Re-introduced into Parliament as Bill C-8 on October 28, 2013, the Combatting Counterfeit Products Act (the “CCPA”) received royal assent on December 9, 2014. As the Act’s namesake might suggest, the key aspects of the CCPA provide: (i) new civil causes of action and criminal offences to more effectively address copyright piracy and trade-mark counterfeiting; (ii) new border enforcement measures; and (iii) amendments to the Criminal Code allowing for new penalties and increased use of electronic surveillance. To implement these objectives, theCCPA will introduce amendments to the Copyright Act (the “CA”) and the Trade-marks Act (the “TMA”) as well as corresponding amendments to other related statutes such as the Customs Act and the Criminal Code.
While the totality of the CCPA will be rolled out over time, the new border enforcement measures took effect on January 1, 2015. More specifically, by Order of the Governor General, CCPA sections 2, 5 and 6 (amending theCA), 7(6), 43 and 44 (amending the TMA) and section 60 (amending the Customs Act) took effect at the beginning of the year.
The Old Border Enforcement Regime
Prior to the CCPA, the act of importing goods that infringed copyrighted works or goods containing infringing use of a registered trade-mark or a trade-name was prohibited. However, if the owner of the copyright or the registered trade-mark wished to prevent the infringing goods from being imported into Canada, the rights holder’s only recourse was to apply to a court, either on notice to the importer or on an ex parte basis, for an order directing the Minister of Public Safety to take reasonable measures to detect and detain alleged infringing goods through the Canada Border Services Agency (“CBSA”). Other than via court order, the CBSA did not have any mandate or ex officio power to detain goods on the basis that the goods were suspected of infringing copyright or trade-mark rights.
To obtain the order, the applicant had to satisfy the court that the goods to be imported would infringe the applicant’s rights, or would otherwise be contrary to provisions, set out in the TMA or CA.
The court could make an order directing the Minister to take any reasonable measures to detain the goods and to notify the applicant and the importer of the detention. The court could also require the applicant to furnish security to cover duties, storage and handling charges and to answer any damages caused by the order that might be incurred by the owner, importer or consignee of the goods due to the detainment of the goods.
After being notified of the court-ordered detainment, the applicant would have two weeks to commence an action for a final determination by the court of the legality of the importation or distribution of the goods. If the action was not commenced by that time, then the Minister would have to release the detained goods. For the purposes of substantiating or refuting the applicant’s claim, the Minister could give the applicant or the importer an opportunity to inspect the detained goods.
Accordingly, under the old regime, the lack of any assistance from the CBSA prior to filing an application for a court order to detain suspected infringing goods, made the process for enforcing intellectual property rights at the border very difficult for rights holders. The requirement to commence legal proceedings within two weeks with no extensions of time increased the difficulty of utilizing the border enforcement regime. Thus, the CCPA’s new border enforcement measures are meant to increase the effectiveness of border enforcement by prohibiting commercial-scale importation and exportation of counterfeit and pirated goods, empowering the CBSA to take action against such counterfeit and pirated goods, and to establish a regime where the CBSA and rights holders can co-operate and share information to facilitate the detainment of infringing goods and civil enforcement against the import and export of pirated and counterfeit goods.
What’s New under the New Border Enforcement Measures?
The CCPA amendments that took effect January 1, 2015 include:
(a) new express prohibitions against importing and exporting goods that infringe copyright and trade-mark rights (s.44.01 of the CA, s. 51.03 of the TMA);
(b) a new Request for Assistance (“RFA”) regime where the CBSA can exchange information with rights holders to assist in civil enforcement against the import and export of pirated and counterfeit goods (ss.44.02 of the CA, s. 51.04 of the TMA);
(c) ex officio powers granted to the CBSA to detain goods suspected of contravening the new express import/export prohibition (ss. 44.03-44.08 of the CA, ss. 51.04-51.1 of the TMA); and
(d) powers of the court in relation to detained goods pursuant to the new import/export prohibitions (ss.44.09-44.11 of the CA, ss. 51.11-51.12 of the TMA).
The CCPA also preserves the old mechanism for rights holders to obtain a court order directing the Minister of Public Safety to detain goods that infringe copyright and trade-mark rights (s.44.12 of the CA, s.53.1 of theTMA).
1. New Prohibitions Against Import and Export
The CCPA provides new express prohibitions against:
(a) the import or export of unauthorized goods or packaging bearing a trade-mark that is identical to, or having all the essential aspects of, a registered trade-mark (s.51.03(1) of the TMA) – except where:
(1) the trade-mark was applied with the consent of the owner of the trade-mark in the country where it was applied;
(2) the sale or distribution of the goods (including labels or packaging) would not be contrary to the TMA;
(3) the goods are imported/exported by an individual for personal use; or
(4) the goods are “in transit” from one place outside Canada to another; and
(b) the import or export of infringing copies of copyrighted works made without the consent of the owner in the country where the copies were made (see s.44.01(1) of the CA) – except where:
(1) the goods are imported/exported by an individual for personal use; or
(2) the goods are “in transit” from one place outside Canada to another.
