Intellectual Property

Gary Daniel and Tariq Remtulla

After many years of calls for reform by intellectual property rights owners, the Canadian government introduced legislation on March 1, 2013 aimed at fighting counterfeiting. Bill C-56, known as the Combating Counterfeit Products Act (CCPA), would amend both the Copyright Act and Trade-marks Act, and make consequential amendments to other acts, all with a view to strengthening the ability of rights owners to fight counterfeiters acting on a commercial scale.

Responding to a Call to Action
Several of Canada's top trading partners, including the U.S. and the European Union, have long been critical of Canada's efforts to adequately address the counterfeit goods trade. Most notably, in April 2009, the current state of Canadian law led the U.S. government to place Canada on a Priority Watch List of countries that fail to uphold effective intellectual property protection and enforcement.

The newly proposed legislation brings forward Canada's commitment to implementing robust anti-counterfeiting measures to address the proliferation of counterfeit and pirated products into Canada. The impetus for such action was that Canada signed (but has not yet ratified) the Anti-Counterfeiting Trade Agreement (ACTA) in October 2011, along with a number of other countries, including Australia, Japan and the U.S. The purpose of ACTA is to establish international standards for intellectual property rights enforcement.

Bolstering Canada's Border Regime
In the eyes of many, the most significant provisions of the CCPA are those that would enhance the powers of Canadian customs and border protection agents. The proposed legislation would enable these agents to detain goods they suspect infringe copyright or trade-mark rights, and permit them to share information with intellectual property rights owners in order to allow rights owners to pursue their legal remedies. The Trade-marks Act has for several years contained provisions that, on their face, would allow trade-mark owners to obtain the court's assistance in detaining goods being imported into Canada which appeared to infringe their trade-mark rights. However, the provisions have been of little practical benefit because, in most cases, by the time the trade-mark owner had sufficient information regarding the shipment of counterfeit goods to Canada, it was too late to pursue these remedies as the goods had already entered the Canadian market or been exported from Canada.

The new measures in the CCPA allow rights owners to work co-operatively with Canadian customs officials to detain suspected counterfeit goods at the Canadian border. This protection mechanism is comparable to procedures in other jurisdictions, such as the U.S., and is sometimes referred to as a "border order."

Under the proposed procedure, trade-mark and copyright owners may file a "request for assistance" with the Canadian Border Services Agency. A "request for assistance" permits customs officers to: (1) obtain information regarding any alleged infringing nature of the goods; (2) provide the rights owner with a sample of the goods in question; and (3) provide the rights owner information regarding the importation of the goods without identifying any of the involved parties.

The customs officer may not detain the goods in question for more than 10 working days (or for a further 10 working days upon the request of the rights owner), or for more than five working days if the goods are perishable. The rights owner may use this detention period to commence proceedings. The rights owner is responsible for the storage and handling charges of any detained goods and, if applicable, the charges for destroying them.

There are restrictions placed on the person who obtains the information from the customs officer. They may not use the information for any purpose other than to assess whether the importation or exportation of the goods is an infringement or to pursue civil proceedings in court.

The court is given power to award damages against the rights owner who commences proceedings to detain the goods in favour of the owner, importer, exporter or consignee of the products who is a party to the proceedings for losses, costs or prejudice suffered as a result of the detention of the goods, if the proceedings are dismissed or discontinued. The court may require the rights owner to furnish security to cover duties, storage and handling charges, and to answer for any damages that may be sustained by the owner, importer or consignee of the goods as a result of the (presumably improper) detention of the goods.

New Criminal and Civil Offences
Among the new offences added to the Copyright Act is the offence of possession of infringing copies for sale, rental, distribution for the purposes of trade or exhibition in public by way of trade, and the export or attempted export for sale or rental of infringing copies of a work.

Additionally, the CCPA proposes criminal offences for counterfeiting under the Trade-marks Act analogous to the offences currently in force under the Copyright Act. In view of the reality of organized criminal involvement in counterfeiting, the CCPA broadens the ability of Canadian law enforcement authorities to obtain judicial warrants to use wiretaps when investigating the commission of counterfeiting offences.

The CCPA creates new civil causes of action for corollary activities that sustain commercial counterfeiting.

Updated Trade-Mark Definitions and Procedures
Although it does not relate directly to counterfeiting, the CCPA contains amendments to the Trade-marks Act to expand the scope of registrable trade-marks in Canada to include non-traditional trade-marks such as three-dimensional shapes, modes of packaging, sounds, scents, tastes, textures and proposed certification marks. The CCPA also proposes certain process-related amendments to applying for a trade-mark registration and opposing an application therefor. In addition, the proposed amendments would allow the Registrar of Trade-marks to correct errors on the Register, which currently requires a court order.

The administrative changes proposed would allow the Registrar to destroy certain documents after six years and the ability to divide applications. As well, the somewhat archaic reference in the trade-mark legislation to "wares" will be replaced by the more common "goods".

It is expected that the CCPA will ultimately become law. What remains to be seen is to what extent, if any, amendments are made to it before it does so. Nonetheless, in whatever form it becomes law, the CCPA can be seen as providing trade-mark and copyright owners with a valuable new tool to combat counterfeiting in Canada.

For further information, please contact:

Gary Daniel 416-863-5840
Tariq Remtulla 416-863-3177

or any other member of our Intellectual Property Group.

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