On September 30, 2018, Canada, the US and Mexico announced the successful conclusion of negotiations to replace the North American Free Trade Agreement or NAFTA. The new agreement entitled the United States-Mexico-Canada Agreement or USMCA proposes to introduce some significant changes to the law governing intellectual property in Canada. The key changes include:
- extending the basic term for copyright protection by 20 years;
- extending the term for patent protection where warranted to compensate for government delay in issuing patents;
- extending the term of protection for data submitted to government authorities for market approval of biologics by 2 years; and
- extending border controls to authorize the seizure of counterfeit goods in transit through Canada.
This article will review the proposed changes in each field of intellectual property law.
Term to be Extended
At present, the basic term for copyright protection is the life of the author plus 50 years following the year of the author’s death. This term will be extended to at least the life of the author plus 70 years following the year of the author’s death. This will bring Canada into harmony with the term of copyright protection in the US and Europe.
For copyright protection not dependent on the life of the author, the term of protection will be extended from 70 years following the year of publication to 75 years following the year of publication. This applies, for example, to sound recordings and performance rights.
Reversionary Interest to be Abolished
Per section 14 of the current Copyright Act, copyright assigned or licensed to others during the life of the author reverts automatically to the author’s estate 25 years after their death and any attempt to dispose of this “reversionary interest” except through the author’s will is deemed void. The USMCA provides that the owner of copyright in a work “by virtue of contract…shall be able to…enjoy fully the benefits derived from that right”. This would apparently require Canada to repeal section 14.
PATENTS & DATA PROTECTION
Patent Term Adjustment to be Adopted
At present, the basic term for patent protection is 20 years following the filing date of the originating patent application. Due to government delays in processing certain patent applications or providing market approval for the subject invention, a patent may not be issued for many years after it was filed and/or may not be approved for sale in Canada for many years after the patent issues. Obviously, these government delays can significantly shorten the effective term of a patent, especially in the pharmaceutical field.
The USMCA proposes to address this issue by authorizing “adjustments” to the term of a patent where it is issued more than 5 years after filing or 3 years after examination is requested to compensate for the delay or where the delay in providing market approval is “unreasonable”. There is no limit on the duration of the adjustment.
Data Protection for Biologics, Pharmaceuticals & Agricultural Chemicals
Biologics include a wide range of products such as vaccines, blood and blood components, gene therapy, tissues or analogous products used to treat, prevent and cure health conditions in human beings.
For obvious reasons, new biologics as well as pharmaceuticals and agricultural chemical products are subject to government approval to ensure the safety and efficacy of the products prior to sale. To receive such approval, parties are required to submit voluminous confidential data to government authorities.
At present, Canada protects the data related to biologics for up to 8 years, the data related to agricultural chemicals for up to 10 years and the data related to pharmaceuticals for up to 6 years. This protection means that the government will not allow third parties to rely on the same data to seek approval to market the same or a similar product in Canada. Instead, third parties must submit their own independent data for approval. This ensures that subsequent products do not unfairly benefit from the research dollars invested by the producers of those who bring a new product to market.
The USMCA proposes to extend the protection for the data related to biologics from 8 to 10 years. The USMCA proposes to require that Canada maintain the current level of data protection for agricultural chemicals at 10 years, but proposes to require data protection for pharmaceuticals for only 5 years instead of the current 6 years.
Border Control Measures to be Extended to Goods in Transit
In 2014, Canada introduced amendments to the Trademarks Act that allow registered trademarks to be recorded with the Canadian Border Service Agency for the purpose of intercepting and detaining counterfeit goods being imported into Canada. At present, these border control measures do not apply to goods in transit which are destined for delivery to another country. This has long been a subject of concern for the US who has accused Canada of serving as a way stop for the delivery of counterfeit goods to be sold in the US market. The USMCA proposes to extend these border control measures to goods in transit.
Geographical Indications to be Subject to Opposition & Cancellation
Sometimes referred to as “appellations of origin,” geographical indications have traditionally identified wines and spirits as originating from a region where a characteristic of the wine or spirit is essentially attributable to its geographical origin. Familiar examples protected in Canada include Cognac, Beaujolais, and Niagara Peninsula. A protected geographical indication can be used only in connection with wines and spirits originating from the indicated geographic region.
The Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union dramatically expanded the protection of geographical indications to other food and agricultural products, including cheeses, oils, spices, cured meats, vinegars, fruits, etc. Effective September 21, 2017, 170 geographic indications were automatically recognized for food and agricultural products, including Asiago, Feta, Kalamata Olives, Prosciutto di Parma. Third parties had no opportunity to object to these registrations and they are not subject to cancellation.
The USMCA proposes to restrict the ability of Canada to add new geographical indications to the trademark register by way of similar bilateral trade agreements in future by requiring that Canada provide means to oppose and/or cancel such registrations – at least with respect to agricultural products and food. Geographical indications for wine and spirits are excepted from this requirement.
Statutory Damages may be introduced for Trademark Infringement
When seeking damages for copyright infringement, the injured party may elect to receive either: (a) traditional compensatory damages; or (b) “statutory damages”. Statutory damages are fixed by section 38.1 of the Copyright Act and set the minimum sum to be awarded to the injured party for each instance of copyright infringement and range from $500 to $20,000 for commercial activity and $100 - $5,000 for non-commercial activity. The regime is intended to reduce the cost of copyright litigation and serve as a deterrent where compensatory damages for copyright infringement are minimal or difficult to calculate.
While the USMCA does not require the introduction of a similar statutory damages regime for trademark infringement, it does require that the injured parties be entitled to either: (a) punitive damages; or (b) “pre-established damages” for trademark infringement. Punitive damages for trademark infringement are already available in Canada so a statutory damages regime is not mandated by the USMCA. Nevertheless, such a system would be welcome to similarly deter counterfeiting and reduce the cost of litigation.
At this point, the USMCA is only an agreement in principle and must be ratified by each country before it is successfully concluded. In the meantime, further changes are possible and, with imminent political change in both the US and Mexico, the timeline for ratification is fairly uncertain. Even after ratification, the USMCA stipulates that the parties will have several years to implement the treaty, ranging from 2.5 years for the copyright related terms to 5 years for data protection measures. As a result, it may be many years before the proposed changes are introduced into Canadian law. However, absent dramatic political developments, I think we should expect the chapter of the USMCA governing intellectual property to be subject to only minor revisions.