New Border Enforcement Program in Place as part of Canada’s Anti-Counterfeiting Regime

On December 9, 2014, Bill C-8, the Combating Counterfeit Products Act (the Act), received Royal Assent, becoming part of Canadian law. The Act amended both the Copyright Act and the Trade-marks Act by introducing new statutory measures for trademark and copyright owners to combat the growing flow of counterfeit goods in and out of Canada’s borders. The Act included certain provisions that will now empower Canada Border Services Agency (the CBSA) customs officers to search, seize, and intercept the import or export of counterfeit goods upon the request of copyright and trademark owners (pursuant to an approved "request for assistance" application, described in detail below).

These border enforcement provisions came into force on January 1, 2015. It should be noted, however, that the CBSA will not investigate any cases in which Canada is not the final destination of the allegedly infringing shipments. Also, the regime will not apply to "grey market goods." 1

The Request for Assistance (RFA) Program

Eligibility: Owners of Canadian trademarks and copyrights are eligible to apply for an RFA. However, the Act requires that trademarks be registered with the Canadian Intellectual Property Office (CIPO), and recommends that copyrights be registered. The RFA Program will apply to goods/packaging/labels bearing a trademark that is identical to or that cannot be distinguished in its essential elements from the registered trademark.

Process: Both the application form for an RFA and a guidance document setting out the application process are available from the CBSA website.2 According to these CBSA documents, at the present time, there is no registration fee to apply for an RFA (although this could change in the future). The CBSA also states that it will take between four to six weeks to process an RFA application. The CBSA will notify the rights holder once an RFA is approved, which will be valid for two years and may be renewed for successive two-year periods upon request.

Detainment: Once an RFA has been approved, the CBSA will monitor, intercept and detain any suspected counterfeit goods. Rights owners will be notified of the detention and will be provided with a sample of the detained goods along with information relating to the detained goods (such as a description or details relating to the owner, importer or exporter of the goods). It is worth noting that the Act now clarifies that both copyright and trademark rights holders can use this information obtained from the CBSA about suspected shipments in seeking out-of-court settlements.

Rights owners will then be given the opportunity to take appropriate action within 10 working days (five for perishable goods) after the day on which the notice was sent out. Rights owners will also have the option to request an additional 10 days for non-perishable goods only, but whether a request is met is at the discretion of the customs officer having regard to the circumstances surrounding the detention.

In order for the goods to be detained beyond the initial 10-day period, the rights holder must submit documentation evidencing the commencement of court proceedings related to the detained goods to the CBSA before the end of the 10-day period. The goods will then continue to be detained until: (i) the proceedings either end, are settled or become abandoned; (ii) a court directs that the goods are no longer to be detained; or (iii) the trade-mark owner consents to the goods no longer being detained.

Liability: Once an RFA is approved, rights owners will be required to accept any liability for the CBSA’s costs associated with the storage, handling and if applicable, destruction of detained goods, commencing the day after the notice of detention is issued. Further, rights owners are also liable for damages to the owner, importer or exporter of the detained good should any of these parties suffer losses, costs or prejudice as a result of the detention if the proceedings are dismissed or discontinued.

It should also be noted that while the Act states that a 10-day renewal as described above may be made more than once, the rights holder may be required by the CBSA to furnish security to cover the potential liability for the storage, handling and possible destruction of the detained goods.

Other Amendments to Combat Counterfeiting under the Act

New Criminal Offences: The Act also includes provisions for criminal offences, which came into force on December 9, 2014. These provisions added new criminal offences to the Copyright Act for possessing, selling, renting, distributing and exporting counterfeit goods. The Act also provides new criminal offences to the Trade-marks Act for trademark counterfeiting which are similar to the offences under the Copyright Act. Specifically, the Act now includes provisions for offences to prohibit the possession, manufacture, sale, distribution, import and export of infringing copies of counterfeit trademarked goods, packaging and labels. If convicted of an offence under these provisions, parties are liable for fines of up to C$1 million dollars and/or up to five years’ imprisonment.

New Civil Causes of Action: The Act now provides for new civil causes of action for commercial activity in infringing copies and counterfeit trademarked goods. Such commercial activity includes the manufacture, distribution and possession of counterfeit goods for the purposes of sale.

Practical Considerations for Owners of Canadian Trademarks

The RFA program is only open to owners of registered Canadian trademarks. Therefore, trademark owners seeking to take advantage of this RFA program should carefully review their trademark portfolios to ensure that the list of goods associated with their registered trademarks covers any goods that are likely to be counterfeited (and that they amend the list of goods for those trademarks that would benefit from the extra protection afforded by the RFA). Rights holders should also, to the extent that it is practical, consider filing applications for unregistered trademarks that are being used in association with goods likely to be counterfeited.

While there is currently no registration fee to apply for an RFA, rights holders should be mindful that there will be costs associated with the RFA program. As detailed above, rights holders will be liable for the CBSA’s costs incurred in the storage, handling, and if applicable, for the destruction of detained goods, commencing the day after the notice of detention is issued (right holders may also be required to furnish security to cover this liability). There is, however, no information currently available from the CBSA that details the scale of such potential costs, which will likely be learned in time as rights holders begin using the RFA program. In addition, rights holders should be mindful of potential liability for damages to the importer/exporter relating to detention of the goods.

_________________________

* With assistance from Morgan Westgate, articling student.

1 Grey market products are goods made with the consent of the intellectual property owner in another country.

2 The RFA application form is available at: http://www.cbsa-asfc.gc.ca/publications/forms-formulaires/bsf738-eng.html and the guidance document is available at: http://www.cbsa-asfc.gc.ca/security-securite/ipr-dpi/menu-eng.html.

To discuss these issues, please contact the author(s).

This publication is a general discussion of certain legal and related developments and should not be relied upon as legal advice. If you require legal advice, we would be pleased to discuss the issues in this publication with you, in the context of your particular circumstances.

For permission to republish this or any other publication, contact Janelle Weed.

© 2017 by Torys LLP.
All rights reserved.

Tags: