Deadwood: Special circumstances to excuse lack of trademark use
Canada’s Trademarks Act is often said to feature a streamlined avenue to clearing the trademark registry of “deadwood,” that is to say, trademarks that are not in active use in Canada.
The regime is fairly straightforward. Anyone (upon payment of the required fee) may request the Registrar of Trademarks to send a notice to the owner of a trademark registration requiring the owner to submit evidence of use of the mark in Canada in the three years up to the date of the notice (the “Relevant Period”). If the owner fails to submit acceptable evidence of use, the entire registration may be expunged. If evidence of use of the mark with only some of the goods and/or services listed in the registration is provided, the registration may be amended by the Registrar to delete those goods or services for which no acceptable evidence was provided.
But that is not the end of the enquiry. The Trademarks Act includes what may be considered a saving provision. The owner may claim that there were special or exceptional circumstances that prevented the owner from using its registered trademark.
That was argued in a recently published decision of the Registrar in a case involving a registration covering goods, namely, “carbonated and non-carbonated non-alcoholic beverages.”
The owner in that case had evidence of sales of its soft drink in Canada for the time just outside (before) the Relevant Period. In that evidence, it was explained that the owner’s product had been sold in 355 ml bottles and that its customers and distributors were requesting the beverage to be available in 250 ml bottles, apparently to reduce the number of servings per bottle.
The owner further explained that finding a supplier for 250 ml bottles was challenging and that the COVID-19 pandemic caused a major disruption in the supply chain for bottles. A new bottle supplier was found in Europe, but the owner disqualified that option due to significantly higher cost.
The Registrar (through the Trademark Opposition Board, which is delegated by the Registrar to determine these matters) found that these circumstances did not constitute special circumstances. There was no explanation for how looking for another size of bottle would have prevented the owner from continuing to manufacture and distribute its soft drink in 355 ml bottles during the Relevant Period.
Further, even though the pandemic may have disrupted the owner’s business for a while, that only accounted for less than half of the three-year period. Despite the owner’s difficulties in sourcing 250 ml bottles during the pandemic, it was not clear from the evidence that the owner would have resumed sales even in the absence of such difficulties.
The Registrar found that the initial absence of use appeared to be the result of a voluntary business decision to change the bottle size of the owner's product, noting from a prior decision that: “Whether compounded by the pandemic or not, such a voluntary business decision does not constitute circumstances that are ‘unusual, uncommon or exceptional.’ ”
The moral of this story is that trademark owners must take care to use their registered marks and, if there are reasons they cannot, those reasons cannot be matters within their control. To be saved under the rubric of “special circumstances,” the reasons for non-use of a registered trademark cannot be business decisions.