Bill C-8 (Historical)

Combating Counterfeit Products Act

An Act to amend the Copyright Act and the Trade-marks Act and to make consequential amendments to other Acts

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; and
(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.

[Judy Sgro, Liberal, York West, ON]

I find this difficult. We started this whole process of Bill C-8 saying that we have to get through this in four meetings and it's hugely important. I agree given that there's been a 400% increase in the amount of counterfeiting going on, with all kinds of issues. Canada's getting a black eye because we don't have legislation, even if it's the minimum that we're putting into this one....

I guess I should be talking through the chair here. Either we're going to deal it or we're not going to deal with it. It seems to me that we're just saying that we're going to get serious about counterfeiting—but it's okay if I bring back two Coach purses that are counterfeit.

When I was in Europe this summer, I was told that if I were to purchase any of the purses or other things that were being sold in various locations, I would be subject to a $150 fine. They decided that the only way to deal with this was to go after the person purchasing it. That's what I'm told they decided in Europe. But we're going to say that it's okay if you bring back a half a dozen Coach purses or whatever it is, because we're only after the big guys.

I think it sends the wrong message. I think we should be getting tough on this stuff if it's having an impact on the government, if we want money. And we want people paying taxes. We want companies paying taxes. This way nobody is paying any taxes to the government and we're just going to allow it to go on.

I know we can all argue both sides of this issue. I just think if we're serious, then let's get serious.

[Paul Halucha]

I would note, as well, that the committee has already voted against NDP-1, which is similar to this provision but applied to the Copyright Act.

Similar to my comments on that earlier amendment, I would note that this is not necessary, as Bill C-8 already clearly exempts parallel imports from the application of the border measures. In this case, the exemption can be found at clause 42, proposed paragraph 51.03(2)(a), which states that the prohibition does not apply if:

(a) the trade-mark was applied with the consent of the owner of the trade-mark in the country where it was applied;

That effectively is the definition of a parallel import. Given that parallel imports are made with the consent of the trademark owner in the country where they are made, the bill clearly excludes these grounds from the application of the border measures, and the language in Bill C-8 does not change the existing law dealing with parallel importation.

In our view, similar to the earlier ones, we agree strongly with the policy intent but would argue that the legislation already contains a very clear exemption.

[Anne Minh-Thu Quach, NDP, Beauharnois—Salaberry, QC]

I know that it is exactly the same as the provision proposed in amendment NDP-1. Mr. Halucha said earlier that it was already in Bill C-8. Yet a number of witnesses who were involved in the committee's study, including Mr. de Beer, a law professor, and Mr. Knopf, an intellectual property lawyer, told us that they consulted a number of intellectual property experts who expressed concern about the bill's vagueness when it came to parallel imports.

Those experts would like an amendment that states clearly that Bill C-8 will not target parallel imports. We added this so there would be no confusion in Bill C-8 between counterfeit products and parallel imports, which are legal.

[Paul Halucha]

Currently, only the Federal Court has the jurisdiction to correct any errors on the trademark register. The goal of Bill C-8 is to give the registrar the ability to correct errors without going to the Federal Court. Right now the circumstances are such that even if an error is determined right after a filing, in order to have it corrected once it's on the register, the commissioner of trademarks or the trademark owner has to go to Federal Court to have that correction made. So what the amendment does is provide for a six-month period during which, if an error is determined by the trademark owner, then the commissioner of trademarks has the ability to make that correction without going to Federal Court.

The amendment changes the flexibility the commissioner has in response to errors identified by the rights holder to a liability, so he or she would effectively be in a position of having, first off, to proactively correct all errors, and then, secondly, be responsible and liable in situations where they did not find the error.

From the perspective of analyzing this section, there's a legal community of trademark agents who have the strongest incentives to make sure that their trademarks are accurate. Our view is that they are best-positioned and most responsible to bring those errors forward to the commissioner, who can then correct them. To create a liability on behalf of the commissioner would substantively raise the bar.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

I sort of feel the same way as Ms. Charlton. The proposed provisions are still fairly long.

Bill C-8 amends the Copyright Act. Do these proposed provisions respect the spirit of that act? It covers a lot of things.

Let's take Canada Goose for example. It's a company that mainly makes coats. If someone made gloves that Canada Goose did not manufacture and puts the Canada Goose logo on them, that provision would make it possible to sue that person and seize the goods in question.

I would like to know whether this respects the provisions of the Copyright Act.

[Michael Ryan]

After the legislation was tabled, we received some comments, or I believe comments were supplied to the committee with respect to the exact drafting and whether it actually fulfilled the entire intention of the provision. I'll provide a bit of information on where the law stands as it is now, on what it would do unamended, and what the amendment seeks to do.

