Industry Committee on Dec. 2nd, 2013

[Glenn Thibeault, NDP, Sudbury, ON]

Thank you, Mr. Chair.

This amendment, I think, would create a duty to use measures of the bill in good faith and it is meant to counter the potential for vexatious litigation.

The idea here is to prevent a rights holder from using detentions and delays to harm a competitor in cases where there is not a legitimate counterfeit or infringement concern, Mr. Chair. I think the main impetus in moving these amendments is to ensure that we are limiting as much as possible the cost that will be borne by small business owners who may be facing a malicious or bad faith claim by a rights holder, who may attempt to use this legislation as it is written as a means of acting anti-competitively.

[The Chair, Conservative, David Sweet]

Thank you, Mr. Thibeault.

Mr. Lake.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

I'll just go back to the officials to comment on the effect of this.

[Megan Imrie, Director General, Border Programs, Canada Border Services Agency]

Bill C-8 as written does give the Minister of Public Safety and CBSA broad discretion with respect to addressing issues of bad faith from a request for assistance that may be frivolous or vexatious and which could—as you mentioned—have impacts on an importer. There is a process. The bill provides for a process for a rights-holder application, which CBSA has the discretion to accept or not. Therefore, if it is viewed that it would be a bad faith issue, we cannot accept a request for assistance. Also, we would have the discretion as written not to extend a request for assistance from a rights holder.

In terms of the liability clause that exists in C-8 , we do also have the opportunity or the discretion not to action a request for assistance where, for instance, there would be an issue of bad faith. We will, as part of our FA process, ensure that there are safeguards in that process to prevent bad faith requests or abuse of the system. As well, we will ensure that we are doing appropriate tracking and monitoring of those requests for assistance to ensure that they are timely and responsive so that there are not undue impacts on the importer.

[The Chair, Conservative, David Sweet]

Mr. Jean.

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

I'll just mention that the courts already have within their purview the power to do so, if they find there's been bad faith at some point in the litigation. They certainly can award special damages and indicate on those damage awards why that is so. It's not necessary; the courts already do that.

[The Chair, Conservative, David Sweet]

Mr. Thibeault.

[Glenn Thibeault, NDP, Sudbury, ON]

For clarification then, Mr. Jean is talking about the courts. So it's a delayed process, right? Small business owners would have to wait then until it's actually at the court level. Looking at this piece I heard a lot of “will ensures”. Maybe you can clarify this. Are there criteria in the bill right now to ensure that we're not just leaving it to the discretion of a minister? Are there things that the CBSA officers would have as criteria?

[Christopher Nelligan, Counsel, Canada Border Services Agency]

First of all, I should say that my minister is the Minister of Justice. I've been assigned to advise CBSA, so I'm here in that capacity. Of course, it's not my role to give legal advice to the Parliament of Canada, so if anything I say sounds like legal advice, I don't intend it to be.

[Some hon. members]

Oh, oh!

[Glenn Thibeault, NDP, Sudbury, ON]

That's a very good clarification.

[Christopher Nelligan]

The grounds to give discretion to the minister in this regard were not specified.

One of the concerns is that if you begin to specify particular grounds in the statute, you limit the agency to those grounds and those grounds alone. At least that's the argument that will be made by people in court, that if you're finding some other good reason to deal with someone in this way, you're not allowed to do it because Parliament specified the only few reasons why you could.

The other concern that does arise is the presumption that if you put this into the statute specifically, that is then a statutory decision and it can be judicially reviewed, and the experience, at least with CBSA, tends to be that the more judicial reviews you have, the more time these processes take.

I hope that's helpful.

[Glenn Thibeault, NDP, Sudbury, ON]

Just following up on all that, Mr. Chair, what we're talking about initially is that if you're looking at these amendments, I think they'd be seen as friendly. They're in keeping with the spirit of the legislation to improve the enforcement mechanisms without creating new barriers to competition.

We were talking about how the cost to small businesses will be borne in facing a malicious or bad-faith claim by a rights holder who may use it to try to slow down...and being anti-competitive. So I hope we'll look on these friendly amendments favourably.

Thank you, Chair.

[The Chair, Conservative, David Sweet]

Well, we'll see how that goes.

Will NDP-2 carry?

(Amendment negatived [See Minutes of Proceedings])

Now we're on to amendment LIB-1.

[Judy Sgro, Liberal, York West, ON]

Thank you very much, Mr. Chair.

This amendment proposes to create a simplified procedure that we heard mentioned by many of our witnesses and is designed to eliminate the need for legal proceedings where there is no dispute that the goods are counterfeit. It proposes to do this by including additional steps early in the process that will effectively create a simplified procedure when there is no dispute that the goods are counterfeit.

Stated generally, once the goods are detained, the process that follows would be that the information is provided to the rights holder, who is asked to determine whether or not the goods are counterfeit. The rights holder responds in writing as to whether or not the goods are counterfeit, and if the rights holder confirms that the goods are counterfeit, the minister provides notice to the importer of the goods that the goods are being detained because they are believed to be counterfeit.

