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Canadian government introduces new bill to address counterfeits at Canadian borders

March 4, 2013

On March 1, 2013, the Canadian government introduced Bill C-56 (the Bill), the Combating Counterfeit Products Act. The Bill proposes amendments to Canadian copyright and trademark laws aimed largely at enabling Canadian border officials and rights holders to address counterfeit products. The Bill also proposes much broader amendments to Canadian trademark laws. See our companion article Bill introduced by Canadian government to address counterfeiting and amend the Trade-marks Act and the Copyright Act that discusses the proposed changes to Canada’s trademark laws. This article focuses on the proposed amendments to the Copyright Act

The Bill proposes new measures to assist copyright owners with enforcement against counterfeits at the border. Similar measures are proposed for registered trademark owners. If passed, copyright owners will be able to request assistance from border officials with respect to the importation or exportation of infringing copies so that the owner can pursue available remedies under the Copyright Act. A request for assistance would be valid for two years, with a possibility of extension and renewal. Security for costs of storage, handling and destruction of counterfeit goods may be required. While the prescribed form of the request is not yet known, it appears a copyright owner would be required to provide their name and address, as well as information about the works or other subject matter they own. The copyright owner would have a duty to inform customs of any changes to the ownership or subsistence of copyright. 

Once goods are detained, the customs officer would have discretion to provide a sample to the rights holder, along with information about the shipment. The copyright owner would then generally have ten working days to commence proceedings, or the goods may be released. There is a possibility of a further ten day extension. If the goods are perishable, the owner generally would only have five working days to commence proceedings. The copyright owner would be liable to the government for certain storage and handling charges for the detained copies, and, if applicable, for charges for destroying them.

Changes to enforcement at Canadian borders have been long awaited by rights holders. Currently, border officers have no authority to proactively target, examine, and detain commercial counterfeit goods at the border. Rights holders also currently have no simplified administrative means to request Canadian border officers to generally watch for counterfeit goods and take action.

The Bill also proposes a new prohibition against importing or exporting counterfeit goods if the goods are made without the consent of the copyright owner in the country where they are made and if the goods infringe copyright (or would infringe copyright had they been made in Canada by the person who made them). The rights holder does not need to show that the importer or exporter knew or should have known the goods were infringing.

The Bill also proposes to make it an infringement to knowingly export infringing copies of works, which would balance out the current provisions against knowingly importing infringing copies of works. 

The Bill expressly carves grey goods out from criminal remedies. If a work or other subject matter is made with the consent of the copyright owner in the country where the good was made, parallel importation of the work or other subject matter will not criminally infringe the rights of a different copyright owner in Canada. Likewise, the above-mentioned prohibition against importing or exporting infringing goods also appears not to address grey goods (since grey goods are made with the permission of the copyright owner in the foreign country, and the absence of consent of the copyright owner in the country where the goods are made is an element of the prohibition). It remains possible that copyright may assist in civil proceedings against grey goods bearing copyright protected labels based on the Supreme Court decision in Euro Excellence Inc. v. Kraft Canada Inc., 2007 SCC 37 if: 

  1. the copyright owner in Canada is different than the copyright owner in the country where the goods are made; and
  2. the importer knew or should have known the goods infringed the Canadian copyright owner’s rights. 

Copyright may be used against counterfeit works and other subjects, and also against counterfeit goods with labels or graphic designs applied in which copyright subsists. The Bill also proposes to introduce a new trademark prohibition against the manufacture, importation, exportation, sale, or distribution of labels bearing trademarks that are identical or confusingly similar to marks if the person knew or ought to have known that the label or packaging is intended to be associated with the goods or services covered by the registration and the owner of the mark has not consented. It appears, however, that copyright in labels would remain enforceable, and could assist if the mark is not registered in Canada. 

Consistent with recent changes to Canada’s Copyright Act, the Bill proposes to exempt copies and counterfeit goods for personal use in Canada. Accordingly, if the Bill becomes law, it would not enable border officials to detain goods brought into Canada by individuals in their baggage for their personal, non-commercial use. The Copyright Act was recently amended to create an exemption for copies made for personal use, and the exemptions in the current Bill appear consistent with government policy in this regard. The Bill also proposes to exempt shipments in customs transit control. 

Offenses would be punishable with fines of up to $1,000,000 or imprisonment for up to five years (or both). If the Bill becomes law, it should equip brand and copyright owners and the Canada Border Services Agency with more power to prevent sale and importation of counterfeit goods.

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