Thank you, Mr. Chair.
Good afternoon. I am a law professor at the University of Ottawa, where I hold the Canada Research Chair in Internet and E-commerce Law. I have appeared before this committee on a number of occasions and as in past occasions I appear here in a personal capacity representing only my own views.
I appreciate the opportunity to speak to you about Bill C-8. While the panel may disagree on certain elements of the legislation, I am sure that all agree that where harmful counterfeiting occurs—particularly involving health and safety—the law should provide all concerned with the legal tools necessary to address the problem. Indeed, we should not forget that the existing law in Canada is regularly used to conduct anti-counterfeiting raids and seizures, that border officials—as you heard on Monday—work with the RCMP and Health Canada on health and safety issues through their MOUs, and that the courts in Canada have awarded increasingly significant penalties in counterfeiting cases.
That said, context within a discussion on counterfeiting is important. It's easy, and rather scary as we just saw, to point to the obvious health and safety issues and, based on that, conclude that any available legal remedy should be adopted in response. Yet I'd argue that it's important to recognize that the scope of the problem remains subject to considerable debate, but even more, some proposed solutions may have unintended consequences that are themselves harmful and should be avoided. Moreover, given Minister Moore's insistence on Monday that the bill is about protecting intellectual property on an international scale, the international context, including the Anti-Counterfeiting Trade Agreement and the proposed trade agreement between Canada and the EU, merits some discussion as well.
Given that need for context, I'll actually shorten my remarks a bit by focusing on two main issues, first highlighting some of those unintended consequences, particularly those that could arise from some of the proposals for amendment that you just heard, and secondly, briefly discuss the international context of ACTA and CETA.
I should add that I won't be discussing the myriad of trademark reforms in the bill, some of which we just heard about, but I frankly think those are out of place in a counterfeiting bill. If the intent was to introduce an omnibus-style intellectual property bill, it should also deal with other live issues, including access to the blind that was the subject of a new international treaty that Canada actively participated in and was agreed to in June of this year, as well as reform of the Copyright Board of Canada that stakeholders on virtually all sides are increasingly calling for.
Let me focus though, as I suggested, on the potential unintended consequences of Bill C-8. I'll start by noting that the exception for individual travellers, the exclusion of patents and in-transit shipments, and the attempt to avoid application to grey market goods—some of the parallel import issues—I think are positive policy choices designed to ensure that the bill targets bad actors and doesn't allow border seizures to raise consumer costs. That said, there are some real concerns about potential unintended consequences, and I wish to highlight four.
First, as you know, the bill vests enormous power in the hands of customs officials, who are not copyright and trademark experts but will now be forced to assess infringement cases, including determining whether any copyright exceptions apply. The bill opens the door to detention of works if created without the consent of the copyright owner and the infringed copyright. Yet there are many works that are in fact created without consent of the owner, but rely upon exceptions such as fair dealing to do so, and are perfectly lawful. That often results in disputes over whether in fact the works infringe, an issue that is frankly best left to the courts and which even the courts often fight over. With this bill, though, it's now customs officials who are asked to make the determination and send the works to the copyright owner to consider whether they think it infringes copyright.
Some have claimed that the powers in this bill are consistent with international standards, yet the reality is that there are a number of countries—including allies such as Australia and Mexico—that do not have the ex officio powers envisioned by this bill in their laws. Using the courts for oversight is still viewed as a workable, legitimate approach to dealing with counterfeiting. As I mentioned, you heard on Monday how the CBSA works with the RCMP and Health Canada on the safety and security concerns. To vest this kind of power in non-expert customs officials, and to go even further as you've just heard, could lead to unintended consequences.
You have heard only today that some want this legislation to go further, including cost-shifting enforcement to the public, ignoring the costs that are borne by small businesses that import goods and could get caught up in the seizures. In fact, even today others have called for even more expansive powers for customs officials, including destruction or forfeiture of goods without court oversight. In my respectful view, these proposals are enormously problematic and would alter the attempt at balance in the bill by removing both important safeguards, shifting private enforcement costs to the taxpayer, and ultimately raising consumer costs.
