Evidence of meeting #36 for Public Safety and National Security in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was goods.
A recording is available from Parliament.
Conservative
Dave MacKenzie Conservative Oxford, ON
But isn't the problem here that they quickly learn to put “new material” tags on? Aren't CSA stickers showing up on counterfeit items?
Chair, Education and Training Committee, Canadian Anti-Counterfeiting Network
It is a problem that's being addressed by the industry through a large increase--this is another growth industry--in brand protection. A lot of the companies have very sophisticated brand protection techniques.
This is something the government knows about through passports and through currency. At a previous meeting of the CACN, we had someone from the Bank of Canada come in. There's a counterfeiting problem with money, as we all know.
Partner, Smart & Biggar Fetherstonhaugh, Canadian Anti-Counterfeiting Network
Your basic point is absolutely true. What you're talking about is fraud, essentially, when you get to the perfect copies of different items. There's no way to rule out that there may be counterfeits really anywhere, because they do get into the legitimate supply chains.
Another problem you have is that there are certain centres--including, for instance, the Pacific Mall in Toronto--where counterfeits and pirated goods proliferate. There's really nothing to address it, for the rights holders; we've looked very carefully at whether we can get landlord liability, that sort of thing. The way things are organized, that's another area that could use some serious reform in order to facilitate even what's gone on in China, for instance, where Louis Vuitton has had success in shutting down some flea markets that were constant purveyors of these types of goods.
Conservative
Chair, Canadian Anti-Counterfeiting Network
I was just going to say that it's a constant cat-and-mouse game. In the case I showed you of the thin wire, the counterfeiters have already figured out that this is what we're now looking at, that this is what we're educating the public and retailers to look for. What they're now doing is they're putting in the same amount of copper, but then they're mixing in aluminum and steel. Now, that won't give you the characteristics you're expecting, but.... And then they're going to tin it to make it look like the proper size. So they're not stupid.
They also capitalize on issues like the floods in Manitoba, or Katrina cases. They know that with just-in-time manufacturing, you're not going to produce enough of that product, since you don't have the ability to do so. They will flood the market with counterfeits. It's also at a time when your infrastructure is down and you're trying to get things up and running. So we're expecting to see fires and problems down the road with those products.
In addition to that, without quality control, as we've seen with toys and other areas, there is the use of heavy metals, and PCBs in the oil for transformers. All the things we thought we had cleaned up with our developed-country requirements, purging them from the system, are now coming back into our marketplace and posing hazards. They can be everything from children's pyjamas that are no longer flame-retardant to the PCBs to the stuffing.
So it impacts on areas that you don't normally have...and I think we can educate consumers, once they start to see it, if we have the teeth in legislation and law enforcement understands it. We have to attack it in many areas, through a number of avenues.
Conservative
The Chair Conservative Garry Breitkreuz
Thank you.
Yes, we're over time.
Ms. Barnes, please, we're on the five-minute round now.
Liberal
Sue Barnes Liberal London West, ON
Thank you.
First of all, the testimony from all of you was very, very helpful this morning, and I appreciate the time you've given and your expertise over many years.
I see in the press release from the Canadian Anti-Counterfeiting Network the link between intellectual property and innovation, productivity, and the economic sustainability of our country. I think it's a crime that we're not addressing this as much as some of the other crime issues. This current government seems to have put this one on the back burner to do other things.
This is about the future of our country. And I want somebody to talk about that.
I have a very short question here. In France, were those effective ads paid for by the Government of France or were they paid for by industry, or jointly?
President, Canadian Recording Industry Association
I believe it was the government. I know it was a government campaign. If you look at it, there were posters that went with it.
It's something the committee should probably source and look at because there was a list of all of the different partners that were involved, and it was a very wide range of stakeholders.
You'll find the same thing in other countries as well.
Liberal
Sue Barnes Liberal London West, ON
I think the point taken is that there is an ethical culture that has to be turned around here. I think that message would connect with Canadians today.
President, Canadian Recording Industry Association
Well, a key component of the report we've prepared has been an effort--as I indicated in my brief notes at the beginning--to connect the intellectual property rights and counterfeiting issues with the innovation agenda.
I'm like you, I don't quite get it. But it hasn't just been for the last year or two years; it's been for a long, long time.
It's something that, when you talk to people about it and you start mentioning it, “Why isn't it connected?”, it's as if a light bulb goes off. So this is one of the easiest things to be an evangelist for, for some of the reasons you, sir, were talking about earlier. People get this very quickly: knowledge economy, intellectual property rights--important.
Chair, Intellectual Property Committee, Canadian Chamber of Commerce
I'm more of a traditional intellectual property lawyer. These IP statutes exist for a reason, and they've been on the books for a long time for a reason. People have debated this. We're not here asking for the passage of intellectual property rights legislation. It's there.
And there are good reasons for the Patent Act and the Trade-marks Act and the Copyright Act: to reward inventive ingenuity, to protect consumer deception. It's all there. All we have to do is just fine-tune it.
