On March 1, 2013, the Canadian government introduced Bill C-56, titled the Combating Counterfeit Products Act (the “Bill”), which proposes to effectively amend, inter alia, the Trade-marks Act (the “Act”).  The Bill, if it becomes law, will introduce remedies to deal with counterfeit goods in the Act.

Criminal Offences

Under the Bill, the sale, offer for sale, distribution on a commercial scale, and manufacture, possession, importation, exportation or attempted exportation of any goods on a commercial scale, or the sale or advertisement of services, would be a criminal offence IF the person engaging in this activity knows that:

  • the trade-mark associated with the goods or services is identical, or cannot be distinguished in its essential aspects from, a registered trade-mark for such goods or services;
  • the owner of the registered mark has not consented to such use; and
  • such action would be contrary to section 19 or 20 of the Act.

Similar offences are included in respect of labels and packaging associated with goods and services.  However, knowledge on the part of the infringer that the label or packaging is intended to be associated with goods or services covered by a registered trade-mark is also required.

For these offences, the Bill would impose fines of up to $1,000,000 and/or imprisonment for up to five years and, in certain circumstances, would allow for destruction or disposition of any goods, labels, packaging, advertising materials and equipment on notice to the infringer.

While criminal remedies would be a welcome addition to the Act, the test to be met in obtaining successful convictions under these provisions is vague and may be of limited application.  For example, the requirement to show the infringer’s knowledge of counterfeit activity appears to be a high standard of proof that may rarely be met in practice.  Additionally, criminal remedies are available only to registered trade-marks owners – common law marks, and marks for which pending applications exist, are not included despite Canada being a use-based jurisdiction.  Moreover, while reference to section 20 of the Act appears to import the test for confusion in the Act, it is unclear how reference to the vague phrase distinguishing marks in their “essential aspects” would affect the application of this test.

Remedies against Unauthorized Import/Export

The Bill aims to prohibit import and/or export of goods if the goods or their labels or packaging bear a trade-mark that is identical to, or cannot be distinguished in its essential aspects from, a registered trade-mark.  This prohibition would not apply where:  (a) the registered trade-mark owner in the country where the trade-mark, label or packaging was applied consents to such use; (b) the Act is not contravened; (c) the goods are for personal use; OR (d) the goods are only in transit in Canada.

The Bill would permit registered trade-mark owners to file requests for assistance to detain the offending goods, labels and packaging with Canada Border Services Agency (“Customs”).  Requests would be valid for two years and may be extended indefinitely.  Registered trade-mark owners may be required to furnish security.

Customs would have broad powers to seize and detain goods under the Bill, including the ability to provide registered trade-mark owners with samples of the detained goods and, in certain circumstances, other information relating to the detained goods.  Inspection of the detained goods by registered trade-mark owners and/or infringers would also possible.

Registered trade-mark owners would be liable for storage, handling or destruction charges once samples are sent to them by Customs and may be required to furnish security.  Infringers may be liable to compensate registered trade-mark owners for such charges.  If any proceedings against the infringers by registered trade-mark owners are dismissed or discontinued, owners may be liable to infringers for losses, costs, and prejudice suffered from the detention.

As with criminal proceedings, these provisions would only be available to registered trade-mark owners.  Administrative costs of this protocol may be high and management of detained goods could be complicated where multiple registered trade-mark owners are involved.

Missing Items

Notably, the Bill does not address, among other things, civil remedies, statutory damages, offences for attempts to sell, distribute, advertise, manufacture, possess or import goods or services (as the case may be), and the use of trade-marks on wares and services which may be related to but not within the registration.

The Bill will now proceed to a second reading in Parliament, followed by referral to a committee, and ultimately a third and final reading in, and potential passage by, Parliament.  A similar process will be followed in the Senate and, if passed, will result in Royal Assent and implementation of the Bill.  The Bill is expected to pass during the current session of Parliament.