Legally Speaking with Michael Mulligan
Legally Speaking with Michael Mulligan
Intellectual Property: Canada's Secret Weapon in Trump Trade War
The spectre of trade wars looms as social media announced tariffs threaten to disrupt the Canada-US relationship, but a powerful alternative to the traditional tit-for-tat approach exists. Rather than punishing ourselves with counter-tariffs that make goods more expensive for Canadians, we could follow Brazil's remarkably successful strategy from 2010.
When faced with harmful US cotton subsidies, Brazil obtained WTO approval to suspend American intellectual property protections on pharmaceuticals, chemicals, and entertainment. The threat alone was so effective that the US capitulated, passing corrective legislation and paying compensation. This approach targeted America's post-industrial economy, where true value lies not in manufacturing but in patents, copyrights, and intellectual property.
Looking at our trade history, intellectual property protection forms the cornerstone of agreements from NAFTA to the 2020 USMCA. These agreements dramatically restricted Canada's generic drug industry, extended copyright terms to 75+ years, protected US semiconductor designs, and created digital IP frameworks that primarily benefit American companies. Since these protections exist because of the very agreements being violated through tariff threats, suspending them represents a logical and asymmetrical response.
The beauty of this approach is its win-win nature for Canada – consumers would save substantially on medications, technology, and entertainment while applying maximum pressure to US interests. When auto executives warned of catastrophic consequences from parts tariffs, Trump backed down within 24 hours. Imagine the lobbying pressure from every pharmaceutical, technology, and entertainment giant facing the loss of their international intellectual property protections. As our legal expert notes, this approach has proven effectiveness has legal standing through WTO processes, and would target "most of the US economy" – making it a strategic option Canada shouldn't overlook as trade tensions escalate.
Follow this link for a transcript of the show and links to the cases discussed.
It's time for a regular segment with Michael Mulligan from Mulligan Defence Lawyers, legally speaking, on CFAX. Morning Michael, how are we doing? Hey, good morning, I'm doing great. Always good to be here. I got a huge amount of positive feedback the last time you and I discussed the prospect of, yes, a trade war all of us would prefer to avoid, but how intellectual property might play a role in Canada's response. I see intellectual property protection and NAFTA at the top of our agenda today.
Michael Mulligan:Yeah, that's exactly right, and I must say it's quite remarkable that you need to check your Twitter or X feed by the minute to figure out who the last advisor was that spoke to Trump to determine whether the tariffs are on or off again, it looks like they count down to being off again very shortly, but be that as it may, of course, now I think, in the context of all the coverage of that, people are now familiar with what a tariff is, which is just a tax paid by somebody who imports something from another country, right? Yes, although if Trump described it as, hey, I'm introducing a 25% GST on all imports from Canada and Mexico, that would seem a lot less tough than putting a tariff on, but really they're indistinguishable. Now, the response to that, the traditional response to that, is well, you'll put a tax on things that your people are buying from somewhere else. We'll put a tax on our people for things they're buying from you, right, and so that's the traditional response to it. But, as we spoke about before, you're sort of punishing yourself to get back at the other person, right, by making things more expensive. And an alternative approach to that.
Michael Mulligan:There was a example of how a different approach was successful for Brazil, who wound up with a trade dispute with the United States over the subsidy of cotton there.
Michael Mulligan:The US was subsidizing their cotton producers, harming Brazilian cotton producers, and Brazil responded to that by bringing a complaint to the World Trade Organization, who gave them approval for. A unique response to the United States and the WTO approval for a retaliatory measure was not to put a tariff on imports from the United States into Brazil, which would both make things more expensive for the people in Brazil and, frankly, produce probably a shrug from the United States, because it's not that much going to Brazil in terms of the size of the US economy, right. But the unique approach that Brazil took was to get approval from the WTO to retaliate for these subsidies by suspending US patents on pharmaceuticals, chemicals and biotechnology. It would also have allowed Brazil to restrict copy rates on music and the audiovisual industry music films and that would allow Brazil to manufacture generic drugs without paying any royalties to US drug companies that might own the patent, or to copy movies and TVs without having to pay anything for them.
