EU-Canada Intellectual Property (IP) Dialogue – January 2021

The International Association (INTA) appreciates the opportunity to contribute to the EU-Canada IP Dialogue. We hope you will find these comments helpful in the context of the upcoming IP Dialogue and remain at your disposal should you have any questions or need further information.

Anticounterfeiting

According to the report titled The Economic Impacts of Counterfeiting and Piracy commissioned by INTA and the International Chamber of Commerce - Business Action to Stop Counterfeiting and Piracy (ICC-BASCAP), the global value of counterfeiting and piracy is expected to reach upwards of $2.81 trillion by 2022. This means that by 2022, the estimated number of jobs lost globally due to the counterfeit trade is expected to be about 5.4 million and the displacement of legitimate economic activity is expected to be $1.244 billion globally. Intellectual property and the protection of intellectual property rights play a significant role in the growth of economies.

1. Information Sharing

Anticounterfeiting is a priority at INTA and the Association strongly believes that stakeholder collaboration is one of the most important components to combatting the growing counterfeit trade. Coordination and information sharing between brand owners and enforcement officials is essential in anticounterfeiting enforcement and critical in preventing harmful counterfeit products from reaching consumers.

We recommend that the Canadian authorities consider forming an Intellectual Property Rights Center (IPRC).The goal of the proposed center would be to establish a central coordination unit to fight against counterfeits, piracy, and other intellectual property crimes. Because of counterfeiting’s links to organized crimes, money laundering, threats to public safety, etc., many agencies at the national level are looking at this type of crimes in isolation without developing the expertise to tackle its complexities. The IPRC would be a singular unit of coordination between the different industries effected by these crimes, the governmental officials that work to stop it, and the targeted public. The center would also provide coordination between the different governmental offices at the national level and would facilitate coordination between national officials and other jurisdictions globally. INTA published a white paper detailing the formation of such a center in 2018 which can be found here. The EU could share its experience and expertise derived from the Intellectual Property Crime Coordinated Coalition (IPC3). Brand Identification Training should be recommended and supported. Information sharing includes the ability for brand owners to train local and national law enforcement officials on brand identification and current counterfeiting trends. Brand trainings should be conducted on a continual basis as updated trainings are necessary in aiding officials in identifying counterfeit goods at the border. The EU could again share its experience in that field.

2. Anticounterfeiting Enforcement Changes to the Canadian Act (TMA)

INTA has compiled recommended changes to the Trademarks Act that would strengthen anticounterfeiting enforcement within Canada. These changes include: 1) statutory damages; 2) amendment to address abandonment or “deemed consent” relating to counterfeit goods detained by customs; and 3) interception of counterfeit goods in transit.

• Statutory Damages- INTA requested additional provisions to the Trademarks Act giving courts the power to award significant statutory (or “pre-established”) damages against counterfeiters in recognition of situations where it is difficult f or the trademark owners to prove their measurable monetary loss or damage. Although the Canadian provides for statutory damages, the Trademarks Act does not. This disparity allows for fixed amounts for damages in copyright law but imposes difficult evidentiary burden of proving actual damages for trademark owners when counterfeiters often do not keep accurate records of their illegal sales. It is in the interest of trademark owners and the Canadian government alike to have the strongest enforcement mechanisms possible such as statutory damages to protect trademarks from infringement, counterfeiting, and fraud. Statutory damages are an added deterrence for counterfeiters, especially if coupled with strong anticounterfeiting provisions in the Criminal Code.

• Abandonment or “deemed consent”- We recommend amending the Trademarks Act to include a section on abandonment or “deemed consent” that allows for more efficient and commercially reasonable recovery of the seized shipment. Dealings in counterfeit goods in Canada adversely impact law-abiding manufacturers and traders, trademark owners, and Canadian consumers to whom such goods could also pose a health and safety risk. INTA believes that such goods should not make their way into the Canadian marketplace. To that end, the Trademarks Act should be amended to provide for a summary procedure allowing for the forfeiture and destruction of counterfeit goods.

Full recommendations along with rationale and suggested statutory language can be found in INTA’s recommended changes to the Canadian Trademarks Act, available here.

3. E-Commerce and Fulfillment Centers

Many e-commerce platforms operating in Canada allow foreign sellers to sell directly on their platforms to Canadian customers. In most cases, the foreign sellers will not cater each order from packaging to importation to delivery. This process is usually fulfilled by third-party logistics providers (3PLs). While some platforms encourage its sellers to hire independent 3PLs, others use their own fulfillment centers to cater each order from packaging to delivery.

The growth of e-commerce platforms and the ease with which one may become a seller on these platforms means that anyone can start an online store from anywhere in the world and sell to Canadians utilizing these fulfillment centers. Brand owners often have a difficult time identifying foreign sellers due to often false or incomplete seller information provided on the waybill. Under the current Request for Assistance process, brand owners are required to commence costly litigation proceedings to destroy counterfeit goods that are detained by the Canada Border Services Agency (CBSA). Under the current program, the CBSA will release the

2 counterfeit goods after a prescribed period unless the rights holder brings a civil action against the known person(s) in Canada involved in the importation of the goods. In those cases in which foreign sellers use intermediaries like 3PLs to sell goods to Canadians, it is difficult, if not impossible, to identify the true importer to be named as the defendant in the civil action.

To combat the proliferation of counterfeit goods for sale on e-commerce platforms, INTA again recommends amending the Trademarks Act to permit the Canada Border Services Agency (CBSA) to destroy confirmed counterfeit goods without requiring rights holders to commence costly litigation proceedings via the summary procedure mentioned above in Point 2.

