Public Safety Committee on March 29th, 2007

[Graham Henderson]

The issue of deterrence is an important one, obviously, in terms of what we're looking for. The case study we gave you shows how weak the deterrent effect is.

Forgetting about border guards for a minute, you can have a case, and this is entirely typical, where there's a disincentive for the RCMP or the police. When we get a case brought, what happens? There's very often a plea bargain.

In this particular case, if you flip to the back of the case study, you'll find what the judge said. When talking to the defendant, he said:

You, Mr. Lough, were very fortunate that your counsel has been able to secure a joint submission between the Crown and the defence with respect to sentencing on your behalf. Had they not done so, I would have considered a much more serious penalty for you.

He got a slap on the wrist.

The judge then said:

This is a widespread practice. You got caught, but this is exactly the kind of situation that calls out for general deterrence, some kind of message needs to be sent to the community that this is a serious offence, and I would suggest that this message is not being sent to the criminal community in this country.

[The Chair, Conservative, Garry Breitkreuz]

Thank you very much.

Monsieur Ménard, you have seven minutes.

[Serge Ménard, Bloc, Marc-Aurèle-Fortin, QC]

I can tell you that it will not be difficult for you to convince me that counterfeiting is stealing. It is stealing the results of intellectual work. If intellectual work ends up not being rewarded, fewer and fewer people will do intellectual work. Also, I am convinced that copyrights are at the basis of the wealth produced in the 20th century. If I'm not mistaken, copyrights date from the French Revolution. I remember that the French revolutionaries who put an end to the Old Regime had said that these were assets that did not come from birth or from privileges granted by princes but were justified by the good they brought to humankind. It is a fact that the protection granted to copyrights has led to important technological advances. That is why they will be the basis of important advances in the future.

I practiced criminal law for 27 years before getting involved in politics. I have been involved in all sorts of cases, some even related to bestiality, but I must say that I never had the opportunity to plead a case relating to copyrights. However, you are right to say that violating copyrights is stealing. Therefore, if counterfeiting is considered stealing, possessing counterfeit products should be considered possession of stolen goods.

Are you asking that the possession of counterfeit goods, if it is known that they are counterfeit, be considered a criminal act that would be punished as severely as theft and possession of stolen goods?

[Lee Webster]

One suggestion I would have is to remove the word “knowingly” from the Copyright Act so that certainly the manufacturing and offering for sale of counterfeit goods, knowingly or unknowingly, should be a crime. That will give merchants an incentive to pay careful attention to the source of their product.

Obviously, when you get it down to mere possession, should the woman who buys the handbag in the flea market be labelled a criminal? I think that's probably open for debate. But if you stop the source and educate the public, you're going to stop the practice.

One thing that I want to say in response to this, though, is that I do believe it is theft, as I said in my opening statement. But you should consider why organized crime is moving into this. You can make a lot of money selling drugs in this country, but if you get caught for selling heroin to kids in a school, you're going to go before a judge and you're going to go to jail for a long time. Why do that if you can make more money on counterfeit products? So you're--

[Serge Ménard, Bloc, Marc-Aurèle-Fortin, QC]

I am sorry to cut you off. I am absolutely convinced of that but we do not have too much time. I do not know myself, I did not check the Criminal Code.

However, is the possession of goods known to be counterfeit considered to be a criminal act? If not, do you think it should be?

[Lee Webster]

The simple possession of counterfeit goods is not a crime, and we're not recommending that it be considered a crime. We think that would just be too sensitive an issue, particularly for the individuals, like the woman who buys the product in the flea market. We think the problem can be stopped by other means, by dealing with the people who sell it.

[Serge Ménard, Bloc, Marc-Aurèle-Fortin, QC]

That may be but if you find that someone in possession of a large quantity of counterfeit goods which are obviously going to be sold, is it a criminal act?

[Lee Webster]

I think you'd have to ask why that person would be in possession of so many products.

[Serge Ménard, Bloc, Marc-Aurèle-Fortin, QC]

It's for resale.