Michael Mulligan:All of those are, of course, just intellectual illegal fictions that we've created. And, in response to the threat to do that, the US in that dispute with Brazil the threat was made in 2010, the United States capitulated and they passed legislation to stop doing what they're doing and pay Brazil compensation. And it was just remarkably effective because of just how asymmetrical that is. It doesn't increase prices for people in Brazil. It would have drastically decreased prices for people in Brazil in terms of medication and all kinds of intellectual property, at great cost to the United States, and they were so fearful of it they capitulated. And that brings me to the agreements that Canada and the US have had, which Trump is now, at least as of a few minutes ago, still planning to repudiate, including starting with NAFTA, which was back in 1994, moving on to the agreement he negotiated it was entered into in 2020 eventually and just how those deal with intellectual property and how core that is to the US economic interests Back at the time NAFTA was implemented. A large portion of that agreement is to try to protect US intellectual property Because, let's not forget, the US in many respects is kind of a post-industrial economy, right Many things, even though they might have a US company involved with them aren't actually made in the United States. They're made, you know, in China, and what the US has is they've designed something or they've got a you know written some software, or they've designed a computer chip or whatever it might be. And so NAFTA lists a whole series of categories, including things like copyright protection. It required that there be copyright protection for sound recordings of at least 50 years. It required protection of like satellite and other signals.
Michael Mulligan:Trademarks Patents was one of the critical ones. That was a requirement in there. It added an obligation to provide patent protection for at least 20 years from the date of filing and 17 years from the date of the granting of a patent for pharmaceuticals, and doing that killed not killed, but seriously hurt the Canadian generic drug manufacturing industry. Prior to that it was either shorter or Canada would just grant mandatory licensing to Canadian companies so they could produce generic copies of drugs at 10% the price, and so when that got eliminated we now pay 90% more and all that money just goes to the US company that has the patent. We also added, as part of the results of that NAFTA agreement, protections on the industrial design of semiconductors and requirements that they be stopped at the border and not be allowed to be used. If those were gone, they could just be imported without paying anything, you know, like NVIDIA chips, for example or Intel-designed chips.
Michael Mulligan:Yeah, sure, copy away, right. You order. Order some up from China or Taiwan or wherever you want to, and away you go. Industrial designs Another thing they included in there. They also included a requirement that there be both border enforcement for intellectual property like stopping stuff from coming in and criminal criminal penalties for copyright infringement. All that is a function of NAFTA. And then when Trump wanted to renegotiate in 2020, that agreement, his agreement was also focused on intellectual property and it included provisions like moving up that 50-year protection for things to 75 years plus the life of the person for copyright on things. It included digital protections.
Michael Mulligan:It also very interestingly included and this is something you may have heard about there's been discussion about the US removing what they refer to asa de minimis limit on imports, and what that means is that when somebody mails a package to the United States or another country, if it's under a certain value, you haven't had to pay duty on it at all. And that's the very foundation of those businesses like Timu, that kind of mails plastic junk to you from China for not much money, and there was no duty on those things because they would ship them over one at a time in the mail rather than coming over in a big container, crate or whatever, and so everything was under the de minimis level. Well, that agreement we entered into, the US-Mexico Canada Free Trade Agreement with Trump in 2020, compelled Canada to provide duty-free de minimis access for shipments from the US to Canada of at least $150. And it speaks about in the policy documents surrounding it how important that is to US businesses, so small businesses being able to ship things individually without cost. And so that's what's going on, why we have it, and all of that is a function of those agreements we entered into.
Michael Mulligan:It's one of the central concerns of large US corporations, everything from Intel to every pharmaceutical, to every movie, studio music producer, book publisher and everything in between. It is a very, very large portion of the value of US companies, and the example with Brazil getting approval from WTO and Canada has made a WTO complaint about what Trump did, at least recently, and hopefully there are some members of the federal government that are listening to some of this or considering this as an option, because it is not a matter of punishing yourself. It's a matter of reducing costs while punishing the country who's imposing tariffs, in contravention of both WTO obligations and contrary to the specific agreements we have with the United States, and so I very much hope that there's some consideration being given to it, because it reduces prices rather than increasing prices and is completely asymmetric. If the US responded in a similar way to Canada, we would shrug, I think, in the same way that the US is likely to shrug if we add a 25 percent tax to orange juice. You would just have such great pushback. Just have such great pushback.
Michael Mulligan:And you saw, it took less than 24 hours for Trump to crumble when the auto executives showed up telling him that if he continued with the 25% tax on or tax on auto parts going back and forth, you know, the president of Ford said they might be able to last a couple of weeks, and so you can imagine the sort of pushback you'd get from every pharmaceutical company, chip company, software company. It's most of the US economy, and so it's a real Achilles heel. There's a proven history of it working, there's a legal basis to do it, and the protection they receive and the payments that they're getting for drugs and software and all those things are a result of agreements that they've repudiated. So hopefully we're being smart and keeping that option in mind to put very serious pressure on the US.
Adam Stirling:Michael Mulligan with Mulligan Defense Lawyers. Legally Speaking will continue right after this break. All right back on the air here at CFAX 1070 as we continue with Legally Speaking Michael Mulligan during the second half of our second hour on a Thursday. Michael, as we move on to our next issue, it says not telling a civil jury that a 75% majority of them could decide an issue after three hours of deliberation not an error. So there's a couple of negatives in there. Help me understand this.
