IP Provisions in 'New NAFTA' Agreement

First it was Mexico that agreed to a new trade accord with the United States. Less than one week later, Canada joined the agreement as well. With that, the stage was set for the 24-year-old North American Free Trade Agreement (NAFTA) to end and the U.S. Mexico Canada Agreement (USMCA) to take its place.

Canada's agreement to the USMCA should come as no surprise, as the Office of U.S. Trade Representative reports that, in 2017, goods imported into the United States from Canada totaled $299.3 billion. With such a high reliance on the U.S. market, Canada was under tremendous pressure to “strike a deal.” The USMCA terminates after 16 years, but every six years the signatories can agree to a 16-year extension.

Among the provisions of note for the entertainment industry, copyright will receive a boost from the USMCA. The current term of a copyright in the United States is the life of the author plus 70 years. For a work made for hire, the duration is 95 years from first publication or 120 years from creation, whichever is shorter. The term of a copyright in Canada expired 50 years after the death of the creator. The USMCA requires that copyright protection shall be “not less than the life of the author and 70 years from the author's death.” Canada will therefore need to change their national copyright laws to comply with this USMCA provision.

With regard to the Internet, the USMCA provides “take down” provisions that require internet service providers (ISPs) to remove content that infringes copyrights and that limit liability for copyright infringement not controlled, initiated or directed by the ISPs. Canada meets legislative requirements that provide an exemption to this provision. Thus, while a Canadian ISP must advise customers of copyright infringement allegations, the ISP is not required to remove the material that is allegedly infringing.

The USMCA also requires that all signatories have a domain name dispute mechanism. This system must be modeled after the international Uniform Domain Name Dispute Resolution Policy (UDRP). Both the United States and Canada already have systems in place to comply with this requirement.

An online database must be publicly available to obtain contact information regarding domain name registrants. While Canada maintains such a database (called a WHOIS database), contact information is maintained in private by default. A mechanism exists, however, to obtain domain name registrant contact information in the event of a dispute.

A number of provisions for providing border protection are significantly stronger than what was required by NAFTA. Each party to the USMCA has the right to “initiate border measures … against suspected counterfeit trademark goods or pirated copyright goods under customs control.”

The USMCA requires pre-established damages for trademark infringement. And in lawsuits involving counterfeiting, the USMCA requires the establishment of “pre-established damages … in an amount sufficient to constitute a deterrent to future infringements and to compensate fully the right holder of the harm caused by the infringement.” Current U.S. law complies with this provision for pre-established damages; requiring statutory damages between $1,000 and $200,000 per counterfeit mark. If a court determines the counterfeit use was willful, damages may increase to up to $2 million per mark. Canada will need to implement legislation in accordance with this provision of the USMCA.

While the USMCA has been agreed to in principle, a 60-day Congressional review period must be completed and enabling legislation must be drafted before Congress can cast its vote. In addition, the U.S. International Trade Commission must complete a full analysis of the agreement.

Given all of the timing, it's been unlikely that a Congressional vote would take place before the end of 2018. And with Democrats taking control of the U.S. House of Representatives in the recent mid-term election, the USMCA is moving along an uncertain path, and we will not know until 2019 whether the agreement will go into effect in its present form, with modifications or not at all.

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Lawrence E. Ashery is a partner in the Philadelphia, PA, office of Caesar Rivise. He focuses his practice on all aspects of intellectual property law. He can be reached at [email protected].