Industry Committee on April 25th, 2007

[Douglas George]

I think the Chinese are taking action to deal with intellectual property issues; they're taking legislative educational action. We've had a number of Chinese delegations come over here to learn from Canada how we approach intellectual property, but they are still the single largest source of counterfeiting and piracy. So there is still concern over China, but they are taking action, yes.

[Brian Masse, NDP, Windsor West, ON]

If they are successful in a crackdown, should we then be looking at where they're going to go next? I don't imagine it's just going to disappear. What would be next? Would another potential third world country become a net producer, India or so forth?

[Douglas George]

A quick answer is a number of countries are involved. China may be the biggest, but any number of countries around the world are involved in counterfeiting and piracy. Our hope is to work with the key ones to improve intellectual property enforcement.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

[The Chair, Conservative, James Rajotte]

Thank you.

We'll go to Mr. McTeague.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Thank you, Mr. Chair.

I want to thank all of you for being here today. I know some of you have already appeared before the public safety committee and that there was an interesting exchange. I'm going to take it that all of you believe there's a problem with respect to counterfeiting and piracy and the theft of intellectual property in Canada. I think that's a fair assumption. I don't see anybody deviating from that.

However, do you all have the same view in terms of a solution to the many problems? You obviously have a plan that your interdepartmental working group could put together, but what department is actually leading this? You're talking about a problem. This committee recognizes this problem. It put it in terms of a recommendation, number 11. It was done unanimously. I think the previous government had the public safety department take the lead. This time I'm concerned that there's no political leadership. You can talk about this issue until you're blue in the face.

Mr. Chair, I'll leave this with the committee. I see that China's WCT and the WPPT are effective June 9, well before Canada will do that. So while we're doing the work to figure out how to get this right, other nations we've pointed a finger to in the past—even Mr. Emerson did the same thing as recently as today in his press release that calls on China to do more—such as China, are doing more, but Canada is lagging behind.

I want to ask you very simply, who is taking ownership of this? You have some good ideas, but I don't see any coordination leading to one department saying this is how we're going to get it right; we're going to get it done as quickly as we can and we'll get the right framework. Who's doing it?

Mr. George, I'll start with you, and Madame Bincoletto, could you respond as well?

[Douglas George]

I think it's evident from what we've explained today that this is not a single department issue. These are multiple departments that have different parts of the puzzle. We're working together to develop a set of options and recommendations for ministers that deal with the various different issues and problems. We can't do it with a single tweak to one piece of legislation or a few extra resources. The reason we sound like we're all singing from the same song sheet is that we've been working together to analyze the problem and develop the recommendation. I think we've made very significant progress.

[Susan Bincoletto]

We have explored options in order to strengthen our IP regime. Now the question is to bring it all together, as a group, to our ministers' attention. There is not a natural lead because we each have a piece of it. This will involve a number of ministers who will have to make a decision based on our options, and eventually our recommendation, as to how to move this forward. It's not unheard of to go to cabinet with a number of ministers signing an MC.

And this will be it. We could improve the IP regime. We could add additional resources. We could equip the CBSA with more powers in order to detect.... There are a number of permutations, and we have all of them in front of us. But we have to make choices in terms of how much it is going to cost, how effective it is going to be. As policy analysts, those are the kinds of questions we still have to ask ourselves in order to give the best recommendation to the minister.

As far as the WIPO treaties, I'm sure you're going to be asking that question. We're also working very closely.... The two departments are always working to try to propose a bill to actually implement the WIPO treaties. We've done it with the past government. Now we're focusing on it again. There is the video piracy. There is this enforcement, counterfeiting. This is the universe we're looking at in order to make progress on dealing with this issue.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

The concern I have, and it's no reflection on my good colleagues here who agreed with me—We all agreed with each other on what framework, what formula, could work with respect to our recommendation 11. But how honest do we look when we're pointing a finger at another country, as we did today? The Minister of International Trade and Pacific Gateway, Mr. Emerson, said:

“We are seeking clarification from China on its intellectual property rights enforcement regime, given concerns expressed by Canadian industry,”.... “Our goal is to resolve this issue through dialogue with the Chinese government and through cooperation with our trading partners.”

It seems to me to be a little patronizing to tell another country, which seems to be getting its act together—when we can't seem to coordinate ourselves to get anything done.

I realize the obstacles you're faced with, but I really want to hear what department and what minister is taking the lead here. They have the political will of consensus—unanimously—from the House of Commons. What's the holdup?

[Douglas George]

As we've explained, this is a complex issue. We've been looking at a number of options. I think you'll also notice in the minister's press release that he did point to the fact that we are working to strengthen our own intellectual property regime.

[The Chair, Conservative, James Rajotte]

Thank you.

We will go to Monsieur Arthur.

[André Arthur, Independent, Portneuf—Jacques-Cartier, QC]

Thank you, Mr. Chairman.

Good afternoon, everyone, and thank you for coming. It is a pleasure to see you go to the lengths that you do to answer our questions.

