Industry Committee on May 2nd, 2007

[Prof. Michael Geist]

I don't agree. In the example I provided in my opening remarks, focusing specifically on camcording, I believe there is the prospect of obtaining very specific data. We haven't seen it to date. We've seen numbers, as I say, that are all over the place. On that kind of issue, I think there is the prospect for identifying to what extent Canada is a player in this or is a source of the problem, and use that as a determinant as to whether or not we ought to move forward with potential new legislative reforms. But we ought not put the cart before the horse. We don't need legislative reforms before we actually have a sense of what the particular issue is.

In other areas, I'm inclined to agree. I don't know that we'll ever get a full sense of the problem, but if we're going to get into the business of prioritizing, both from a legislative perspective and a resource perspective, I think we have to know more than we know right now.

[The Chair, Conservative, James Rajotte]

The second issue I want to raise was on your comment, Mr. Erdle, that “The Copyright Act has criminal provisions but they have not been applied effectively.” Can you expand on that?

[Michael Erdle]

Yes. We've mentioned already the penalties of $20,000. The reality is that when cases are brought to court, those penalties are never applied.

Now, I agree that raising the penalties won't necessarily mean that those would be applied either, but I think it is a matter of perception that this is a serious offence, or not a serious offence, and I think we need to change the perception. This is serious, and I think courts need to apply those penalties.

[The Chair, Conservative, James Rajotte]

The third issue I want to raise with Mr. Drapeau. Under your solutions, you have “Provide for statutory damages,” and then you have “No proof of actual damage required.” Can you expand on that?

[Daniel Drapeau]

Yes. Under the Copyright Act, this is the figure of $20,000 that has been mentioned previously—and this is the difference between trademarks and copyright.

Under the Copyright Act, you have what is called statutory damages. Statutory damages means that if the court finds that there is infringement, it has the discretion to award an amount of damages that is independent from any damage suffered by the rights owner. The reason statutory damages exist is that sometimes it's very difficult for a rights owner to prove the actual damage he sustained, so there is this creation of statutory damages. The legislator says, okay, for a violation of copyright, per work infringed we will give you between $200 and $20,000, without your having to prove that you've actually sustained the damages.

On the issue of statutory damages, be aware of the fact that it is only provided in the Copyright Act. The Trade-marks Act contains no such provision. So the $20,000 figure is only applicable in copyright, and in Canadian jurisprudence it has only been granted once, last December. Before that, the awards were always $10,000.

If I can talk about the stiffer penalties, in terms of imprisonment, even in cases of recidivism, the Federal Court has declined to order imprisonment. Recidivism is passable of contempt of court, and one of the punishments for that is imprisonment. The Federal Court has mentioned, on a first recidivism, we won't imprison. The idea behind changing the laws is also raising the bar in terms of the penalties that are awarded by the court.

One thing you have to bear in mind is that most of the anti-counterfeiting jurisprudence that is rendered right now is rendered under the aegis of Anton Piller orders and John Doe orders, which means orders for seizures. Those orders are so intrusive that the court is very careful in the way it approaches these orders. There is actually a restrictive trend on these, and that, I think, has extended to the realm of anti-counterfeiting and the punishment of anti-counterfeiting.

[The Chair, Conservative, James Rajotte]

Okay. The clerk's actually giving me my time, but Mr. Geist, you wanted to respond briefly?

[Prof. Michael Geist]

Yes, very quickly on the issue of statutory damages, because it shows how there can be negative consequences from something when you're trying to do a good thing. When we read, for example, in the United States of grandmothers or teenagers being sued for file sharing with liability in the millions of dollars, that's because if someone has 1,000 songs on their hard drive, they face the prospect of statutory damage for every song, literally the prospect of millions of dollars.

So how does this work? It's not that courts are awarding $20,000 per infringement; it's that settlements are forced on people because they have no choice but to settle because the prospect of liability is so high. So the potential for misuse of these kinds of provisions is something we're seeing in play right now in countries such as ours and the United States.

[The Chair, Conservative, James Rajotte]

Do you really want to respond, Mr. Drapeau? Can you do it in 10 seconds?

[Daniel Drapeau]

We're not talking about file sharing; we're talking about products on which a trademark or a copyrighted logo is placed. That's the definition we set for counterfeiting at the beginning. That's number one.

Number two, on these humongous settlements, if the infringer just doesn't have money and she's a poor grandmother, she's not going to be able to pay one or another, so I doubt there's going to be a humongous settlement.

[The Chair, Conservative, James Rajotte]

I suspect we could keep this going, but my time is up.

We'll go to Mr. Scott.

[Andy Scott, Liberal, Fredericton, NB]

Thank you very much.

Mr. Chair, you mentioned the job of the chair is the scorekeeper. We obviously have a very ambitious clerk. Get yourself elected.

I think we're creating artificial distinctions between the question of whether there's a broad problem or whether it should be only health and safety or those kinds of things. It occurs to me that these are compounding offences.

Consequently, if you steal somebody's idea, then that's a line of a defence. It's not unusual, I don't think, in law that then there would be other impacts of that act and then it becomes a greater offence. If you steal somebody's intellectual property, if it's theft of somebody else's creation, then that's an offence against whoever created it. If there's damage done by that, then there's an additional victim. Is it unfair to imagine that there's less of a victim if the thing you've stolen has less impact on the purchaser—other than the fraud, which I think has been articulated—than with a health and safety issue, where there's an additional damage?

