IP monitor: Missing the mark – online trademark and copyright enforcement in Canada

The US Chamber of Commerce Global Innovation Policy Center recently released its 2018 International IP Index, which compares the intellectual property regimes in 50 world economies and ranks them based on 40 benchmark indicators in eight categories related to innovation, protection and commercialization of IP assets, and enforcement of IP rights.

Canada ranked 18^th overall with a total score of 26.50/40.¹ This is down one position from last year, and is substantially lower than the scores of the US and the UK who ranked 1^st and 2^nd respectively, with scores of 37.98/40 for the US and 37.97/40 for the UK.

One area in which Canada received notably low marks was protection and enforcement against online trademark and copyright infringement. Canada received a failing grade of 0.25/1 for the following benchmark indicators:²

By way of contrast, the UK received a score of 1.00 in all of the above benchmark indicators. The US received a score of 1.00 in all of the above benchmark indicators, with the exception of expeditious injunctive-style relief and disabling of infringing content online, where the US received a score of 0.75.

While these are some of the key differences between the legislative regimes in Canada, the US and the UK, Canadian trademark and copyright owners can enforce their rights in Canada quickly and efficiently but there is room for improvement.

Online piracy

In Canada, you may need a court order before an infringer is compelled to take down infringing online content. This can be an expensive and timely process and does not promote cooperative action among rights holders, or intermediaries such as internet service providers (ISPs), or government entities, and is the reason Canada scored so low in this indicator.

The Copyright Modernization Act provides a uniquely Canadian approach to combat online piracy and the removal of infringing material online, and requires ISPs or other intermediaries who receive notice of infringement from a rights holder to forward the notice “as soon as feasible” to the user associated with the alleged infringement. However, there is no requirement for an intermediary such as an ISP to remove infringing material following receipt of proper notice. A rights holder must then seek a court order for relief where the infringer does not remove the infringing content.

Canada’s “notice and notice” regime must be contrasted with the “notice and takedown” remedies available under the Digital Millennium Copyright Act in the USand the European Electronic Commerce Directive implemented in the UK. These regimes require ISPs and other intermediaries who receive notice of the alleged infringing content to expeditiously remove or disable access to the material or potentially face liability for copyright infringement. This has created greater cooperation between rights holders and intermediaries than under the Canadian system.

However, in the recent decision in Bell Canada v Lackman,³ the Federal Court of Appeal has made it abundantly clear that swift interim and interlocutory relief is available to combat online copyright infringement.

Online counterfeits

In Canada, ISPs and other intermediaries are not required to provide notice to trademark infringers or to take down their infringing material. Rights holders must seek a court order for any relief from trademark infringement. Canada has been justifiably criticized for the failure of this system to promote any type of cooperation among rights holders, ISPs or other intermediaries or the government in combatting trademark infringement online.

In contrast, rights holders in the UK can use the “notice and takedown” system provided for in article 14 of the Electronic Commerce Directive for both trademark and copyright infringement.

While the Digital Millennium Copyright Act only technically applies to copyright infringement, the Act requires ISPs to create a policy for removing infringing content online. As a result, many ISPs have taken the initiative to extend their policies to include takedown for trademark infringement, which has resulted in increased protection for rights holders and cooperation between rights holders and ISPs. These same protections are available to Canadian rights owners through many of the major social media and online marketplace providers.

The availability of interlocutory relief in trademark infringement actions was also recently confirmed in Sleep Country Canada Inc. v Sears Canada Inc.,⁴ where the Federal Court granted an injunction preventing Sears from using the slogan “There is no reason to buy a mattress anywhere else.” Sleep Country had sued Sears for infringement of its registered trademark “Why buy a mattress anywhere else.” Additional advantages for Canadian trademark owners include: the court’s willingness to consistently applying a tariff of presumptive damages (often referred to as “nominal” damages); significant punitive damage awards; and enforcing compliance through contempt proceedings that have resulted in fines and imprisonment. Proceeding summarily by way of application has also been shown to be an effective tool to minimize enforcement costs.

Expeditious injunctive-style relief and disabling of infringing content online

Canadian legislation operates under a similar system to the US where the court’s ability to issue an injunction against infringing parties and intermediaries is not specific to IP rights. Canadian courts are generally reluctant to issue injunctions for violation of IP rights finding that the rights holder fails to establish irreparable harm as required under the test for granting an injunction.

