Current Trademark Insights

Counterfeiting: What Is It and What Can You Do About It?

Whenever I hear the word “counterfeiting” I think about the scene in the desert in To Live or Die in L.A., where they show up to shut down the counterfeiters only to find nothing left but a washing machine.  The far less gritty definition of counterfeiting though, related to counterfeit merchandise and services, is something that impacts many of us on a regular basis.

What is counterfeiting, you ask?  There are many different definitions – this one from Wikipedia is good as any to outline the term:  “…Counterfeit products are fake replicas of the real product. …The word counterfeit frequently describes both the forgeries of currency and documents, as well as the imitations of clothinghandbags,shoespharmaceuticals, aviation and automobile parts, watcheselectronics (both parts and finished products), software, works of arttoysmovies.[1] Counterfeit products tend to have fake company logos and brands.”  Counterfeit goods are copies of your legitimate products.  They are sold by others to trade on your goodwill or other IP rights.  In many cases as the notoriety of your company and your brands increases, so does the temptation for people to copy or trade on the goodwill and value of your IP rights and planning to deal with counterfeit products is one area in which many companies can benefit from the deployment of some resources.

What types of products or services might be copied? Virtually anything – everything from the widely anticipated counterfeit consumer fashion goods such as clothing or the like, through to construction materials, safety products and others (I spoke once to a fellow who found out he had a copycat furnace in his house!).  Services can also on occasion be copied  – for example the copycat Apple store in China in which by reports the staff all thought they were working for the real company.  Appreciating the scope of the counterfeiting problem, you might ask yourself what you can do to minimize or avoid its impact on your business.  As with many IP-related business decisions, the resources you dedicate to awareness and enforcement in the counterfeiting area will vary but a starting point is to understand some of the options that you have at your disposal to detect or fight back against these problems.

Grey market goods are products manufactured by you but which are not authorized for sale in a particular market – for example if a distributor in one country to whom you ship product moves it for sale in another market in which you have another exclusive distributor. The product itself is legitimate, but is not authorized for sale in that territory. There are steps which can be taken to provide the best possible legal scenario to deal with grey market scenarios, although a good measure of common sense and positive working relationships with all your channel partners is often the best way to minimize these situations!


One of the first key elements for a business seeking to implement an anticounterfeiting program is to establish rigorous monitoring in the markets of interest. The monitoring program can become more complex as the geographic footprint of your business expands into multiple countries. Your staff or local distributors in corners of the market can provide feedback and periodic information about what they see in the marketplace, and in certain cases you may also wish to retain local legal counsel or investigative help to proactively monitor activity or particular parties in the marketplace to identify when counterfeit goods or services are entering the market. The best information possible results in your best ability to enforce your rights.

 A related issue in terms of monitoring or establishing an enforcement framework is to ensure that any contracts that your company enters into with local companies, manufacturers, distributors, agents and the like establish the proper relationship of those companies to assist you with monitoring and enforcement as well as to minimize the ability of those companies to themselves become sources of grey or black market goods in the marketplace.  Establishing this documentary framework is something that you can work on with your counsel, to ensure that the extent possible you have created precedent documents and contract templates that you are using that support your monitoring program. You will also potentially need to rely on local legal counsel in the market of interest to ensure that the contract language which is created is best enforceable Oreos most efficiently drafted for the local legal framework of that country.


Once you have implemented a monitoring program, or a counterfeit or infringement matter comes to your attention, you next need to develop an enforcement strategy.  You will typically have many different options at your disposal to try to stop it.  Depending upon the jurisdiction and severity of the situation, you may have a civil remedy at your disposal (ie. you could sue the counterfeiter or the vendor of the counterfeit goods for infringement of your IP rights), or in some countries and circumstances there is even a criminal avenue by which a criminal case of counterfeiting can be reported.  In Canada there are civili and criminal options available to consider although most rights holders would at present likely find themselves in the civil route for enforcement of their rights.  You can and should rely on your IP lawyer to give you some help to understand and frame your enforcement approach, since the decision is complicated by the type of business, the country or jurisdiction, the severity of the counterfeiting or infringement, and other factors.  Depending upon the level of enforcement that you elect to undertake as well as the potential geographic dispersion of your market again, you may even wish to leave standing enforcement instructions with your local counsel or representatives so that they can upon detection of the presence of counterfeit merchandise simply proceed with enforcement without the need to delay and hopefully in that fashion most quickly intervene.

Border control:

One of the primary means in many countries to exclude infringing products from the marketplace are customs and border enforcement mechanisms which exist allowing for the seizure or destruction of infringing goods at the national borders by customs officials. Many export markets, including the United States, have such a scheme in place, and they provide one of the simplest means of local market enforcement where available. In order to use these border control mechanisms it is most often the case that you will need to have registered  your trademarks or other IP rights locally, so given the time involved in completing those registration steps it is best to be prepared in advance. Canada does not currently have such a simple border control mechanism in place, but there is currently federal legislation pending.  The availability and accessibility of border control programs varies  and again there is the need to rely on local legal advice to make sure the best possible approach is taken  to interface the governmental border control mechanisms in particular jurisdictions with your own civil or criminal enforcement program.

Copy protection:

Some of the measures which can be taken to minimize the possibility or impact of a counterfeiter on your products and operations include maintaining tight control over your manufacture and distribution channel through appropriate contracts, as well as in some cases copy protection or detection of origin schemes can be implemented, so that with your brand or legitimate products, their source or authenticity can be verified.  There are many different types of copy control or  rights management systems which can be implemented from very simple to very sophisticated. In terms of sophisticated systems, for example, in polymer manufacturing, trace ingredients have been placed in plastic to allow for tracking of the origin of the plastic. In computer software everyone is aware of the various types of digital rights management or license management schemes which are typically implemented with respect to software programs. There is a strong vendor support industry in this area and to the extent that your company wishes to incorporate some type of a copy protection or  control mechanism into your day-to-day distribution plan you can find a lot of good help in this area.

To summarize, there are a number of steps which can be taken to best prepare to deal with possible counterfeit or copycat presence:

  • Ensuring proper distribution or channel contracts, dealing with IP ownership;
  • Registration of selected trademarks, patents or other IP rights;
  • Awareness of local law and requirements for use of customs interdiction or other local enforcement mechanisms;creation and implementation of a internal policing mechanism to detect counterfeit merchandise or services, including building awareness amongst your personnel; and
  • Implementation of copy protection or other schemes to help with identifying original product.

Companies addressing some of these issues in their market development plans will be best positioned to protect, exploit and maximize their own IP positions as their businesses grow. You know what they say about an ounce of prevention…

Public Authority Trademarks in Canada – Legislative Reform

On June 9, 2014 Bill C-611 (a private members bill) was put before Parliament with the intention of amending section 9 of the Trademarks Act,which deals with official marks. Section 9, and official mark protection thereunder, is the primary purview of governments and governmental authorities within Canada allowing for streamlined access to broader protection for public authorities and official marks than is available in most circumstances to regular trademark applicants. Currently, official marks are not subject to any opposition proceedings or renewal terms, and do not have to meet many of the typical requirements for trademark registration under the Act. The superior rights which attach to these types of advertisements and official marks have been attractive to those public authorities qualifying for their use in the past, but are somewhat idiosyncratic in Canadian trademark law as well as internationally, for the large majority of parties who cannot use them.

In 2013, the Standing Committee on Industry, Science and Technology recommended that the Government introduce amendments to the portions of the Trademarks Actdealing with official marks so as to “avoid stifling innovation and distorting markets”. Halifax MP Geoff Regan tabled his private member’s bill, the purpose of which “is to clarify what constitutes a public authority under section 9, as well as to create a review and objection process to ensure public marks do not unduly restrict the market”. The specific changes proposed by Bill C-611 are as follows:

  • Added definition of “public authority” – the term is not defined under the current legislation.
  • All public authority marks will be subject to a 10-year term, with the option to renew for a further 10-years, subject to a further opposition period.
  • The Bill’s transitional provisions state that all existing marks as of the coming into force of the amendments would be subject to an opposition period as well as a 10-year term. spike in opposition proceedings as a result.
  • Added objection process– within 3 months of the registrar giving public notice of the adoption and use of a mark by a public authority, any interested person can file an objection on the basis of:
    • lack of use;
    • the body is not actually a public authority;
    • the mark is confusing with a previously registered mark, or is identical or nearly identical to a registered trademark and may significantly undermine the ability of the trademark owner to fully exploit the mark;
    • the mark is a generic term; or
    • the granting of the mark does not serve the public interest.