For a more detailed explanation on how counterfeiters use fulfillment centers to ship counterfeit goods directly to consumers via e-commerce sites, please see INTA’s report to Innovation, Science and Economic Development Canada (ISED), here.

Famous Marks

The Trademarks Act does not sufficiently protect famous or well-known marks. Some of the specific limitations and proposed solutions are discussed below.

At the outset, it is important to note that a system that fails to adequately protect famous or well- known marks, including the imposition of registration and use as prerequisites to protection, fosters public deception and commercial dishonesty. Italso poses an untoward risk that a company will be significantly hampered or precluded all together from doing business under its own mark in a jurisdiction precisely because the strength of its reputation has led to a pirating of its mark or bad faith filings.

Canadian trademark law offers statutory grounds of opposition (sections 38(2)(f) and 22 TMA) and injunctive relief (sections 53.2(1) and 22 TMA) when the use of a mark by a third party in Canada is likely to result in the depreciation of the value of the goodwill (“dilution”) in a registered trademark that is well-known, as a result of its use in Canada. In the absence of use and registration in Canada, the owner of a well-known mark who wants to stop a third-party user from diluting its mark must rely instead on the (and the statutory codifications of select common law principles set out in section 7 TMA). As the concept of dilution, in contrast to the concept of confusion, is not established in the common law in Canada, this represents a serious challenge and leaves the owner of the well-known mark with very limited chances of success, if any. Such owner would be likely left without recourse in the context of an opposition to an application for a diluting mark, letting the third party register its mark and, as a result, be granted the right to use it in Canada. Attempts by the owner of the well-known mark to register it in Canada could be opposed on the basis that the owner neither uses nor has the intention to use its mark in Canada (section 38(2)(e) TMA). Issued registrations are vulnerable to summary cancellation proceedings based on non-use (section 45 TMA).

If we consider the same scenario as above, but in a context of confusion rather than dilution, in the absence of use and registration in Canada, the owner of a well-known mark who wants to stop a third-party user from registering a confusing mark could successfully oppose it (sections 16(1)(a) and 38(2)(c) TMA), if it were able to establish that it had made its trademark known in Canada at the relevant date (section 5 TMA). To stop a third-party user, the same owner would have to rely on common law or section 7 TMA, perhaps with better odds than in a dilution scenario, but it would still be challenging in the best of cases in the absence of use in Canada.

3 Making a mark known in Canada (section 5 TMA) does not make a trademark application less vulnerable to an opposition on the basis that the owner has not used it in Canada and has no intention of using it (section 38(2)(e) TMA). Again, issued registrations are vulnerable to summary cancellation proceedings based on non-use (section 45 TMA).

We summarily set below 5 solutions to consider for improving the treatment of well-known marks under the Canadian regime.

1. The definition of “making known”

Section 5 TMA sets out the criteria for when a mark is deemed to have been “made known” in Canada. It provides that a mark can become well known in Canada only as a result of very narrow and strict requirements, including notably “advertisement in printed publications or radio/TV broadcast”. This section is outdated and should be amended to qualify as “made known” any mark that becomes well known in Canada by any means of promotion and/or advertisement, including the Internet, social media and digital marketing.

2. Making known as a “basis” for registration

A second solution lies with the amendment of sections 30(1) and 38(2)(e) TMA to reintroduce “making known” as a “basis” for registration and shield the application of a mark not used o r f or which the applicant has no intention of using it against opposition on that basis, when the applied-for mark has been made known in Canada.

3. Expanding the Application of “Depreciation of Goodwill” to unregistered “made known” marks

As indicated above, section 22 TMA, which provides a remedy against the depreciation of goodwill, requires that a mark be registered. Section 22 TMA should be amended to offer the same remedy to marks that are made known in Canada, whether they are registered in Canada or not.

4. Include making known as a defense to section 45 proceedings (section 45 TMA)

Section 45 TMA provides a simple administrative procedure to expunge from the Trademark Register marks unused for a consecutive period of 3 years. To maintain a registered mark on the Register, the owner must show use of the mark with the goods and services covered during the previous 3 years (“relevant period”). Section 45 should be amended to include as acceptable evidence to maintain a registration a showing of continuous making known in Canada during the relevant period.

5. Eliminate the requirement of use in the first 3 years of registration for enforcing a registration (not yet in force section 53.2 (1.1) TMA shown below)

(1.1) If, within a period of three years beginning on the date of registration of a trademark, the owner of the registered trademark makes an application claiming that an act has been done contrary to section 19, 20 or 22, the owner is not entitled to relief unless the trademark was in use in Canada at any time during that period or special circumstances exist that excuse the absence of use in Canada during that period.

4 Prior to coming into force, section 53.2(1.1) TMA should be amended to include “or made known” after “was in use” so that owner of a registration for a made known mark that is not used in Canada has access to the recourse provided at sections 19 and 20 TMA in the 3 years following registration.

About INTA

The International Trademark Association (INTA) is a global association of brand owners and professionals dedicated to supporting trademarks and related intellectual property (IP) to f oster consumer trust, economic growth, and innovation. Members include nearly 6,500 organizations, representing more than 34,350 individuals (trademark owners, professionals, and academics) from 185 countries, who benefit from the Association’s global trademark resources, policy development, education and training, and international network.

Founded in 1878, INTA is headquartered in New York City, with offices in Brussels, Santiago, Shanghai, Singapore, and Washington, D.C., and a representative in New Delhi. For more information, visit inta.org.

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