THE CANADA CONSUMER PRODUCT SAFETY ACT The New Reality

THE CANADA CONSUMER PRODUCT SAFETY ACT The New Reality SEMINAR WEDNESDAY, SEPTEMBER 14, 2011 STIKEMAN ELLIOTT LLP MONTRÉAL TORONTO OTTAWA CALGARY VANCOUVER NEW YORK LONDON SYDNEY www.stikeman.com

THE CANADA CONSUMER PRODUCT SAFETY ACT The New Reality CONTENTS SEMINAR WEDNESDAY, SEPTEMBER 14, 2011 SPEAKERS Justine Whitehead, Partner, Stikeman Elliott, Ottawa Douglas Harrison, Partner, Stikeman Elliott, Toronto PRESENTATION SLIDES Canada Consumer Product Safety Act ARTICLES An Overview of Canada Consumer Product Safety Act, written by Douglas Harrison, to appear in Lexpert s 2011 Guide to the Leading US/Canada Cross-border Litigation Lawyers in Canada (publication date October 2011) RESOURCES Health Canada Guidance Documents on the CCPSA Canada Consumer Product Safety Act (CCPSA) Section 13 Guidance on Mandatory Incident Reporting under the Canada Consumer Product Safety Act - Section 14 Duties in the Event of an Incident Report an Incident Involving a Consumer Product Frequently Asked Questions for the Canada Consumer Product Safety Act Canada Consumer Product Safety Act FIRM PROFILE An overview of Stikeman Elliott s Toronto Litigation Group and the Ottawa offices Federal Regulatory focus STIKEMAN ELLIOTT LLP

THE CANADA CONSUMER PRODUCT SAFETY ACT The New Reality PROFILES OF TODAY S SPEAKERS SEMINAR WEDNESDAY, SEPTEMBER 14, 2011 Justine Whitehead Partner, Federal Regulatory Group Stikeman Elliott, Ottawa Douglas Harrison Partner, Litigation Group Stikeman Elliott, Toronto STIKEMAN ELLIOTT LLP

Justine M. Whitehead Suite 1600, 50 O Connor Street, Ottawa, Canada K1P 6L2 Direct: (613) 566-0546 Fax: (613) 230-8877 jwhitehead@stikeman.com Law Practice Justine Whitehead is a partner in the Ottawa office of Stikeman Elliott. Ms. Whitehead practises federal regulatory law, mainly in the areas of intellectual property, marketing and advertising, and international trade law. She has appeared before the Federal Court and Federal Court of Appeal on matters relating to intellectual property and international trade. Ms. Whitehead regularly counsels clients in connection with the acquisition and protection of intellectual property rights. Her practice includes trademark prosecution and portfolio management, and advice on enforcement of intellectual property rights. Ms. Whitehead also provides advice on intellectual property issues arising from commercial and transactional matters. Ms. Whitehead has significant experience in the negotiating and drafting of technology services and intellectual property licensing agreements. Ms. Whitehead provides counsel pertaining to the marketing, advertising and sale of regulated consumer products including food, beverages, natural health products, cosmetics, pharmaceutical products, medical devices, consumer chemicals, pesticides and hazardous products. Ms. Whitehead has advised various complainants on all aspects of the Canadian procurement process, including preparing bid submissions. She has represented a government institution and various complainants before the Canadian International Trade Tribunal (CITT) in the procurement review process, and has appeared before the Federal Court of Appeal in respect of judicial review of decisions of the CITT. Professional Activities Ms. Whitehead is a member of the Canadian Bar Association, the American Bar Association, and the International Trademark Association (INTA). Publications Ms. Whitehead is the editor of Stikeman Elliott s monthly IP Update, and regularly writes and speaks on issues relating to intellectual property and information technology. Lower Court Erred in Using Trademark Principles in Keyword Case, INTA Bulletin, Vol. 66, No. 12 (July 1, 2011). Technology Rights and Distressed Companies, presentation to International Bar Association (Vancouver, October 2010). Canadian Government Re-introduces Anti-spam Legislation", Ultimate Corporate Counsel Guide, August 2010 (Volume 44). Opposition to Toothpaste Design Doesn t Brush Past Pleading Rules, INTA Bulletin, Vol. 65, No. 11 (June 15, 2010). STIKEMAN ELLIOTT LLP PROFILE

"Series of Unfortunate Events Protects Registration Despite Non-Use of Mark, INTA Bulletin, Vol. 65, No. 10 (May 15, 2010). Policy Considerations Influence Federal Court s Descriptiveness Interpretation, INTA Bulletin, Vol. 65, No. 6 (March 15, 2010). "Federal Court of Appeal Confirms Material Dates for Confusion Analysis", INTA Bulletin, Vol. 64, No. 23 (December 15, 2009). Successful Expungement Action Requires Direct Evidence of Prior Use of Confusingly Similar Trademark", INTA Bulletin, Vol. 64, No. 15 (August 15, 2009). Federal Court Procedures Influence Outcome of Undefended Claim and New Opposition Practice Notice in Effect, INTA Bulletin, Vol. 64, No. 9 (May 1, 2009). Marks Prohibited Under Section 10 Must Be Considered in Their Totality, INTA Bulletin, Vol. 64, No. 7 (April 1, 2009). High Threshold Required to Establish Likelihood of Confusion in Specialized Services, INTA Bulletin, Vol. 64, No. 6 (March 15, 2009). J. Whitehead and A. Stockwell, Bankruptcy Risks for Intellectual Property Licensing in Canada, Internet and E-Commerce Law in Canada (March, 2009). Opposition Board Rejects Application Because Applicant Lacked Good Faith", INTA Bulletin, Vol. 63 No. 21 (November 15, 2008). Continuous and Blatantly Recidivist Infringement Can Result in Multiplication of Scale Nominal Damages, INTA Bulletin, Vol. 63 No. 17 (September 15, 2008). "Intention to Resume Use Cannot Excuse Non-Use in Summary Cancellation Proceedings", INTA Bulletin, Vol. 63 No.17 (July 15, 2008). Canada s Olympic and Paralympic Marks Act, The Lawyer s Weekly (May 2, 2008). Protecting Your Intellectual Property Assets, presentation to 14 th Annual Conference for Law Clerks (May 2004). J. Whitehead and E. Zipes, Copyright Board of Canada Presses Pause Button on Blank Tape/CD Tax Creep: It says $60 Million per Annum is enough Compensation for Private Copying, (2003-04) 4 Internet and E-Commerce Law in Canada (February 2004). J. Whitehead, E. Derényi and J. Blakey, Information Technology and Intellectual Property Issues in Corporate Transactions, presentation to Ontario Bar Association, Young Lawyers Division (November 2003). Comparative Advertising: Passing Off, Depreciating Goodwill or Just Good Business, presentation to Intellectual Property Forum (December 2003). Should Advances in Internet Filtering Technology Affect Regulatory Choices? 3 rd International Conference Law and Technology (December 2002). J. Blakey and J. Whitehead, Approaching a Regulatory Crossroad: Internet Retransmission Activities in Canada, (2002-03) 3 Internet and E-Commerce Law in Canada (August 2002). R.J. Hofley and J. Whitehead, Defining the Boundaries of Export Assistance: Preliminary Lessons from Two Recent Canadian WTO Losses, (1999:3) International Trade Law and Regulation. D.A. Kubesh and J. Whitehead, Canada Works Toward Developing an Agricultural Trade Position, (1999:4) International Trade Law and Regulation. STIKEMAN ELLIOTT LLP PROFILE 2

