Canadian Heritage Committee on Feb. 7th, 2011

[Daniel Drapeau]

In my handout, you can see my observations on the weaknesses of the Canadian system, which are on the left, and my recommendations, which are on the right. In the middle I've added a column on the relevant provisions of ACTA.

Now please note--and I know there's a lot of discussion on Bill C-32 and on the Copyright Act--ACTA will impact not just on copyright. ACTA also impacts on trademarks, and a number of my comments today will be directed to trademark protection, which receives very little temps d'antenne.

The problems I've identified and that are dealt with in ACTA are in the left-hand column. I'll go through them briefly. From a criminal point of view, the RCMP and crown prosecutors do not act under the Trade-marks Act for the very simple reason that there are no criminal dispositions under the Trade-marks Act. We need criminal law, because fighting counterfeiters only under civil terms is basically fighting crooks by the books: it doesn't work. From a cooperation point of view, we have a blockage of information. The RCMP and Canada Customs cannot provide information to rights holders, which impedes their ability to institute civil actions in a timely fashion.

And finally, from a deterrence point of view--which I think is the worst part of our system--we have no statutory damages under the Trade-marks Act. The maximum penalty under the Copyright Act is $20,000, which is completely not comparable to the profits that are made by counterfeiting, and this maximum amount has been awarded only three times, in three cases where the plaintiffs were represented by our firm, since 2006.

Finally, case law is very ill equipped to deal with this. We still have some notions that the cost of the fight against counterfeit is the cost of business and should not be paid by the counterfeiters. This is jurisprudence from the Federal Court.

The solutions--and I have 30 seconds left--that I propose to you, which you have on the right side of my handout, you can implement either through piecemeal legislation--you can amend the Trade-marks Act to provide for criminal dispositions, statutory dispositions, and statutory damages--or you could have an omnibus bill with civil and criminal components that would ensure parity between trademarks and copyright, so not a different outcome, depending on which rate you can fit yourself under.

[The Chair, Conservative, Michael Chong]

Okay. Thank you for that, Mr. Drapeau.

Mr. Del Mastro, one question, and then I'll proceed to the next member.

[Dean Del Mastro, Conservative, Peterborough, ON]

I agree with you 100%. I do think it's critically important. In part, while you said you didn't think Canadians wanted to hear what some of these folks have to say, I think in some ways we need to hear some of that. Because we are a bit of a pariah when it comes to the protection of...I don't care if it's IP, I don't care if it's cultural products in this country, whether it be music or otherwise, we're currently an outlier, and I never realized we were experiencing similar difficulties on trademark protection.

You have made some specific recommendations in this document. Maybe you'd like to go over those for the benefit of the committee, because I don't think you had an opportunity to do so.

[Daniel Drapeau]

In terms of what other countries are saying about us, I had informal discussions with people who are obviously much more open. However, in the public sphere you have the U.S. trade representative's special watch list, where we've been high up there with China, Algeria, Pakistan, India, and Venezuela for at least the last 10 years, with respect to our border enforcement, with respect to the lack of resources afforded both to order enforcement and law enforcement.

More recently, the EC mentioned in a document that's called, “Assessing the costs and benefits of a closer EU-Canada economic partnership: A Joint Study by the European Commission and the Government of Canada”...at page 88 it reports that Canadian “court, customs, and police enforcement mechanisms can be difficult to activate”. When you consider the amount of diplomacy that goes into these documents, this is a pretty strongly worded statement.

So you're getting it not just from the Americans, you're getting it from the European Union. It is publicly known that our system is quite weak. During the hearings at the security committee and at the science and industry committee, that was also mentioned.

We're beyond that stage. My recommendations....

Yes?

[The Chair, Conservative, Michael Chong]

Just finish that thought and then we're going to go to Madam Crombie.

