Trademark provisions under the new Cannabis Act

The federal government’s recently tabled Cannabis Act (Bill C-45) – which will legalize the recreational use of cannabis in Canada –will affect, in one way or another, a wide variety of existing regulatory regimes, including those relating to criminal law, health law, employment law, municipal law, sales tax and consumer protection, among others. Naturally, what we’re interested in most here at Shift Law is how it will affect trademark rights.

 Provisions which relate directly to trademarks are:

• Sections 17, 19, 25 – 28 and 31, which deal with marketing, packaging, labeling and designing cannabis and cannabis accessories; and
• Section 132, which contemplates potential conflicts between compliance with the Cannabis Act and the circumstances that may invalidate a trademark registration under Section 18 of the Trademarks Act.

The following is a brief summary of these provisions and some comments.

Marketing, packaging, labeling and design provisions: Sections 17, 19, 25-28 and 31

Sections 17, 19 and 25 – 28 prohibit the marketing of cannabis products or the use of any package or label that:

• appeals to young people;
• “sets out a depiction of a person, character or animal, whether real or fictional”;
• “associates the cannabis or one of its brand elements with, evokes a positive or negative emotion about or image of, a way of life such as one that includes glamour, recreation, excitement, vitality, risk or daring”; or
• incorporates “any term, expression, logo, symbol or illustration” specifically prohibited under the (yet to be drafted) regulations to the Act.

Section 31 prohibits the unauthorized sale of cannabis or a cannabis accessory “that has an appearance, shape or other sensory attribute… that there are reasonable grounds to believe could be appealing to young persons”.

What is prohibited by these provisions is the use of certain subject matter that could otherwise be used as trademarks – namely, words, designs, characters and even scents and sounds that are intended to distinguish the trade source of a product from other trade sources of similar products.

The Trademark Act already prohibits the use of an assortment of otherwise trademark-able subject matter – e.g. the crest of a member of the Royal Family (s. 9(1)(b)) or “any scandalous, obscene or immoral word” (s.9(1)(j)). The foregoing provisions of the Cannabis Act will, in effect, add to these existing prohibitions, the use of characters like Tony the Tiger or Ronald McDonald, images of skateboards, scents like bubble gum or terms like “Get Happy” or "High Society" when associated with cannabis products.

These provisions will also, in effect, expand the grounds on which an application to register a trademark for a cannabis product can be opposed under the provisions of the Trademarks Act.  Section 30(i) of the Trademarks Act requires that an application to register a trademark include “a statement that the applicant is satisfied that he is entitled to use the trademark in Canada in association with the wares or services described in the application”. Proposed revisions to Section 30 will require, simply, that applicants “are entitled to use” the trademark in Canada. Non-compliance with Section 30 of the Trademarks Act is a ground on which a person can oppose an application to register a trademark under Section 38(1)(b) of the Trademarks Act.

Section 132

Section 132 of the Cannabis Act states:

(1) Despite the Trademarks Act, the registration of a trademark is not to be held invalid on the basis of paragraph 18(1)(b) or (c) of that Act as a result of compliance with this Act.

(2) For greater certainty, the absence of use of a trademark as a result of compliance with this Act constitutes special circumstances that excuse the absence of use for the purposes of the Trademarks Act.

The provision is clearly intended to forgive circumstances that would otherwise render a trademark registration invalid under Sections 18(1)(b) and (c) of the Trademarks Act and presumably, though it is not expressly referred to, Section 45 of the Trademarks Act.

Sections 18(1)(b) and (c) of the Trademarks Act say that a trademark registration will be invalid if the subject trademark is no longer distinctive or if its owner has abandoned use of it. Section 45 of the Trademarks Actpermits any person to seek cancellation of a trademark registration if its owner fails to provide evidence of use of the trademark in the previous three years.

Section 132 of the Cannabis Act suggests that if complying with its provisions requires the owner of a registered trademark to suspend or abandon use of it or results in the trademark becoming non-distinctive (e.g. as a result of others using it or the trademark becoming a generic term), then the registration will not be invalid in spite of Section 18(1)(b) and (c) and Section 45 of the Trademarks Act.

This provision seems to reflect a concern that a trader who has already registered a trademark for cannabis products (e.g. a trademark for pipes or bongs that has already been in use) may be required to suspend use of its registered trademark for an extended period of time, for instance, in order to obtain a license under the Cannabis Act or to modify its branding to comply with the provisions relating to packaging and labeling etc. In the interim, the owner might otherwise be deemed to have abandoned the trademark or it may become difficult for the owner to stop others from using the trademark or a confusingly similar trademark to such an extent that the trademark becomes non-distinctive.

The provision raises a number of interesting issues. Could someone who used, say, KIDZ WEED as a trademark for marijuana and was required to stop using it under Section 26(a) of the Cannabis Act, but who was nevertheless able to secure a registration for it by declaring use of it in the Canadian Intellectual Property Office, be permitted to hold on to the registration indefinitely? They may well wish to do so in the hopes that amendments to, or even a repeal of, the Act might remove the labeling prohibitions at some point in the future.

No doubt, there will be many other questions asked about the intent, scope and application of these provisions over the coming months, many of which will likely remain unanswered in July 2018 when the legislation is expected to come into force. Finally - thanks to my colleague, Andrea Hill at SkyLaw, for sharing her insights on this new legislation with me. Check out her blog, What's Up in Weed?, for a round up of what's new in the cannabis industry in Canada.