Comparing Anticounterfeiting Measures in Canada and the United States
Published: February 1, 2018
Timothy O. Stevenson mart & Biggar/Fetherstonhaugh Ottawa, Ontario, Canada INTA Bulletins Committee - North America Subcommittee
Mark A. Watkins Vorys, Sater, Seymour and Pease LLP Akron, Ohio, USA
On January 1, 2015, Canada improved the ability of customs authorities to detain suspected counterfeit products and to exchange information regarding these products with brand owners. These measures were a result of amendments to the Copyright Act (CA), Trade-marks Act (TMA), and Customs Act, effected by the Combating Counterfeit Products Act (CCPA)—and their purpose was to restrict the import and export of counterfeit goods at the Canadian border.
On November 2, 2015, the Canada Border Services Agency (CBSA) released an official memorandum on the new provisions providing detailed guidance as to how the system and the related detention process would work in practice. CBSA, Copyright and Trade-marks, Memorandum D19-4-3 (Ottawa: CBSA, Nov. 2, 2015). All discussion of the Canadian system, below, is with reference to this memorandum..
Now that the system has been in place for more than two years and the processes are well defined, it is a good time to assess the scope of its adoption by brand owners and compare key elements of the Canadian system with the customs protections available in the United States.
Adoption by Brand Owners
The core of the new anticounterfeiting system in Canada is the Request for Assistance (RFA), by which the owner of a Canadian trademark registration or a registered or unregistered copyright can file an application with the CBSA, listing its rights, with information to permit customs officers to more easily identify and detain suspected counterfeit goods at the border. CBSA officials who encounter suspected counterfeit goods during their inspections will contact the brand owner of the authentic goods so that it may facilitate the detention of the suspected counterfeit goods and begin court proceedings for infringement.
While the RFA system is still in its early days, more than 150 RAFs have been filed with Canada’s customs authorities, resulting in more than 35 seizures of suspected counterfeit or pirated products and at least 10 civil actions as a result of those seizures (figures provided by CBSA as of Oct. 31, 2016)). A variety of brand owners from different industries have taken advantage of the program; not only those in the consumer packaged goods and luxury goods fields, but also those in, for example, the automotive, aviation, and heavy industrial goods sectors.
Given the relatively low upfront cost to register with the RFA system (as discussed below, there is no government registration fee and attorney time is often minimal), it is one of the most cost-effective means of ensuring that suspected counterfeit goods entering and leaving Canada are brought to the attention of brand owners.
Comparison to the United States
While the Canadian RFA system has some general similarities to the U.S. system of border protection, there are some significant differences. The most fundamental difference is that the Canadian RFA system is effectively a system of notifying the brand owner of the potentially counterfeit goods so that the brand owner can then begin its own action for infringement in the Canadian courts. The CBSA will not adjudicate the matter or impose remedies or fines as can the U.S. Customs and Border Protection (CBP) agency under the Code of Federal Regulations. 19 C.F.R. § 133.
With this in mind, some of the more significant aspects of the two countries’ protection regimes are compared below.
1. Eligibility and Application
Under the Canadian RFA system, brand owners can record both trademarks and copyrighted works. The trademarks must be registered with the Canadian Intellectual Property Office (CIPO). Copyright does not need to be registered with CIPO in order to be listed on the RFA, but it is still recommended by CBSA that the copyright be registered.
The RFA program is intended to capture commercial counterfeits entering and leaving Canada, but does not extend to parallel imports (gray market goods), in-transit goods (those merely passing through Canada between two destinations), or goods imported or exported in personal baggage which appear to be for personal use.
The above differs to a limited extent from the U.S. recordation system, in which only the owner of a trademark registered on the Principal Register with the U.S Patent and Trademark Office (USPTO) or copyrighted work registered with the U.S Copyright Office may be recorded with CBP. 19 C.F.R. § 133.1 and § 133.31. Also, while the U.S. system does not address goods being exported out of the United States, there are restrictions on the import of gray market goods. 19 C.F.R. § 133.23.
2. Fees and Duration
In Canada, there is no registration fee to apply for an RFA, and it takes CBSA approximately four to six weeks to process the RFA application. The RFA is valid for two years, after which it may be renewed, at no cost, for successive two-year periods.
With the U.S. recordation system, there is a $190 fee for each trademark (per class) or copyright to be recorded. 19 C.F.R. § 133.3(b) and § 133.33(b). The U.S. recordation system also has a fee of $80 for each renewal of a trademark (per class) or copyright recordation. 19 C.F.R. § 133.7(a)(3) and § 133.37(c)(3). However, in the United States, the term of the recordation with CBP is much greater, and flows concurrently with the registration period for the trademark or copyright. The recordation or renewal of a trademark will be valid concurrently with the 10-year registration period or latest renewal period in the USPTO. 19 C.F.R. § 133.4(b). The recordation of copyright remains in effect for 20 years, unless the copyright ownership expires before that time, in which case recordation is in effect until the ownership expires. 19 C.F.R. § 133.34(b).
The procedures of notification and detention of suspect infringing goods differ noticeably. In particular, with the Canadian RFA system, the brand owner is first notified of the suspect goods by customs authorities, and they must then begin an infringement proceeding in a Canadian court to obtain a remedy. Under the U.S. system, the notification and initial burden is first placed on the importer to justify that the suspect goods are legitimate, and if the importer is not able to do so, the goods will be seized and disposed. 19 C.F.R. § 133.21(b) and § 133.43(a). Relevant details of the two systems are compared below.
