en- acted, the legislation would make trademark searching far more expensive and uncertain and oppositions are sure to increase as they have in Europe. During the past fi ve years, oppositions have been fi led in Canada with respect to about two per cent of all applications fi led whereas in Europe oppositions are fi led in more than 15 per cent of all applications fi led. e proposed legislation may be a boon for lawyers but bad for businesses that can ill aff ord the cost and uncertainty of trademark oppositions. In proposing to grant registrations in the absence of use anywhere and even without a requirement of bona fi de intention to use the trademark in Canada, the gov- ernment has invited a challenge to the validity of the re- sulting statute on constitutional grounds. It is one thing to have a national system of trademark registration based on use and quite another to permit enforcement of trade- mark rights anywhere in Canada irrespective of whether someone has used the trademark here or abroad. But that is precisely what the legislation proposes. Never before has Canadian trademark law con- ferred rights in a trademark without accompanying goodwill. e proposed legislation arguably constitutes an improper invasion of property and civil rights with- in a province contrary to the Constitution Act. Searches before selection and use of new marks will require marketplace investigations to determine when, or if, use of a registered mark commenced in Canada. Similarly, the lack of useful information about use on the register (such as the date of fi rst use in Canada) will force expensive investigations before advising on the chances of success in oppositions or litigation. Costs of both clearance and risk analysis are bound to increase. In addition, choosing a new mark will become more diffi cult with more of them on the register and actual use in Canada hard to determine. While such registra- tions might become vulnerable to challenges for non- use, the onus of removing the marks will be on busi- nesses and not the registrant. Although the amendments purportedly anticipate Canada's accession to various international agreements, key elements of the proposed legislation have little or nothing to do with these treaties. Improving government effi ciency is a worthy objective, but the additional ex- pense and uncertainty for Canadian businesses will more than off set any improvements on that score. Here are a few of the more important proposed changes: • Any applicant, domestic or foreign, can register a trademark in Canada without any need to use it here or abroad prior to registration. Registrations are sub- ject to attack for non-use in Canada a er three years from the date of registration, but in the meantime reg- istrations can be issued covering a long list of goods and services without prior use anywhere. is is likely to clutter the register of trademarks as it has done in Europe and make searching and clearance even more diffi cult and expensive than it is now. ere's not even a requirement to prove use in Canada a er a set pe- riod, such as fi ve years, to maintain the registration. is puts the onus on others to get rid of deadwood on the register at substantial expense to them rather than the trademark owner. • Applications can be opposed inter alia on the basis of prior use in Canada, but a potential opponent won't be able to determine from the register whether it is a prior user. It will need to engage in potentially expensive investigations to determine relative use dates. It may also need to initiate opposition pro- ceedings without this information. • Nice classifi cation, as per the Nice Agreement Con- cerning the International Classifi cation of Goods and Services for the Purposes of the Registration of Marks, is imported into the act, and applicants will have to describe goods and services both in ordinary commercial terms, as they do now, and also grouped by the Nice classifi cation with the class identifi ed and in order as set out in the classifi cation system. Exist- ing registrants have to provide the Nice classifi cation for their goods and services with a threat of being ex- punged for failure to respond. e fact that the Nice classifi cation dates back to the 19th century, long be- fore the invention of computer databases, does not seem to have deterred slavish adherence to a system that has long outlived its usefulness except perhaps as a future government revenue generator. • Proof of use following registration is not necessary unless the registration is subject to challenge for non-use. It is not easy and usually expensive to try to prove that a trademark is not in use. It would be far more sensible to require trademark owners to prove actual use in Canada for specifi ed goods and services within a reasonable time following registration as a condition for allowing it to remain in eff ect. • Renewals will now be every 10 years versus the current 15 years. Proof of use is not required upon renewal. It's regrettable that the government has seen fi t to discard years of use-based trademark jurisprudence without a comprehensive analysis by those the legisla- tion is most likely to aff ect. LT Cynthia Rowden is a partner and head of the trade- marks practice group at Bereskin & Parr LLP. She spe- cializes in all areas of trademark and copyright law and manages the international trademark portfolios of large Canadian companies and the Canadian portfolios of some of the biggest trademark owners in the world. Dan- iel Bereskin is a founding partner of Bereskin & Parr. As a member of the trademarks