Evidence of meeting #56 for Industry, Science and Technology in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was problem.
A recording is available from Parliament.
4:40 p.m.
Supt Ken Hansen
I don't think they've appeared yet. The charges have been laid, but I don't think they've been sentenced yet. As a matter of fact, I'm sure they haven't been sentenced yet.
4:40 p.m.
NDP
Brian Masse NDP Windsor West, ON
Could we get back for the committee...? I'd be interested to see what the full penalties could be in a case like that, because that, to me, would determine whether you can even make an example of someone.
4:40 p.m.
Director General, Marketplace Framework Policy Branch, Department of Industry
What you're raising is extremely important. In this case it is a counterfeit and perhaps pirated good, to the extent that there is unauthorized use of a CSA logo and perhaps some copyright violation as well. So yes, it might be a counterfeit good. Where it becomes trickier is if, as you say, the consumer buys something in the discount store that would cost five times the price outside. Are they being defrauded? Do they actually know there's something wrong with that? Or, in normal stores, do they think they're buying the legitimate product and they are not?
To protect the consumer, we have to distinguish the circumstances of the purchase. What Ken is suggesting is that more and more we're blurring those two lines. The consumer is getting more and more confused. Perhaps there are also circumstances in those discount stores where there is no copyright or trademark infringement; there is no CSA label, and consumers know they're taking a risk. Those are more public safety and health issues than a counterfeit issue in the context of an intellectual property crime.
We are still trying to figure out where the trend is and how important the public and health issues are versus the counterfeit. It goes without saying that the counterfeiters, or those who replicate in an unauthorized manner, will go where the money is. If people know that using the CSA logo will increase their sales, they will use it; hence, they will become counterfeiters.
The situation is more complicated on the ground than one is led to believe by looking at IP laws versus public and health safety issues.
4:45 p.m.
NDP
Brian Masse NDP Windsor West, ON
Has the insurance industry been part of the discussions of your working group?
4:45 p.m.
Director, Intellectual Property, Information and Technology Trade Policy Division, Department of Foreign Affairs and International Trade
We met with the Chamber of Commerce and the Canadian Anti-Counterfeiting Network. I don't believe there are any specific insurance issues that have been brought before us.
4:45 p.m.
NDP
Brian Masse NDP Windsor West, ON
I worry that in the future someone may not get their insurance coverage if a counterfeited item is seen in their home and it was the cause of a fire or something.
4:45 p.m.
Supt Ken Hansen
Until a couple of years ago we never would have considered that this might have been the cause of a fire. It's only been in the last two years that CSA has been doing training with fire marshals and so on.
I investigated lots of arsons when I was in the field. If something like this caused a fire, it was defective. I never would have looked to see if it was counterfeit.
4:45 p.m.
Liberal
Gerry Byrne Liberal Humber—St. Barbe—Baie Verte, NL
Thank you very much for your presentations.
We, as a committee, were seized with this particular issue about an hour and fifteen minutes ago, but you've obviously been working on it for some time. How long has your particular interdepartmental working group been in place?
4:45 p.m.
Director, Intellectual Property, Information and Technology Trade Policy Division, Department of Foreign Affairs and International Trade
A little over two years.
4:45 p.m.
Liberal
Gerry Byrne Liberal Humber—St. Barbe—Baie Verte, NL
Based on each and every one of your presentations I think all of us are seized with the notion that one of the key issues is updating various acts to meet modern-day realities. Some of these acts are 50 years of age. They were born in eras when closed trade existed, prior to free trade and increased globalization.
Has your committee been asked to report to the Privy Council Office or to cabinet with specific recommendations on legislative and regulatory changes? If so, could you share them with the committee so we may not necessarily reinvent this particular wheel and fraudulently copyright it.
4:45 p.m.
Director, Intellectual Property, Information and Technology Trade Policy Division, Department of Foreign Affairs and International Trade
I don't think we've taken out a copyright on it.
We have been working on this. As you notice, it's a very complex issue, with a number of different players and agencies and international questions. We've analyzed the problems. We're looking at legislative gaps. Resource issues have come up. We're in the process of looking at very specific options and the technical details with the intent of preparing recommendations. Unfortunately, at this time we cannot share them with you. These will be shared with our respective ministers when we're in a position to do so. But the work is ongoing.
4:45 p.m.
Director General, Marketplace Framework Policy Branch, Department of Industry
That being said, there have been lessons learned, clearly. We are looking at our international partners. In my introductory remarks, I was saying that there are two basic philosophies out there. In one, border enforcement in particular is strengthened à la U.S. The U.S. is taking on a very strong and costly role to try to stop the importation of counterfeit goods. In the more moderate approach, in the E.U. for example, there is a partnership with industry, to try to set up a system whereby they share the cost and the burden of trying to prevent the entry of those counterfeit goods. So clearly we are informed by those.
We are very much informed by the industry in Canada as well. They've invested a lot of time and effort in the CACN report itself and in issuing recommendations. Obviously we're looking at those recommendations, because as my colleague, Danielle, mentioned earlier, until recently—five years is fairly recent in legislative terms, believe me—there was no attention given to the fact that global trade was so great and that the Internet was such a great factor in terms of incentivizing the flow of counterfeit goods and pirated goods. It is now clearer that we should be focusing more on the various legislation. I'm not just saying IP legislation; I'm also saying, as did my colleague, that we should be focusing on the legislation in terms of regulatory frameworks, in terms of what works. So clearly that's a focus that is—
4:50 p.m.
