After more than a year of intense negotiations, the United States (“US”), Canada and Mexico reached a new trade agreement on Sunday September 30th, 2018, minutes before the midnight deadline. The United States-Mexico-Canada Agreement (“USMCA” or “Agreement”) will serve as a replacement for the North American Free Trade Agreement (“NAFTA”) that came into force on January 1, 1994.
The USMCA has 34 chapters and 12 side letters. It covers several subjects, including agriculture, dispute settlement, the automotive industry, labour standards, the environment and indigenous peoples. Chapter 20 of the USMCA, entitled “Intellectual Property Rights”, contains 63 pages, with obligations on copyright and related rights, trademarks, geographical indications, patents, data protection for pharmaceutical products, industrial designs, trade secrets, and intellectual property rights enforcement. While Canada’s laws and upcoming amendments already comply with a big part of the provisions, Canada will still have to make more amendments to its law to fully comply with the USMCA. Here are some of the most significant changes under the Agreement:
- The general term of copyright protection will be increased from the life of the author plus 50 years to the life of the author plus 70 years;
- There will be pre-established remedies to combat trade in counterfeiting and pirated goods;
- The term for data protection for new biologic drugs will increase from eight to ten years;
- A patent term adjustment procedure for unreasonable patent office delays.
The following will give a more detailed summary of the changes coming with the USMCA.
Under NAFTA, the basic term of copyright protection is the life of the author plus 50 years after the author’s death. Under the USMCA, the protection will be extended for the author’s life plus 70 years after the author’s death. Canada will have two-and-a-half years to implement this provision from the date the USMCA enters into force.
Internet Service providers
The USMCA also provides “safe harbors” for internet service providers from liability for copyright infringements that they do not control, initiate or direct. The Agreement specifies that a Party that has a notice-and-notice system as of the date of the Agreement is exempted to adopt the notice-and-takedown requirement. This is good news for Canada, as it will get to keep its current notice-and-notice approach.
Pursuant to Annex 15-D of Chapter 15, “Cross-Border Trade In Services” of the USMCA, Canada has agreed to rescind Canada Radio-television and Telecommunications Commission’s (“CRTC”) Broadcasting Regulatory Policy CRTC 2016-334 and Broadcasting Order CRTC 2016-335, put in place in 2016. The Policy and Order banned simultaneous substitution (also known as “simsub”) during the Super Bowl. Simultaneous substitution is a practice that allows Canadian ads to be broadcast on American networks when the program is showing in both countries at the same time. The CRTC’s Policy and Order suspended simultaneous substitution once a year for the Super Bowl – which therefore required the broadcast right holder for the Super Bowl (currently Bell Media) to show the original US ads rather than replacing them with Canadian ads. Bell Media and the National Football League appealed the CRTC’s Order at the Federal Court of Appeal (“FCA”) but were unsuccessful. The Supreme Court of Canada granted leave to appeal the FCA’s decision, and the case will be heard in early December.
While the USMCA revokes the CRTC’s Policy and Order, it is unclear whether the USMCA will be ratified before the next Super Bowl. Moreover, since the Supreme Court of Canada has yet to hear Bell Canada’s and the National Football League’s appeal of the CRTC’s Order, this provision may not be enforced in time for the Super Bowl in 2019.
Under the USMCA, customs officials will be given more authority with respect to suspected counterfeit trademark goods or pirated copyright goods that are either imported, destined for export, in transit or admitted into or exiting from a trade zone or bonded warehouse. Canada had passed an anticounterfeiting legislation seven years ago as a requirement to join the Trans-Pacific Partnership (“TPP”) negotiations. The current provisions do not cover in-transit shipments, therefore this new addition to the USMCA will require further reforms to Canadian law.
The USMCA requires each Party to ratify or accede to the Madrid Protocol, adopt a trademark classification system consistent with the Nice Agreement and “make best efforts to register scent marks”. These changes were already in place for implementation in Canadian law in 2019.
Collective and Certification Marks
The Parties to the Agreement will need to provide for their trademark law to include collective and certification marks as trademarks. Canada will most likely need to implement legislation to permit the registration of collective marks.