Education Osgoode Hall Law School (LL.B. 1997), Carleton University (BA economics, Honours BA english, MA Canadian studies). Background Prior to attending law school, Ms. Whitehead spent several years working in finance and corporate development at Canada Post Corporation s headquarters in Ottawa. Bar Admission Ontario, 1999. STIKEMAN ELLIOTT LLP PROFILE 3

Douglas F. Harrison 5300 Commerce Court West, 199 Bay Street, Toronto, Canada M5L 1B9 Direct: (416) 869-5693 Fax: (416) 947-0866 dharrison@stikeman.com Law Practice Doug Harrison is a partner in the Litigation Group of Stikeman Elliott in Toronto. His practice is focused primarily in the areas of general corporate-commercial litigation and arbitration, environmental litigation, products liability, defamation and insolvency. He has extensive advocacy experience having appeared before all levels of court in Ontario (including the Commercial Court), the Federal Court (Trial Division), and various administrative tribunals. He is also experienced in alternative dispute resolution and class actions. Professional Activities Mr. Harrison is a member of the Canadian Bar Association, the Ontario Bar Association, the American Bar Association (Section of International Law), The Advocates Society, the Toronto Lawyers Association, the Defence Research Institute, the Canadian Chamber of Commerce (Arbitration) and the International Association of Defense Counsel. Mr. Harrison is also a member of The Chartered Institute of Arbitrators (U.K.), entitling him to the designation MCI Arb, and was a member of the Corporate Counsel Committee of the American Arbitration Association. Mr. Harrison taught Trial Advocacy at the Queen's University Faculty of Law 1993-1997. Publications Canada Consumer Product Safety Act comes into force June 20, 2011 - What retailers need to know, republished in the Illinois State Bar Association s newsletter, The Corporate Lawyer (August 2011) "Damages and Liability - Or, the Cart and the Horse" presented at the Canadian Institute s Forum on Consumer Product Safety, Liability and Recalls (May 2011) "New Commercial Mediation Act Makes Ontario a Better Choice for Commercial Dispute Resolution," republished by CCH Canadian Limited's newsletter, ADR Forum (March 2011) Canada Consumer Product Safety Act comes into force June 20, 2011 - What retailers need to know, Business Law Update, Stikeman Elliott (March 2011) Co-author of Canadian chapter in Getting the Deal Through - Arbitration 2011, Law Business Research (February 2011) Damages for stigma awarded in Canadian environmental class action, Newsletter of the Toxic Torts and Environmental Law Committee of the ABA's Tort Trial & Insurance Practice Section. Case comment discussed Smith v. Inco decision of the Ontario Superior Court of Justice (Fall/Winter 2010) STIKEMAN ELLIOTT LLP PROFILE

New Commercial Mediation Act makes Ontario a better choice for commercial dispute mediation, Litigation Update, Stikeman Elliott (November 2010) Yugraneft Corp. v. Rexx Management Corp., 2010 SCC 19., ABA s The International Dispute Resolution News (joint newsletter of the International Arbitration, International Litigation, and International Mediation Committees of the ABA s Section of International Law) (November 2010) Co-author of Canadian chapter in Getting the Deal Through - Product Liability 2010, Law Business Research (September 2010) "Canada as an International Arbitration Forum: The Best of Both Worlds?", Defense Research Institute Annual Meeting (October 2009) "Cross-examination in International Arbitrations: One Person's Meat is Another Person's Poison", American Bar Association Section of International Law Fall Meeting (October 2009) Canadian chapter in International Commercial Dispute Resolution (April 2009) "Limiting Liability in Goods Manufactured Abroad: Coping with the Challenges Created by Outsourcing Production" at the Canadian Institute's Forum on Product Liability and Recalls (May 2008) "Seeking Rationality and Uniformity: Multi-Jurisdictional Class Actions in Canada", Defense Research Institute - For the Defence - Commentary (July 2007) Arbitration chapter in CCH Canada, Ultimate Corporate Counsel Guide (Litigation and ADR section) (2006) "Letters Rogatory: Examination of Witnesses in Canada for U.S. Litigation", Defense Research Institute - For the Defence - Commentary (February 2006) "Food Products Liability Law in Canada", NFPA Journal (2003) "The Canadian Experience: Food Products Liability", National Food Processors' Association Litigation Conference (2003) "Drafting ADR and Arbitration Clauses", ADR Institute of Canada (2002) "Key Elements of an Effective Arbitration Clause", LSUC Department of Continuing Education (1997) "Drafting the Arbitration Clause: Ensuring an Efficient and Predictable Process", Osgoode Hall Law School Professional Development Program (1997) "Commercial Free Speech and Tobacco: A Case Study", Canadian Institute (1997) "Canada" in The International Libel Handbook, Butterworth Heinemann (1995) Representative Work Mr. Harrison has extensive experience representing clients in domestic and international arbitrations, drafting arbitration agreements and assisting in the selection of arbitrators. His major mandates include acting for: a major Canadian media entity in an arbitration with a large municipality over certain contractual obligations a home services company in an arbitration to determine amounts due pursuant to a shareholder buyout a large Canadian manufacturer in an arbitration over pricing in a long-term supply agreement STIKEMAN ELLIOTT LLP PROFILE 2

