Industry Committee on Nov. 18th, 2013

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Thank you very much.

[The Chair, Conservative, David Sweet]

Thank you very much. We actually have enough time, if I'm a little bit more vociferous regarding timing than I have been up until now, to get another round in. That I will do.

So now on to Madam Gallant for five minutes.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

How often do we have cases where Canada Border Services actually finds an in-transit shipment that's counterfeit and then just lets it go? Does anybody have an answer to that?

[Prof. Jeremy de Beer]

As far as I know, we have no empirical data on that question.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Does the United States ever stop shipments that it sees are counterfeit and are bound for Canada? Does it do that on our behalf?

[David Lipkus]

Yes, absolutely, they do.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

On the parallel imports, that's really a dispute between different business owners who have their territory purchased. If these parallel imports are genuine, why would you think they would be encompassed or captured in this anti-counterfeit legislation?

[Prof. Jeremy de Beer]

It's in particular respect of provisions amending the Copyright Act—more so than in respect of the provisions amending the Trade-marks Act. When I read through the technical language in this bill and I look at the Copyright Act as it's presently worded—and I've consulted with a number of my expert colleagues, other intellectual property experts—we don't understand how this doesn't apply to parallel imports. If it's inadvertent, then it's an easy fix. If everybody agrees this shouldn't apply to parallel imports, then we just add an exception for parallel imports and the matter's closed.

Otherwise, I'd encourage the committee to look through the provisions very carefully to get a better understanding of the scope of their application.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

When we have a situation where there are batteries that cause a laptop or phone to explode and cause personal injury, are you aware of whether or not criminal charges are involved in any of these cases?

[David Lipkus]

Of any personal use...?

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Let's say a counterfeit light bulb or electronic device is brought into the country and somebody suffers a physical injury as a consequence of it not being certified to Canadian standards. In your experience, has anyone been charged under the Criminal Code for knowingly bringing in these defective devices?

[David Lipkus]

I'm not aware of any current charges with respect to those issues. What I can tell you is that we're not doing enough testing of the harmful effects of counterfeiting. If there's a house fire and an electrical cord caused that fire, for example, the fire department and the officials don't test to see that it was due to a counterfeit electrical cord. They don't say, had the homeowner used the real thing, there wouldn't have been this house fire. How many house fires have there been or how many car accidents because counterfeit parts were involved? We don't know how big the problem is because not enough testing is being done.

I'm not saying let's amend the bill and include more testing; I'm saying the problem is so much bigger than what we think.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Then for a victim who has suffered an injury as a consequence of unknowingly using a counterfeit electrical product, there is no recourse other than the civil courts? There are no criminal charges inflicted upon the importer or the manufacturer, if they can trace it?

[David Lipkus]

Unfortunately, I don't have an answer for you right now. I don't want to speculate on anything.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

For Hockey Canada, do you feel this bill will help combat the counterfeiting of your goods?

[Dale Ptycia]

It's a start, but more needs to be done. More teeth need to be implemented in the Trade-marks Act than suggested here in the bill, to allow perhaps, as a summation, the exchange of information between the CBSA agents and property rights holders like ourselves.

I'll mention, as Mr. Lipkus did, the training. We do that on a regular basis. We offer our resources. As I mentioned in my earlier comments, we financially invest in our brand protection. I could probably say that many of my rights holder partners would do the same too, if we could find more effective ways of stopping the product from entering into the country and having some very definitive means of dealing with it at the border.

[The Chair, Conservative, David Sweet]

Thank you very much, Mr. Ptycia.

Now we will go to Ms. Charlton for five minutes.

[Chris Charlton, NDP, Hamilton Mountain, ON]

Thank you very much.

I think for us the big challenge will be to make sure we achieve the right balance. To some extent, the bill has tried to do that in its present form. It's up to us to make sure that we actually live up to that intent in the final draft.

I have a couple of quick questions.

First, we talk a lot about people who are commercially selling counterfeit goods. What about retailers who unknowingly end up with counterfeit goods on their shelves? Do you have any suggestions about what we need to do there, if anything?

Perhaps to you, Mr. de Beer....

[Prof. Jeremy de Beer]

That's a very good question. I don't understand why such a retailer wouldn't have recourse under the ordinary law of contracts against their suppliers for supplying them with counterfeit goods. So I'm not sure this is a matter that should be dealt with in a bill of this nature. I think there are civil remedies that the retailer can take against the wholesalers or the counterfeiters for that kind of fraud.

[Chris Charlton, NDP, Hamilton Mountain, ON]

The reason I raise it is that I'm concerned that, if you're actually selling counterfeit goods, you become liable under this bill, and yet it may happen unwittingly. Yes, I understand that you can go through the courts and that there are remedies. But for a mom and pop shop in which there are two people in the store, that kind of costly remedy isn't an easy one to pursue, and I wonder how we protect people on that retail side as well.

Mr. Ptycia, you talked about more teeth and have made strong suggestions about how we get more teeth into the legislation. Do those teeth matter, if we don't have adequate enforcement?

[Dale Ptycia]

I would say that in my experience of dealing with our law enforcement officials at the front lines, those who are empowered to take action have an effect. We've seen instances, coming out of either national training sessions or online sessions, in which we'll be contacted by on-the-street officers informing us that a suspected counterfeit product is being offered in either a smaller store or through other means. We take action with that. If they're given the ability and the empowerment to at least seize and detain and then communicate with the rights holder or the property holder, that's a big step.

I think we have to continue to focus on putting the onus back on the counterfeiter. Counterfeiters are not going to have large amounts of formal records to help in going back to pursue civil remedies. We may get judgments in Federal Court against them, but collecting on those damages is virtually impossible. We'll spends hundreds of thousands of dollars with our investigators on a yearly basis and with our legal counsel making claims. We get judgments against counterfeiters across the country on a regular basis, but we can't collect on those.

[Chris Charlton, NDP, Hamilton Mountain, ON]

Thank you.

Mr. de Beer, here is one last question to you.

We've had Mr. Lipkus say that goods in transit should not be excluded; Mr. Lavoie has said that they should be excluded. Do you want to weigh in on that to say whether you think they ought to be or not, and why?

[Prof. Jeremy de Beer]

I believe they should be excluded from the scope of this bill for two reasons. One is feasibility, including administrative and financial feasibility. The other is the unintended consequences that can arise by virtue of the detainment of in-transit shipments when there are legitimate disputes about the validity of the copyright or trademark claim.

[Chris Charlton, NDP, Hamilton Mountain, ON]

How is that different from other shipments, for which those disputes may also occur?

[Prof. Jeremy de Beer]

I think it's a problem in both situations, but applying the act's provisions to in-transit shipments exacerbates it by expanding the scope of the application of the act and therefore the scope of the problem.