Canada: An Overview Of Bill C-56: Combatting Counterfeit Products Act

On March 1, 2013, Bill C-56 was introduced in the House of Commons. The majority of Bill C-56 is directed to amendments to the Copyright Act (CA)and the Trade-marks Act(TMA) to add new tools to fight commercial counterfeiting and piracy activities. An overview of these proposed tools, which include new civil and criminal remedies, and new powers for customs officers in respect of counterfeit and pirated goods, is set out below.

New Criminal Offences

Bill C-56 would expand the criminal provisions of the CA and introduce criminal offenses under the TMA. For the CA, Bill C-56 would make it an offence to possess an infringing copy of a work for the purposes of sale, rental, and/or distribution for the purpose of trade or exhibition in public by way of trade. It would also make it an offence to export (or attempt to export) an infringing copy of a copyrighted work for the purpose of sale or rental. (The CA currently already prohibits import in Canada of any infringing copies of a copyrighted work for sale or rental.)

For the TMA, Bill C-56 introduces a number of offences relating to counterfeit trade-marked goods,  including: (i) prohibitions against knowingly selling or distributing counterfeit trade-marked goods (or their labels or packaging) on a commercial scale; (ii) prohibitions against knowingly manufacturing, possessing, importing or exporting counterfeit trade-marked goods (or their labels or packaging) for the purpose of their sale or distribution on a commercial scale; and (iii) prohibitions against knowingly selling or advertising services in association with a third party's mark (or an essentially similar mark), without the permission of the owner of that mark.

Bill C-56 would also amend the Criminal Code to allow the police to seek judicial authorization to use a wiretap to investigate the new offences under the CA and TMA.

Proposed penalties for conviction on indictment in respect of the new offences are a maximum fine of $1,000,000 and/or imprisonment for a maximum term of five years. Proposed penalties for summary conviction include a maximum fine of $25,000 and/or imprisonment for a maximum term of six months.

New Civil Remedies

Bill C-56 would create new civil causes of action aimed at persons engaging in the sale or distribution of (i) counterfeit trade-marked goods; (ii) packaging and labelling to be used with counterfeit goods; and (iii) infringing copies of copyrighted works.

Importation and Exportation

Bill C-56 would amend the TMA to make it clear that goods cannot be imported or exported if the goods (or their packaging and labelling) bear a trade-mark that is "identical to, or ... cannot be distinguished in its essential aspects from", a registered trade-mark, without the consent of the owner of the registered trademark. However, there are some exceptions to these prohibitions. Grey market goods are expressly excluded, as the provisions do not apply "if the trademark was applied with the consent of the owner of the trademark in the country where it was applied." 

Similar provisions would be added to the CA to make it clear that copies of works cannot be imported or exported if: (i) they were made without the consent of the owner of the copyright in the country where they were made; and (ii) they infringe copyright (or, if the copies weren't made in Canada, they would infringe copyright had they been made in Canada by the person who made them).

Under the proposed revisions to both the TMA and CA, there are express exemption for goods or copyrighted works imported or exported by individuals, provided that: (i) such goods are in the possession or baggage of the individual; and (ii) the circumstances (including the number of such items) indicate that the goods or copyrighted works are intended only for the personal use of the individual. As well, goods or copyrighted works in customs transit control or customs transhipment control in Canada are not caught by these prohibitions.

Request for Assistance and Border Detention Powers

Bill C-56 would introduce a procedure by which copyright and trade-mark owners could file a "request for assistance" with the Minister of Public Safety in order to help protect their intellectual property rights. While the details of the program are not clear, it appears that this would enable the creation of a database of rights that could be relied upon by customs border officers in the exercise of their new detention powers.

Pursuant to Section 101 of the Customs Act, a border customs officer may detain goods that have been imported or are about to be exported until the officer is satisfied that the goods have been dealt with in accordance with any federal statute relating to import or export of goods.  The addition of the express prohibitions against import and export discussed above would allow customs officers to exercise those powers in respect of suspected counterfeit goods and suspected infringing copies. Moreover, Bill C-56 would expressly empower customs officers to provide trade-mark owners and copyright owners with a sample of the goods and any non-identifying information to help the officer determine if such goods are counterfeit or infringing copies. 

In addition, if the intellectual property rights holder has filed a request for assistance, the customs officer can provide the owner with a sample of the goods or other information about the goods (including the name and address of the owner, importer, exporter, consignee or manufacturer of the detained goods) that could assist the owner in pursuing a remedy under the CA or TMA. The customs officer would then also have the discretion to allow the rights holder (and others) inspect the detained goods.

Detention power would be limited to 10 working days (or 5 working days if the goods are perishable) after the date that a sample or information is provided to the copyright or trade-mark owner. For non-perishable goods, the trademark or copyright owner could request continued detention for another 10 working days. At the end of these periods, and upon filing evidence that a court proceeding has been initiated with respect to the detained goods, the goods would remain detained until: (i) the court proceeding is finished; (ii) a court order directs the goods to be released; or (iii) the copyright or trade-mark owner consents to the goods no longer being maintained. (The notified copyright or trade-mark owners would be liable to the federal government for storage and handling charges (including costs of destruction) after they first receive a sample or information related to the goods.)

Other Provisions

While the essence of Bill C-56 is clearly directed to counterfeiting and piracy, the legislation also proposes significant amendments to the Trade-marks Act (the TMA) that are unrelated to counterfeiting activities. The most significant of these other changes are highlighted in a previous  blog post.

Conclusion

Bill C-56 may face significant criticism, especially from persons who are critical of the Anti-Counterfeiting Trade Agreement to which Canada is a signatory (but which is not yet in force). It remains to be seen whether the draft legislation will change after debate at second reading, and a clause-by-clause review by a committee. We will continue to monitor the progress of this bill, and keep you advised as the bill progresses through the legislative process.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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