Law Times

Page 10 January 27, 2014 Law Times • FOCUS Counterfeiting bill means lots of work for IP lawyers But critics worry legislation gives too much power to border officials BY CHARLOTTE SANTRY Law Times N o one wants to discover the pricey Canada Goose jacket on their back is a fake stuffed with animal feces and chicken parts. Bill C-8 may be an attempt to avoid this type of scenario, a scenario evoked by NDP MP Glenn Thibeault during a parliamentary debate on the proposals last November. Depending on the legal opinion sought, the bill, also known as the combating counterfeit products act, could either let criminals get away with selling knock offs or lead to seizures of legitimate goods at the border. There's consensus in one area, though. Observers suggest the provisions are likely to benefit the litigation and intellectual property lawyers tasked with taking clients through the far-reaching changes. The changes are "perhaps the most sweeping legislation in Canadian IP law in 70 years," according to Macera & Jarzyna LLP counsel Howard Knopf's comments on his blog, excesscopyright. blogspot.ca. As of this month, bill C-8 was awaiting its report stage after the standing committee on industry, science, and technology presented its report to Parliament on Dec. 5, 2013. One of the experts given 10 minutes to suggest legislative improvements to the committee was Cynthia Rowden, a partner at Bereskin & Parr LLP and past 'I think customs officials will have to be trained to identify merchandise,' says Cynthia Rowden. president of the Intellectual Property Institute of Canada. She welcomed the bill's creation of criminal sanctions for trademark infringement but said the Crown would struggle to obtain convictions under the current wording because it essentially states that people commit an offence if they know a trademark is registered for certain goods and that the sale or distribution of them would be contrary to ss. 19 or 20 of the Trademarks Act. "To suggest that criminals even know there's a section in the Trademarks Act is a big jump," says Rowden. "To set the bar so high by referring to specific sections of the Trademarks Act means there will be very few successful convictions." Controversially, the bill also allows customs officials to temporarily detain suspected counterfeit or pirated goods. Currently, border officers can't search for and detain counterfeit and pirated goods without a court order obtained by the trademark or copyright owner. On May 30, 2013, Conservative MP Kellie Leitch explained the new process during the second reading of an earlier version of the bill. Under the new regime, rights holders would submit a request for assistance to the Canada Border Services Agency. The request would allow rights holders to record details about their trademark or copyright at the border and provide contact information. Border officials would also have "practical information about how to identify counterfeit or pirated goods," said Leitch. She added: "This information could only be used to determine if the goods were counterfeit or pirated or to assist the rights holders in pursuing remedies in the courts. "The courts would remain the only competent authority to determine whether goods detained at the border infringed intellectual property rights and to apply appropriate remedies." However, Rowden suggests the provisions fail to adequately protect rights holders forced to pay to have the goods detained while going through lengthy and expensive litigation. The Intellectual Property Institute of Canada lobbied for a summary procedure to have goods permanently detained or destroyed if there was incontrovertible evidence that they were counterfeit or the person attempting to import the goods hadn't responded to an inquiry. Standing in the opposite cor- ner is University of Ottawa law Prof. Michael Geist. He suggests the bill reduces court oversight of counterfeiting issues by giving too much power to non-expert border officials. "It's difficult to identify works that may be infringing from genuine works . . . even for experts," he says, noting it's better to leave those decisions to the courts. Giving customs officials even more expansive powers through, for example, the summary procedure advocated by the Intellectual Property Institute of Canada would remove important safeguards, shift private enforcement costs to taxpayers, and ultimately raise consumer costs, according to Geist. Knopf echoes those concerns. "The new law will allow incredible opportunity for abusive or even simply incompetent enforcement," he wrote on his blog. Rowden, however, has more confidence. "I think customs officials will have to be trained to identify merchandise. Trademark owners will take a lot of the responsibility for that training," she says. "Brand owners are the victims after all," she adds. The bill would also increase the possibility of registering trademarks for smell, taste, and texture. Currently, the Trademarks Act permits registration for words, designs, symbols, and some shapes. Rowden feels the provisions lack sufficient guidance on how they would work in practice. For example, trademarks usually have to be displayed to and "used" by Pallett Valo Welcomes Two New Partners Ted Evangelidis Jeffrey Percival Ted Evangelidis is a member of the Commercial Litigation Practice. Ted's practice includes litigating matters relating to real estate and land development, mortgage and title fraud, mortgage recovery actions, contractual disputes, shareholder disputes, professional negligence, asset and debt recovery, trademark and copyright infringement, and product liability. Jeffrey Percival leads the Employment & Labour Practice and is a member of the Commercial Litigation Practice. Jeffrey practices in the area of management-side employment & labour law and commercial litigation, with a particular focus on advising clients on workplace human resources matters and product and professional liability issues. 905.273.3022 Ext. 250 tevangelidis@pallettvalo.com 905.273.3022 Ext. 254 jpercival@pallettvalo.com Business Law • Commercial Litigation • Commercial Real Estate Construction • Insolvency & Corporate Restructuring Employment & Labour • Wills, Estates & Trusts Untitled-2 1 www.lawtimesnews.com 14-01-16 3:54 PM consumers at the time of sale, but how will that apply to a taste? It would be better if there was "a bit more thought to how these trademarks fit with the traditional definition of trademark use" through guidelines for lawyers on the type of evidence required, Rowden suggests. "Some of these definitions are going to be very hard to interpret," she says, noting that aspect of the bill will likely lead to more litigation. "That's good for lawyers but not for consumers and trademark owners." A bigger concern for brand owners over and above trademarking smells, according to Rowden, is the ability to register shapes, something that can be "time-consuming and difficult." For example, in the 2006 decision of Kirkbi AG v. Ritvik Holdings Inc., the Supreme Court of Canada ruled trademark law couldn't prevent competitors from selling toy building blocks that look like basic Lego. So what's driving the changes if it's not due to demand from brand owners? In her speech, Leitch set out the "message" that the government hoped the bill would convey. "We understand the threats that counterfeiting and piracy represent for our businesses, for the economy, and for the health and safety of Canadians, and we are acting accordingly," she said. "Our focus remains on jobs, growth, and long-term prosperity for Canadians," she added. "Counterfeiting and piracy directly threaten each of these." Generally, observers have interpreted bill C-8 as being a response to international demands, particularly from the United States, for stricter counterfeiting laws and a need to prepare for trade deals like the Trans-Pacific Partnership and the Comprehensive Economic and Trade Agreement with Europe. The federal government's response to these demands doesn't necessarily reflect "what the public in Canada has been asking for," says Geist. He highlights what he sees as the dangers lurking in some of the demands to beef up Canada's counterfeiting laws, such as calls to include in-transit shipments within the new regime. In other countries where that already happens, the system "has been subject to mistakes," he says, pointing to instances in which authorities have impounded lifesaving drugs headed for developing countries. However, the bill as it stands doesn't include these provisions. As well, it's noteworthy that several of the failed amendments that would have applied a stricter set of laws came not from the Conservatives but Liberal MP Judy Sgro. While the bill is "clearly helping rights holders," the government "will only go as far as it feels it must to comply with the treaties," says Geist. LT

• Cover