Section 9 will continue to exist in its current form for the foreseeable future, as it was largely unaffected by the massive overhaul of the Trademarks Act in Bill C-31 earlier this year. However, regardless of the outcome of this particular bill, the text of it provides a catalyst for ongoing discussion around the future and scope of official marks in Canada, both for public authorities enjoying and urging their continued use, and other brand owners and parties in the market who wish to level the playing field by curtailing or eliminating their use.

New Canadian trademark law amendments – business impact

In the summer of 2014 a large series of amendments to the Trademarks Act in Canada received Royal Assent. The stated policy basis for these amendments was to provide alignment between the Canadian trademark regime and international laws, to allow for accession or completion of the implementation of three international trademark treaties to which Canada was a signatory.   The implementation of these treaties and legislative changes will have a significant impact on trademark practice and brand owners in Canada. The following is intended to provide a very basic understanding of the high points of the amendments and how they might impact businesses and brand owners.


What are the Treaties Intended To Do:

The three treaties in question have different purposes, which from a very high level can be summarized as follows:

  • Madrid Protocol:  this treaty provides a consolidated international application mechanism by which trademark applicants in signatory countries can potentially file a simplified or single trademark application to protect their trademark to a certain degree in a number of countries at the same time. This mechanism is intended to reduce the complexity of International trademark protection for some applicants, who choose to use this process rather than use the filing of local trademark applications to protect their rights internationally;
  • Nice Agreement:  the Nice agreement imposes a standardized classification of wares and services for use by signatory trademark authorities. Trademark applicants are required to outline in their applications the nature of their products and services, and by using the Nice classification to categorize these applications and registrations, a more standardized International searching approach and mechanism is facilitated. Use of this classification and agreement is also intended to result in the application of more standardized examination standards on the description of products and services in international trademark offices; and
  • Singapore Treaty: This international treaty mandated the streamlining and harmonization of many trademark application procedures to allow for harmonization on the international level of trademark applications. This treaty spoke also directly to the implementation of an International classification regarding wares and services, which is the Nice classification specifically created by the Nice agreement.


Highlights of the Amendments:

There are a large number of amendments to the trademark regime and the Canadian Trademarks Act within the proposed changes. From a high level the changes which probably have the most impact on Canadian businesses include the following [not an exhaustive list]:


  1. The revised act will provide an expanded definition of a trademark, which is intended to cover a lot of nontraditional categories including moving and three-dimensional marks etc.
  2. The key amendment from the perspective of many trademark professionals in this regime is the removal of the requirement for a trademark applicant to either declare their use or their intent to use the trademark in Canada at the time of filing of a trademark application or at any time. Anyone will be able to file a trademark application for any trademark regardless of any intent to use the trademark, since they do not need to declare their intention to do so
  3. The definition of confusion in the Act is revised to suggest that the use of confusing trademarks need not take place within the same channel of trade. Depending upon its interpretation or application this could limit the past practice of multiple marks coexisting in disparate channels.
  4. Certification marks:  certification marks are a class of trademark registrations available under the Canadian Act which are registered and used to certify the certain standard of the product or service to which they are applied. In the past some companies have elected to seek regular trademark protection as well as certification mark protection where they wish to sell or promote their own products and services as well as to propagate a standard. The definitions around certification marks are revised in this legislation so that a certification mark can only be registered by someone who does not themselves make products or services in the field – presumably to avoid the monopoly or hijacking of industry standards or certification terms by individual vendors.
  5. The term of trademark registrations is shortened to 10 years.
  6. The Registrar of Trademarks can request registrants to reclassify or to provide classification information under the Nice classification for their pre-existing registrations.

The transitional provisions in this legislation are lengthy. The determination of the applicable legislation and regime will be made by and large based upon the date of advertisement of a trademark application.


