Combating Counterfeit Products Act Receives Royal Assent

On December 9,2014 Royal Assent was given to Bill C-8, the Combating Counterfeit Products Act. The intention of Bill C-8 is to give the government and holders of trade-marks and copyrights new mechanisms for enforcement, along with substantial remedies, in order to combat counterfeit and black-market goods. Before the introduction of Bill C-8, Canada had been criticized for not having meaningful policies to combat the global problem of counterfeit trafficking which flowed across Canadian borders.

Specific enforcement mechanisms contained in Bill C-8 include:

  • new civil prohibitions under the Trade-marks Act and Copyright Act giving rights holders the ability to start civil actions against those who infringe their trade-mark or copyright by possessing, manufacturing, distributing or trafficking goods for commercial purposes;
  • new criminal offences under the Trade-marks Act and Copyright Act for possessing, manufacturing, distributing or trafficking counterfeit goods for commercial purposes;
  • new provisions giving customs officials ex officio power to independently seize and detain suspected counterfeit goods. This includes the ability for copyright and trade-mark owners to file a “request for assistance” with customs officials to increase the information available to customs regarding possible counterfeit goods.

For a deeper review of the changes contained in Bill C-8, please see our previous post written in March 2013 when the bill was first introduced as Bill C-56.

While the Bill has obtained Royal Assent, it is only partially in force. Changes currently in force include:

  • the introduction of the new criminal provisions;
  • the deletion of section 7(e) of the Trade-marks Act; and
  • amendments to Section 20 of the Trade-marks Act dealing with infringement.

The majority of the amendments to the Trade-marks Act and Copyright Act, including the provisions relating to importation and exportation and ex officio powers of custom officials, will be brought into force by regulation. It is not clear when this will occur. However, it is thought that implementation will be in step with Bill C-31, the Budget Implementation Act, which is also waiting to come into force sometime in 2015 early 2016 and contains further significant amendments to the Trade-marks Act.

We will keep you updated as coming into force dates are announced and these legal tools become available to trade-mark and copyright owners.

Punitive Damages: Trademark and Copyright Infringement

The most recent case from the Federal Court continues the Court’s tough stance with respect to trademark and copyright infringement in Canada. 

In Harley-Davidson Motor Co. Group LLC v. Manoukian, the Court awarded significant compensatory and punitive damages against the Defendant company and its principal.

The Plaintiffs, H-D Michigan, LLC (“MI”), Harley-Davidson Motor Company Group, LLC (“MCG”) and Harley-Davidson Company, Inc. (“MCI”), hired an investigator to conduct an investigation into the alleged manufacture, offering for sale and sale of counterfeit Harley-Davidson clothing by the Defendants.  The investigator attended two separate locations of the Defendants.  While in attendance at both locations, the investigator was shown and purchased a number of counterfeit items including t-shirts, cloth and leather jackets and hooded sweatshirts, all of which contained unauthorised productions of the Harley-Davidson trademarks.

The Court was satisfied the matter could proceed on a motion for summary judgment.  In determining the damage award, the Court noted that where Defendants provide no records to substantiate the manufacture and sale of counterfeit wares, it is difficult to assess damages.  However, in these circumstances, the Court will apply a minimum compensatory damage award on a per infringing activity basis.

Following such cases as Ragdoll Productions (UK) Ltd v. Jane Doe and Oakley Inc. v. Jane Doe, the Court awarded damages for trademark infringement of $3,625 for each of the three occasions on which the Defendant was observed selling counterfeit goods at a flea market and $7,250 for each of the two occasions on which the Defendant was observed selling wares from a fixed retail establishment.  As the Plaintiffs were seeking damages on behalf of the trademark owner, MI, and the licensee/distributor, MCI/Fred Deeley, these amounts were doubled for a total of $65,250, payable jointly and severally by the Defendants.

In addition, although the Defendants’ lack of records made an accurate assessment of profits impossible, the Court found that the Plaintiffs were entitled to punitive damages of $50,000 to sanction the “blatant disregard” of the law by the Defendant.  In awarding the punitive damages, the Court noted that the Defendants had been offering for sale and selling counterfeit Harley-Davidson merchandise since as early as October 2006, and continued to do so despite the cease and desist letter served on the Defendants in 2010.  The Court also noted that there was evidence that the Defendant Manoukian, was well aware of the illegal nature of his trade.

The Court refused to award solicitor-client costs, since the evidence that the Defendants had missed a number of deadlines was not the kind of conduct attracting solicitor-client costs.  Further, the Defendants’ unjustifiable and inexcusable violation of the Plaintiff’s rights was covered by the punitive damages.

Significant Amendments to Canada’s Trade-marks Act Closer To Reality

Canada’s federal Government introduced Bill C-56 on March 1, 2013 – the Combating Counterfeit Products Act.   The primary focus of this Bill is to improve the ability of copyright and trade-mark owners to combat the manufacture, importation, sale and distribution of counterfeit goods in Canada. 

 While the primary focus of the Bill is on counterfeit goods, the Bill calls for amendments to both the Copyright Act and the Trade-marks Act that will have effects beyond counterfeiting. 

Should this Bill go through as is, the changes to the Trade-marks Act (the “Act”) include the following: 

–         “Wares” will become “goods” and the definition of a “distinguishing guise” will be repealed

–          “distinctive” in relation to a trademark will describe a trademark that actually distinguishes or that is inherently capable of distinguishing the goods and services of the trademark’s owner from those of others

–          The references to “mark(s)” throughout the Act will now be references to a “sign or combination of signs”

–          “sign” will include a word, a personal name, a design, a letter, a numeral, a colour, a figurative element, a three-dimensional shape, a hologram, a moving image, a mode of packaging goods, a sound, a scent, a taste, a texture and the positioning of a sign

–          A trademark will not be registrable if its features are dictated primarily by a utilitarian function (codifying recent case law)

–          In order to make a priority filing date claim, an applicant will no longer be required to have a real and effective industrial or commercial establishment in the country where the first application to register the trademark was filed. 

–          A Counterstatement to a Statement of Opposition will only need to state that the applicant intends to respond to the opposition.

–          It will be made clear that the Trade-marks Opposition Board can, in applicable circumstances, refuse some goods/services and let the remainder of the goods/services through to Registration, when dealing with Opposition proceedings

–          Divisional applications will be permitted, as well as mergers of registrations that stem from an original application that was divided

–         Applications for proposed certification marks will be permitted

–          The Bill contains many provisions relating to offences arising out of manufacturing, sale, possession, importation, distribution, and the like of counterfeit goods, labels and packaging, with fines of up to $1,000,000 or imprisonment for up to 5 years, if convicted on indictment.  There are also a number of provisions dealing with detention and destruction of infringing goods

There are, unfortunately, a number of  other provisions in the Act that could have been modified, deleted or clarified, which this Bill does not currently deal with.  Time will tell what changes are made to this Bill as it proceeds through the legislative process, with input from various committees and special interest groups.