Monday, March 04, 2013

Bill C-56: Just When You Thought It Was Safe To Go Back Into The Water?

Some may have thought that ACTA was dead and that, after a year of arguably the most sweeping changes in Canadian copyright law in almost a century, there might be time to pause, reflect, absorb and assimilate.  No such luck.

Bill C-56 could very well be intended to set the stage for Canadian ratification of the controversial Anti-Counterfeiting Trade Agreement (“ACTA”).The European Union has clearly rejected ACTA – amid much controversy and even internal acrimony. Canada has signed the ACTA treaty - but has not yet ratified it. Canada has no obligation to ratify it and has no current binding obligations to make any of the changes proposed in Bill C-56. Clearly, the USA would like Canada to implement whatever changes ACTA may require and to ratify it soon.

This is what the Bill says it does, according to the published summary, which has no direct legal  effect:
This enactment amends the Copyright Act and the Trade-marks Act to add
new civil and criminal remedies and new border measures in both Acts, in order
to strengthen the enforcement of copyright and trade-mark rights and to curtail
commercial activity involving infringing copies and counterfeit trade-marked
goods. More specifically, the enactment
(a) creates new civil causes of action with respect to activities that sustain
commercial activity in infringing copies and counterfeit trade-marked goods;
(b) creates new criminal offences for trade-mark counterfeiting that are
analogous to existing offences in the Copyright Act;
(c) creates new criminal offences prohibiting the possession or export of
infringing copies or counterfeit trade-marked goods, packaging or labels;
(d) enacts new border enforcement measures enabling customs officers to
detain goods that they suspect infringe copyright or trade-mark rights and
allowing them to share information relating to the detained goods with rights
owners who have filed a request for assistance, in order to give the rights
owners a reasonable opportunity to pursue a remedy in court;
(e) exempts the importation and exportation of copies and goods by an
individual for their personal use from the application of the border measures;
(f) adds the offences set out in the Copyright Act and the Trade-marks Act to
the list of offences set out in the Criminal Code for the investigation of which
police may seek judicial authorization to use a wiretap.
The enactment also amends the Trade-marks Act to, among other things,
expand the scope of what can be registered as a trade-mark, allow the Registrar
of Trade-marks to correct errors that appear in the trade-mark register, and
streamline and modernize the trade-mark application and opposition process.
Nobody defends counterfeiting – especially when it involves medicines or other products with health and/or safety aspects. However, the evidence that counterfeiting of such products with health and safety consequences actually occurs in Canada on a commercial scale seems strangely elusive and mostly anecdotal, as is the case with respect to economic data. Moreover, there are other laws to deal more directly with hazardous and dangerous products, especially food and drugs. 

On the other hand, the rhetorical attempts (without any evidence) to conflate “counterfeiting “and “piracy” with terrorism, pornography, theft, stealing, money laundering, organized crime  and other ills  continue unabated. Indeed, overly zealous border enforcement to prevent trade in counterfeit drugs has held up the transshipment of life saving generic and perfectly legal drugs to developing countries (for example, even via such an advanced country as The Netherlands) because customs officials took it upon themselves – or perhaps were encouraged – to block such shipments. 

Excessive criminalization and excessive border enforcement measures do not promote respect for the law. It also costs a lot for society to enforce such laws at the expense of taxpayers. 

What we do know is that ACTA is an American initiative and Canada has been under intense pressure to support the Americans on such initiatives. We see this every year in the annual “301”show. We will likely see similar efforts in the Trans Pacific Partnership ("TPP") negotiations. We vividly saw attempts to pressure Canada on IP  a few years ago when a prominent American lobbyist named Scotty Greenwood blatantly tried to trade off “buy American” protectionism for Canadian copyright capitulation. In the past, various Canadian Governments including the current Government, to its credit, have mostly resisted these kinds of tactics. Funny – we thought we already had free trade with the USA – but we keep finding out that we still just have to tweak a little here and there in our IP laws... which, incidentally, comply with every treaty we have ever ratified. The same cannot be said of the USA – as the WTO has confirmed on the copyright front, where the USA is an ongoing scofflaw in respect of the infamous “Section 110” violation.

Against this background, we now see Bill C-56 – introduced on Friday, March 1, 2013. Even with the whole weekend to look at it, one will need much more time. It is 50 pages long.  The first 13 page deal with copyright – the balance with trade-marks.  