Currently with respect to a registered trademark, you have protection against a mark that is identical to or confusing in regard to that mark for the same goods that are listed on the trademark register or for goods that would be confusing with the list on the register. What Bill C-8 also sought to do, under clause 21, is that not only is that infringement at the time of sale, which it currently is, but it would also seek it earlier in the supply chain, so that's importing for the purposes of sale or manufacturing for the purposes of sale.

However, the way it was drafted, it limited those new civil causes of action to only the explicitly registered goods or services on the registry. This created a bit of discord between what's an infringement to sell versus what's an infringement earlier in the supply chain.

It can be difficult to follow, so I think it would be best to use an example. Since it's everyone's favourite example, we'll look at Canada Goose. They registered their trademark for jackets, but they didn't—hypothetically—register it for mittens and gloves, for example, which are also winter attire. If somebody were selling a knock-off version with a counterfeit Canada Goose mark on gloves, that would be infringing, because it would be confusing with a registered trademark, even it weren't explicitly listed on the registry.

Bill C-8 sought to ensure that not only is that at the time of sale, but that it is also earlier in the supply chain. Bill C-8, if unamended, would allow an infringement for anyone importing for the purpose of sale, or manufacturing for the purpose of sale, for example, those coats or jackets, but not those gloves or mittens. What the restructuring ensures is that whatever is an infringement to sell is also an infringement to manufacture for the purposes of sale. It's filling a gap there in the protection for types of wares and services that aren't on the trademark registry.

[Judy Sgro, Liberal, York West, ON]

Again to the staff, you indicated there are mechanisms to report yet no one knows how many cases we're going to see, or we've seen in the past, in spite of the fact that we were told there has been an increase of over 400% in counterfeiting. So what are the mechanisms? Somebody is tracking these cases or we wouldn't be sitting here dealing with Bill C-8 today.

[Glenn Thibeault, NDP, Sudbury, ON]

Thank you, Chair.

I'm being hopeful and optimistic that my friends across the way will be loving with this amendment.

I know it's similar to my previous amendment, but I think this addresses the cost that may be borne by small businesses for the wrongful or mistaken detention of goods. As it's currently written, Bill C-8 contains a no-liability provision for the crown and provides for the damages against rights-holders in cases where court proceedings are dismissed or discontinued.

In attempting to strike a balance between consumer and industry interests, I think Bill C-8 places the cost of detaining suspect goods on the rights-holders. However, as we heard during the testimony of Dr. Geist, C-8 is clearly lacking a misuse provision to ensure that actors are not engaging in frivolous claims as a means of acting anti-competitively.

I could speak to it further but I'd like to hear from the officials.

Thank you.

[Michael Ryan, Senior Analyst, Copyright and Trade-mark Policy Directorate, Department of Industry]

Thank you.

With respect to G-2, it seeks to amend a provision that allows the owner, importer, or exporter to pay security to the court after an action has been initiated to have the goods released. A court would determine on what security or conditions those goods could be released. It provides a balance to allow that they may be maintained. But a person who is interested, the owner of the goods, may seek the court's direction on getting them released pursuant to a payment of security. That's with respect to G-2.

G-3 is a clarification on a safeguard. If litigation proceeds, and if it is ultimately dismissed, it is not an infringing good. Not only is the owner, importer, or consignee able to recover damages for what was determined to be inappropriate seizure or detention, G-3 also adds reference to the exporter, since exporters can also have their goods detained, pursuant to Bill C-8.

[Louis Plamondon, Bloc, Bas-Richelieu—Nicolet—Bécancour, QC]

Thank you, Mr. Chair.

Witnesses and experts who appeared before this committee said that they were afraid that Bill C-8 would have some unexpected negative consequences. For instance, one major consequence we can see is an unfair financial burden being imposed.

That is exactly what could happen as a result of subclause 44.07(1). In those specific cases, the charges for storing, handling and, if applicable, destroying the samples could fall on the shoulders of a victim whose copyright has been stolen, rather than on the shoulders of the importer of the goods in question.

A witness from Canadian Manufacturers and Exporters said: “We believe that the importers should be responsible for these costs, since they are the ones introducing these goods...”.

That is why I suggest replacing “The owner of copyright” with “The importer” in that subclause.

Since I unfortunately cannot discuss that with you, I hope you see my point of view.

[Megan Imrie]

There's just one point of clarification I hadn't mentioned earlier. If they go through the court process, and, in fact, those goods are found to be infringing, they could be awarded damages through the court, which would include the cost of storage and holding onto those goods. If they are successful through the court process, they will be refunded those fees.

What we're saying, in terms of the way Bill C-8 is constructed to put the onus on the rights holder, is that they're the ones who have an incentive or a predominant interest in this. The danger with impacting the importer is that it may not turn out to be an infringing good or they may not be the actual owner of that property. We don't want to alter the balance in the way Bill C-8 is currently designed and put the onus elsewhere.

[Paul Halucha]

I'd be happy to do that.

