Mr. Speaker, it is my pleasure to rise in the House today to speak to Bill C-8, the combating counterfeit products act. What a great short title for a bill. Who could possibly not be against counterfeit products coming into our country, especially when they may pose serious health and safety risks for Canadians? Certainly New Democrats are against that. However, despite the fact that the bill tries to frame the debate in the now infamous George Bush way of suggesting “you are either with us, or you're against us”, my NDP colleagues and I take our responsibilities here in the House very seriously, and we proposed a number of amendments that would have vastly improved the bill. So yes, despite supporting the thrust of the bill, we were at times critical of some of its provisions.
Let me not get ahead of myself. I will speak to our proposed amendments in due course. First though, let me spend a moment commenting on the bill as a whole. Bill C-8 would amend both the Copyright Act and the Trade-marks Act so as to strengthen enforcement of copyright and trademark rights and to curtail commercial activity involving infringing copies or counterfeit trademark goods.
To that end, the bill would add two new criminal offences under the Copyright Act, for possession and exportation of infringing copies, and create offences for selling or offering counterfeit goods on a commercial scale. It would also create a prohibition against importing or exporting infringing copies and counterfeit goods and introduce some balance to that prohibition by creating two exceptions: one, for personal use, meaning items in one's possession or baggage; and two, for items that are in transit.
On the enforcement side, the bill would grant new ex officio powers to border officials to detain infringing copies or counterfeit goods. This is a significant policy shift. Until now, border officials required private rights holders to obtain a court order before seizing infringing copies or goods. I will have much more to say about that in a moment, but first let me continue with my quick overview of Bill C-8.
The bill would also grant new ex officio powers to the Minister of Public Safety and border officials to share information on detained goods with rights holders. Lastly, it would widen the scope of what can be trademarked to the features found in the broad definition of “sign”, including colour, shapes, scents, taste, et cetera.
There can be no doubt that dealing with counterfeiting and infringement is important to both Canadian businesses and consumers, especially as I said before, where counterfeit goods may put the health or safety of Canadians at risk. However the bill is only as good as its enforcement. The strongest laws in the world do not mean a thing if governments are not willing to dedicate the necessary resources to crack down on counterfeit products coming into our country. When I look at the Conservative government's track record in that regard, I fear that we might be creating a paper tiger.
It is very difficult to see how a bill like this would be implemented, when last year alone the Conservatives slashed $143 million in funding to the Canada Border Services Agency, which further reduced front-line officers and harmed the agency's ability to monitor our borders. In fact, CBSA's report on plans and priorities indicates a loss of 549 full-time employees by 2015.
When I asked the minister about that at committee, he said that no new resources would be needed to implement the bill, but that means that border officials and the RCMP would have to reallocate existing resources to enforce this new law and that begs two questions. Which of the functions that they are currently performing to keep Canadians safe are they going to drop to enforce Bill C-8; or are they really not going to get serious about combatting counterfeit goods, in which case, why are we passing this bill? We never did get a satisfactory answer to that question, but it is a point that we will continue to press because it is critical to the successful fight against counterfeiting.
I want to move on now to a different issue. Canadians will remember that my NDP colleagues and I have often criticized the Conservative government for failing to take a balanced approach to copyright legislation in the past. The government's record was far from stellar. I do want to give the government some credit where credit is due. Bill C-8 contains important measures to protect consumer and individual rights, and my NDP colleagues and I worked hard at committee to make sure that these measures were maintained and strong.
When dealing with intellectual property, it is imperative that we adopt an approach that strikes a balance between the interests of rights holders and the interests of users and consumers. At first, alarm bells went off when the deputy minister for the Department of Industry said that Bill C-8 would bring Canada in line with the Anti-Counterfeiting Trade Agreement. ACTA contains copyright provisions that have been heavily criticized for failing to achieve this necessary balance. The European parliament rejected ACTA after an unprecedented outcry because its benefits were far outweighed by the threats to civil liberties.
Those threats included the risk of criminalizing individuals, concerns about the definition of “commercial scale”, the role of Internet service providers, and the possible interruption of the transit of generic medicines. In the end, the European Parliament rejected the anti-counterfeiting trade agreement.
I was therefore happy to see that Bill C-8 is much narrower than ACTA and that it contains a number of provisions that offer balance. There are important personal-use exceptions and exceptions for goods that are in transit. Most important, the bill does not address Internet service providers. Therefore, while my NDP colleagues and I continue to be concerned about the broader provisions in ACTA, we are comfortable supporting Bill C-8.
Ironically, it was the Liberal Party that, at committee, threatened to undermine the important balance that Bill C-8 struck. In fact, it moved two amendments that we worked hard to defeat precisely for that reason.
The first Liberal amendment was to remove the personal-use exception for individual travellers, a provision my NDP colleagues and I believe is absolutely crucial to bringing some balance to the bill.
