Industry Committee on Dec. 2nd, 2013

[Paul Halucha]

I would note, as well, that the committee has already voted against NDP-1, which is similar to this provision but applied to the Copyright Act.

Similar to my comments on that earlier amendment, I would note that this is not necessary, as Bill C-8 already clearly exempts parallel imports from the application of the border measures. In this case, the exemption can be found at clause 42, proposed paragraph 51.03(2)(a), which states that the prohibition does not apply if:

(a) the trade-mark was applied with the consent of the owner of the trade-mark in the country where it was applied;

That effectively is the definition of a parallel import. Given that parallel imports are made with the consent of the trademark owner in the country where they are made, the bill clearly excludes these grounds from the application of the border measures, and the language in Bill C-8 does not change the existing law dealing with parallel importation.

In our view, similar to the earlier ones, we agree strongly with the policy intent but would argue that the legislation already contains a very clear exemption.

[The Chair, Conservative, David Sweet]

Madame LeBlanc.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

I would like to ask a brief question.

Is it easy for customs officers to identify parallel imports? When the merchandise arrives, is it clearly marked? Based on the documents presented, is it easy for them to recognize that they are parallel imports and, therefore, legal?

[Megan Imrie]

The powers the legislation currently gives us when it comes to forgeries is limited. We've already discussed this. To determine whether they really are parallel imports, the importers and copyright holders must be consulted. We are going to work with our external partners to establish an RFA rights holder system. Discussions with importers and copyright holders will help determine if the imports are parallel imports.

[Christopher Nelligan]

From my experience and education and negotiation of trade treaties and so on, I've picked up a little bit of knowledge in this area as well. We're talking about tens of thousands or hundreds of thousands of different types of goods in the world. There are many different types of commercial arrangements in the world whereby a brand may be manufactured here, there, and everywhere, and it's not always manufactured to the same standard in some other country as it might be in Canada or elsewhere.

So for some products, a parallel import may look absolutely identical to what is considered genuine in Canada, and you won't really know if you're at the border looking at it. With respect to some other products, it may be quite different and that may actually temporarily fool the customs officer into thinking this must be a counterfeit, and they may have to make some inquiries about whether this is actually an authentic parallel import or not. Presumably—hopefully—the importers will be able to enlighten them if the goods are detained for a short period. The importers may well come forward and say, “I can prove to you that this is a lawful parallel import” and then the customs officer has the discretion to release in that case. They will no longer have their reasonable suspicion to keep detaining those goods.

[The Chair, Conservative, David Sweet]

Madam Sgro.

[Judy Sgro, Liberal, York West, ON]

Just to go a bit further, Mr. Nelligan, on that, you keep saying the “importer” versus the counterfeiter. Do you think most counterfeiters, if they know what they're doing is counterfeit, will go and talk to the customs officials to try to explain to them and say, “Sorry, this is counterfeit”? Do you really think that anybody who's deliberately trying to pass counterfeit merchandise will speak to a customs officer?

[Christopher Nelligan]

Those are the types of people who often try anything. But with a parallel import, that's a lawful good. Those types of importers, if they know they have a legitimate parallel import, will come forward and say these are legitimate goods. With the counterfeiters, some of them will come forward and try anything. Others may well just disappear. We'll have to find out.

[The Chair, Conservative, David Sweet]

Is there any further comment on amendment NDP-6?

(Amendment negatived [See Minutes of Proceedings])

We're on amendment LIB-5.

[Judy Sgro, Liberal, York West, ON]

I will start by asking for comments.

This amendment eliminates the personal-use exemption. So what's the definition of personal use? Is it someone with three handbags that are counterfeit, or twenty-three counterfeit Coach bags?

[Paul Halucha]

In answer to your question, the bill does not include a definition of what is individual and what is commercial.

[Judy Sgro, Liberal, York West, ON]

So how will you deal with it if I bring into the country boxes of counterfeit Coach purses and I say they're for personal use?

