Probably not – although, various efforts are being employed by the Canadian government to tackle the counterfeit products industry and protect the Canadian consumer.
While the counterfeit products industry has persisted for many decades, it was previously localized and limited to a specific geographical region. However, this is no longer the case. The internet and e-commerce has allowed the counterfeit products industry to evolve into a very complex entity. The roots of this industry now extend beyond their initial geographical barriers and illegitimate products easily find their way into global markets. The ease of flow and production of these counterfeit goods is particularly concerning for Canada, and many other jurisdictions, because it:
- Causes confusion amongst the consumers as to the source of the product; and
- Infringes the rights of a registered trademark holder.
Fortunately, trademark law exists to counteract these issues and in the past the Canadian Trademark Act has been successful at doing so. However, the issue now is that the operators of online counterfeit industries are usually foreign based and holding a judgement, let alone obtaining one, against them can prove to be a difficult task. Therefore, the existing Trademark Act, although evolving, cannot solely address the complexity of counterfeit products over e-commerce; rather, efforts must be made at a global scale to address this global issue.
The Canadian government has already taken several initiatives to address the need of IP enforcement at a global scale. On September 15, 2017, Canadian officials met Chinese delegates in Ottawa, ON to discuss the IP enforcement strategies of the two respected countries, including a discussion on Project Chargeback.
The Canada Anti-Fraud Centre (CAFC) established Project Chargeback in 2012 to address the issue of deceptive practices employed by fraudsters to sell counterfeit goods over the internet. Project Chargeback was developed with the following objectives: to protect consumers by reducing their losses, to reduce organized crime profits that originate from the sale of counterfeit and pirated materials, and to protect and support the intellectual property rights of owners. To effectively achieve these objectives, CAFC requires the assistance of the Royal Canadian Mounted Police, credit card companies, banks, right holders, and the victims themselves.
The process of Project Chargeback is simple in theory and begins when the victim files a complaint with the CAFC. The CAFC then contacts the right holders of the product in question to verify if the complaint is valid, and whether the online website is in fact selling a counterfeit product. If the right holder confirms the validity of the complaint, the CAFC then requests that the victim contact their credit card issuing bank and provide them with the CAFC report. Credit card companies, upon receiving the required information, begin the chargeback process whereby they refund the victim’s money and subsequently remove money from the sellers account. The CAFC also requests that the bank close the account associated with the seller to prevent future sales of the counterfeit products over the internet. As well, to further punish the counterfeit products seller, the CAFC asks that the victim not return the product thereby causing a further loss to the seller.
Although, Canada is the only country with Project Chargeback, other jurisdictions have previously employed a similar mechanism. In Tory Burch v Yong Sheng International Trade Co. [1], the US Court froze the PayPal accounts of 41 Chinese companies that sold counterfeit versions of Tory Burch and subsequently released these PayPal funds to Tory Burch. Similarly, the US Court in Gucci America Inc v Frontline Processing Corp [2] held a credit card processing company liable for contributory trademark infringement because of their involvement in processing the payments on a website that sold counterfeit goods.
Despite the availability of similar mechanisms, the major incentive offered by Project Chargeback, and not by other jurisdictions, is the ability of individual consumers to hold accountable the sellers of counterfeit products. Comparatively, individual consumers in the US do not receive the same level of protection and their options are to proceed through the Courts or contact their credit card company and begin a chargeback process. Given that a large monetary sum is often not involved when purchasing a counterfeit product, to proceed through the Courts could be an unreasonable and a lengthy method. Alternatively, the US chargeback process does not prevent future victimization of other individuals by the seller, nor would it induce a strict liability on the seller.
Ankit Sareen is a JD Candidate at Osgoode Hall Law School and was enrolled in Osgoode’s Intellectual Property Law Intensive Program. As part of the program requirements, students were asked to write a blog on a topic of their choice.
[1] Tory Burch LLC v Yong Sheng International Trade Co Ltd, No. 10-cv-09336 (SDNY 2011)
[2] Gucci America Inc v Frontline Processing Corp, 721 F Supp 2d 228 (SDNY 2010)