a large Canadian re-insurer in a proceeding to set aside an international arbitration award on the basis of arbitrator incompetence a major Korean manufacturer in a significant arbitration over the termination of its American distributor an entertainment industry association in an arbitration to establish certain royalty rates an international building supplies company in an arbitration of an entitlement under an earn-out agreement a major European reinsurer in an arbitration to determine amounts due under a coinsurance agreement a large waste disposal company in an arbitration to establish a shared cost arrangement for a municipal landfill operation a Japanese auto manufacturer in an arbitration concerning dealership termination rights Mr. Harrison has extensive experience in the defence of class actions, including the following matters: a US public company in the defence of claims brought by residents of Burlington, Ontario relating to allegations of off-site TCE contamination Northstar Aerospace in the defence of claims brought by residents of Cambridge, Ontario relating to off-site TCE contamination Siemens Canada in the defence of a claim brought by residents of Kingsville, Ontario for damages arising from a large plastics fire Pharmaceutical manufacturer in a class action alleging defects in a prescription drug Whitehall-Robins in a class action brought on behalf of purchasers of a certain over-thecounter cold remedy Heinz Canada in a class action brought over alleged improper bottle recycling fees Among the significant proceedings in which Mr. Harrison has appeared as counsel include: Allen v. Carnival Corporation, 2008 ONCA 57 (CanLII) Longyear Canada, ULC v. 897173 Ontario Inc. (J.N. Precise), 2007 CanLII 54076 (Ont. S.C.J.) Ludwig v. 1099029 Ontario Ltd., 2004 CarswellOnt 4516, 4 C.P.C. (6 th ) 251 (Sup. Ct.) TAL Global Asset Management Inc. v. Wai-Ping, 2003 CarswellOnt 129 (Sup. Ct.) Universal Showcase v. Alliance Store Fixtures Inc., 2002 CarswellOnt 680 (Sup. Ct.) Working Ventures Canadian Fund Inc. v. Angoss Software Corp., 2001 CarswellOnt 2752 (C.A.) Knowles v. Wyeth-Ayerst Canada Inc., [2001] O.J. No. 1812, 16 C.P.C. (5 th ) 330 (Sup. Ct.) Zeldin v. Goldis, [2000] O.J. No. 3001 (Sup. Ct.) Working Ventures Canadian Fund Inc. v. Angoss Software Corp., 2000 CarswellOnt 4554 (Sup. Ct.) Coulter v. E.L. Huckerby & Associates Inc., [1998] O.J. No. 909, 41 B.L.R. (2d) 264 (Gen. Div.) STIKEMAN ELLIOTT LLP PROFILE 3

Troxler Electronic Laboratories Inc. v. M&L Testing Equipment Co., 1997 CarswellOnt 3325 (C.A.) Education University of Toronto (LL.B. 1985), Queen's University (BA Political Studies 1982) Background Prior to being called to the Ontario Bar, Mr. Harrison was a reporter and copyeditor with the Globe and Mail (Canada s national newspaper), as well as a freelance sports writer and broadcaster for several Canadian media outlets including the Canadian Press and the Canadian Broadcasting Corporation. Bar Admission Ontario, 1988 STIKEMAN ELLIOTT LLP PROFILE 4

THE CANADA CONSUMER PRODUCT SAFETY ACT The New Reality PRESENTATION SLIDES SEMINAR WEDNESDAY, SEPTEMBER 14, 2011 Canada Consumer Product Safety Act STIKEMAN ELLIOTT LLP

Canada Consumer Product Safety Act An Overview of the Act 1 STIKEMAN ELLIOTT LLP www.stikeman.com OVERVIEW OF CCPSA - In force as of June 20, 2011 New Powers for Health Canada Order recall and other corrective measures Require tests and studies Increased fines and penalties including AMPs SLIDE 1 STIKEMAN ELLIOTT LLP STIKEMAN ELLIOTT LLP 1

OVERVIEW OF CCPSA - In force as of June 20, 2011 New Obligations for Industry General prohibition of goods that pose a danger Record-keeping Mandatory reporting of incidents SLIDE 2 STIKEMAN ELLIOTT LLP What is Covered by CCPSA? Consumer Products (defined in s. 2 of CCPSA) 1) a product, including its components, parts or accessories, and packaging 2) that may reasonably be expected to be obtained by an individual to be used for non-commercial purposes SLIDE 3 STIKEMAN ELLIOTT LLP STIKEMAN ELLIOTT LLP 2

What is Excluded from the CCPSA? Schedule I of CCPSA lists exclusions The packaging of an exempt product might be considered to be a consumer product SLIDE 4 STIKEMAN ELLIOTT LLP Overlapping Jurisdiction for Electrical Products Health Canada is working with the provincial electrical safety authorities In the meantime, there is overlapping jurisdiction SLIDE 5 STIKEMAN ELLIOTT LLP STIKEMAN ELLIOTT LLP 3

