Canada: Counterfeiters Beware - Canada Introduces New Law To Deal With Counterfeit And Pirated Products

Last Updated: March 20 2013
Article by Robert D. McDonald

On March 1, 2013, the Canadian Government introduced Bill C‐56, otherwise known as the Combating Counterfeit Products Act (the "CCP Act"). The Bill is primarily designed to amend the Federal Copyright Act and the Federal Trademarks Act to add new civil and criminal remedies and improved border measures in order to strengthen the enforcement of copyright and trade‐marks rights. The Canadian Government has recognized that there is significant commercial activity involving counterfeit and pirated goods in Canada, and this Act is intended to curtail such activity. While Bill C‐56 also introduces other amendments to the Trademarks Act to expand the scope of what can be registered as a trade‐mark, and to modernize the trade‐mark application and opposition process, this article will focus on the anti‐counterfeiting aspects of the Bill. For more information on these other amendments to the Trademarks Act, please refer to the next article "A "Sign" of Things to Come – How Bill C‐56 Will Change Canadian Trade‐mark Law".

In the summary of the purpose of the Bill, the Canadian Government states that the new legislation will accomplish the following:

a) Create new civil causes of action with respect to activities that sustain commercial activity in infringing copies and counterfeit trade‐marked goods;

b) Create new criminal offences for trademark counterfeiting that are analogous to existing offences in the Copyright Act;

c) Create new criminal offences prohibiting the possession or export of infringing copies or counterfeit trade‐marked goods, packaging or labels;

d) Enact new border enforcement measures enabling customs officers to detain goods that they suspect infringe copyright or trade‐mark rights and allowing them to share information relating to the detained goods with rights owners who have filed a request for assistance, in order to give the rights owners a reasonable opportunity to pursue a remedy in court;

e) Exempt the importation and exportation of copies and goods by an individual for their personal use from the application of the border measures; and,

f) Add the offences set out in the Copyright Act and the Trademarks Act to the list of offences set out in the Criminal Code for the investigation of which police may seek judicial authorization to use a wiretap.

In its published fact sheet, the Canadian Government focuses on how the CCP Act will protect Canadian Consumers. They state that counterfeit goods are not only harmful to the economy, but are often made without regard to Canadian health and safety standards, and that organized crime groups use the profits from sales of counterfeit goods to fund many other crimes. By giving additional tools to law enforcement agencies and border officers, and allowing them to detain such goods, it is anticipated that the proliferation of counterfeit pirated goods will be reduced. It is noteworthy that the CCP Act would allow a specific exception at the border for individuals importing or exporting counterfeit trade‐marked goods which are intended for personal use, as part of their personal baggage.

As much as the consumer will benefit from the CCP Act, trade‐mark and copyright owners and rights holders will benefit in terms of greater ability to enforce such rights.

Indeed, many of the proposed legislative provisions closely resemble those of the Anti‐ Counterfeiting Trade Agreement ("ACTA"), which Canada has signed on to, but not yet ratified. The U.S. has strongly urged Canada to "meet its ACTA obligations by providing customs officials with an ex‐officio authority to stop the transit of counterfeit and pirated products through its territory" (2013 Trade Policy Agenda, Office of the U.S. Trade Representative). This Bill would be a significant step towards this objective.

The provisions of the CCT Act would provide several tools that could be used by a rights holder in the enforcement and protection of its trademarks and copyrights, including:

1. There is a specific prohibition against the import and export of pirated or counterfeit goods, and customs officers may detain such products. These provisions are subject to exceptions relating to transiting goods, goods for personal use and goods where the trademark was applied with the consent of the trade‐mark owner in the country where the trade‐mark was applied (so called "grey market" goods). Customs officers may provide samples of products and other information to the rights holder, and rights holders may request assistance to confirm that their trade‐marks or copyrights are being infringed. Under the detention provisions, limits are set on the length of time goods can be detained (no longer than 10 working days of information having been provided to the rights holder), and the rights holder may be required to post security or even damages if detention and destruction of goods proves to be unlawful. Rights holders can also provide notices to customs authorities regarding copyright works, however, these provisions were not added to the Trademarks Act.

2. There are specific provisions making it unlawful to make, import, export or possess counterfeit labels and packaging. Some counterfeiters attempt to avoid detection and border detention by importing or exporting counterfeit goods separately from the labels or packaging bearing the infringing trade‐marks. The CCP Act will provide a remedy against this practice.

3. There are new criminal offence provisions added to the Trademarks Act (such provisions already exist in the Copyright Act), making it an offence to knowingly sell, offer for sale, distribute on a commercial scale, manufacture, process, import or export goods or packaging for such goods, or to advertise or sell services, in association with a trade‐mark that is identical to, or cannot be distinguished in its essential aspects from, a trade‐mark registered for such goods or services. Such offences punishable by up to $1 million or five years of incarceration.

In order to fully take advantage of the enforcement tools proposed by this Bill, rights holders should take steps to register their intellectual property rights to the full extent allowed by Canadian law, including obtaining Federal trade‐mark and copyright registrations.

While the Bill is not law yet, the fact that it was introduced by the Canadian Government means that it will likely move quickly through the parliamentary process and pass during this session of parliament.

Once the Combating Counterfeits Products Act is law in Canada, copyright and trade‐marks rights holders all over the world will have an increased ability to protect and enforce their intellectual property rights in Canada, particularly in respect of the import and export of counterfeit

About Fraser Milner Casgrain LLP (FMC)

FMC is one of Canada's leading business and litigation law firms with more than 500 lawyers in six full-service offices located in the country's key business centres. We focus on providing outstanding service and value to our clients, and we strive to excel as a workplace of choice for our people. Regardless of where you choose to do business in Canada, our strong team of professionals possess knowledge and expertise on regional, national and cross-border matters. FMC's well-earned reputation for consistently delivering the highest quality legal services and counsel to our clients is complemented by an ongoing commitment to diversity and inclusion to broaden our insight and perspective on our clients' needs. Visit: www.fmc-law.com

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