As Dr. Michael Geist, Canada Research Chair in Internet and E-commerce Law, put it in his blog:
Given that personal use exceptions are even included in the Anti-Counterfeiting Trade Agreement, it is shocking to see any party proposing their removal, which would result in longer delays at the border and increased searches of individual travellers...“this was one of the important provisions that brought some balance to the bill.”
Professor Jeremy de Beer added that:
...the personal use exception...[is] important...to make the whole system workable, manageable, and cost-effective. It's not possible to do everything within the resource allocations and the training parameters that our agents are provided with. So the system in the bill as it is creates a very pragmatic, workable starting point, and I would encourage us just to leave it there.
Thankfully, the Conservatives agreed with us, and the Liberal amendment was defeated.
The same was true of the Liberal amendment to add statutory damages to the bill. Having already proposed removing the personal exception for travellers and a simplified procedure for the seizure of goods that would remove court oversight in the destruction of goods in a greater number of cases, the Liberals proposed an amendment to add statutory damages, with a mandatory minimum of $1,000 and a maximum of $100,000 in liability. The provision would limit the discretion of judges to order damages based on the evidence.
Again, I am going to quote the expert testimony by Dr. Geist at our committee:
With respect [to trademarks], statutory damages...are unnecessary. Rights holders frequently cite the specific value of their goods and the harms associated with counterfeiting. If the claims are accurate, demonstrating the value for the purpose of a damage award should not be difficult.
Moreover, other countries have experienced problems with statutory damages for trademarks. For example, Taiwan reformed its trademarks statutory damages provision when courts began awarding disproportionate awards. In the U.S., statutory damages for trademarks has led to trademark trolls engaging in litigation designed primarily to obtain costly settlements against small businesses that can ill afford to fight in court.
Again, my NDP colleagues and I were adamant that this amendment be defeated, because it not only undermined the delicate balance achieved by Bill C-8 but actually went beyond what even ACTA had envisioned.
Not all proposed amendments were bad, however, and as I said at the outset, there were sections of the bill that could, and should, have been strengthened. To that end, I want to spend the remainder of the time available to me here to highlight just a few of the amendments my NDP colleagues and I moved in committee in a sincere effort to improve the bill.
The first was one that all parties ended up agreeing to, which was that we needed to return to the original definition of “distinctive” in the Trade-marks Act.
I understand that squabbling about definitions may seem as exciting as watching paint dry, but in this case, it was important that we get it right.
As the generic drug industry persuasively argued before our committee, there is significant case law to make it possible for a generic version of a drug to have the same colour, shape, and size as the brand-name drug with the same effect. This is absolutely crucial for the patients who are using those drugs, since any confusion could have deadly consequences.
To throw that case law into doubt by changing the existing definition for no demonstrably important reason made no sense to any of us on the committee.
I am pleased to say that the original definition is now restored in Bill C-8. Sadly, the spirit of co-operation did not extend to other amendments that would have been equally important to ensuring that the intent of the bill was actually reflected in its language. For example, the NDP moved amendments to Bill C-8 that would have ensured that parallel imports would be excluded from the bill's reach.
Intellectual property lawyer Howard Knopf told us:
The bill should propose appropriate declaratory language for both the Copyright Act and Trade-marks Act that makes is [sic] absolutely clear that, with the exception of the sui generis book importation scheme now found in s. 27.1 of the Copyright Act, neither of these acts shall in any way restrict the importation, distribution or sale of any product, whether tangible or digital, that has been manufactured or first put on the market anywhere in the world with authorization.
This is crucial, because parallel importation is an important tool for many businesses for participating in perfectly legal trade, which we would not want to discourage. Yet the bill is unclear as to whether trade like this could unintentionally get caught under this bill. We of course continue to expect that important health and safety standards are met by all parallel imports, but at the same time, we want to ensure that small and medium-sized businesses, and in fact businesses of every kind, can continue to engage in parallel importation.
We heard from Jeremy de Beer at committee. He said:
...I've consulted with a number of my expert colleagues, other intellectual property experts—we don't understand how this doesn't apply to parallel imports. If it's inadvertent, then it's an easy fix. If everybody agrees this shouldn't apply to parallel imports, then we just add an exception for parallel imports and the matter's closed.
We could not agree more, but unfortunately, the government rejected the amendments that would have added that much-needed clarity to the bill.
Our NDP amendments to create a duty to use the measures of the bill in good faith unfortunately met the same end. The intent of our amendments was to counter vexatious litigation and to prevent a rights holder from using detentions and delays to harm a competitor in cases where there was no legitimate counterfeit infringement concern. This is especially important for small-business owners whose businesses may not be able to survive the costs of malicious or bad-faith claims. Again, this was a concern that was raised in testimony to our committee.
Michael Geist made this clear:
...detention of goods can be used to harm small Canadian businesses that could find the goods they are seeking to import detained, oftentimes by competitors. The absence of a misuse provision in this bill is particularly notable in this regard.
Our amendments should have been seen as friendly. They were in keeping with the spirit of the legislation and simply sought to improve enforcement mechanisms without creating new barriers to competition. Sadly,the government rejected our good-faith efforts to improve the bill.
