Public Safety Committee on April 26th, 2007

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Are there additional answers or other aspects that you would like to raise?

[Prof. Michael Geist]

I think you've raised a number of interesting questions.

Have things changed due to globalization? I think they probably have. Technology and the Internet have clearly made it both easier to copy and easier to distribute. I don't think it's necessarily a surprise that you're looking at these issues today as opposed to perhaps not seeing it as a critical issue even a few years ago. Technology is unquestionably making a change.

The question as to whether or not there is a model out there is perhaps the most challenging one. We'd all love to be able to point to a particular country that is doing very well on this issue and come up with the right legislative framework. I would suggest to you there isn't a model out there. We have a large number of countries moving in any number of different directions, most of them unsuccessfully, given the fact that we see this as a global issue.

You mentioned it's World Intellectual Property Day. This week the U.S. government will likely release its special 301 report, where it will unquestionably criticize Canada for the steps it has taken on issues related to copyright. But it's important to note we'll be joined by dozens of other countries that the U.S. will also criticize.

In fact, some of the recommendations the U.S. has been making on an anti-camcorder law, for example, haven't been adopted in virtually any other country outside the United States. There are only a handful of countries that have done so, and even in the U.S. it's been spectacularly unsuccessful.

Even with France as a proposed model...it's true that France certainly has a number of very powerful luxury goods companies and has done very well on some issues. But on other issues, they've taken steps that are perhaps interesting and could also serve as a model. For example, two weeks ago they established the first agency to look at issues on digital rights management, the technical locks that can be used to lock down CDs and DVDs, out of concern for the lack of interoperability, what consumers might lose, and the potential that these technologies might well be abused.

We see that many countries are taking a range of different approaches. I'd submit, as I did in my comments, that no one is for counterfeiting. Everyone is looking for the right solution.

I think to reach the right solution we really need more independent study and analysis about what is taking place in our own country. I think the reality is that once you get beyond some of the rhetoric, we just don't know.

[Paul Hoffert]

While I'm not an expert, I think we might look to countries other than the large United States or France as the two polar opposites that we frequently cite.

The Scandinavian countries come to mind as countries that in general have a very strong regard for intellectual properties. They are leading the world and leading Canada as well within the G-7, in terms of the success of industries like Nokia cellphones, etc. High levels of innovation are leading to great commercial success.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

About the big tractors—In my riding, someone who sells tractors came to see me three weeks ago to tell me that it was impossible that a certain type of tractor be sold at such a low price. It is a reality. We talk about products costing hundreds of thousands of dollars. In the case of those items that are not luxury products but industrial products, the fact is that something should be done. The Standing Committee on Industry, Sciences and Technology is beginning a study on that issue. It will focus on legal sanctions, but it will also deal with that issue.

I shall come back to my question. If we leave the law unchanged, are we going towards the same position as China which was described earlier by Mr. Hoffert, or are we simply maintaining the status quo? The problem is rapidly growing. When you tolerate that kind of thing, you tend to tolerate all sorts of other things in our society. Do you think that this raises a real danger or that it is only a reality that we must accept?

[Bob Sotiriadis]

I can see, from my files, that we normalize more and more that kind of behaviour. Logically, when a behaviour is penalized—as Mr. Hoffert said earlier—it raises the tolerance level for illegal activities and make them more prevalent. Furthermore, with modern digital technologies, the tools used for counterfeiting are more diversified. Are they more numerous? I do not know, but they are more diversified and more sophisticated. The importation of counterfeit tractors certainly brings with it potential jail time and penalties.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

As concerns China, you have—

[The Vice-Chair, Liberal, Roy Cullen]

Mr. Crête, unfortunately, your time is up.

Now, over to you, Mr. Norlock.

[Rick Norlock, Conservative, Northumberland—Quinte West, ON]

Thank you very much, gentlemen, for coming here this morning, in particular Mr. Geist for offering us a different take on the issue we're looking at currently.

I'm going to ask all three witnesses a question about a scenario, and then you can tell me what the difference is in your view.

A person owns a production company and they make a movie, so they have to hire a whole lot of folks, spend a lot of money, invest a lot of their time, etc., in producing the movie, versus someone who just takes that product and spends a bit of time and money at reproducing it.

I guess, to get to your personal situation—I'm speaking to the lawyers—what's the difference between a company that hires pharmacists and doctors and purchases some of the best equipment on the face of the earth to produce a product that does a lot of good for people, versus a person who invests some time and some effort in going to a strip mall, a person who has a very good or reasonable knowledge of the law and goes to a good counterfeiter to produce a nice certificate saying he went to a particular university and obtained a law degree, and then opens his door and gives people legal advice? What's the difference between those two people?

