Trademark Licensing In Canada: Pitfalls For The Unwary

Even though there are no mandatory formalities, trademark licensing remains a trap for the unwary in Canada. Particular attention must be given to how licenses are drafted to avoid attacks on the validity of the underlying trademarks. It is quite possible that a license agreement acceptable under foreign law will not meet Canadian requirements.

The notion of "control" of the character or quality of the goods or services associated with a trademark is central to Canadian trademarks law. For instance, the control could manifest itself as the right of a trademark owner to conduct inspections and request reports and samples in connection with the goods or services. It was found in the past by the courts that a right of annual inspection and a right to terminate the license agreement in the event products are found to be deficient were indicative of sufficient control.