On July 1, 2020, the Canada-United States-Mexico Agreement
(CUSMA) and the Canada-United States-Mexico Agreement
Implementation Act (Implementation Act) will come into
force, replacing the North American Free Trade Agreement
(NAFTA). The intellectual property (IP) chapter of CUSMA
establishes minimum legal standards for the protection and
enforcement of IP rights that build upon existing international
agreements and World Intellectual Property Organization (WIPO)
treaties.
Although many of the IP obligations in CUSMA have already been
incorporated into Canadian law through recent amendments to the Patent Act, Industrial Design Act and Trademarks Act, several key changes
are set to come into force through the Implementation Act or will
be required through further legislative amendment. This bulletin
summarizes these key changes and their implications for Canadian
businesses.
TRADEMARKS
One of the few CUSMA trademark provisions that has not yet been
implemented into Canadian law is the requirement under Article
20.18, to provide trademark protection for "collective
marks," which are marks owned by a collective group or
organization and used exclusively by its members. The
Trademarks Act does not currently permit registration of
collective marks, and this issue is not addressed in the
Implementation Act. Further legislative amendment will therefore be
required to comply with this obligation.
Canada may also be required to establish statutory damages for
trademark infringement. Article 20.82 of CUSMA mandates a system
for civil remedies for trademark infringement that include
"pre-established damages" in an amount sufficient to
deter infringement and compensate the right holder. Canada does not
currently provide statutory damages for trademark infringement, nor
are they included in the Implementation Act. However, this
obligation may be satisfied by the availability of "additional
damages," such as exemplary or punitive damages, under
Canadian common law. It remains to be seen whether Parliament
intends to comply with Article 20.82 by establishing statutory
damages or by relying on the current common law approach. For
further analysis on this issue, see our December 2018 Blakes Bulletin: Demystified: USMCA's
Intellectual Property Provisions on Damages for Trademark
Counterfeiting.
PATENTS
The most significant change to Canadian patent law is the
obligation under Article 20.44 of CUSMA to implement a patent term
adjustment to compensate patentees for unreasonable delay in the
issuance of their patent. Under this provision, the term for
patents filed on or after December 1, 2020, may be extended if the
patent issues more than five years after the application date, or
three years from an examination request, whichever is later. CUSMA
explicitly excludes certain delays from this determination,
including delays not directly attributable to the granting
authority.
Currently, Canadian patent law does not contain a term adjustment
for delays in issuance, and no such provision is included in the
Implementation Act. Under Article 20.90 of CUSMA, Canada will have
four and a half years from July 1, 2020, to implement this
change.
Changes will not be required to Canada's pharmaceutical data
protection laws. While the original CUSMA required the extension of
market protection for new biologic medicines from eight years, as
it currently is under Canadian law, to a period of 10 years, this
requirement was abandoned in the Protocol of Amendment to the
Agreement signed December 10, 2019. Several other proposed changes
to patent and regulatory protection for pharmaceutical products
were also undone, the result being that in order to implement CUSMA
in these areas, no legislative changes will need to be made.
COPYRIGHT
Under Article 20.63 of CUSMA, Canada is required to
significantly increase the duration of its copyright protection.
For the general copyright term calculated on the basis of the life
of the author, the duration must increase by 20 years to at least
life of the author plus 70 years. This term extension is not
included in the Implementation Act. Under Article 20.90, Canada
will have two and a half years to implement this obligation.
For terms calculated by other means, the duration of copyright
protection must be at least 75 years from the end of the year of
first publication, or if not published within 25 years of creation,
at least 70 years from the end of the year of creation. The
Implementation Act amends the Copyright Act to bring the terms for
anonymous works, cinematographic works, performances and sound
recordings in line with this requirement. These changes will come
into force on July 1, 2020, and will not apply to works that have
already expired by this date.
