Canada: Trademarks And The USMCA: Action Or Inaction On Trade-Related Trademark Issues?

Last Updated: October 15 2018
Article by Cynthia Rowden and R. Scott MacKendrick

After much drama and tension, negotiations to replace the North American Free Trade Agreement (NAFTA) have resulted in an updated agreement, called the United States-Mexico-Canada Agreement, or USMCA (which doesn’t really trip off the tongue as easily as NAFTA). The Agreement confirms that it requires “internal procedures” to be completed, but once all Parties have provided notice of completion of such steps, formal entry into force will be effective on the first day of the third month following the last notification. In terms of timing, it is unlikely that the USMCA will could come into force before early 2019, and quite possibly not until mid-2019.

Since 1994, when NAFTA was formally implemented, Canada’s IP laws, and specifically its trademark laws, have changed significantly, spurred by international trade negotiations, including the Comprehensive Economic Trade Agreement (CETA) between Canada and Europe, the Trans-Pacific Partnership (TPP, not yet ratified), and a trade agreement with South Korea. Those have resulted in new anti-counterfeiting remedies adopted in 2015, and other major amendments passed and planned for implementation in early 2019 that will impact protectable marks, filing procedure, use requirements, opposition and cancellation provisions and the procedure for acquiring, challenging and cancelling Geographic Indications (GIs).

Recent announcements by the Canadian Government of a proposed national IP strategy may also impact trademarks, with recommendations to add bad-faith opposition and cancellation grounds, as well as use requirements for enforcement. As a result, the decades-old NAFTA trademark provisions no longer reflect existing trademark laws in Canada, including ones planned for implementation in early 2019. 

The USMCA also responds to several “trademark trade irritants”, namely issues raised by the United States Government and international brand owners, particularly relating to Canada’s system for controlling and reducing counterfeit activity.

The following focuses on several cross-border trademark issues and how they have been handled in the USMCA, as well as other USMCA terms that might require Canadian legislative attention, and highlights some interesting omissions from the original NAFTA trademark terms. As an initial observation, few substantive changes appear to be required for Canada’s trademark laws to comply with the USMCA. Many USMCA terms are already addressed by both the 2015 Trademarks Act amendments adding an enhanced anti-counterfeiting regime and new criminal sanctions for infringement, as well as the major amendments already promised for early 2019. Nevertheless, a number of specific amendments to the Trademarks Act, Regulations or office procedures do seem to be in order. 

Specific trademark trade irritants

The United States Government, as well as many brand owner groups, previously identified several trademark-related trade irritants, most specifically related to the perceived lack of effective anti-counterfeiting deterrents, as well as the procedures and remedies to control the import and export of counterfeit goods. As noted, Canada’s Trademarks Act was amended, effective January 1, 2015, to introduce a new anti-counterfeiting regime permitting registered trademark and copyright owners to request assistance with surveillance and detention of counterfeit goods by filing a “request for assistance” (RFA) with the Canadian Border Services Agency (CBSA), creating a procedure to handle detained goods, and adding new criminal sanctions. While a welcome addition, many complained that the 2015 provisions did not go far enough. They didn’t apply to all imported/exported goods – and specifically excluded goods in transit. Many complained that the new RFA procedure seemed to result in detentions only for goods specifically covered by RFAs. Goods could remain in detention only if court proceedings were commenced, and there was no obvious expedited judicial proceeding. While damages, costs and destruction of goods could be ordered by courts, trademark owners did not have the benefit of specific statutory damages for trademark infringement; these effectively acted as impediments to frustrate use of the anti-counterfeiting regime.  

Non-counterfeiting issues include the absence of specific protection for famous or well-known marks, and the difficulty in obtaining interim or interlocutory relief. A concern for many brand owners in the United States is the expanding list of protected geographic indications, which threaten to end long-standing trademark or generic name use in the food industry. On the other side of the United States borders, those who had experience in U.S. litigation complained about high costs and the absence of clear rules on recovery of costs by winning parties. The USMCA addresses a few of these complaints.

Goods in transit: The USMCA provides that each Party “shall provide that its authorities may initiate border measures” against suspected counterfeits or pirated goods that are in transit, or admitted into or exiting from a free trade zone or bonded warehouse. The Trademarks Act now excludes goods in transit from prohibitions on import/export of infringing goods, and restricts such goods from RFA requests. Those exclusions must now be removed. The USMCA also confirms the existing practice of border officials exchanging information with their counterparts in other countries about suspected counterfeit shipments – and, practically, Canadian customs authorities may rely on information-sharing with its trade partners about suspected counterfeits ultimately destined for the U.S. or Mexico, as opposed to seizure of goods in transit.  