[Daniel Drapeau]

My recommendations, in short.... In Canada right now we've got a problem, in that if you go under the Copyright Act, you can have statutory damages. Statutory damages, for those of you who don't know, are damages for which you do not need to prove your actual loss. This is very important in the fight against counterfeits, because the minute you get a counterfeiter, the first thing he's going to tell you is his $5 cheapo doesn't cause a serious loss because he's selling it so cheaply. That's not the issue; it's the aggregate of the problem that creates an issue. That's been recognized under the Copyright Act. The Trade-marks Act has no statutory damages, so you have to prove your actual loss under the Trade-marks Act.

Copyright is good for the life of the author, plus 50 years. Trademarks can potentially be eternal. So you have a lot of rights' owners who will rely on trademarks rather than copyright.

If you have one take-home message, that's the one I'm giving you. There are other points in my handout.

[The Chair, Conservative, Michael Chong]

Thank you, Monsieur Drapeau.

Madam Crombie.

[Bonnie Crombie, Liberal, Mississauga—Streetsville, ON]

Thank you to both our witnesses today.

I'll start with Mr. Drapeau, and if I have any time I'll move over. I'm really surprised that Canada is part of the problem and not part of the solution.

Can you explain how that is? There are nations you've described that are far worse, obviously. I don't know if I'm supposed to list them, but I'll let you do that. So tell me how it is that we're so much a part of the problem.

[Daniel Drapeau]

I find it somewhat disheartening that you're surprised, and I don't mean to say this aggressively, because I'm sure you're not the only one who is surprised, both in this room and outside this room.

The work the anti-counterfeiting community has been doing for at least the last five years is to raise awareness. Our awareness campaign is so good that it is the only awareness campaign that is featured at the Musée de la Contrefaçon, operated by the Union des Fabricants in Paris, which I think is quite good.

Why are we behind the curve? The Trade-marks Act is quite old. It hasn't been updated to reflect modern realities. Counterfeiting has taken an incredible effort in the last 10 years. We're just not up to date.

That's the underlying reason. Other reasons include there being no political champion for this. We need a strong member of Parliament, a minister, somebody who champions this cause. You don't want to wait until people die because bus parts are counterfeit or medication is counterfeit. So far there have been instances like that, but the evidence is not strong enough to demonstrate an absolutely undebatable link. Once that happens, you'll have Canadians asking you what you were doing. And guess what? The transcripts of this testimony will be public.

[Bonnie Crombie, Liberal, Mississauga—Streetsville, ON]

Now tell me, how will ACTA impact the copyright bill, Bill C-32, if it's passed?

[Daniel Drapeau]

First of all, on C-32, my overall comment is that ACTA aims to “responsibilize” various people, including Internet service providers, and to provide remedies against anti-circumvention devices. When one reads Bill C-32, one gets the impression that the aim is to “de-responsibilize”.

Here are a couple of examples for you. I was talking about statutory damages. Currently they are $20,000, and you get $20,000 for each work that is infringed upon, no matter how many rights owners are pursuing a given infringer. Usually when counterfeiters sell, they don't just sell one brand; they sell a number of brands. Under C-32, we now have statutory damages reduced from $20,000 to $5,000, and we have this new rule, which I'll describe in French, because we have a term that describes it so accurately: au plus fort la poche. So you have five rights holders who are suing an infringer. Well, the first rights holder who sues gets the $5,000. The others get diddly-squat.

My view on C-32 is not a very positive one. Also, the way the liability of ISP service providers is framed, it seems as if we're dealing with the exceptions rather than the liability.

In terms of the impact ACTA is going to have on C-32, I read the testimony of January 31, and initially I wasn't in agreement that C-32 complies completely with ACTA. That's because I was reading earlier versions of ACTA, mainly the version that immediately preceded this one. With the one we have right now, yes, C-32 complies. But once again, we're not ahead of the curve. We're not showing the way to anybody.

[Bonnie Crombie, Liberal, Mississauga—Streetsville, ON]

What's in place right now? What regulations are in place now? What kinds of enforcements do we have? Who's responsible for enforcing? In fact, who's going to be responsible for enforcing ACTA? You've already talked about the penalties, which are statutory damages. Are there criminal charges as well?