CUSMA also requires increased protection for rights management
information (RMI), such as digital watermarks. Under Article 20.68,
parties must provide both civil and criminal remedies for wilfully
removing or altering RMIs for commercial advantage or financial
gain. While Canadian law includes civil remedies for the misuse of
RMIs, it does not currently provide for criminal remedies. The
Implementation Act fills this gap by amending the Copyright
Act to include offences for infringement relating to RMI, the
penalty for which can include a fine of up to C$1-million and
imprisonment of up to five years for a conviction on indictment.
Consistent with Article 20.68, only conduct for commercial purposes
is criminalized and exemptions are provided for those acting on
behalf of libraries, archives, museums or educational institutions.
These amendments to the Copyright Act will come into force
on July 1, 2020.
Although CUSMA also establishes a "notice-and-takedown"
system for online copyright infringement, Canada is exempted from
these provisions under the Annex to Section J on the basis of its
current "notice-and-notice" regime.
TRADE SECRETS
Section I of CUSMA establishes a framework for the civil and
criminal protection and enforcement of trade secrets. Although
Canada currently protects trade secrets through common law actions
and criminalizes theft of trade secrets by or with foreign
entities, it does not currently provide criminal procedures and
penalties for "unauthorized and willful misappropriation"
of trade secrets as required under Article 20.72.
To comply with this section, the Implementation Act amends the Criminal Code by establishing an
offence for fraudulently obtaining, communicating or making
available a trade secret, that is punishable by imprisonment for up
to 14 years. A "trade secret" is defined in the amendment
as information that: (a) is not generally known in the trade or
business that uses or may use that information; (b) has economic
value from not being generally known; and (c) is the subject of
efforts that are reasonable under the circumstances to maintain its
secrecy. The offence only applies to knowing infringement and does
not apply to trade secrets obtained by independent development or
reverse engineering. These amendments to the Criminal Code
will come into force on July 1, 2020.
ENFORCEMENT
The enforcement section of CUSMA establishes enhanced border
measures for IP enforcement that depart significantly from NAFTA
and current Canadian law. Under Article 20.84, customs officials
must be given the authority to initiate border measures ex
officio against counterfeit trademark goods or pirated
copyrighted goods that are in transit. Currently, customs officials
are not authorized to seize in-transit goods or initiate border
measures without first receiving a complaint from the right
holder.
Customs officials must also be permitted to destroy or dispose of
suspected counterfeit or pirated goods outside the channels of
commerce if they are determined infringing by "competent
authorities," which may include customs officials and other
law enforcement and administrative authorities. These powers are
not currently provided for in Canadian law and could permit customs
officials to make determinations of trademark and copyright
infringement—an authority which is currently only possessed
by the Canadian Intellectual Property Office and the courts.
The Implementation Act includes amendments to the Trademark
Act and the Copyright Act that extends the
prohibition on importation and exportation of infringing goods to
those in customs transit or transhipment control; for more
information, see sections 31 and 109(3) of the Implementation Act.
However, the Implementation Act does not include amendments to
expand the powers of customs officials as required by Article
20.84. Compliance with this section will therefore require further
legislative changes.
Another important change to enforcement of IP rights under CUSMA is
the elimination of the investor-state arbitration mechanism
currently found in Chapter 11 of NAFTA for investors from, or in,
Canada. For more information on this issue, see our June 2020
Blakes Bulletin: Enter CUSMA: Protecting
Cross-Border Investment in North America Post-NAFTA.
CONCLUSION
As July 1, 2020, rapidly approaches, businesses should carefully
review the IP provisions coming into force under CUSMA and the
Implementation Act to ensure that their practices are consistent
with the new legal rights and obligations arising from these
changes. Of particular importance will be the extension of
copyright terms for certain works such as performances and sound
recordings, new criminal offences relating to RMIs and trade
secrets and the prohibition on infringing goods in transit to
another country.
Organizations should also prepare for changes required by CUSMA
that are likely to be introduced at a later date, such as trademark
protection for collective marks, the implementation of a patent
term adjustment for unreasonable office delay, the 20-year
extension of the general copyright term and enhanced powers of
customs officials to determine infringement and destroy or dispose
of infringing goods.
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.
