Customs recordal now available in Canada to combat counterfeit goods

In January 2015 portions of the Combating Counterfeit Products Act came into force, enabling rights holders to record their copyrights and registered trademark rights with the Canada Border Services Agency (CBSA) in an effort to stop counterfeit goods before they enter the Canadian market.

Amendments to the Trademarks Act, which stem from the Combating Counterfeit Products Act, create a new statutory prohibition against the import or export of goods whose labels or packaging bear, without the consent of the owner of a registered trademark for such goods, a trademark that is identical to, or that cannot be distinguished in its essential aspects from, that registered trademark (ie, counterfeit goods). Similar amendments to the Copyright Act create a statutory prohibition against importing or exporting infringing copies of a work.

CBSA has adopted a new border regime to assist rights holders in enforcing the new statutory prohibition against the import of counterfeit goods. Under the new regime, owners of copyright protected works (registered or unregistered) and/or a registered Canadian trademark can record these rights with CBSA by filing a request for assistance.

If suspected counterfeit goods are discovered during examination at the border, CBSA can use the information contained in the request for assistance to contact the appropriate rights holders and inform them of details regarding the goods. Such details may include a sample of the goods, the name and address of their owner, importer, exporter or consignee, the quantity of goods, the country in which they were made and the date on which they were imported into Canada. With this information, the rights holder can make a determination as to whether the goods are counterfeit and whether to pursue civil remedies in relation to the goods. The information provided under the request for assistance regime may be used by the rights holder only to pursue remedies under the Copyright Act and/or the Trademarks Act. Notably, specific allowance is made for the use of the information for the purpose of reaching an out-of-court settlement.

Goods detained pursuant to a request for assistance will remain in detention for 10 days (five days for perishable goods), and the rights holder can request that the goods be held for an additional 10 days. If the rights holder initiates court proceedings in relation to the goods and provides CBSA with notice of such proceedings, the goods will remain in detention until the proceedings are disposed of, the court orders the release of the goods or the rights holder consents to the release of the goods.  

In order to file a request for assistance, the designated form must be completed with:

• the rights holder’s name and address and the name and contact information of a Canadian representative for service;
• the Canadian trademark and/or copyright registration numbers;
• details of the rights holder’s authentic goods (ie, product features, packaging and trademark location);
• the World Customs Organisation Harmonised System code for the goods covered in the registration(s);
• a list of known authorised importers of legitimate goods; and
• any known distributors of counterfeit goods.

There is no government fee for filing the request for assistance and no limit on the number of registered trademarks or copyrighted works that can be included in a single request for assistance. Once recorded, the request for assistance is valid for two years and may be extended in two-year increments thereafter at the request of the rights holder.

While there is currently no fee for filing a request for assistance, the minister of public safety and emergency preparedness does have the discretion to require that the applicant furnish security by way of a bond to cover any costs associated with storage, handling and, if applicable, destruction of the detained goods.

Although the specific details have yet to emerge, the storage, handling and destruction costs may be determined on a case-by-case basis depending on the nature and quantity of the goods, and their entry point into Canada. These costs may be significant. For instance, storage costs for a shipping container in a Canadian port or bonded warehouse can be C$300 a day. Handling costs (ie, if the goods are required to be moved) can be in the range of C$700 and the costs for the destruction of the goods under supervision can be in the range of C$1,700 per event. It is expected that CBSA will provide more guidance and clarity on the potential costs associated with detained goods as the regime matures.

Rights holders should be certain of the counterfeit nature of the goods before commencing proceedings, since the court can require the rights holder to pay any damages suffered by the owner/importer of the goods as a result of their detention if the proceedings are dismissed or discontinued. In this regard, rights holders should be aware that the import prohibitions do not apply to parallel imports, goods in transit through Canada or goods imported by an individual for personal use. Accordingly, proceedings should not be commenced in relation to goods which were manufactured outside Canada with the consent of the rights holder.  

While CBSA will now accept compliant request for assistance applications, the extent to which it will take action in its border enforcement activities in response to such applications remains to be seen. However, despite some uncertainty, the new border and request for assistance regime is a significant new tool for rights holders in the fight against counterfeit goods in Canada. The regime has the potential to stop counterfeit goods before they are distributed in the marketplace and is a major improvement on the former situation in which rights holders had a very limited ability to intercept and halt counterfeit goods coming into Canada. 

While unregistered copyrights can be recorded as part of an request for assistance, it is recommended that these rights be registered in Canada in order to provide more concrete information to CBSA. The implementation of the new regime also presents a good opportunity for rights holders to review their Canadian trademark portfolios to ensure that their registered Canadian rights are sufficient to take full advantage of the new provisions.