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.
4:55 p.m.
Conservative
The Chair Conservative James Rajotte
Mr. Masse, you're almost out of time, but Mr. Savaria did want to comment on your question.
4:55 p.m.
Manager, Codes and Standards, Eaton Electrical Canadian Operations
I am confident that the big-box stores, certainly in my field, have this under control. The sixth-level distributors, though, are the ones who are liable to be committing the offences, and they're doing it willingly by sourcing this material from totally unauthorized directions, such as from Asia.
4:55 p.m.
Conservative
4:55 p.m.
Liberal
Roy Cullen Liberal Etobicoke North, ON
Thank you, Mr. Chair.
I'd like to come back in a minute to the question I posed earlier to Mr. Geralde about the Canada Border Services Agency, but I'll just make a comment first about the need to have some concerted efforts internationally and to harmonize.
In fact, the European Parliament has just passed some laws to harmonize and stiffen the penalties. There is so much we can do here at home that we need not wait for these multilateral efforts to take hold.
One specific case that comes to mind is that the United States trade representative has just added Canada again to the watch list, or has retained Canada on the watch list. There are some in Foreign Affairs Canada who minimize this. They say that in the U.S. there is such a heavy lobby from the motion picture industry and the software industry that it's not surprising that they do this.
What other developed economies that are huge trading partners with Canada are on this same list?
4:55 p.m.
Director, Corporate Audits and Investigations and Chair of the Canadian Anti-Counterfeiting Network, CSA International
If I may comment on it, I'd like to say in alignment with that—and CACN feels this way—that there is a lot that we have to do ourselves.
One of the arguments I get from China is that Canada is no better. It's an embarrassment to go there, with the legislation and the porous activities we have. We have to key in on this. We have to do it ourselves, in addition to the others.
Clearly we're in with countries that are developing nations, as opposed to being a leader at the level we should be. It's imperative that we work on these things and take those recommendations seriously: enhancing the border services—
5 p.m.
Liberal
Roy Cullen Liberal Etobicoke North, ON
Thank you.
Let me come back, sir, to the Canada Border Services Agency, which currently doesn't have a mandate or the authority to search and seize and store and destroy counterfeit goods. I think that's something that needs fixing.
But in the meantime, let's say they come across a container filled with something that looks like counterfeit batteries—they just come upon it; they don't go out and actively search for it. I gather there are constraints right now in terms of what information they could share with intellectual property rights holders, such as the intellectual property rights holders for Eveready batteries in Canada, because of privacy constraints.
But in some countries there is a lot of information that is shared, so that at least intellectual property rights holders can exert their civil remedies. But right now there are constraints even to do that, and the criminal sanctions are not severe enough.
5 p.m.
Manager, Criminal Law Enforcement, Underwriters Laboratories Inc.
You're exactly right. It's beyond ludicrous that a border services agency cannot actually search out hazardous products and things like this. It's beyond me why they don't have the authority already. This issue has been beaten to death for many years, and I'm glad it's coming to the forefront now.
But my colleagues and I have been beating the same drum for nearly ten years and nothing has changed. Hopefully it will come about.
If a rights holder wants to take civil action, a shipment can come into the country and they don't get any information. Right now, under the current regime, if the RCMP don't have the resources or can't take it, the rights holders get no information and that product is let into the country, regardless of the type of product.
5 p.m.
Liberal
Roy Cullen Liberal Etobicoke North, ON
Madame LaBossiere, I want to come back to the idea that Montreal seems to be a haven or an area where motion pictures are replicated, I gather, in great numbers. I don't know why particularly Montreal; I'm sure it happens also in Toronto and other places. I gather they used to come into the theatres with video cameras, but people have cottoned on to that. Now they have the cameras, I'm told, and you can correct me if I'm wrong, actually hidden in their ties or garments, and they hope that someone doesn't get some popcorn or something.
They film, and I don't expect the quality is that great, but they walk out of the theatre and in about an hour they're burning these onto CDs and DVDs at an incredible profit and with not much risk of anything happening.
Is that the case?
5 p.m.
Executive Director, Entertainment Software Association of Canada
I can tell you anecdotally. I don't represent the movie industry, but I work closely with my colleagues in that industry, because we find that often where pirated movies are sold, pirated video games are sold.
I very much have heard stories to that effect, and that Montreal is definitely a haven for camcording and other crimes. Certainly for our industry, we've found that Montreal is actually a haven for the manufacture of circumvention devices, as well as B.C. and some parts of Ontario. So it is happening here in Canada, and it's quite shocking how blatant and egregious it is.
5 p.m.
Conservative
The Chair Conservative James Rajotte
Thank you.
Just for your information, the movie industry, I think, will be here on May 7.
I have the privilege of having the next Conservative spot, and I have a few questions. One of the questions I've been thinking about is how we actually get hard data on counterfeiting and piracy, because what we have at best case now is estimates. But it seems to me it's actually difficult to get hard data because of the nature of what we're dealing with.
