A recent decision of the Canadian Trademarks Opposition Board confirms the necessity for executing written licenses, where a party, including a subsidiary, uses a trademark owned by another entity in Canada.

In 1993, Canada amended the Trademarks Act and abolished its system for the recordation of trademark licensees as Registered Users, replacing the Registered User practice with a system of controlled trademark licensing. Under the amended Act, where a trademark is licensed by or with the authority of the trademark owner, and the owner has, under the license, direct or indirect control of the character or quality of the goods or services under the license, such use of the trademark by the licensee has the same effect as use by the owner. Where there are proper marking legends to indicate both the name of the trademark owner and that the use is licensed, there is a presumption under the law that the use of the mark is authorized and under the control of the trademark owner, unless the contrary is established.

In MCI Communications Corp. v. MCI Multinet Communications Inc., the Trademarks Opposition Board concluded that the use of the trademark MCI by the opposer's subsidiaries did not inure to the benefit of the opposer, since it was not established that a license, formal or informal, existed between the opposer and its subsidiaries under which the opposer, as trademark owner, exercised control over the character or quality of the services provided by the subsidiaries. The Board did express a willingness to recognize an informal license, in the absence of a license in writing, but on the facts of the case, it concluded that no license existed.