Combatting Counterfeiting

Articles

While implementation of the significant reforms to the Trade-marks Act in Canada that were passed in 2014 has been very slow, one area that has been implemented is the amendments to combat counterfeiting. The amendments are an attempt to change the international reputation of Canada as a laggard in battling counterfeiting.

The amendments brought into force on January 1, 2015 assist both trade-mark and copyright owners in their efforts to stop the distribution and importation into Canada of counterfeit goods.

Specifically, the amendments create new civil and criminal prohibitions and remedies. An owner of a registered trade-mark in Canada may claim against importers or exporters of goods which, without the consent of that owner, bear trade-marks on the goods, labels or packaging that are identical to or cannot be distinguished from those of that owner. Similarly, a copyright owner may claim against importers and exporters of infringing copies of its copyright protected works. It is important to note that the copyright protected work does not need to be registered in Canada, as is the case with trade-marks. Having said that, in order to take advantage of the new remedy, it is still recommended that copyright protected works be registered.

The remedies under this new civil cause of action include the destruction of the counterfeit goods, packages, labels and advertising materials and the equipment used to make the counterfeit goods. Further, the new remedies provide for the imposition of punitive damages.

The new criminal sanctions for counterfeiting provide for $25,000.00 in fines and up to 6 months imprisonment for a summary conviction, and $1 million in fines and up to 5 years imprisonment for an indictable conviction. However, these sanctions do not apply to grey market goods, goods imported for only personal use and goods being shipped through Canada (imported and exported without distribution or sale in Canada).

An interesting innovation in the amendments is to provide for a new mechanism to stop counterfeit goods at Canada’s borders. The Canada Border Service Agency (“CBSA”) is operating a new program where owners of registered Canadian trade-marks can make a request for assistance (“RFA”) of the CBSA concerning counterfeit goods imported into Canada. Upon filing an RFA, the CBSA will contact the trade-mark or copyright owner with respect to suspected counterfeit goods that are being imported into Canada, provide samples of the goods and detain the suspected counterfeit goods at the border.

Suspected counterfeit goods will be detained by the CBSA for 10 days (5 days for perishable goods), which can be extended for a further 10 days. This period of detention is to allow the rights owner an opportunity to commence court proceedings for infringement. If the rights owner does not commence a legal proceeding, the suspected counterfeit goods will be released to the importer.

It is important to note that the rights owner is liable for the storage, handling and destruction of the detained goods. Further, the rights owner may have to provide security for these costs as well as pay damages if the rights owner is unsuccessful in any legal action it commences.

There is no filing fee for rights owners to register an RFA with the CBSA and no limit to the number of Canadian registered trade-marks that can be filed with the CBSA. RFAs filed are valid for a period of two years and can be renewed.

We understand that, to date, 139 RFAs have been filed with the CBSA. These RFAs cover 1,972 trade-marks and 4 copyrights. While we are not aware of a reported case expressly dealing with these provisions, there have been 26 shipments of suspected counterfeit goods detained by the CBSA under the new rules.

This new mechanism will ultimately depend on the CBSA’s ability to identify suspected counterfeit goods of trade-mark and copyright owners who have filed RFAs with the CBSA. Further, it is likely that in order for this mechanism to be effective, there will need to be an ongoing working relationship between the rights owners and CBSA, in order for the rights owner to educate and train the CBSA on what to look for with respect to counterfeit goods of the rights owners.

The amendments brought into force are welcome and provide new and important tools for trade-mark and copyright owners to protect themselves against counterfeiting. We recommend that trade-mark and copyright owners take steps to register RFAs with the CBSA to take advantage of this new protection mechanism. Please contact us to assist you with the registration of RFAs for your intellectual property portfolio.