Why should one particular group of people, because they have greater influence on the law, have more influence than another? When people see a product, shouldn't they be able to have reasonable confidence that a lot of research and development—a lot of effort—went into it, making it worth what they're paying for...as a person who wants to take advantage of good faith?

Perhaps we could start with Mr. Geist.

[Prof. Michael Geist]

I must admit that I don't see a huge amount of difference between the two, and in fact I don't think the law necessarily treats them differently either. Someone who wrongfully practises law using a fake degree is going to be subject to some sort of charges, and the law can crack down on that. As we heard, someone who burns copies of DVDs also faces the prospect of both financial penalties and jail time under the Copyright Act when they intend to distribute these.

So I think the law already seeks to address both of those. As I said in preface to my remarks, no one is suggesting that counterfeiting is a good thing. The second example is more of a fraud than anything else, but to the extent to which these things occur in society, I think everybody would agree that it's appropriate to take action.

I don't know that this is really the question you're facing, though, when we're talking about the “Canadian counterfeiting question”. The question here, as we heard earlier, is, do we already have laws to address many of these issues? I think the answer is yes. Are there some things that are more severe and more problematic than others? I think the answer is again yes.

I'm a father with an eight-year-old, a six-year-old, and a three-year-old, and the stories of exploding batteries and other sorts of health and safety issues scare me too. So when I hear the RCMP—as they said yesterday before the industry committee—say that they have limited resources and with all due respect to the Hollywood studios are going to focus on health and safety first, I'm thankful that this is their perspective. I hope that's the perspective we generally bring to this issue: that there is a difference between an allegedly pirated movie and an exploding battery. If we're going to put resources and attention into some of these issues, then surely it's to protect the health and safety of Canadians.

[Rick Norlock, Conservative, Northumberland—Quinte West, ON]

Thank you.

Either one of you may comment.

[Paul Hoffert]

Professor Geist and I actually agree on the broad strokes, but when it comes down to interpretation, we don't always come to the same conclusion.

I agree that there's a fine and a difficult line that the government needs to draw between balancing the need to prevent harm from coming to Canadians and the need to let business run in a less fettered manner and in a manner less expensive to police. However, I still believe very strongly that the two examples Professor Geist uses—one in which there's a case of an exploding battery and the other one in which there's a case of Canadian consumers who are buying illegal goods—are both serious. I don't see one as more serious.

In fact, there was a situation just a while back in which computer batteries were catching fire. In that particular case, the large manufacturers such as Dell and Apple had been purchasing their batteries from reputable, non-counterfeit sources such as Sony, and the net result was that all the consumers who had bought computers with faulty batteries were sent new batteries, and there were remedies. I would put it that the line between that and the fact that we protect a company that has a name like “Sony”, which is a big international company in the entertainment business—Theirs should not be dealt with differently than a little battery that's made by a small company with no name and is counterfeit. I think it's all part of the same issue.

And it's a larger issue. It's really an issue of whether we want to live in a society in which we encourage people to save money at the expense of having a framework that's fair or in a society in which we don't. If you look at it from a point of view of fairness, I don't think there's a big difference between the exploding battery and people ripping off DVD movies.

[Bob Sotiriadis]

I agree with the last comment on the basis of fairness. I know everything is a question of resources and compromise when it comes to legislating one problem vis-à-vis another. There are competing interests.

I still think one of the inexpensive ways is to make it easier for the private sector, with their civil remedies, to do this work. If at least we had full-fledged civil remedies and perhaps a clearer statute that identifies certain infractions or creates new ones, we wouldn't have to ask the government to do everything for us. That's what I think could help, at least as a compromise, vis-à-vis real health and safety issues versus luxury goods and movies.

[The Vice-Chair, Liberal, Roy Cullen]

Thank you very much, Mr. Norlock.

We'll go to our second round now of five minutes each.

Mr. Chan.

[Raymond Chan, Liberal, Richmond, BC]

Thank you, Mr. Chair.

I am sorry that because of other commitments I couldn't listen to Professor Hoffert's and Professor Geist's presentations.

I would like to follow up on what my colleague Mr. Wappel started to talk about: the breakdown of the law and order system. That is an overriding problem that I'm really concerned about—besides the health and safety factor, which of course is important. If you don't deal with the fairness issue to make sure our youth grow up in an environment where the Canadian values of honesty and fairness are preserved, you will see a deterioration in behaviour, and eventually we'll lose what we have.