[Lee Webster]

For sale, yes, definitely. That should be a crime.

[Serge Ménard, Bloc, Marc-Aurèle-Fortin, QC]

Is it one now?

[Lee Webster]

No, it's not.

[Serge Ménard, Bloc, Marc-Aurèle-Fortin, QC]

All right but I must say that I don't know if I could convince my wife to resist the temptation of purchasing a Louis Vuitton bag for 200 $! Ah, ah!

[Graham Henderson]

On that point, may I direct the committee's attention to a very successful French anti-piracy campaign. It shows a series of French consumers about to buy a Louis Vuitton bag, or whatever it is, and it directs their minds to where the money is going; it's going to organized crime. That's what people need to be concerned about.

We hear a lot of people saying, who cares? It's a Louis Vuitton bag. It's a pair of Oakley sunglasses. What's the big issue? The big issue is where the money is going, and it's going--

[Brian Isaac]

And following up on the France comment, France is one of the few countries where it is an offence to possess the good itself. They will seize things in the airport and impose fines.

One thing we also handed in, which wasn't mentioned, was an executive summary of a position paper the CACN put out in early 2006. One of the recommendations we included in there was that the products themselves should be unlawful. Whether or not it's a criminal offence for a person who may not know it's counterfeit to have it, the product itself is the result of a crime and should be subject to seizure. That's one of our recommendations.

[Serge Ménard, Bloc, Marc-Aurèle-Fortin, QC]

I do not have too much time left but I think you have started answering the question I was going to ask. Generally speaking, I believe that France, which was the first country to legislate copyrights, is very strict about that. And Quebec pop stars are very aware of that fact. When one of their songs is successful in France, they earn a fortune, and not only because of the difference between a 10 million and a 60 million people market.

I am pleased because I find that, too often, here, we forget to look to France as a model. However, I believe that the French are extremely strict about copyrights because they truly believe that protecting copyrights contributes to creating wealth.

I wonder if that should not be a model for us, especially as far as implementation is concerned.

[Graham Henderson]

I think absolutely. But what you're seeing there is evidence of very powerful partnerships among the stakeholders, the government, the police, and even the community, to focus on the issue and deal with it. France is an excellent example. Brazil has one of these crime task forces, which brings together absolutely everybody.

But I think the answer--and this goes to what my colleagues were saying--is in education, not necessarily in criminalizing simple possession. I think you'll find that we can turn this around. In addition to focusing on supply and cutting off supply, we have to focus on demand and on changing the mindset of a nation.

[The Chair, Conservative, Garry Breitkreuz]

Thank you very much.

Your answers are very interesting. We had the officials before us in a previous session, and they gave us the impression that there were no effective laws around the world that we could look at to pattern what we could do here. So I find this very interesting.

I'm almost sorry we didn't televise this session. I think this would be very educational for the public.

[A voice]

[Inaudible--Editor]

[The Chair, Conservative, Garry Breitkreuz]

No, those two comments are completely separate. I think it would be good for the public to hear what you have to say, and maybe we can look at this again.

We now have Mr. MacKenzie, please.

[Dave MacKenzie, Conservative, Oxford, ON]

Thank you, Mr. Chair.

Mr. Cullen indicated that the other government had almost got to the point where they were going to solve the problem, but that's true of a lot of things that are almost there.

I sense a lot of frustration on behalf of all the panel here that this has gone on too long. It's been too long a problem. It's put Canadian jobs and Canadian people at some risk with safety issues. Also, when I suggest Canadian jobs, a lot of this counterfeit material is brought into the country, and that means it's not manufactured here. Obviously that's a concern.

I have another concern. If we're repackaging in Canada and shipping to another country, does that create another risk for our industries in Canada in that some countries may be reluctant to receive shipments from here?

[Doug Geralde]

If I could, I'll just comment on that.

There are a number of those issues that are happening. That's quite common in the case of batteries, where they bring them into the country, and it's also a way for them to get around the systems and the checks we have. So if you don't finalize the packaging and the markings in the country where we're doing inspections, or where they're shipping out of, they have some problems.

So certainly the tentacles of this problem are now entrenched in all of the other areas and the organized distribution network. We're seeing activities on that front as well. There are domestic issues. There are problems that we have within our own country. That certainly has an impact on the safety for other citizens in other countries, and over a period of time it's going to have an impact on our trade.

In the U.S. they talk about sanctions, and other countries will also talk about sanctions. So if you refer to France and the issues there.... If we don't step up to the plate and if not lead, at least be at the level they are, we're going to have increasingly more difficulties. Even in China—we'll speak next month, or in May—their legitimate manufacturers are now screaming at the Chinese to get a handle on this and try to get a hold on the problem, because it's impacting their sale in the global marketplace. Liability issues are on the way, and I think the number one issue for any manufacturer or anybody in any business is safety.

So all of those impinge on our trade, our reputation. Take a look at the most recent, the dog food issue. We have contaminants at different levels that we wouldn't have in North America getting in there. It can ultimately cause a company its total liability. If we lose confidence in the safety system that we've worked so hard to develop, it all comes crashing down, and it comes crashing down quickly. The impacts are beyond imagination.

[Lorne Lipkus]

I would also like not to lose sight of the fact that these repackaging cases—certainly the ones I've been involved in—are under everyone's radar. Canada is not making any money on them. Goods are coming in; no one is paying anything. They're being declared at insignificant dollars. They're being repackaged and sent to the U.S., for insignificant dollars.

One shipment was about 55,000 counterfeit Gucci ties. Where are they going to sell 55,000 Gucci ties in Canada in a short period of time? These were broken down and shipped not only into the U.S. but elsewhere. It's a serious drain in Canada of tax revenue.

[Dave MacKenzie, Conservative, Oxford, ON]

I have another question.

We talk about these ending up in the legitimate retail stores that all of us would deal with. I think Mr. Webster made mention of some way to inform the public. My understanding from what we've seen and heard is that it would be impossible to educate everyone in the general public to know what there is. I think with some of these items you'd have to take them apart, for instance, to find out. But are there places beyond flea markets that are regularly viewed as the home or the retail outlets for counterfeits?

[Lorne Lipkus]

I want to give you an example here.

I'm chair of the education and training committee of the Canadian Anti-Counterfeiting Network, and I've been going to a public school for four years now. An elementary school teacher invited me four years ago to come in and tell her class what I did for a living. She told them I was the “protector of toys”.

So I speak to kids who are six, seven, and eight years old, and I must tell you that in the entire practice of law, nothing I've done has given me more satisfaction than speaking to those kids. You know what? They get it.

For instance, I stood up there, showed them a plush toy, which they call a “stuffie”, and said, “This one for sure has no pieces of metal inside. It has a tag. According to our law, it must be made of new material.”

I asked them—22 children in a circle, four years in a row—“What does it have to have inside?”

“New material only.”

“I can't hear you.”

“New material only!”

One night, after one 30-minute session, these delicious, delightful children went home and spoke to their parents, and we got a call from one of the parents. Her six-year-old daughter had gone into her room, looked at all of her stuffies--she had dozens of them--and found all the ones that she thought were counterfeit. She put them out in the hallway, closed the door, and called her mother.

The mother called to ask me, first of all, what I could possibly have said. We asked her to describe the toys, and every toy she described did not have a tag. It did not say “new material”. Some of them just said “Made in China”. We told her they were all counterfeit.

So the child got it, and the mother was incensed: why did she, as the mother who was there to protect her child, not know that it had to have new material only? She didn't know it. But it's the law.

So I think we can educate, and I think we can have the government come up with an education program. People will stop buying when they realize the health and safety issues, the link to organized crime, and the fact that these factories--for example, plants making ink-jet cartridges and purses--have three- and four-year-old children mixing chemicals in foreign countries.

That's child labour, and I'm not talking one year less than what they should be; I'm talking many years less. We can't condone that.