Vol. 148, No. 27 — December 31, 2014

Registration

SI/2014-107 December 31, 2014

COMBATING COUNTERFEIT PRODUCTS ACT

Order Fixing January 1, 2015 as the Day on which Certain Provisions of the Act Come into Force

P.C. 2014-1451 December 12, 2014

His Excellency the Governor General in Council, on the recommendation of the Minister of Public Safety and Emergency Preparedness, pursuant to subsection 63(2) of the Combating Counterfeit Products Act, chapter 32 of the Statutes of Canada, 2014, fixes January 1, 2015 as the day on which sections 2, 5 and 6, subsection 7(6) and sections 43, 44 and 60 of that Act come into force.

EXPLANATORY NOTE

(This note is not part of the Order.)

Proposal

This Order fixes January 1, 2015, as the date on which sections 2, 5 and 6, subsection 7(6) and sections 43, 44 and 60 of the Combating Counterfeit Products Act (the Act) come into force, pursuant to section 63(2) of the Act.

Objective

To bring sections 2, 5 and 6, subsection 7(6) and sections 43, 44 and 60 of the Act into force, thereby creating a new border enforcement regime that will allow right holders to take action against pirated copyright goods and counterfeit trademark goods before such goods enter the Canadian market.

Background

The Act received Royal Assent on December 9, 2014.

The purpose of the Act is to combat two types of intellectual property rights infringement, namely, copyright piracy and trademark counterfeiting. The Copyright Act protects literary and artistic works (e.g. books and other writings, musical compositions, paintings, sculptures, computer programs and films). The Trade-marks Act protects distinctive signs, which serve to distinguish goods or services of a particular brand. Amending the Copyright Act and the Trade-marks Act will provide new remedial measures to strengthen the enforcement of the intellectual property rights protected under these statutes.

The Act enacts new border enforcement measures, which will include the creation of a request for assistance (RFA) system and the enabling of customs officers to detain goods suspected of infringing copyright or trademark rights. The Act also amends subsection 107(5) of the Customs Act to allow customs officers to share certain information relating to the detained goods with rights owners. These new border measures will further support the civil enforcement of these intellectual property rights by giving the rights owners the information and assistance necessary to pursue a remedy in civil court or to reach an out-of-court settlement with importers and exporters of infringing goods.

In both the Trade-marks Act and Copyright Act, the Act creates a new prohibition of the commercial-scale importation and exportation of counterfeit trademark goods and labels, and pirated copyright goods (i.e. prohibition of the goods themselves, not the act of importing/exporting as sanctioned by the criminal offences). These provisions give customs officers the ex officio authority to proactively search for and detain suspected counterfeit trademark goods, labels or packaging as well as for suspected pirated copyright goods.

In both the Trade-marks Act and Copyright Act, the Act creates a new provision to enable customs officers to detain goods upon filing of an RFA by the copyright or trademark rights owners. This provision enables the Canada Border Services Agency (CBSA) to establish a system in which rights owners can provide the CBSA with information on commercial shipments of suspected goods, including their intellectual property rights. Customs officers may then detain these goods on the basis of the information received, thus giving rights owners the opportunity to initiate a civil action.

In both the Trade-marks Act and Copyright Act, the Act creates a new provision to enable the CBSA to share information on detained suspected counterfeit trademark or suspected pirated copyright shipments with rights owners. This provision provides rights owners with the opportunity to protect and enforce their intellectual property rights via a civil action.

Specific changes brought by the coming into force of the Act include the following.

Section 2 of the Act amends the definition of “Minister” in section 2 of the Copyright Act to include a new reference to the Minister of Public Safety and Emergency Preparedness.

Section 5 of the Act amends the Copyright Act by replacing sections 44 and 44.1 to codify the establishment of a new border enforcement regime for copyrights. The new sections 44 to 44.12 introduce new definitions, prohibitions on importation and exportation, the creation of an RFA system, detention authorities for suspect infringing copies to be exercised by customs officers (upon request or on their own initiative), measures relating to detained copies, including detention costs, information-sharing between customs officers and copyright owners, detention-related liability and powers of the court relating to detained copies.

Section 6 of the Act is a housekeeping amendment that replaces existing references to section 44.1 with section 44.12 in various provisions within the Copyright Act.

Subsection 7(6) of the Act creates a definition for “release” in section 2 of the Trade-marks Act, so that this definition will apply to both detentions as a result of court orders and to the new detention powers of customs officers at the border.

Section 43 of the Act amends the Trade-marks Act to codify the establishment of a new border enforcement regime for trademarks. The new sections 51.02 to 51.12 introduce new definitions, prohibitions on importation and exportation, the creation of an RFA system, detention authorities for suspect infringing goods to be exercised by customs officers (upon request or on their own initiative), measures relating to detained goods, including detention costs, information-sharing between customs officers and trademark owners, detention-related liability and powers of the court relating to detained goods.

Section 44 of the Act is a housekeeping amendment that repeals the definition of “release” in section 52 of the Trade-marks Act, as that definition has been relocated within section 2.

