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A Retrospective Look and
Resulting Best Practices on the
Last Twenty Years of Canadian
Trade-mark Licensing
Gowlings at a Glance
• One of Canada’s largest
law firms
• Over 750 professionals
across 10 offices
worldwide
• Recognized...
Gowlings at a Glance
www.gowlings.com
3
Trade-mark Licensing Pre-1993
• Pre-1993 – No real ability to license and viewed as
antithetical to source theory of trade...
Trade-mark Licensing Post-1993
• Post-1993 – Section 50 implemented quality
controlled licensing and abolished registered ...
Main Themes and Ideas Post-1993
• Court and the TMOB are working through different
scenarios
• Cases look at what needs to...
Main Themes and Ideas Post-1993
• A couple of interesting decisions:
• Cassels, Brock & Blackwell LLP v Tucumcari Aero
Inc...
Proper Quality Control
• Important to consider:
• What needs to be controlled
• What is required in order to exercise that...
What needs to be controlled?
• The Act does not provide key definitions
• Character and quality – look to standard
definit...
Invalidating the mark
• Wilkinson Sword (Can) Ltd v Juda, (1966) 51
CPR 55 (Ex Ct)
• Involved grey market goods, transferr...
Exercising control
• Revisions to Section 50, did not provide any
new guidance in terms of how to exercise
quality control...
Clause Example
• Licensee acknowledges and agrees that its use
of the Licensed Marks shall at all times be
under the contr...
Outlining Standards
• Legislation doesn’t offer guidance in terms of
what needs to be contained in standards
• Think about...
Outlining Standards
• Quality issues:
• Performance and reliability
• What is the level of excellence, how durable is it?
...
Quantifiable and Measurable Guidelines
• Hard to enforce standards if you can’t properly
measure
• “Products need to be go...
Character and Quality
• Section reads “character or quality” not
“character and quality”
• While standards and follow up c...
Testing and Inspection
• Setting standards is the first step
• Need to provide proof that you have monitored
and tested fo...
Specimens
• Licensee shall supply to Licensor, at
Licensor’s request, specimens of Licensed
Wares manufactured or sold by ...
Inspections
• Depends on the type of product
• Parent or subsidiary relationships might
require little in the way of forma...
Good Business Practice
• Quality
• Testing for the right things:
• Material product characteristics
• Spirits BV: taste te...
Licensee Does Not Comply
• Litigation:
• Worst case – your mark is being challenged in an
action where they say your mark ...
Disputes under the license
• Contractual dispute
• Adequacy of the license would need to be
addressed
• Cases failing on t...
Termination Provision
• Not always included when drafting
• Agreements don’t always outline what happens
when licensee doe...
Q&A
24
Thank You
montréal  ottawa  toronto  hamilton  waterloo region  calgary vancouver  beijing  moscow  londo...
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A Retrospective Look and Resulting Best Practices on the Last Twenty Years of Canadian Trade-mark Licensing

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A Retrospective Look and Resulting Best Practices on the Last Twenty Years of Canadian Trade-mark Licensing