CCPSA s Key Prohibitions Section 5 Products Banned for Sale in Canada No one can manufacture, import, advertise or sell a consumer product listed in Schedule 2 Schedule 2 lists products that were already banned under the Hazardous Products Act, such as baby walkers and lawn darts SLIDE 6 STIKEMAN ELLIOTT LLP CCPSA s Key Prohibitions Section 6 Products that Do Not Meet Regulatory Requirements Cannot manufacture, import, advertise or sell E.g. flammability requirements under Children s Sleepwear Regulations; lead ban under Children s Jewellery Regulations SLIDE 7 STIKEMAN ELLIOTT LLP STIKEMAN ELLIOTT LLP 4

What is A Danger to Human Health or Safety Section 2 CCPSA - any unreasonable hazard (existing or potential) Normal or foreseeable use Can reasonably be expected to cause (i) death; or (ii) an adverse effect (including injury) to an individual exposed to this hazard SLIDE 8 STIKEMAN ELLIOTT LLP CCPSA s Key Prohibitions Section 8 Applies to Everyone No advertising or sale of a consumer product that person knows: a) dangerous b) subject of recall order or because it is dangerous c) is subject to any other measures imposed by Minister SLIDE 9 STIKEMAN ELLIOTT LLP STIKEMAN ELLIOTT LLP 5

CCPSA s Key Prohibitions Section 9 Misleading Packaging/Labelling - Applies to Everyone No one shall package or label a consumer product that a) creates an erroneous impression that the product is not a dangerous b) is false, misleading or deceptive regarding its compliance with safety requirements SLIDE 10 STIKEMAN ELLIOTT LLP CCPSA s Key Prohibitions Section 10 Misleading Claims in Advertising or Sale - Applies to Everyone No one shall advertise or sell a consumer product that they know is deceptively misleading under the terms of section 9 of the CCPSA SLIDE 11 STIKEMAN ELLIOTT LLP STIKEMAN ELLIOTT LLP 6

CCPSA s Key Prohibitions Section 11 Applies to Everyone No one shall knowingly provide the Minister with false or misleading information in respect of a matter under the CCPSA or its regulations Section 20 Applies to Everyone No one shall knowingly obstruct, hinder or make a false or misleading statement (orally or in writing) to a Health Canada inspector SLIDE 12 STIKEMAN ELLIOTT LLP CCPSA s Key Obligations Section 12 Applies to Manufacturers or Importers Minister can make order for: a) tests or studies and provide results to Minister b) compile information and provide information to Minister SLIDE 13 STIKEMAN ELLIOTT LLP STIKEMAN ELLIOTT LLP 7

CCPSA s Key Obligations Section 13 Documentary Obligations Retailers: name and address of the person from whom they obtained the product and the location where and the period during which they sold the product Others: name and address of the person from whom they obtained the product or to whom they sold it, or both, as applicable. SLIDE 14 STIKEMAN ELLIOTT LLP CCPSA s Key Obligations Until end of sixth year after end of the year they relate to Must be kept a person s place of business in Canada Electronic documents need to be accessible from computers in Canada SLIDE 15 STIKEMAN ELLIOTT LLP STIKEMAN ELLIOTT LLP 8

CCPSA s Key Obligations Minister can provide confidential information (without consent) a) to a person or government that carries out functions relating to the protection of human health or safety or the environment (in relation to a consumer product), b) to anyone, including the public, when there is a serious and imminent danger to human health or safety or the environment, if the disclosure of the information is essential to address the danger SLIDE 16 STIKEMAN ELLIOTT LLP Canada Consumer Product Safety Act Mandatory Incident Reporting and Product Recalls 2 STIKEMAN ELLIOTT LLP www.stikeman.com STIKEMAN ELLIOTT LLP 9

Mandatory Incident Reporting Section 14 Incidents report by manufacturers, importers or sellers Death or serious adverse effects on health, including serious injury: occurrence anywhere defect or characteristic insufficient label or instructions; or Other remedial measure by another government SLIDE 18 STIKEMAN ELLIOTT LLP Health Canada s Interpretation of Reportable Incidents Death Injuries necessitating medical treatment Non-fatal threats to breathing Fire or other property damage SLIDE 19 STIKEMAN ELLIOTT LLP STIKEMAN ELLIOTT LLP 10

Who Must Report and When? Initial Report manufacturer, importer, or seller within 2 days Follow Up Report - manufacturer or importer within 10 days Online reporting forms SLIDE 20 STIKEMAN ELLIOTT LLP DECISION TREE FOR INCIDENT REPORTING SLIDE 21 STIKEMAN ELLIOTT LLP STIKEMAN ELLIOTT LLP 11

WHEN & WHO TO REPORT TO SLIDE 22 STIKEMAN ELLIOTT LLP Health Canada s Inspection Powers Inspectors have power to enter, at any reasonable time, any place or vehicle Inspectors may examine or test anything Reasonable assistance required SLIDE 23 STIKEMAN ELLIOTT LLP STIKEMAN ELLIOTT LLP 12

Health Canada s Remedial Powers Can order a recall Can order other measures Can seek a court injunction SLIDE 24 STIKEMAN ELLIOTT LLP Administrative Review of Recall Order Written request for a review of the decision Questions of fact alone or questions of mixed fact and law SLIDE 25 STIKEMAN ELLIOTT LLP STIKEMAN ELLIOTT LLP 13

Offences Under the CCPSA Breaches of prohibitions to avoid knowingly distributing unsafe products, or failure to comply with a mandatory recall order On indictment - an indeterminate fine or imprisonment of up to five years, or both. On first summary conviction - maximum fine of $500,000 or a maximum imprisonment of 18 months (or both) On subsequent summary convictions - maximum fines of $1-million or maximum imprisonment of two years (or both) SLIDE 26 STIKEMAN ELLIOTT LLP Offences In sentencing, the court is directed to take into account the harm or risk of harm and the vulnerability of the individuals Separate offence for each day on which it is committed or continued Individuals can be a party to the offence and are liable to the above penalties SLIDE 27 STIKEMAN ELLIOTT LLP STIKEMAN ELLIOTT LLP 14