Another question I had, especially concerning counterfeit products, was how and when counterfeit products actually enter the supply chain, at what stage they do, how they go up that chain, and then how you chase them back. One thing I just want to ask, following on the points that Mr. Masse and Mr. Shipley made--and thinking we could actually do this might perhaps be pie in the sky--is whether we can actually trace, for instance, the goods you have there. Is it feasible to think we can trace them from the retail right back to where they started and all the points where they have gone?
I would use the example, as Mr. Masse mentioned, of restaurants. If you look at the trade we're doing with countries like Japan on beef, the Japanese have demanded to know, and I think rightly so, for any finished beef product or beef product that they buy, where it was packaged, where it was slaughtered, where it was born, whether it was transferred between one farm and another, what it was fed, and where it was fed this. It's all traceable now in answer to a legitimate concern with respect to BSE or other animal health or human health issues.
So is it feasible to expect, for instance, for the products you have there, Mr. MacInnis or Mr. Geralde and Mr. Savaria, that we could actually trace them back and thereby enforce that better?
Mr. Savaria.
5:05 p.m.
Manager, Codes and Standards, Eaton Electrical Canadian Operations
Yes. Without getting into details, there are all kinds of pieces of information on the legitimate product that lead us back to who made it, who on the production line made it.
5:05 p.m.
Director, Corporate Audits and Investigations and Chair of the Canadian Anti-Counterfeiting Network, CSA International
Yes, if we're talking about a legitimate product, we can trace it back, and usually there are ways to do it. For a counterfeit product, those markings will indicate that it was made at a factory that it wasn't made at. So I'm not sure you can get back to that.
There are some techniques that we can use, at the source, looking at things, and with those who are buying to line up products, sampling methods.... So there are some steps that could be taken. But to do a truly counterfeit product.... They have found in eastern bloc countries in Europe that products are marked now with “made in China”, just because they know they can focus it. So the counterfeiters are getting the counterfeiters. It's really hard to definitively take a counterfeit product made in Shenzhen in an unlisted factory, which just makes its way through the system, and actually trace that back. It requires the network on the ground.
So some steps can be taken that way. Certainly legitimate products can be traced back. But there's a hole even in that approach.
5:05 p.m.
Conservative
The Chair Conservative James Rajotte
Do we then take the approach that if we cannot trace it back, we would almost assume that it's not a legitimate product? For instance, that's what the Japanese do with the beef, and say, “If you can't trace all these 20 steps back, we're not buying it.”
5:05 p.m.
Manager, Criminal Law Enforcement, Underwriters Laboratories Inc.
They're starting with a legitimate product going through a legitimate market. Where we're dealing with counterfeit products, there's no legitimate market for a counterfeit product. Counterfeiters don't keep any types of records. So who knows where it's manufactured at the end? When you do catch the mid-level players in Canada, they're never going to turn on their larger brothers in other countries and things like that, especially in a complex network.
If you're talking about grey market items coming into the legitimate chain, then you can probably trace them back. But for a counterfeit product, it has no business in any market, so there's no way you could possibly track it unless it had legitimate components.
5:05 p.m.
Conservative
The Chair Conservative James Rajotte
This is my point, that the retailer says, “Look you cannot track this back, so we're not accepting it.”
5:05 p.m.
Manager, Criminal Law Enforcement, Underwriters Laboratories Inc.
Okay, now I understand that. I know they're doing that with pharmaceuticals in the States, where they have to be tracked. So if a legitimate retailer says he'll buy only if you can show the steps to it.... But then again, documents are counterfeited; forgeries are put in place; false companies are set up. Things like that happen. So it would be a very complex thing to do.
5:05 p.m.
Conservative
5:05 p.m.
Director, Corporate Audits and Investigations and Chair of the Canadian Anti-Counterfeiting Network, CSA International
It's an interesting concept, something we should look at. But as Mr. MacInnis has said, I can give you counterfeit documentation. That's what we're seeing as well.
The other thing is, for a lot of these products, catching that in the timeframe in which the products come across, at what point will they do that?
April 30th, 2007 / 5:05 p.m.
Liberal
Robert Thibault Liberal West Nova, NS
I have two points. One is that the border agency can inspect Canadian product, but they must have a warrant currently. They must get a court warrant first. Am I not correct?
5:05 p.m.
Manager, Criminal Law Enforcement, Underwriters Laboratories Inc.
No. If something comes into Canada, you don't need a court order to inspect it. The thing is, customs in Canada don't have the mandate; they don't have the legislation to actively look for counterfeit products.
If they come across something in a shipment, the next step is to contact the RCMP, wherever it comes into in that part of the country, and then they say, “Can you deal with this product?” If the RCMP says, “No, we don't have the resources, we don't have the time, we can't do it”, then they have no choice but to release it, unless there's--
5:05 p.m.
Liberal
Robert Thibault Liberal West Nova, NS
Okay, but there is a way. If you find that one of the distributors of electrical equipment has found some bad product in his chain of supply, you can advise the police and they can get the next shipment coming in. You don't have to catch it on the store shelf itself. There is a way you can get it at the border.
5:10 p.m.
Manager, Criminal Law Enforcement, Underwriters Laboratories Inc.
If they'll do that for you. Under the current structure, if you want to target a shipment, customs want the departure date, the container number, the name, address, and birthdate of the bad guy. It's impossible for--