  1. 1. A Retrospective Look and Resulting Best Practices on the Last Twenty Years of Canadian Trade-mark Licensing
  2. 2. Gowlings at a Glance • One of Canada’s largest law firms • Over 750 professionals across 10 offices worldwide • Recognized expertise in Business Law, Advocacy and Intellectual Property Law 2
  3. 3. Gowlings at a Glance www.gowlings.com 3
  4. 4. Trade-mark Licensing Pre-1993 • Pre-1993 – No real ability to license and viewed as antithetical to source theory of trade-marks • 1954-1993 – Registered user regime. Procedure, limitations and resulting problems 4
  5. 5. Trade-mark Licensing Post-1993 • Post-1993 – Section 50 implemented quality controlled licensing and abolished registered user agreements • Intention to have legislation reflect modern business realities • Changed the idea from source theory to one based on quality control • Created presumption of proper licensing if public notice was given as to the owner and that the use was under license 5
  6. 6. Main Themes and Ideas Post-1993 • Court and the TMOB are working through different scenarios • Cases look at what needs to be controlled, how that control is exercised and who is entitled to exercise that control • Not a lot of case law during this period (most in the context of expungement, (Section 45) proceedings 6
  7. 7. Main Themes and Ideas Post-1993 • A couple of interesting decisions: • Cassels, Brock & Blackwell LLP v Tucumcari Aero Inc, 2010 FC 267 – provides guidance on sublicensing • BCF SENCRL v Spirits International BV, 2012 FCA 131 – provides guidance on the issue of corporate control 7
  8. 8. Proper Quality Control • Important to consider: • What needs to be controlled • What is required in order to exercise that control and who is entitled to exercise control • What is the degree of control that is required to meet Section 50 requirements 8
  9. 9. What needs to be controlled? • The Act does not provide key definitions • Character and quality – look to standard definition of those terms • Act is not concerned with inherent quality control • The Act does not state that a product has to be good or excellent but that it needs to be of a consistent quality so the consumer is not deceived • Same quality as set by the licensor 9
  10. 10. Invalidating the mark • Wilkinson Sword (Can) Ltd v Juda, (1966) 51 CPR 55 (Ex Ct) • Involved grey market goods, transferred the mark • Consuming public not notified and the mark was invalidated • Heintzman v 751056 Ontario Ltd, (1990) 38 FTR 210 (FCTD) • Manufacturing facility changed to imported goods and did not tell the public of the change from the original source • Significant change in quality can invalidate a mark 10
  11. 11. Exercising control • Revisions to Section 50, did not provide any new guidance in terms of how to exercise quality control • Start with language in Section 50: a right to control • License required - can be written or oral (with sufficient proof that license exists) 11
  12. 12. Clause Example • Licensee acknowledges and agrees that its use of the Licensed Marks shall at all times be under the control of Licensor. Without limiting the generality of the foregoing, Licensee agrees that it shall adhere at all times to the standards governing the character and quality of the Licensed Wares that may be set by Licensor and communicated toy Licensee from time to time. 12
  13. 13. Outlining Standards • Legislation doesn’t offer guidance in terms of what needs to be contained in standards • Think about what ought to be contained in standards: • Can be brief or complex and detailed • Character: • Manufacturing specifications (technical/functional) • Parts and materials specifications 13
  14. 14. Outlining Standards • Quality issues: • Performance and reliability • What is the level of excellence, how durable is it? • Varies from case to case • Required degree of complexity 14
  15. 15. Quantifiable and Measurable Guidelines • Hard to enforce standards if you can’t properly measure • “Products need to be good quality”, how do you measure? • Need to follow through as the owner • Case law has not answered this yet • Don’t file and forget 15
  16. 16. Character and Quality • Section reads “character or quality” not “character and quality” • While standards and follow up can be left to parties to complete at a later date it might be dangerous to do so • Licensor should set standards to show they are following through on it’s obligations 16
  17. 17. Testing and Inspection • Setting standards is the first step • Need to provide proof that you have monitored and tested for compliance with standards • Provision of specimens • Inspection of premises or performance of services 17
  18. 18. Specimens • Licensee shall supply to Licensor, at Licensor’s request, specimens of Licensed Wares manufactured or sold by Licensor to enable Licensor to determine whether Licensee is in compliance with the terms and conditions of this Agreement • How often? • Who will bear the cost? • When will you inspect? During manufacturing or when product is in the market? • Who is entitled to conduct tests? 18
  19. 19. Inspections • Depends on the type of product • Parent or subsidiary relationships might require little in the way of formal inspection • Food products or consumer facing products might need to be inspected regularly • Look at the situation and consider the goods and services to draft properly 19
  20. 20. Good Business Practice • Quality • Testing for the right things: • Material product characteristics • Spirits BV: taste testing of licensee’s vodka • Could have also tested for colour/impurities/proof • Good quality control inspects the right things 20
  21. 21. Licensee Does Not Comply • Litigation: • Worst case – your mark is being challenged in an action where they say your mark in invalid for improper licensing • Different quality or mixed quality goods – improper licensing that allowed that to occur • What was actually done to allow that? 21
  22. 22. Disputes under the license • Contractual dispute • Adequacy of the license would need to be addressed • Cases failing on the inability of the licensor to prove they followed through on the quality control • Need good documentation and record keeping 22
  23. 23. Termination Provision • Not always included when drafting • Agreements don’t always outline what happens when licensee does not comply with quality control requirements • Consider a series of remedies before termination • Irrevocable license may be close to an assignment of the mark 23
  24. 24. Q&A 24
  25. 25. Thank You montréal  ottawa  toronto  hamilton  waterloo region  calgary vancouver  beijing  moscow  london Visit www.gowlings.com Email: kelly.gill@gowlings.com stuart.ash@gowlings.com

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