Administrative Monetary Penalties (AMPs) Where persons have contravened a Health Canada mandated recall or Health Canada order to take other remedial measures Due diligence is not a defence to a violation; neither is a reasonable and honest belief in facts that, if true, would exonerate the person A points system Maximum penalty for a violation is $5,000 or $25,000 SLIDE 28 STIKEMAN ELLIOTT LLP Questions and Answers Douglas Harrison dharrison@stikeman.com Justine Whitehead jwhitehead@stikeman.com STIKEMAN ELLIOTT LLP www.stikeman.com STIKEMAN ELLIOTT LLP 15

THE CANADA CONSUMER PRODUCT SAFETY ACT The New Reality ARTICLES SEMINAR WEDNESDAY, SEPTEMBER 14, 2011 An Overview of Canada Consumer Product Safety Act, written by Douglas Harrison, to appear in Lexpert s 2011 Guide to the Leading US/Canada Cross-border Litigation Lawyers in Canada (publication date October 2011) STIKEMAN ELLIOTT LLP

AN OVERVIEW OF THE CANADA CONSUMER PRODUCT SAFETY ACT The new Act brings Canada s consumer product safety regime more in line By Douglas Harrison; Stikeman Elliott LLP (To appear in Lexpert s 2011 Guide to the Leading US/Canada Cross-border Litigation Lawyers in Canada, October 2011) The Canada Consumer Product Safety Act, S.C. 2010, c. 21 ( CCPSA or the Act ) came into force on June 20, 2011. Canadian manufacturers, importers, distributors, retailers and advertisers of consumer products have significant new obligations under the CCPSA. Under the old legislative regime, one could sell any product in Canada unless it was prohibited by law. In contrast, the CCPSA establishes various general prohibitions in respect of the sale of unsafe goods, and enforcement mechanisms that bring Canada s consumer product safety regime more in line with that in the US and EU In particular, the CCPSA: prohibits the manufacturing, importing, advertising or sale of consumer products that pose a danger to human health and safety (ss. 7 and 8); prohibits anyone from packaging or labeling a consumer product in a manner that could reasonably be expected to create an erroneous impression that it is not a danger to human health or safety (s. 9); imposes requirements for the reporting of incidents and test results to Health Canada (ss. 12 and 14); imposes document retention requirements (s. 13); empowers Health Canada to order recalls and impose other remedial measures (ss. 31 and 32); empowers Health Canada with various inspection rights and the ability to order testing to verify compliance with the Act (ss. 12 and 21); and establishes increased enforcement options in the face of non-compliance, including both criminal sanctions and administrative monetary penalties (ss. 41 to 53). The CCPSA maintains the majority of prior Canadian safety regulations under the repealed Part I of the Hazardous Products Act, R.S.C., 1985, c. H-3. For example, regulations concerning toys, children s sleepwear and car booster seats have now been transferred to the CCPSA. Other than Part I, the Hazardous Products Act remains in force and effect to provide a legislative and regulatory scheme for controlled products.

- 2 - Retailers will find themselves on the front line in dealing with the CCPSA but others in the chain of distribution will have similar obligations. This article provides a comprehensive overview of the key obligations, and a summary of the penalties for non-compliance with the CCPSA. Products Covered by the CCPSA Under s. 2 of the CCPSA, consumer products are broadly defined to include any product (including its components, parts, accessories and packaging) that could reasonably be expected to be obtained by an individual for non-commercial purposes, including domestic, recreational and sports purposes. There are exceptions. Consumer products do not include products that are governed by other federal legislation, such as food, drugs, natural health products, medical devices, cosmetics, pest control products, animal feed, seeds, fertilizers, explosives, firearms, ammunition, motor vehicles (including integral parts), airplanes, ships and animals (CCPSA, Schedule 1). The CCPSA applies to tobacco products but only in respect of their flammability properties (CCPSA, section 4(2)). But it is important to note that there may be situations in which the packaging of an exempt product is considered to be a consumer product, but the contents of such package are not. Health Canada has advised that it will be working with the provincial electrical safety authorities to streamline the process for handling consumer electrical product safety issues. In the meantime, however, affected persons must be cognizant of the overlapping jurisdiction of provincial electrical safety authorities and Health Canada under the CCPSA. For example, in Ontario, manufacturers, importers, distributors and retailers of electrical products will continue to be subject to the mandatory reporting and approvals regime of Ontario s Electrical Safety Authority, and there are some differences in products covered, reporting obligations and definitions of serious injury. General Prohibitions The CCPSA includes express prohibitions against the manufacture, importation, advertisement or sale of consumer products that are a danger to human health or safety, or that are the subject of a recall (voluntary or mandatory), or that are subject to another measure ordered by the Minister in respect of such products (ss. 7 to 8). There are also a number of specifically prohibited products listed in Schedule 2 of the CCPSA, as was the case under Part I of the Hazardous Products Act (s.5) and no one is permitted to manufacture, import, advertise or sell a consumer product that does not meet the requirements set out in the regulations (s.6). In addition, no one can package or label a consumer product in a manner that creates an erroneous impression that the product is not a danger to human health or safety, or that falsely describes its certification status or compliance with a safety standard or regulation (s. 9). Furthermore, no one can sell consumer products that they know do not comply with obligations in respect of misleading advertising, packaging or labeling (s. 10). As might be expected, the phrase danger to human health and safety is broadly defined to include any existing or potential unreasonable hazard posed by the normal or foreseeable use (and even foreseeable misuse) of a consumer product that may reasonably be expected to cause death, injury or an adverse effect on an individual s health, whether immediate or chronic. The definition of sell is defined so as to include leases, donations and sales for no consideration, which encompasses loyalty programs. Mandatory Incident Reporting While there is a general prohibition on manufacturing and distribution of consumer products that are known to be unsafe, mandatory incident reporting (s. 14) applies only to incidents concerning

