“Canada is not open to your kind of business.” This is Canada’s message to criminals engaging in counterfeiting and piracy with its Combating Counterfeit Products Act (known as Bill C-8), which received Royal Assent on Dec. 9, 2014. Industry Minister James Moore has stated that this Act will “give rights holders, border service officers and law enforcement officers the tools that they need to work together to directly confront the growing threat of international counterfeiting and piracy.”
The Act creates new civil causes of action with respect to sustaining commercial activities in infringing copies and counterfeit trademarked goods, as well as new criminal offences for trademark counterfeiting which bring them in line with existing offences in the Copyright Act. This is undoubtedly helpful to brand owners whose logos are not the subject of copyright protection. The Act also creates new criminal offences prohibiting the possession or exporting of infringing copies or counterfeit trademarked goods, packaging or labels. The latter offence aims to capture those who import packaging and labels separately from goods themselves, only to assemble them in Canada for re-sale.
The signature change is the new border enforcement regime enabling customs officials to detain goods that they suspect infringe copyright or trademark rights, and allowing them to share information relating to the detained goods with rights owners who have filed a request for assistance, so that they may have a reasonable opportunity to pursue a remedy in court.
There is no border mechanism under the current system, nor can information on suspicious shipments be shared with brand owners. Currently, the Canadian Border Services Agency (CBSA) has no authority to detain suspected counterfeit goods, or disclose shipping information. CBSA will now have the authority to temporarily detain goods suspected of being counterfeit, and set in motion criminal (RCMP) and administrative (Health Canada) investigations. CBSA will also have the authority to refer to a matter to a rights holder for the pursuit of civil remedies.
The Act targets commercial grade counterfeiting aimed for the Canadian market: goods in transit, parallel imports and goods imported by an individual for personal use are all exempt from the application of the border measures.
It is also notable that the Act allows police to seek authority for a wiretap for offences under the Copyright Act and the Trademarks Act. It remains to be seen how these measures will be treated by the courts.
The Act is a welcome acknowledgement of long-standing concerns over the growth of counterfeit business in Canada, which the Royal Canadian Mounted Police (RCMP) estimates has increased by 400% within the last seven years alone. Counterfeit products now permeate a broad variety of industries, raising concerns for health and safety and threatening legitimate business owners.
While the Act is being welcomed by many as ushering in a new era of enforcement and being a step in the right direction, it also has its critics. In particular, some changes have been met with general approval, such as strengthening the civil and criminal enforcement provisions of the Trade-marks Act. Other changes suggested by stakeholders but ultimately rejected had included adding statutory damages to the Trade-marks Act, and not exempting goods in transit. Troubling to many is that the provisions of the Act do not permit the seizure and destruction of counterfeit merchandise where the importer does not respond to a rights holder’s Request for Assistance. Other concerns include allocation of insufficient resources to law enforcement agencies and CBSA.
In responding to criticism, the government has stated that it aims to balance competing interests with safeguards, for example by allowing only temporary detention of goods to preserve the presumption of innocence. CBSA has no ability to make a decision as to infringement, and damages are awarded via the court system, without the mechanism of statutory damages. In this way, the Act aims to balance pursuing the abuses of criminals and due process.
Implementation is expected to be swift, and possibly as soon as early 2015. Much uncertainty remains as to how the gritty details of enforcement will play out. In short, we are about to enter an interesting time in Canada in respect of counterfeiting issues.