However, in a recent 7-2 Supreme Court of Canada decision in Equustek Solutions Inc. v Google Inc.,⁵ the Supreme Court upheld a decision of the BC Supreme Court’s order against Google to block and de-index websites that were selling goods that violated the plaintiffs’ trade secrets. Not only is this an important decision in Canadian law as the Supreme Court upheld the court’s ability to issue global injunctive relief for online infringement, but it also confirms the court’s ability to issue injunctive relief against an innocent intermediary in order to provide substantive relief to a rights holder. It remains to be seen how this decision will impact Canadian law in the future.

Transparency and public reporting by customs authorities of trade-related IP infringements

In 2016, the United States signed the Trade Facilitation and Trade Enforcement Act, which provided additional rights over prior anti-counterfeiting legislation, such as the Trademark Counterfeiting Act of 1984.

The Trade Facilitation and Trade Enforcement Act specifically included new requirements for customs authorities to disclose information to rights holders earlier in the process with the intention that this would enhance a rights holder’s ability to identify and address potential counterfeit goods in a timely fashion. The Act also established the National Intellectual Property Rights Coordination Center, with the authority to coordinate investigations with other agencies and improve communications with rights holders and the public. The implementation of this legislation improved the US score for this indicator and enhanced transparency between customs officials, rights holders and the public.

Since 2013, pursuant to the Trade Marks Act 1994 and other UK statues, the UK has established an IP Crime Unit that operates within the London police department. A substantial part of the unit’s work is protecting against the sale of counterfeit goods, particularly in the online space.

Since its inception, the IP Crime Unit has suspended more than 30,000 websites selling counterfeit goods.⁶ As part of its function, the unit is in communication with rights holders, customs officials, police officers and the public. The IP Crime Unit maintains the IP Crime Directory, a database directed to customs officials and police officers to assist them in identifying counterfeit goods based on information provided by rights holders. The IP Crime Unit also maintains “an infringing website list” provided to the digital advertising sector and made available to the public so that advertisers and agencies can cease advertisement placement on these websites. The IP Crime Unit also engages in regular news releases and public reporting.

By way of contrast, in 2015, with the Canadian Combating Counterfeit Products Act becoming law, Canadian rights holders received added protection with the new legislation providing customs officials with the ability to detain suspected counterfeit goods and to exchange information with rights holders.

Canadian rights holders must file a “request for assistance” form with customs officials and must have registered trademarks in Canada or registered copyrights (can be registered outside of Canada). Once the goods are detained by customs officials, rights holders have 10 working days to commence court proceedings related to the detained goods. The Canadian Border Services Agency (CBSA) provides little public reporting on their anti-counterfeiting activities and the effectiveness of the legislation is often questioned. It also worth noting that although the Canadian regime does currently not offer a simplified procedure for the deemed abandonment of detained goods, rights owners and intellectual property organizations are lobbying strongly to have this deficiency corrected.

Doing business in Canada

Companies doing business in Canada should consider taking advantage of Canada’s “notice and notice” system as a potential fast method to resolve any issues of online piracy and, where that proves ineffective, seek an interim and interlocutory injunction. In addition, companies should consider taking advantage of the Supreme Court’s recent decision in Equustek Solutions Inc. v Google Inc. to seek effective relief against infringers through an order against an ISP or other intermediary.

Companies doing business in Canada should ensure they registered their trademarks and copyrights in Canada. Registrations provide a number of evidentiary and procedural advantages, allow rights holders to take advantage of the CBSA’s Request for Assistance program, and can be persuasive evidence in complaints to social media sites and online marketplaces.

While not perfect, Canada has a strong intellectual property protection regime. Mechanisms exist that, when used strategically, can provide cost-effective redress for online infringement.

Source: Global Innovation Policy Center, US Chamber International IP Index, Sixth Edition, 2018

Footnotes

¹ 2018 FCA 42.

² 2017 FC 148.

³ 2017 SCC 34.

⁴ https://www.cityoflondon.police.uk/advice-and-support/fraud-and-economic-crime/pipcu/Pages/default.aspx.

⁵ Countries are awarded 1 point per indicator for a total of 40 points.

⁶ Canada also received a score of 0.25/1 for in the category of “scope of limitations and exceptions to copyrights and related rights”; however, this issue will not be addressed in this article.