- 3 - serious adverse effects on health. Health Canada interprets a serious adverse health effect as being an illness or injury requiring medical treatment such as a burn, a laceration, internal bleeding, a fracture, poisoning, loss of function, loss of consciousness, inability to breathe, etc. Health Canada s goal in requiring incident reporting is to address unreasonable hazards and help prevent serious injuries and other adverse health effects on people by observing and responding to trends that are revealed in reports. Manufacturers, importers and sellers must report any incidents involving consumer products (whether they occurred in Canada or elsewhere) to Health Canada. Incident is defined in the Act to include any occurrence that resulted (or may reasonably have been expected to result) in death or a serious adverse effect on an individual s health, including a serious injury (s. 14(1)(a)). Incident is also defined to include a defect or characteristic, or an incorrect, insufficient or missing label or instructions, any of which may reasonably have been expected to result in death or a serious adverse effect on someone s health (again, including a serious injury) (s. 14(1)(b) and (c)). Examples of incorrect labels could include a picture that shows unsafe use, or inadequate instructions that might result in someone incorrectly assembling a product that creates a hazard. Importantly, an injury does not have to have occurred in these cases. Finally, recalls or any other measure instituted for human health or safety reasons by a foreign entity, a provincial government or other provincial government body or institution, or an Aboriginal government or institution, are also considered to be incidents that must be reported (s. 14(d)). Under the strict language of the Act, once a manufacturer, importer or seller learns of an incident, it has two days (not including holidays) to provide a report to Health Canada and the person (if any) from whom they received the consumer product (e.g., the importer or distributor in the case of a retailer) containing all the information about the incident within their control (s. 14(2)). However, Health Canada has stated that the clock only starts to run once it is determined that there has been an incident. This means that once a manufacturer, importer or seller becomes aware of the event or the relevant information, it can take a reasonable amount of time to evaluate it to decide whether such event constitutes a reportable incident under the Act. Insights into Health Canada s interpretation of the CCPSA can be found in its Frequently Asked Questions for the Canada Consumer Product Safety Act and its presentation to industry, which can be found at www.hc-sc.gc.ca/cps-spc/legislation/actslois/ccpsa-lcspc/faq-eng.php and www.hc-sc.gc.ca/cps-spc/legislation/acts-lois/ccpsalcspc/indust/ppt-eng.php, respectively. Health Canada s guidance document on incident reporting includes a decision tree to assist in determining whether something is a reportable incident. Guidance on Mandatory Incident Reporting under the Canada Consumer Product Safety Act Section 14 Duties in the Event of an Incident can be found at www.hc-sc.gc.ca/cps-spc/pubs/indust/2011ccpsa_incident-lcspc/index-eng.php. The questions the document poses are: Is this a consumer product that I manufacture, import or sell in Canada? Is the consumer product connected to the event? Does the event meet the criteria of an incident? Does the event indicate an unreasonable hazard posed by the normal or foreseeable use of the product or the foreseeable misuse of the product? Only if the answer to each of those questions is yes, and only once that determination is made, can one conclude that there is a reportable incident (note that the event may occur in a commercial setting, but involve a consumer product and therefore be reportable). At that point, the clock begins to run on the reporting obligation. It is also possible that while an individual event may not rise to become an incident, a string of similar events may lead to the conclusion that there is something that requires reporting.

- 4 - If a manufacturer, importer or seller has determined that there has been an incident, it can complete the online incident reporting form developed by Health Canada (which can be found at www.hc-sc.gc.ca/cps-spc/advisories-avis/incident/cpir-ricpc-i-eng.php). If the report contains confidential business information (defined in s. 2 as information that is not publicly available, that has been protected to remain confidential, and that has economic value by virtue of it not being publicly available) or personal information, that fact should be indicated at the time the report is provided to Health Canada. Generally speaking, before disclosing such information the Minister requires the consent of the person to whose business or affairs the information relates. However, there are exceptions to this. The Minister may disclose a reporting entity s confidential business information without first obtaining the consent of that entity: to a person or government that carries out functions relating to the protection of human health or safety or the environment (in relation to a consumer product), provided that person or government agrees to maintain the information in confidence and to use it only for the purpose of carrying out its functions (s. 16); or to anyone, including the public, when there is a serious and imminent danger to human health or safety or the environment, if the disclosure of the information is essential to address the danger (ss. 17(1) and 18). In the latter case, the person to whose business or affairs the information relates is to be notified by the Minister of the disclosure within the next business day (s. 17(2)). Serious and imminent danger is a very high threshold and it is unlikely the Minister would exercise this power absent extreme circumstances. However, it is also notable that the Act does not address what a party may do if it believes the Minister has improperly disclosed confidential business information. Similarly, records may contain personal information about an individual. The Minister may disclose personal information to a person or government that carries out functions relating to the protection of human health or safety, without the consent of the individual to whom the information relates, if the disclosure is necessary to identify or address a serious danger to human health or safety (s. 15(1)). There is no requirement for the Minister to notify the individual concerned. In considering the effect of these provisions, it should be noted that Health Canada routinely shares information with the US Consumer Product Safety Commission (US CPSC), pursuant to a 2005 Memorandum of Understanding regarding cooperation related to the safety of consumer products (see www.hc-sc.gc.ca/ahc-asc/intactiv/agree-accord/us-eu-cooperation-eng.php). In addition to the incident report, Canadian manufacturers and importers of products manufactured outside Canada must also provide Health Canada with a second report within 10 days of becoming aware of the incident (or within the period that the Minister specifies by written notice). This report must include information about the incident and the product involved, and identify any other products they manufacture or import that to their knowledge could be involved in a similar incident (for example, because they share the particular component that is at issue) (s. 14(3)). This report must also set out any measures the manufacturer or importer proposes to take with respect to those products. Health Canada s online incident reporting form has been designed to permit a manufacturer or importer to simply update the initial two-day report with the additional information required for the 10-day report. For a particular product, all parties in the chain of distribution must consider whether they need to submit an incident report. If a retailer submits an incident report to Health Canada, the manufacturer or importer concerned may also have to submit an incident report if it determines, independently of the retailer, that there has been a reportable incident. As well, there could be two or