Personally, I am somewhat surprised that I have not heard about such large-scale problems. When I go to New York and I bring back a Rolex that cost me $35, instead of $20,000, I know full well that I bought a knock-off. I don't know who the victim of my offence is, but I am convinced that I am not jeopardizing security in Canada.

When the RCMP goes off looking for bad Canadians who, without the permission of the government, watch a channel as seditious as HBO or ESPN, I know that my national police force is being used for ridiculous issues.

However, there is a topic that I have not heard mentioned here. I would like to have, I don't know from whom, a report on the current situation. I am referring to the problem of counterfeit spare aircraft parts. A few years ago, serious tragedies that led to the death of dozens if not hundreds of people were attributed to the use on certain aircraft, namely the DC-9, of parts that had been fraudulently manufactured, that were of very poor quality, and that shortly thereafter caused wide-scale deaths.

In the United States, at least one MD-11, a modern version of the DC-10, crashed as did a Boeing 737 with a rudder control system. We also heard about an Airbus that lost its tail over New York and it is now thought that some of the bolts were counterfeit. When the issue was examined, it was discovered that all North American companies had counterfeit parts in their inventories. All of them, including Air Canada, clearly said they acted in good faith, with officials stating that they had no idea how those parts ended up in their hangars.

Would someone like to really scare us by talking about counterfeit aircraft parts, please?

[Douglas George]

Speaking personally as a pilot, yes.

While we don't have anyone from Transport Canada here, they do have an active program of advising people of the concerns with respect to counterfeit airplane parts.

[André Arthur, Independent, Portneuf—Jacques-Cartier, QC]

But to my knowledge, nobody—nobody—has ever been prosecuted in Canada for that. We never knew who put those parts in the Air Canada inventory. Nobody knew. And nobody knows at this time.

[Douglas George]

I have no idea about that. We have, however, discussed the issue of supply chains. It is truly an international problem, and a topic in which the G8 is interested.

As to whether anyone has been prosecuted in Canada, I don't know. I don't have that information, but I can ask.

[André Arthur, Independent, Portneuf—Jacques-Cartier, QC]

Do we have any knowledge of how those things happen, of what the channel was, of which organization was behind it? Do we know, or is it still a mystery?

[Supt Ken Hansen]

With regard to aircraft, I am familiar with the FAA, which stated, I believe, that 2% of the aircraft parts in the FAA are counterfeit. I haven't seen a comparable study in Canada.

I am not familiar with the one you're talking about, the Air Canada aircraft. As far as I know, we've never been asked to do an investigation on that. Certainly if we were asked, that is something we would look at, definitely, to see if the parts came from Canada--

[André Arthur, Independent, Portneuf—Jacques-Cartier, QC]

We are led to believe at this time that this problem is settled, and I don't believe that. I just think we forgot about it. We just thought, well, nobody talks about it, and nobody crashed recently, so we'll talk about something else.

[The Chair, Conservative, James Rajotte]

Last question.

[André Arthur, Independent, Portneuf—Jacques-Cartier, QC]

Thank you.

[The Chair, Conservative, James Rajotte]

Mr. George.

[Douglas George]

I don't think we have the expertise here to answer your specific question. If you want, we could follow up with Transport Canada to see if they have any additional information.

[André Arthur, Independent, Portneuf—Jacques-Cartier, QC]

And the TSB, the Canadian Transportation Safety Board, they're the ones who picked up the aluminum fallout.

[The Chair, Conservative, James Rajotte]

Okay, merci.

We'll go now to Mr. McTeague.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

I'm going to pursue exactly what I said before. We've given you the parameters of what we as a Parliament, as a committee, want. I think it's fairly easy for you to speak to the justice department and work on that assumption.

We have a credibility problem in this country on this issue. It's leaving all of us, regardless of what party we come from, with the perception that despite the gargantuan requirements and the Herculean efforts you're going to require in terms of drafting this together, if you can't do it and no minister wants to take responsibility for it, it's conceivable this committee may very well come up with specific recommendations the government could implement.

I want to make sure we get the right policy mix, but we need to do it quickly. We know the problem. We've known the problem for years. I'm suggesting that even if it comes to what the Americans are doing with the Department of Homeland Security, having customs representatives in China or in other nations where there is a problem, we could be looking at the same outcome.

Let me ask this to you. We know, and we have a pretty good idea of the two conventions we need to implement. If we need to put a stronger perspective on our Criminal Code with respect to people who copyright movies, for instance—which is something I definitely support, and I think a number of members on this committee support—how long do you think the legislation would take to at least address some of these problems? Frankly—and I appreciate all the discussion that's going into this—we're just not getting where we need to get, and we're looking like the laughingstock of the international community. It would be funny, except that we've just gone to many communities that have lost jobs across this country as a result of our not getting our act together.

So I'm putting it at your feet and saying you have to get this together, but we also need political direction. When can we expect that your working group will actually come forth with concrete proposals? I want a timetable.