It has been recognized for several years that ’s intellectual property ("IP") crime laws are outdated. There has been recent legislative activity which may add to the tools available to combat IP crime, including passage of the Consumer Products Safety Act and consideration of copyright reform to implement the WIPO Internet Treaties. Further, has agreed to the Anti-Counterfeiting Trade Agreement ("ACTA") and long-awaited legislation dealing with customs enforcement and trademark issues implementing that treaty is anticipated. What follows is an update on recent developments and current enforcement practices.
Recent legislative action. Parliament and the Government of have taken some steps to address IP crime, including passing legislation amending the Criminal Code to address the pirating of movies using camcorders in theatres and a regulatory amendment to include copyright offences within proceeds of crime provisions in the Criminal Code.
Most recently, An Act Respecting the Safety of Consumer Products (Bill C-36) was passed but has not yet been proclaimed into force. (See Bill C-36.)
Bill C-36 includes an express prohibition against packaging or labelling consumer products in a manner creating an erroneous impression regarding danger to human health or safety, safety certification or compliance with safety standards or regulations. Unauthorized use of certification marks (such as CSA and UL marks) is accordingly directly prohibited, and unauthorized use of quality brands on inferior products that may raise health and safety issues should also be caught. Bill C-36 includes provisions enabling administrative enforcement and offence provisions, the latter including penalties, for advertising or selling products packaged in a prohibited manner, of up to five years incarceration and fines without an upper limit (lesser offences being limited to $5,000,000 under Bill C-36).
Pending legislation. Another bill relevant to addressing counterfeiting and piracy currently before Parliament is An Act to Amend the Copyright Act (Bill C-32). (See Bill C-32.)
Bill C-32 is the third attempt by Parliament to pass legislation implementing the WIPO Internet Treaties. The Bill is now being reviewed by a special legislative committee. It appears likely that the committee process will result in amendments to the text to address drafting shortfalls and possibly some more substantive amendments.
The provisions of Bill C-32 most relevant to IP crime are those relating to technical protective measures ("TPMs") and Internet service provider ("ISP") liability. With respect to TPMs, the Bill includes relatively strong provisions prohibiting and making it an offence to deal in TPM circumvention products and services. With respect to ISPs, there is a provision clarifying that operators of services enabling copyright infringement may be liable. The section presently limits liability to situations where the service is "designed primarily" to enable infringement, but an amendment has been suggested so as to catch services "designed or operated primarily" to enable infringement. In addition, the Bill expressly provides a "notice and notice" system whereby ISPs will be required to pass on notices from copyright owners complaining of infringement to their customers.
Anti-counterfeiting Trade Agreement. has agreed in principle to give effect to the provisions of ACTA, the finalized English text of which was settled at meetings ending on December 3, 2010. The agreement sets minimum requirements for border enforcement, including that custom authorities be able to act on their own initiative to suspend the release of suspect goods and regarding provision of information to rights holders and disposition of forfeited goods. The agreement also includes, inter alia, requirements in respect of protecting TPMs and digital rights management information ("DRMI"). Implementation of the agreement will require amendments to ’s IP crime laws, including in respect of border enforcement and prohibitions against the importation of counterfeit and pirated products.
Significant work had been completed by the government (including preparing draft legislation and considering resource allocation to implement IP crime reform) but no legislation has yet been tabled. While that work will have to be updated to ensure compliance with all mandatory provisions of ACTA, work on the "IP crime file" is ongoing and indications are that a bill may be introduced in the near future.
Current enforcement environment
Criminal enforcement. While ’s IP crime laws are admittedly outdated, there are existing criminal offences dealing with trademark forgery (Criminal Code sections 406-412) and copyright infringement (Copyright Act section 42). The Criminal Code is enforced by law enforcement officers across the country and the Copyright Act is primarily enforced by the RCMP Federal Enforcement Section ("). The RCMP FES takes responsibility for and has expertise in enforcing against IP crime in . The FES has identified intellectual property crime coordinators in each region of (see Reporting Intellectual Property Crime) who may be contacted with IP crime complaints.
In addition to the RCMP, other police forces in undertake enforcement against IP crime. Further, while customs authorities in Canada do not currently have the mandate to monitor for counterfeit or pirated products on their own initiative and no formal systems are set up for IP crime training or recordkeeping, the Canadian Border Services Agency ("CBSA") is certainly aware of the issue, has officers participate in IP crime training, and does take action against the importation of counterfeit and pirated goods either under existing customs legislation or in cooperation with the RCMP and/or Health Canada.
Generally, the position of the RCMP is that priority will be given to cases involving counterfeit products that raise health and safety issues, are connected to criminal organizations or involve large scale distribution. Small-scale retail cases are generally not pursued by the RCMP.
To the extent a rights holder has a problem with knockoffs that raise health and safety issues or can be shown to be connected to organized crime, a complaint and provision of information to the RCMP, the CBSA and Health will likely be advisable. Further, if a rights holder has information regarding a particular shipment of knockoffs, there are provisions available under the Copyright Act, and the Trademarks Act providing for detention of the goods by customs during civil court proceedings.
While criminal enforcement is normally very effective in removing products from the market and stopping counterfeiters and pirates while charges are pending against them, penalties imposed through criminal proceedings in have tended to be quite low. In addition, rights holders must recognize that they will be requested to support any criminal prosecutions and will not have control over timing or processes.
Victims of crime in Canada generally have rights that include the right to be informed of charges laid, hearing dates and disposition, as well as the right to be heard at sentencing (through a victim impact statement). Some rights holders retain counsel to represent them in criminal proceedings regarding infringement of their trademarks or copyrights, and interaction between such victims' counsel and prosecutors may have positive outcomes. For instance, interaction between counsel from our firm and prosecutors have resulted in several recent orders providing for restitution in respect of costs to the victims/rights holders of supporting criminal investigations and prosecutions of IP crimes.
Civil enforcement. also has civil procedures that rights holders may utilize to address a counterfeiting or piracy problem. All legal remedies and normal court procedures are available. Further, it is not uncommon for the courts to award extraordinary preliminary relief such as Anton Piller orders (civil search and seizure), Mareva (freezing assets), interim and interlocutory injunctions in counterfeiting and piracy cases. It is also worth noting that summary proceedings and statutory damages are available under the Copyright Act, and judicially set nominal damages and typical summary disposition procedures (applications where appropriate, default judgment, summary judgment, summary trial) will often be available in trademark counterfeiting cases allowing cost to be minimized. Although damage awards have historically been relatively low in , recently federal and provincial courts have imposed significant awards, including punitive damages, against recidivist counterfeiters and pirates. Nevertheless, civil proceedings can be problematic against criminals who arrange their affairs in order to avoid potential liability.
Conclusion. Owners of intellectual property in have several tools for pursuing enforcement against IP crime. However, ’s outdated laws tend to obstruct enforcement. Advances are being made but further reform is required.
As we await further expected reforms, rights holders may continue to support criminal prosecutions and take civil actions to address the serious problem of counterfeit and pirated goods being traded in s domestic markets. There are experienced law enforcement and customs officers, as well as experienced lawyers and investigators, who may be able to assist in addressing the damage being caused by such criminal activity. Hopefully, tools to more affectively address the problem will be available in the near future.
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