For example, a customs officer has reasonable grounds to suspect that the importation or exportation of the goods is prohibited under subsection 53(1) of the Trade-marks Act, or that the importation or exportation of the copies is prohibited under section 44.1 of the Copyright Act, requiring that the importer provide written notice to the minister within a specified period of time if they wish to dispute this. If the importer does not provide such written notice, the goods are forfeited. If the importer provides such written notice, the brand owner would have to initiate legal proceedings in order for the detention to continue.

Mr. Chair, we heard a lot about the issues of how the U.S. and Europe deal with these counterfeit goods, and that without this, we're just going to create a huge amount of money for lawyers—with all due respect to the lawyers at the table, and any other lawyers in this country—but we're not going to achieve what we need to achieve with Bill C-8. Counterfeiters are not going to own up and go and collect their goods, unless they really feel they have a solid case and the goods are not counterfeit.

So then you would have a difference between the brand owners and the so-called counterfeiters.

What we're going to get into without the simplified procedure is a whole lot of wrangling. It will involve lot of cost for the brand owners, and for many of them it's a huge cost. I'm surprised the department didn't put forward the simplified procedure as a recommendation, and I assume that now they're going to explain why they didn't, but I do think it's an important part of the procedure that we're going forward with.

[The Chair, Conservative, David Sweet]

We'll go to Mr. Lake first, and then to the officials.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

That is where I was going to go anyway.

It strikes me, as we went through the aforementioned copyright legislation that we passed last year, and as we're dealing with this, that the word “balance” comes up a lot. Maybe you could speak to the impact of this amendment on the balance that is struck within this piece of legislation.

[Paul Halucha]

I'd be happy to do that.

Bill C-8 seeks to implement a cost-effective border enforcement regime that balances the interests of rights holders, importers and exporters, and individuals. A key component of the legislation is that when goods are detained at the border, they aren't determined as being counterfeit; they are only detained as suspect of being counterfeit or pirated. Only the court makes that final determination.

The amendment under discussion would alter this approach by making the rights holder's allegation stronger and by forcing an importer-exporter to go to court to disprove the allegation. Due to the complexity of international trade transactions, importers may have little incentive or ability to give timely notice of detention to the actual owner. If notified the actual owner may be able to establish that the goods are not infringing, while importers may lack information on the provenance or purposes of the goods. And the courts are well equipped.

A number of witnesses testified to the importance of not turning border guards into judge and jury on whether a good is counterfeit or not. The balance that we have in the bill is that if an allegation is made, the goods can be detained at the border. There is a sharing of information between the rights holders and the state. The state is accepting responsibility for dealing with the most grievous forms of counterfeit goods, either those where there is a criminal investigation or those cases where there could be health and safety risks, and then also supporting the information exchange with the rights holders. We're not turning the border agents essentially into judge and jury in a situation where they could be expropriating property from importers without having that go to court.

So that's effectively the balance in the legislation that we think could be disrupted by this amendment.

[The Chair, Conservative, David Sweet]

Ms. Charlton.

[Chris Charlton, NDP, Hamilton Mountain, ON]

Thank you, Chair. I'm reminded of the expert witness testimony that we heard from Mr. de Beer, who said:

I believe it would be impractical and excessively costly for taxpayers to impose further obligations on customs and border services officers than already provided for in the bill—certainly without increased budgetary support.

Members will have heard me question witnesses in this committee about the cutbacks to CBSA. So I find myself in the unusual position of actually agreeing with the government in this instance. Given those cutbacks to CBSA and the costs that are at stake here, I think we've actually arrived at an appropriate balance.

[The Chair, Conservative, David Sweet]

Madam Sgro.

[Judy Sgro, Liberal, York West, ON]

Could you tell me then why both Europe and the U.S., who are very aggressively moving towards trying to cut back on counterfeiting, felt that the simplified procedure was clean and cut and easy for them to deal with and yet in Canada we're going to put the onus on our rights owners to have to go to court and spend a whole lot of money that many of these businesses don't necessarily have to try to prove their case? I don't get why we're so holier than Europe and the U.S. Why can't we just have a simplified process for this?

Why is it, Mr. Halucha, that their process is great for them and not good enough for us?

[Paul Halucha]

First off, I think that both of those jurisdictions have only recently moved to a version of the simplified procedure. After experience we will see whether or not it works over time.

Second, I think Canada is not the United States or Europe from the perspective that many of the rights holders are actually European and American, so I think they have potentially a greater interest in the strength of their enforcement regimes on this issue than Canada. Also, from the perspective of balance, if you look at Canada on copyright we have struck a different balance around many things. For example, in the U.S. for many years they had large court rulings against people who didn't have the money when it turned out their son or daughter was doing downloads. We have struck a very different balance in the Canadian legislation.

So I think the balance really reflects Canadian values around the appropriate amount of enforcement that we want to have at the border and the role that we would like the courts to play in the system.

[Judy Sgro, Liberal, York West, ON]

Lawyers are going to be making lots of money.

[The Chair, Conservative, David Sweet]

Mr. Nelligan.