[Daniel Drapeau]

Who's in charge of ACTA? There will be an ACTA committee, which is provided for in chapter 5 of ACTA. Now, will it have the pouvoir contraignant? I don't know. Honestly, I don't think so. It's a general demonstration of an intention on the part of developed countries to do something about counterfeiting.

By the way, the reason I was saying that part of ACTA was to bring Canada on board is that a lot of these countries don't really have problems in their legislation, so there's no overwhelming need for them to get together to make a treaty.

In Canada, you have things split in a number of directions. Customs is a first line of attack. The problem here is that customs has no power to seize counterfeits because they're counterfeit. They have power to seize when somebody makes a false declaration of importation, but they have no power to seize and no power to destroy.

[Bonnie Crombie, Liberal, Mississauga—Streetsville, ON]

The person may not be aware that they purchased a counterfeit.

[Daniel Drapeau]

Well, that leads to another problem. Canada, contrary to most other developed countries, does not have a system of recordal of rights at the border. So when you want to sensitize customs to your rights, what you have to do is make sure that your sales representatives make friends with customs or the RCMP and that they basically interest them in checking shipments that come in and show them how to recognize counterfeits. It's actually quite easy to recognize a number of counterfeits. It's just a question of whether you have the resources to allow that verification to take place.

Customs is one place. The RCMP is another. But as I said, the RCMP won't act under the Trade-marks Act.

The last thing is civil enforcement, where the penalties aren't strong enough.

[The Chair, Conservative, Michael Chong]

Thank you very much. Thank you Madam Crombie.

We'll go to Madam Lavallée or Monsieur Pomerleau.

Monsieur Pomerleau.

[Roger Pomerleau, Bloc, Drummond, QC]

Thank you Mr. Chair.

Thank you, both of you, for your presentations. In my opinion, they were among the best and clearest we have heard in a long time.

My question is for you Mr. Drapeau. The minister recently told us, with a straight face, that Bill C-32 would be dealt with first before tackling the Anti-Counterfeiting Trade Agreement.

Do you not think that it would be better to tackle things the other way around in order to send the message that our legislation will comply with the treaty we intend to develop?

[Daniel Drapeau]

Do it in any order you like, but just do it! It has dragged on for long enough. You have everything you need. You have recommendations from the Canadian Anti-Counterfeiting Network, numerous other groups, practitioners like me and also from an institute of intellectual property. Whichever one you choose to do first … just do it!

In my opinion, the current version of Bill C-32 makes the problem worse not better. However, I realize that that is not the topic of the discussion today. Consequently, I will stop there.

[Carole Lavallée, Bloc, Saint-Bruno—Saint-Hubert, QC]

Tomorrow morning at 11 a.m.

[Daniel Drapeau]

If you want to invite me back, it would be my pleasure to appear before you again. I gave a presentation on the issue to the ADISQ.

Bill C-32 does not resolve the disparity between the Trademark Act and the Copyright Act. It will not tackle the lack of legal provisions to protect trademarks.

There are provisions in the Criminal Code but they are not tailored to the issue of trademarks. In answer to your question: do it whenever you want but do both, and quickly.

[Roger Pomerleau, Bloc, Drummond, QC]

My second question is for you Mr. Vallerand. European Union negotiators have some reservations about giving a blanket exemption to culture. This is extremely surprising because this is not what we believed their position to be.

[Charles Vallerand]

Indeed.

[Roger Pomerleau, Bloc, Drummond, QC]

I know that you have answered most of the questions we have asked you but I have more questions than I have answers. Just how do you account for the European position exactly? Where is the problem? Is it just because they cannot agree?

[Charles Vallerand]

You are asking me to answer for the Europeans.

[Roger Pomerleau, Bloc, Drummond, QC]

Yes, you have not—