IP Rights Holders: The Sky is Not Falling - Life Under Trump's NAFTA

April 11, 2017

In the advent of President Trump's desire to revisit, renegotiate or perhaps, altogether repeal the NAFTA, one has to consider whether such an act would have palpable effects on intellectual property rights holders in Canada. The simple answer is: probably not.

In its time, the NAFTA was one of the first international trade agreements that included provisions which governed intellectual property rights. The NAFTA recited a three-step approach. First, the NAFTA sought to establish minimum standards of intellectual property protection, based on the principles set out in the major international intellectual property conventions, and required the enforcement of these standards. Second, it required effective enforcement of intellectual property rights at the borders to ensure that intellectual property rights holders are protected from infringement by imported products. Finally, the NAFTA established a dispute-settlement procedure which contemplated trade-related sanctions and damages, to provide effective recourse against infringements of intellectual property rights. The result was that intellectual property holders in the three NAFTA countries were expected to gain an additional avenue for enforcing intellectual property rights when domestic law did not adequately protect them.

Murmurs surrounding Trump's desire to renegotiate the NAFTA seems to suggest that there is a desire to ask Canada to expand patent, copyright and trademark protection to more closely resemble the rights awarded in the U.S. This may result in more rigorous IP enforcement provisions intended to foster stringent border measures. The hope for intellectual property holders is twofold: (i) more consistency in the prosecution of intellectual property rights in the two jurisdictions and (ii) more certainty in market enforcement measures across the Canada-U.S. border. But since the most recent Federal budget[i] announced a modernization of the IP legal framework with the aim of bolstering innovation in Canada these changes to prosecution and enforcement of IP rights may occur regardless of Trump's desire to renegotiate NAFTA. Although it is hard to predict the nature and extent of the changes envisioned by this Federal budget, the signature of CETA by Prime Minister Trudeau last fall certainly provides an indication of Canada's willingness to harmonise its IP legislation with those of our major commercial partners.

In the event that NAFTA would be completely repealed, the impact on IP enforcement based on this treaty would likely be negligible. This is because IP right holders resorted to the national legislation in the vast majority of IP infringement cases. Recourse to the provisions of NAFTA for the enforcement of intellectual property rights in Canada has been scarce. We have been able to identify only twenty-four (24) cases in which IP rights holders have had recourse to the provisions of NAFTA to assert their rights.[ii] Broadly speaking, as it relates to intellectual property, the provisions of the NAFTA have been cited in two lines of cases:

  • To interpret the data protection provisions contained in the Food and Drugs Act. An argument under the NAFTA has been put before the courts by the brand pharmaceutical industry to convince courts to uphold data protection provisions, failing which Canada would be violating its international obligations under the NAFTA and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).
  • To argue the scope of intellectual property rights enacted under the Canadian Copyright Act, Trademarks Act and Patent Act. Such cases have challenged foundational concepts in intellectual property law in Canada including the definition of "intellectual creation"[iii] and the "Promise of the Patent"[iv] doctrine.

In theory, while the NAFTA was intended to address the issue of parallel, grey market and counterfeit imports, we have been unable to identify a case where the provisions of NAFTA were successfully invoked by IP rights holders to obtain retribution.

Armed with this knowledge, U.S. and Canadian intellectual property rights holders should have their minds put to rest that any action by Trump on the IP provisions recited in NAFTA will likely have a negligible effect. However, the anticipated market instability expected to arise while the NAFTA is being negotiated should be seized by intellectual property rights holders as an opportunity to explore and enter alternative markets, such as Europe or Asia. Such expansion will diversify your client pool and may help maintain stability for your business all the while expanding the potential uses and licensing of your intellectual property rights to new and diverse trading partners.



[i] http://www.budget.gc.ca/2017/docs/plan/budget-2017-en.pdf, at p.87

[ii] List of cases available upon request.

[iii] Édutile Inc. v. Automobile Protection Assn. (APA), 2000 CarswellNat 1258, 2000 CarswellNat 744, [2000] 4 F.C. 195, 181 F.T.R., 160, 188 D.L.R. (4th) 132, 255 N.R. 147, 6 C.P.R. (4th) 211, 97 A.C.W.S. (3d) 1229.

[iv] Eli Lilly and Company v. Government of Canada, In the Matter of an Arbitration Under Chapter Eleven of the North American Free Trade Agreement and the UNCITRAL Arbitration Rules (1976), Case No. UNCT/14/2.. The final decision of the Tribunal was released on March 6, 2017 and Eli Lilly's attempt to impugn the promise of the patent doctrine on the basis of the provisions of NAFTA failed. In support of its position, Eli Lilly quoted the observations made in the Special 301 Report by the United States about Canada's patent law. The Tribunal equally considered the effects of NAFTA on patent law in Mexico and the United States and concluded at paragraph [378] that "[…]the Special 301 Report stands alone in the record as a complaint regarding Canada's utility doctrine from any other State, including Mexico, in the decade since the promise utility doctrine was allegedly adopted. For the Tribunal, that silence speaks louder than the single, brief criticism contained in the USTR's Special 301 Report."

Recent bulletins Related bulletins