Evidence of meeting #59 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.
Senior Vice-President and Chief Economist, National Office, Canadian Manufacturers & Exporters
We've been talking about bilateral and trilateral trade in counterfeit product, but of course we usually talk about a global marketplace. What we're really concerned about here is the security of global supply chains.
The Federal Aviation Administration estimates that somewhere around 580,000 parts going into airplanes manufactured in the United States are counterfeit product. We have auto parts coming in, brake linings made of compressed grass. We have oil filters that use rags for filter equipment.
The thing is, if we can't secure the supply into the supply chain, who knows what that part contains if it's an assembly of parts coming in for a legitimate assembly and manufacturing process? Many of these are caught in quality control.
Liberal
Andy Scott Liberal Fredericton, NB
We had a committee meeting last week about prioritizing—I don't mean to make it too tough a debate—around health and safety versus the rest, and all those kinds of issues. Are there remedies? I've identified five different areas: regulatory, statutory, resources, borders, maybe social marketing. Of the remedies, is it fair to say that they're not sectorally specific? Are the remedies generally agreed upon in terms of whether it's entertainment or IT or whatever? Is it generally the case that the remedies—
Liberal
Andy Scott Liberal Fredericton, NB
You're of that view?
All of this is to the big question. I'm not a member of this committee. In fact, I'm on the Canadian heritage committee. I should have been a member of this committee, I think.
Speculate as to why Canada would find itself in the position you've described. There's no jurisdictional problem, is there, in the context of...? No? So what explanation would you give?
Chair, Intellectual Property Committee, Canadian Chamber of Commerce
I think I can answer that. I've been enforcing IP rights on behalf of clients for a long time.
What I find is that although the basic tools are there, it's very difficult to bring these rights to bear. I would say the border enforcement tools are not there, but if you're in-country dealing with an in-country sale of product, you can look to the Copyright Act, you can look to the Trade-marks Act. The causes of action are there, but it's very difficult to bring these things to bear.
You've heard Michael Hilliard testify about the Microsoft Interplus case. It takes a lot of work and time to litigate on a file like this. And faced with a vigorous defence, it's going to cost a fortune.
We need to have our legislation fine-tuned to make it more efficient and effective. There are other specific things, like camcording—we talked about border enforcement—but the rights that are there have to be tuned up a bit to allow us to pursue this effectively and efficiently.
Conservative
President, Canadian Motion Picture Distributors Association
I want to add, Mr. Chairman, that you have the legislative vacuum, then we have the enforcement vacuum, and then the judiciary, the system. There has to be an education, so that when a person is charged for the third time, he doesn't plea bargain and get a $3,000 fine.
Conservative
Conservative
Bev Shipley Conservative Lambton—Kent—Middlesex, ON
Thank you very much.
I appreciate our witnesses coming out today.
Mr. Hilliard, you talked about our being able to move ahead with grant, seize and destroy, bring it into the Criminal Code and have the resources to actually carry out this sort of seizure. Do you believe this will deter the piracy and counterfeiting, and is there evidence that it will work?
Corporate Counsel, Microsoft Canada Co.
I think it's fair to say it would deter piracy. The reality is that as hard as Microsoft works on the civil side to go after people, criminal sanctions, particularly if they are significant, would be a considerably stronger deterrent to people's actions. As I mentioned to your colleague Mr. Carrie, the reality is that if you sue somebody, at the end of the day they could be nothing more than a bankrupt shell.
Conservative
Bev Shipley Conservative Lambton—Kent—Middlesex, ON
Obviously Microsoft has the resources and money to do this, but I suspect that not every company does. Is that an issue?
Corporate Counsel, Microsoft Canada Co.
Absolutely. One of the comments I make about the problems with piracy and counterfeiting is that they deter local software developers. It is unfortunate that there are very few companies that have the resources to go after this problem.
