Industry Committee on Nov. 25th, 2013

[The Chair, Conservative, David Sweet]

Good afternoon, ladies and gentlemen.

Welcome to the sixth meeting of the Standing Committee on Industry, Science and Technology, where we're hearing evidence with regard to Bill C-8, An Act to amend the Copyright Act and the Trade-marks Act and to make consequential amendments to other Acts.

Before us in person we have Kevin Spreekmeester, vice-president of marketing for Canada Goose, and via teleconference we have Joy Nott, the president and chief executive officer of the Canadian Association of Importers and Exporters.

I will follow the agenda that is before us.

By the way, colleagues, you'll see that we have time set aside between 5 and 5:30 for committee business. I think we have a committee budget that we're going to deal with, along with some other items.

Now we'll go to the witnesses.

Yes, Mr. Bélanger?

[Mauril Bélanger, Liberal, Ottawa—Vanier, ON]

Mr. Chairman, I will be moving a motion, for which the committee has received notice, about the creation of a subcommittee. I'd like to know if I can do that right now.

[The Chair, Conservative, David Sweet]

You can do that when you have the floor, when it comes time for you to go ahead, after we introduce the witnesses, Mr. Bélanger.

[Mauril Bélanger, Liberal, Ottawa—Vanier, ON]

After you've introduced them?

[The Chair, Conservative, David Sweet]

After we've gone through the rounds and it's your time to take the floor, yes, that's correct.

[Mauril Bélanger, Liberal, Ottawa—Vanier, ON]

Well, Mr. Chair, it's just that you've already specified that other matters will be dealt with in camera, and I'd rather this be dealt with in public. That's why I'd like to move it right now.

[The Chair, Conservative, David Sweet]

You can move it in public, Mr. Bélanger. What I'm saying is that right now we're going to follow the agenda. We'll introduce the witnesses, they'll give their testimony, we'll go to the rotation, and you will be in the first rotation.

[Mauril Bélanger, Liberal, Ottawa—Vanier, ON]

So it's during the rotation?

[The Chair, Conservative, David Sweet]

You can do what you like during the time when you have the floor.

[Mauril Bélanger, Liberal, Ottawa—Vanier, ON]

Thank you, Mr. Chair.

[The Chair, Conservative, David Sweet]

We'll now go to the witnesses.

Mr. Spreekmeester, please go ahead and give your opening remarks.

[Kevin Spreekmeester, Vice-President, Marketing, Canada Goose Inc.]

Thank you very much. Thank you for having me.

As some of you know, Canada Goose has been in favour of greater protection of our intellectual property for a long time now. This bill is a great first step in the direction that we need to go in to protect our brand, our IP, and Canadians.

We've been fighting the counterfeit fight quite aggressively for I'd say about five or six years now. It increases exponentially every year.

We go to such lengths as, in Europe, working with IP crime units, who alert us when there's a counterfeit seizure at borders. They send us e-mails to let us know how much they've seized and what the contents are. Then we make a decision about whether to destroy or not.

We work with MarkMonitor out of the United States, who sweep the Internet twice a day for us. They try to take down counterfeit auctions, counterfeit websites, rogue websites around the world. We're told that Canada Goose is among the most counterfeited brands globally that they've ever come across.

We also work with a litany of legal offices around the world. We work with the Chinese authorities to try to protect our borders there, or at least the import towards our borders there. We've been working with the CIPC and with the Outdoor Industry Association in the United States and their task force on counterfeit.

The problem with counterfeit products for Canadians...and obviously it's not just Canada Goose. It's pharmaceuticals, it's entertainment, it's ball bearings for airplanes, it's whatever. But as it relates to Canada Goose, it's the content of the jacket that comes in that is often quite harmful. We've dissected four different counterfeit jackets that we've purchased online. Inside we found no trace of down fill at all. We have found anything off a factory floor—bacteria, mildew, feces, beaks, dust, it doesn't matter—and that content is coming into Canada through unprotected borders to unsuspecting consumers.

Not only have we invested in building this manufacturing infrastructure in the apparel industry in Canada, and in creating jobs here in Canada, which counterfeit takes away from, but we're also putting the health of Canadians at risk when we allow counterfeit product to cross our borders without any sort of opportunity for Canada Border Services to detect, seize, and destroy.

We've had great success in other parts of the world. We do what we can online. Online is really where the battle has to go. Online is what yesterday's flea market was. Today, if it were just in flea markets, I probably wouldn't be sitting here, but the amount of industry that's done online with counterfeit product is ridiculous. I wish our company were that size.

So I'm here to advocate on behalf of this bill and see if we can't get, as a first step, greater measures in place to help us protect our borders and help protect Canadians from some of the garbage that's coming in.

[The Chair, Conservative, David Sweet]

Thank you very much, Mr. Spreekmeester.

We'll now go to Ms. Nott.

[Joy Nott, President and Chief Executive Officer, Canadian Association of Importers and Exporters]

Thank you very much for inviting me to speak today.

I'm also here to advocate in favour of this particular piece of legislation, not unlike my counterpart from Canada Goose. I.E.Canada represents a number of different Canadian companies, in fact over 500 companies, and I'm hearing the same sorts of stories. Counterfeit involves everything from Christmas lights to clothing, handbags and apparel, which of course we're all familiar with, and entertainment.

One of the issues, though, that I would have to caution about is not so much some of the things that have been heard in the mainstream media and that sort of thing, about giving customs officers powers to determine and trying to turn them into trademark experts. My members are not concerned about that sort of thing. What we are concerned about, however, is the slowing down of legitimate trade in an attempt to try to capture illegitimate trade.

