Pocket IP Guide to CUSMA – the New NAFTA

IPIC members are aware that IP rights have been hotly disputed in the recent Canada-US-Mexico trade negotiations. IPIC's IP Trade Policy Committee has been watching closely and provides this brief summary of what it believes are the most significant commitments of the parties as they now stand. 

“CUSMA” as used herein means the Canada-US-Mexico Agreement, as currently amended and proposed for implementation by all three countries. CUSMA now consists of two documents: the initial CUSMA proposal of November 30th, 2018 and  the amendment signed in Mexico City on December 9th 2019 (the Protocol of Amendment or “PoA”). 

Extended copyright term

The CUSMA extends the term of copyright protection for works, sound recordings and performances in Canada. 

In Canada, the term of protection for works will have to be extended from 50 years after the life of the author to 70 years; and for sound recordings and performances, from 70 years to 75 years (for published sound recordings and performances). These term extensions will bring Canada more in line with global norms of protection for creators and the Agreement allows Canada 2.5 years to implement these changes.

Currently, Mexico already enjoys a long term of protection for copyright (for works, it is 100 years after life of the author and for sound recordings and performances, it is set at 75 years from fixation). As Mexico already meets the standards set by CUSMA with respect to copyright terms, no changes to their local laws are likely to result. 

In the United States (U.S.), the current term of protection for copyright is already set at 70 years following the life of the author. With respect to sound recordings, they are typically protected for a term of 95 years following fixation. As a result, the U.S. will not need to implement further extensions to comply with these elements of CUSMA. 

Otherwise, Canada’s Copyright Act is largely already in compliance with the provisions of the CUSMA, other than some possible amendments to remedies relating to the infringement of Technological Protection Measures and Rights Management Information.

Expanded measures against counterfeit goods

The CUSMA requires Canada to bolster its anti-counterfeiting measures.

Don’t forget that despite the adoption of new anti-counterfeiting measures in the Combating Counterfeit Products Act, which came into force in 2015, Canada was again included in the U.S. Trade Representative’s “Priority” Watch List Special 301 Report in 2018.  Canada’s repeated inclusion in the Special 301 Report reflects the U.S.’ persistent view that Canada serves as a point of trans-shipment for counterfeit goods and is not doing enough to prevent these goods from later entering the U.S.

The legislative amendments required by the CUSMA will provide Canadian border officials with authority to initiate measures to detain suspected counterfeit goods in transit through Canada. Canada may also need to implement, in civil proceedings with respect to trademark counterfeiting, a system that provides for “pre-established damages” in an amount sufficient to deter future infringement and to compensate the right holder for the harm caused by the infringement. Moreover, customs officials will have authority to order destruction of suspected counterfeit trademark goods or pirated copyright goods following a determination that the goods are infringing.

These enhanced rights will provide additional enforcement tools for trademark owners.

Trademarks:  License recordals, Use of country names, Collective marks

There are three noteworthy points about trademarks and related rights in CUSMA. Regarding trademark licenses, the agreement explicitly spells out that the recordal of a trademark license is not required to establish the validity of a license and that recordal is not a condition for a licensee’s use of the mark to be deemed use by the trademark owner in trademark enforcement proceedings.  Canadian trademark law is already in compliance with this. 

Second, CUSMA is the first free trade agreement to give protection to country names in a commercial context, against usage by unauthorized persons. This provision is intended to prevent the use of country names (to make sense, this provision would need to apply to geographic names in general) on products, especially when the places are well known, and the labeling gives the false impression that the product originates from that territory. Canada’s trademark law is already in compliance with this provision. One of the main discussions of the WIPO Standing Committee on the Law of Trademarks, Industrial Design and Geographical Indications for the past few years, has been how to protect country names in consumer markets against misuse, on products, as part of domain names and as business identifiers. Its inclusion in CUSMA may be one way of doing so. Canada seems to have met the CUSMA requirements (at least in part) relating to the use of country names, but study is required to determine whether further legislative changes are required. 

Third, the CUSMA requires trademarks to include collective marks and certification marks. Canada will need to implement legislation to allow registration of collective marks (marks used by members of an association or collective).