There may be some  positive aspects of this legislation that will be useful to combat seriously harmful counterfeiting. However, there are countless questions that require answers. No answers in today’s blog – but just some questions that many will or should be asking:


1. How will these provisions affect “parallel imports”? These are imports that may in some way be protected by copyright or other IP law and which were made perfectly legally in the country where they were made and which can be imported (apart from possible “private tariff”  IP legal tactics) into Canada at a lower price than the “exclusive” Canadian distributor is able or willing to charge. Canada is known to be a high price market where price discrimination is prevalent, as a Senate Report recently confirmed. The party with copyright ownership in Canada and the place of manufacture may or not be same or related. But the goods are perfectly legitimate. The copyright owner has already been paid where the goods were made. We had a Supreme Court of Canada decision about this in the 2007 Kraft decision, in which arguments that I made were instrumental in the prevailing judgment. The complexity of that judgment is enough to show that there are no easy answers to the issues involved, as I show in a short paper for the Law Society of Upper Canada. To what extent is this initiative being driven by those whose real agenda is opposition to parallel imports and the use of IP law as "an instrument of trade control"?
2. What are the consequences of customs officers getting more immediate and short term power than we now give to judges? 
3. What does “reasonable grounds” mean, when see through the eyes of a customs officer?
4. If the Supreme Courts of Canada and the USA struggle with the difference between legitimate parallel imports and pirated goods, how are customs officers supposed to make these decisions on the spot and accurately?
5. What protection will there be for the privacy of importers?
6. What redress will there be for importers whose goods have been wrongfully seized?
7. Why does the bill deal with a “communication signal”?
8. Will the personal baggage exception be sufficient to prevent overly zealous and intrusive border searches of laptops, smart phones, etc. to ensure that "the number of copies, indicate that the copies are intended only for their personal use"? After all, it could be argued that such a determination cannot be made without a search in the first place.


1. Why change the definition of trade-mark – which derives from who knows how many centuries of  jurisprudence – to be based upon “sign” rather than “mark”? If this is meant to sweep in colours, sounds, smells and other things that are not “marks” in the classic sense of “making a mark”, “marking out a territory”, setting out a boundary, the “mark” of a signet ring, etc., is this a major policy shift that requires extensive debate? Or is this simply another example of “If IP protection is good, more IP must be even better”.  It’s not obvious to everyone that the colour of delivery trucks or the sound of a motorcycle or the smell of a perfume should be protected by trade-marks law and, even if so, how such a regime can be effectively maintained and enforced. For example, if I should want to start a little parcel delivery business on the side and I find a good deal on a brown van, should I need to get it repainted?
2. Will we now have a “Trade-signs Act”? Alan Macek has already decried that we have not reverted to pre-hyphen days – so many may focus on the very name of the legislation.
3. Do we want to introduce a concept of being able to expunge an existing registration that “is likely to unreasonably limit the development of any art or industry”? The Courts have struggled for years with very mixed results to interpret much clearer provisions under the Competition Act.  Whatever the intention may be here, what does this really mean?
4. Do the provisions mix up the copyright aspect of packaging and labelling with the trade-marks aspects, and create a result that could prevent or severely inhibit legitimate parallel trade? It is common ground that trade-marks law has become virtually totally ineffective in Canada and the USA in the blocking of legitimate parallel imports – and most agree that this is how it should be. But is this now about to change without a thoroughly informed discussion?
5. Are we criminalizing a whole range of activity that has at most been subject to civil remedies? Are we criminalizing activity that may even have been perfectly legal, such as parallel trade?
6. Do the criminal provisions as drafted – with the mens rea concept of “knowingly” - suggest that wise parties should do more diligent searching when adopting a trade-mark, or should they avoid any kind of searching whatsoever so as to avoid any “knowledge” of possibly “criminal” infringement?
7. Is it really a good idea for a trade-mark examiner to be able to block a registration on the basis that “the trade-mark is not distinctive”? Is this really what is intended? This is potentially a huge change in policy and practice. Does this mean that examiners will now browse the internet and raise countless problematic objections?
8. Again, is it wise to give powers to customs officials that even judges do not have?
9. Again, what redress is in place for importers and their customers for wrongful seizures.

This bill is bound to raise a lot of difficult technical and policy issues on its own. It is immensely complicated and requires enormous scrutiny.  Indeed, the proposed changes to the Trade-marks Act are the most comprehensive in 60 years. 

Moreover, questions will also be asked focussing on:
1. Is ACTA a good idea for Canada?
2. If so, does this bill go farther than necessary?
3. What are the unforeseen effects of this bill resulting from  non-transparent policy objectives, if any, and problematic drafting, if any? 
4. Could the bill, through its substantive provisions or through overly zealous enforcement or in other ways, affect trade in legitimate goods?

The coincidental timing of the bill with certain aspect of the Canada/USA file having to do not only with IP but potentially other issues is also bound to raise many questions.


(rev. March 6, 2013)

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