How to record your brand’s rights and stop counterfeit goods at the Canadian border

As we approach the one-year anniversary of the coming into force of the Canada-United States-Mexico Agreement (CUSMA) on July 1, 2021, we reflect on the changes that the CUSMA brought about for brand owners, particularly at the Canada-U.S. border. Previously, Canadian customs officials could detain only commercial shipments of suspected counterfeit goods destined for Canada. With the passage of the CUSMA, the Canada Border Services Agency (CBSA) is now empowered to detain in-transit commercial shipments of suspected counterfeit goods travelling through Canada enroute to their final destinations.

Since the CUSMA became effective, the CBSA has exercised its new powers, and brand owners have seen a more than 70 percent increase in detentions of commercial shipments of suspected counterfeit goods.

While Canada’s border enforcement program now offers rights holders more powerful tools than ever before to protect against the unlawful importation of counterfeit and pirated goods into Canada, rights holders must do their part and file a Request for Assistance (RFA) with the CBSA to record their registered trademarks, registered or unregistered copyrights and protected geographical indications. Rights holders will only receive the full benefits of Canada’s border enforcement program once they record their rights with the CBSA.

In-Transit Goods Are Now Susceptible to Detention

Since 2015, Canada has offered rights holders the ability to prevent counterfeit and pirated goods from entering the Canadian marketplace by recording their rights with the CBSA. Prior to the implementation of the CUSMA, customs officials were not permitted to detain goods that were transiting, or traveling through, Canada.

However, as part of the implementation of the new trade agreement, customs officials may now detain in-transit commercial shipments containing suspected counterfeit and pirated goods.

Record Your Rights, Protect Your Brands

The global COVID-19 pandemic has exacerbated the proliferation in counterfeiting worldwide, as brand owners and counterfeiters alike adapt and pivot to an increasingly digital world of online marketplaces. It is therefore critical for rights holders to record their rights with the CBSA by completing and filing an RFA application. Once their rights are recorded, customs officials who detect an inbound, outbound or in-transit commercial shipment containing suspected counterfeit and pirated goods will contact the rights holder via its Canadian counsel and give the rights holder information regarding the shipment, including the nature and quantity of the suspected goods, photographs of the goods, and the identities and addresses of the importer and exporter.

The rights holder may then elect to commence an action against the importer and/or exporter, in which case the CBSA will detain the goods until the action is settled or a court decides the action. Nearly 80 percent of cases result in an out-of-court settlement and destruction of the detained goods.

An RFA is therefore a highly effective and efficient way of not only collecting important information about the activities of counterfeiters, including where the counterfeit and pirated goods are coming from and where they are going, but also stopping the unlawful importation of such goods before they enter the Canadian marketplace and Canadian households.

Rights holders can record all their registered trademarks, registered or unregistered copyrights and protected geographical indications in a single RFA, and update their recordal as often as they wish. They may also include supplementary information and documents, including the names and addresses of authorized importers and of known distributors of illegitimate or suspect goods, and copies of product identification guides and handbooks, all of which will be kept confidential. There is no government fee for filing an RFA. However, it must be renewed every two years.

According to The Economic Impacts of Counterfeiting and Piracy, a 2018 report 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 $2.81 trillion by 2022.

Statistics collected by the CBSA show that rights holders’ active participation in the border enforcement program is key to preventing suspected counterfeit and pirated goods from entering the Canadian marketplace and Canadian households. Evidence suggests that rights holders need not fear excessive or unrecoverable costs when enforcing their rights through the program. As noted, the vast majority of cases are resolved prior to trial, and importers typically bear the costs associated with the storage and destruction of the infringing goods.

The preceding is intended as a timely update on Canadian intellectual property and technology law. The content is informational only and does not constitute legal or professional advice. To obtain such advice, please communicate with our offices directly.