Ontario's new limitations act will affect trademarks

The Ontario Limitations Act 2002, which limits the period in which an action may be brought to court to two years from the date a claim is discovered, has come into force.

Most intellectual property (IP) litigation in Canada is governed by federal legislation, and the legal doctrine of federal prevalence over the provinces dictates that any limitation period prescribed in the relevant federal statute will supersede Ontario's two-year limitation period. For example, the Canadian Copyright Act prescribes a limitation period of three years in which to commence an action for infringement. Similarly, the Industrial Design Act explicitly provides a three-year limitation period in which to bring an action for infringement.

However, the Trademarks Act does not prescribe a limitation period. This means that Ontario's new two-year limitation period may apply. The main factors to govern the appropriate limitation period will be whether (i) all the elements of the cause of action arise within the province of Ontario, and (ii) the action is brought in the Federal Court of Canada or the Superior Court of Justice in Ontario.

The two-year limitation period prescribed by the new act will apply to trademark claims in those instances where an action is commenced in the Superior Court of Justice in Ontario where (i) the cause of action is arising from common law (ie, passing off), or (ii) no limitation period is prescribed by the governing federal statute (ie, causes of action under the Trademarks Act).

The matter becomes somewhat more complicated for proceedings brought in the Federal Court. Section 39 of the Federal Courts Act provides that the limitation period for actions brought in the Federal Court is governed by the applicable provincial limitation periods. In respect of a cause of action arising 'otherwise than in a province', a six-year limitation period applies. According to the Federal Court of Appeal, the term 'cause of action' refers not only to the location of the negligent act, but also to the location of the damage suffered. This lead the court to conclude that, if all of the elements of a cause of action arise within a province (ie, Ontario), the law of that province will govern. If not, the limitation period is six years.

However, the meaning of the phrase "cause of action arising other than in a province", which has been considered by the trial division of the Federal Court in the context of IP cases, remains open to interpretation. In the trademark context, the court held in Kirkbi AG v Ritvik Holdings Inc ((2002), 20 CPR (4th) 224 (FCTD)) that:

• the elements of the action arose 'other than in a province' since the parties' advertising and promotional programmes were conducted throughout Canada;
  
  
• the point-of-sale displays were used throughout Canada; and
  
  
• confusion occurred in the minds of retail purchasers throughout Canada, rather than in the minds of purchasers buying from wholesale facilities in the province of Quebec.

Consequently, the court found that all of the elements of the cause of action did not arise in one province. The six-year limitation period was applied. The issue of the applicable limitation period was not considered on appeal.

Many factors can influence the application of the appropriate limitation period in Ontario. The effect of the Limitation Act 2002 should be carefully considered in respect of legal action arising out of or commenced in Ontario.

James H Buchan, Gowling Lafleur Henderson LLP, Ottawa