These new express prohibitions against import and export set the stage for the new border enforcement provisions.
Note that in the case of the TMA, the CCPA also significantly amended the provisions relating to infringement under section 20, with specific provisions governing the import and export of trade-marked goods. However, the new ex officio powers of the CBSA and the Request for Assistance regime rely upon the new import/export prohibitions and not the definition of trade-mark infringement under section 20 of the TMA.
2. Ex Officio Powers to Detain and Request for Assistance
The CCPA amendments will allow the CBSA, as a result of its border inspections, to temporarily detain any goods that may be suspected of contravening the new import/export prohibitions (i.e. s.44.01 of the CA and s.51.03 of the TMA).
The new border enforcement provisions also provide for a regime where copyright and trade-mark owners can file an RFA with the Minister of Public Safety. The RFA would include, amongst other things, details about the rights holder, the copyright or trade-mark rights at issue, the name and description of authentic goods (i.e. product features, packaging, trade-mark location), a list of trusted importers, and a list of known illegitimate importers/exporters. Once the RFA is approved by the Minister, the RFA will then be placed on file with the CBSA for a period of two years (extendable by request). It is the responsibility of the rights holder to update the information in the RFA, particularly any changes to the subsistence or ownership of the copyright or trade-mark rights.
It should be noted that only registered trade-mark owners are eligible to file an RFA based on trade-mark rights. Copyright owners do not need to register copyright to file an RFA, but registration is still recommended by the CBSA.
The CBSA may provide rights holders with a sample of the goods and any information about the detained goods. The samples and information may be provided to rights holders for the purposes of: (i) assisting the CBSA in determining whether the import/export of the goods contravenes the new import/export prohibition and (ii) assisting the rights holder in pursuing a remedy under the TMA or CA. The information provided by the CBSA to assist the rights holder might include a description of the goods and their characteristics (including the quantity, the countries of origin and countries where the goods traveled through), the name and address of the goods’ owner, importer, exporter, consignee or manufacturer, and the day on which the goods were imported. The CBSA may also give the rights holder, or the owner, importer, exporter, consignee of the detained goods, an opportunity to inspect the detained goods.
The CBSA will initially detain suspected goods for only 10 working days (only 5 if the goods are perishable). The initial detainment of non-perishable goods may, on request of the rights holder, be extended by the CBSA for an additional 10 working days. Before the expiry of the 10 working days (or the further 10-day extension), the rights holder must file proof with the CBSA that a court proceeding to obtain a remedy under the TMA or the CA has been commenced. Under such circumstances, the CBSA will continue to detain the suspected goods until the proceedings have been finally disposed of, settled or abandoned, or until either the rights holder consents to, or a court orders, the release of the goods.
Upon receiving a sample or information pertaining to detained goods, the rights holder will be liable to the Minister for any storage, handling or destruction charges for the detained goods during the entire period of detainment related to the RFA. It should be noted that the Minister may, as a pre-condition for accepting an RFA, require the rights holder to provide security to cover the amount of storage, handling and/or destruction charges for the detained goods.
3. Powers of the Court Relating to Detained Copies
In the course of court proceedings commenced by the rights holder, the Minister or a party to the court proceeding, may apply to the court for an order:
(a) imposing conditions on the storage or detention of goods at issue;
(b) releasing the detained goods on conditions that the court may impose, including that the owner, importer, exporter or consignee of the detained goods provide security in an amount to be fixed by the court; and
(c) requiring the rights holder to provide security to cover duties, storage and handling charges and to answer any damages that may be sustained by the owner, importer, exporter or consignee of the detained goods as a result of the detainment.
If the court proceeding is dismissed or discontinued, the court may also award damages against the rights holder who commenced the court proceeding to the owner, importer, exporter or consignee of the detained goods for losses, costs or prejudice suffered as a result of the detention of the goods.
4. Application for Court-Ordered Detention
In addition to the new enforcement regime set out above, the CCPA also preserves the previous mechanism for obtaining a court order to detain goods that infringe copyright and trade-mark rights, as set out in the CA (now s.44.12) and TMA (now s.53.1).
