United States-Mexico-Canada Agreement Provides a Leg Up in Combating Counterfeiting

Published: November 1, 2018

Karen MacDonald Norton Rose Fulbright Vancouver, Canada

On October 1, 2018, the government of Canada announced a new free trade agreement with the United States and Mexico to replace the North American Free Trade Agreement (NAFTA), now known as the United States-Mexico-Canada Agreement (USMCA). The USMCA remains in its preliminary stages and will still need to be tabled, debated, and ratified by Parliament before Canada adopts the agreement.

INTA is pleased to report that Article 20.J.6 of the USMCA states that customs officials will be given authority to “initiate border measures” against “suspected counterfeit trademark goods” that are imported, destined for export, in transit, or admitted into or exiting from a free trade zone or a bonded warehouse.

Canada has long lagged behind the United States and other countries in having effective provisions to combat against counterfeit goods. Canada had been on the Office of the United States Trade Representative’s (USTR’s) “Priority” Watch List Special 301 Report on Intellectual Property Rights, for many years prior to 2013, when it came off the list for a few years with the passing of Canada’s Combating Counterfeit Products Act. More recently, in 2018, Canada’s placement on the “priority” watch list has been in part due to its lax laws and enforcement against counterfeit goods.


Canada made significant changes to its laws with the 2013 Combating Counterfeit Products Act legislation, but brand owners and trademark practitioners have always seen such legislation as having significant holes that continue to put Canada at a disadvantage in being able to effectively combat counterfeiting.

Since the passage of the 2013 legislation, INTA has continued to strongly advocate for additional changes to the legislation itself and to increasing the resources put towards anticounterfeiting (including with respect to detaining counterfeit goods at the border). Statistics show detention of only 70 shipments of suspected counterfeit goods by the Canadian Border Services Agency (CBSA) between January 2014 and the fall of 2018.

As a part of its efforts, INTA, working with the Canada Subcommittee of INTA’s Anticounterfeiting Committee, has sent numerous delegations of brand owners, trademark professionals, and INTA representatives to meet with government officials in Ottawa. The focus of these meetings has been educating the relevant government departments on the scope of the problem and need to take action, as well as seeking legislative changes in three primary areas:

  • Providing a “simplified procedure” at the border to allow the CBSA to destroy counterfeit and pirated goods (the current procedures require a judicial determination unless the brand owner negotiates with the importer to relinquish the goods, assuming the brand owner can find the importer);
  • Providing statutory damages for trademark infringement; and
  • Allowing the CBSA to detain counterfeit and pirated goods in transit.

Improvements under the USMCA

The USMCA brings us part of the way there, requiring for ex officio initiation of border measures against counterfeit trademark goods in transit. This commitment in the USMCA will require Canada to amend its legislation and remove the exception to the detainment of counterfeit goods in transit through Canada to other destinations (an exemption found in Section 51.03(2)(d) of the Trade-marks Act). Given that Canada is a significant port of entry for goods coming from China and other Asian countries, where counterfeit goods primarily originate, the addition of in-transit goods to Canada’s border regime is a significant win for brand owners in the global fight against counterfeits.

Other Possible Changes

Unfortunately, much of the other language of the USCMA that might have affected Canada’s legislative regime to assist in combating counterfeit goods, whether through civil or criminal enforcement or border measures, is permissive in nature and will not likely require Canada to amend any of its existing legislation or enforcement policies.

For example, the USMCA speaks of “pre-established damages” “in an amount sufficient to constitute a deterrent to future infringements and to compensate fully the brand owner for the harm caused by the infringement.” It was hoped that such language might lead to the implementation of statutory damages in the context of counterfeit goods in Canada, which would be of great assistance to brand owners, since the calculation of damages in such cases is next to impossible. However, the provisions provide for “one or more” (emphasis added) of the following: (a) pre-established damages, which shall be available on the election of the rights holder; or (b) additional damages, with footnote indicating that “additional damages” “may include exemplary or punitive damages.” Statutory damages in Canada are likely still not yet on the table. The Canadian civil legal system already allows for “additional damages” in the nature of exemplary and punitive damages, and Canada is probably already in compliance with the provisions of the USMCA.

In relation to the border regime, the USMCA requires Canada to provide for ex officio (i.e., by virtue of its position) initiation of border measures in relation to suspected counterfeit goods. Currently, unless dealing with goods which are of national security or public health concern-the latter of which is given a very narrow interpretation-CBSA will generally only detain counterfeit goods if a brand owner has filed a Request for Assistance (RFA). It is hoped that the USMCA language will be read as expanding the circumstances under which the CBSA will detain counterfeit goods, including situations where an RFA has not been filed. However, the provisions of the current Trade-marks Act (s. 51.03) and Customs Act (s. 101) already give CBSA the power to detain counterfeit goods ex officio, and so it is likely that Canada is already in compliance with the requirements of the USMCA.

Other language in the USMCA may arguably provide support for a simplified procedure relating to the destruction of counterfeit goods detained at the border, which would allow CBSA itself to make a determination and destroy counterfeit goods so that a brand owner wouldn’t have to bring a civil action and get a court order in order to obtain destruction of such goods. Specifically, the permissive language of the USMCA does not require that the determination that goods are counterfeit be made by a court, but contemplates such determination being made by law enforcement authorities, such as the CBSA. However, again, as the provisions are permissive, Canada’s regime, which does require a judicial determination prior to destruction, is already likely in compliance with these provisions.

Similarly, while the USMCA calls for criminal measures to be in place to address commercial-scale counterfeiting, Canada already has criminal provisions in place that likely meet the requirements of the USMCA. The issue on the criminal side in Canada has always been that law enforcement and crown prosecutors are very reluctant to lay charges or pursue counterfeiting criminally, and nothing in the USMCA will require Canadian authorities to start using the criminal provisions that it already has in place.

Next Steps

Initial discussions with governmental officials on each of these issues tends to support their position that Canada is in fact already in compliance with all of these provisions of the USMCA, and that, other than removing the “in transit” language, no further legislative changes in these areas are required.

Nevertheless, the language of the USMCA would appear to suggest ongoing international pressure and support for Canada to update its legislation on all of these fronts. INTA looks forward to the upcoming amendments to the Trade-marks Act, and will continue to lobby for the possibility of an introduction of a simplified procedure regime in Canada (Art, 20.J.6, USMCA) and the establishment of statutory damages to act as a deterrent to future counterfeiting, and fully compensating brand owners for the harm caused. Art. 20.J.4, USMCA.

A copy of the text of Article 20 the USMCA as it currently stands can be found here.

For more information on INTA’s anticounterfeiting activities, please contact INTA Anticounterfeiting Manager Maysa Razavi at [email protected] or Anticounterfeiting Senior Coordinator Tiffany Pho at [email protected].

Although every effort has been made to verify the accuracy of items in the INTA Bulletin, readers are urged to check independently on matters of specific concern or interest. Law & Practice updates are published without comment from INTA except where it has taken an official position.

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