Liberal
Gerry Byrne Liberal Humber—St. Barbe—Baie Verte, NL
I think, though, the committee, in our generation of a study and ultimately in recommendations, at that point comes to a bit of a crossroads. If there are no specific recommendations for legislation, we can investigate and probe further the Copyright Act, the Patent Act, and a whole plethora of legislation and regulations that are out there, and we can come to cross ends and determine whether or not we should be recommending this. Basically, that's probably not going to happen. So we'll have to wait until a future time when the government comes forward with recommendations, notwithstanding my friend Mr. Brison's recommendation for an amendment to a piece of legislation.
The next issue is that we're trying to control, manage, and make safe the Canadian supply chain and the distribution for wholesale and retail purposes within the Canadian supply chain. I guess the other point would be how we secure the competitiveness of Canadian industry in terms of the global marketplace. What mechanisms should we be looking at? Say, for example, a Canadian company has a particular piece of patented intellectual property that's being infringed on by a foreign manufacturer in Asia, potentially. What should we be looking at as a committee?
4:50 p.m.
Director, Intellectual Property, Information and Technology Trade Policy Division, Department of Foreign Affairs and International Trade
This issue is a problem not just for Canada; it's a problem for a lot of countries, in that you're seeing your copyrights, your trademarks, your patents infringed on. We're working closely through the G-8, APEC, and other agencies to try to get international cooperation. That's on the international side. Domestically, Foreign Affairs and International Trade has trade commissioners overseas, and we can provide advice overseas on particular markets.
The biggest problem we've found with some of the smaller companies is that they don't understand the need for registering patents in other countries or how to go about doing it. So it's an issue that we're working on in cooperation with the U.S., EU, and others to ensure that there's information available to companies working overseas and producing overseas. We have some very specific information on some of the procedures for anyone interested in dealing with China.
4:50 p.m.
Conservative
April 25th, 2007 / 4:50 p.m.
Conservative
Bev Shipley Conservative Lambton—Kent—Middlesex, ON
Thank you very much.
This has actually been a bit of a startling investigation--or at least it has been for me anyway--learning the extent and the breadth and the number of products that we're actually dealing with. I know we focused on some of the ones that are available--the CDs and those types of things, which are important in the industry. Obviously, and this was brought up earlier, those that put human life at risk, to my mind, are the things that are the most significant, but we need to tackle all of them as a package.
I'm wondering whether or not one avenue would be the stores that actually put them on the shelves. In your thoughts, is there something that should be put in place in terms of their being charged for carrying counterfeit products, or are they so sophisticated that some actually don't know they're there?
4:50 p.m.
Director, Intellectual Property, Information and Technology Trade Policy Division, Department of Foreign Affairs and International Trade
The Canadian Anti-Counterfeiting Network is in a better position to give you details from the industry. But we've heard from Canadians and internationally that some very sophisticated organizations are introducing counterfeits into supply chains. So one of the recommendations to industry is to better secure its supply chain to make sure this isn't a problem. Big industries are unknowingly buying products that are counterfeit.
4:50 p.m.
Conservative
Bev Shipley Conservative Lambton—Kent—Middlesex, ON
I'm looking at that breaker. It has Westinghouse and CSA labels and everything on it. A major construction company has purchased that for a hospital. You would think that a reputable electrical company doing that, knowing that it is going into a hospital in this particular case, in intensive care...so the conscience is not there.
Do you believe that a change in regulation with stiffer criminal codes will actually be a deterrent, or is there just so much profit that it will be more of a nuisance than a deterrent in stopping it?
4:55 p.m.
Supt Ken Hansen
I was asked earlier if we usually get convictions. Most of the time we do get convictions, but part of the reason is that we pick and choose which ones we go to court with.
The reason we don't get convictions in some cases is because we have to prove the knowledge, and that's a very hard thing to prove. Between the manufacturer and the retail level there's a supply chain, and you have to prove how many people in that supply chain knew this thing was counterfeit. Sometimes that's not easy. So maybe the retailer didn't know, maybe they did, or maybe they were told it wasn't counterfeit, it was refurbished, or something like that. There's also the concept of wilful blindness.
We do sometimes charge the retailer, although generally we try to work backwards and go for the wholesaler, the importer, and the manufacturer, and leave the retailer up to the private sector.
4:55 p.m.
Conservative
Bev Shipley Conservative Lambton—Kent—Middlesex, ON
Industry groups have come together. You're talking about a working group that is meeting. We're listening to dialogue and information that's coming to us. To follow up a little on Mr. Byrne's perspective, we're going to be looking for some direction. Where do we as a committee fit in to help the Canadian consumer—our families? Whether it's in pharmaceuticals, electrical, or whatever, it all affects families.
Quite honestly, we've tried to do some fairly concrete things in the justice system to help it go against people who commit serious crimes against our families. So is it totally about resources or legislation, or is there a combination that we need to be looking at more stringently?
