Evidence of meeting #57 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 product.
A recording is available from Parliament.
Executive Director, Entertainment Software Association of Canada
A short answer? Yes.
Director, Corporate Audits and Investigations and Chair of the Canadian Anti-Counterfeiting Network, CSA International
Yes, just to that point, not only NAFTA, the G-8...it is a global issue. Europeans have trouble with Eastern bloc countries, developing countries, farming it in, and it's taking circuitous routes. I think we recognize through law enforcement that there is circuitous routing with organized crime. They are the global perspective.
So not only would I endorse that approach, but I would look at it holistically, as part of a global approach for all countries.
Vice-President, Sales and Business Development, Polyform Foam Plastics Inc.
The answer is definitely yes. As nations, those countries have to clean it up themselves. If we have to deal with these people, if we have to deal with those countries, they must perform to some standards, and they must go after the ones who are counterfeiting and infringing the patents.
As a general aspect, not only for specific Nintendo games or plastics or electric cords, but as a nation, they must clean up and act by themselves. Then, yes, we can deal with them, without having tax restrictions or anything like that.
Conservative
Bev Shipley Conservative Lambton—Kent—Middlesex, ON
Thank you very much.
I appreciate your coming today.
As we listened to witnesses over the last couple of days, I think some of the stuff is a little more frightening than most of us, as lay people, would have recognized when we walk into the store and see the CSA, a recognized name stamped on it, and then we find out that it may or may not be. As a consumer, when I looked at some of the products, I wouldn't know they didn't come from the original manufacturer.
But understanding that the U.S. would have tougher laws than we have, and we've been reading some of the information that's coming across, do you agree with that? Should we use some of their legislation as a format, if it is tougher?
Executive Director, Entertainment Software Association of Canada
I'm sorry, can you repeat the last part of the question?
Conservative
Bev Shipley Conservative Lambton—Kent—Middlesex, ON
If it is tougher legislation, should we use that as a guideline for our legislation?
Executive Director, Entertainment Software Association of Canada
Absolutely. We can take lessons from a number of countries around the world that have already grappled with a lot of these very complex issues. I know the EU has a border model that is worth looking at, as does the United States, the U.K....
We can learn a number of lessons from other jurisdictions, and I would urge the government to do so.
Conservative
Executive Director, Entertainment Software Association of Canada
No, absolutely not. I think to suggest it's too complicated so let's just not deal with it is, frankly, a scary proposition. You think about our economy. Intellectual property is the future of our economy, plain and simple. These issues are not necessarily easy to solve, but they're absolutely worth doing. Canada has such a tremendous opportunity to be a leader in the digital age, in the age of intellectual property, so it's critical that the government examines and deals with these issues in an urgent manner.
Conservative
Bev Shipley Conservative Lambton—Kent—Middlesex, ON
Obviously, the numbers in lost revenues, lost jobs...the criminal aspect of it alone would make you think we would not want to condone this type of activity. I don't think many of the counterfeiters are mom and pop. I think this is criminal activity. I think most would agree with that.
Are they single-item production criminals that pirate, if you don't mind my using that term, or do they pirate a number of products?
I have another question. I don't know if I heard you right, that a manufacturer may produce legitimate ones throughout the day and then run an operation at night?
I have two points on that.
Executive Director, Entertainment Software Association of Canada
On the first part of your question, which I've forgotten now.... I'm sorry, I had something very—
Conservative
Executive Director, Entertainment Software Association of Canada
Yes. I would say that organized crime is involved. We have evidence to that effect. But we also see smaller operators running burning operations, for example, out of a storefront. So you definitely see both.
A report by the RCMP recently indicated that 90% of the counterfeits in Canada are imported, many of them from Asia. So I would say we see both, but certainly the large-scale operations are of the most concern.
Director, Corporate Audits and Investigations and Chair of the Canadian Anti-Counterfeiting Network, CSA International
With respect to counterfeiting, we have found everything. When you think about it, it is so lucrative to use counterfeits. You're not paying taxes; you're not paying for design. You're not doing any of these things. It's pure profit, other than the assembly. Certainly, we see that. The more sophisticated organized crime have their own factories, their own facilities, and they're done there.
But there's no doubt knock-offs are done and filtered into the distribution system. I remember Johnson & Johnson looking for shampoo. They had some with E. coli bacteria in it. When they went into the factory, they had an order of 700,000 bottles but 1.2 million caps. So you know they're storing, and those things are going on. Both are problems.
