Trademark registration: An undervalued corporate asset

Intellectual property plays a crucial role in a company’s success and competitiveness. Intellectual property assets include patents, trademarks, copyrights, industrial designs and trade secrets.

Today, companies invest heavily in research and development to create innovative products, services and technologies. However, protecting the trademarks associated with these innovations is often neglected and poorly integrated into companies’ growth strategies.

In Canada, the importance of trademark protection is often underestimated in companies’ business strategies. Indeed, trademark registration is a crucial step for Canadian companies, but one that is frequently undervalued.

Depending on the jurisdiction, trademark rights may be acquired through use or registration. In Canada and the United States, rights are acquired through use. In other words, it is not necessary for a trademark to be registered in order to confer protection on its owner. However, registering a trademark provides significant advantages for businesses. In most other countries, the use of an unregistered trademark confers no rights over it; only its registration grants rights.

A trademark is a distinctive sign used by a company to identify its products or services and distinguish them from those of its competitors. A distinctive sign may consist of one or more words, sounds or designs, or a combination of these elements.

There are several categories of trademarks:

  • The most common trademark consists of one or more words, sounds or designs.
  • Non-traditional trademarks: holograms, moving images, smell, taste, color per se, three-dimensional shape, product packaging, texture, position of a sign.
  • Certification marks: A certification mark is a type of trademark whose purpose is to show that certain goods or services meet a defined standard.
  • Prohibited trademarks: emblems, coats of arms, badges, flags

Over time, trademarks have come to represent not only actual goods and services, but also a company’s reputation and goodwill. As such, they are considered important intellectual property and represent an undervalued asset for companies. Registering a trademark can significantly strengthen a company’s position in the marketplace. This article explores in depth why trademark registration is a valuable and often overlooked asset for businesses in Canada.

1. Exclusive right of use

The rights conferred by the use of a trademark are limited to the geographical areas in which the trademark is used. Without registration, a company runs the risk of discovering that another entity is using an identical or similar trademark in the marketplace, and this represents a significant risk for a business. Conversely, by registering a trademark, a company obtains the exclusive right to use that trademark throughout Canada in connection with the goods and services specified in the registration. This exclusive right extends throughout Canada, regardless of where the trademark is actually used.

In fact, a “CHAUSSEMOI” shoe company that sells its products only in Quebec, and specifically in Montreal, will only be able to take action against a competitor using the same brand in Toronto, if the company holds a registration. This legal protection not only prevents unauthorized use of the trademark, but also reinforces the company’s credibility and reputation in the marketplace.

A trademark registration is valid for ten years, and can be renewed indefinitely on payment of government fees. Thus, the exclusive right granted by the registration can last indefinitely, as long as the registration remains in force.

2. Facilitate brand advocacy

Registration of a trademark in Canada opens the way to several legal recourses to protect the trademark, including an action for infringement.

Remedies are also available to protect a trademark used but not registered in Canada (common law trademarks). However, the burden of proof is very heavy, and legal costs are often very high.

The owner of a trademark registration benefits from a legal presumption of exclusive ownership of the trademark, thus reducing the burden of proof. Thus, a person claiming that the trademark owner has no rights would first have to invalidate the registration. Registration has a deterrent effect on competitors, and can also be used to prevent counterfeit goods from entering the country through customs.

3. A competitive edge

A registered trademark confers a significant competitive advantage. It enables a company to stand out from its competitors by offering consumers a distinctive sign they can recognize and trust. A strong, well-established brand can become a powerful marketing asset, attracting new customers and building loyalty among existing ones. In addition, trademark registration can deter competitors from trying to appropriate identical or similar elements, thus reducing the risk of confusion in the marketplace.

4. Maximize company value

 Registering a trademark can considerably increase a company’s value. Trademarks are intangible assets that can increase in value over time. When a company decides to sell or be acquired, a registered trademark can be a valuable asset that increases the overall value of the business.

For a potential buyer or investor, trademark registration guarantees that intellectual property rights are properly protected. Without registrations, it becomes much more difficult to evaluate a company’s trademark portfolio.

That’s why it’s a good idea to protect your trademarks from the outset by filing trademark applications.

5. Facilitate international expansion of the trademark and the company

Trademark registration in Canada protects the owner’s rights only in Canada. In fact, intellectual property is a national right, subject to the rules of each country. Consequently, registration of a trademark in Canada does not confer rights in other countries. However, registering a trademark in Canada facilitates a company’s international expansion. Thanks to international agreements such as the Madrid Protocol, Canadian companies can extend their trademark protection to several countries in a single application.

On June 17, 2019, Canada joined the Madrid Protocol, enabling Canadian companies to facilitate and optimize the protection of their trademarks abroad. The Madrid system makes it possible to apply for trademark protection in up to 122 territories by filing a single form with the World Intellectual Property Organization (WIPO). To benefit from this international registration system, you must have registered your trademark in Canada, or have an application for registration in Canada in progress.

In practice, when a company applies for registration in Canada, it has up to 6 months to file an application for registration in another country, in order to be able to invoke the Canadian date as the priority date. This privilege enables companies to obtain a presumption of prior right, even abroad.

For example, a furniture company “DEPOT MEUBLE” registers a trademark in Canada on March 31, 2024. The company is also considering registering this trademark in the United States, but has not yet proceeded. Meanwhile, a competitor “TUBEDESK”, which manufactures furniture, filed an application for registration of a similar or identical trademark in the United States on April 15, 2024, without using the mark for the time being. On May 25, 2024, “DEPOT MEUBLE” registered the trademark in the United States. The company “DEPOT MEUBLE” has a prior right to the registration and the registration of  “TUBEDESK” might be refused in the United States.

On the contrary, if the competing company “TUBEDESK”, which manufactures furniture, files an application for registration of a similar or identical trademark in the United States on April 15, 2024, with use of the trademark in the United States for 5 years, then the company “DEPOT MEUBLE” will be refused registration of its trademark in the United States.

Caution: Unlike Canada and the United States, many countries do not grant protection to owners of trademarks that are used but not registered, so trademark registration becomes necessary to secure the company’s rights abroad.

6. Facilitate e-commerce

To combat and prevent counterfeiting, some e-commerce platforms have set up verification and authentication mechanisms. Indeed, some e-commerce platforms, such as the Amazon® Brand Registry, require sellers to prove that the trademark associated with their products is registered, or that an application for registration is in progress.

These programs enable registered trademark owners to benefit from various protections, such as the ability to report violations of their trademark, and access to advanced search tools to monitor and protect their brand.

What’s more, customers are more likely to buy products from registered brands, knowing that these products are genuine and that the brand is protected. This can lead to increased sales and customer loyalty.

Registering a trademark in Canada is a strategic asset that is often undervalued by companies. It offers exclusive rights of use, enhanced legal protection, a competitive advantage, maximizes business value, facilitates international expansion and facilitates online commerce. By understanding and taking advantage of these benefits, Canadian companies can strengthen their market position and ensure their long-term success.

If you would like to explore registering a trademark with our help, book an exploratory call here:

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