As noted in our last two posts, Canada’s trademark registration system is expected to undergo extensive change due to recent legislative amendments. In parallel legislation subtitled the Combating Counterfeit Products Act, Canada is also proposing to introduce new border control measures as well as criminal and civil remedies which target the sale of counterfeit goods.
Counterfeit goods are products sold in association with a trade-mark which were not manufactured with the knowledge or authorization of the trade-mark owner. To complete the fraud, the product itself and/or its packaging will often copy features of the authentic goods. From a public interest perspective, such goods are manufactured in a “black market” that undercuts the legitimate market and may not satisfy Canadian safety and quality control standards. From the perspective of the IP owner, it is outright theft and often poses a threat to the commercial reputation of their business.
The Combating Counterfeit Products Act was re-introduced on October 28, 2013 and has been fast-tracked through the House of Commons where it was introduced for third reading on June 19, 2014.
According to its summary, this new Act will:
- create new civil causes of action with respect to the sale of counterfeit goods and works that infringe copyright;
- create new criminal offences for engaging in counterfeit activities that are analogous to existing offences for copyright infringement;
- create new criminal offences prohibiting the possession or export of products that infringe copyright or of counterfeit goods, packaging or labels;
- authorize police to use electronic surveillance for the investigation of such offences with judicial oversight; and
- enact new border enforcement measures enabling customs to detain commercial goods that they suspect infringe copyright or trade-mark rights and allowing customs to share information relating to the detained goods with the IP owners who may pursue a remedy in court.
The new border control measures will likely provide the most direct benefit to IP owners who will be able to register their trade-marks with the Canadian Border Services Agency to be pro-actively monitored. This is similar to a program available in the United States for many years. Canada’s lack of any real border control measures has long been criticized by IP owners as serious deficiency in its legal regime for intellectual property rights enforcement.
IP owners will also welcome some assistance from police in the enforcement of their intellectual property rights, especially where organized crime is involved. In many respects, the civil justice system is simply not equipped to engage the criminal forces that often participate in the black market.
Although the legislation is criticized by some as unnecessary overkill and driven by international trade negotiations rather than domestic policy, recent data indicates that the value of counterfeit goods seized by the RCMP has risen dramatically in recent years. The RCMP reported to Parliament that the retail value of the seized goods rose from $7.6 million in 2005 to $38.1 million in 2012. Since the RCMP reallocates its resources as priorities shift from time to time, some fluctuation is expected, but the upward trend is fairly convincing.
Given the increasing threat, the allocation of some public resources to assist IP owners with the enforcement of their private rights can be justified by the public policy concerns about quality control and public safety as well as the negative impact on Canada’s legitimate economy.