Business owners are often hesitant to register their trademarks and are unaware that failing to do so could expose their business to greater expenses than those associated with trademark registration. A competitor with a registered trademark has the right to force a business to stop using an unregistered trademark if it is confusingly similar to their registered trademark. This would expose the later business to significant rebranding and legal costs. Without a registered trademark, a business is very limited in its ability to protect its branding without incurring significant costs from an expensive court action. Even after paying the legal costs, there is no guarantee the business will be successful in protecting its brand and trademarks.
The decision in the Ontario Court of Appeal, Molson Canada v. Oland Breweries Limited, highlights the importance of trademark registration in highly competitive industries. The case involved two long established Canadian breweries: the plaintiff Molson Canada ("Molson"), and the defendant Oland Breweries Ltd. ("Oland"), owned by Labatt Brewing Company. Molson sold an ale in Ontario under the brand name EXPORT since 1955. Oland, from the Maritimes, also sold an ale under the name EXPORT.
In March 1996, Labatt and Oland attempted to expand distribution of its EXPORT ale from the Maritimes into Ontario. In response, Molson commenced a passing off action against Oland seeking injunctive relief and damages in an attempt to stop Oland from distributing their EXPORT product. Molson asserted that Oland's use of EXPORT would cause confusion in the Ontario market where Molson had used the trademark for over 40 years.
As eloquently put by the Court, Oland held the "trump card". Oland had owned and maintained a valid registered Canadian trademark for EXPORT since 1951 and as such had a complete defence to the passing off action. The Court held that pursuant to Section 19 of the Trade-marks Act, the owner of a registered trademark has the exclusive right to use the trademark throughout Canada. Oland was allowed to sell its product in Ontario and was awarded significant legal costs. Had Molson registered the trademark before Oland, they could have prevented Oland from using EXPORT and avoided costly and lengthy court actions. The fact that Molson had offered the only EXPORT ale in Ontario for forty years was irrelevant.
The competitive landscape of the brewing industry has changed significantly since the Molson case. While Canadian brewing in the 1990's was dominated by a small group of large multinational brewers, today local craft breweries are significantly on the rise both in both numbers and popularity. There are now 75 craft breweries operating in Ontario (plus an additional 25 contract brewers), 118 in Quebec, and 49 in British Colombia. The Ontario Craft Brewers estimate that there are on average two to three new brewers in Ontario per month. Without the marketing reach of a large multinational corporation, using a trademark that stands out and attracts consumers is integral to remain competitive. Selecting the right mark is critical to building a customer base, and protecting that trademark is critical to preserving it. Failing to register your trademark can put the trump card into a competitor's hand and cause you to lose the trademark that drives your image and sales.