I think the easiest way to highlight our concerns would be to say that while we are fully in support of this particular piece of legislation, and I think members of I.E.Canada share exactly the same concerns that Canada Goose just expressed so well, the devil's in the details: the issues are with the regulatory infrastructure that's going to be put in place and the boots on the ground, what's actually going to happen at the border.

CBSA, like other agencies right now of the Canadian government, faces financial cutbacks and whatever else. I can tell you that they don't have a lot of infrastructure in place that could easily handle doing this.

That being said, I'm not saying that CBSA would not be willing or capable of handling it. I'm just a little bit concerned, because they're dealing with very antiquated tools when it comes to software and that sort of thing. I'm a little bit worried about how they would handle this on a shipment-by-shipment basis so that a legitimate Canada Goose shipment, for example, coming into the country would not be held up and would not incur any supply chain delays where illegitimate trade would be captured.

That is probably the crux of my comments.

I now welcome any questions.

[The Chair, Conservative, David Sweet]

Thank you very much, Ms. Nott. We'll go on to our regular rotation of questions now. The first round is seven minutes, and it's over to Mr. Lake.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Thank you, Mr. Chair.

Thank you to both witnesses.

Kevin, we had you before the committee not a whole long time ago, talking about some of the challenges. I know you passed a coat around; we all had a chance to take a look at it. The challenge you face is clearly very significant. I think most Canadians, if they had a chance to hear your story, would understand what the issue is a lot more than they currently do.

I don't know if this was just the way you worded it at the beginning, but you said this was a great first step. What would other steps would you like to see at some point?

[Kevin Spreekmeester]

I think I started to talk a little bit about it, but we really have to find a way to deal with the online trade of counterfeit product and with protecting our intellectual property. I can only speak for Canada Goose, but we've built a brand that is globally known to represent a premium product, and consumers believe that's what they're buying, for the most part. Most of the counterfeit struggles that we have occur online, and yet there's very little legislation to help us deal with the online trade of counterfeit product. That to me would be the most significant next step.

First we have to protect our borders, but next it would be to try to find a way to deal with the online counterfeit trade.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Of course, online trade happens across the borders as well. The law that we're putting in place right now will have an impact in that regard too.

Perhaps you could speak to how you address issues of counterfeit right now. What I'd like to hear from you—and you can take some time doing this—is a description of what you do now when you're dealing with suspected counterfeit, when you identify areas where you know your product has been counterfeited.

Then take the time to talk about how the world will different when this legislation is passed.

[Kevin Spreekmeester]

I can give you a couple of good examples of how we deal with counterfeit, or IP to the same degree.

We'll find out through services around the world, say, through the IP crime unit in London that there's been a seizure of counterfeit products crossing the Danish border. Depending on the volume, we then have to make a call because we're paying for any sort of legal proceedings. Do we want to go to court with this? Do we want police action? How far do we want to go? In cases in both Sweden and in China, we have gone through legal channels and ended up with importers of counterfeit product behind bars. It really just sends a message to other would-be counterfeiters that we, for one, are going to make it difficult for them to counterfeit and import our products. We do things like that.

We make it difficult on a business to business and a business to consumer platform for counterfeiters to sell their products. So we work with financial institutions, PayPal, Visa, and different banks, to try to seize the accounts of counterfeiters and those who would sell counterfeit.

In China we will selectively raid factories to try to get to the root of counterfeit, but that's a whole other world that, quite honestly, we don't completely understand, and we're trying to. So we make selective raids.

With this bill's passing and future legislation that might protect consumers more online, what would the world look like? First of all, we would be able to take the money and the resources that we invest now to fight counterfeit, and put that into marketing Canada and our brand. Consumers would be able to purchase online a little bit more confidently. We would spend less time answering consumers who believe they've bought a Canada Goose jacket and have got something in the mail that isn't, for all the reasons I explained before, and they're calling us to say, what did you ship me? It would be a lot cleaner commercial enterprise for us.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Tell me a little bit about the size of your business and how many employees you have here in Canada, because I think some people following this might not understand the impact.

[Kevin Spreekmeester]

We have over 400.

We sell in over 50 countries around the world. Still today, we're growing by 30% year over year. We own two factories in Canada, one in Winnepeg and one in Toronto, and we subcontract another 20-plus. We have taken what was a decimated apparel manufacturing infrastructure and worked diligently over time to rebuild it so that this a viable business.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Before I was elected, I worked for the Edmonton Oilers for 11 years, so I understand the importance of a brand and the importance of protecting that brand, because strong brands are always under attack in these ways.

Maybe you could talk about the investment your company has made in that brand.

[Kevin Spreekmeester]

I don't know how you can separate the investment in the brand from the company or from any one of us. People buy Canada Goose because it's an authentic, iconic brand.

We created the premium outerwear segment in the industry. There are all kinds of brands—or faux brands—that are trailing on our coattails, manufacturing in the same half-dozen factories in China, calling themselves a brand, and trying to take market share.

That's okay, but I think that without our brand, without the authenticity of Canada Goose, without protecting our name and what we stand for—being made in Canada and being authentic and everything that we put behind that—we may as well be one of the others. If we don't protect that brand, we're just another jacket—arguably the warmest jacket on the planet, but just another jacket.

[Some hon. members]

Oh, oh!

[The Chair, Conservative, David Sweet]

Thank you, Mr. Spreekmeester. I know that these days in Ottawa people appreciate that.

Now we'll go on to Mr. Thibeault for seven minutes.