US-Mexico-Canada Agreement: Raising Standards to Combat Counterfeit and Pirated Goods
The U.S. released the text of the U.S.-Mexico-Canada Agreement (USMCA) on October 1, a newly proposed trade agreement intended to replace NAFTA, that includes intellectual property provisions that strengthen enforcement. The international trade in goods that infringe trademarks and copyrights has been targeted for decades due to the growing threat infringing goods pose to public health and safety.
The USMCA requires that Mexico and Canada up their game when dealing with trademark and copyright infringing goods that cross the border. Under the proposed agreement, trademark protection would expand to protect against goods bearing counterfeit marks (identical to or substantially indistinguishable from a registered mark) and confusingly similar marks.
The USMCA would also give border enforcement authorities in Mexico and Canada discretion to take enforcement actions ex officio – i.e., on their own initiative – if counterfeit or pirated goods are suspected. The border enforcement officials must have the legal authority to exercise their ex officio authority in situations where the counterfeit or pirated goods are being imported or exported, goods are moving in-transit or transshipped, or the goods are entering or exiting either a free trade zone or bonded warehouse. This was an enforcement feature missing from NAFTA; these new requirements would offer greater protections to trademark and copyright owners.
Another new requirement that would strengthen intellectual property enforcement obligates participating governments to have criminal penalties in place to combat the import and export of infringing products. The availability of criminal penalties extends to cover the entry and exit of infringing goods into and out of free trade zones.
On the negative side of the ledger, it is unfortunate that the USMCA does not close a glaring loophole that counterfeiters frequently exploit in today’s internet trade environment. Article 20.J.6 (10) applies to goods of a commercial nature sent in small consignments and permits exclusion from border measures small quantities of goods of a non-commercial nature in a traveler’s personal luggage. In light of the growth of small consignments in international trade, including their purpose to distribute infringing products, this exception is striking.
While the language in the body of the text is acceptable as written, a footnote to this provision significantly undercuts it and opens up opportunities for great abuse that undermines effective enforcement. The footnote states that “a Party may exclude from the application of this Article small quantities of goods of a non-commercial nature sent in small consignments.” Internet-related trade often involves massive amounts of small consignments of infringing goods that exploit express couriers and the international postal systems to evade detection. This oversight has the potential to undermine overall efforts to strengthen and combat cross-border trade in infringing goods.
Trademark and copyright owners also will likely find the information sharing requirements to be problematic. Article 20.J.6 (4) does not impose a requirement that the border enforcement authorities have the power to share information. Instead, the Article states that if the competent authorities do not have such information sharing authority, then information must be shared with the trademark or copyright owner after a seizure were to occur or upon a substantive determination that the goods are counterfeit or pirated.
The proliferation of cross border trade in infringing goods demands that governments share more information with stakeholders as soon as possible. The U.S. has amended its laws and Customs regulations allowing for greater information sharing with stakeholders. The disclosure of more information about those involved in the production, distribution and sale of infringing goods would allow stakeholders to use the information to track back to foreign sources involved in the production and distribution of infringing goods. The USMCA provision delays the disclosure of information until after a proceeding on the merits that determines that goods are counterfeit or pirate goods. Under the best circumstances, these proceedings would take months, delaying possible efforts to target manufacturers and distributors.
Finally, we should not overlook the fact that, at least in the case of Mexico, border enforcement has not been effective because its Customs officials have lacked authority. Without U.S. technical assistance, trademark and copyright owners may not benefit from these stronger border provisions. It’s incumbent upon trademark and copyright owners to monitor progress and, if necessary, encourage the U.S. to provide the assistance necessary to obtain effective intellectual property border enforcement.
This post was written by Timothy Trainer, coauthor of Customs Enforcement of Intellectual Property Rights. Trainer also is the founder of the Global Intellectual Property Strategy Center, P.C., a consulting firm representing domestic and international clients, in Washington, D.C. Follow Trainer on Twitter @TTrainerglobal