So He Stole Your Idea, Now What? - Booker Zhang

Imagine you run a small fashion design company, and a competitor, Tom, used your laptop without your authority and browsed through your design drafts. Three months later, you noticed that Tom’s company published a new jacket very similar to your design. You were outraged and called the police, hoping they could do something. And then? Most likely, nothing would happen. Since 2014, the government of Canada has never brought the fourth charge against “unauthorized use of a computer” for intellectual property (IP) theft.[1] The police might tell you to sue Tom as a civil issue, but you would likely have to give up given the costs and risks of civil litigation. This might be a depressing story, but it is happening in Canada right now—IP enforcement in Canada is extremely weak and needs urgent enhancement.

Current IP law in Canada

Based on the Intellectual Property Enforcement Guidelines published on March 13, 2019, IP laws “create legally enforceable private rights that protect to varying degrees that form and/or content of information, expression and ideas.”[2] Governed mainly by the federal government, IP laws contain some rules regarding criminal issues, but the actual enforcement and prosecution of the law is sporadic and weak. For example, did you know that if you record a movie in a movie theatre without authority, you could be charged for a summary conviction offence and may be sentenced to imprisonment for no more than two years?[3] We all know that this sort of conduct happens everywhere—theatre recordings are one source of downloadable movies online. However, I could only find two cases where defendants were charged under “unauthorized recording of a movie” on Lexis Advance Quicklaw, even though this rule has been amended in the Criminal Code since 2007. Compared to the U.S., which treats IP law offences as a severe issue, Canada’s intention against IP law crime is much less aggressive and less consistent.

The Criminal Nature of Intellectual Property Offences

Some argue that IP violations are civil issues, as no physical harm happens other than pure economic loss. It can also be argued that IP laws are private law because they only affect certain groups. I am afraid I have to disagree with both arguments; I believe that IP laws are criminal laws addressing public issues. In order for an act to be defined as a crime in Canada, two major elements are necessary:

1. Conduct that is prohibited because it is considered to have an “evil or injurious or undesirable effect upon the public,” and

2. A penalty that may be imposed when the prohibition is violated.[4]

Applying this principle to IP laws, the question is whether IP law offences have an evil or injurious or undesirable effect upon the public. Ironically, many people may benefit from IP offences because they can enjoy downloading music, movies, and games for free. However, if we look at this issue from the perspective of society as a whole, it becomes an entirely different story. For instance, if most people downloaded pirated games instead of buying legal copies, game companies would eventually become bankrupt due to reduced profits. As a result, no more new games would appear, and all gamers would suffer, including those who insist on buying games.

Such a phenomenon is formally known as “counterfeiting” and could happen in any industry. Counterfeiting could lead to severe societal problems on a national level: losing direct foreign investments, missing out on foreign know-hows, job loss, loss of foreign exchange, discouraging inventiveness, and tax losses.[5] Accordingly, IP law offences possess an undesirable effect—detrimental influence against the economy—upon the public. To some extent, IP offences may be even more harmful than conventional crimes such as robbery and theft. The reason is that IP law offences could be untouchable and unrecognizable for most of us while slowly and silently killing the economy. These little instances of harm accumulate with time and will eventually appear as a dreadful crisis. As said by the axiom, quantity breeds quality. In addition, the Government of Canada has stated different levels of penalties for IP crime ranging from fines to imprisonment, depending on the penalty.

The nature of IP infringement thus perfectly fits into the definition of crime in Canada, even though it is different from our traditional understanding of crime. It is reasonable to treat IP violations as economic crimes, also referred to as any non-violent crime leading to a financial loss.[6] Undertaking that consideration, I see no reason why IP violations should be set aside when other economic crimes such as financial fraud, for example, are accepted as criminal issues and draw public attention.

Why Should Canada Enforce IP Crimes?

Other than domestic economic concerns brought by IP crimes, Canada also needs to strengthen enforcement against IP crime to build a solid foundation for booming internet and technology industries in international contexts. The world is now experiencing the Fourth Industrial Revolution, which will revolutionize everything through technology and digitization.[7] What comes with progress is the fast-increasing number of IP claims and related legal concerns. Nevertheless, the Public Prosecution Service of Canada does not even have a section devoted to IP theft, and no single attorney or other professionals in the Department of Justice or the Public Prosecution Service of Canada focus on criminal theft of IP.[8] An unprepared executive practice like this will not fulfill rising demand and will slow Canada down in competition with other countries.

