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

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enforcement procedures … are available under theirlaws as to permit effective action against any act ofinfringement of intellectual property rights.” 111 In theabsence of laws for contributory liability for suppliersin the counterfeiting chain and the absence of summaryproceedings for cases of trade-mark infringement, onemust question if the remedies available in Canada aretruly effective. Article 58 further outlines proceduresfor ex officio powers of customs officials, which havenot yet been implemented.It is clear that borders can be used effectively byrights holders to enforce their IP rights. In Canada theeffectiveness of border enforcement is significantlyimpaired by the inability of border officials to seize andhold counterfeit products at their own initiative. Unlessthe RCMP becomes involved and provides specificinformation about a shipment, CBSA agents are unableto act when encountering commercial shipments ofcounterfeit goods. What Canada needs at its bordersis legislation that adequately addresses the realities ofIPR theft and empowers our law enforcement officialsto protect legitimate channels of trade. To achieve this,the Canadian government must grant CBSA agentsex officio authority to search detain, seize and destroycounterfeit and pirated goods.Canada recently signed the ACTA, the preamble to thisagreement acknowledging that “The proliferation ofcounterfeit and pirated goods, as well as services thatdistribute infringing material, undermines legitimatetrade and sustainable development of the worldeconomy, causes significant financial losses for rightsholders and for legitimate businesses, and, in somecases, provides a source of revenue for organizedcrime and otherwise poses risks to the public.” 112This agreement introduces numerous provisions thatwill require amendments to Canadian law, includingprovisions which require the introduction of ex officiopowers for border officials in order for this country tokeep up with international best practices.Recommendation 1Amend Canadian law to ensure Canada is meetingthe minimum requirements of the internationalagreements to which it is a signatory. In addition toimplementing the revisions contemplated in Bill C-11,specific amendments that are required include:1) Clarify the Trade-marks Act to ensure that trademarkowners have the right to expeditious legalprocess in respect of counterfeiting activities2) Introduce ex officio powers for border officials thatgive these officials the ability to detain, seize anddestroy counterfeit products outside the normalchannels of commerce.3) Amend Canadian law to introduce the abilityto obtain injunctions against third-partyintermediaries as suggested by Article 8.1 ofACTA.4) Introduce provisions of Canadian law toensure that those who induce, jointly act withor materially aid and abet another person incommitting an infringement of copyright or trademarkare also infringing the law.Inconsistencies in National LawIn addition to these changes to the law that arerequired by international commitments, there areinternal inconsistencies and shortcomings in Canadianlaw that are a barrier to effective enforcement of IPR.As we have seen from case law, litigation is a costlyand lengthy affair. In the recent case Louis VuittonMalletier S.A. v. Singga Enterprises (Canada) Inc., theplaintiffs demonstrated that the defendants knowinglyand wilfully manufactured, imported, advertisedand sold counterfeit articles. Their operation wasconducted on a large scale over an extended periodof time, confused consumers and caused harm to thebrands involved because of the inferior quality of the111 TRIPS, Article 41112 ACTA, Preamble.Counterfeiting in the Canadian Market | The Canadian Intellectual Property Council 27
goods. 113 Despite this wilful and malicious activity bythe defendants, the plaintiffs had to seek a remedyunder the civil system when criminal remedies couldhave provided a more effective deterrent effect.International best practices, reflected in the ACTA,acknowledge that countries are required to introducecriminal remedies for instances of wilful copyrightand trade-mark infringement. While Louis Vuittonwas able to seek statutory damages for copyrightinfringement, no such damages were available fortrade-mark infringement and the plaintiffs had toadduce significant evidence as to the quantum ofdamages and the circulation of stock by the defendantsin order to support the significant damages award thatwas ultimately made.Unlike the Copyright Act, the Trade-marks Act doesnot contain any criminal remedies. In order forcounterfeiters to be criminally prosecuted for theiractions, this prosecution takes place under the fraud orpossession of property obtained by crime provisionsof the Criminal Code. The Criminal Code should clearlystate that trade-mark counterfeiting is a criminaloffence. The Trade-marks Act should also be amendedto make it clear that importing, exporting andtransshipping counterfeit goods are criminal offences.When considering Canadian law on counterfeiting,the Standing Committee on Industry Science andTechnology noted that there were disparities in thecivil remedies in the Trade-marks Act and the CopyrightAct. One disparity noted was the fact that trade-marklaw does not contain any statutory damages as areavailable under copyright law. 114Furthermore, under the Customs Act it is not illegal toimport counterfeit goods. The Customs Act must bemodified to clearly state that the import and export ofcounterfeit and pirated goods is a criminal offence, inrespect of which border officials can take independentaction. In order for this to be effective, the definitionsof counterfeit and pirated goods should be taken fromthe Trade-mark Acts and Copyright Act respectively.Recommendation 2Amend Canadian law to overcome internalinconsistencies in its applications. Specific amendmentsthat are required include:1) Introduce criminal provisions for wilful trademarkinfringement to make the Trade-marks Actconsistent with the Copyright Act and internationalbest practices.2) Introduce civil remedies for trade-markinfringement to make the Trade-marks Actconsistent with the Copyright Act.3) Introduce provisions to make it illegal to importcounterfeit goods under the Customs Act.4) Introduce provisions in the Criminal Code thatmake wilful trade-mark counterfeiting acriminal offence.Exploit All Available RemediesThough the law in Canada has been amended toensure that the proceeds of crime regime applies toCopyright Act offences, these remedies are not regularlyexercised by enforcement officials and the penaltiesthat are imposed for counterfeiting and piracy serve asnothing more than a slap on the wrist for professionalcounterfeiters. Action must be taken to encourageenforcement officials to seek strong remedies and useall tools available to them when doing so.Recommendation 3The government must encourage enforcementofficials to seek strong remedies in the case of IPRinfringements and ensure prosecutors exploit the fullrange of remedies available to them, including theproceeds of crime regime.113 2011 FC 776114 Report of the Standing Committee on Industry, Science and Technology, Counterfeiting and Piracy are Theft, June 200728 Counterfeiting in the Canadian Market | The Canadian Intellectual Property Council
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Page 3 and 4: Executive SummaryIn 2009, the Canad
Page 5 and 6: Table of ContentsIntroduction .....
Page 7 and 8: This paper aims to build a common u
Page 9 and 10: a “spectacular increase” in det
Page 11 and 12: Identifying Counterfeit ProductsCou
Page 13 and 14: Legitimate businesses dedicate time
Page 15 and 16: In addition to the seizure of more
Page 17 and 18: detain and seize goods on an ex off
Page 19 and 20: Packages are not generally inspecte
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Page 23 and 24: Pharmaceuticals are not the only ta
Page 25 and 26: fundamentally illicit business mode
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Page 33 and 34: Mounted Police (RCMP), with the man

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