Will There Be a “Fake-Free” Canada?

by David Wotherspoon & Dierk Ullrich

The sale of counterfeit goods is an international phenomenon with billions of dollars in annual sales. In addition to economic harm to intellectual property (IP) right holders and loss of tax revenue, counterfeit goods can pose serious health and safety risks – e.g. in pharmaceuticals, automotive parts and food products –they are increasingly associated with funding of organized crime and terrorist activities. Yet, counterfeiting lacks the social stigma of many other criminal activities.

Canada has received unwelcome notoriety for its failure to effectively combat importation of counterfeit products. Criminal sanctions are usually modest and difficult to impose and so far the IP lawyer’s arsenal of civil remedies (Anton Piller orders, injunctions, damages, etc.), effective in individual cases, has failed to stem the flow of counterfeit goods into Canada. Indeed, the U.S. has placed Canada on its Special 301 watch list, expressing particular concern over ineffective border enforcement: in 2004, U.S. authorities seized approximately 30,000 inbound shipments of counterfeit goods, whereas in Canada the number of seizures was six!

However, Canada appears to have recognized the need to provide greater protection for IP rights. Along with Mexico and the U.S., it established a Security and Prosperity Partnership of North America (SPP). One in a series of working groups specifically addresses the goal of a “fake-free North America.” The SPP’s June 2005 Report to Leaders recognized protection of IP as key to sustaining an innovative economy. By 2006, the SPP seeks to develop a co-ordinated anti-counterfeiting strategy focusing on enhancing detection and deterrence of counterfeiting and piracy; expanding public awareness and outreach efforts regarding trade in pirated and counterfeit goods; and developing measurements to assess progress and estimate the problem’s magnitude.

Prior to the federal election in January there appeared to be considerable activity from the Canadian government toward dealing with the challenge of protecting IP rights. Recent government efforts include developing a national strategy for prevention, detection, enforcement and public awareness, and providing $433 million in new funding for the Canada Border Services Agency. Legislative and regulatory improvements to the legal framework for the prevention of trade in counterfeit goods were anticipated for early 2006. In a speech last November, The Honourable Roy Cullen, then Parliamentary Secretary to the Minister of Public Safety and Emergency Preparedness Canada, recognized “the role that rights holders play in the protection of their rights and the protection of the consumer” and that “public/private partnerships are important in dealing with intellectual property crime, and that it takes a co-ordinated effort among all stakeholders, including the consumer, to combat IP theft.” The legal profession can play a significant part in this public-private collaboration.

Whether these efforts will proceed is an open question at the moment. With a new government in Ottawa these anti-counterfeiting plans may be in jeopardy. No doubt, IP rights holders and lawyers alike will be closely watching to see if the new government remains committed to the SPP initiative and other measures aimed at combating the proliferation of counterfeit goods in Canada.

This article was published in the April 2006 issue of BarTalk and is subject to the copyright by the British Columbia Branch of the Canadian Bar Association, 2006, all rights reserved.