Canada Introduces New Legislation to Combat Counterfeit Products

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On May 31, 2013, Bill C-56, the Combating Counterfeit Products Act (“CCPA”), received its second reading. The CCPA, if enacted, will provide trade-mark and copyright owners with powerful new tools against counterfeiters. It will also modify trade-mark practice in Canada in a number of important ways.

There are three significant new powers to combat counterfeiting provided for in the CCPA:

First, the CCPA creates additional criminal offences for possessing unauthorized copies of works for the purposes of sale, rental or distribution, and for the export of those unauthorized copies from Canada. The CCPA also makes it a criminal offence to import, export, manufacture, sell or distribute goods that make unauthorized use of a trade-mark. These new criminal provisions fill some of the existing legislative gaps and increase the government’s ability to prosecute those trading in counterfeit products in Canada.

Second, the CCPA significantly increases the Canadian Border Services Agency’s (CBSA) authority to detain counterfeit goods and unauthorized copies. Intellectual property rights owners are often frustrated by their very limited ability to halt the importation of counterfeit products into Canada. The CCPA will allow rights owners to request assistance from the CBSA in pursuing remedies in relation to counterfeit goods. Rights owners will be able to register their rights with the CBSA. The CBSA will then have the authority to temporarily detain suspected counterfeit goods and give notice of that detention to the rights owner. The rights owners will have to act quickly or risk having the detained goods released.

Third, the CCPA grants new powers for the CBSA to detain suspicious shipments even in the absence of a request for assistance. Upon identification of a suspicious shipment, the CBSA will give notice to the rights owner and request assistance in prosecuting offences.

In addition to the anti-counterfeiting provisions, Bill C-56 also makes substantial amendments to the Trade-marks Act including a significant expansion to the definition of trade-mark. Some of the most noteworthy amendments are summarized below.

The CCPA would vastly expand the definition of a trade-mark to include “a sign or combination of signs”. A “sign” includes words, personal names, designs, letters, numerals, colours, figurative elements and three-dimensional shapes, but it can also include the more non-traditional signs holograms, moving images, modes of packaging goods, sounds, scents, tastes, textures, and the positioning of signs. While the possibilities for trade-marks would seem endless, the Registrar has the right to refuse an application where the trade-mark is not distinctive or if the features of the trade-mark are dictated primarily by utilitarian function. Additionally, the Federal Court will be able to invalidate a trade-mark if it “is likely to unreasonably limit the development of any art or industry”.

For years, Canadian trade-mark opposition procedure was considered lengthy, expensive and, in many cases, unfair. In 2009, the Trade-marks Office attempted to improve opposition practice by streamlining the procedure and limiting the number and length of extensions. The CCPA proposes to further improve opposition procedure by confirming the Registrar’s power to strike all or parts of the Statement of Opposition. The CCPA also amends opposition procedure to allow an applicant to file a very simple Counterstatement, and leaves open the possibility of parties filing written representations in a prescribed order, rather than the current practice of having parties file written representations simultaneously – a practice that has long been viewed as inefficient and causing unnecessary oral hearings.

Under the current Trade-marks Act, the Registrar will “associate” confusing trade-marks for which there is a single applicant. Once registrations are associated, the Registrar will not record any amendments to the owner of one of any of the associated marks. This provision severely limits the ability of a trade-mark owner to transfer portions of its trade-mark portfolio if any of the marks are associated. The CCPA proposes to amend these provisions to merely state that confusing trade-marks are registrable if the applicant is the owner of all of the confusing marks.There would be no limitation on the later transfer of one or more of these marks. Additionally, this amendment may also allow for the possibility of registration of confusing marks with the consent of a prior mark owner.

Many of the CCPA’s proposed amendments to the Trade-marks Act are non-controversial and, in fact, welcomed by trade-mark practitioners. A main criticism of the CCPA is that it does not go far enough in modernizing Canadian trade-mark law, particularly with respect to overhauling the system of registration for official (government) marks and in adopting the international classification system for goods and services.

This article originally appeared in the May 3, 2013 issue of The Lawyers Weekly published by LexisNexis Canada Inc.

Bill C-56 received second reading on Friday, May 31, 2013 and is expected to proceed expeditiously through the legislative process. Heenan Blaikie’s trade-mark practice group has already started working with clients to ensure that they are ready to take advantage of the proposed new protections.

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