Law Times

Page 10 February 2, 2015 • Law Times www.lawtimesnews.com FOCUS Legislative update Notice and notice, counterfeit goods among recent changes By shannon Kari Law Times number of changes in the intellectual prop- erty field took effect as the year began as various pieces of legislation made their way through Parliament and finally received royal assent. The government has intro- duced amendments to the Pat- ent Act and the Industrial De- sign Act in an effort to conform to international agreements or treaties. The objective is to simplify the filing process for patents and industrial designs and the changes appear uncon- troversial. Two other sets of amend- ments, though, have already received significantly more at- tention both within the legal community and among the general public. The efforts to reduce illegal downloading on- line and limit the f low of coun- terfeit goods into Canada may be more substantive than the patent and industrial design changes. However, some lawyers are raising questions about how successful the notice-and-notice procedures and the Combating Counterfeit Products Act will actually be in addressing these issues. Notice aNd Notice It was a rough start for the no- tice-and-notice provisions of the Copyright Modernization Act. Within days of the new mea- sures taking effect on Jan. 2, me- dia were reporting on potential f laws in the requirements that were then the subject of debate in the House of Commons. Industry Canada found itself having to respond and its office of consumer affairs posted an explanatory note online. The controversy stemmed from a notice sent to a Canadi- an Internet subscriber by U.S.- based Rightscorp Inc. and made public by University of Ottawa Prof. Michael Geist. The notice alleging copyright infringement, which Canadian Internet service providers must forward to their customers, sug- gested the user could be liable for $150,000 in damages and have online access suspended. The new Canadian provisions cap potential damages at $5,000 for a consumer and there's no requirement to suspend Internet access. In its explanatory note, Industry Canada reminded individuals who receive such a no- tice that it's only an al- legation of an infringe- ment of copyright, U.S. penalties don't apply, and it doesn't mean there will be a legal action. Susan Abramovitch, a partner at Gowling Laf leur Henderson LLP in Toronto retained by Rightscorp to assist it in expanding its intel- lectual property services in Canada, didn't return requests for comment. The federal govern- ment described the notice-and-notice pro- visions as a way to "dis- courage online infringe- ment" and "raise awareness" about illegal downloading. John Cotter, a partner at Osler Hoskin & Harcourt LLP, says it remains an "open question" whether the new notice-and-no- tice scheme will have an impact. "The really interesting ques- tion is to what extent is the send- er of the notice exposed to lia- bility if they have overstated the consequences to the consumer? What are the remedies?" asks Cotter, a lawyer who specializes in intellectual property and in- formation technology litigation. For rights holders, the new provisions impose fewer ob- ligations on service providers than in the United States. "They have a notice and take down regime," says Cotter. The ap- proach makes a service provider in that country liable unless it moves quickly to remove or dis- able access to the material at is- sue. In Canada, there's only the requirement to forward a notice by e-mail from the copyright owner to the owner of the rel- evant Internet protocol address. While much of the pub- lic discussion has been about downloading, another issue, ac- cording to Cotter, is the signifi- cant online marketplace for pi- rated or counterfeit goods. The notice-and-notice provisions and the Combating Counterfeit Goods Act may both come into play when considering an action against the hosts of the web sites used to sell the products, he says. couNterfeit goods The federal government says its new Combating Counterfeit Products Act provides a "clear framework" to help trademark and copyright owners crack down on the f low of counterfeit goods into the country. The RCMP seized counter- feit goods with a retail value of $38 million in 2012 and In- dustry Canada says that's only a fraction of the annual illicit trade in that area. Whether the new pro- visions will actually do what the title of the leg- islation promises is still not clear, according to legal experts in the field. "It is better than what we had before," says Brian Isaac, a partner at Smart & Biggar/Fether- stonhaugh & Co. in To- ronto. Some of the key parts of the statute include the creation of a system for rights holders to re- quest assistance from the Canada Border Services Agency. It would give notice to border officials to help detain shipments that may include coun- terfeit goods. As well, trademark owners can use the courts to seek civil rem- edies against importers shown to have the intent to sell counterfeit goods. Parliament has also enacted new criminal offences related to counterfeit goods. Isaac describes the changes as a "good first step," although he's not sure how effective the new framework will be in practice. "At least there is a process to detain goods. The downside is the need to go to court," says Isaac. If border officials receive a request for assistance, they can detain the goods for 10 days and again for a subsequent 10 days. If no civil proceedings begin in that time, they'll release the goods. However, even if a rights holder starts an action during that period, it may not be cost- effective, says Isaac. "Who is go- ing to start an action when they cannot get substantial damag- es?" he asks. "It is not the most efficient system." In advance of the changes, some of the players urged the federal government to consider a framework with an adminis- trative proceeding, something that's in place in some European countries. In that sort of system, if the importer doesn't contest the allegation of counterfeit products, it forfeits the goods, Isaac notes. The size of the counterfeit market is very difficult to mea- sure, although Isaac says there have been estimates it's up to seven per cent of all world trade. The types of counterfeit goods that cross into Canada are "any- thing and everything" from shampoo to pharmaceutical products to electronics, accord- ing to Isaac. The federal government has promised a review of the new provisions within the next two or three years. 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