Further, detention of goods can be used to harm small Canadian businesses that could find the goods they are seeking to import detained, oftentimes by competitors. The absence of a misuse provision in this bill is particularly notable in this regard.
Second, the bill does include an exception for personal travellers. However, the bill is oddly drafted by speaking of “works” rather than “goods”. Both the Anti-Counterfeiting Trade Agreement and leaked drafts of the Trans-Pacific Partnership focus on physical goods. By focusing on works, it could also cover things like iPod and laptop searches. In fact, if the exception were removed—and there have been some proposals that the exception could be removed—it could lead to escalated searches of iPods, smartphones, and other electronic devices, on personal travellers when they come across Canadian borders.
Third, there are groups, as we just heard, that are arguing for expanded penalties. The bill already moves copyright and trademark into the world of criminal provisions in a manner that extends far beyond what we've had in conventional IP law. Further, some are looking, and we just heard this, for statutory damages for trademark infringement. With respect, statutory damages for trademark are unnecessary. Rights holders frequently cite the value of their goods and the harms associated with counterfeiting. If the claims are accurate, demonstrating the value for the purpose of a damage award should not be difficult. Moreover, other countries that have moved in this area have run into serious problems. For example, Taiwan actually scaled back their statutory damages for trademarks when they found courts awarding disproportionate awards. In the United States, the use of statutory damages for trademarks has led to what is known as trademark trolls, similar to patent trolling. We would engage in litigation primarily designed to obtain costly settlements against small businesses that can often ill afford to fight in court.
Fourth, as you again just heard in some of the debates on what was then Bill C-56, there has been the prospect of removing targeting in-transit shipments. I'd argue that the bill wisely excludes in-transit shipments, and, with respect, a removal of that would be a mistake. The seizure of generic pharmaceuticals in transit would pose a threat to international trade, development, and public welfare. Experience with such seizures in the European Union led, in 2010, to both India and Brazil filing complaints with the World Trade Organization. They highlighted several incidents of consignments of generic medicines that were being transited via the European Union and being detained there.
In fact, Doctors Without Borders reported that in 2008 and 2009 there were at least 19 shipments of generic meds from India headed for other countries that were impounded while in transit in Europe. In one instance, German customs authorities wrongfully seized a drug shipment of amoxicillin, on suspicion that it infringed the brand name Amoxil. The cargo was detained for four weeks during investigation and ultimately revealed there was no trademark infringement. In another instance, Dutch customs authorities seized a shipment of AIDS drugs that were en route from India to a Clinton Foundation project in Nigeria.
In 2011, the Court of Justice of the European Union ruled against in-transit seizures on the grounds that there was no infringement in the EU. A similar approach to exclude in-transit seizures is appropriate here, and any arguments that it should be removed, I believe, should be rejected.
Finally, from an international context perspective, notwithstanding some claims that this legislation is responding primarily to domestic concerns, much of the pressure comes from outside the country. Ms. Sgro asked about the Anti-Counterfeiting Trade Agreement, on Monday. In fact, the United States has not yet ratified ACTA. The only country to have done so is Japan. The vast majority of signatories to ACTA, the entire European Union—all their member states—as well as Switzerland, are out. They have rejected the Anti-Counterfeiting Trade Agreement through their votes at the European Parliament. There are doubts that ACTA will ever take effect, as it may not even receive the requisite number of ratifications to take effect. Frankly, even if it does, it now stands as damaged goods and a far cry from the relevant international standard that some had hoped. It elicited an enormous public backlash, and Canada would do well to move on.
Perhaps even more relevant is CETA, which apparently contains border provisions consistent with Bill C-8. The problem, as many will know, is that the government has not yet released the CETA text, so there is no way of knowing precisely what is required under that treaty and whether there is room for change under this bill. It is perhaps consistent, but without the text we can't know if alterations to the bill might still fall within treaty requirements.
Finally, there is also the possibility, indeed, some say the likelihood, of border measures provisions in the Trans-Pacific Partnership, which is also still under negotiation.
The net effect of these international pressures—and with this I'll conclude—is, I would argue, that Canada would do well to pause for the moment until these international treaties are concluded and our obligations with regard to these kinds of border measure provisions are better understood.
I'll stop there, and I would welcome your questions.