It was a thrilling tale of will they, won’t they, but in the end Canada and the US agreed on a trade deal, which was signed today by Canada, the United States and Mexico at the G20 leaders’ summit in Buenos Aires. While large parts of the new Canada-United States-Mexico Agreement (CUSMA) seem to be a perfunctory rehash of NAFTA, the deal does have some significant consequences for IP law in member states. While a long list of changes can be found throughout the IP chapter, I’ll focus on the ‘big league’ stuff (i.e. copyright, patents and trademarks).
Copyright
Under the CUSMA, Canada will have a 2.5-year transition period (Article 20.90) to increase the length of copyright protection to life plus 70 years for works, and life plus 75 years for performances. The duration of protection for copyright in performances won’t be changing dramatically (up from 70), but with the length for works currently at life plus 50 years, the new trade deal represents a significant change (i.e. a length of time equivalent to 5/6 of my lifetime) (Article 20.63). It remains to be seen how the deal will affect marginal cases. From the text of the agreement, it seems open for the parties to decide what happens to copyright protections that expire during the transition period. A hard cut-off may be simplest, but it’s not clear that would be fair to owners. The rights-balancing involved should not be understated, since the short transition period means that a more gradual change will be difficult, if not impossible – it is very much a 2-or-20 year extension situation.
Canada’s notice-and-notice framework will persist under the new deal (Article 20.89); for a brief introduction to the notice-and-notice regime, see my review of the recent Rogers v Voltage Supreme Court decision. While Section J (and its Annex) of the CUSMA IP Chapter preserves the framework, the specificity of the language removes some of the flexibility that Canadian law might otherwise have to respond as notice-and-notice continues to evolve. In the long run, might this increase the risk that Canada shifts to the CUSMA-default notice-and-takedown regime that already governs south of the border?
The CUSMA also goes out of its way to make sure that criminal and civil remedies exist for tampering with digital locks or removing digital watermarks (although criminal remedies were already in place for the former). Nonetheless, a host of common-sense exceptions are directly enumerated, including circumvention by non-profit libraries, archives, educational institutions, or public noncommercial broadcasters, or for research or national security purposes. (Articles 20.67, 20.68)
Trademarks
In trademarks, statutory damages may be required for trademark counterfeiting (Article 20.82). Given the Canadian experience with statutory damages for copyright infringement this is a controversial move; according to Prof. David Vaver, statutory damages may encourage litigation of worthless claims and unfairly compensate rights holders, though on the other hand it may streamline the enforcement of rights protected by law.[1] However, because of the open-ended nature of the provisions, having a system of ‘additional’ (i.e. exemplary or pecuniary) damages instead of statutory ones may suffice (Article 20.82).
The border provisions in the CUSMA also include new procedures for detention of goods that are confusingly similar to registered trademark goods. Arguably the biggest change is the ability of border officials to detain goods in-transit, which, until now, has not been authorized in Canada. (Article 20.84)
Patents
Apart from affirming commitments to existing international treaties and trade agreements, the most significant change to patent law is how biologics (large molecules produced by living systems) are protected. Specifically, over a five-year transition period (Article 20.90), the term of market exclusivity will be increased to 10 years, from the current standard of eight (Article 20.49). Given that many novel therapeutic methods depend either directly (for treatment) or indirectly (e.g. for diagnosis) on biologics like antibodies, there are concerns about what even a two-year extension may mean for the future of healthcare costs in Canada.
The second big change for patents is more administrative, in that it affects how applicants interact with the Canadian Intellectual Property Office. In particular, those seeking a patent will now be able to expect compensation for unreasonable delays in application processing. The caveat is that a delay can only be unreasonable if more than five years have passed since filing or three years have elapsed since a request for examination. Note also that ‘compensation’ is strictly defined to mean adjusting the lifetime of the patent according to the delay. (Article 20.44)
The ‘Hot Take’
Many commentators view the agreement as a capitulation to US IP demands. I won’t argue for or against that notion. When looking at the larger context of the deal, however, IP stands out as one of the few areas that has been substantively changed by the provisions of the CUSMA. One is left with the uncomfortable question – were American demands acquiesced to in order to appease US negotiators on the substance of the broader deal? On the face of it, that does not seem totally implausible. For Canada, the CUSMA is essentially the same as NAFTA but for opening our dairy market and changes to IP. Unlike the US, though, Canada does not have the luxury of a massive domestic economy to cushion the blow of a lapsing free-trade regime with its largest trading partner, so it’s hard not to see the appeal of taking the best deal we can (sweetened by Canada, and especially Ontario, not getting slammed by crippling auto tariffs).
Regardless of what happened behind closed doors, I hope that the decision to accept these changes to the Canadian IP system was well-reasoned. The ground given on intellectual property will cost Canadian users, but may end up preventing greater damage that would be visited to the Canadian economy writ-large if NAFTA were to end with no replacement. In an international arena increasingly characterized by transactional relationships and realpolitik, such sacrifices may end up being inevitable. At the same time, we should be wary of the potential for IP to end up playing second-fiddle to other policy and economic considerations. There is a reason why other countries are willing to accept concessions on Canada’s IP law and policy in exchange for other, sometimes more tangible, benefits.
Written by Peter Werhun, IPilogue Editor and JD Candidate at Osgoode Hall Law School.
[1] David Vaver, Intellectual Property Law, 2nd ed (Toronto: Irwin Law, 2011) at 644-645.