Geographical Indications

The CUSMA is one of the few trade agreements that set out detailed parameters for geographical indications (GI) protection between its contracting parties. While the provisions are detailed, they are restrictive to the progression of GI rights in jurisdictions that rely on the legislation – Mexico and Canada (the latter to a lesser extent). The GI content in CUSMA is covered in 6 pages, almost as much as the patent and patent related provisions of the agreement. This is an intentional move, as CUSMA GI provisions aim to create a level playing field in approaches to GI protection between the parties, and to curtail European Union (EU)-based approaches to GI protection. This concerns specifically non-wine and spirit GIs, especially foods. A little background to CUSMA GI provisions is helpful. As reflected in at least a decade of complaints by the U.S. in its Special 301 Reports, IP laws that make GIs indefinite rights and a thorn in the flesh to established trademark rights should either be restricted or, not exist. In EU-based free trade agreements, GIs are highly epitomised IP rights, so much so that they often cannot be cancelled (for example, specific EU-based GI designations under CETA). The EU has been able to spread this perception of GIs globally, through its free trade agreements. The CUSMA is an attempt to stymie this perception of GIs.

Therefore, in CUSMA, GIs can be cancelled or opposed and can be challenged as generic in the host jurisdiction. Canada has similar laws on GIs. The only disconnect concerns its EU-GI commitments under CETA. Recall that under CETA, EU GI designations cannot become generic or challenged as such in Canada.  Other notable mentions, CUSMA makes it clear that there should be no bureaucratic barriers to GI registration within the contracting parties’ jurisdiction. This is meant to address U.S complaints that some GI laws (the EU to be specific) make it difficult for U.S rightsholders to register their products as GIs abroad. Globally, few free trade agreements contain stipulations on what to consider in GI generic claims. This is spelled out extensively in CUSMA. Once ratified, the parties are now obliged to ensure that there is transparency in the procedures and regulations used to register GI products. All GI procedures used by rightsholders will need to be publicly available and accessible. The point is that should an interested party want to oppose a GI registration, they will have the necessary information to do so. Another interesting provision is that if Canada or Mexico were to join the Geneva Act of the Lisbon Agreement for the Protection of Appellations of Origin and Geographical Indications (Lisbon Agreement), an international treaty that gives indefinite rights to all GIs within member countries, such an agreement would have no effect in their jurisdiction.

Enhanced protection for trade secrets

All member countries must now provide civil and criminal protections for the misappropriation of trade secrets. Canada does not have trade secret legislation. Trade secrets are based on common law principles and are enforced through common law torts or breach of contract. As such, they are treated as property and civil rights under provincial jurisdiction. Criminal offences relating to trade secrets will require new legislative changes under federal jurisdiction. It will be interesting to see how these CUSMA commitments will be implemented in Canada as it requires federal and provincial co-ordination. Mexico and the U.S. will see no change as they both have federal trade secret acts in place, and confidentiality agreements are generally enforceable (though highly variable among the U.S. states).

Patent term adjustment for patent office delay

Patent applicants will be entitled to patent term adjustment (PTA) if the issuance of a patent is unreasonably delayed by the patent office. Canada and Mexico will need to amend their respective Patent Acts to provide for PTA following delays of more than five years from the date of filing a patent application or three years following a request for examination of the application, whichever is later. The amended CUSMA provides clarification on what conditions and limitations on PTA may be applied. Canada and Mexico have 4.5 years to implement changes to PTA.  The US already has a PTA provision in effect.

Pharmaceutical data protection:  No change for biologics

The three parties will maintain their current periods of data protection for pharmaceuticals: Canada 8 years, Mexico 5 years and US (7.5 years for small molecules; 12 years for biologics). For the record, this is a reversal of the initial CUSMA proposal, wherein data protection for biologic pharmaceuticals was to be enhanced to 10 years in both Canada and Mexico. This has now been revoked by the PoA.

The impact of this “non-change” is being hotly debated in the biologics industry. A useful reference in the discussion is the estimate of the Parliamentary Budget Office on the financial impact the change would have had on Canadian prescription drug prices:  0.5% increase by 2028 ($169m/yr increase on $34.5B/yr total).

Under the PoA, Canada and Mexico will not be obliged to grant 3-years data exclusivity on new indications of previously approved drugs, contrary to US practice.

But the PoA does clarify that combination drugs, where at least one member of the combination is new, must be granted at least 5 years protection in all three member countries.

Patentable subject matter in life sciences

The PoA has abandoned efforts to push Mexico to accept certain types of patents common in Canada and US. Mexico is no longer obliged to accept patents covering new uses of a known product, new methods of using a known product, or new processes of using a known product.  Such patents would have been particularly beneficial to innovative pharmaceuticals and life sciences. 

 The IPIC IP Trade Policy Committee will be tracking implementation of these provisions in Canada, US and Mexico during 2020.