practice group, he provides strategic planning and business advice relating to all as- pects of intellectual property law. u SPEAKER'S CORNER Case on unjust enrichment could lead to unjust results mong the noteworthy Ontario Court of Appeal family law de- cisions this year is Martin v. San- some, a case that involved the interrelation between the property equal- ization provisions of the Family Law Act and the principle of unjust enrichment between married spouses. e central issue before the Court of Ap- peal was to what extent, in light of equaliza- tion of net family property, a married spouse can maintain an unjust enrichment claim. In Martin, the parties had been in a com- mon law relationship for nearly 10 years and were married for another decade. e husband, Delmer Martin, grew up in a Men- nonite community on a farm that had been in his family for nearly 200 years. Ultimately, he le the family farm to work outside of the community and started a business. At one point, the common law spouse, Linda Sansome, worked with him at his business even as most of her pay went back to the company account. at busi- ness ultimately failed and he and his busi- ness went bankrupt. e mortgagee took the parties' family home and obtained a further judgment against Sansome for $50,000 as she hadn't fi led for bankruptcy. Martin's parents then off ered to as- sist the couple by allowing them to move back to the family dairy farm and, if a er a three-year test period things were going well, they could then buy it from them. e parents ultimately sold their milk quota, stopped the dairy farming operations, and distrib- uted the milk quota proceeds to each of their children. e parties used Martin's share plus a $90,000 advance on his inheritance to partly fund the purchase of the farm from his parents and fi nanced the balance. However, the day before closing, the wife's name was struck from the purchase of the property and she was made to sign a domestic contract releasing any interest she had in the farm and home because, she was told, the Mennonite congregation wouldn't ap- prove of the sale to the parties if she were to maintain an interest and the lender wouldn't provide funds if she were on title due to the existing judgment against her. She received a domestic contract to sign and obtained independent legal advice that same day. However, the advice came from a lawyer who, as found by the trial judge, was blind, didn't read the document, and spent only about 20 minutes in total with her that day. At trial, Sansome moved to set aside the domestic contract, and, among other relief, sought a constructive trust interest in the farm. e trial judge did in fact set aside the domestic contract and awarded her a one-half ownership interest in the farm rather than de aling with the property through the equalization process found in the Family Law Act. e husband appealed the trust issue, among other matters. In setting aside the award of a one-half ownership interest in the farm, Associate Chief Jus- tice Alexandra Hoy, writing for a unanimous court, outlined the process to follow in these types of cases. First and foremost, before determining the issue of equalization, the court must de- cide on the ownership of prop- erty. In order to determine the ownership interest when dealing with a constructive trust claim, the trier of fact must fi rst de- cide, and the claimant must prove, that an ownership interest rather than monetary damages is more appropriate. In the case at bar, Sansome didn't tender evidence on this point (or at least not suffi cient evi- dence). Hoy noted, for example, that she wasn't seeking to maintain the farm and continue farming it. Hoy went on to further note that s. 5(7) of the Family Law Act provides that the purpose of the equalization scheme is to address issues of unjust enrichment be- cause the provision recognizes that spouses are deemed to contribute equally to the fi - nancial success of a marriage by both fi nan- cial and non-fi nancial contributions. On the facts of this case, the court determined that an equalization payment would ad- equately compensate Sansome and, there- fore, there was no need to look into the is- sue further. While I see the court's point to a certain extent, I don't entirely agree with this decision. Certainly, an equalization scheme addresses property issues between spouses arising out of the marriage; how- ever, it doesn't cover other situations, like in this case, of signifi cant premarital cohabita- tion and eff orts by a common law spouse in the maintenance of property such as shares in a family business where the non-owner spouse works to keep it going but doesn't take pay or puts earnings back into it. In the present case, the wife (both during premarital cohabitation and the marriage) seemed to have made signifi cant eff orts in maintaining the farm. In my opinion, the decision overemphasizes the compensa- tory nature of equalization when discussing unjust enrichment claims that seem to arise outside of the equalization scheme. Equal- ization of net family property and construc- tive trust awards address diff erent scenarios in very diff erent ways. Relying on one to oust the other seems to mix the two together in a way that could lead to unjust results. LT Marta Siemiarczuk is a lawyer practising family law litigation and collaborative family law at Nelligan O'Brien Payne LLP in Ottawa. She can be reached at marta.siemiarczuk@ nelligan.ca. BY CYnTHIA ROWDEn AnD DAnIEl BERESKIn For Law Times L Family Law Marta Siemiarczuk A

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