- 5 - more manufacturers that need to report the manufacturer of a component and the manufacturer that assembles the finished product (and the manufacturer of any intermediate assembly). While Health Canada recognizes that there may be a reasonable period of time between learning of an event and having to report an incident, it will be important for retailers to ensure that their front-line retail staff obtain information from consumers regarding any events and pass that information along to supervisors who can inform the organization s responsible person. However, there are many ways to learn of an event, including notification from a standards body or from the entity from whom a product has been sourced, or receiving a test report or a scientific or epidemiological study. Procedures need to be established to ensure that such information reaches a responsible person within the organization in a timely fashion, to allow for a determination to be made whether an incident report is required. It is also important to evaluate whether the triggers to report in Canada are different from those in other jurisdictions. Just because a report is made to the US CPSC does not necessarily mean that an incident report must be made to Health Canada, and vice versa. However, if Health Canada inquires as to why it did not receive an incident report (after learning of a report made to the US CPSC), one would be advised to have a reasoned analysis for that decision available. Document Retention and Disclosure The CCPSA requires parties in the chain of distribution to maintain various documents and keep them available for inspection. According to Health Canada, these requirements were implemented to ensure consumer products (and their components, given the definition of consumer products) can be traced back through the supply chain to their origin in the event a danger must be addressed, by, for example, instituting a recall (Health Canada, Guidance on Preparing and Maintaining Documents under the Canada Consumer Product Safety Act (CCPSA) Section 13, which can be found at www.hc-sc.gc.ca/cps-spc/legislation/pol/doc_13-eng.php). Anyone who manufactures, imports, advertises, sells or tests a consumer product must now maintain records of names and addresses of persons from whom they obtained the consumer product (s. 13(1)(a)(i)) and (with the exception of sellers) to whom they sold it (s. 13(1)(a)(ii)). While sellers (i.e., principally retailers) do not need to keep a record of each sale and the identity of their customers, they must retain records of the location where and period during when they sold the product (s. 13(1)(a)(i)). Health Canada is considering regulations to exempt certain classes of persons (e.g., those who obtain consumer products for sale through donations) from these obligations. Any records prescribed by regulation (such as records required under the Consumer Chemicals and Containers Regulations, 2001 (SOR/2001-269)) must also be kept by anyone who manufactures, imports, advertises, sells or tests a consumer product (s. 13(1)(b)). In the case of importers of consumer products for commercial purposes, the prescribed records must be provided to the Minister no later than at the time of importation (s. 13(5)). These records must be kept until the end of the sixth year after the end of the year to which they relate. So if the record is made in February 2012, it must be kept until the end of December 2018 (unless a regulation prescribes otherwise) (s. 13(2)). All records must be kept at the person s place of business in Canada or any prescribed place (unless the Minister exempts them from doing so on the basis that it would be unnecessary or impractical to do so) (ss. 13(3) and 13(4)). However, electronic documents do not need to be kept on servers in Canada, as long as such records are accessible from a computer terminal in Canada. In the case of retailers, the documents in question may be located at the corporate head office rather than an

- 6 - individual retail location. (For more information, see Health Canada, Frequently Asked Questions for the Canada Consumer Product Safety Act at www.hc-sc.gc.ca/cps-spc/legislation/acts-lois/ccpsalcspc/faq-eng.php.) These documents must be provided to the Minister upon request. The time period within which to provide the documents will depend on the circumstances and in some cases is prescribed by regulation (for example, documents regarding the specification of child-resistant characteristics of a container under s. 10 of the Consumer Chemicals and Containers Regulations, 2001 must be provided within 15 days). Again, for the reasons set out above, it will be important to clearly identify confidential information and personal information in any documents disclosed by the Minister. Inspections and Orders for Remedial Measures To verify compliance with the CCPSA, Health Canada inspectors have the power to enter, at any reasonable time, any place (or vehicle) in which they have reasonable grounds to believe that a consumer product is manufactured, imported, packaged, stored, advertised, sold, labeled, tested or transported (s. 21(1)). An inspector is permitted to examine or test anything, open packages, take samples, seize articles, search computers, copy documents and stop the activity in question (s. 21(2)). These powers are akin to the powers that are possessed by the Canadian Food Inspection Agency, which oversees many of the types of products that are exempt from the CCPSA such as food, drugs, fertilizers and feeds. Persons in charge of the premises are required to provide inspectors with reasonable assistance and with any information that they reasonably require (s. 21(5)). In addition, the CCPSA has provided significant new powers to the Minister. If the Minister of Health believes on reasonable grounds that a consumer product is a danger to human health or safety, the Minister can order a manufacturer, importer or seller to recall it (s. 31(1)). This is a major change in the consumer product safety regime in Canada: prior to the CCPSA, it was only possible for Health Canada to request recalls be undertaken voluntarily. However, this new power is comparable to the Canadian Food Inspection Agency s pre-existing power to order a mandatory recall of food (or another product within its mandate) if it poses a risk to public, animal or plant health (Canadian Food Inspection Agency Act, S.C. 1997, c. 6, s. 19). A Minister s recall order must include a statement of the reasons for the recall and the time and manner in which the recall is to be carried out (s. 31(2)). Under the CCPSA, the Minister also has the authority to stop a person from manufacturing, importing, packaging, storing, advertising, selling, labeling, testing or transporting a consumer product, or to order them to take any measure that the Minister considers necessary to remedy noncompliance with the CCPSA (or its regulations), if the person fails to comply with an order regarding testing or a recall, or if there has been a voluntary recall or if the Minister has reasonable grounds for believing there has been a contravention of the CCPSA (or its regulations) (ss. 32(1) and (2)). If a party fails to comply with a Minister s order, then the Minister can carry out the recall or other remedial measure at the party s expense (s. 33). There is an administrative process to review a Minister s order for a recall or other remedial measure. However, it must be initiated within seven days of the order (or a shorter period if specified in the order), and the review is limited to questions of fact or mixed law and fact (ss. 35(1) and (2)). The review decision (which can confirm, amend, terminate or cancel the reviewed measure) must be provided within 30 days (although the officer can request a longer period) (ss. 35(7), (8) and (10)). An order continues to apply during a review unless the review officer decides otherwise (s. 35(6)). The reviewing officer has the authority to refuse to conduct a review if it is not submitted in a timely