Conservative
Bev Shipley Conservative Lambton—Kent—Middlesex, ON
Just one other quick one. How do reliable distributors or consumers protect themselves against this type of activity?
Director, Corporate Audits and Investigations and Chair of the Canadian Anti-Counterfeiting Network, CSA International
They want to look at their channel, their network. Sometimes they can go into the factory and look at the capability of that factory. If they can produce 10,000 a week and you're ordering 400,000 and you're getting that in a month, you know something doesn't line up.
For consumers, we have tips on the CSA website for what to do. You look for spelling mistakes. We're talking to regulators about failures, and that's a little bit reactive. What we've said in the past is if the price is too good to be true, chances are it is. Certainly, with many of the products we're talking about today, you cannot afford to do it. It's not a matter of performance, it's a matter of safety. So those are some of the issues.
Bloc
Paule Brunelle Bloc Trois-Rivières, QC
Good afternoon everyone. Thank you for coming here.
A number of problems have been raised today. Obviously, we are talking about intellectual property and counterfeiting with a view to security. It's also about social dumping, working conditions and living conditions which conspire to keep prices very low. We are navigating in different waters, depending on the problem. During a previous meeting, we also heard—and this really surprised me—that Canada was also a source of counterfeit goods. So we can't say that we're as pure as the driven snow.
For its part, the Canadian Anti-Counterfeiting Network has asked that the act be amended. I want to know whether you think that this next suggestion would be a solution.
Among other things, the network is proposing new legislation with a clear definition of the prohibited activity, along with provisions to ensure that the offences committed were in fact committed with criminal intent and are strict liability offences. It also recommends applying special legislation along the borders, which a number of others have suggested as well. The network suggests that the Canada Border Services Agency obtain a clear mandate to target, seize and destroy counterfeit or pirated products. It also talked about imposing fines, laying charges under the act, adopting provisions authorizing communications between the police and intellectual property rights holders, in order to facilitate investigations and civil suits, and about using summary proceedings in order to obtain compensation in counterfeiting cases.
Would amendments of this nature to the legislation resolve problems? Should we in fact amend the legislation? Also, there is something we haven't talked about, but which I believe is important. People selling these products don't always know that they are counterfeit. Nonetheless, this practice is very widespread. Should we not prohibit, through legislation, such people from selling these products? If the counterfeit goods are identical to the legal goods, we cannot fault the consumer for purchasing them cheaply, albeit in good faith. I always thought that counterfeit goods were sold on the street or in flee markets. In such locations, the prices were always so low that you suspected something. Now this phenomenon is extremely widespread.
Vice-President, Sales and Business Development, Polyform Foam Plastics Inc.
I would fully support legislative changes of this nature. They are critically important. However, there are two factors to consider: legislation supporting victim's rights, on the one hand and, the speed with which the legislation can be applied, on the other. The problem is that, in some cases, even if we discover a counterfeit or a clearly pirated product, it takes too long for justice to prevail. It is already too late. This is a very important factor because it directly threatens the survival of the company. This is true for us as it is true for the other witnesses here. In the case of the individual manufacturing apparel, a two-year wait before getting a favourable ruling is too little too late.
The time factor is extremely important. I don't know whether we would need a parallel system or something else, but the legal system needs to be able to stop or prevent these activities.
Bloc
Vice-President, Sales and Business Development, Polyform Foam Plastics Inc.
Absolutely. I would even recommend extreme measures. If there is evidence that someone is knowingly selling counterfeit or pirated products, the fines should be really very heavy. The second point that you raised is equally important.
With regard to products, let me tell you that currently, you can choose a cycling helmet on a shelf with every intention of buying a certified, safe and legal product. Unfortunately, things have changed. The dealer—I mentioned Canadian Tire, but I would have mentioned any other dealer—may sell you a helmet for your child or for yourself, and you will only know whether or not it is effective when an accident happens.
Unfortunately, China does not meet safety standards. The products in my industry are subject to stringent specifications and constant verification. This is not the case in China. In China, we visited factories that produce products similar to ours, and we saw that they did not follow the same procedures at all. They have no respect at all for factors like density, safety, straps and so forth. The products are brought to Canada, and people buy them in good faith. Such products may even bear a tag that says "designed in Canada". Clearly, this is cheating the consumer. The product was designed by someone in Canada, but entirely produced in China. Nonetheless, people think that they are buying a Canadian product. We can see that the product is marked "Made in China". It could also come from some other country. It's important that products be identified in a way that does not cheat the consumer.
Conservative
