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:

1. Causes confusion amongst the consumers as to the source of the product; and
2. Infringes the rights of a registered trademark holder.

Fortunately, trademark law exists to 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 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 .

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 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)

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Recently, knock-off basketball jerseys bearing the trademarks of the Golden State Warriors and Cleveland Cavaliers were mass-produced around the time the two teams met in the NBA Finals. Unfortunately, consumers from buying these items as they are generally to feel that of these items would be worth it. In other words, the thrill of the find is sometimes the primary objective.

The Canada Border Services Agency (CBSA) has instituted a program that is geared towards “”. While the program has been communicated to the public and is relatively simple, it operates through a complaint system. This means that a Canadian trademark holder registered with the is eligible to file a����with the CBSA. Furthermore, processing a request takes four to six weeks and the applicant must fill out a that is not exactly user friendly.

Additionally, pinpointing the primary source of the counterfeit merchandise is a problem, which does not seem to be directly addressed by the CBSA. As such, an added layer of government support in this matter would likely prove to be helpful.

It is interesting to note that the United States (U.S.) is facing a similar struggle. The U.S. Customs and Border Protection (“CBP”), has also been trying, , to prohibit the sale and delivery of such products. Once again, this is much easier said than done. “Enforcing IPR laws is a priority trade issue for CBP and helps to protect America’s economic security and competitiveness,” said of the Apparel, Footwear and Textiles Center of Excellence and Expertise. “The significance of that mission is magnified even more during national sporting events such as the NBA Finals and just as our recent seizure activity shows, we remain committed to ensuring that arriving merchandise adheres to federal [intellectual property] law and shipments that infringe on registered trademarks will be targeted and seized.”

Section of the Canadian Trade-marks Act forbids the distribution, sale, or exportation of merchandise that infringe registered trade-marks, with a special focus on counterfeit goods in section This means that while the proper laws are in place, enforcement is the primary hurdle with respect to this issue.

Given the new age of Internet shopping, controlling the shipment of fake goods is increasingly difficult. While counterfeit merchandise used to be sent to stores, they are now being sent, individually, to online shoppers. As such,��government officials are forced to find and seize counterfeits one-at-a-time.

Another issue is the public’s interest in counterfeit goods. Finding products that look very similar to that of high-end designers at a much lower price may make shoppers feel as though they are being clever. However, the harm that this brand of shopping inflicts can be profound. Firstly, this causes severe problems for designers who spend much more time, effort, and capital to produce the because counterfeits can tarnish the reputation they have built through branding, and diminish their company’s good will.

Furthermore, according to the U.S. Department of Homeland Security assistant special agent , counterfeiting efforts have to international crime rings that use this scheme to launder money from illegal drug sales and human trafficking. This direct link has is also supported by the .

So, the next time an ‘I-can’t-believe-it’s-not-real’ product catches your eye,��please consider the consequences for all parties involved.

Saba Samanian is an IPilogue Editor and a JD Candidate at Osgoode Hall Law School.

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