Under Canadian law, a trade-mark is generally valid only as long
as it is distinctive of its owner – that is, where the mark
designates a single source to the consumer. However, it is common
in business for trade-mark owners to capitalize on the goodwill
that has been built in their trade-marks by licensing the
trade-marks to third parties. In such circumstances, it is
important that trade-mark owners know how to mitigate the potential
risk that a license may pose to valid and existing trade-mark
rights in Canada.
The law. The possibility of eroding the
distinctiveness of a trade-mark upon granting a license for a third
party to use the mark results from the application of section 50 of
the Trade-marks Act ("section 50"). Section 50
provides that the use of a trade-mark by a licensee is deemed to
have the same effect as use by the owner of the trade-mark where
the owner maintains and exercises direct or indirect
control over the character or quality of the wares or