Impacts and Recommendations:

While it is believed that the amendments will cause significant upheaval in Canadian trademark practice for at least a couple of years while they worked their way into practice and the jurisprudence, there are some anticipated benefits to the amendments. These include the streamlining of application processes and the benefits to be obtained from the implementation and harmonization of classification based upon the Nice agreement. Clients who might wish at this point to await the completion or entry into force of these amendments in advance of significantly advancing their trademark strategy include the following:


  • Clients or trademark properties who will desire widespread international trademark coverage which is compatible with protection pursuant to the Madrid Protocol;


  • Clients who wish to file trademark applications without the need to declare use of the trademark or an intent to use the trademark at the time of filing of the application;


With the removal of the use requirement from the application process, the changed system will likely result in large numbers of trademark registrations which cover unused goods and services – this has been the international experience in the Madrid environment. It will be necessary for Canadian companies to conduct additional investigations to verify the possibilities of use of conflicting trademarks in market in advance of the filing or adoption of their trademarks to have clearance comfort, and there will also in addition to the increased cost and complexity in searching and clearance of trademarks be increased complexity, cost and volume of trademark opposition proceedings since oppositions may be the only way for a party to verify the use status of a trademark definitively from a third party who has filed a conflicting application.


Of a more time sensitive fashion, there are believed to be a number of clients and client situations in which it may be desirable to contemplate accelerated trademark filing consideration – i.e. certain fact patterns may benefit from the filing of trademark applications under the current regime rather than waiting for the implementation of these other measures. These scenarios include:


  • The term of trademark registrations being shortened to 10 years, trademark registrants may wish to proactively renew their trademark registrations within the defined parameters in the legislation to permit for one more 15 year renewal.


  • It may be preferable to file trademark applications related to colors or sounds in advance of proclamation of the new sections, to potentially avoid the need to prove acquired distinctiveness under the new legislation. Proof of acquired distinctiveness is often done by the collection and preparation of affidavit evidence which significantly increases the costs and the trademark process. As well, these applications might be required to include territorial limitations based upon the acquired distinctiveness locale;


  • Trademark applications which may be desired to be filed covering large numbers of goods and services might be more cost-effective to file in advance of the proclamation of the application of the Nice classification. It is likely that the implementation of the Nice classification would install a class based fee system in the trademark process and as such significant cost savings might be anticipated in cases where large numbers of classes would be included in an application if they were filed now rather than later;


  • If it is desired with more certainty to clear trademarks and filed applications to protect them, in advance of the proclamation of these amendments we can still use the use information in the trademark register to streamline the clearance process and provide some degree of additional certainty for clients in selecting or prosecuting their trademark applications;


  • Following implementation of the changes it will be possible to obtain registration without use of a trademark anywhere in the world, so it may be beneficial to file as soon as possible to secure a filing date or priority position in advance of trademark squatters who might file large numbers of applications following the implementation of the changes and the removal of the requirement to declare the intention of the applicant at the time of filing regarding trademark usage;


  • It is advisable for clients to consider the breadth and scope of their trademark protection before these amendments are implemented.

Canadian government introduces new anti-counterfeiting measures

On March 1, 2013, the Government of Canada introduced new anti-counterfeiting legislation in draft form for consideration to Parliament.  The Combatting Counterfeit Products Act, if implemented in substantially its present form, would amend a large number of provisions in the Copyright Act and Trademarks Act in  Canada to provide enhanced counterfeiting enforcement mechanisms and increased penalties for parties liable for the distribution of counterfeit goods in Canada.  This legislation should be welcomed by international brand holders, who have in the past been critical of the available enforcement mechanisms available in Canada, as too lax or cumbersome.

One of the primary provisions in this Act as presented is the creation of enhanced customs and border enforcement and seizure mechanisms, which would allow law enforcement officials greater ability to seize or detain suspected infringing goods.

Use It or Lose It – Importance of Use to a Trademark Owner

In order to maintain the validity of a Canadian trademark registration, the trademark must be used as registered. Trademark usage is what actually supports the ongoing validity of your trademark in the marketplace.

Use of a trademark in Canada in respect of products typically comprises actual sales of those products bearing the trademark. Specimens of such use would include commercial documentation or packaging sold along with the product or the product itself bearing the trademark. Use of a trademark in respect of services can comprise advertisement of those services to the public for sale.  It is no longer necessary to file specimens of use with the Canadian Intellectual Property Office, but in certain other countries including the United States it is necessary to file specimens of use showing the trademark as applied to the products or services in question.