Bill C-8 seeks to implement a cost-effective border enforcement regime that balances the interests of rights holders, importers and exporters, and individuals. A key component of the legislation is that when goods are detained at the border, they aren't determined as being counterfeit; they are only detained as suspect of being counterfeit or pirated. Only the court makes that final determination.

The amendment under discussion would alter this approach by making the rights holder's allegation stronger and by forcing an importer-exporter to go to court to disprove the allegation. Due to the complexity of international trade transactions, importers may have little incentive or ability to give timely notice of detention to the actual owner. If notified the actual owner may be able to establish that the goods are not infringing, while importers may lack information on the provenance or purposes of the goods. And the courts are well equipped.

A number of witnesses testified to the importance of not turning border guards into judge and jury on whether a good is counterfeit or not. The balance that we have in the bill is that if an allegation is made, the goods can be detained at the border. There is a sharing of information between the rights holders and the state. The state is accepting responsibility for dealing with the most grievous forms of counterfeit goods, either those where there is a criminal investigation or those cases where there could be health and safety risks, and then also supporting the information exchange with the rights holders. We're not turning the border agents essentially into judge and jury in a situation where they could be expropriating property from importers without having that go to court.

So that's effectively the balance in the legislation that we think could be disrupted by this amendment.

[Judy Sgro, Liberal, York West, ON]

Thank you very much, Mr. Chair.

This amendment proposes to create a simplified procedure that we heard mentioned by many of our witnesses and is designed to eliminate the need for legal proceedings where there is no dispute that the goods are counterfeit. It proposes to do this by including additional steps early in the process that will effectively create a simplified procedure when there is no dispute that the goods are counterfeit.

Stated generally, once the goods are detained, the process that follows would be that the information is provided to the rights holder, who is asked to determine whether or not the goods are counterfeit. The rights holder responds in writing as to whether or not the goods are counterfeit, and if the rights holder confirms that the goods are counterfeit, the minister provides notice to the importer of the goods that the goods are being detained because they are believed to be counterfeit.

For example, a customs officer has reasonable grounds to suspect that the importation or exportation of the goods is prohibited under subsection 53(1) of the Trade-marks Act, or that the importation or exportation of the copies is prohibited under section 44.1 of the Copyright Act, requiring that the importer provide written notice to the minister within a specified period of time if they wish to dispute this. If the importer does not provide such written notice, the goods are forfeited. If the importer provides such written notice, the brand owner would have to initiate legal proceedings in order for the detention to continue.

Mr. Chair, we heard a lot about the issues of how the U.S. and Europe deal with these counterfeit goods, and that without this, we're just going to create a huge amount of money for lawyers—with all due respect to the lawyers at the table, and any other lawyers in this country—but we're not going to achieve what we need to achieve with Bill C-8. Counterfeiters are not going to own up and go and collect their goods, unless they really feel they have a solid case and the goods are not counterfeit.

So then you would have a difference between the brand owners and the so-called counterfeiters.

What we're going to get into without the simplified procedure is a whole lot of wrangling. It will involve lot of cost for the brand owners, and for many of them it's a huge cost. I'm surprised the department didn't put forward the simplified procedure as a recommendation, and I assume that now they're going to explain why they didn't, but I do think it's an important part of the procedure that we're going forward with.

[Megan Imrie, Director General, Border Programs, Canada Border Services Agency]

Bill C-8 as written does give the Minister of Public Safety and CBSA broad discretion with respect to addressing issues of bad faith from a request for assistance that may be frivolous or vexatious and which could—as you mentioned—have impacts on an importer. There is a process. The bill provides for a process for a rights-holder application, which CBSA has the discretion to accept or not. Therefore, if it is viewed that it would be a bad faith issue, we cannot accept a request for assistance. Also, we would have the discretion as written not to extend a request for assistance from a rights holder.

In terms of the liability clause that exists in C-8 , we do also have the opportunity or the discretion not to action a request for assistance where, for instance, there would be an issue of bad faith. We will, as part of our FA process, ensure that there are safeguards in that process to prevent bad faith requests or abuse of the system. As well, we will ensure that we are doing appropriate tracking and monitoring of those requests for assistance to ensure that they are timely and responsive so that there are not undue impacts on the importer.

[Paul Halucha, Director General, Marketplace Framework Policy Branch, Department of Industry]

Thank you.

I'll start off by reminding the committee that parallel importation is the act of importing legitimate copies into Canada against the wishes of a copyright owner, authorized importer, or distributor, and which originate from the source having some relationship to the rights holder.

So parallel imports are by definition not pirated copies, not counterfeit copies, and Bill C-8 clearly exempts parallel imports from the application of the new border measures. I would point out that proposed paragraph 44.01(1)(a) does this by requiring the copies to have been made without the consent of the owner of the copyright in the country with which they were made.

In short, the legislation as it exists already has a clear exemption for parallel imports. They are not included, and having a second amendment would effectively do the same thing as has already been done in the legislation.