Michael Mulligan:Sure. So we spoke before about the fact that we have civil juries in British Columbia and why that's a pretty important part of our civil justice system. Civil juries criminal juries are 12 people. For civil cases though, it's only eight, so they're smaller. And this was an interesting decision out of the BC Court of Appeal, and it deals with another provision of civil juries that many people, I'm sure are just not aware of, and that particular provision is that after a deliberation of at least three hours, a judge may receive a verdict based on 75% agreement of the jurors. So that would be six. And the theory of all that is that you know when you're charging somebody criminally, it's always proof beyond all reasonable doubt, right. And you know there's a civil case, you're just there on a balance of probabilities, right? Did the person probably do something that is deserving a payment of money? And so we've got a lower standard of proof. And that's why we have smaller juries, but also why there's that provision that allows a judge to receive a verdict of only 75% of them. So six of the eight would be enough, but only after three hours of deliberation. And so this particular case it was a claim against ICBC prior to having no fault. Fault that's when the accident occurred.
Michael Mulligan:The case involved a jury trial and the person involved she was 28 at the time. She was a nurse and she had made a claim following an accident for various things, including non-pecuniary damages like pain and suffering right from a serious injury, but also a claim for lost earnings and lost future earning capacity. And in Canada those things are usually the bulk of what claims are. When somebody is injured and suffers a loss. We don't have in Canada, you know, giant jury awards, like you might have heard of from the United States, millions of dollars or whatever for pain and suffering. Those have all been limited for a long time, not just juries but judges as well, and so a large part of jury, a large part of awards for compensation, are usually for things like lost capacity to work.
Michael Mulligan:And here the nurse who was seriously injured. She claimed this was going to reduce her capacity to earn money in the future because of physical limitations, and the argument was that she wouldn't be able to get as many possible nursing jobs if employers didn't want to hire her because of physical limitations flowing from the accident. That was her argument. It didn't work. The jury ordered that she receive zero dollars for that. They did award her money for other things, so they were satisfied. She was seriously hurt. She got a total of $122,000, but nothing in terms of loss of future earning capacity and only $1,200 for loss of past earning capacity. So the jury didn't buy that she wasn't able to work and earn as much money.
Michael Mulligan:Now, the argument she made was kind of a novel one. On the appeal she said well, the judge was mistaken, because the judge in there charged the jury. And the way it works is after the jury hears all the evidence in a case civil or criminal a judge is required to what's called charge the jury, not run at them, but instead charge them in the sense of like tell them what they're supposed to do right, explain the law to them, how they're supposed to reach their decision. That's the same in criminal cases as well, and the judge did that here. And one of the things the judge said in the charge to the jury was that they had to be unanimous in their decision. And the argument made on appeal was well, hold on, that's wrong. They should have been told that after three hours they could make a decision. That wasn't unanimous. That was the argument. Well, they were misled when they were told they all had to agree and the argument was well, had they been told that they didn't all have to agree after three hours, you know, let's say six of them wanted to give the injured nurse money for loss of future earning capacity. They could have just, you know, run out the shot clock and then done that, you know, even if a couple of people didn't agree. And so they said they should have been told. That was the argument, the creative argument.
Michael Mulligan:The Court of Appeal did not agree. They said that was not an error and they pointed to several things, including, first of all, it's not incorrect that at the beginning they all have to be unanimous. They pointed to the fact that the language is permissive in terms of receiving a verdict. That's only 75%, not unanimous, that's only 75 percent, not unanimous. And the other thing they pointed out and this arises with some frequency that the lawyer for the nurse didn't complain about the jury charge at the time. So if you had a problem with that, you should have raised your hand, you know, at the time, but you didn't. And so, by virtue of a combination of those things, the judge concluded, or the court of appeal concluded, there was no error in not telling the jury about that.
Michael Mulligan:In fact, there are other things that juries are not told about at all, which is interesting, like one of the things they're not told about is they're not given any sort of quantum assistance in terms of figuring out like how much money might you give somebody for pain and suffering there's actually some prohibitions on making specific submissions to the jury about that and the judge gives them no help about that. They have to kind of left to figure out for themselves. You know, how much is it worth when you have a compound fracture, or what should you give somebody when their back's broken or whatever. They're just kind of left to their own judgment about that, which is interesting. Or, like in criminal cases, they're not told like what punishment would be imposed if there was a conviction and it would be prohibited to tell them. And so you know there are cases where juries convict and then they're just aghast that you know what punishment has to be imposed. Interesting, you know, in that case involving the mercy killing of the man from the prairies killed his severely disabled and in pain daughter, issues in unremitting pain for many years. The jury convicted and then were aghast to find out he was set to go to prison for life, but they weren't told.
