Public Safety Committee on April 26th, 2007

[Laurie Hawn, Conservative, Edmonton Centre, AB]

Currently there are two departments with the responsibility for copyright policy in Canada: Canadian Heritage and Industry Canada. Does this cause a problem? Should it be given to one department only, and if so, which one, Professor Geist?

[Prof. Michael Geist]

That's a loaded question. The practical effect has probably been a good one in Canada. The perception is that Canadian Heritage and Industry Canada bring different perspectives to the table. Given the complexity of copyright, having two departments seeking to work through some of those issues probably leads us to a better result in many instances, than if one side alone were given the mandate.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

Have any of the three of you, Mr. Sotiriadis, seen any conflicts there, or has this resulted in any conflicts?

[Bob Sotiriadis]

It's a fair assessment. There's industrial property and intellectual property. This is an old distinction we used to make; I think it was sort of dropped by those two departments.

[Prof. Michael Geist]

If I might just add, the more difficult challenge we face in developing the appropriate policy is ensuring that all stakeholders are heard. Certain groups are well able to ensure that their voices are heard. They have the dollars, the lobbyists, and so on.

There are stakeholders on all sides, whether on the industry side, or that of some of the copyright collectives, or of the industry associations often representing foreign interests.

My concern is that these sorts of issues now impact individual Canadians in ways they never have before. I don't know that we have frameworks in place to ensure that those voices are heard—perhaps occasionally in your e-mail inboxes—but generally some of those voices aren't heard as effectively. We're missing a very important part of the puzzle if those voices and those considerations aren't taken into account.

[The Vice-Chair, Liberal, Roy Cullen]

Thank you, Mr. Hawn. Unfortunately, the time is up.

If we have no one else on this side, we'll go to a concluding—

Sorry, Mr. Wappel.

[Tom Wappel, Liberal, Scarborough Southwest, ON]

Sorry to be a pest. Somebody handed me this; it's kind of interesting: “Members of the European Parliament back criminal sanctions for counterfeiters.” This is Wednesday, April 25, so it's pretty topical. “In an effort to clamp down on piracy and counterfeiting, Parliament”—that's the European Parliament—“endorsed, on 25 April 2007, measures for fining counterfeiters up to €300,000 or, in the most serious cases, jailing them for up to four years.”

I don't know what “Parliament endorsed” means. Does that mean it passed a law or some committee—? If any of you have any further knowledge about this article, could you please expand on it for us?

[Prof. Michael Geist]

It's an interesting example of the timelines and shift in perspective on some of these issues. That was proposed fairly recently and made its way through the European Parliament quite quickly.

Over the last two to three weeks, thousands of Europeans signed petitions, calling on the European Parliament not to adopt that particular provision. Yesterday's vote was far closer than anyone had initially anticipated.

The indications in a number of reports were that it's just at the European Parliament stage, and then it would go to the European Council. The sense is that at the Council this will become far more contentious as people begin to recognize that this issue is more complex than simply upping the penalties.

[Tom Wappel, Liberal, Scarborough Southwest, ON]

Mr. Sotiriadis, do you have any comment on this?

[Bob Sotiriadis]

No, but you also have to keep in mind that in Europe there are some very interesting recourses that allow rights' owners to go from jurisdiction to jurisdiction in counterfeiting situations, which I can't expand on right now.

With those torpedo recourses, they've really—notwithstanding the more complex structure than ours as one country—managed to put in place some very efficient measures that we should look at, considering that they're different countries all acting in concert.

[Tom Wappel, Liberal, Scarborough Southwest, ON]

Okay.

The article also says, “Economic losses related to counterfeiting are estimated at around €500 billion per year through lost business opportunities and tax revenues, and some fake products also present a serious health threat.” I don't know, but that seems like an enormously huge amount of money to estimate as a loss.

I have to believe that those estimates would include what we were talking about at the very beginning. Assuming that someone who buys a $10 Rolex would also be someone who would buy a $10,000 Rolex, they didn't buy the $10,000 Rolex because they bought the $10 Rolex. In my view, that's a false assumption, because it's a different consumer in the two instances.

[Bob Sotiriadis]

But that's the thing everyone thinks of. You have to look at it this way. At the Burlington Coat Factory in the United States—it's a very big reputable discount store—I had a case where they were selling very good quality fake Burberry. Just one individual imported the stuff from ex-authorized factories in Italy that weren't authorized anymore, and it sold for, geez, a couple of million dollars' worth. The price was almost 20% or 30% cheaper than you'd get at the new store, so you would think, oh, it's just not this year's model or something. The same thing for movies, for example. Yes, when you get them at the retail level at a pretty high price, that's where the comparison should be made.

[Tom Wappel, Liberal, Scarborough Southwest, ON]

That's because the sellers are trying to convince the buyers that they're getting the real thing, although perhaps last year's model, and that's fraud.

[Bob Sotiriadis]

No. Often even reputable department stores sell counterfeit goods unknowingly. It's the person who imported them who got good quality, put the right labels on, he's the person who's making us lose all this money. From what I understand, the policy is not to go after retail counterfeiting. The store is not a counterfeiter. They happen to be selling what we call infringements, or—

[Tom Wappel, Liberal, Scarborough Southwest, ON]

They're an innocent buyer.

[Bob Sotiriadis]

Yes, and that's where the price goes up fast on the lost goods, you're right. But $10, $10,000, maybe they throw it into their figure, but it goes up fast. It goes up very fast.

[Tom Wappel, Liberal, Scarborough Southwest, ON]

Thank you.

Thank you, Chair.

[The Vice-Chair, Liberal, Roy Cullen]

Thank you, Mr. Wappel.

That's going to wrap it up. I should point out that Interpol estimates about 5% to 7% of world trade is now counterfeit goods. In fact, I was just in Europe at the Council of Europe, where they are doing a lot of work on this and trying to elevate the importance of it. The studies there are saying it's 7% to 10% of world trade that's now in counterfeit goods.

Nonetheless, I want to thank all the witnesses for coming. Of course, as the name of this committee would suggest, we're focused primarily on public safety and national security, and I note that the Standing Committee on Industry, Science and Technology is beginning some work, and I think they will delve, I'm sure, looking at their witness list, more into the piracy issues, as they do not affect us directly at public health and safety.

I have a request, Mr. Geist. You had mentioned the RCMP report Project Sham, I think it was called. We didn't hear about that from the RCMP, to my recollection, and I think you accessed it through Access to Information? If you could make a copy of that report available to the committee, we'd much appreciate it. It would be quicker to do it that way.

Thank you again, ladies and gentlemen. We're going to pause now for about two minutes, and then we have to come back in camera to deal with the item on the agenda, Bill C-279. I don't think it should take too long.

Thank you very much.

[Proceedings continue in camera]