When I put it into the context of what we're dealing with today and other law and order issues on civil litigation, because of the cost of the legal system we might not get fair play decisions in our daily operations. Also, with the youth justice problem, a lot of the property crimes are not being addressed because of a lack of resources.

If I put this all together, the biggest problem we face today besides legislation is the lack of resources in the whole law and order sector. I think we need to put more resources in it at this time when we have surpluses in government. This is the sector we have ignored for a long time—enforcement, administration, application of the law, and the criminal penal system. How do you respond to that?

[Prof. Michael Geist]

Thanks. It's an interesting comment. I'd raise a couple of things, since it's a theme that has recurred with a number of people who have spoken.

First, this notion that people who buy fake Louis Vuitton handbags are going to cheat on their taxes strikes me as a dramatic stretch for which there's absolutely no evidence at all. The practical reality is that people who buy that $10 handbag know they're buying a $10 handbag. We can argue whether that is fair or unfair, good or bad. I don't think it's necessarily a good thing. Then again, when I know of family members who buy the $1,000 handbag, I'm not convinced that's a good thing either.

[Some hon. members]

Oh, oh!

[Prof. Michael Geist]

I think the practical reality is that these are not people who are necessarily more likely to commit crimes, or the like. I just don't see any kind of evidence for that at all.

I do think there are some people whose respect for certain sorts of laws have diminished. Let's take intellectual property, for example. But I would argue that much of the lack of respect has come from the industry itself, which has failed to respect the customers.

The person who buys a DVD while on vacation in Europe and brings it back to play on their DVD player finds that it will not play because it is locked down. The honest consumer buying a legitimate product finds that the industry is stopping them from playing it. The honest consumer who goes out and buys a song from some of the online music services and then tries to play it on their iPod finds it's not interoperable and won't play. The honest consumer who wants to use the DVD to make a parody and take a portion of it finds that the content is locked down. So even though our legislation might well have things like fair use or fair dealing to permit that, they're not permitted to do so.

If we're going to talk about lack of respect, I think it's a two-way street here. In many of these areas there has been a lack of respect for the customer. When we talk about embarrassment and embarrassment of laws, I run into many people who are deeply embarrassed that Canada doesn't have a parody exception that would allow them to speak out. It doesn't have fair use in the way the U.S. does. So there's plenty of embarrassment to go around, if we want to talk about where our laws could get to in addressing all the concerns of Canadians.

[The Vice-Chair, Liberal, Roy Cullen]

Thank you, Mr. Chan.

Monsieur Ouellet, you have five minutes.

[Christian Ouellet, Bloc, Brome—Missisquoi, QC]

Thank you, Mr. Chairman.

I shall talk from my own life experience and that of my father. He was an architect and I am one also. Fifty or sixty years ago, in the beginning of contemporary architecture, architects started copying the work of other architects who got mad and started legal proceedings but to no avail.

Then there were the technicians. They were not trained as architects, but they started preparing architectural plans at a much cheaper cost by copying architects. The GST and other costs were lower. We could not stop that either. The only thing we managed to do was to better inform the public on our services and their costs. To build a house, the services of an architect cost around $15,000 when those of a technician cost $2,000 or $3,000. Those services were not the same and people had to be informed about it. Things went far enough that finally, the province and the Order of Architects agreed to solve the matter clearly so that there are now architect services and technician services. It is legal. We went from an immoral system, as it was not acceptable to copy, to a moral system. We now accept that situation.

I think that this trend is the same in many other areas. What have been the consequences for architects? They had to work harder to be able to give a more interesting product, to renew themselves constantly, to be more at the avant-garde, to be faster than others. It has been very positive.

Following that I taught at university for several years. What happened at that time? Students started submitting plagiarized work. In view of that situation, teachers had to be better informed, read more, to avoid being fooled by students. It has been very positive. It was immoral but positive.

The same thing happened in the area of copyright. Books are copied, but they get subsidies from the government. More books are subsidized. The provincial governments, but particularly the federal government, gave significant support to the publishing industry for the creation of new books. Even if they are copied later, their owners have the time to make money. There is a line of thinking which allows us to see the positive consequences of that.

We talk about China, but let us not forget that in the past, there was a time when Japan was producing very poor quality products. It is not true anymore. It is a matter of time. We talk about tractors and I think that if you paid $100,000 less for a tractor than someone else, unless you are completely stupid, you should know that the quality will not be the same. We morality according to 19th century norms. You agree with me, do you not? We are not considering the fact that certain changes might be positive. Mr. Geist, I entirely agree with you that health and security should be the prime considerations.

