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A recent decision of the Canadian Registrar of Trademarks
acknowledged that the path to launching a franchise system may have
some bumps along the road and underscored that to preserve a
franchisor’s trademark rights, it is essential to document the
efforts to launch the system. Specifically, the Registrar
maintained a franchisor’s trademark despite the absence of
evidence that the associated services had in fact been offered to
the Canadian public. While there were unique circumstances that
assisted the Registrar in reaching this decision, the case serves
as a reminder as to how important it is to document the time and
effort involved in launching a franchise system, as it might just
save the franchisor’s trademark.
In Life Maid Right – 2799232 Ontario Inc. and Maid Right,
LLC (2022 TMOB 104),1 Maid Right, LLC (Maid Right)
purchased a franchise system in 2018 that included a trademark
registration for MAID RIGHT for various cleaning services. In
December 2020, summary cancellation proceedings were commenced
against the MAID RIGHT trademark registration, which required Maid
Right to provide evidence of the trademark’s use in Canada at
some point in the prior three year period. If Maid Right could not
provide evidence of use, the MAID RIGHT trademark registration
would be expunged for non-use unless Maid Right could establish
that there were “special circumstances” justifying this
non-use.
Ultimately, Maid Right was successful in establishing the
requisite “special circumstances” to save its trademark
registration. Whether the special circumstances excusing the
non-use had been established required consideration of three
criteria: (i) the length of time during which Maid Right had not
used the trademark; (ii) whether the reasons for non-use were
beyond the control of Maid Right; and (iii) whether Maid Right had
a serious intention to shortly resume use.
Maid Right satisfied these three criteria by putting forward the
following evidence:
(i) it could only recruit
pre-qualified individuals or businesses, making it more difficult
for Maid Right to find franchisees who could offer the cleaning
services;
(ii) that the Maid Right onboarding
process involved an initial training program with 40 hours of
on-boarding training, 80 hours of online training, 36 hours of
classroom training and 4 hours of field training, meaning it was a
very involved process;
(iii) that Maid Right had gone
through a significant effort to produce a Canadian Disclosure
Document to be used in marketing to potential Canadian franchisees,
and that franchisees would need to obtain legal advice prior to
entering into a franchise agreement, which would further slow down
the process;
(iv) that franchisees needed to make
a sizeable investment to begin the operation of the franchise, thus
further narrowing the potential pool of candidates who could offer
the services; and
(v) that Maid Right had engaged in
recruitment efforts throughout 2019 and 2020, and provided
disclosure documents to several Canadians, resulting in the sign-up
of a single franchisee (who ultimately backed out, so they never
offered cleaning services).
Collectively, this evidence allowed the Registrar to conclude
that Maid Right had engaged in a good faith effort to launch the
franchise and offer the services during the relevant period, and
that the delays were ultimately beyond Maid Right’s
control.
While this decision may prove to be an outlier in the Canadian
jurisprudence, there are some helpful broad takeaways.
- As noted at the outset, if you are a franchisor, carefully
document your efforts to launch your franchise system and to offer
goods or services in Canada – it can ultimately preserve your
registered trademark rights. This is especially important given
that at present it is taking at least three years before Canadian
trademark applications are examined, so the majority of marks take
a minimum of 4 years to proceed to registration. Therefore, if you
have a registration, you want to do everything in your power to
avoid losing it given that trademarks are a pillar of a healthy
franchise system.
- Ensure your trademark application adopts broad language and
includes goods or services that you think will be quick to market.
For example, had the MAID RIGHT trademark registration included a
service description like “providing information to franchisees
in the field of cleaning services via a website”, having a .ca
website displaying the MAID RIGHT trademark with informative
content targeted at potential Canadian franchisees would have more
likely meant there was trademark use. Therefore, at least part of
the services for the MAID RIGHT mark would not have been in as much
jeopardy when the summary cancellation proceedings were
commenced.
All that being said, the trademark lawyer’s mantra is
“if you don’t use it, you lose it.” So while
there are exceptions like the one discussed above, engaging in
continuous trademark use is by far the best way to securely create
and maintain your trademark rights in Canada and allow your
franchise business to grow on a solid foundation.
Footnote
1 Life Maid Right – 2799232 Ontario Inc. and
Maid Right, LLC, 2022 TMOB 104 (CanLII), (https://canlii.ca/t/jpnfb)
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.
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