Conceptually, I'm just trying to figure that out. Isn't that the way it would work—whatever the sanction, forget about what it is—or could work?

[Michael Erdle]

It certainly could work that way. In the area of regulated products, electrical, pharmaceuticals, there are violations of the law. Health Canada enforces other regulations. There are certainly avenues there.

But what we're trying to focus on, from the perspective of the Intellectual Property Institute, is that we want to make sure that Canada has good intellectual property laws. So it's the damage to the intellectual property itself, quite apart from any health and safety issues, quite apart from any other consumer fraud, false advertising, whatever, which may also be offences, it's the damage to the intellectual property, the damage to the good will of the company that produces Spider-Man, when the pyjamas are defective or any other product; that, from a trademark perspective, is what we care about.

From a copyright perspective, similarly, the rights of the owner are being infringed, quite apart from any other damage to the retailers who can't sell the DVDs because the pirated ones sell for half the price.

[Andy Scott, Liberal, Fredericton, NB]

Those aren't inconsistent. That's what I was trying to get at.

[Michael Erdle]

They're not inconsistent, no.

[Prof. Michael Geist]

But the goal of intellectual property law is not the enforcement of intellectual property law. The goal of intellectual property law is that it serves the broader public interest in saying that copyright at our Supreme Court has articulated a view that it's about both user rights and creator rights and the balance.

What we're really trying to serve here is the public interest. So I don't think our end goal to say that our intellectual property laws are enforced in the maximum fashion possible. Our goal is to say that the public benefits, our societal benefits, are maximized to the greatest extent possible.

I think we do need to ask ourselves whether or not every infringement is equal in terms of its impact on the public interest in society. My view is that it is not, that there are some kinds of infringements—whether in scope or in a particular area—where that public interest is more deeply affected. Of course, it's in those instances that I think we would quite rightly say that that's where law enforcement, where public resources have to play a role, because the public interest is being deeply affected.

Where it's more private interest and the impact on society or the public interest is less, well, then sure, it's still an infringement, but the gain here isn't saying we're pure enforcement, it's about society and the public interest as a whole.

[Andy Scott, Liberal, Fredericton, NB]

I can see that enforcement would prioritize, but I'm simply saying these aren't inconsistent. Simply, one is a greater offence.

Are we doing enough research? Most of this is new. I think part of the reason we seem slow in dealing with a lot of these things is that we're applying a historical approach to coming up with rules and laws and so on, and the reality is that it's moving faster than our historical approach to dealing with these things allows. Are we doing enough research independently?

There's an e-commerce centre in Fredericton, in my riding. Are we doing enough research there? In the way of recognizing the commercial activity that this really speaks to, it's in Canada's interest to get it right, to understand it, to put these things in place. Are we doing enough of that to aid us, aid the government, aid the country in coming to terms with this?

[The Chair, Conservative, James Rajotte]

Mr. Erdle.

[Michael Erdle]

I don't think it really is new. I think this has been going on since there's been copyright and since there have been trademarks. What is new is some of the technology, the digital technology, that allows people to reproduce vast numbers of products overnight. So a movie can be released on Friday, and thousands of DVDs can be on the street on Saturday morning. That's new. What's also new is globalization and international trade, which allow products to be made very cheaply in other countries and sold here.

Some of those things are new. Those have increased the problem and increased the awareness of the problem. But the problem itself is not new. Ever since the first trademark and first copyright, there has been infringement and some degree of counterfeiting.

[The Chair, Conservative, James Rajotte]

Thank you.

Do you want to add briefly, Mr. Geist?

[Prof. Michael Geist]

I would say that I agree with you. I don't think the NRC is focused very heavily on counterfeiting. I would say Canadian academia has been very focused on copyright. So you can find a large number of academics doing independent research on the optimal system of copyright for Canada, and I would say the majority of Canadian academics right now would reject the special 301-type recommendations. On counterfeiting per se, not so much. That's one of the main reasons I started by saying I think this is an area we need to turn our attention to.

[The Chair, Conservative, James Rajotte]

Thank you.

Mr. Drapeau, briefly.

[Daniel Drapeau]

I'm not qualified to speak on the issue of research, but I do want to mention one thing. If the goal of IP is not enforcement, what is IP if one does not enforce it?

[The Chair, Conservative, James Rajotte]

Thank you.

I have two members left. I have Mr. Carrie and then I have Monsieur Vincent.

[Colin Carrie, Conservative, Oshawa, ON]

Thank you very much, Mr. Chair.

I want to thank you all for a very interesting discussion this afternoon.

As I'm putting this all forward in my mind, I'm thinking about the principles. As my Liberal colleague stated, it's principles in our society. I know that one of the things Canadians believe in, and I believe in, is property rights, which include of course intellectual property rights.

I'm concerned that if we're not doing anything, to what extent are we encouraging illegal behaviour, not only here at home but also overseas. Again, my colleague brought up these sweat shops, that people could be taking advantage of young children, that there could be crime—well, there certainly is crime around this. What should we be doing?

Mr. Drapeau, you hinted at this, but what would you describe as the purpose of IP law?

[Daniel Drapeau]

I think there are numerous purposes to IP law. First and foremost, I think the purpose of IP law is to protect and stimulate innovation. It's to grant someone a just reward for having been creative, and thereby encouraging others to be creative also. When I think of what I'm doing on a day-to-day basis and my social value, that's the social value I think I have. I help protect innovations. I think that's IP law.

On another component, it flows from the respect for property.