In Canada, when a CBSA officer encounters suspected counterfeit goods during routine inspections, and the brand owner has filed an RFA, the following steps will be followed:
- The brand owner will be contacted and provided with preliminary information, such as information about the nature and quantity of the goods (and photographs), and must, within three business days, notify the CBSA whether or not it wishes to pursue a remedy under the Copyright Act or the Trade-marks Act. Memorandum D19-4-3, paras. 17â€’19.
- If the brand owner notifies the CBSA, it will be issued a formal Notice of Detention. The brand owner must then, within 10 working days (five working days for perishable goods), provide to the CBSA a copy of a document filed with a Canadian court beginning proceedings with respect to the detained goods. During this time, the brand owner may be provided with further information that could assist it in pursuing a remedy (e.g., samples of the goods and/or the opportunity to inspect them, information that identifies the owner, importer, exporter, consignee, and/or manufacturer of the goods). Memorandum D19-4-3, paras. 20â€’21, 26.
- If the brand owner submits documentation showing the start of court proceedings before the end of the 10-day detention period, the goods will then continue to be detained until: the court proceedings either end, are settled, or become abandoned; a court directs that the goods are no longer to be detained; or the brand owner consents to the goods no longer being detained. Memorandum D19-4-3, para. 27.
In the United States, suspected counterfeit articles bearing a trademark registered with the CBP will be detained for a period of up to 30 days. 19 C.F.R. § 133.21(b)(1). Within five business days from the date of a decision to detain suspected merchandise, CBP will notify the importer of the detention, giving the importer the option of presenting information within seven business days to establish that the detained merchandise is not counterfeit. 19 CFR § 133.21(b)(2). Where the importer does not provide this information, CBP may then provide the brand owner with a sample and information regarding the detained merchandise. 19 C.F.R. § 133.21(b)(2).
Once CBP determines that the article bears a counterfeit mark, the owner of the mark, within 30 days of notification of seizure, may provide written consent to the importer allowing the importation of the seized merchandise after removal of the mark, or other appropriate disposition. 19 C.F.R. § 133.21(g). Otherwise, the merchandise will be seized and disposed. 19 C.F.R. § 133.21(g).
For copyright, when CBP has any reason to believe that an imported article may be infringing a recorded copyrighted work, the importer will be notified and advised that it may file a statement denying that the article is an infringing copy and, in the absence of receipt within 30 days of a denial, the detained article will be considered an infringing copy and subject to seizure and forfeiture. 19 C.F.R. § 133.43(a).
If the importer files a denial, CBP will then give the copyright owner 30 days to file a written demand for the exclusion from entry of the detained imported article and a bond to make sure the importer or owner of the imported article is not liable for any loss or damage resulting from customs detention in the event that it is determined that the article is not infringing. 19 C.F.R. § 133.43(b). If the copyright owner files a written demand with a proper bond, the parties may then submit evidence, legal briefs, or other pertinent material to substantiate the claim or denial of infringement, in order for CBP to decide the disputed claim of infringement. 19 C.F.R. § 133.43(d)(1). Alternatively, the copyright owner may seek a court order enjoining importation of the article. 19 C.F.R. § 133.43(e).
4. Possible Additional Costs
Under the Canadian RFA system, brand owners are potentially liable for the CBSA’s costs associated with the storage, handling, and, if applicable, destruction of detained goods, should the goods be found not to be infringing. Brand owners are also potentially liable for damages to the owner, importer, or exporter of the detained goods should any of these parties suffer losses, costs, or prejudice as a result of the detention if the proceedings are dismissed or discontinued.
In the United States, for recorded trademarks, CBP may release to the owner of the mark a sample when the owner provides a bond, conditioned to indemnify the importer or owner of the imported article against any loss or damage resulting from the furnishing of the sample. 19 C.F.R. § 133.21(c)(2). However, CBP will provide brand owners with certain information regarding the suspected infringing products, such as photographs of the products, without the payment of a bond. 19 C.F.R. § 133.21(b). For copyright owners, a bond may be required to make sure the United States, its officers and employees, and the importer or owner of the imported article are not liable for any loss or damage resulting from the furnishing of a sample. 19 C.F.R. § 133.43(c). In addition, a copyright owner must also provide a bond conditioned to ensure that the importer or owner of the imported article is not liable for any loss or damage resulting from customs detention in the event that it is determined that the article is not an infringing copy. 19 C.F.R. § 133.43(b).
The table below summarizes many of the key differences between the Canadian and U.S. systems.
|Request for Assistance (RFA) application with Canadian Border Services Agency (CBSA)
|Recordation of trademarks and copyrighted works with U.S. Customs and Border Protection (CBP)
|Eligible IP rights
Registered or unregistered copyright
|Registered trademark (on Principal Register) or registered copyright
|Applies to commercial counterfeits entering and leaving Canada
Does not apply to gray market goods, in-transit goods, or goods in personal baggage that appear to be for personal use
|Applies to importation of goods, including gray market goods, articles accompanying importer carried in baggage or on the person, and mail importations
|Term of recordation
|Two years with additional two-year extensions upon renewal
|Recordation of trademark remains in force concurrently with the 10-year registration period or latest renewal period
Recordation of copyright in effect for 20 years unless copyright expires before that time
|No filing fee
|$190 for each trademark (per class) or copyright to be recorded
$80 for each renewal of a trademark (per class)/copyright recordation
|Initia detention period
|Up to 10 working days—or five days if the goods are perishable—after the day on which the CBSA first provides a sample or information to the brand owner
|Up to 30 days from the date on which the merchandise is presented for examination
|Possible additional costs
|Brand owner may be liable for:
|To obtain a sample of the goods, a bond is required from the brand owner to account for any loss or damage resulting from the furnishing of a sample
For copyright, a bond is also required for any loss/damage resulting from detention if the article is found to be non-infringing
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