It's well established that IP and the information economy are directly linked. You can't have a strong information economy without intellectual property rights. It's almost self-evident. Maybe the Canadian consumer doesn't get it. Maybe the Canadian public doesn't get it. Maybe we're not getting the message out. But these issues have all been addressed long ago in the past.
It's just a question of making these things work. It's fundamental to the future of Canada.
Liberal
Sue Barnes Liberal London West, ON
Michael, go ahead. First of all, I commend you. The chamber's 2006 policy resolution on this issue I think is bang on. And I've had the pleasure of working with you many times in the past.
Go ahead.
Executive Vice-President, Policy, Canadian Chamber of Commerce
I appreciate that. Thank you.
I'm just going to add one quick comment to what Mr. Webster just added. That's the context of economic growth and how much and how important the international trade side is for us in terms of trade and investment globally.
One of the things you want to do when you're speaking as a country is speak from a position of strength. And we have some challenges with other economies in terms of IP, and some of those are very significant.
It's a heck of a lot better to be dealing with some of those issues externally when we know we're doing it from a position of strength domestically. So that's part of our rationale here, because it fits. I agree with you, there is a cultural component to this that's absolutely fundamental, and that's why the educational component is so high. But I think from a trade and investment standpoint it's a big part of the issue as well.
Liberal
Sue Barnes Liberal London West, ON
Many of you would have seen the Industry Canada report. I know that at least one witness has seen it because I saw your press release on it.
Are you in agreement, or do you think their recommendations have missing elements in it? And if you had your druthers, would you have added something?
Before I run out of time, recommendation 3.1 states: “Remove the Copyright Act from the list of indictable offences excluded from Proceeds of Crime legislation.”
Maybe one of the lawyers would like to address that for me.
President, Canadian Recording Industry Association
That's easy. That could be done by regulation. It could be done tomorrow. That's a key thing.
But the first question was...oh, yes. We issued a press release.
That was a very interesting recommendation because it was organic. The Industry committee went out on cross-country hearings into the manufacturing sector and this issue kept coming up, so it was something that was completely organic.
Do we support what they said? Absolutely.
Partner, Smart & Biggar Fetherstonhaugh, Canadian Anti-Counterfeiting Network
But it's almost indicative in a sense of the lack of education on the issue. They talk about copyright, but they didn't drill down. One of the problems we certainly have to address is our problem with the trademark regime—the fraud side of things, which wasn't specifically mentioned. But the language was very broad, so it's in the right direction.
President, Canadian Recording Industry Association
I guess we're looking to this. We've tabled a series of recommendations here. I think that's what we need now. We need a report with very specific, detailed recommendations. I think the industry committee was a cri de coeur that emerged rather organically, as I say.
Liberal
Sue Barnes Liberal London West, ON
Can somebody address that recommendation 3.1 for me, about the proceeds of crime legislation, so that it gets on the record? What do you mean by it, so that people who read this committee evidence understand?
Chair, Education and Training Committee, Canadian Anti-Counterfeiting Network
Right now, for some reason, the government has left it to the rights holders to go after the proceeds of the crime. If someone is charged criminally with these offences, the government can't attack some of the assets. The rights holders are saying, we want you to take the assets, because civilly we're never going to get to them anyway; it's not possible civilly. When someone is a criminal and is making their affairs such that you can't attach their assets, we want the government to grab them.
President, Canadian Recording Industry Association
And fund anti-piracy and anti-counterfeiting. It's a self-generating....
Chair, Canadian Anti-Counterfeiting Network
I'm not a lawyer, so I can't speak on that behalf. I just know that if we're capturing as small a portion as we are, even on our best days, then anything that's been caught, confiscated, and fined for is just the cost of doing business. I think the true mechanism for getting at this is going after proceeds of crime. At that point, you can broaden the sweep, and it's up to them to prove that any of this money, now or in the past, has not been used illicitly to purchase these. I think that is a very big deterrent.
Chair, Education and Training Committee, Canadian Anti-Counterfeiting Network
One example is one case I was involved in where somebody was caught by the police with the help of the brand owners. He was manufacturing counterfeit products. He had a $100,000 computerized embroidery machine in his possession. The fine was $25,000, but that person made a lot more than $25,000. Our informant—whether it's true or not, we don't know—said he was bringing in $5,000 to $7,000 cash sales per weekend at one flea market, the St. Jacobs flea market in Ontario.
Liberal
Sue Barnes Liberal London West, ON
How do you target flea markets? Obviously there's a public issue here.
Chair, Education and Training Committee, Canadian Anti-Counterfeiting Network
His machine was in a manufacturing facility in a bricks-and-mortar building in Brampton.
Chair, Canadian Anti-Counterfeiting Network
To the point whether there are rights holders, CSA has gone out with the RCMP. We go through first to identify the counterfeit products they have. They're usually out in the open; then they move them under the table. The RCMP often will follow suit and then charge. It's a small way, but that's one way of doing it. There's a whole arsenal of activities that we can do if we allocate the resources to it.