Section 60 of the Act amends subsection 107(5) of the Customs Act. The new subsections 107(5)(l.1) and 107(5)(l.2) enable information-sharing between customs officers and copyright owners and trademark owners, respectively.

Implications

The Government takes the emerging threat of counterfeiting and piracy very seriously. The retail value of counterfeit goods seized by the Royal Canadian Mounted Police is stated to have increased from $7.6 million in 2005 to $38 million in 2012.

Counterfeit goods made of inferior materials often pose health and safety risks due to the lack of quality control and can undermine consumer confidence in the marketplace. The commercial trade in counterfeit trademark goods and pirated copyright goods disrupts the Canadian market by undermining consumer confidence, leads to lost tax revenues for the Government and increases costs for legitimate Canadian businesses. The resulting lost revenues for rights owners may lead to delays in creating new products and innovative services.

Three House of Commons committee reports discuss the growing threat posed by these goods (see footnote 1) and the necessity for enhanced intellectual property rights enforcement measures that are in line with international standards. Combating counterfeiting and piracy is a priority for domestic stakeholders as well as for Canada’s key international trading partners and is of particular importance to the Government’s trade agenda.

The coming into force of the amendments to sections 2, 5 and 6, subsection 7(6) and sections 43, 44 and 60 of the Act will create a new business line for the CBSA and include new classes of goods subject to detention at the border. The related work will be done by the CBSA within existing reference levels.

The new RFA system will provide a benefit to copyright and trademark owners, allowing them to seek assistance from the CBSA to support civil enforcement of their copyrights and trademarks. The RFA system will include contact information for the rights owners and also allow them to provide information about their copyrights and trademarks to help customs officers identify suspect goods. Stakeholders involved in the commercial importation and exportation of goods into Canada may have suspected infringing goods detained at the border for the purposes of enforcing their rights under the Copyright Act and the Trade-marks Act.

The coming into force of these various sections of the Act will also allow Canada to implement and uphold its border enforcement obligations within the intellectual property chapter of the Canada-Korea Free Trade Agreement (CKFTA) by January 1, 2015. Although the changes to Canada’s intellectual property enforcement regime are being pursued for domestic policy reasons, the intellectual property chapter of the CKFTA contains border enforcement obligations that will be implemented through the Act. These include the prohibition against commercial-scale importation and exportation of counterfeit and pirated goods, border enforcement authorities for the CBSA to take action against such goods and the establishment of an RFA system that will permit cooperation and information-sharing between the CBSA and rights holders to facilitate civil enforcement.

The border enforcement authorities in this Act will apply to the import and export of all suspect counterfeit or pirated goods, regardless of their country of origin. The implementation of this Act ensures that Canada’s regime is consistent with existing international standards and will also support our ability to comply with the intellectual property enforcement obligations of current and future trade agreements.

Consultation

The Government conducted targeted consultations with stakeholder groups such as the International Trademark Association, the Intellectual Property Institute of Canada, the Canadian Anti-Counterfeiting Network and the Canadian Chamber of Commerce (through the Canadian Intellectual Property Council) during the policy development of the Act to obtain their views on key aspects of the proposed intellectual property rights enforcement regime, including the “rights holder pays” approach. The Government also consulted public reports published by stakeholder groups to identify the issues associated with counterfeiting and piracy, the gaps in the existing legislation and the needed improvements to ensure an effective Act. Government officials also met with representatives of these associations after provisions were drafted and made public in order to obtain their views. Some concerns raised by stakeholders, such as clarifying appropriate use of customs information by rights holders, were incorporated in amendments made to the bill at the House of Commons Committee stage.

The CBSA engaged in extensive consultations with representatives from the industry, in the context of the Fraud and Anti-Counterfeiting Conference that was organized by the Canadian Anti-Counterfeiting Network, as well as with the International Warehouse Logistics Association. Stakeholders have also been contacted through different fora and associations and given information on the border measures proposed for implementation. Stakeholders have had the opportunity to voice their expectations and concerns and to interact with the CBSA during the final development of the implementation plan. Stakeholder engagement efforts will also be ongoing as implementation progresses.

Generally, all stakeholders consulted support the implementation of new enforcement authorities to combat counterfeit trademark and pirated copyright goods at the border, the implementation of the CKFTA and, by extension, the coming into force of sections 2, 5 and 6, subsection 7(6) and sections 43, 44 and 60 of the Act. The United States Trade Representative and the U.S. Ambassador have publicly stated their desire for Canada to extend the border enforcement provisions in the Act to include suspect counterfeit and pirated goods that move in transit through Canada. Such goods are not destined for the Canadian market and would therefore not infringe any domestic intellectual property laws. During Third Reading in the House of Commons, the official Opposition characterized the Act’s exception for in-transit goods as a way of introducing some balance to the new prohibitions against importing and exporting infringing goods.

Departmental contact

Michael Holmes
Director
Serious and Organized Crime Division
Public Safety Canada
269 Laurier Avenue West, 12th Floor
Ottawa, Ontario
K1A 0P8