[Paul Halucha]

Ultimately it would be for a court to determine. First off, you wouldn't be detained if you were coming into the country at an airport with one Coach purse in your possession. I don't know at what point—two Coach purses, three Coach purses—but at some point you could trigger a commercial...you could be importing on a commercial scale.

It wouldn't be an individual coming into airports with small numbers of a good.

[Christopher Nelligan]

Perhaps I can add that the exemption was drafted to recognize that this is something where some judgment will have to be exercised, first of all at the border, and second of all if it ever gets through there, later on in a courtroom.

To put it one way, a commercial quantity for, say, marbles would be maybe a thousand of them or more. For ocean liners, it would be one. You really cannot set out particular criteria saying which circumstance is a personal use circumstance versus which circumstance is a commercial circumstance.

There are so many different goods, and so many different sets of circumstances, that this is something that will have to be determined at the border, using the judgment of customs officers. If they are of the view that this is a commercial situation and the person disagrees, they can then follow through with a courtroom and see what the court decides.

[The Chair, Conservative, David Sweet]

Madam Sgro.

[Judy Sgro, Liberal, York West, ON]

I find this difficult. We started this whole process of Bill C-8 saying that we have to get through this in four meetings and it's hugely important. I agree given that there's been a 400% increase in the amount of counterfeiting going on, with all kinds of issues. Canada's getting a black eye because we don't have legislation, even if it's the minimum that we're putting into this one....

I guess I should be talking through the chair here. Either we're going to deal it or we're not going to deal with it. It seems to me that we're just saying that we're going to get serious about counterfeiting—but it's okay if I bring back two Coach purses that are counterfeit.

When I was in Europe this summer, I was told that if I were to purchase any of the purses or other things that were being sold in various locations, I would be subject to a $150 fine. They decided that the only way to deal with this was to go after the person purchasing it. That's what I'm told they decided in Europe. But we're going to say that it's okay if you bring back a half a dozen Coach purses or whatever it is, because we're only after the big guys.

I think it sends the wrong message. I think we should be getting tough on this stuff if it's having an impact on the government, if we want money. And we want people paying taxes. We want companies paying taxes. This way nobody is paying any taxes to the government and we're just going to allow it to go on.

I know we can all argue both sides of this issue. I just think if we're serious, then let's get serious.

[The Chair, Conservative, David Sweet]

Madam Charlton and then Mr. Van Kesteren.

[Chris Charlton, NDP, Hamilton Mountain, ON]

Thank you very much, Chair.

I actually thought this was one of the important provisions that brought some balance to the bill. As I've said—probably way too often for your colleagues' liking on that side of the floor—I'm really profoundly worried about the resources we have to bring to bear on this issue. I would much rather those scarce resources be brought to bear on those who are not just importing one bag for personal use but really bringing large amounts of counterfeit goods into the country.

Unfortunately, at this point, we are in a position where we have to prioritize, and I think the balance we're striking here is all right for the moment.

[The Chair, Conservative, David Sweet]

Mr. Van Kesteren.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

I see what you're saying, Judy. I understand the concept. But as a little bit of a parallel, perhaps I can bring my own business into play.

In a car business, we need a licence to sell cars. But you as a private individual can sell a car. They allow for provisions for that, and they have a number: it's three. It seems kind of silly, and sometimes somebody is in business when they're selling three....

I guess I should be talking through the chair, but that's probably along the same lines. I see what you're saying about whether or not we should prosecute somebody, but I don't think we've taken that position. I think we feel as a government that we understand that some people really don't care, so long as it has the tag on it and it appears as though they are walking around with a....

What was the name of that purse again?

[Judy Sgro, Liberal, York West, ON]

Coach, Gucci, you name it.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Coach, yes; my wife has one of those too, I think.

I wonder if it's a knock-off.

[Judy Sgro, Liberal, York West, ON]

Now we have to figure out if it's a knock-off.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

I'm starting to wonder.

It's more in the light of those things: we're going to allow it, but if you go beyond that, now you're bringing it in to sell it. That must be the provision of the government.

[Judy Sgro, Liberal, York West, ON]

Do you want me to go?