There is also fraud that is committed mostly by electronic means. People are told that they won the jackpot, for instance, or that they got a wonderful job and they are asked money to get it. That kind of trend is mostly coming from the United States. The police is trying to solve that problem, but does it have the necessary tools? I am not really advocating public order at all costs. On the contrary, I believe that all this brings changes. However, in some cases, the result is not necessarily positive. Batteries are copied, but some day they will be all at the same price and it won't go further. If it is a type of battery that is dangerous, it is another matter, but otherwise, all this has positive results. Some individuals are extorting money from people that are naive and unsuspecting. What can we do about this?

[Prof. Michael Geist]

I think a lot of those points are really terrific. There are people out there who argue that counterfeiting forces people to innovate when they're facing competition from both legitimate competitors and otherwise.

I'd also note that this notion that Canada is not innovative, or somehow we're going to suffer from innovation because of our current state of affairs, simply doesn't give enough credit to the amazing creativity and innovation we already see. For every Nokia we have a Research in Motion, a world leader in its delivery of technology. Our Canadian musicians are world leaders. In fact, Canadian musicians have succeeded over the last number of years in increasing their profiles both internationally and at home.

So I don't know that the sky is necessarily falling, although when we hear about the real health and safety issues I think there are legitimate concerns. When we also hear that the RCMP is laying double the number of charges and is prioritizing those issues, I think there is good reason to feel somewhat optimistic that law enforcement has its priorities straight and clearly has some of the powers it needs to try to deal with the issue.

[The Vice-Chair, Liberal, Roy Cullen]

Merci beaucoup, Monsieur Ouellet.

I don't know if any of the other panellists want to answer. The time is essentially up.

Mr. Brown, I'll turn to you now. You can take the floor.

[Gord Brown, Conservative, Leeds—Grenville, ON]

Thank you very much, Mr. Chairman.

I want to thank our witnesses for coming.

I am very curious about a number of things. First, I know our witnesses—at least Professor Geist was quite quick to be concerned about the testimony we heard from the group that was concerned about counterfeiting.

What is it that you fear? I have a feeling that if you were to review the testimony from other witnesses you would get the sense that committee members were strongly opposed to counterfeiting and seeing the government clamp down on it—So what is it? Clearly you have a somewhat different view. You were quick to want to come in front of us. What is it you fear the government would do that makes you want us to see a different view? What is it that you think the government could bring forward in terms of legislation?

[Prof. Michael Geist]

That's a terrific question. I'm always glad to have people read my blog.

I thought it was a very powerful presentation from the witnesses, and my sense was that the committee was very sympathetic. If the government was to move forward with health and safety issues, as I say, I think we first need to better understand where the shortcomings in the law are. But just for the purposes of argument, if we accept that there may be some things we could do to bolster our laws that are concerned with health and safety, I think that's a very good thing.

However, my concern with this file generally—and it really relates to the very first issue I pointed to—is the attempt to use the counterfeiting umbrella to cover all sorts of other things.

There are other legal issues that could be recommended. I'll give you one example. Ratification of the World Intellectual Property Organization Internet treaties has caused an enormous amount of controversy in countries around the world. Even in the United States, the architect of that law has now admitted that the laws have been unsuccessful. In my view, they have negative consequences for privacy, for security research, and for innovation more generally. I think it has had a negative impact, in many respects. The laws are a decade old. They don't look forward.

My concern is that we could see a government take that broad look at counterfeiting and move forward, not just on the core issues that may need something such as health and safety, but as an opportunity to venture into other areas. The impact would be felt much more widely than merely dealing with the fake Gucci bag.

[Gord Brown, Conservative, Leeds—Grenville, ON]

One of the things we're hearing a lot about is that CBSA doesn't really have the powers to confiscate counterfeit goods. Do you have any problem with the CBSA getting more powers to be able to confiscate those goods?

[Prof. Michael Geist]

I think if we had the appropriate counterbalances to ensure that what they are confiscating is counterfeit, perhaps it would be helpful. As I think we already heard, though, that strikes many as a difficult burden to put on border security.

I note, in many instances, that the umbrella of counterfeiting begins to include things like grey market. Just in the last couple of months the Supreme Court of Canada heard a case where you had one company trying to stop the importation of chocolate—this literally involves Toblerone—in arguing that the design of the mountain was copyright infringent. It was legitimate chocolate that was being brought in.

I have some concerns that if we pressure border authorities, in some instances they may not only confiscate the stuff we might agree we want to see confiscated, but they may venture into legitimate products that don't pose health and safety issues and that in fact are legal to be sold in this country.