Michael Mulligan:So the final comment, just on the civil jury thing I thought people might be interested in, is that you cannot have a civil jury if you're suing the government. It's primitive. In fact you didn't used to be able to sue the government at all. There used to be this concept of immunity, like you just couldn't go to court and sue the government. We got a thing called the Crown Proceedings Act I think it was 74 when it first came in allowing you to do that. Provisions in that crown proceedings act that allows you to sue the government, um is section four, sub two, which says that, uh, they must be tried without a jury, which is very interesting, right? Uh, so the idea we don't trust the community, members of the community, to sue the government they'd all go after the government not us at least on civil juries yeah, that's funny yeah, uh, so we've got one more.
Michael Mulligan:Uh, one more case on the agenda. Yeah, yeah, we've got four minutes Definitely, just on civil juries. Yeah, that's funny. So we've got one more case on the agenda.
Adam Stirling:Yeah, we've got four minutes remaining Four minutes.
Michael Mulligan:Okay, so the final case is another BC case, also fresh out of the Court of Appeal, and it has to do with the issue of cryptocurrency mining and getting hooked up to electricity, and the case involved a company, which is an odd combination, described as a forestry and independent power company it's kind of an odd combination already that wanted to develop high-performance computing facilities that would need a lot of electricity, and their original plan was that those high-performance computing facilities for the forestry company would be doing cryptocurrency mining, and the concern with that from the government I guess there are multiple people wanting to hook up to BC Hydro to do cryptocurrency mining is it uses a whole lot of electricity. Right, because basically you've got huge banks of computers solving complex mathematical problems, which is how some of those things like Bitcoin operate, and then they give those miners quote unquote payment in Bitcoin for doing that work. It just uses a whole lot of power and in BC Hydro has a statutory monopoly. They provide 95% of the electrical service in British Columbia a couple of oddball exceptions, but basically they're it. And so the legislation dealing with BC Hydro one of the principles in there is the idea of not discriminating amongst various users, right, because if you can deny somebody power, you're basically denying them the ability to do really anything right in terms of business, and so you know, that sort of makes sense, right. But here the concern was, well, oh my goodness, all those people want to set up here and I think some of that came from China banning them. So I think there were a whole bunch of people with a bunch of these computers that were finding alternative places with cheap power to kind of set up and mine cryptocurrency. To prevent that, the BC government passed an order in council that, for 18 months, suspended the right of cryptocurrency companies to get hooked up for electrical service, and so that brought a challenge to whether that order in council was valid, given those general principles in the legislation about not discriminating against different people who want to use it. It didn't work at the trial level asking for that to be reviewed, and so they appealed that to the Court of Appeal, arguing that that was a mistake. Now, interestingly, since then, the Order of Council has run out, the 18 months is gone, and they replaced it with sort of a regulation that essentially has the same effect, but the thing being challenged was gone, and so one of the interesting concepts.
Michael Mulligan:Here was the issue of mootness, and what the Court of Appeal had to analyze. There is that courts are not supposed to deal with issues that have no effect any longer. Like you shouldn't be there just kind of a debating society about some interesting legal point that no longer matters. And the principle there is if something becomes quote academic and there's no longer any real dispute, you're just kind of arguing about something. In principle, that's not really the job of courts. They've got enough real things to be doing. And it causes other problems if you no longer have any real stake in it or you're really arguing for the thing. Is the adversarial process working? And so here the argument from B Hydro and the government was in part well, this is all expired.
Michael Mulligan:The Court of Appeal, interestingly, didn't buy that, and part of the argument was that the forestry mining company said well, it affected our position in the queue to get hooked up, and they now shifted gears, saying they still wanted to create the facilities, but now no longer for cryptocurrency, but instead for artificial intelligence and machine learning. But they still wanted a whole bunch of power. But they were back in the queue because of that decision and for that reason the Court of Appeals found this wasn't moot. It still could have an impact. It wasn't completely academic, and so they decided the case on its merits. Unfortunately for the forestry company, they got the thumbs down. So it was an interesting case, both because it dealt with cryptocurrency and that idea of neutrality, and finally that concept of mootness, which wasn't made out here because there was still some impact, even though the forestry come cryptocurrency has moved into artificial intelligence. So there we are, they're still waiting.
Adam Stirling:Michael Mulligan, with Mulligan Defense Lawyers, legally speaking during the second half of our second hour. Michael, thank you so much. Pleasure as always. Thanks so much. Always great to be here. All right, talk to you later. Bye now.