Fee-for-service proposal – Trademarks
Page 3 of 5

From: Canadian Intellectual Property Office

B) How did CIPO establish its new fees?

Financial neutrality principle

CIPO funds its operations on a cost-recovery basis whereby applicants are charged fees in return for receiving a service, namely the grant or registration of an IP right. The fees charged for these rights and related services must recover the costs of the associated activities in order to adequately fund and support CIPO's operations while complying with its mandated role of supporting economic growth and innovation.

For this reason, when implementing the trademark treaties, the organization must balance expenses with the necessity of maintaining a high level of client service and ensuring that the registration process is as efficient as possible. While CIPO's existing services and processes will remain mostly unchanged by the implementation of the treaties, specific fees will be adjusted or combined to recover the expenses of operating the Trademarks Branch (TMB) including the Trademarks Opposition Board (TMOB). One of the guiding principles that the organization followed in establishing its new fees was to ensure financial neutrality. In other words, CIPO sought to generate the least amount of surplus or deficit over a three-year cycle, in accordance with Treasury Board Secretariat (TBS) Policy on Special Revenue Spending Authorities.

Projected revenues and costs

The new proposed fees were set using the activity-based management (ABM) methodology, a recognized approach that provides the information needed to make both strategic and management decisions with a focus on ensuring value-for-service. Unit costs from CIPO's ABM model were used to forecast expenses over a three-year period based on forecasted volumes and expected changes to processes and client behaviour.

Other factors besides financial neutrality also helped guide the decision regarding the level of the proposed fees. CIPO considered comparable fees by other IPOs (International comparisons section) and sought to encourage certain client behaviour such as online filing (e-filing), by charging lower fees for e-filing than for paper filing as paper-based applications are more costly to process.

Finally, CIPO also needed to consider the effects of other legislative and regulatory changes undertaken as part of treaty implementation on the overall financial health of TMB and TMOB. The following represent a loss to incoming revenue projections:

It is also expected that the implementation of the Nice Classification will, in the short-term, require additional CIPO resources:

Based on projected volumes, the proposed fee package will, over a three-year period, cover the expenses associated with the overall operation of Canada's trademark regime, from application, to opposition, to registration, to renewals. Table 1 shows the projected revenues and costs for operating TMB and TMOB over a three-year cycle beginning in 2018.

It is important to note that there will be a period of transition whereby applications governed by the current fee regime (the “old” regime) will coexist with applications governed by the proposed fee regime. The “old” regime applications, which are subject to the $200 registration fee, will cause a short-lived increase of revenues and costs starting in fiscal year 2018‒19 as these applications are examined, advertised and ultimately accepted for registration. Their numbers will taper over the next two years with a balanced situation by fiscal year 2020‒21.

Table 1: Projected revenues and costs of operating TMB and TMOB over three years (in Millions $)
  2018‒19 2019‒20 2020‒21 Total over three years
Revenues 49.6 45.7 45.0 140.3
Costs 56.5 42.3 40.8 139.6
Surplus/(loss) (6.9) 3.3 4.2 0.7

Fee-for-service proposal

Application fees

As explained in the Merging of the Application and Registration Fees section, maintaining the requirement that the registration fee be paid after allowance would complicate the implementation of the Madrid Protocol. Therefore, maintaining the current fee structure for domestic applications (that is, those NOT filed using the Madrid Protocol), while creating a new one for applications received from WIPO would be unacceptable, as it would result in a two-tiered system with one set of applicants being subjected to a given procedure while another would be subjected to a different procedure. Keeping in mind the objectives of reducing paperwork burden on applicants, granting trademark rights in a timely fashion and avoiding a two-tiered system, the proposed approach is to merge the application and registration fees and to have one application fee payable at the onset of the registration process.   

The proposed fee would be $330 when filing online or $430 on paper. The higher fee associated with a paper application takes into account the fact that the information must be inputted manually into CIPO's systems rather than automatically processed. The new proposed fee is less than the sum of the current application and registration fees ($250 and $200, respectively), which will make trademark registration an attractive option especially for small first-time users.