The USMCA includes several provisions relating to the protection of geographical indications similar to provisions in the TPP. While the USMCA provides that a country shall not preclude the possibility that the protection of a geographical indication could cease, exceptions to these rules have been set out to protect geographical indications that became protected through previous international agreements.
The USMCA requires each Party to have a domain name dispute mechanism modelled on the principles of the Uniform Domain-Name Dispute-Resolution Policy. There must be adequate remedies, such as revocation, cancellation, transfer, damages or injunctive relief, for registration of a domain name with a bad faith intent to profit that is confusingly similar to a trademark. Canada already complies with this provision, through the Canadian Internet Registry Authority (“CIRA”) Dispute Resolution Policy, in place since 2002. Canada will be required to provide online public access to a database of contact information of the domain name registrants (subject to policies regarding privacy and personal data). The CIRA’s WHOIS database and policy likely comply with this requirement.
The USMCA also requires the Parties to maintain a system that provides pre-established damages for trademark counterfeiting “in an amount sufficient to constitute a deterrent to future infringements and to compensate fully the right holder for the harm caused by the infringement.” Canada will have to make amendments to its law to include this provision.
The Parties to the USMCA are required to give due consideration to ratifying or acceding to the Patent Law Treaty, or to adopt or maintain procedures standards consistent with the objectives of the Patent Law Treaty. The Economic Action Plan 2014 Act, No. 2 has some provisions amending the Patent Act to comply with Patent Law Treaty; however these provisions are not yet in force.
Patent Term Adjustments
The USMCA provides for a patent term adjustment procedure to compensate for Patent Office unreasonable delays in issuing a patent. According to the Agreement, an unreasonable delay includes “a delay in the issuance of a patent of more than five years from the date of filing of the application in the territory of the Party, or three years after a request for examination of the application has been made, whichever is later.” Canada will have four-and-a-half years to implement this provision from the date the USMCA enters into force.
The USMCA defines “biologic” as “a product that is produced using biotechnology processes and that is, or, alternatively, contains, a virus, therapeutic serum, toxin, antitoxin, vaccine, blood, blood component or derivative, allergenic product, protein, or analogous product, for use in human beings for the prevention, treatment, or cure of a disease or condition.” NAFTA offered eight-year data protection terms for biologics; under the USMCA, terms will be extended for a protection of at least ten years from the date of first marketing approval. Canada has five years to implement this provision from the date the USMCA enters into force.
The USMCA requires Parties to ratify or accede to the Hague Agreement. Canada’s law will change with amendments to the Industrial Design Act and new Regulations, coming into force on November 5, 2018. The changes, which include the ratification of the Hague agreement, will comply with the Industrial Design provisions in the Agreement.
The USMCA includes new provisions relating to trade secrets protection and enforcement through civil and criminal measures, and remedies or penalties for the misappropriation of trade secrets. The provisions are consistent with Canada’s legal framework.
While Canada’s law is largely compliant with the USMCA provisions, a few amendments are still needed in order to fully comply with the Agreement. One of the changes enumerated above is the change in the term of copyright protection from the life of the author plus 50 years to the life of the author plus 70 years. This change will align Canadian law not only with that of the US, but also with the European Union law. One of the potential consequences of this new provision is the increase in educational costs, as works will take decades before entering the public domain. Some believe that when amending Canada’s copyright law for the term of copyright protection, there should be an extension of fair dealing protection in order create a balance.
Another big change coming with the USMCA is the change in the data protection terms for biologics, increasing the term from eight to ten years. This is a contentious issue; as every additional year adds billions of health care costs. There will be immense additional costs for pharmaceuticals in Canada. While the drug costs rise in the next decade, the Canadian population will also be aging – we can therefore expect additional problems and costs with the health care system.
While an agreement was reached, the USMCA is not yet law in Canada, the US or in Mexico. Among other phases, the USMCA still needs to be approved in the US Congress and the legislatures in Canada and Mexico. This process is expected to take months, and therefore the provisions will not likely be in place before the end of 2019 – early 2020.