President, Canadian Recording Industry Association
You're asking if it will make a difference. I think it is instructive to look at piracy rates in the United States, where they've had effective, vigorous laws against intellectual property rights crimes, and where they pay a lot of attention to intellectual property rights. As I said, 39% of Canadians knowingly or unknowingly acquire counterfeit products. It's 13% in the U.S. I believe Mr. Hilliard mentioned that the piracy rate of business software is 33% versus 21%. We have a case in the road map of video games, where it's 34% and 17%.
So it clearly makes a difference.
Conservative
Bev Shipley Conservative Lambton—Kent—Middlesex, ON
When we talk about the illegal drug industry, we know what it does to our families, our economy, and our kids. As a committee person here, I have to tell you that in the last week or two the awareness has gone from almost zero to the top end. I suspect it's not just politicians who don't understand or realize the impact of this; it's families and parents too.
So when we talk about the need to do studies, we don't likely understand the full impact of the drug industry. We don't fully understand the numbers that are coming in. We don't fully understand the full manufacturing of that and the impact on our economy. Yet we have laws and actions in our Criminal Code to deal with that.
Can you relate to the fact that this is something we need to know--that there really isn't recognition of the piracy and counterfeiting issue in terms of intellectual property?
Conservative
Chair, Intellectual Property Committee, Canadian Chamber of Commerce
I think people are becoming more aware of it. You look at the recent dog food scare with pets being poisoned, and that's a form of counterfeiting. People think they're buying a food ingredient of a particular type, and they're getting something else that kills them. There's the example we gave of the woman in British Columbia who was eating the uranium and lead filler. Just today on the cover of the New York Times there was an article about poisoned drugs in China killing people.
With articles like that, you start to get some public awareness. But you don't get public awareness of the fact that intellectual property infringements cost lost jobs and lost revenue. This is not simply a safety issue. A safety issue is a byproduct of the lack of quality control in these goods. Where the rubber meets the road primarily is in the lost economics of this.
People are losing their jobs, and companies are not investing in this country. The innovation that's typically sparked by strong enforcement of intellectual property rights is not happening here. That is a serious harm. It's a dollars-and-cents problem that affects Canadians and the federal government as well, because you're not getting the tax revenue on this stuff.
So we can't lose sight of that.
President, Canadian Recording Industry Association
The point is that we know a surprising amount about this. When we get the study translated and you've had a chance to read it, I think you'll agree that we know a surprising amount. As far as I'm aware, only one person and maybe one official have suggested we don't know enough.
As someone else said today, we do know a lot, but just because we don't know everything doesn't mean we shouldn't act now.
Conservative
Bloc
Guy André Bloc Berthier—Maskinongé, QC
Welcome, gentlemen.
I am very surprised to see the number and variety of counterfeit goods. It is easy to imagine the major impact that this might have on the manufacturing sector, which is currently facing some difficulties. I have seen your recommendations and I was wondering whether a larger public awareness campaign should be launched about this issue. You included a survey showing that generally speaking, consumers know that some goods are counterfeit but buy them anyway, probably because these goods are less expensive. There are willing to take a risk. In other cases, consumers buy goods not knowing that they are counterfeit.
In light of the range of goods that you are showing us today, people should be more aware of these counterfeit goods and the socioeconomic and employment-related consequences of counterfeiting.
Chair, Education and Training Committee, Canadian Anti-Counterfeiting Network
Thank you for that question.
The Canadian Anti-Counterfeiting Network has members who actively go out and educate the public. There is also a poster campaign, with some posters in English and French, that was done in conjunction with the RCMP. Those posters are in places across Canada, and the poster campaign is getting bigger, showing the dangers of counterfeiting.
Last year France developed an extremely effective campaign on television. If you ever have a chance to see the commercials, you will see how strong they are in how they impact upon the public.
We need the government to be part of the educational process, and we welcome it. Rest assured that private industry has been involved in that education process for quite some time. I regularly go to public schools to teach 6- to 14-year-old children how to tell the difference, and they understand right from wrong. Perhaps it's their parents who we're having trouble with.