Fee-per-Nice class

In order to discourage overly-broad trademark applications containing more goods and services than the applicant intends to use, it is proposed that a fee-per-class be implemented. While there are already safeguards to discourage overly-broad registrations from the Register of Trademarks (see text box), these only apply once a trademark has been registered. This proposed fee-per-class would provide a disincentive at the application stage and, combined with existing measures will help ensure that the Register of Trademarks accurately reflects trademark use in the Canadian marketplace.

Countries adhering to the Nice Classification generally take one of two approaches to fee-per-Nice class: either instituting a fee for each individual class or an initial fee covering three classes and then a charge for each class thereafter. Canada’s closest trading partners, including the US, the UK, Mexico and members of the European Union take this first approach. To prevent overreach, to ensure that businesses (particularly small and medium sized businesses) only pay fees for the classes they actually require, and to ensure that our practices are aligned with the jurisdictions where our clients are most active, CIPO proposes to move forward with this fee-per-individual-class approach.

The proposed application fee and fee for each additional Nice class, both at filing and at renewal, have been established to reflect the basic cost of examination. The proposed fee is $100 when filing a new application and $125 when renewing a trademark for each additional class over one class.

Under s. 45 of Trade-marks Act, the Registrar may require evidence that a trademark is being used in the Canadian marketplace for the goods and services listed in the registration. Failure to provide such evidence can result in a trademark registration being amended (to remove the goods and services for which no evidence of use was provided) or entirely struck from the Register.

Renewals

When considering individual fee changes as is the case here, CIPO must nonetheless keep in mind the overall financial health of TMB and TMOB and maintain financial neutrality, as explained above. As a result of the increased costs for implementing the Nice Classification, CIPO has made the decision to increase its renewal fee. Currently, the fee to file a renewal is $350 if the request to renew is made and paid for online, or $400 for paper requests. Based on international comparisons, renewal fees are generally higher than filing fees to prevent owners from renewing trademarks that are no longer in use or encourage owners to only renew a trademark in association with the classes of goods or services that are in use. This fee structure provides the incentive to only renew truly valuable trademarks that are in use which, in turn, helps ensure that the Register of Trademarks is up-to-date and is a true reflection of the Canadian marketplace. For these reasons, the proposed renewal fees would be $400 when a trademark is renewed online and $500 when it is renewed by paper request as paper-based applications are more costly to process

Proposed new trademark fees
New application (for first class) Application to extend goods & services to an existing registration (for first class) Renewal (for first class)
E-com Paper Per additional class Paper Per additional class E-com Paper Per additional class
$330 $430 $100 $430 $100 $400 $500 $125

Impact assessment

The proposed fee changes are not expected to have a significant impact on trademark applicants. Under this proposal, the most significant change affecting fees is due to the implementation of the Nice Classification and the related proposed fee-per-class principle.

Currently, applicants pay $250 to file an application and $200 upon registration for a total of $450. Analysis of trademark applications over the last five years shows the following:

The above shows that under the new proposal, 67% of applicants (i.e. those who file 1 and 2 Nice classes) would pay $330 and $430 respectively, as opposed to the current fee of $450.

In addition, the fee proposal will have an impact on renewals of trademark registrations. In the current regime, trademark owners must pay a renewal fee of $350 for online requests which provides for an additional 15 years of protection. Under the new regime, the renewal fee would increase to $400 for online requests for a registration covering 1 class and $525 for a registration covering 2 classes, instead of $350. These amounts would provide a 10 year period of protection, a requirement of the Singapore Treaty. The increase in the renewal fee dissuades the renewing of less valuable trademarks and ensures trademark owners only renew valuable trademarks that are actually in use in the Canadian marketplace. Over time, this will reduce “clutter” and improve the quality of the information found in the Register of Trademarks.

As a result, the impact of the new fee structure on trademark owners is not expected to be significant.

Date modified: