A Look at IP Rights under the New CETA Text

Published October 24th, 2014

After several years of drawn-out negotiations, Canada and the European Union finally signed the Canadian-EU Comprehensive Economic and Trade Agreement (“CETA”) on September 26, 2014, following an “agreement in principle” on October 18, 2013. The complete text of CETA was also officially released to the public, which was previously being drafted behind closed doors.

The Canadian government has described CETA as a landmark trade agreement that is broader in scope and deeper in ambition than NAFTA, boasting a predicted 20-percent boost in bilateral trade and a $12-billion increase in Canada’s GDP. The text of CETA covers a comprehensive range of trade and innovation related issues and seeks to effect several changes across the IP landscape in Canada. In particular, Chapter 22 covers Intellectual Property Rights (“IPRs”), which focuses on setting standards for IPRs and enforcement measures and is meant to achieve two objectives:

1)       facilitate the production and commercialization of innovative and creative products, and the provision of services, between the Canada and the EU; and

2)       achieve an adequate and effective level of protection and enforcement of intellectual property rights.

The following is a summary of the provisions in the IPR Chapter.

Copyright and Related Rights (Article 5)

As a result of the recent update to Canada’s copyright system via the Copyright Modernization Act, which came into force on November 7, 2012, the CETA provisions relating to copyright are reflected in Canada’s current copyright regime, including compliance with international treaties, term of protection, broadcasting, protection of technological measures, protection of rights management information, and liability of intermediary service providers.

Compliance with International Treaties

CETA will require the parties to comply with various international IP treaties affecting copyright, including the Berne Convention (1886, amended 1979), the WIPO Copyright Treaty (1996), the WIPO Performances and Phonograms Treaty (1996), and the Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations (1961). Canada is now in compliance with all of these treaties as a result of the Copyright Modernization Act.

Copyright Term Extension

Despite earlier reports of the EU demanding Canada extend the term of copyright protection, the CETA text does not require Canada to extend copyright protection beyond the current term of life of the creator plus 50 years.

Broadcasting and Communication to the Public

CETA will require the parties to provide performers with the right to authorize or prohibit the broadcast of their works by wireless means and to ensure that appropriate remuneration is paid, all of which is reflected in Canada’s current laws. Despite earlier reports of the EU demanding enhanced copyright protections for broadcasters, which would have required new restrictions on copying broadcast programs for personal use or other fair dealing purposes, the CETA text is silent on such enhanced copyright protections for broadcasters.

Protection of Technological Measures and Rights Management Information

CETA will require the parties to provide “adequate legal protection” and “effective legal remedies” against the circumvention of technological protection measures (“TPMs”) and removal or alteration of rights management information (“RMI”). Canada’s new provisions in the Copyright Act governing TPMs and RMIs (see s. 41) are consistent with CETA’s requirements.

Liability of Intermediary Service Providers

CETA will require the parties to provide certain exceptions or limitations to the liability of intermediary service providers for copyright infringement taking place via the communication network services that they provide. Canada’s new provisions in the Copyright Act governing exceptions to copyright infringement for Internet or other digital network service providers (see s. 31.1) are consistent with CETA’s requirements.

Trade-marks (Article 6)

CETA will require the parties to “make all reasonable efforts” to comply with the Singapore Treaty on the Law of Trademarks (2006) and to accede to the Madrid Protocol. Through the omnibus Bill C-31 Budget Implementation Act (see our previous discussion here), which received royal assent on June 19, 2014, Canada will be amending its Trade-marks Act to bring Canadian trade-mark law in compliance with the Madrid Protocol, the Singapore Treaty and the Nice Agreement.

CETA will also require the parties to provide a system for trade-mark registration that includes: (i) a system that allows applicants to contest and appeal refusals to register, (ii) a process for filing oppositions against trade-mark applications or trade-mark registrations, and (iii) a publicly available electronic database of trade-mark applications and trade-mark registrations. The parties must also allow for the fair use of descriptive terms, including terms descriptive of geographical origin, as a limited exception to the rights conferred by a trade-mark. These requirements are already reflected in Canada’s current trade-mark system.

Geographical Indications (Article 7)

CETA will require the parties to establish protections for a broad range of geographical indications (“GIs”), i.e., an indication which identifies an agricultural product or foodstuff as originating in the territory of Canada or the EU, or a region or locality in that territory, where a given quality, reputation or other characteristic of the product is essentially attributable to its geographical origin. Such protections include the legal means for an interested person to prevent the use of the GI in certain circumstances, e.g., in a manner that is false or misleading or otherwise constitutes unfair competition.

Attached to the CETA text as Annex I, Part A is a list of protected GIs for 173 European agricultural products or foodstuffs. While Canadian law currently offers protection for certain GIs related to wine and spirits (see CIPO’s List of GIs for Wines and Spirits), the CETA Part A list greatly expands the number and types of products protected by GIs. For example, Canadian producers of Roquefort cheese would now need to re-label the product with a different name, as the term Roquefort is a listed GI for cheese produced in France.

However, the CETA text does provide several exceptions or limitations to protection afforded to certain listed GIs. For example, an exception is made for certain GIs relating to the use of specified English and French-language terms that are commonly employed in Canada, e.g., Canadian producers can use “Black Forest Ham” or “Jambon Forêt Noire”, but not the German equivalent (“Schwarzwälder Schinken”). The CETA text also provides for exceptions for certain GIs that are commonly used in Canada (e.g., Asiago, Feta, Fontina, Gorgonzola, Munster) when the use of such terms is accompanied by qualifiers such as “kind”, “type”, “style”, “imitation”, etc.

GIs for Canadian products and foodstuffs would be listed in Annex I, Part B. However, Part B in the CETA text is currently empty, suggesting that no Canadian products are currently protected. However, Article 7.7 provides that Annex I can be amended to add or remove GIs by recommendation of the CETA Committee on Geographical Indications.

Industrial Designs (Article 8)

CETA will require the parties to make “all reasonable efforts” to accede to the Geneva Act of the Hague Agreement Concerning the International Registration of Industrial Design (1999).

Canada is not yet a party to the Geneva Act of the Hague Agreement and Canada’s Industrial Design Act has remained substantively unchanged since the 1985 amendments. CIPO has published a paper dated July 2013 entitled Legal and Technical Implications of Canadian Adherence to the Geneva Act of the Hague Agreement (available here) which suggests that a number of substantive changes will have to be made to Canada’s Industrial Design Act in order to adhere to the Hague Agreement. For example, adherence to the Hague Agreement will require amendments:

  • to designate Canada’s Industrial Design Office (“CIDO”) as the office for accepting international applications and to require CIDO to receive and send communications to the International Bureau of WIPO (the “IB”) regarding acceptance or refusals of international registrations within strict time limits;
  • to increase the total term of protection of industrial designs to at least 15 years from the filing date of the international registration;
  • to limit the period in which publication of an international registration can be deferred to 30 months or less (currently, Canada’s Industrial Design Act or its Regulations do not contain any limits on how long publication of a registration can be deferred);
  • to provide an international registration designating Canada with the same effect as an application for registration filed pursuant to section 4 of the current Industrial Design Act;
  • to provide that an international registration designating Canada be treated as having met, on the date of the international registration, the Canadian requirements for filing an application, i.e., the technical requirements for filing and thereby establishing the filing date will have to be relaxed to accept the particulars provided in the international registration; and
  • to allow for the division of an international registration (which can include up to 100 different designs belonging to the same class) into individual Canadian registrations (which are limited to a single design per application/registration).

Patents, Pharmaceutical Products and Data Protection (Articles 9, 10)

Sui Generis Protection for Pharmaceuticals (Patent Term Restoration/ Extension)

CETA will require the parties to provide a period of “sui generis” protection to pharmaceutical patents to cover the period between the filing date of the patent application and the date on which the pharmaceutical product was granted authorization to enter the market, reduced by a period of 5 years. The sui generis period may not exceed a period of two to five years, to be established by each party. According to a previous summary document released by the Canadian government, the period of protection offered by Canada will not exceed 2 years, while the cap on protection in the EU will be 5 years.

