Thank you, Mr. Chair.
Thank you for inviting me to discuss Bill C-8, the Combating Counterfeit Products Act.
I represent the Canadian Manufacturers & Exporters. We are Canada's largest trade association. We represent about 10,000 manufacturers and exporters across the country. Our sector represents more than 75% of all R and D expenditure by the Canadian private sector, so you can understand that protecting intellectual rights is central to our industry.
We applaud the government for introducing this important legislation and the committee members for keeping a close eye on the details of this bill. We strongly support the objective of the bill. Canada needs strong legislation to prevent counterfeit goods crossing our borders. However, I would like to raise a number of concerns that we and our members have with the bill in its current form.
One of them is about the responsibility of the right holder—or in other words, the victim of counterfeiting—to pay the fees associated with the detention and destruction of goods. We do not understand the rationale for this.
We believe that the importers should be responsible for these costs, since they are the ones introducing these goods into our country in the first place. They should not be given a free ride. Where is the disincentive in that? Moreover, these costs, which will largely be incurred in court proceedings, are likely to be onerous and difficult to support for smaller companies that are the victims of counterfeiting. I know that you've heard this from other witnesses. We share this concern.
Our second concern is the provision that the detention of goods requires that a court action be undertaken by the IP owner. Court actions are expensive and time-consuming, and they take a long time to get results. We believe that if there is enough evidence to show that the goods in question are counterfeit, they should be destroyed, regardless of whether or not the IP owner undertakes a court action.
You have heard the stories. Not only have you seen many examples of goods that are counterfeit, but you have seen cases where even the Canadian standards association logo is being copied. Do we really need a long court process to destroy those items? I think there are many examples of where we could proceed with the destruction of goods without requiring prior legal action on the part of the victim.
As the witness from the Intellectual Property Institute of Canada said when she appeared here on November 6:
Other countries such as the United Kingdom and Australia, as well as the European Union have already introduced a summary procedure whereby goods that are truly counterfeit, where there's incontrovertible evidence that they are, and the importer of the goods does not respond to an inquiry, will be permanently detained or destroyed.
That should apply to Canada as well.
We believe that when legal proceedings do take place, the onus should be placed on the importer, or whoever is responsible for bringing the goods in question into the country, to provide evidence that the goods are not counterfeit. Has the importer undertaken sufficient due diligence to ensure that the foreign supplier is not producing counterfeit products? What steps have been taken to make sure that counterfeit goods are not harming our economy? In its current form, the bill makes it too easy for the importer to claim ignorance.
Another issue I'd like to raise, which is not necessarily within the scope of this bill but is essential if you want to succeed in combating counterfeiting, is the need for better international coordination. This may be another area in which Canada can do more.
As you know, the “Special 301” priority watch-list of the United States Trade Representative, or USTR, has included Canada for the past several years because of our failure to implement our international obligations or to take effective enforcement action against counterfeit and pirated goods, especially at the border. This priority watch-list is an annual review of the global state of intellectual property rights protection and enforcement.
In 2011, the USTR's report stated:
The United States encourages Canada to provide for deterrent-level sentences to be imposed for IPR violations as well as to strengthen enforcement efforts, including at the border. Canada should provide its Custom officials with ex officio authority to effectively stop the transit of counterfeit and pirated products through its territory.
This bill will fix some of these issues. That's why in 2013 the same report was better. It recognizes the importance of Bill C-8. As a result, the USTR is moving Canada from its priority watch-list to its watch-list. The report says that the United States “urges Canada to expand the legislation to also provide authority for its customs officials to take action against goods-in-transit”. We agree with that. I know this has been raised by some other witnesses who were here before.
Finally, we applaud the Canadian government's leadership in the negotiation of the anti-counterfeiting trade agreement, the ACTA. While most countries have not yet implemented the agreement, it is a step in the right direction. The ACTA signatories are Australia, Canada, Japan, South Korea, Mexico, Morocco, New Zealand, Singapore, and the United States. The European Union and the 22 EU member states signed the agreement in January 2012, but it has not yet been approved by the European Parliament.
You will notice that none of the countries included in the U.S. watch-list is a signatory of the agreement, so we still believe that a lot of work remains to be done to bring more countries to the table.
Thank you again for your time and for inviting me. I look forward to questions.