The existence of counterfeit products often signify that a particular brand or product has ‘made it’: it is now sufficiently popular that someone is making knock-offs. Of course, counterfeits are a nuisance for legitimate rights holders and indeed harmful to consumers, who may not get the product they expect (and certainly without the usual warranties, etc. that legitimate products carry). There has never been an easy ‘fix’ to this problem, which involves the misappropriation of intellectual property rights, principally, copyrights and trade-marks; counterfeit goods will typically copy a brand owner’s trade-marks/copyrights or use confusingly similar copies.
Canada’s most recent response to this was last year’s Bill C-8, the Combating Counterfeit Products Act, S.C. 2014, c. 32 (the “CCPA”), which received royal assent in December 2014. The CCPA made a number of changes to Canada’s trade-mark and copyright laws, as well as minor amendments to the Criminal Code. These included certain civil and criminal causes of action for commercial counterfeiting, including:
- Civil causes of action for trade-mark owners in respect of the manufacture (or causing to manufacture), possession, importation, exportation or attempts to export goods for sale or distribution bearing the owner’s trade-mark (or a confusing trade-mark or trade-name), including where the alleged infringer “knows or ought to know that the label or packaging is intended to be associated with goods or services that are not those of the owner of the registered trade-mark”;
- Criminal causes of action for the possession for sale, renting or distribution “for the purpose of trade or exhibition in public by way of trade”, the importation for sale or rental, or the export or attempt to export for sale or rental an infringing copy of a copyrighted work; and
- Criminal causes of action for the sale, offering for sale, distribution on a “commercial scale”, manufacture (or causing to manufacture), possession, importation, exportation or attempts to export goods for sale or distribution on a “commercial scale” using an infringing trade-mark, where the alleged infringer knows that “the goods bear a trade-mark that is identical to, or that cannot be distinguished in its essential aspects from, a trade-mark registered for such goods” (with similar offences for infringing use of trade-marks in association with services, labels or packaging, or the trafficking in labels or packaging).
More recently, in January 2015, the CCPA’s “request for assistance” provisions relating to trade-marks and copyrights came into force. These provisions allow for rights owners to file an assistance request with the Minister of Public Safety and Emergency Preparedness (i.e. with the Canada Border Services Agency or CBSA).
The request must meet prescribed criteria, and pursuant to the form made available by the CBSA, must, among others, include:
- the rights owner’s name and address in Canada;
- contact information (name, phone number, mailing address, e-mail address and a secondary or back-up e-mail address) for whom to contact in the case of a detention;
- identification of the relevant trade-marks or copyrights---trade-marks must be registered marks and the CBSA recommends that copyrights that are the basis for a request also be registered;
- a description of the applicable authentic goods;
- if applicable, a list of known trusted importers that are permitted to bring these authentic goods into Canada; and
- if applicable, a list of known illegitimate importers and exporters.
A request is generally valid for two-years (but renewable). As a condition of accepting the request, security for costs (costs are discussed below) may be required from the rights owner. While the CBSA indicates a bond may be acceptable security, it is not yet clear if any other forms would be valid, or what quantum of security may be required.
A valid request would empower a customs officer with the CBSA to ‘detain’ copies of products that may be infringing on the basis of the details found in the request, to obtain information about the importation/exportation of such allegedly infringing goods (e.g. identification information, source information, quantity, etc.) and to share such information and a sample of the detained goods with the rights owner. After receiving a sample, the rights owner may also seek to inspect the detained goods. The detention is for a short period -- 10 working days for most goods, with the potential for an additional 10 days on request (5 days for perishable goods). If the rights owner commences formal litigation during this period and provides notice of this to the CBSA, then the detention will continue until the CBSA is informed in writing that:
- the proceedings are finally disposed of, settled or abandoned;
- a court directs that the goods are no longer to be detained for the purpose of the proceedings; or
- the rights owner consents to the goods no longer being so detained.
A key point to bear in mind is that the rights owner is liable to the CBSA (i.e. the Crown as represented by the agency) for: (1) the “storage and handling charges” relating to the detention, and, if applicable, (2) also for the “charges for destroying” the detained goods. These costs, generally, begin to accrue on “the day after the day on which a customs officer first sends or makes available a sample or information” to the rights owner, until the goods are no longer detained or the rights owner indicates (a) they are not infringing, or (b) that they will not commence legal proceedings. Should the owner of the detained goods or the importer or exporter (as the case may be) of the detained goods forfeit same, then they are jointly and severally liable to the rights owner for the storage costs.
It should be noted that, absent a Court Order to the contrary, the ‘storage’ is to be at a bonded customs warehouse and, consequently, storage charges, if the detention is for any material period, may be quite expensive. As such, the cost/benefit analysis for a rights owner may be complicated by the fact that legal proceedings can take significant time to reach a conclusion and that the ‘owner’ of the detained goods (or the importer, or the exporter) may not be a ‘real’ entity or one with any assets against which judgment may be enforced.
The idea behind the regime is to provide rights owners with the ability to ‘stop’ counterfeit goods at the border and to gain the time and information to commence legal proceedings, but, while goods may be stopped, a key question will be ‘at what cost?’ Furthermore, with the limited detention period one is left wondering whether or not this provides sufficient time for a rights owner to make an informed decision to initiate proceedings, given the liability to the CBSA for costs. At a minimum, the various changes made by the CCPA do provide some additional tools to rights owners and the government to combat the serious problem of counterfeit goods.
For a printable PDF version of this article, please click below:
Border Measures of Anti-Counterfeiting Legislation Now in Force: Additional tools for rights owners, but at what cost?
For questions on Canadian intellectual property law, including Canada’s new anti-counterfeiting laws, acquiring, registering, transferring or licensing trade-marks and copyrights, or other aspects of Canadian intellectual property law, please contact Athar Malik, Kristen Murphy, or another member of Cox & Palmer’s Intellectual Property & Technology team