This sui generis protection, which confers the same rights as conferred by the patent and is subject to the same limitations and obligations, is essentially a patent term extension or restoration for some of the time lost between the filing date of the patent application and the date when the pharmaceutical product was granted market authorization.

There are certain limitations or exceptions to the sui generis protection, for example:

1)       only one sui generis term of protection is available per pharmaceutical product, even if the product is covered by multiple patents;

2)       the sui generis protection extends only to the pharmaceutical product that is covered by the marketing authorization and the use of any such products approved before the expiry of the sui generis protection; and

3)       the sui generis protection can be revoked if the applicable patent has been invalidated or no longer covers the product approved for market, or where such market approval has been revoked.

Patent Linkage Mechanisms and Right of Appeal

CETA will require the parties to provide “equivalent and effective rights of appeal” for all litigants in proceedings which rely upon “patent linkage” mechanisms, whereby the granting of marketing authorizations for generic pharmaceutical products is linked to the existence of patent protection.

The current system in place in Canada for marketing approval of generic pharmaceutical products relies upon a patent linkage mechanism. The Patented Medicines (Notice of Compliance) Regulations (the “PM(NOC) Regulations”) provide for a summary proceeding in which generic pharmaceutical companies address patent(s) owned by a brand-name manufacturer linked to a brand-name drug by alleging invalidity or non-infringement of the linked patent(s). Only if the generic’s allegations prove successful can market approval (or a “Notice of Compliance”) be issued.

The current system does not provide brand-name manufacturers with a right of appeal under the PM(NOC) Regulations. Brand-name manufacturers can only sue the generic manufacturers for patent infringement separately in the regular court system, essentially creating a practice of “dual litigation”. While generic manufacturers do have a right of appeal under the PM(NOC) Regulations, a generic’s success under the PM(NOC) proceeding is no guarantee of similar success in a case of a patent infringement litigation, as decisions under the PM(NOC) proceeding regarding patent infringement or validity are not necessarily binding on subsequent patent litigation decisions.

The CETA text is silent on how exactly the equivalent and effective rights of appeal must be implemented by the parties. However, according to a previous summary document released by the Canadian government, it suggests that Canada will end the practice of “dual litigation”.

Data Protection

CETA will require the parties to provide for protection of undisclosed data relating to new, innovative pharmaceutical products submitted by brand-name manufacturers for purposes of market approval by: (a) prohibiting generic drug manufacturers from relying upon such data in its own market approval application for a period of 6 years and (b) prohibiting the parties from issuing market approval within 8 years of granting data protection.

In Canada, the Food and Drug Regulations provide market exclusivity to innovative drug manufacturers for innovative new drugs via 8 years of data protection. Canada also imposes a 6-year “no filing” data protection period where generic companies cannot make use of the innovative drug manufacturer’s data in their applications for market approval for a minimum of 6 years (it generally takes another 2 years to obtain market approval). The CETA text locks in Canada’s current allowance for a 6/8-year term of data protection.

Data Protection on Plant Protection Products (Article 11)

CETA will require the parties to provide a protection, for a period of at least 10 years, of data supporting the marketing authorization of a new active ingredient that is a plant protection product and data supporting concurrent registration of the end-use product containing the active ingredient. The CETA text also provides for other provisions to provide certainty for data protection for plant protection products.

Canada’s laws appear to be consistent with the requirements of the CETA text. For example, the Pest Control Products Regulations provide registrants of new active ingredients that are pest control products, with the exclusive use of test data filed in support of their registration, for a period of 10 years following the date of registration (see s.17.5).

Plant Varieties (Article 12)

CETA will require the parties to co-operate to promote and reinforce the protection of plant varieties based on the International Convention for the Protection of New Varieties of Plants (“UPOV”).

Canada and countries in the EU are already members of UPOV, but Canada is only party to the 1978 Act of UPOV and has not yet signed onto the 1991 Act. In Canada, Bill C-18, entitled the Agricultural Growth Act, is an omnibus bill currently before Parliament which proposes amendments to the Plant Breeders’ Rights Act which will bring Canada into compliance with the 1991 Act of UPOV.

The amendments would include, for example:

  • a one-year grace period for the sale of a plant variety in Canada prior to the filing date, which would otherwise be a bar to the registration of plant breeders’ rights;
  • increasing the term of protection from 18 years to 25 years in the case of a tree or vine and 20 years in any other case;
  • an expanded scope of plant breeder’s rights respecting a variety, including the types of materials to which that the expanded scope of rights applies; and
  • exceptions for private and non-commercial purposes, experimental purposes, for the purpose of breeding other plant varieties, and for “farmers’ privilege”, i.e., allows for farmers to save and replant seeds of a protected variety on their own land for the purposes of propagating that variety.

Enforcement of IPRs (Articles 13 to 23)

CETA requires the parties to generally provide procedures for the enforcement of IPRs that are fair and equitable, not unnecessarily complicated or costly, and not entail unreasonable time-limits or unwarranted delays. In particular, the CETA text requires a list of provisions applicable to civil enforcement, which includes the requirement that judicial authorities be given the authority to order, in the context of civil proceedings relating to IPR infringement, the following:

1)       the production of relevant evidence and information;

2)       the preservation of relevant evidence and information;

3)       appropriate precautionary or preventive measures, e.g., injunctions, seizures of infringing goods/property, etc.;

4)       other remedies such as the removal or destruction of infringing goods;

5)       monetary awards to IPR holders in the form of damages, accounting of profits, or remuneration (e.g., royalties) to compensate for any infringement of IPRs; and

6)       compensation to the prevailing party by the losing party of legal costs and other expenses.

Canada’s current legal system appears to meet all of the requirements under the CETA text regarding the enforcement of IPRs.

Border Measures (Article 24)

CETA requires the parties to maintain or adopt procedures with respect to import and export shipments that allow for the suspension or detainment of goods under suspicion of infringement of IPRs, either at the request of IPR holders or by competent authorities to act on their own initiative. In particular, the CETA text calls for:

1)       appropriate procedures in place to allow IPR holders to allow for applications, supported by adequate evidence and relevant information, for suspension or detainment of goods suspected of infringing IPRs;

2)       adoption of procedures by which competent authorities may determine, within a reasonable period after the suspension/detainment procedure has commenced, whether the suspected goods infringe IPRs; and

3)       remedies, including the ordering of administrative penalties and the destruction of goods, or otherwise the removal of materials, found to be infringing IPRs.

It is important to note that the IPRs covered under this article concern pirated copyright goods, counterfeit trade-mark goods, and counterfeit GI goods. Canada’s laws do not currently provide for such procedures. However, Bill C-8, the Combatting Counterfeit Products Act (“CCPA”), is currently pending in Parliament (recently passed by the House of Commons, currently making its way through the Senate) and will amend Canada’s Copyright Act and Trade-marks Act to add new civil and criminal remedies and new border measures in both Acts. Amongst other things, the proposed CCPA will enact new border enforcement measures enabling customs officers to detain goods that they suspect infringe copyright or trade-mark rights. It allows rights owners to file a request for assistance from customs officers and allows for information to be shared between customs officers and rights holders, which will allow rights holders an opportunity to pursue remedies in court.

The passage of the CCPA would update Canada’s border and counterfeiting laws to bring Canada mostly in compliance with the requirements under CETA. However, the proposed amendments under the CCPA do not address any counterfeit GI goods, which is expressly required under the CETA text. As such, further amendments to Canada’s laws will be required.

Conclusion

According to a disclaimer in the released CETA text, the complete text will be subject to legal review and formatting before being finalized and will become binding upon the completion of the ratification process by both Canada and the EU.

There is enough flexibility in the CETA text that the precise implementation of all of Canada’s commitments under CETA’s IPR Chapter will be up for debate. However, it is apparent that the Canadian government has been busy effecting changes in the IP landscape while it was negotiating CETA. Several of these changes have already been formalized or will be formalized shortly, but there will still be several new changes to Canada’s IP laws to take form over the next few years.