On the contrary, the U.S. Department of Justice has established a Computer Crime and Intellectual Property Section with forty competent attorneys to exclusively address investigating and prosecuting IP crimes as a national strategy.[9] Strong and effective enforcement fighting IP crimes helps the U.S. maintain creativity and secure its leading position in the high-tech industry. Canada is currently on a “watchlist” under the U.S. trade representative’s Section 301, which indicates countries with poor IP laws and enforcement; such a designation will only harm Canada’s development in the next few decades.[10] It is time for Canada to change and develop rightful attitudes and actions to fight IP crimes.

How to Enforce IP Crimes

Effectively enforcing IP laws has always been a challenging topic to discuss. In my opinion, Canada ought to concentrate on three aspects to enhance IP enforcement.

Canada should commence with a separate and professional legal department focusing on IP laws related to investigation and prosecution. Other than the U.S., specialized IP courts and judges have handled both civil and criminal IP cases in China.[11] A skillful team is the basis of an effective and efficient judicial process. Another consideration is that although current judges and other regular court professionals are undoubtedly very competent, they may not be familiar with frontier technologies where IP violations frequently happen, given their age and practice areas. The expertise of a professional team is therefore helpful to improve efficiency and avoid mistakes.

Secondly, the cooperation between the government and private sectors could contribute to the success of IP enforcement. Investigation is tricky for IP law enforcement, as it takes much effort and requires expertise. By contrast, private sectors—usually the primary victims of IP violations—possess the knowledge and motivation to fight back against said violations. A great partnership can start from here. In Europe, companies from different industries have built units to investigate IP infringements and gather evidence to support the authorities.[12] Such a method can also be applicable in Canada as a win-win strategy for the private and public sectors.

Finally, international cooperation is crucial because the internet allows people to access online resources worldwide. The difficulty in enforcing IP laws is apparent when an IP violation is happening in another jurisdiction—what if some people infringe a Canadian company’s patent but they are in the U.S.? Setting servers and data in other countries is common for many illegal websites to escape punishment. Cases regarding multiple jurisdictions are usually very costly and time-consuming to handle. The good news is that Canada has realized the problem and has begun to act. In 2018, Canada signed the United States-Mexico-Canada Agreement (USMCA) to “strengthen its patent system and harmonize certain IP laws with its trading partners.”[13] This agreement is a good beginning, but there is still more to do.

Conclusion

Overall, as a country considered a high-tech hotbed, Canada is doing far from enough to prosecute IP crimes. Canada needs to appreciate the importance of effective IP crime enforcement and take action as soon as possible. Otherwise, it may lose creativity privileges and possibly even fall behind in this fast-changing world.

[1] Matt Malone, “Why isn’t Canada prosecuting intellectual property crime?” (7 October 2021), online: The Hill Times <www.hilltimes.com> [perma.cc/2FCF-X3UW]. [2] Canada, Competition Bureau Canada, Intellectual Property Enforcement Guidelines (Quebec: Competition Bureau Canada, 2019), s 2.1. [3] Criminal Code, RSC 1985, c C-46, s 432(1). [4] Simon N Verdun-Jones, Criminal Law in Canada: Cases, Questions, and the Code, 7th ed (Toronto: Nelson Education, 2015) at 2. [5] OECD, ICC Counterfeiting Intelligence Bureau, The Economic Impact of Counterfeiting, (Paris: OECD, 1998). [6] Irene Calboli & Maria Lillà Montagnani, Handbook of Intellectual Property Research: Lenses, Methods, and Perspectives (Oxford: OUP Oxford, 2021) at 203. [7] Klaus Schwab, The Forth Industrial Revoluntion (Switzerland: World Economic Forum, 2016) at 14. [8] Malone, supra note 1. [9] Ibid. [10] Ibid. [11] Dan Prud’homme & Taolue Zhang, China’s Intellectual Property Regime for Innovation (Switzerland: Springer International Publishing, 2019) at 170. [12] Benoit Godart, “IP crime: the new face of organized crime: From IP theft to IP crime” (2010) 5:5 J Intellectual Property L & Practice 384. [13] Managing Intellectual Property, News, ISSN: 0960-5002, “Canada: USMCA strengths IP protection” (Nov 23, 2018).