Under this mechanism, the owner of copyright or a registered trade-mark must make an application to the court, either on notice or ex parte, for the detainment order. To obtain the order, the rights holder must prove to the court that:
(a) in the case of copyright:
(1) copies of the work are about to be imported, or have been imported into Canada but have not been released;
(2) copies of the work were unauthorized and would infringe copyright if the copies were made in Canada by the importer; and
(3) the importer knows or should have known that the copies would infringe copyright in Canada; and
(b) in the case of trade-mark:
(1) goods to which a trade-mark has been applied are about to be imported into Canada or have been imported into Canada but have not been released; and
(2) distribution of the goods in Canada would be contrary to the TMA.
5. Two Options for Rights Holders
As a result of the CCPA amendments, rights holders now have two options for pursuing enforcement at the border. With the new border enforcement measures, rights holders can file an RFA and utilize the CBSA’s resources in detaining shipments of suspected infringing goods at the border and obtaining necessary information to commence legal proceedings against the owner, importer, etc. of the detained goods. In addition to, or in lieu of, the new border enforcement regime, rights holders can also utilize the “traditional” method of bringing an application for a court-ordered detainment of goods from being imported into Canada.
In comparing the requirements for court-ordered detainment and the new border enforcement measures, it appears that the evidential burden on the rights holder is lower under the new border enforcement regime.
For example, in the case of copyright, obtaining a court-ordered detainment requires the rights holder to convince the court that, in addition to showing that the suspected goods infringe copyright, that the importer knew or should have known of the infringement of copyright. Under the new border enforcement regime, the CBSA can detain the suspected goods (and continue to detain after a legal proceeding is commenced) without the need for evidence from the rights holder of the importer’s knowledge of the infringement of copyright – only that the goods would infringe copyright had they been made in Canada and that the goods were made without the rights holder’s consent.
In the case of trade-marks, obtaining a court-ordered detainment requires the rights holder to convince the court the detained goods would, if distributed in Canada, be contrary to the TMA. Under the new border enforcement regime, the CBSA can detain the suspected goods (and continue to detain after a legal proceeding is commenced) on the basis that the rights holder’s registered trade-mark (or a substantially similar mark) was used with the goods without consent from the rights holder – not necessarily that such use was contrary to theTMA.
In both copyright and trade-mark cases, it appears that by structuring exceptions to the import/export prohibition, the onus might then fall on the importer to show that, for example, its use of the registered mark was not contrary to the TMA (i.e. convincing either the CBSA upon initial inspection or the court when applying for an order releasing the detained goods).
As a result of the amendments under the CCPA introducing new border enforcement measures, rights holders now have new options and resources that will make civil enforcement against the import/export of pirated and counterfeit goods more effective. However, in order for rights holders to make effective use of the new border enforcement measures, rights holders need to take pre-emptive action and must be vigilant in pursuing such civil enforcement.
Trade-mark owners should take notice that the RFAs are only available to owners of registered trade-marks. As such, trade-mark owners should ensure that their trade-marks are protected by registrations in Canada and that those registrations will remain in good standing during the detainment period. Trade-mark owners should ensure that all potential counterfeit targets in their trade-marks portfolio are properly registered with CIPO and that such registrations should cover all potential goods that may be counterfeited.
For copyright owners, registration is not a pre-requisite for RFA approval. However, it may still be beneficial to the copyright owner to obtain copyright registrations for inclusion in the RFAs as this may reduce the likelihood of any disputes over the validity or ownership of copyright within the CBSA administration and during the inspection and detainment of the goods.
Rights holders should also take note of the tight timelines under the new border enforcement regime. The CBSA will only detain the suspected goods for 10 business days following notification to the rights holder, by which time the rights holder must request for a further 10-day extension, notify the CBSA of the commencement of legal proceedings, or inform the CBSA that the detained goods should be released. Rights holders should keep in mind that liability for storage, handling or destruction charges for the detained goods begins when the rights holder is notified of the detained goods. Rights holders may also be liable for any damages, losses, costs or prejudice suffered by the importer as a result of the detainment of the goods. Accordingly, there is monetary incentive for rights holder to respond promptly to the notifications from the CBSA.
Rights holders should also ensure that their authorized importers/exporters are properly listed as a “trusted importer” in the RFAs. The failure to do so may result in unnecessary delays at the border while the CBSA detains legitimate goods destined for Canada. Similarly, ensuring that all known illegitimate importers/exporters are listed in the RFA will assist the CBSA in making more effective inspections of suspected infringing goods.
While the new border enforcement provisions appear in theory to be promising for rights holders, it remains to be seen whether this new regime will actually be effective in practice. The regime’s effectiveness will likely depend on the commitment of CBSA resources and their efficiency, along with whether rights holders are pre-emptive and vigilant in their pursuit of their civil remedies. Only time will tell.