- 7 - fashion, fails to state the grounds for the request, or fails to set out the evidence that supports those grounds, or is otherwise frivolous, vexatious or not made in good faith (s. 35(3)). The Minister also has the power to seek an injunction from a court to stop someone from doing something that may appear to be directed toward committing an offense under the CCPSA or to order someone to do something that may prevent the commission of an offense under the CCPSA (s. 36). As well, the Minister has the power to make an interim order in respect of any matters within the Minister s regulatory authority if the Minister believes that immediate action is required to deal with a significant danger to human health or safety (s. 40). In the preamble to the CCPSA, it is expressly stated that a lack of full scientific certainty is not to be used as a reason for postponing measures that prevent adverse effects on human health if those effects could be serious or irreversible. The Minister can order manufacturers and importers to conduct tests or studies to ensure compliance with the CCPSA or its regulations; to compile information considered necessary to prevent non-compliance; and to provide the Minister with that information and any test or study results (s. 12). Penalties Under the CCPSA Offenses The most serious penalties are reserved for circumstances in which someone advertises or sells a product they know is a danger to human health or safety; is the subject of a recall because it is a danger to human health or safety; or is the subject of a Minister s order under s. 32 for remedial measures (e.g., stopping its importation). Similarly serious penalties face those who knowingly or recklessly contravene the CCPSA (including knowingly providing the Minister with false or misleading information), or contravene any CCPSA regulations or a Minister s order. In such circumstances, the person can be indicted and subject to an indeterminate fine or imprisonment of up to five years, or both. Or, if the Crown proceeds by way of summary conviction, a person convicted of a first offense is subject to a maximum fine of $500,000 or a maximum imprisonment of 18 months (or both). Subsequent convictions face maximum fines of $1 million or maximum imprisonment of two years (or both) (s. 41(3)). For other contraventions of the CCPSA, its regulations or a Minister s order, the penalties for conviction on indictment include a maximum fine of $5 million or a maximum imprisonment of two years (or both). On summary conviction for a first offense, penalties include a maximum fine of $250,000 or maximum imprisonment of six months (or both). Subsequent convictions risk a maximum fine of $500,000 and a maximum imprisonment of 18 months (or both) (s. 41(1)). Due diligence is a defense for these other contraventions (s. 41(2)). In sentencing, the court is directed to take into account the harm or risk of harm caused by the commission of the offense and the vulnerability of the individuals who use the consumer product (s. 41(4)). Children, for example, would be considered more vulnerable than adults. It is important to note that if an offense is committed or continued on more than one day, it constitutes a separate offense for each day on which it is committed or continued (s. 44). However, proceedings by way of summary conviction have to be instituted within two years after the Minister becomes aware of the acts or omissions that constitute the alleged offense (s. 46). Directors, officers, agents or mandatories who directed, authorized, assented to, acquiesced in, or participated in the commission of an offense, are considered a party to the offense and if

- 8 - convicted are liable to the above penalties (s. 42). It is sufficient proof of an offense to establish that it was committed by an employee, agent or mandatory of the accused (s. 43). Violations The CCPSA also provides for the imposition of administrative monetary penalties (AMPs) where persons are found to have committed violations by contravening a Minister s order to conduct recalls or a Minister s order to take other remedial measures to remedy non-compliance with the CCPSA or its regulations. Due diligence is not a defense to a violation; neither is a reasonable and honest belief in facts that, if true, would exonerate the person (s. 59(1)). The exact manner in which an AMP will be calculated is to be laid out in a regulation that is expected to be enacted in 2012. In its 2010 consultation paper, Health Canada proposed a points system based on the gravity of the violation, including the number of prior violations a party had and the risk of harm from the acts or omissions in question (see www.hc-sc.gc.ca/cpsspc/legislation/consultation/_2010ampr-rsap/consult-eng.php). However, the Act provides that the maximum penalty for a violation is $5,000 in the case of a non-profit organization (or any other person acting for non-commercial purposes) and $25,000 in any other case (s. 50(2)). If someone receives a notice of violation, then rather than pay the proscribed penalty they may ask to enter into a compliance agreement with the Minister, which could include a reduction of the penalty (in whole or in part), or they can request a review of the acts or omissions at issue. If a compliance agreement is entered into, the Minister may require reasonable security to be given pending compliance with the agreement. If a compliance agreement is not complied with, the security shall be forfeited to the Crown and the penalty that was set out in the notice of violation is doubled. On a review, which is to be done in writing only, the Minister can determine, on a balance of probabilities, whether or not the violation was committed, and has the ability to alter the penalty (ss. 56, 60). If a violation is continued on more than one day, it constitutes a separate violation for each day on which it is continued (s. 63). Proceedings by way of summary conviction have to be instituted within six months after the Minister becomes aware of the acts or omissions that constitute the alleged violation (s. 66). Directors, officers, agents or mandatories who directed, authorized, assented to, acquiesced in, or participated in the commission of a violation are considered a party to and liable for the violation (s. 61). A person is liable for a violation committed by any employee, agent or mandatory acting in the course of their employment or scope of their authority (s. 62). Conclusion The CCPSA imposes many new obligations on a vast number of entities that until now have not had to be concerned with a specific product safety regime, beyond basic common-law obligations like the duty to warn. Health Canada now wields powers much like the US CPSC, but how it will exercise such powers remains to be seen. In advance of the CCPSA coming into force, Health Canada doubled the number of inspectors nation-wide to 90. The Director General of the Consumer Product Safety Directorate has stated publicly that Health Canada will use targeted oversight, focusing on protecting vulnerable populations such as children from serious injury, and will try to head off potential problems by working with the higher levels of trade (i.e., manufacturers and importers) and with the Canadian Border Services Agency. As well, Health Canada has advised that it expects to engage in step-wise