Trademark owners who rely on licensed use by third parties to support their registrations also need to be sure to have appropriate license provisions in place so that use of the mark accrues to the benefit of the owner rather than the licensee.

Something else to keep in mind is the “creep” or morphing of trademarks which can take place over the years as marks are modernized or revisited by or during brand revisions. Modest, non-substantial modification of the trademark may not result in a sufficient departure to render the initial registration susceptible to cancellation but this is something to consider on an ongoing basis as a part of your brand monitoring.

From a business perspective it is important to implement some degree of ongoing trademark surveillance on your brand portfolio to ensure that sufficient use is being made and information gathered to support your trademark registrations – you don’t want to lose your rights at an inopportune moment because of a failure to use the trademark on an ongoing basis!

Supreme Court of Canada: Trademark confusion test

The Supreme Court of Canada decision in the case of Masterpiece Inc. v. Alavida Lifestyles Inc.  provides a recent precedential review of the law around trademark confusion.

Parties to this trademark dispute were in the retirement living industry.  Masterpiece Inc. used several unregistered trademarks including “Masterpiece the Art of Living”.  Alavida, located in Ontario, sought to register the trademark “Masterpiece Living” in December 2005 on a proposed use basis.  Masterpiece Inc. started using and sought to register the marks “Masterpiece Living” and “Masterpiece” in parallel to Alavida, based on filings in 2006.  Alavida’s application eventually registered, and Masterpiece Inc. sought to expunge the registration.

Summary and impact:

Masterpiece Inc.’s previous unregistered use of MASTERPIECE THE ART OF LIVING as a trademark was sufficiently similar to, and earlier than, Alavida’s subsequent MASTERPIECE LIVING registration to cause potential consumer confusion in Canada and on this basis Alavida was found to not be entitled to registration.

The Court provides thoughtful consideration of the detailed application of many of the factors in the confusion test set out in the Trademarks Act.

This decision reinforces for businesses and trademark applicants or rights holders the importance of conducting common law and unregistered trademark clearance as a part of the clearance process in selecting and adopting new trademarks.  Use of unregistered marks in any region of Canada is relevant to the registrability of a subsequent applicant.  Also of interest in this case is the fact that cost is minimized as a discounting factor in a confusion analysis as the marks in question become more similar.


In the Federal Court Trial and Appeal divisions, the expungement attempt by Masterpiece Inc. was refused.

In an assessment of trademark priority and infringement, consumer confusion is the key test – section 6 of the Trademarks Actforms the basis for the law in this area.  Overall the test is whether or not as a matter of first impression, a consumer would be likely to confuse the source of particular products and services – in this case would a casual consumer in passing recollection be likely to think that retirement services of Alavida and Masterpiece Inc. came from the same or a similar source.  If such confusion is likely, then infringement is likely to be found.

One of the issues considered by the Court was whether or not the geographic location of use of the conflicting marks is relevant in considering likelihood of confusion.  Does the fact that these parties were using their respective marks in Alberta and Ontario, with significant geographic separation, lessen the likelihood of confusion?  In the context of a registered trademark, the Court held that the location of use in Canada is not relevant and there cannot be confusion anywhere in the country.

On the issue of comparison of the trademarks in question, the Court held that there is a strong resemblance between Masterpiece Inc.’s unregistered “Masterpiece the Art of Living” and Alaveda’s “Masterpiece Living” trademark, based on the presence of the same predominant element, the word MASTERPIECE.  Masterpiece Inc., even though their earlier use was unregistered, is afforded chronological priority in the confusion test since it is the use (ie. 2001 vs. 2006) of the trademark which crystallizes a trademark owners position rather than the registration of the mark.

Alavida argued a lessened likelihood of confusion on the basis of the sophistication and cost of the purchase of their services – the fact that retirement living services are carefully considered and of high cost, in their position, was a factor tilting against a finding of confusion which would support expungement of their registration.  The Court held that cost of the goods or services is unlikely to support negation of confusion where a strong resemblance between the trademarks or the other factors on the confusion test under section 6 of the Act are in play.

Rothstein J.’s decision reviews and applies the law on trademark confusion in an informative and succinct way and in the application of the section 6 “first impression” confusion test, the commentary on test for resemblance and other of the section 6 confusion factors is of legal interest and import.