The Canadian government today introduced a bill aimed at ensuring the Canada complies with the widely discredited Anti-Counterfeiting Trade Agreement. Despite the European Union’s total rejection of ACTA along with assurances that ACTA provisions would not resurface in the Canada – EU Trade Agreement, the new bill is designed to ensure that Canada is positioned to ratify ACTA by addressing border measures provisions. The core elements of the bill include the increased criminalization of copyright and trademark law as well as the introduction of new powers for Canadian border guards to detain shipments and work actively with rights holders to seize and destroy goods without court oversight or involvement.

While the bill could have been worse – it includes an exception for individual travelers (so no iPod searching border guards), it does not include patents, and excludes in-transit shipments – the bill disturbingly suggests that Canada is gearing up to ratify ACTA since this bill addresses many of the remaining non-ACTA compliant aspects of Canadian law. Moreover, it becomes the latest example of caving to U.S. pressure on intellectual property, as the U.S. has pushed for these reforms for years, as evidenced by a 2007 Wikileaks cable in which the RCMP’s National Coordinator for Intellectual Property Crime leaked information on a bill to empower Canadian border guards (the ACTA negotiations were formally announced several months earlier). [Update: On the same day the Canadian government introduced Bill C-56, the U.S. Government issued its Trade Policy Agenda and Annual Report, which calls on Canada to “meet its Anti-Counterfeit Trade Agreement (ACTA) obligations by providing its customs officials with ex officio authority to stop the transit of counterfeit and pirated products through its territory”]

A full examination of Bill C-56 is forthcoming, but its introduction raises four immediate issues: that Canada is moving toward ACTA ratification, that it is pursuing policy based on debunked data on counterfeiting, that the bill could have serious harmful effects with border guards forced to serve as copyright experts without court oversight, and the increased criminalization of copyright and trademark law.

First, this bill provides a clear signal that Canada will move forward with ACTA notwithstanding some doubts over whether there is even sufficient global support to allow it to take effect (six ratifications are needed). ACTA is toxic in Europe, where officials now go out of their way to assure the public that ACTA is dead and that any new agreements will not involve efforts to revive it. ACTA has also faced serious opposition in other negotiating countries, including Switzerland (which has not signed it), Australia (where a Parliamentary Committee recommended against ratification), and Mexico (where the Senate rejected it in 2010). ACTA was promoted as a “gold standard” agreement on counterfeiting, yet the failure to garner support from many participants has left an agreement that is often cited as an example of how not to engage in international negotiations. Given the global opposition, Canadian support for ACTA is disappointing.

Second, the government is framing this legislation as being geared toward countering harmful counterfeiting activities. Where counterfeiting raises health and safety concerns, no one would oppose measures to address it. Yet it should be noted that the data on counterfeiting has been regularly debunked as inaccurate and overstated. The U.S. General Accounting Office examined the issue in 2010 and concluded that the oft-quoted estimates are not reliable and cannot be substantiated to a data source. A year later, the Social Sciences Research Council released a major piracy report (funded by Canada’s IDRC) that found little evidence of organized crime involvement in piracy activities. In 2012, the CATO Institute posted another assessment of the piracy claims, which it found were unsupportable.

Similar suspect data has been regularly used in Canada. For years, the RCMP cited figures of $30 billion in losses due to counterfeiting, but upon closer examination (using the Access to Information Act), the claims were found to be fatally flawed, based on little more than a single bullet point in a slide presentation from an industry group. The RCMP no longer cites the figure (and the bill’s press release notably does not provide an estimate), but the Canadian Chamber of Commerce’s IP Council still often uses it. Counterfeiting is certainly a serious issue, but the industry has consistently failed to provide reliable data to allow for a meaningful assessment of the problem and potential solutions.

Third, the decision to grant border guards increased powers without court oversight or review raises serious concerns. Customs officials are not copyright and trademark experts, yet they may now be forced to assess infringement cases including determining whether any copyright exceptions apply. If they fail to do so, it may result in wrongful seizures or detentions of works. The bill opens the door to detention of works (they cannot be imported or exported) if created without consent of the copyright owner and if they infringe copyright. Yet there many works that are made without consent of the owner but rely upon exceptions such as fair dealing. Those may result in disputes over whether the works infringe, which is an issue best left to the courts. With this bill, customs officials will now make the determination and send the works to the copyright owner to consider whether they think it infringes copyright.

Moreover, there is a danger that parallel imports, which are not counterfeit product, may be targeted. Those products provide pro-consumer benefits of enhanced competition since the goods are legitimate but enter the market through alternative channels. The provisions also greatly expand border controls to both imported and exported goods (current controls are limited to imported goods), but there has been no evidence that Canada is a significant source of counterfeit product. There is also far greater information disclosures, with rights holders now able to ask for greater information sharing and assistance on imports and exports.

The bill will likely be promoted as protecting public health, however, there is a danger that the provisions could be used to stop the entry of legitimate generic medicines. Sean Flynn highlighted the concern in an ACTA analysis of border measures and trademarks:

The problem with trademark infringements is particularly complex and worrying for generic medicines. Generic labels are required to be similar to the brands. They must use the same words identifying active ingredients, the same warnings and indications and other information. In addition, they often desire to have similar packaging and presentation as the brand drugs to help patients switch between brand and generic with comfort. Requiring border officials to identify which medicine labels are too â€œsimilarâ€ to allow into the market is bound to lead to many more supply interruptions than if the measures were limited to criminally counterfeit products that intentionally use identical marks.

Similar concerns were raised by European scholars in their analysis of the ACTA provisions.

Fourth, the bill shifts toward an increased criminalization of copyright and trademark law. It adds copyright and trademark offences to the criminal code as well as establishing the possibility of prison terms for trademark infringement.

This is a 52 page bill that makes numerous changes to the Copyright Act and Trade-Mark Act, requiring careful study. Yet the starting point is to move Canada toward ACTA, to create new border measures powers that could have adverse consequences on legitimate activity, and to extend the criminalization of copyright and trademark law in Canada.