Canadian Border Measures Regarding Intellectual Property Infringements
July 15, 2021
Like most countries, Canada has a system in place that allows owners of certain intellectual property rights to ask Customs to detain goods at the border that may infringe those rights. This article discusses the details of Canada’s system of border enforcement.
Several treaties impose obligations on signatories to provide border enforcement measures for infringing goods.
The treaty with the broadest application is the Agreement on Trade-Related Aspects of Intellectual Property Rights (“TRIPS”), to which more than 100 countries are signatories. This treaty obligates members to provide measures to suspend the importation of counterfeit trademark or pirated copyright goods. Although it is not mandatory, members may also provide border enforcement measures for other intellectual property rights (such as industrial designs and patents) and may also provide measures regarding the detention of infringing goods destined for export.
Other treaties such as the Canada – United States – Mexico Agreement (“CUSMA”) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (“CPTPP”) also contain provisions mandating that members provide border enforcement measures.
Scope of the Problem
The export of infringing goods from one country to another is serious business. It is also a growing problem.
For example, the OECD has estimated that counterfeit and pirated goods amount to as much as 3.3% of world trade and up to 6.8% of the goods imported by the European Union from third countries.
Types of Intellectual Property Rights Protected
Canada provides border enforcement measures for registered trademarks, copyright and protected geographical indications.
There is a worldwide trend towards the enforcement of additional intellectual property rights beyond those mandated by treaty. For example, many major jurisdictions such as the European Union, Japan, South Korea, China, India, Israel, Brazil, Turkey and South Africa also provide border enforcement measures for industrial designs (known as “design patents” in some countries).
The lack of enforcement for industrial designs in Canada is no small matter. The European Union has reported that in 2019, more than 17% of all articles that were detained were detained because they infringed a registered community design.
The numbers are even more significant in Japan, which started border enforcement of industrial designs in 2003. During the period from 2004 to 2008, approximately 10% of the goods that were detained were suspected of infringing industrial design rights. By 2017, that proportion had grown to nearly 27% of all seized goods.
The United States is currently considering whether to extend its border enforcement measures to design patents. It is to be hoped that Canada will take similar action in the future in order to ensure that right holders can obtain effective protection against a broader range of infringing goods.
Import/Export/Goods in Transit
Canada’s border enforcement measures apply to goods being imported to or exported from Canada. Additionally, as part of Canada’s implementation of CUSMA, its border enforcement measures now also apply to commercial shipments of goods in transit through Canada. These prohibitions do not apply to goods that are imported or exported by an individual in their possession or baggage if the circumstances indicate that the goods are intended only for their personal use.
The extension of border enforcement measures to goods in transit is an important improvement to the Canadian system. For example, even though the majority of counterfeit and pirated goods originate in China, the OECD has identified that infringing goods are often shipped through other countries on their way to their ultimate destination. In many cases, these shipments are made for the purpose of disguising the origin of the goods being shipped so as to reduce the likelihood of customs authorities seizing the goods.
The OECD has identified Hong Kong, Singapore and the United Arab Emirates as important transit points for the trade in counterfeit goods.
Even Canada has been identified by the OECD as a transit point for the shipment of certain counterfeit products, namely pharmaceuticals. In the OECD’s view, criminals have been using Canada as a transit point because the country’s reputation for high standards and quality gives consumers a false sense of confidence in the product being shipped.
Request for Assistance
Canada, like most other countries, has a procedure whereby an intellectual property right holder/owner can notify customs authorities of its IP rights and request that the authorities detain suspected counterfeit and pirated goods.
A rights holder/owner can file an application known as a Request for Assistance (“RFA”) with Canada Border Services Agency (“CBSA”). There is no fee to apply.
The RFA must identify the intellectual property rights at issue. Trademark and geographical indication rights must be registered with the Canadian Intellectual Property Office in order to be eligible for inclusion in a RFA. While CBSA recommends that copyright also be registered with CIPO, it is not mandatory.
The RFA should ideally also identify:
- the name and description of authentic goods, such as product features, packaging and trademark location;
- known trusted importers permitted to bring these goods into Canada; and
- all known illegitimate importers and exporters of these products.
Once a RFA has been filed, CBSA reviews the application and, if approved, such approval lasts for two years. An approval can be renewed by filing a new application before expiry of the existing approval. The review and approval process typically takes four to six weeks.
An intellectual property right holder/owner is required to keep CBSA updated if anything changes (such as its contact information, change in ownership of registration, etc.).
If suspected counterfeit or pirated goods are intercepted by CBSA, it will then contact the rights holder/owner and give them the details needed to decide whether to take legal action in respect of such goods. These details may include:
- a sample of the goods;
- a description of the goods and their characteristics;
- the name and address of the importer/exporter/consignee;
- their quantity;
- the countries in which they were made and through which they passed in transit; and
- the day on which they were imported, if applicable.
If the IP right holder/owner does not, within three business days, notify CBSA that they will be pursuing a remedy, CBSA will then release the goods.
If, on the other hand, the IP right holder/owner does advise CBSA that it will be pursuing a remedy, then CBSA will continue to detain the goods to enable the IP right holder/owner to commence proceedings in court within the deadlines set out in the applicable legislation, for a remedy with respect to the detained goods. The IP right holder/owner is also required to provide CBSA with proof of the commencement of such proceedings. CBSA is then required to continue detaining the goods until:
- the proceedings are finally disposed of, settled or abandoned;
- the court directs that the goods are no longer to be detained for the purpose of the proceedings; or
- the right holder/owner consents to the goods no longer being detained.
Obligations of Right Owner
By registering, the IP right owner becomes liable to the government for costs related to storage, handling and destruction of detained goods beginning on the day after a notice of detention is sent to the right holder. The right holder’s liability ends on the first day on which one of the following occurs:
- goods are no longer detained for the purpose of enforcing trademark, copyright or GI rights;
- the rights holder/owner provides a response in writing that advises that the goods do not contravene their rights; or
- the holder/owner provides a response in writing that court proceedings to obtain a civil remedy with not occur.
Should the holder/owner choose not to seek a civil remedy and the goods are released but not claimed by the importer within the regulatory time limits, the holder/owner becomes liable for storage, handling and destruction costs for the entire period.
A right holder can minimize its potential liability by responding promptly to CBSA and advising whether the goods are not counterfeit or pirated and/or whether it has chosen not to launch an action for the detained goods.
CBSA has seen an uptick in usage of its border enforcement program in recent years.
To date, a little over 350 RFA’s have been filed, covering approximately 4,000 trademarks and 300 copyrighted works. Of the approximately 1,000 suspect shipments that CBSA has encountered and notified to right holders, the right holders have pursued litigation in over 80% of the cases. In the 810 instances where the right holder has pursued litigation, 583 cases resulted in out-of-court settlements and 60 cases led the importer to abandon the detained goods.
It can therefore be seen that IP right holders have been able to use the RFA program with great success.
The CBSA program for border enforcement is a powerful tool for intellectual property owners to ensure that their rights are not being violated by third parties seeking to import infringing goods into Canada. Given the ease with which right holders can register their rights with CBSA, any right holder would be well-advised to take advantage of the program.
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