As businesses in Canada scrambled to market their cannabis products when recreational cannabis use was legalized in 2018 (“Legalization“), some brands filed trademark applications for cannabis-related goods and services prior to Legalization. While filing an application to register a trademark can certainly be seen as a proactive step, there are legitimate questions about whether the move was permitted by the Trademarks Act (the “Act“) at the time.
Prior to the legislative overhaul of the Act in June 2019, section 30(i) read as follows:
30 An applicant for the registration of a trade-mark shall file with the Registrar an application containing
(i) a statement that the applicant is satisfied that he is entitled to use the trade-mark in Canada in association with the goods or services described in the application.
Sections 38(2)(f) of the current Act provides that an opposition may be based on the ground that “the applicant was not entitled to use of the trademark in Canada in association with those goods or services.” Importantly, the relevant time for this ground of opposition is “at the filing date of the application in Canada.”
How can a party applying to register a mark prior to Legalization be “satisfied that he is entitled to use the trademark in Canada” when, at the time of filing, the goods and services their proposed mark is associated with were illegal?
Whereas the Trademark Opposition Board (the “Board“) has commonly discarded oppositions based on the former section 30(i), successful allegations can result in the refusal of an application. Successful challenges to trademarks using section 30(i) fell into two general categories: (1) trademarks filed in bad faith; and (2) trademarks that could not be legally used by the applicant due to contraventions of federal statutes such as the Bank Act, Canada Post Corporation Act, Food and Drugs Act and Copyright Act.
A more recent decision from the Board may provide us with a window into how early-adopter cannabis trademarks may be considered.
Into the weeds
Weeds Glass & Gifts Ltd v Kenneth Kinnear, 2021 TMOB 261 is a decision about a trademark application filed on June 29, 2017, for the mark WEEDS WORLD (the “Mark“) based on its proposed use in Canada in association with the good “dried marijuana.”
The Mark was opposed on October 22, 2018, with the Opponent alleging that the Applicant was not entitled to register the Mark. In response to the opposition, the Applicant alleged that the use of WEEDS and WEEDS & Design by the Opponent in association with cannabis-related goods and services prior to Legalization was unlawful.
The Board noted that medical cannabis use was legalized in 2001 and recreational cannabis use was legalized on October 17, 2018. Without determining whether the Mark had been used in association with medical or recreational cannabis, the Board was not prepared to declare that the Opponent’s use of its WEEDS marks had been unlawful. Absent a court finding that the Opponent’s use of the WEEDS marks had been unlawful, the Board was reluctant to make such a finding. In other words, unless it is absolutely clear that a party would be unable to use a trademark without breaking the law, the Board will not conclude that an Applicant is not entitled to use the trademark.
The Board referred to the Federal Court’s decision in Sunbeam Products Inc. v Mister Coffee & Services Inc., 2001 FCT 1218 (“Sunbeam Products“), where the Court provided comments regarding the Board’s inability to make findings of legality without a full hearing with viva voce evidence. The Court held that the Board does not have jurisdiction in trademark opposition proceedings to make findings of lawfulness, particularly where the matter is within the jurisdiction of another decision-maker, except in clear circumstances.
Spectre of invalidation still looms
For early adopters of cannabis trademark registrations, the Board’s inability to make determinations of illegality except in clear circumstances should provide some relief. In effect, the Court’s holding in Sunbeam Products may function as a shield in opposition proceedings against trademarks that were filed before Legalization despite the use of such trademarks potentially being illegal as of the date of application.
By now, many pre-Legalization cannabis trademark applications have been registered, rejected or abandoned. However, even after a cannabis trademark issues, the spectre of invalidation still hangs over these registered trademarks. While the Board may be unable to entertain complex questions of legality regarding the use of a trademark, the Federal Court might tackle such questions. In particular, the Federal Court may consider the validity of a trademark, including whether it was registrable at the date of registration under section 18(1)(a) of the Act.
To date, there have been no reported Federal Court decisions involving attempts to challenge a pre-Legalization cannabis trademark on the basis of use of the trademark being illegal at the date of filing. Further, there are no provisions within the Act or the Cannabis Act that preclude the Federal Court from invalidating pre-Legalization cannabis trademarks by virtue of the illegality of their use (though section 132 of the Cannabis Act does remove two other grounds to challenge validity).
However, now that recreational cannabis, including cannabis edibles, is legal, there may be a way to avoid prospective trademark attacks based on past illegality. Having effectively cornered the market associated with their trademarks, pre-Legalization trademark owners may simply file new applications with respect to their trademarks. By doing this, they may be able to avoid the uncertainty associated with the registrability and validity of older cannabis trademarks.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Source: https://www.mondaq.com/canada/trademark/1280780/trademarking-cannabis-products-before-legalization-a-proactive-step-or-an-illegal-one?email_access=on