In a similar vein, we tried to amend Bill C-8 to address the costs that may be borne by small businesses for the wrongful and mistaken detention of goods. As the bill is currently written, it contains a “no liability” provision for the crown and provides for damages against rights holders in cases where court proceedings are dismissed or discontinued. In attempting to strike an appropriate balance between consumer and industry interests, Bill C-8 would place the cost of detaining suspect goods on the rights holder. However, as we heard during testimony at committee, Bill C-8 is clearly lacking misuse provisions to ensure that actors are not engaging in frivolous claims as a means of acting anti-competitively. As a result, our amendments sought to provide the courts with the clear authority to provide for damages where any court action is determined to be frivolous, vexatious, or made in bad faith.
Without creating a new barrier for rights holders to protect their copyright or trademark, this amendment would create a safeguard to ensure the integrity of the system and would protect small businesses from the possibility of a company abusing the provisions of Bill C-8 for anti-competitive purposes rather than for protecting their legitimate intellectual property. Although we again believed that these amendments would be deemed to be friendly by the government, we were mistaken. These two were defeated, and in our view, it was an important missed opportunity to make the bill stronger.
The last NDP amendment I want to highlight here was our effort to create a tool for assessing whether the bill would actually be effective in combatting counterfeit products, as the bill's title would have us believe it would be. When my NDP colleagues and I asked in committee whether it was possible to ascertain the extent of the problem of counterfeit goods coming into our country, the answer was a resounding no. At best, we know the value of the seizures that were made. As the RCMP told us, the retail value of counterfeit goods they seized increased from $7.6 million in 2005 to $38 million in 2012. However, that does not account for any of the goods that were not detected as they crossed our borders.
That is a significant concern, especially since, as I said earlier, the government has cut the ability of Canada Border Services to do its job by slashing the agency's budget by $143 million. That cut has seriously harmed our ability to monitor our borders.
We know that the problem is bigger than the numbers reflected in the RCMP's seizure stats, but accurately measuring the scale of counterfeit copies and goods in Canada remains difficult. This is owing to the clandestine nature of counterfeiting. In addition to the actual seizures, much of the data are estimates based on anecdotal information or are from industry itself, in which case, the collection methods may be unavailable to assess.
What we do know is that counterfeit products can pose risks to the health and safety of consumers, whether we are talking about counterfeit electrical components, faulty brake pads, or unsanitary stuffing in goose down jackets.
According to the Chamber of Commerce's Canadian Intellectual Property Council, counterfeit batteries have exploded in the desks of police who have stored them, and the acid leaking from counterfeit batteries has caused burns to at least eight Canadian children. It is precisely for those types of safety reasons that it is essential that we know the scope of the problem. How else can we know whether we are assigning the appropriate resources to dealing with the problem of counterfeiting?
When I raised this issue with the Minister of Industry in committee, he acknowledged that there are no more accurate estimates out there. When we asked the RCMP whether it had numbers, just with respect to the number of Canadian manufacturers who have been convicted of importing or exporting counterfeit goods, we were told that it had no figures for that either. Therefore, it seemed to us that the bill could create an important opportunity to require accurate information to be both collected and reported so that Parliament, and more importantly Canadians, would have a better way of evaluating whether we were being successful in addressing the concerns at the heart of this bill. In fact, we were simply echoing the recommendation of the industry committee in 2007, which called on the government to establish a reporting system that would track investigations, charges, and seizures for infringing copies and counterfeit goods as a means of collecting some data.
Our proposed amendment had the support of the Canadian Association of Importers and Exporters. Joy Nott, the president and CEO of the organization, responded to a question from me by saying:
Do I support the monitoring of this sort of thing? Absolutely I do. I think that's a great idea because, from a business perspective, business lives on metrics and on data. This is how they help to make decisions. Right now when it comes to copyright infringement, trademark infringement, and the ability to import into Canada, it's a little bit like the wild west in that there's nothing that stops these shipments at the border currently unless the owner of the trademark takes specific, very onerous action through Canadian federal courts to register something.
Since there seemed to be agreement that a reporting requirement would be an important improvement to Bill C-8, we moved an amendment to require an annual report to Parliament with information on detainments made under the bill. We had hoped for information on the number of detainments, the number of requests for assistance under both the Copyright Act and the Trade-marks Act, and the number of inspections conducted. Sadly, the government members voted to defeat this amendment, and once again confirmed for me that this government has complete disdain for evidence-based decision making.
Despite the fact that our amendments were defeated, we continue to be supportive of the bill as a whole. In this case, at least it is a start. Dealing with counterfeiting and infringement is important for both Canadian businesses and consumers. Members can rest assured that with or without a report back to Parliament, we will not stop holding the government to account on this important file. Without adequate resources for enforcement, C-8 will prove to be a paper tiger. That cannot be allowed to happen, especially when the health and safety of Canadians may very well be at risk.