Canada’s Proposed Combating Counterfeit Products Act – A First Step in the Right Direction

Cassels Brock Blackwell LLP – Toronto Office
On Friday, March 1st, 2013, the Canadian Federal Government introduced a new Bill for discussion, proposing the Combating Counterfeit Products Act (“CCPA”). This newly proposed legislation brings forward Canada’s commitment to a “get tough” stance on the implementation of anti-counterfeiting measures initiated by our nation’s execution of the Anti-Counterfeiting Trade Agreement (“ACTA”) on October 1st, 2011 in Tokyo, along side Australia, Japan, Morocco, New Zealand, the Republic of Korea, Singapore, and the United States of America. ACTA’s stated objective is to put in place international standards for enforcing intellectual property rights in order to more efficiently fight the growing problems of counterfeiting and piracy.

Civil courts and law enforcement have been doing what they can to staunch the ever increasing flow of knock-off products that find their way into Canada or that are transhipped through Canada and destined for markets with our foreign trading partners. While perhaps initially seen as a cost of doing business in the luxury goods sector, it has become clear that counterfeit products can pose health and safety risk to Canadians, resulting in decreased confidence in the marketplace, lost tax revenue for various levels of government, and lost business for legitimate manufacturers and their employees. An unabated parallel flow of counterfeit goods also has an adverse effect on Canadian wholesale and retail channels of trade through which legitimate products and services flow to the consuming public.

To a great extent, these enforcement efforts have been hindered by antiquated IP rights legislation, difficult to enforce criminal offence provisions, and an absence of proactive monitoring and seizure procedures. Indeed, on April 30, 2009, the current Canadian legislation led the U.S. Trade Representative to place Canada on a Priority Watch List of countries causing “the most significant concerns regarding insufficient IRP protection or enforcement”, along with China, India, Russia, Thailand, and Algeria, just to name a few. All too often legitimate rights holders are left having to chase the horse after the barn door has been opened.

As proposed, the CCPA will introduce new measures and amend a number of pieces of Federal legislation, including the Trade-marks Act and the Copyright Act in order to effect five significant initiatives:

1.Seizure and Detention Initiatives. Officers with the Canadian Border Services Agency (“CBSA”), will be given authority to detain suspect commercial shipments and communicate with legitimate right holders concerning those goods and their ultimate disposition;

2.Requests for Assistance. Legitimate rights holders will be entitled to lodge “requests for assistance” with the CBSA in order to provide law enforcement with the necessary heads-up to be able to initiate effective counterfeit seizure protocols before counterfeit product enters the marketplace;

3.New Canadian Criminal Offences. New Canadian criminal offences are proposed for the commercial possession, manufacture, importing or exporting of counterfeit trade-marked goods, rendering offenders subject to significant fines and incarceration. The CCPA also proposes changes to the Copyright Act to establish a new criminal offence of possessing and exporting counterfeit goods for the purposes of trade, thus allowing the RCMP (or, Royal Canadian Mounted Police, our national law enforcement agency) to seize counterfeit copyrighted goods that find their way across our borders;

4.Updated Trade-mark Definitions and Procedures. The CCPA also proposes a number of changes to the Trade-marks Act. In order to enable legitimate trade-mark owns to accelerate the registration of their trade-marks in Canada, trade-mark owners will be entitled to separate contested portions of their trade-mark applications into divisional applications, thus allowing the non-contentious portions to proceed to registration and ultimately into enforcement mode, unencumbered. In addition, the CCPA proposes to update and refresh a number of terms in the Trade-marks Act, including the definition of a “trade-mark”, such that the term will include not only words, logos, and sounds, but also personal names, numerals, colours, figurative elements, three dimensional shapes, holograms, a moving image, a mode of packaging, a scent, a taste, a texture, and the positioning of a trade-mark; and,

5.New Civil Cause of Action for Trade-mark Infringement. The CCPA also proposes a new civil cause of action entitling legitimate trade-mark owners to seek proactive civil as opposed to criminal recourse (with its lesser standard of proof when compared to the evidentiary burden in criminal proceedings) for the manufacture, distribution and possession with the intent to sell counterfeit goods. This should prove to be a powerful tool in the hands of legitimate trade-mark owners, as they will now have an effective enforcement mechanism before counterfeit trade-marked goods are sold in the marketplace.

However, absent from the draft legislation and its announcement are particulars of exactly how the Federal Government will meet the financial challenge of putting such an ambitious program and infrastructure into effect.