Thank you, Mr. Chair.
My name is Michael Halickman. I'm the president of Caccia Fashions. We've been in the garment business in Canada for close to 50 years. I personally have been involved for 30 years. We're located in Montreal and Toronto. We have over 130 employees across the country, and we service over 1,000 retail customers in Canada.
Our business involves sales of upwards of $50 million per year. We pay millions of dollars in taxes and customs duties and support hundreds of suppliers and service providers in Canada. We're involved in the sales, marketing, production, and distribution of clothing and related accessories for numerous famous brand names such as Ecko Unlimited, G-Unit, Avirex, and Gotcha, just to name a few. Some of you may not be familiar with these brands, but I can assure you that if you check with your children, they're very familiar with them.
To the young consumer, we represent a quality product with an iconic image that is well known and accepted by customers who purchase nearly two million items per year, from headwear to shoes and everything else worn in between.
My purpose in speaking to you today is to express my deep concern for the apparel industry in Canada as it is affected by the flood of counterfeit product in the market. Counterfeiting, if left unchecked, places our whole business in jeopardy.
It's been difficult enough to deal with non-counterfeiting issues in a worldwide market, but it is clear to me that the need to protect the intellectual property of Canadian brand owners, distributors, and licensees is more important than it has ever been. The counterfeiters are stealing our sales and destroying our brand, and if they are left unchecked, they will ultimately destroy our business.
In addition to having to face the normal cost of business, which obviously counterfeiters do not, we are obliged to fight back and pay tens of thousands of dollars to private investigators, lawyers, and destruction facilities to combat these illicit operations. Last year we found ourselves in litigation and prosecution of over 100 cases of counterfeit merchandise, the real cost of which is in lost sales and brand dilution.
How many consumers have purchased inferior shoddy merchandise thinking it was real? They've been dissatisfied and are no longer customers. How many of my retail customers have stopped carrying our brands because they cannot compete with unscrupulous sellers of fakes? No one knows the real number, but judging by the amount of fake product, we find it significant and extremely damaging.
In the past, our lawyers and investigators have been involved in cases in which we have identified goods bearing our trademarks being imported into Canada. We have subsequently found out that Customs or the RCMP were aware of the situation and were willing to take action, but unfortunately, due to the lack of resources, were unable to do so. This puts us in the position of having to pay lawyers and inspectors to have the goods seized and destroyed after they have already entered the marketplace. Even with this effort, we are losing the battle as the amount of counterfeit is increasing, not decreasing.
I'm speaking today not only on my own behalf, but also on behalf of all my competitors who face similar problems. We are happy to compete against each other on a level playing field, but we cannot compete with the criminal counterfeiters. Nobody can.
In addition to the problem described above, there is a growing phenomenon of even legitimate businesses mixing counterfeit product with legitimate product. This puts us in the position of having to prosecute our own customers, which, to say the least, isn't conducive to building strong business relationships.
We are not seeking subsidies or financial aid. We are asking only that criminals who copy our product not destroy our industry. The criminal counterfeiters do not have to comply with any regulations, laws, taxes, or other legitimate business expenses such as licensing fees, large royalty payments, and the millions of dollars we spend on marketing.
In short, we are asking for increased protection from these criminal counterfeiters in the form of increased political pressure on countries that do not sufficiently respect intellectual property rights; more resources for the police and border patrol to intercept goods as they enter the country; and stricter penalties for those involved in the manufacture, sale, and distribution of counterfeit product.
Thank you for giving me the opportunity to express my concerns today.