April 10, 2014

Is Our Friendly Neighbor to the North Friendly on IP?

By Kelly Anderson

Yesterday, Ambassador Bruce Heyman officially assumed his duties as the new U.S. Ambassador to Canada. As the Ambassador begins his new role, it is critical that protecting and enforcing intellectual property (IP) remain at the top of the U.S. agenda in Canada.

Canada is currently the United States’ largest trading partner, and in many ways, nations around the world look to mirror the decisions made in Canada. Yet, Canada continues to be one of the primary markets of concern to intellectual property-intensive industries. The GIPC’s International IP Index, which maps the IP environment in 25 countries, found that Canada ranks well behind the likes of other developed countries, including the U.S., UK, and Australia in protecting and enforcing IP. Canada scored particularly low in the pharmaceutical and enforcement categories but also in the copyright indicators, illustrating that the IP concerns in Canada are cross-industry.

In particular, Canada’s heightened standard for patent utility – which dictates that innovators must demonstrate the effectiveness of a pharmaceutical as “promised” at the time the patent application is filed – has led to the invalidation of 20 patents in Canada which are recognized as both valid and useful in numerous other countries. This onerous patent utility standard is of great concern, and is a trend that is not happening anywhere else in the world.

At the Ambassador’s confirmation hearing back in December, Senator Robert Menendez (D-NJ) urged the Ambassador to act upon the “serious concern” with patent protections in Canada. The Ambassador vowed to highlight the “important issue” with the Canadian government, noting “intellectual property rights are the core of what American institutions depend on to compete globally . . . . American ingenuity is our special sauce.” We applaud Ambassador Heyman’s commitment and look forward to working with him to ensure that America’s life-saving innovations are properly protected within our neighbor to the north.  Yet, the concerns go beyond just the pharmaceutical industry.

American businesses have also expressed unease with the lack of ex officio authority for customs officials to seize counterfeit goods at the border. Currently, customs officials can only intercept counterfeit goods if the trademark owner obtains a court order or if the Royal Canadian Mounted Police (RCMP) authorizes them to do so. This lack of ex officio authority makes it much easier for counterfeiters to ship illicit goods through Canada’s porous borders to the United States.

Additionally, counterfeiting and piracy is taking hold in Canada, with the market for fake sporting goods, medicines, consumer electronics, automotive parts (you name it!) costing the economy approximately $20-30 billion annually.

However, progress has been made. For example, the government tabled Bill C-8, which would grant customs officials ex officio authority to seize counterfeit goods at the border, but this bill has yet to be enacted. Further, if ratified, the Comprehensive Economic and Trade Agreement (CETA) could remedy some of the pharmaceutical industry’s concerns by introducing an effective right of appeal for patent owners and creating two years of patent term restoration. Notably, if implemented, both Bill C-8 and CETA would improve Canada’s score on the GIPC Index.

Sharing the longest undefended border in the world, Canada continues to be an important ally to the U.S. on many fronts. As Ambassador Heyman begins his tenure in this diplomatic post, we urge him to ensure that Canada can also be our ally in supporting strong IP protections. The special sauce of American innovators and creators must be safeguarded in order for the U.S.-Canada trade relationship to continue to thrive.

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