Registered vs. Unregistered Trademarks - Common Law Protection
In Canada there are two streams of trademark protection: the registration system and the unregistered or common law approach. Accordingly, any introduction to trademark law in Canada necessitates a discussion on the advantages and disadvantages of pursuing and enforcing trademark rights utilizing either approach. In this post I will review some of the advantages and disadvantages of unregistered trademarks.
For individuals, businesses and other organizations utilizing unregistered trademarks in conducting business, they have placed reliance upon common law trademark protections. Generally speaking, a company satisfying the basic requirements for establishing common law trademark rights can utilize such rights to enforce or restrain a competitor from “passing off” its goods and/or services as those of the rights owner. For some individuals and entities, particularly entrepreneurs and start-ups, this approach to trademark protection is cost effective for the purpose of immediate adoption of a trademark while providing some avenues of rights enforcement since you avoid the costs associated with obtaining legal advice, running trademark searches and filing a trademark application.
Reliance upon common law trademark rights does, however, have several disadvantages. In particular, such rights are limited to the geographic area in which the particular unregistered trademark is known. For example, a company operating in the Maritime region of Canada would be in a position to defend and enforce its common law trademark rights against others operating within (a) the Maritime region and (b) within the same (and/or potentially, an overlapping) channel of trade. Accordingly, that same company would have no ability to restrain or otherwise prevent the use of the same mark within the same channel of trade throughout Western Canada.
Perhaps the clearest disadvantage of reliance upon common law rights involves the costs associated with enforcement. Indeed, over the longer term, such costs can exceed those associated with seeking trademark registration due to the time and financial expense associated with assembling the evidentiary records necessary to defend and/or enforce common law trademark rights. Since the onus is on the party asserting common law rights to substantiate such claims, it will be necessary to maintain and produce records evidencing use of the mark – and such a process has the potential of greatly exceeding the costs associated with running a comprehensive trademark search and seeking trademark registration.
As a final note, reliance upon common law trademark rights is increasingly risky as commercial use of the internet expands to most, if not all, trade channels. A reluctance to obtain a trademark registration due to the initial costs associated with such a pursuit may result in costs exponentially greater if it becomes necessary to defend or enforce common law rights against a competitor with a large and/or growing internet presence.