Detention and Determination of Counterfeits: The USMCA deals with civil procedures before “competent authorities” (by footnote defined as appropriate judicial, administrative or law enforcement authorities). It requires each Party to have a procedure for “application” to detain or suspend release of suspected counterfeits or infringing goods. Canada’s current legal landscape appears to meet those requirements. The Customs Act already permits CBSA officers to detain suspected counterfeits. The Canadian Trademarks Act has provisions (admittedly rarely used) permitting applications for interim custody orders of suspected imported counterfeit goods, to be followed by civil action for infringement, and since 2015, the Act has included an additional option, permitting rights holders to make a request for assistance from the CBSA to identify and detain suspected counterfeits of registered trademarks and copyright, with continued detention subject to the commencement of court proceedings, and at the expense of the rights holder. Both – the civil action and RFA procedure – would appear to meet the “application” requirement mentioned in the USMCA. Practically, no party is prevented from asking for CBSA assistance in detaining suspected counterfeits even if an RFA has not been filed, and the CBSA is not prevented from detaining suspected counterfeits if no RFA is on file. However, absent a side letter or other understanding between the U.S. and Canadian Governments not public at this time, it is recommended that the Canadian Government publicly confirm that brand owners do not need to have previously filed an RFA for the CBSA’s detention steps to be activated. The USMCA states that “if” a Party provides administrative (vs. judicial) procedures, it may also permit such authorities to impose administrative penalties and sanctions. However, as noted above, there is no obligation to have administrative procedures if judicial authorities have the discretion to act against counterfeit goods.

Expeditious procedures: The USMCA requires border measures to be handled “within a reasonable period of time" after the initiation of any application for relief. Other countries have responded with administrative tribunals who can quickly assess infringement, and set remedies in the event there is either no defence, or a finding of infringement. While specific summary procedures would be very welcome, Canada’s position could be that in now complies, since the court system already provides for expedited trial, summary judgment and other more efficient trial procedures.

Civil remedies: The USMCA requires that competent authorities have the authority to destroy infringing goods. The Trademarks Act already provides that a court may make any order it considers appropriate, including injunctive relief, recovery of damages and profits, punitive damages and destruction of goods, packages and labels. Since “competent authorities” include judicial authorities, Canada would already appear to be in compliance with the USMCA.

Statutory damages and litigation costs: The USMCA states that in civil proceedings dealing with trademark counterfeiting, each Party shall establish a system providing for one or more of “pre-established damages”, or “additional damages” sufficient to deter infringements and also to “fully” compensate the rights holder. A footnote confirms that additional damages include exemplary or punitive damages. The Trademarks Act already expressly permits punitive damages for all trademark infringements, so the addition of specific statutory damages does not appear to be required. Nevertheless, they would be a very welcome addition to the Act and could ultimately reduce litigation costs.

On the issue of “full compensation”, Canada’s litigation system (unlike that of the United States) already provides for cost recovery, and in rare instances what amounts to cost recovery approaching “full” compensation. Federal and other court rules may need to be amended to specifically address cost recovery in trademark disputes relating to counterfeits. However, it appears that the U.S. may need to do more to comply with the USMCA requirement that judicial authorities may order that the prevailing party be fully compensated, including to recover attorney fees.

Interlocutory remedies: The USMCA also deals with “provisional measures”, which appear to be directed to interim and interlocutory relief. While the reluctance of Canada’s courts, especially the Federal Court, to grant interlocutory relief is well known, the USMCA provisions do not appear to require specific action on Canada’s part.

Criminal sanctions: The USMCA contains detailed requirements for criminal procedures for counterfeiting. Since 2015, the Trademarks Act has included criminal sanctions for trademark infringement, in addition to the civil remedies already in place. The USMCA appears to signal an intent to encourage more criminal enforcement, by suggesting that the Article on civil sanctions “applies to goods of a commercial nature sent in small consignments”, and, in the Article on criminal procedures, that each Party “shall treat willful importation or exportation of counterfeit trademark goods or pirated counterfeit goods on a commercial scale as unlawful activities subject to criminal penalties”. A broad definition of “commercial scale” may push more cases into criminal courts.

In addition, under the heading of “Criminal Procedures and Penalties”, the USMCA states that competent authorities may act on their own initiative without need for a formal complaint. Both the CBSA and policing authorities, including the RCMP, now have that right – suggesting no statutory change in enforcement provisions is required. What does appear to be needed is more attention by the CBSA to counterfeit goods that are not specifically the subject of an RFA, and more resources to effectively police counterfeits, either with or without specific requests from brand owners.

Well-known marks: While NAFTA specifically referred to the Paris Convention provisions for protection of well-known marks, it stated that the parties could not require protection to extend beyond the “sector of the public that normally deals with the relevant goods or services.” The USMCA appears to stress the need for both administrative proceedings (trademark refusal and cancellation) and use restrictions that give more respect to well-known marks. However, it is questionable that additional statutory protection is necessary in Canada. The Trademarks Act already expands the boundaries of common law passing off by not requiring that goods and services be of the same general class, and both opposition and litigation decisions apply confusion and depreciation of goodwill to goods and services that are related to or associated with those covered by registered marks. In addition, the Trademarks Act directs attention in assessing confusion to both the length of use, and the extent to which any trademark, registered or unregistered, has become known, as well as all surrounding circumstances. These suggest that specific legislation to protect well-known marks may not be required.

