Counterfeiting in the Canadian Market - Manitoba Chambers of ...

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Despite a recommendation in A Time for Change whichcalled on the Canadian government to establish aspecialized IP crime task force to guide, coordinate andlead anti-counterfeiting and anti-piracy enforcementefforts in Canada, no task force has been created. Thesuccess that can be met by creating such a specializedtask force is evidenced by the success in the UnitedStates under the guidance U.S. Intellectual PropertyEnforcement Coordinator Victoria Espinel. In her 2011Annual Report on IP Enforcement, she reported thatDepartment of Justice prosecutions resulted in higherpenalties as they were able to target more significantcases, with a 71% increase in convictions over fiscalyear 2010; Department of Homeland Security increasedseizures of counterfeit pharmaceuticals by almost200% and seizures of fake consumer safety andcritical technology merchandise by 44%; major creditcard companies and payment processors reachedvoluntary agreements to reduce the payments tocompanies selling counterfeit and pirated goodsonline; government agencies have increased efforts tode-conflict cases and ensure investigative resourcesare not duplicated or wasted —the number of deconflictedcases rose to 2,877 in 2011, a 429% increaseover 2010; and the concerted effort ensured a 5%increase in project spending was properly allocatedresulting in a 33% increase in seizures, arrests andinvestigations of counterfeiting and piracy over 2010. 70Expert knowledge cannot be created without aninvestment by rights holders. The UK IP Crime Strategyin 2011 stated “There must be a sufficient focuson operational activity that enforcement agenciesunderstand the importance of tackling IP crimeand prioritize it appropriately. That means not justhaving a sound evidence base but also presenting theevidence in a way that it can best inform enforcementbodies’ difficult decisions on prioritization andlevels of response, where there are other competing(or maybe linked) priorities such as firearms, illegalimmigration or drugs.” 71 Rights holders are wellpositioned to provide evidence to enforcement bodiesand support them in necessary forensic analysis. Thelink between IP crimes and other types of offences iswell documented and this information should guideenforcement officials in dedicating the necessaryresources to the fight against counterfeiting and piracy.A System of Effective RemediesRights holders and government officials have longacknowledged that remedies have to be sufficient todeter potential offenders. 72 Regimes that offer onlynominal fines and minimal sentencing do not provide asufficient deterrent for career IP criminals.Our international partners have implementedinnovative remedies in order to curb the impacts ofcounterfeiting and piracy. In other jurisdictions, courtsare able to order an intermediary to block access toa site that facilitates infringement 73 and have takenaction to seize the domain names of sites engagedin counterfeiting online. In Operation In Our Sites,the National IPR Coordination Center institutedenforcement actions that involve U.S. federal lawenforcement investigation cases and developingevidence to obtain seizure warrants from federaljudges. Pursuant to these orders the websites are seizedand redirected to display a seizure notice. 74 Courtoversight in these instances ensures that IP rights arebalanced against other legal rights and interests. As ofApril 2012, Operation In Our Sites has led to the seizureof 758 domain names accused of selling counterfeitgoods, and officials have used legislation to seize fundsfrom bank accounts associated with the operation ofthese illicit enterprises. 7570 2011 United States Intellectual Property Enforcement Coordinator Annual Report on Intellectual Property Enforcement. Available at:www.whitehouse.gov/sites/defaul/files/omb/IPEC/ipec_annual_2011_report.pdf71 Prevention and Cure: the UK IP Crime Strategy 2011, p. 8. Available at: www.ipo.gov.uk/ipcrimestrategy2011.pdf72 Safety Committee Report Recommendation 6.73 European Copyright Directive Article 8.374 National IPR Coordination Center Fact Sheet “Operation In Our Sites”. Available at http://www.iprcenter.gov/reports/fact-sheets/operation-in-our-sites/view75 Grant Gross, “ICE, DOJ Seize More Domain Names of Sites Accused of Selling Counterfeits” April 10, 2012. Available at:www.pcworld.com/printable/article/id.253522/printable.htmlCounterfeiting in the Canadian Market | The Canadian Intellectual Property Council 19
The standards for remedies for infringement of IPRare provided in international treaties. The TRIPSagreement provides that ratifying countries “shallprovide for criminal procedures and penalties tobe applied at least in cases of wilful trade-markcounterfeiting of copyright piracy on a commercialscale.” 76 In order to clarify the application of thisobligation, the signatories to the ACTA have indicatedthat commercial scale activities include those “carriedout as commercial activities for direct or indirecteconomic or commercial advantage.” 77 The ACTAalso makes clear that the civil and criminal remediesthat are available in respect of tangible IPR shouldalso be available in the “digital environment” andfor infringement which takes place “over digitalnetworks.” 78 This essentially means that a criminalorganization that commits an online infringementshould be treated the same way as a group thatcommits an infringement across borders. 79The necessity of criminal remedies applying toonline infringements has been demonstrated in theMegaupload case commenced by the U.S. JusticeDepartment. In this case, the Justice Department hascharged two corporations and their owners/operatorswith racketeering, conspiracy, conspiracy to commitcopyright infringement, conspiracy to commit moneylaundering and criminal copyright infringement. Theactions, which are the substance of the case, took placein the online environment. 80 The Justice Departmenthas alleged that Megaupload generated over 175million USD in profits and caused over a half billionUSD in harm to copyright owners. 81 Use of proceedsof crime legislation has empowered the JusticeDepartment to seize and freeze many of the assets ofthe corporations and the individual defendants duringthe proceeding.Additionally, contributory liability systems have beenused in the United States to go after key suppliers ofmaterials who actively induce or aid in the distributionof counterfeit goods. The Supreme Court in the UnitedStates has held:[if a person] continues to supply its product to onewhom it knows or has reason to know is engagingin trade-mark infringement, the manufacturer ordistributor is contributorally responsible for any harmdone as a result of the deceit. 82International regimes that allow action involvingintermediaries have also provided innovative solutionsfor rights holders. Under these regimes intermediariesare not liable for infringement; rather they are subjectto injunctions, or blocking orders, that preventconsumers from accessing sites that offer infringingcontent. These provisions have been used in the EU toblock access to sites like The Pirate Bay, underminingthe illicit service’s access to its customers. Injunctionremedies involving third parties have now beenrecognized as an international standard. The ACTAcalls on signatories to provide civil remedies thatenable a court to order a third-party to the proceeding“to prevent goods that involve the infringement ofan intellectual property right from entering into thechannels of commerce.” 83Both legislative and non-legislative projects view theISPs as crucial players for their ability to block websitesfrom the users or simply not “resolve” or completethe search query. In some jurisdictions, ISPs musttake action in order to prevent access to infringingcopyright material in order to avoid secondary liabilityfor infringement. 84 Though such regimes do not extendto action respecting sites offering trade-mark infringing76 TRIPS Agreement, Article 61.77 ACTA, Article 23(1)78 ACTA, Article 27(1) and (2)79 ACTA in the European Union – A Practical Analysis, February 2012 BASCAP/INTA.80 Justice Department Press Release, Justice Department Charges Leaders of Mega Upload with Widespread Online Copyright Infringement, January19, 2012. Available at: www.stopfraud.gov/opa/pr/2012/january/12-crm-074.html81 Ibid.82 Inwood Labratories, Inc. v. Ives Labratories, Inc. (1982) 456 U.S. 844 at 85483 ACTA, Article 8.120 Counterfeiting in the Canadian Market | The Canadian Intellectual Property Council
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