Geographic indications (GIs): The amended Trademarks Act expected to be implemented in early 2019 already contains significantly expanded GI provisions reflecting interest in GIs for foods and beverages by other trading partners, especially the European Union. However, the USMCA appears to require additional amendments to the Trademarks Act and/or Regulations. For example, the USMCA provides for greater transparency for application and cancellation status that may require Canada to set up provisions for more access to GI details (which might be achievable, at least in part, by administrative changes within the Canadian Trademarks Office). Reflecting the language in the upcoming Trademarks Act, while the USMCA requires a system of denial, opposition and cancellation to be available, it need not apply to wine and spirits. One of the grounds for objection or cancellation refers to names that are “identical to a term customary in common language as the common name”, and USMCA adds factors to determine such consumer understanding (which could be added to the Trademarks Act, included in regulations interpreting the GI provisions, or set out in an administrative Practice Notice). The USMCA confirms that GI rights commence no earlier than the filing date and specifically recognizes GI rights and possible limitations on cancellation of such rights granted under other agreements that predate the USMCA (implicitly recognizing rights under CETA or other trade agreements) – which would appear to require a specific Trademarks Act amendment to ensure compliance.

Other USMCA provisions

Ratification or accession to trademark treaties: The USMCA requires each party to ratify or accede to (but not implement) specific intellectual property treaties by the date of entry into force of the USMCA, including two trademark treaties, the Madrid Protocol and the Singapore Treaty. Canada committed to accede to both in 2014 as part of initial CETA negotiations. Earlier this year, CIPO announced that it intends to deposit formal notice of intent to accede to these treaties early in 2019. Deposit of the notice triggers possible implementation within three months, or later if requested. Under this timeline, Canada should meet the USMCA timing obligations.

Collective Marks: Canada does not currently provide for registration of “collective marks”, defined under U.S. law as marks of a cooperative, association, or other collective group or organization, fraternal organizations and unions, that are available for use by its members. While NAFTA stated that trademarks “shall” include collective marks, no change to the Trademarks Act was ever made. The USMCA states that each Party shall provide that trademarks include collective marks. While the updated (but not yet implemented) Trademarks Act defines “signs”, collective marks are not included – suggesting that an amendment is in order.

Country names: The USMCA requires “legal means” to prevent commercial use of a country name in relation to goods (but not specifically services) in a manner that could mislead consumers as to the country of origin. Canadian competition laws can now be used to challenge deceptive country name use, so it appears that specific Canadian legislation is not required.

Committee on Intellectual Property Rights: While not requiring any statutory changes, the USMCA establishes a new Committee on Intellectual Property Rights, with a mandate to meet within a year to consult on issues including strengthening border enforcement, enhancing procedural fairness in patent litigation, and expansion of GIs.

Electronic Systems: Reflecting the increasing reliance on electronic systems, USMCA includes requirements for both electronic communications, filing and maintenance, as well as “publicly available electronic information systems” with a database of applications and registrations. Canada’s electronic filing and recordal systems could use some updating, but it appears to be in the works and little needs to be done to comply with the USMCA.

Interesting Omissions

“Use”: NAFTA required that each Party “require” use of a trademark to maintain registration. In Canada’s increasingly “useless” trademark world, use will no longer be required to obtain or renew a registration – which should have triggered some concerns about NAFTA compliance when the 2014 Trademarks Act amendments were passed. However, the USMCA drops any reference to trademark “use”.

“Scandalous Marks”: NAFTA also required each Party to refuse immoral, deceptive or scandalous marks, or marks that disparage or bring into disrepute persons, institutions, beliefs or national symbols. With free speech decisions in the United States declaring that such restrictions are unconstitutional, those provisions have been dropped from the new trade agreement.  

Plain Packaging Implications: Many organizations that challenged trademark limitations in plain packaging laws, for example, relating to tobacco, had relied on NAFTA provisions that stated that the “nature of goods or services to which a trademark is to be applied shall in no case form an obstacle to the registration of the trademark.” That restriction is gone – presumably reflecting the interest of many Governments, including Canada’s, to have more freedom to control, or limit, the use of brand elements on specific goods for health and safety reasons. 

Summary

It will take time to learn the full impact of many USMCA provisions, and especially which ones are viewed by Canadian, American and Mexican Governments as requiring specific legislative and/or amendments, or changes to administrative procedures. Also, each Government must separately ratify the Agreement, which could mean additional changes before finalizing the Agreement. Further, there is an issue of compliance with laws, versus the “spirit” of the Agreement, which in turn could be impacted by the respective parties’ ongoing trade agreements and relations.

The Canadian Government had already signaled willingness, with the announcement of a new National IP Strategy, to implement changes to the Trademarks Act, in addition to the very significant changes already planned for early 2019. Presumably, amendments required by the USMCA could be included in new amending legislation. Trademark owners and advisors should be on the lookout for announcements about upcoming changes.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Cynthia Rowden
R. Scott MacKendrick
Similar Articles
Relevancy Powered by MondaqAI
Global Advertising Lawyers Alliance (GALA)
Alexander Holburn Beaudin + Lang LLP
Fogler, Rubinoff LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Global Advertising Lawyers Alliance (GALA)
Alexander Holburn Beaudin + Lang LLP
Fogler, Rubinoff LLP
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions