Proceedings of the Standing Senate Committee on
Banking, Trade and Commerce
Issue 20 - Evidence - December 3, 2014
OTTAWA, Wednesday, December 3, 2014
The Standing Senate Committee on Banking, Trade and Commerce, to which was referred Bill C-8, An Act to amend the Copyright Act and the Trade-marks Act and to make consequential amendments to other acts, met this day at 4:17 p.m. to give consideration to the bill.
Senator Irving Gerstein (Chair) in the chair.
[English]
The Chair: Good afternoon and welcome to the Standing Senate Committee on Banking, Trade and Commerce.
Today is the second meeting on Bill C-8, An Act to amend the Copyright Act and the Trade-marks Act and to make consequential amendments to other acts. Known as the Combating Counterfeit Products Act, the purpose of Bill C-8 is to combat counterfeiting by strengthening enforcement and creating new civil causes of action and criminal offences.
In our first meeting last Thursday, we heard from Industry Minister James Moore, as well as officials from the Department of Industry. This afternoon, we welcome a number of outside witnesses that we will split into two panels of approximately one hour each.
On our first panel, I am pleased to introduce, from Canada Goose, Kevin Spreekmeester, Chief Marketing Officer. As many of you know, Canada Goose is a great Canadian success story, having made the decision to keep its manufacturing force here in Canada. From Food & Consumer Products of Canada, Carla Ventin, Vice President, Federal Government Affairs; from the Canadian Intellectual Property Council, Scott Smith, Director, Intellectual Property and Innovation Policy, Canadian Chamber of Commerce; and Philippe Bensimon, Criminologist. We're delighted to welcome you here.
We will begin with opening comments by Mr. Spreekmeester and then move across the panel. I remind our witnesses to keep their opening comments to five minutes each, so is that we have sufficient time for senators' questions. Mr. Spreekmeester, the floor is yours.
Kevin Spreekmeester, Chief Marketing Officer, Canada Goose: Thank you very much for having me here today. It's a great pleasure to be able to come and to talk on behalf of this bill, and on behalf of Canada Goose. You all have a deck, which we put together. I'm not going to read through it. It's there if you have any questions or you'd like to refer to anything.
I'd just like to tell you a little bit about our story and what puts me in a position to be here today. I've been with the company for eight years. The company has been in existence since 1957.
In the time that I've been with Canada Goose, I've seen the counterfeit issue escalate from a couple of reports a month that we could handle with my executive assistant to something that is now global in nature and that forces us to spend hundreds of thousands of dollars annually to take down worldwide counterfeiters, be they trade counterfeiters on sites like Alibaba, or consumer-to-consumer counterfeiters that permeate social media and the Internet.
We spend inordinate amounts of resources protecting our intellectual property and, at the same time, protecting Canadian consumers who believe that they are buying authentic product, who believe they're supporting a made-in- Canada product and who believe they're buying into this great story, yet are receiving goods often from China that can cause serious health risks because of what's in the jackets which are made with labour standards that would definitely be unacceptable in North America, and they don't keep you warm at the end of the day.
We sent four counterfeit jackets to Feather Industries Canada, where we get all our down, and we had them tested for down quality. Three of the jackets came back with absolutely no trace of down in them. It was more or less ballast, whatever was on the factory floor at the time, and was covered in mildew and bacteria. It's not going to keep you warm and, if you're susceptible to allergens or disease, it's a health risk. The ruff around the jackets was unidentifiable at times. Other times, it was referred to as something called a racoon dog. I have no idea what that is, nor do I want to know. It could have been partly the translation, but that's what the species was identified as. We use coyote because it is a functional part of the jacket. The different strands of hair break up the wind as it approaches the face and create turbulent wind in front of the face, which actually warms the air and helps to prevent frostbite.
Our jackets are functional. They're made in Canada. We go to great lengths to rebuild the Canadian manufacturing infrastructure that was decimated in the 1980s when a lot of brands moved offshore. We're committed to Canada. We're proud of our story.
This bill mimics some of the activities that we see in Europe that help us stop counterfeit product from coming into countries over there. It's a great first step, in our belief. It doesn't go all the way to solving our issues, because a lot of the issues today occur online and we'll need to get to that eventually, but it is a great first step and we applaud that.
The Chair: Thank you very much.
Carla Ventin, Vice President, Federal Government Affairs, Food & Consumer Products of Canada: I do have to say that, just before sitting down here, I was showing off my Canada Goose authentic winter jacket, which keeps me very warm in the winter, and it definitely topped some of the best gifts my better half has given me over the years.
Food & Consumer Products of Canada welcomes the opportunity to contribute to today's study on Bill C-8. This is our second opportunity to testify, as we were also before the Standing Committee on Industry, Science and Technology when they studied this bill last year.
FCPC is the largest national industry association in Canada representing companies that manufacture and distribute food and consumer products sold on grocery and drugstore shelves across the country. Our member companies have facilities in 170 federal ridings across the country. Our industry is the top employer in manufacturing in Canada, employing approximately 300,000 Canadians in 6,000 manufacturing facilities located in every region in Canada, making us a truly national industry.
We are very pleased that the government is taking action to address the growing presence of counterfeit products in the Canadian marketplace. Our industry's priority is the safety and integrity of our products, and we therefore welcome Bill C-8 and look forward to its passage.
We have become increasingly concerned with the growing presence of counterfeit and noncompliant products in Canada and have been raising awareness of this issue for some time with the federal government. Our primary concern, of course, is the impact of these products on the health and safety of Canadians. We're also concerned with the negative impact on Canadian manufacturers, especially in terms of brand reputation.
FCPC is a proud member of the Canadian Anti-Counterfeiting Network, which represents a coalition of individuals, companies and associations that have united in the fight against product counterfeiting and copyright piracy in Canada.
The provision of new authorities in Bill C-8 for border officers, for the first time, to detain suspect shipments and share this information with rights-holders is a critical component of the bill. This legislation also importantly allows for businesses to file a request for assistance with the government regarding suspect shipments. This new framework will allow, for the first time, border officers and rights-holders to share this information and work together. We fully support this new collaborative approach.
As the government steps up its efforts at the border, adequate resources will determine whether or not we actually succeed in decreasing counterfeit products from entering Canada. We, therefore, were reassured to hear on November 27 Canada Border Services Agency's report that they feel they have sufficient resources to implement this legislation. This is an important consideration.
We also need to ensure that Bill C-8 strikes a reasonable and fair balance between law-abiding rights-holders who play by the rules, and those who profit at the expense and safety of others. We were therefore pleased to see the Standing Committee on Industry, Science and Technology make an important change to this bill that places more responsibility on the perpetrator. During our appearance at committee on November 20, 2013, we outlined our concerns with subsection 51.01(1) under offences and punishment, which outlines that a new trademark offence is limited to situations where the perpetrators know that the trademark is registered and that the actions they are undertaking would be contrary to the Trade-marks Act. The committee's removal of paragraph 51.01(1)(c) means that there is no longer a requirement to prove that the accused knew that they had violated section 19 or 20 of the Trade- marks Act. We applaud the committee for making this amendment, as it improves Bill C-8 by providing a more pragmatic approach to the intent provision and placing more responsibility on the person involved in the illegal activity.
In terms of ensuring this bill is balanced and fair, we still have concerns with financial burden and liability for charges. Under proposed subsection 44.07(1), the rights-holder is responsible for the costs associated with the storage, handling and destruction of the detained goods. We disagree that rights-holders who play by the rules should pay for the costs associated with the illegal activity of others. Canadian manufacturers already face enormous challenges, and we oppose any new fees that unfairly burden law-abiding companies. We fully support the Canadian Anti- Counterfeiting Network's recommendation to amend this provision to put the primary responsibility for costs on the perpetrators of the crime instead of on the rights-holders.
I'd like to take this opportunity to also provide some insight on how the important new tools in this legislation could help our industry address a similar concern regarding an increase in products on store shelves that are not labelled correctly. While these products are not counterfeit, they originate from other parts of the world with labels that do not conform to Canadian regulations and therefore can mislead and confuse consumers. More seriously, some of these products also contain ingredients that are not approved for use in Canada or are not clearly identified or disclosed on the package. If products are not accurately labelled, the health and safety of Canadians may be at risk, especially those with allergies.
Like counterfeit products, the presence of improperly labelled or illegally labelled products also has a negative impact on Canadian manufacturers who take the time to play by the rules and comply with Canada's regulations regarding both product formulations, and labelling and packaging. To address this concern, we suggest that companies be allowed to use the request for assistance to flag to border officials not only counterfeit products but also illegally labelled products. We would be interested in discussing in more detail how we can rely on the new tools and authorities in Bill C-8 to help protect Canadian consumers and manufacturers.
Finally, building on a point that Kevin mentioned earlier, we would be interested in learning how this legislation would apply to the selling of counterfeit products on the Internet. We need to be prepared for the different and changing ways that illegal products are entering Canada.
In summary, the safety and integrity of our products will remain a priority for our industry, and we look forward to continuing to work with the government and discussing partnering opportunities in areas like training to help equip border officials with the information they require for implementation.
Thank you, again, for taking action with this legislation, and I look forward to answering any questions.
Scott Smith, Director, Intellectual Property and Innovation Policy, Canadian Chamber of Commerce, Canadian Intellectual Property Council: Mr. Chair and senators, thank you for providing us the opportunity to share our thoughts on Bill C-8. I'm pleased to be here representing the Canadian Intellectual Property Council, which is a distinct unit within the Canadian Chamber of Commerce. As you're probably aware, the Chamber of Commerce is the largest business association in Canada, with a network of 450 local chambers and representing over 200,000 businesses across Canada, in every region and in every province.
CIPC members include representatives from the manufacturing sector, the entertainment industry, the pharmaceutical and life sciences companies, retailers, importers and exporters, and other business associations. We're an umbrella group.
From the inception of the CIPC in 2008, one of the key components that we've been looking for in our advocacy program is securing ex officio powers for border services — being able to actually stop materials coming across the border. That means trademark or copyright infringing materials.
We had a little conversation before this meeting and we were talking about statistics. I'm often asked to put a number on what this costs the Canadian economy. There are lots of numbers out there, and it's hard to put them in context. Globally, the World Intellectual Property Organization tracks numbers and so does the OECD. There are estimates that the counterfeit fashion and luxury goods markets alone is as much as $600 billion globally, and that's double the value of the global illegal drug trade. That costs those rights-holders approximately 10 per cent of their top line value.
Another estimate would put the counterfeit value of goods sold in Canada at $30 billion. That would be more than just the fashion industry. That's children's toys and the batteries that go into them, the circuit breakers in your electrical panel, the brakes in your car, the case that protects your electronics, the prescription drugs you take to heal you, and even the foods you eat. There's a market for fake everything.
I'm going to provide you with a tangible example. We're Canadian and for most of us, I speaking for myself anyway, hockey is part of our DNA. I think you saw from the minister, last week, that hockey jerseys are a target. At the 2010 Vancouver Winter Olympic Games, there were an estimated 35,000 counterfeit hockey jerseys available for sale. That's according to Hockey Canada. During the 2014 Winter Games, security officials and brand trademark officials were able to seize about 17,000 of those counterfeit jerseys. Sixty to 80 per cent of Team Canada jerseys are believed to have been counterfeited. The jerseys are offered at online websites for around 20 bucks. Authentic jerseys, the ones the hockey players wear, cost about $450. There is a good reason why they are differentiated in price. But in the end, the actual numbers don't matter. It's that those brands are property — property that requires investment and the integrity on the part of those intellectual property owners.
Counterfeit goods costs the Canadian economy billions of dollars each year in lost revenue, brand devaluation and lost jobs. It is also putting the health and safety of Canadians at risk. The risk is from inferior products that are untested and uncertified, and they are often of inferior quality, which has been mentioned already. It contributes to the proliferation of organized crime. When goods are seized, there are storage costs. There are energy costs, land fill costs and, potentially, environmental costs, as counterfeit goods may not be as recyclable as the products that they're imitating. They may or may not include hazardous materials. What do you do with those? What do you could for the people who are actually handling those materials?
As it stands right now, counterfeiting is not a crime in Canada. Rather, it's the perpetration of a fraud that's the crime and this is often difficult to prove.
Bill C-8 does a number of things that are important for protecting Canadians from unsafe and misleading products, and it's important for businesses' bottom line. First, the bill will ensure that selling, distributing, processing, importing or exporting of counterfeit goods for the purposes of trade will be subject to fines and possible jail time. In addition, new criminal offences for processing and exporting counterfeit goods for the purpose of trade will be added to the Copyright Act, which would allow the RCMP to seize counterfeit goods. The bill also makes it illegal to import, export, or possess counterfeit labels. Often what happens is that you will have goods coming in without label and that way they're not counterfeit. They'll bring the labels in separately, attach them and there is no way to catch them.
Second, by creating a new border regime, the government is empowering the CBSA to detain goods and share information. This is important for brand owners because that hasn't been the case over the last couple of years.
Third, the bill will allow trademark owners to seek legal recourse before counterfeit trademark goods are sold in the marketplace. Specifically, rights-holders will be able to seek civil remedies for the manufacturing, distribution and possession with intent to sell counterfeit goods.
From a brand owner's perspective, Bill C-8 isn't perfect. Our members have concerns about the request for assistance procedure. We have described that in previous submissions, of which I've submitted a copy to this committee. Feel free to have a look at that. It puts the burden of administrative costs on brand owners as opposed to the importers, who are the perpetrators of these crimes.
Our members are concerned with the explicit exclusion of goods in transit, because it will have a negative implication with our key trading partners, particularly in the U.S., which I think you've heard from the U.S. ambassador about.
Our members are concerned that the bill only captures large shipments of goods entering Canada via major ports. It does nothing to address the proliferation of small shipments of counterfeit goods entering Canada through online portals. Ironically, Canada Post suffers a loss of up to $10 million from counterfeit stamps.
My other concern about the bill is that it does not address online piracy. In an age of digital media, music, movies and software are an easily replicated commodity and a high-value target for those wishing to cash in on the work of others. That costs our economy.
For example, the music industry has seen significant declines in revenues over the last decade. From 2007 to 2011, revenues from sales of physical media — that's CDs — dropped 50 per cent. While digital sales increased almost threefold during that time — they were moving to the online iTunes type platform — it was not anywhere near sufficient to make up the losses on physical sales. Last year was actually a turning point for the music industry. It was the first year that they've actually seen an increase in sales overall, but that is once you've taken into account the 50 per cent drop over the last five years. They had about a 10 per cent increase.
Despite these concerns, CIPC believes that on balance, the proposed provisions of the bill regarding criminal offenses, ex officio powers and civil remedies are sufficiently important enough to the Canadian economy that we encourage the government to pass this legislation as swiftly as possible. I look forward to continuing to work with government to find satisfactory remedies to the issues that are not addressed here.
The Chair: Thank you. Mr. Bensimon, please.
[Translation]
Philippe Bensimon, Criminologist, as an individual: Honourable senators, I would like to begin by thanking you for giving me the opportunity to appear before your committee. Given the short amount of time I have to speak, I would like to briefly remind you that the protection of artwork in its variety of forms, including the protection provided under international agreements, came about because of the barbaric acts committed in times of war.
Above and beyond who we are, each generation leaves signs of their very brief passage on earth. These signs, from prehistoric humans to today's humans, will be seen by future generations, which is why it is so important to protect our cultural heritage.
Canada, a country that has participated in the greatest wars of all time, is aware of how fragile works of the mind are, and of the fact that our world is constantly evolving.
In 1921, the very first federal copyright law was created and Bill C-8 is the continuation of that. We should feel proud of this progress. However, the work is not done, because even though Canada is a world-wide example of a young nation where one can still hope to find a better life, it is getting older and it needs to protect its cultural heritage, whether that heritage comes from within or outside its borders via the art market.
As you know, five sources may lead to the creation of legislation. The first is the public, its concerns, its fears, whether they are expressed by individuals, representative groups, or researchers who have spent part of their lives contributing to the social fabric. In 1995, my doctoral thesis condemned the lack of specific measures for dealing with a criminal offence like no other: counterfeit paintings. I am going to explain why this is a unique case.
You may wonder why this phenomenon only exists in painting and not in literature, music, or sculpture. The reason is very simple. Literary or musical works' strength comes from numbers. In sculpture, even more than a century after an artist's death, original numbered artworks are still legally produced, whether they be the creations of Rodin, Maillol, Claudel, or others. These are numbered series and the only original piece is the mold that was used to pour the bronze.
What makes painting unique is the fact that there can only be one piece of work. It can only be admired in one location at a time and by a very limited number of individuals, contrary to literature and music. If it is destroyed or stolen all that is left is a photograph. There is no such thing as labelling, packaging, trademarks, industrial and protected manufacturing model, in the area of painting. Painting is not a decorative product, and it cannot be monitored by our border services in the same way that drug trafficking is. That is the main reason why paintings more than any other form of artistic expression, are the main tool used for money laundering by organized crime.
Some may say that only a minority of individuals can afford to buy art. I would respond that the majority of North American museums have built their collections based on donations. And where there is a donation, there is a tax credit. Therefore, when counterfeit artwork gets into a museum, all Canadian taxpayers are victims.
[English]
The Chair: Mr. Bensimon, I apologize for interrupting. Do you have any reference to Bill C-8?
[Translation]
Yes, what I wanted to say is that Bill C-8 is extremely important; I just said so, it is progress. But to fight crime in all its forms, we have to work in the interest of the law, of intellectual property, and this has to be put in the Civil Code, in common law and in the Criminal Code.
To conclude, to fight a criminal offence, it needs to be very clearly defined. As far as the Canadian Criminal Code is concerned, for instance, there are about 20 provisions which contain the idea of ''false'' counterfeit money, false passport, false travel document, false representation, false name, forged document; but there is nothing which refers to a counterfeit object in the art world. Common law and civil law contain the idea of a seller's good faith; there is also the notion of a time limit to bringing action between the moment a work of art is sold and the discovery that it is false. In general, this time period ranges between two weeks and three months, but a false work of art remains false, and it might just grow old inside a museum, which is ironically enough one of our most well-protected institutions.
So to finish, please understand that no museum in the world is spared from this kind of thing. All the paintings you see around you were gifts from great museums, and there is no really rigorous monitoring of art trafficking. Therefore, we all have to take the right kinds of measures to fight crime in all its forms.
Thank you, honourable senators, for your attention.
[English]
Senator Hervieux-Payette: Mr. Smith, I presume you made the same recommendations in the house. Did you see any changes following your representation, or are you just now saying, better this than nothing? As far as I am concerned, we are here to look at this. Did you have enough time? Did you make these recommendations? Did you feel that there was a genuine interest for them to make the improvement that you were recommending?
Mr. Smith: At the Industry Committee, we focused on the recordation system, or the lack of it, and the request-for- assistance process. I actually had somebody with me making that presentation. There were no significant changes to those processes. The only change I would suggest that has been made is a commitment on the part of CBSA to work more closely with business. Our concern still is around the associated costs. Once you sign on the dotted line as a brand owner, you become responsible for storage and destruction costs and for court costs. That can get extremely expensive, particularly in cases where you have relatively small consignments within a major container.
For example, you get a container shipment that is the size of a truck, and on that truck you have only 100 pairs of shoes. Is it worth it for the brand owner of that shoe company to prosecute? Probably not, as there's just not enough material on that truck to warrant the costs. They become obligated to do it through the request for assistance. So, there is a significant amount of work that needs to be done on how that will actually function.
In the end, it's important for our members to make sure that the things I mentioned in this presentation actually pass.
Senator Hervieux-Payette: One question bothers me, which I think was mentioned to us before: The United States is very unhappy about the way we have proceeded. It seems we are not changing. Some people mentioned to me that we might face a special charge to do the work a second time, which means that what should have been done was not done. Of course, they will have to do it. This would have a big impact on people who import into Canada and some of it is shipped to the United States. Is this a concern for you?
Mr. Smith: It's a concern from the perspective that most of our members are multi-national, so they would expect that any jurisdiction participating in international trade would respect the general procedures that other jurisdictions undertake. Canada would be one of the few that does not handle in-transit shipments.
Senator Hervieux-Payette: Where do we stand in the global picture? When we met previously, we had some figures to show that in the U.S. $1.5 billion was collected and in Europe a large amount was also collected. In our case, we were at $30 million over five years; we are so out of the club. As far as I'm concerned, you're talking about the importer and the chain of people involved. As far as I'm concerned, do we not encourage people to go through Canada?
Mr. Smith: The numbers that you're seeing from the RCMP about seizures really is a matter of enforcement resources. They do what they can with the resources they have. The purpose of this bill is to find ways to improve the tools they have to be able to enforce.
[Translation]
Senator Maltais: My question is for the representative for Canada Goose. It is recognized in Canada and elsewhere that you produce extremely high-quality products. I understand the problem you have to deal with very well, and that it represents a loss of income for your business and a loss of quality for any Canadian who buys these products, which are fairly costly, but of very high quality, it must be acknowledged.
How does the consumer get conned? A consumer will buy a low-quality product, and may not have taken the time to look at the tag when a store offers to sell this consumer a Canada Goose overcoat at half the price that your authorized resellers would sell it for. The customer is told that it is indeed a Canada Goose jacket, except that it is less expensive. The customer might believe that the seller is doubling his revenues, and that he might even put half of the difference in his pockets. How can one defend against this?
[English]
Mr. Spreekmeester: A couple of things. On your opening position that we are losing money and that Canadian consumers are potentially being duped, Canada Goose is in an enviable position — knock on wood — such that our demand is far greater than our ability to supply as we continue to build out the Canadian manufacturing infrastructure. This isn't about us recouping lost revenue. We sell out every year, and we're lucky to do that. This is about protecting our intellectual property and protecting Canadian citizens. I just want to be clear on that. The money that we put into anti-counterfeit is a resource that we spend willingly to protect our brand and to protect consumers.
Now, the challenge for consumers becomes even greater today because the bulk of the counterfeit sold, as was referred to earlier, is in small shipments coming from China that are bought through the Internet.
For example, from August to November of this year, we enacted on 700 counterfeit websites to try to take them down. We are one of the most searched brands globally, and you can include Rolex, Louis Vuitton and Chanel among them. Part of that is because of the great demand for the product, which we are proud of.
Right now, a lot of our resource goes into consumer education. We spend a lot of time and space on our web site educating consumers about what to look for and where to buy. We direct them to retailers that are authorized, and we talk a lot about retailers that are unauthorized.
[Translation]
Senator Maltais: I have another question for you. Given the quality and price of the product, would it be possible for your authorized resellers to put up a sign near the entrance of the store explaining how to recognize whether a Canada Goose jacket is the real thing or not? That way, a consumer would not be conned twice. Would it be possible to do that?
[English]
Mr. Spreekmeester: Yes, I would be happy to provide the retailers with all the information, and we do a lot of what we call product knowledge sessions to help them explain to consumers what to look for. We would give them the point of purchase materials. We can't legislate to the retailers what to put in their stores. As I'm sure you're aware, retail floor space is of great value, so we have to convince them to put the stuff up, but we're more than happy to provide it. We have a lot of educational material for consumers.
Senator Massicotte: Thank you for being with us today. The whole counterfeit issue is very important. My wife has some fashion stores and she sells Canada Goose, but there is so much reproduction that it's affecting everyone's sales. Let me get to the issues.
Three or four issues were raised among all of you, which I think is important. One is the efficiency of recourse, if you wish. I think, Mr. Smith, you raised the issue, so I will address this to you. You say it's still too cumbersome to take recourse with counterfeit goods, but you must acknowledge that the fact that it's a criminal offence and the penalties are up to $1 million or six months in jail, which is pretty significant. One could argue that you are right and it's still very cumbersome, but the penalties are of such consequence that I presume they may shy some people from continuing to import these goods or manufacture these goods. I gather you don't buy that. You still think the process is still too cumbersome.
Mr. Smith: I'm less concerned about how cumbersome the process is, than by how expensive the process can be. It's a bit of a nuance. I think most companies are not put off by the idea of an administrative burden. They are put off by, what is this going to cost me in legal fees? What is this going to cost me in storage fees? What is this going to cost me in destruction fees? How long will this be in court?
You're right that there are a number of things in the bill that may satisfy that problem. For instance, the brand owner can take a proceeding against the importer to try to recover those costs. The only challenge is going to be, in a lot of cases, that those importers are ephemeral. As soon as they are caught, they're gone, if they can get caught. Sometimes you can't find them. That's why we're suggesting there should be a recordation process. That doesn't need to be in the legislation. We can find ways to do that without.
Senator Massicotte: You say that, but one of the witnesses was basically saying we should do like what they're doing in Europe whereby if you note counterfeited goods, the onus is upon the importer to prove it's not. It's a negative thing, effectively. You don't buy that. You say you can do it by regulation, not by amending legislation?
Mr. Smith: I didn't say ''regulation;'' I said ''recordation'' — in other words, just having a database of products and products IDs. There are ways of doing that outside the legislation.
Senator Massicotte: There is an association that is not here, but I think they reported to the Chamber of Commerce relative to ''in transit.'' Am I correct? That was one of your subgroups. They criticized the legislation. The legislation currently as worded, in fact, the amendment being made, is such that you can have goods in transit controlled by the border patrol people that are clearly counterfeit, but it's not illegal if the goods are not destined for Canadian consumers. You raised the issue that that's not appropriate. Could you provide further comment on that?
Mr. Smith: Most other jurisdictions that have border protections in place for counterfeit goods will not allow goods in transit to leave their facilities if they are deemed to be counterfeit. All we're saying is that as a trading partner, in good faith, we would hope that Canada would do the same thing.
Senator Massicotte: You say that. Does that apply to the United States?
Mr. Smith: It does.
Senator Massicotte: The United States is not following our practice?
Mr. Smith: No.
Senator Massicotte: You're sure of that.
Mr. Smith: As far as I know, yes.
Senator Massicotte: Our government makes the argument that every country has different laws. For instances, they use the example of Aspirin. Aspirin is a generic product in the United States. It's a trademark product by Bayer in Canada. They cannot impede the import of an Aspirin generic product, which is a counterfeit once it gets there, because their laws don't make it illegal. It's only illegal in Canada. They're saying, using that example, that it's hard for us to impose laws which are maybe not consistent with our own.
Mr. Smith: Not to be argumentative, but a generic product is not considered a counterfeit product in Canada, and I don't think under this legislation it can be —
Senator Massicotte: In Canada, it's a trademark product. In the United States, it's generic.
Mr. Smith: It would be a counterfeit product if the generic company chose to put Bayer's name on it. If they sell it as a generic product, then it's not a counterfeit.
Senator Black: Thank you all for being here supporting this clearly important piece of legislation. I have two questions. One is to help me understand if there are any constructive suggestions that you might have as to how this challenge of importing counterfeit goods over the Internet could be dealt with. You've raised it as an issue. Good. I get it that it would be an issue, but how would you address that? Do you have any constructive suggestions for us?
Mr. Smith: There is a program through the RCMP. A former Ontario provincial police officer is conducting a program right now to go after the market accounts of counterfeiters. He's using the payment companies, like Visa and MasterCard, to basically shut down the market account of the operations of those importers. He's having a significant amount of success in doing that.
It's difficult to shut down websites because you're playing whack-a-mole. They come up very quickly. It's easy to get a URL, but difficult to get a market account. I would suggest that providing some additional resources to the RCMP to do something like that would be a good step.
Senator Black: Are there any other suggestions on that point?
Mr. Spreekmeester: I would support what Scott said. We work with that RCMP officer. We have piloted projects with him globally and he has been a fantastic resource. The more we can help him, the better.
Holding social media accountable to who advertises online would also be helpful.
Senator Black: As a criminal matter?
Mr. Spreekmeester: As a criminal matter, so Facebook and places like that where counterfeiters do advertise and where a lot of consumers follow, that would be helpful.
Senator Black: You raised, Ms. Ventin, the point, and a couple of you underlined the problem, that if a Canada Goose product comes in and it's bad product, then charges related to storing, destroying and legal fees are then assumed by Canada Goose. That's the contemplation.
I get that that would be a burden. However, I'm not sure, if that burden wasn't put to the infringed party, who else would bear that?
Ms. Ventin: When we discussed this issue at committee, it centred on the fact that it's difficult, building on Scott's point, to get hold of and track the importer. We have to do a better job. If you're importing goods into this country, you have to be held accountable. We have to know who you are and we have to be able to track you.
I would say that those who are importing should be responsible for the administrative costs of the detainment.
Senator Black: We have heard some importers say, ''We've been duped, too.'' That's the problem. I'm wondering, whether this is fair or not, if unfortunately in today's world that just might be a cost of business for people who are trying to protect the brands.
Ms. Ventin: The fair assumption, if you're dealing in a business, is that you familiarize yourself with the products that you're selling and with the laws under which you are operating.
Senator Ringuette: I have two questions. One is with regard to commercial imports, where this bill centres its regulation and legislation. For instance, you identified Alibaba as a commercial importer to Canada. They've gone from Alibaba to the next step, AliExpress, which is on the retail side. There's nothing in this bill with regard to anything that is non-commercial in nature, non-wholesale.
My other question is this: For many, many years, different organizations have been trying to get the Canadian Food Inspection Agency to inspect not only the quality of food but also the labelling of food imported into this country. There's nothing in this bill with regard to food imports. I'd like to have your comments on those two issues, please.
Mr. Spreekmeester: I would like to comment on Alibaba and AliExpress. I'm not familiar with AliExpress, so I apologize.
Senator Ringuette: It's the new retail extension of Alibaba. From my recent look into the issue, in the U.S. they are surpassing Amazon and eBay in online retail sales.
Mr. Spreekmeester: If they're fed by Alibaba, it doesn't surprise me. The thousands and thousands of jackets we find on Alibaba are staggering.
Senator Ringuette: The online retail aspect of that is not covered by this bill.
Mr. Spreekmeester: I assumed that the online enforcement would be the next step that the government would address in supporting Canadian manufacturers.
Ms. Ventin: I can jump in here on the question you had concerning CFIA and food products, in particular. This is a big concern for us. As I mentioned in my remarks, we're not only concerned about the counterfeit products, but also the products on store shelves that aren't properly labeled. That is a problem because they may not disclose everything that's inside the box, as well as outside the box. We need to have consistent labels that comply with our regulations.
Many member companies call me to say that there are noncompliant products on store shelves and what should they do. The CFIA is operating under a complaints-driven process, so the more complaints they get at a retail outlet, they will send an inspector. That is a really tough situation as there are a lot of retail outlets and products to look at. That system is tough.
I can say that the CFIA is undergoing a major modernization initiative, the first in decades and decades. It's long overdue. We expect in the new year that the CFIA will implement a new importer licensing system that's going back to holding the importer accountable — not waiting until it gets on store shelves. The importer will be held accountable, so that there's a record of who is importing the products and they can be traced back to the importer.
Hopefully, we'll see some progress on that front soon.
Senator Tannas: Mr. Spreekmeester, and maybe others if you have some idea, I'm trying to stratify and wondering if you can help. We've got online B to B, small numbers that are coming across, not through the major ports, obviously. We've got stuff that is coming through the major ports. We have folks who buy stuff in a flea market in New York. We have people ordering one jacket online. Can you give us an idea of the volumes or percentages of your product in each of those buckets and any bucket that I may have missed?
Mr. Spreekmeester: I'm happy to speak on behalf of Canada Goose. I would suggest that 85 per cent of our counterfeit issue is one-off packages coming in from China. The rest would be flea markets, discount malls and stuff like that.
Senator Tannas: I'm not surprised. To the other witnesses, would that confirm what you think the bulk of the product is that's coming through?
Mr. Smith: To Senator Ringuette's point, it's definitely shifting. Alibaba, Amazon, eBay and, to an extent, Kijiji all offer a platform for counterfeiters to sell their goods more easily; and they're being delivered through legitimate couriers and Canada Post. Yes, something needs to be done.
Senator Tannas: One at a time.
Mr. Smith: Yes. This bill does not address that. We understand that, but it makes that practice illegal.
Senator Tannas: It makes it illegal for somebody who doesn't live in Canada, unfortunately, right?
Mr. Smith: Yes.
Senator Tannas: Senator Massicotte talked about the U.S. Again, from your own experiences or any information that you have, how much of your product has been seized by U.S. Customs and delivered back to you, or have you been notified about? How much is that filter we hear they're doing actually working?
Mr. Spreekmeester: Very little.
Senator Tannas: Right. It's interesting that they would ask us to do something that doesn't appear to be working on their side, if they're in fact doing it, right?
Mr. Spreekmeester: Not to be contrary, but it has helped us in Europe. We would be alerted by the Danish border patrol if a package were on its way to Sweden and they had seized it there, for whatever reason; or if it came through the U.K. That's where this plays out for us in its greatest form. We have not received much from the U.S.
Senator Tannas: For us in Canada, it won't be stuff coming to the U.S. through Denmark; it will be coming through here and vice versa.
Mr. Spreekmeester: Yes.
Senator Campbell: Thank you for coming today. I really don't know where to start. I suppose we could start by ensuring that the next time the Prime Minister meets with Alibaba he has a long and serious talk about this. Obviously, we're interested in trade; we all agree on that, but you are talking about $600 billion. I don't agree with Senator Massicotte because six months in jail is bupkis. You get six months in jail for six pot plants.
My question is: If you get popped on this and are convicted, how do we go about sending you down? If we consider this worse than drug trafficking, from a financial point of view, how do we get to that point? It seems to me like we're sneaking up on something. We're not saying, okay, let's go out and let's hammer this. Let's get the border security. How do we get to that point? Or do we just keep sneaking up on it, little by little?
Mr. Smith: It sounds like it's a question of political will.
Senator Campbell: That's all I need.
My second question is: I'm having some real difficulty with this idea of due diligence. Coming from the person who makes the counterfeit good, to the person who imports it, to the person who sells it, at some point along this chain, who has responsibility for diligence? We just can't keep throwing this back on the Chinese exporter. There are Canadian businesses that are importing this stuff and selling it. At what point does due diligence come in?
What really concerns me is what happens when I have on my shelf, in a large supermarket, goods that come from outside of the country that are mislabelled? Do we wait for another dog food scandal? This is very concerning. Who is going to take responsibility for that? Shouldn't I have the responsibility, as the owner of the grocery store, to ensure that what's coming in is Canadian and marked properly? Who takes responsibility here?
Ms. Ventin: The importer should take responsibility for bringing in whatever product that they're dealing with. They have to familiarize themselves with those products. The well-established, well-respected retailers will know their suppliers very well. They will have that trust.
Senator Campbell: Clearly that's not enough, if it's still making it to the shelves. I would suggest to you that the importer has the responsibility for due diligence. The due diligence on the part of the end, simply can't be that ''Oh, I've done business with them for 60 years and I trust them,'' because things are changing so rapidly in this world. God, wouldn't we love to go back to 60 years ago? That ain't gonna happen.
There is also a concern that people have to start taking responsibility. It can't always be the government. It can't always be ''them'' from someplace else. The EU clearly has done it and why aren't we copying the EU? I agree that it goes back to all political will. It's not just one party or another. At $600 billion, if we ignore this, we're in deep — even at $30 billion — we're in deep trouble. I think we need to move faster and further on these things.
Just to finish off; you know what? You get what you pay for. Anybody who thinks that they can buy a jacket from Canada Goose for $20 deserves to have whatever bacteria is coming out of that jacket.
Senator Tkachuk: I was a sponsor of this bill in the Senate and I do want to ask you the question on the goods travelling into the United States, because that was one of the main areas that I was interested in. I believe that if it's going to Chicago and it's a false product, then the border agency would notify Chicago to be on the alert for this particular good, if they have already identified it.
Hopefully, if they do their job well, then they'll be able to get the Americans to start doing their job well and thus protect the North American market. It would be interesting to see whether in a year or two we could come back to the table and see exactly how they're doing. Perhaps then we could have another study on this, because counterfeit is certainly something that I'm interested in from my old music days. Could you comment on that?
Mr. Smith: Certainly to your point on the sharing of information, it is one of the key points for us in this bill and the fact that the bill makes it legal for border services to share that information with other organizations. It's between brand owners and it's between enforcement agencies, which include other border services agencies like the U.S. So, you're correct. It will allow them to share that information.
But I think one of the other concerns about the in-transit shipments is that it is possible for an importer to then take a shipment, disassemble the overall container and then repackage it, so that it looks closer to what the original product should look like. It allows them to put those labels together and assemble products. It makes it much more difficult to actually identify those counterfeit products and that's one of the other concerns about the in-transit provisions.
Senator Tkachuk: On the question of Alibaba — and the public offering they just had was huge — it seems to me that these kinds of things would be against security laws. There must be other ways to skin the cat. Outside of the fact that they may be getting away with counterfeit goods, but at the same time, once you're a public company, you have different obligations. There might be another way for both the Canadian and the U.S. governments to put a little pressure.
To me, it's like a criminal conspiracy, right? That's what it is. You're sitting out there and you're conspiring to sell false goods and make huge profits, just because you're not located here and using the Internet to sell these products.
[Translation]
Senator Bellemare: I would like to ask a question about cost distribution to see whether that could be a way to avoid counterfeiting. In this bill, we understand that it would be up to the holders of the copyrighted product to pay for storage and to make sure that their rights are upheld. My question is probably for Mr. Smith, but other witnesses may respond.
As an association, Mr. Smith, had it not occurred to you, or perhaps it occurred to you and it was not possible to do so, that you could mutualize this risk among property rights holders? As there is a great deal of money at stake, billions of dollars, would it not be worthwhile to share this risk with members of your association? It is likely that the cost of mutualizing that risk would be lower than all of the benefits you could obtain from it.
[English]
Mr. Smith: I'm hoping I understand your question correctly. The point, I think, you're trying to make is: Is it fair that the businesses that own the brands incur all of the costs for protecting their own materials, and then should we find a way to distribute that cost among all brand owners, in other words, make it a collective?
Senator Bellemare: Yes.
Mr. Smith: I don't think that is something that has been considered within our association. We would certainly agree that we would rather see the costs be put on the perpetrators instead of the brand owners are the ones, who are having their intellectual property stolen.
The idea of a collective; it's certainly something that could be discussed. I can't tell you how much support there would be for that at this point. Maybe Kevin could elucidate on that.
Mr. Spreekmeester: I think, if other brands want to share Canada Goose's costs, I would be more than happy to distribute them. My guess is that there will be a handful of brands that spend a lot and coming together to share those costs as a business might be a tough discussion, and you're willingness to accept thresholds for seizure, storage and stuff like that.
I would also be very happy to discuss it. I think it might be a tough sledding, though.
[Translation]
Senator Bellemare: Importers are not always identifiable, on the one hand, and they are not necessarily always liable. The government, for its part, thinks that property rights holders are the ones who should pay to have their rights upheld. In any case, it is just a suggestion.
[English]
The Chair: I welcome the Chair of the Senate Finance Committee to our Banking Committee today, Senator Day.
Senator Day: I have one question and would appreciate your helping me on this. The statistics I have seen are the RCMP and Canada Border Services Agency have increased their activity in terms of seizures very significantly over the past few years, so things have been happening without this legislation. Mr. Smith, you indicated your concerns that, once you file this request for assistance, you open yourself up for a whole lot of storage costs, moving costs, court costs, et cetera. What happens if you don't file the request for assistance?
Mr. Smith: You raised the issue of the RCMP. The RCMP will focus on cases with clear issues about public safety. They generally do not involve themselves in cases where it's strictly a brand protection issue, unless they are handed a case, in other words, somebody else does the investigative work and they're handed something and it's easily prosecutable. For the most part, they don't do that.
The statistics have shown that the additional resources that the RCMP put into enforcement have generated a significantly higher number of seizures. As soon as they withdraw those resources, which they have in the last two years, those numbers drop again.
Senator Day: So what happens now if this legislation is passed and you do not file a request for assistance with border services?
Mr. Smith: Then you take the risk that you will not have your goods seized.
Ms. Ventin: Then those products end up on store shelves in Canada.
Senator Day: You think they won't do anything without this request for assistance?
Ms. Ventin: I think — and Scott can jump in — these costs are being borne by the rights-holder, so they have to make the decision. Number one, they have to detect if there is any sort of questionable products coming in; and, number two, they have to decide whether or not it's worth their while, worth the cost and worth the resources in order to put forward a request for assistance. If not, those products probably will come in and end up on store shelves in Canada.
Mr. Smith: One thing I'll add is that business can be pretty ingenious when it comes to how to work with existing systems, so it may take some time, but I think there are probably ways that business will find ways to work with this and make it more effective. It won't be effective immediately.
Senator Day: Thank you, Mr. Chair.
The Chair: I have one very short question coming from Senator Massicotte.
Senator Massicotte: Ms. Ventin, you made reference in your report that the legislation proposed makes it very clear for the copyright and the trademark that the person who infringes the act has to have knowledge that there's a copyright or a right on the issue. If you go further down the act, though, another paragraph, the prosecutor does not have to prove that the party that has infringed the act is aware of that fact.
When I read the act, which would be right? He's not guilty unless he knows he's infringing the Copyright Act; yet, if he goes to court, the prosecutor does not have the obligation to prove that he knew he was in contravention of the Copyright Act.
Ms. Ventin: That is a good question. From my understanding, the amendment that was made means that it will be easier to prosecute, so you no longer have to prove that the person involved in the illegal activity actually knew that they were in contravention of the Trade-marks Act. I don't know past that point.
Senator Massicotte: That was an amendment you people requested, right?
Ms. Ventin: Many folks did, but I don't know further down in court how that would play out.
The Chair: Thank you. To our panel, I would like to express on behalf of all of the members of the committee our great appreciation for your appearance today. It has been very helpful in our deliberations.
We have three more outside witnesses on our second panel. It is my pleasure to introduce, from the International Trademark Association, David Lipkus, Chair, Canada Subcommittee of the Anti-counterfeiting Committee; from the Intellectual Property Institute of Canada, Ryan Evans, Vice-Chair, Anti-Counterfeiting Committee; and from the Canadian Bar Association, Georgina Danzig, Chair, Counterfeiting and Trade Offenses Committee, Intellectual Property Section.
We will begin with an opening statement from Mr. Lipkus and will move across the panel after that. I remind our witnesses to keep their opening comments to five minutes, please.
David Lipkus, Chair, Canada Subcommittee of the Anti-counterfeiting Committee, International Trademark Association: Good afternoon. My name is David Lipkus. I'm a lawyer at Kestenberg Siegal Lipkus LLP in Toronto. I'm appearing today on behalf of the International Trademark Association as chairman of the Canada subcommittee of INTA's Anti-counterfeiting Committee. I'm honoured to appear before the Standing Senate Committee on Banking, Trade and Commerce to share INTA's views on the combating counterfeit products act.
INTA supports the bill as a first step in improving protection against counterfeiting in Canada, but our members believe that Bill C-8 can better protect the Canadian public by including tougher deterrents against counterfeiting and developing stronger measures at the border to keep counterfeits out of our country and off the store shelves.
INTA is a not-for-profit membership association with over 6,400 member organizations in over 190 countries. We have 179 member organizations in Canada. INTA's membership spans all industry lines and sectors, and is united in the support of trademarks and related intellectual property in order to protect consumers and promote fair and effective commerce.
Our message is simple: Counterfeiting is a crime. It endangers the public health. It steals from Canadian businesses. It drains revenue from our government and the counterfeiting problem is growing in Canada.
The dangers to health arise in respect of many types of counterfeit products, including products raising fire, choking, equipment failure or other dangers to health or safety. The dangers are clear with respect to counterfeit pharmaceuticals, as evidenced by past cases reported in Canada, such as the R. v. Nasr case, where a Hamilton pharmacist was accused of selling counterfeit medications that the coroner found may have contributed to the death of several people.
Further, the trade in counterfeit goods of all kinds, including pharmaceuticals, is a continuing problem, as evidenced in Toronto recently, whereby the Toronto Police Service executed a criminal search warrant against a recidivist infringer dealing in luxury counterfeit products who also happened to be selling counterfeit drugs.
If you include our suggestions to Bill C-8, we can make a huge impact on this growing problem. There are three main issues I will address, which thankfully you have asked lots of questions on earlier.
Statutory damages: INTA is recommending additional provisions to the Trade-marks Act, giving courts the power to award significant statutory or pre-established damages against counterfeiters in recognition of situations where it is difficult or even impossible for the trademark owners to prove the measurable monetary loss or damage. It will deter the sale of counterfeit merchandise in our countries. Often, counterfeiters don't keep records and transact only in cash. The minimum compensatory damages currently ordered by our courts make breaking the law and selling counterfeit in our country simply the cost of doing business and to continue to sell counterfeits in the future.
The concept of statutory damages is already accepted in Canada, as evidenced by the Copyright Act. While this bill does allow for punitive damages, punitive damages are discretionary and rarely, if ever, awarded by our courts. Thus, there is a need to provide for significant statutory damages in order to deter the sale of counterfeit in our country by business, both large and small, and to protect the public from this crime.
Goods in transit: INTA recommends that the section of the Trade-marks Act that explicitly prohibits CBSA from intercepting and seizing counterfeit goods in transit be removed from Bill C-8. Counterfeit goods must be stopped at any point of transit or destination.
Right now, for example, the U.S. government is stopping the sale of counterfeit merchandise in Canada, so goods that are destined for our market are being stopped by U.S. customs. Wouldn't you, as a government, be upset if you found out that your neighbour to the north is not going to afford you the same level of protection? I sure would, because we're choosing not to stop the sale of goods that might be destined to the U.S.
Allowing counterfeit goods in transit to pass through Canada encourages the use of Canada as a convenient transit destination by organized crime. Counterfeiters rely on transit through third countries as a covert way of getting their illegal products to designated markets. Prohibiting this practice hurts local companies whose products are being counterfeited and distributed within the country and abroad, not to mention any counterfeits in transit that are reimported into the Canadian market. For example, counterfeit car parts shipped to the U.S. could easily be installed into cars driven into Canada, thereby increasing the serious safety issues to Canadians.
Given the integration in North American manufacturing, it makes sense to intercept counterfeit goods when and where they are discovered. Ensuring that national laws allow customs inspectors to seize counterfeit goods in transit is an important tool in the global fight against counterfeiting. It is not in any country's best interest to support counterfeiting. Allowing counterfeits in transit to pass through Canada has the unfortunate effect of supporting the global trade of counterfeit goods.
Administrative regime: An administrative regime at Canada's border to efficiently destroy counterfeits can significantly reduce the costs and resources devoted to counterfeit goods that are seized at the border. The alternative is litigation, which is time-consuming, and the costs associated with a request for assistance and storage of counterfeit merchandise will undoubtedly be onerous on rights-holders and taxpayers, because court actions must be issued every time customs detains counterfeit merchandise.
An administrative regime will eliminate many unnecessary costs — especially in cases where the importer does not respond to a seizure notice and the goods have already been confirmed to be counterfeit by the rights-holder.
Many countries have an administrative regime in place to quickly destroy counterfeit goods seized at the border. The customs officials in the EU, Australia, the U.K. and the U.S. dispose of a large percentage of counterfeits seized at the border by way of some form of administrative regime. The EU adopted a new regulation on January 1, 2014 to improve its simplified procedure, including to make it more effective in dealing with small shipments, for example, items that come through when purchases are made through trades such as AliExpress.
As the bill currently stands, it appears that confirmed counterfeits will be released to the Canadian domestic market in cases where a rights-holders whose goods are knocked off has made a request for assistance but does not commence legal action. In cases where no request for assistance had been made but ex officio action by CBSA confirms counterfeit products, it appears that the disposition of the goods will be up to the importer, since court proceedings by rights-holders based on information received from CBSA are precluded and the relevant Customs Act provisions provide the importer with the option of re-exporting the goods.
Therefore, the inclusion of an administrative regime in Bill C-8 will be beneficial not only for brand owners but also for the government and Canadian consumers.
INTA appreciates the efforts of the Standing Senate Committee on Banking, Trade and Commerce and its consideration of our testimony today. We need effective laws to address this crime that harms the public and steals from our businesses. Also, because counterfeiting is a global issue, Canada's actions on this issue will have international consequences. Canada must address counterfeit products with the same high bar as its trading partners. Canada has the benefit of being able to look at the systems that are already in place in the United States and the EU, and learn from the data that's available.
I look forward to responding to your questions.
The Chair: Thank you very much, Mr. Lipkus.
Mr. Evans, please.
Ryan Evans, Vice-Chair, Anti-Counterfeiting Committee, Intellectual Property Institute of Canada: Good afternoon. I am a lawyer at the firm Dimock Stratton, practising exclusively in IP. I am also the vice-chair of the Anti- Counterfeiting Committee of the Intellectual Property Institute of Canada, or IPIC. I'm honoured to be appearing here today on behalf of IPIC, and thank you for having invited us.
IPIC is an association of over 1,700 Canadian IP professionals from across the country. Our members include those in private practice, as well as in corporate, governmental and institutional environments, whose clients include individuals and groups across the country, and elsewhere, who have an interest in IP rights in Canada.
We are pleased to see the government move forward in its commitment to help combat counterfeiting and protect Canadian businesses and consumers through the amendments proposed in Bill C-8. This bill is a welcome step in maintaining both a profitable business environment and a commitment to public safety.
There are two particular aspects of the bill which we believe need amendment, and I think the commonality and themes that we've heard earlier will not be lost upon you.
Our first concern relates to the absence of a simplified procedure within the request for assistance system. Under the proposed RFA system, counterfeit goods that have been detained by border officials will be released after 10 days, unless court proceedings are commenced before then.
All too often, importers dealing in counterfeit goods do not show up to defend themselves in court. Instead, rights- holders are left responsible to move for default judgment. Such motions draw on the court's already limited resources and require significant costs to be incurred by rights-holders for both the costs of the litigation and for the storage and handling costs of the detained goods until the case is resolved.
We recommend implementing a procedure that would avoid the need for these inefficient court proceedings in cases where there is no dispute that the goods are counterfeit. The proposed system would maintain the importer's right to defend itself against any allegation of infringement — the onus of proof remaining on the rights-holder — but it would also eliminate the inefficiencies associated with undefended court proceedings.
Generally speaking, this procedure would involve, as a first step, requiring the rights-holder to identify whether or not the detained products are counterfeit. Where the products are counterfeit, notice of the detainment would be given to the importer, requiring a written response if there is any dispute as to the counterfeit nature of the products. Finally, if there is such a dispute, the rights-holder will be required to commence legal proceedings, as currently required. However, if there is no dispute or if the importer does not respond, then the shipment is forfeited. This type of procedure would be in step with a number of Canada's trading partners, including the EU, the U.K., Australia and the U.S.
The second aspect of the bill that I will speak to is the general exemption of in-transit goods from Bill C-8.
At last week's hearing, the Honourable Senator Tannas mentioned that the success of our Canadian ports has incentivized the import of goods destined for the U.S. from Asia through Canada. However, there is a genuine risk that counterfeits arriving at, for example, Port Metro Vancouver and destined for a warehouse in the U.S. will ultimately re-enter Canada for sale to consumers here.
IPIC believes that the CBSA ought to have the power to deal with counterfeit products travelling in-transit through Canada, in cooperation with Canadian rights-holders and willing trade partners. It is easier to identify and stop such goods at their original point of entry, before they are distributed in the marketplace or incorporated as components in other goods at the risk of Canadians.
Counterfeit goods are not limited to knock-offs of luxury handbags and wristwatches. In 2012, more than 30 per cent of the RCMP's reported occurrences pertaining to counterfeits involved what it describes as ''harmful products.'' These can include untested and substandard personal care items, automotive parts and electrical components.
Even seemingly innocuous products can pose risk. As an example, Health Canada previously issued a public advisory about counterfeit toothbrushes found in the Canadian market, where loose bristles posed a choking hazard.
We are not asking that Canada act as a customs agent for the United States. Our concern is that Bill C-8 exempts even the RFA system from applying to in-transit shipments. Last week, the CBSA explained that the government will not incur costs related to the RFA system. Rather, it is the rights-holders who will carry the costs associated with the detention of goods, yet the in-transit exemption keeps the RFA system out of rights-holders' reach.
The exemption also conflicts with the direction being taken by some of our major trading partners. For example, the EU has preliminarily approved proposed regulations to permit the detention of counterfeit goods in transit. Likewise, U.S. border officials currently stop in-transit shipments of counterfeits destined for Canada and contact Canadian authorities and rights-holders about such shipments.
We recommend that in-transit, counterfeit products ought to be prohibited from traversing Canada's borders and that Bill C-8 be amended to equip rights-holders with the necessary tools to target these shipments.
I'd be pleased to respond to any questions you may have concerning these topics at the appropriate time. Thank you.
The Chair: Thank you.
Georgina Danzig, Chair, Counterfeiting and Trade Offenses Committee, Intellectual Property Section, Canadian Bar Association: I'm a partner at the law firm of Kestenberg Siegal Lipkus in Toronto, and my practice is exclusively in the area of anti-counterfeit enforcement. I'm pleased to be here today on behalf of the Canadian Bar Association.
The Canadian Bar Association is a national association representing 36,000 jurists, including lawyers, notaries, law teachers and students across Canada. The association's primary objectives include improvement in the law and in the administration of justice.
I'm here on behalf of the CBA's Intellectual Property Section to let you know that we have studied the bill and we have, in our written submissions, advanced nine suggestions for a more effective anti-counterfeiting statutory regime. Given the strictures of time, I will limit my comments to the implementation of the new border enforcement regime and specifically to our request that the legislation, first, integrate a simplified procedure into the border enforcement regime, a common theme today; second, preclude the re-exportation of confirmed counterfeit goods; and three, expressly provide for blanket RFA filings in advance of importation and expedited RFA filings after contact by customs.
To strike the appropriate balance between the interests and obligations of importers and the interests and obligations of the IPR owners, the CBA recommends the implementation of an administrative regime sometimes called a simplified procedure. Peter Hill, Associate Vice-president, Programs Branch, Canada Border Services Agency, testified before this committee last week that the border enforcement model contemplated by the bill is a detention model, as opposed to what he referred to as the ''U.S. seizure model.'' He further testified that the Government of Canada is not responsible for paying the costs associated with goods that are detained or seized. Those costs rest with the rights-holders.
CBA challenges the merit of a model that requires the initiation of court intervention by the rights-holders as the only mechanism available to mandate the seizure and destruction by Customs of imported counterfeit goods.
Consideration of the appropriate balance of the competing interests and obligations of importers and rights-holders, and the maintenance of a system that is revenue neutral to the government led the CBA to consider whether there are other less costly, less time-consuming and more balanced approaches to forfeiture and destruction. We at the CBA submit that there are.
As drafted, the bill places complete responsibility and cost on the IPR owners to enforce their rights and effectively pay for the forfeiture and destruction of the counterfeit goods. By sharp contrast, the bill imposes no obligation — economic, procedural or otherwise — on the importer to take a position — any position. In fact, as drafted, the bill rewards an importer of counterfeit goods that abstains or stays silent. In the face of that silence, and even in the face of an affidavit prepared by a rights-holder confirming that the importer's goods are counterfeit, the goods cannot be detained beyond the prescribed 10-day period by customs unless the rights-holder starts a lawsuit.
Several jurisdictions, including the E.U., the United Kingdom and Australia, have adopted simplified procedure regimes. In those regimes, customs may seize and destroy the counterfeit goods without judicial intervention in uncontroverted cases. If there is an objection raised by the importer, that then necessitates a judicial determination prior to the forfeiture and destruction. We submit that this simplified system is fair and equitable to both users — being the importers and the IP owners — not overly complicated, efficient and not a barrier to legitimate trade.
For these reasons, the CBA recommends the adoption of the simplified procedure integrated with the proposed border enforcement regime, which would allow for the seizure and destruction of confirmed counterfeit without judicial intervention in case of admission or silence by the importer.
In respect of our second point, the CBA recommends that the bill be modified to prohibit the re-exportation of confirmed counterfeit in an unaltered stated. Our members are acutely aware of the investment of time and resources involved in litigation and not all IPR owners will file an RFA. In the event an IPR owner has not filed an RFA and the IPR owner confirms that the goods are counterfeit, because there is a mechanism that allows for a modest degree of information to be delivered even though an RFA wasn't filed, if they are able to confirm that the goods are counterfeit, then customs as presently constituted has only three options with respect to how it can deal with those goods. It can dispose of the goods if the underlying legislation permits it, and neither the Trade-marks Act nor the Copyright Act permits that without a court order; the importer may abandon the goods; or the importer may export the goods. That will be the likely option exercised by the importer.
Because the bill does not provide for forfeiture and destruction of counterfeit goods unless a court action is commenced by an IPR owner, customs may have no choice but to permit importers to re-export goods which had been confirmed to be counterfeit. Exporting counterfeit goods is prohibited by and an offence under the Copyright Act and the Trade-marks Act.
The Chair: Two minutes to conclude, please. We must leave time for questions.
Ms. Danzig: The CBA expects that this is an unintended consequence of the bill as drafted. If the government recognizes as a valid policy the need to protect society domestically and globally against counterfeit goods and pirated works, then it, too, should share in the responsibility of protecting its citizens and its global trading partners by not re- exporting confirmed counterfeit goods.
Finally, the CBA recommends that the bill be modified to preclude the exportation of confirmed counterfeit in an unaltered state.
Given the importance of protecting Canadians from counterfeit products, and recognizing that a strong border enforcement regime is an effective means of addressing commercial activity involving infringing copies and counterfeit trademark goods, the CBA respectfully requests that this committee give serious consideration to some of the suggestions we put forward both in our written submissions and our oral testimony today. We thank you for the opportunity of being here and welcome any questions you have.
The Chair: Thank you.
Senator Black: I want to thank the three of you for this outstanding presentation. I arrived here thinking this was pretty straightforward. Well, it obviously isn't pretty straightforward. In preparation for the deliberations the committee will have, I want to clarify a summary I prepared to see whether or not you agree with it.
In terms of the legislation, we're saying on the large importation that's coming into, say, the Port of Vancouver, you believe that the legislation is an improvement, a step in the right direction, but it's still lagging where we possibly should be. You believe it's lagging in a couple of areas, including enforcement and a potential unintended consequence. You also believe that, generally speaking, the penalties are not tough enough. That's how I see what you have said jointly, and the panel before you, in respect of large shipments.
In terms of the excellent question that our colleague Senator Tannas asked about getting a breakdown of where goods come, we understand that a lot of goods coming into Canada, the majority of goods coming into Canada now, don't come through the Port of Vancouver, et cetera. So, while we can deal with this, we're still not getting at the real issue, which we understand is Internet importation into Canada, which this act is completely silent on, so it will be a challenge for the future. Is that an accurate assessment of what you are saying?
Mr. Lipkus: With respect to large shipments, before this legislation CBSA did not have any authority to detain or seize counterfeit merchandise. With the legislation as it's drafted right now, CBSA will have the authority to detain, but after there is a detain, there is a 10-day window and in that 10-day window the rights-holder has to, number one, confirm the item is counterfeit and, number two, institute legal action against the importer.
Senator Black: We understand that. So you'd say it is a step in the right direction but not a big enough step.
Mr. Lipkus: Correct. CBSA requires the ability to seize and destroy counterfeit at the border without the need to litigate. That's why we keep talking about this administrative procedure, because it kills two birds with one stone, number one, if an importer doesn't respond to an RFA. So, if there are items detained in Canada through this system and the importer decides they are going to abandon the shipment, why not allow for the immediate destruction? Right now, the rights-holder has to go to court and convince the judge and pay the cost.
Senator Black: We've got that.
Mr. Lipkus: Number two, if there is a simplified procedure, then all the small shipments, those items purchased on the Internet, can be dealt with through that avenue as well. So, you are able to deal with large shipments and small shipments that come through our border through post or other means. The administrative regime is a valuable tool, in our respectful submission, that's required by our customs, and right now they don't have it. Right now, we have the courts. That's how this legislation is drafted.
Senator Campbell: My question is to Ms. Danzig. Why is Canada so offside on this issue? It would seem like other countries, the EU in particular, but also the U.S. have recognized this. Why are we so offside, and will this bill bring us onside?
Ms. Danzig: It's not for me to comment on what the thinking behind the government is.
I would like to echo the comments that it is a step in the right direction. To look at what we have presently, and then to consider the legislation as presented, I think most people who are engaged in anti-counterfeiting enforcement work would say finally we're moving in the right direction. I mean, Canada has been on watch lists and has not been a model anti-counterfeiting enforcement country in the past. The very fact of this, the recognition of the need for ex officio enforcement powers at the border, is a step in the right direction. To suggest that the ex officio powers have gone far enough is not the message we're trying to communicate.
Senator Campbell: If I'm on border, and I seize three pounds of heroin and I can't figure out who brought it in or who will get it, I destroy it, period, end of the conversation. It would seem to me this is no different. This is an illegal substance, albeit maybe clothing or food, so why would we not have given that power such that when everyone says, ''Not mine,'' and you're sitting here holding on to it? Instead of destroying it, what do we do? We say, ''Fine, let's ship it to another country.''
Ms. Danzig: Perhaps the answer is we approached the analysis of the problem from the theoretical position that we have two legitimate business enterprises, each of whom genuinely believes they have a genuine right to the commodity. When you're dealing in an infringement action, or when each side has a genuine interest, that's a whole different analysis. When you're dealing with counterfeit goods, they're illegal, and I wholeheartedly agree with you, senator, that I think that Canada could go a lot further in terms of expediting the process.
Senator Campbell: I go back to the last one: Who is responsible? Like, the importer: ''You don't get to ship it. We're going to charge you, and your CEO will stand time in jail.'' No one is taking responsibility here.
Ms. Danzig: At the moment, the way it works is we tend to go after the low-hanging fruit, so the responsibility rests with the last actor who was in possession of the counterfeit goods. If that's the retailer, that's where the shoe drops and that's where the liability starts.
Senator Campbell: As an ex-police officer, you always start with the low-hanging fruit, but you don't want to be hanging around there long because it goes rotten real quick.
Ms. Danzig: That's from the perspective of once it's in the country.
If we want to talk about efficiency, unequivocally the studies have shown, for example, with our trading partners, the EU, that the most efficient regimes stop it at the border, because once it gets into the country, it's whack-a-mole. Go find it.
[Translation]
Senator Bellemare: My question is simple. We have heard many witnesses and we agree on the fact that the bill is not as effective as we would like it to be, because it relies on rights holders to exercise their property rights. With a move towards an administrative regime, as you seem to be suggesting, there would be associated costs.
Do you have a cost-sharing formula that would be acceptable for all of the partners, all of the beneficiaries of the fight against counterfeiting? Do you have any suggestions to make in this matter?
[English]
Mr. Evans: I think the administrative regime, the simplified procedure being proposed, goes a long way in reducing the costs. The cost of litigation is enormous for the rights-holders. That right there would bring the cost significantly down.
There are other aspects within the bill that could also be amended to reduce the cost. For example, it seems that the default position upon detainment is the goods are stored in a bonded warehouse. If that was just a regular warehouse, the pricing difference is about tenfold. The rights-holders again are being required to pay a significant amount to keep the goods detained and, under the current regime, they have to wait for the end of litigation.
Even with a default or summary judgment motion, you're talking about eight months down the road, whereas with this administrative procedure, we're talking about 10 days to a month where the rights-holder has confirmed they're counterfeit, the importer has either agreed they're counterfeit or hasn't responded, and then they're destroyed. Those are two minor amendments.
[Translation]
Senator Bellemare: In your opinion, the procedure that you recommend would involve little or no cost for the government to recoup with this type of warehouse. Is that indeed what you are saying?
[English]
Mr. Evans: Based on the testimony of the CBSA, where they said the costs are going to the rights-holders, under the RFA system, both of the suggestions I made would significantly reduce the costs on that side of it.
[Translation]
Senator Bellemare: Yes, as it pertains to property rights holders, but if administrative measures are taken, I would imagine that the government would cover those costs. And so, my question was about who would share the costs of the public sector's increased responsibility. What I understood — and tell me if I am wrong — is that your accelerated process would lower costs, even for the government. It would certainly lower costs for property rights holders, but it would also lower costs for the government, who would not need a warehouse.
[English]
Mr. Evans: I'm sorry. I misunderstood. It would be equally applicable to the government. So, if they don't have to go through the court procedure and can have it revolved immediately, then you have wiped out that long-term cost.
Senator Ringuette: Ms. Danzig, you indicated that you sent a presentation, but I have not received it and I would very much like to have it. I don't know if it's the case for all my other colleagues. Maybe you can send it to the clerk of the committee, because you're making excellent arguments.
My other question is this. All three of you, you know this stuff; I feel that you have it on the tips of your fingers. Were you consulted by the department before this legislation was put in front of the House of Commons?
Mr. Lipkus: I was not consulted. INTA sent a letter out requesting that changes be made, believe it or not, two weeks before the legislation was announced. There were meetings after the legislation was drafted, but, no, not before legislation was drafted.
Mr. Evans: I'm not aware of it.
Ms. Danzig: My understanding is that the impetus for the drafting of the legislation was as a result of a variety of hearings with industry and multiple parties, but the Canadian Bar Association, from what I understand, was not specifically consulted prior to.
Senator Ringuette: I understand all your arguments and I agree. However, it takes a lot of time for the machinery of government to move. Would it be better to amend this bill and send it back to the House of Commons and try to get a better deal for counterfeit goods or should we say, okay, this is better than nothing and wait another five years?
Mr. Lipkus: I think that's the problem. This is a personal belief, but I believe the reason everybody prefaces their comments to say they support that bill but, is because of that worry that we're going to go back to the system of customs having absolutely no power whatsoever.
Having said that, and in the exact same breath and sentence, this bill requires change. It requires an administrative regime. These are tools that customs needs in order to keep counterfeits off of our shelves. So, it's a balance of those interests and, I'm not the expert on this but perhaps this bill proceeds and it becomes law and within a year we look at the statistics.
Part of the advantage of Canada being so late into the game is that we get to look at other countries and see what other countries are doing. In the EU, we know in 2013 that 77 per cent of the shipments that came in that were detained by customs were dealt with through a simplified procedure. If we know that's how it's working in the EU and we know in the U.S. that they have a system where there are seizures and immediate destruction and we know it works, why wouldn't we, as a government, learn from it? That's what we're asking.
Mr. Evans: Jumping off from Mr. Lipkus' suggestion, something to think about, certainly for the administrative procedure, a potential solution is that the bill is amended to extend this 10-day period before they're released, with the understanding that there's an administrative procedure, and then that's dealt with by regulation.
Senator Ringuette: Also with that, an extended 10-day period, should an amendment also include that at the end of the extension, if no process has begun, that it is destroyed?
Mr. Evans: I believe so. As it's currently drafted, the default is after 10 days — sorry, you said destroyed.
Senator Ringuette: Yes.
Mr. Evans: Our proposal is that if there is no response or if the importer has agreed that they're counterfeit, then yes, they are destroyed.
Senator Ringuette: Thank you. Ms. Danzig, do you have anything to add?
Ms. Danzig: I generally share the comments. I just don't want it to be lost on the committee; we're all limited for time so we identify the issues that we want to make sure are heard. However, from the Canadian Bar Association's perspective, let's not fail to recognize that there are some very valid and significant improvements in the bill. This is the first time that the Trade-marks Act will actually have an offence for trademark counterfeiting. That's a very long time coming and that's a very important provision for Canadians and for the enforcement and protection of Canadian society.
The theme is competing interests and I think the general tenor is, let's proceed in the best way we can.
Senator Ringuette: And wait for another five years and the cost of $30 billion a year.
Senator Tkachuk: Thank you very much for your testimony here today. To all of you, it's very informative.
Just help me out a little bit on the Americans stopping goods coming into Canada, for example. If there is a shipment that they suspect is counterfeit that's going to Toronto and it hits the Los Angeles port, do they destroy it?
Mr. Lipkus: I'll respond to that. Remember, I'm not an expert, obviously, on the U.S. system, but I can tell you in our experience, let's say for example there is a shipment that's seized at the U.S. border destined for Canada and there is a recordation filed by a rights-holder in the U.S., similar to our request for assistance in Canada. So, there's a customs recordation and the goods are seized by the U.S. Government. The rights-holder will confirm the item is counterfeit and the goods are then destroyed. There is a small cost to the rights-holder in order to participate in the system, but their system is very different from ours. In ours, customs detains and we institute court action. In theirs, customs seizes and destroys. That is how the system works.
Senator Tkachuk: The rights-holder is a Canadian rights-holder who would be saying this, or an American rights- holder would be say this to them? There are different laws that apply to both countries. A product may be counterfeit in the United States and may be against the law, but may be okay here in Canada.
Mr. Lipkus: Right, so in the U.S. it will be based on the U.S. trademark registration, similar to in the Canadian system, which would be based on a Canadian trademark registration and that counterfeit good, like drugs, is illegal and is destroyed in the U.S.
Senator Tkachuk: It would be an American who would be beginning the legal action, right, or dealing with the custom?
Mr. Lipkus: Correct.
Senator Tkachuk: What if it was heading here for Chicago, wouldn't the same thing apply for a Canadian company that would be doing that, if they believed that that was counterfeit goods heading for the Chicago market?
Mr. Lipkus: No. In Canada there's a specific exclusion of in-transit shipments. If there are counterfeit goods in Canada destined for the U.S. market, based on the legislation as drafted, they would be exported to the U.S.
Senator Tkachuk: So, what the Canadians are saying is that the Americans have an obligation to deal with this product because it's heading for Chicago and we will inform them that this product is heading there. My understanding is from the previous testimony that that is no longer a problem for Canadian customs officials to inform the Americans that there is bad stuff coming to their country.
Mr. Lipkus: Right. Regardless of whether there is close communications between governments, which I'm sure there is and which is great, right now the U.S. Government is seizing counterfeit merchandise destined for Canada and protecting our public, and we are not doing that. We are saying, ''Sorry, U.S., we're going to let the shipments through, but we'll call you and let you know.''
With the greatest of respect, that's not enough, and that's not the Canadian way. That's why there is so much — I don't know what the right word is, but that's why it's a challenge to accept that.
The Chair: I'm sorry, Mr. Lipkus, we have seven minutes left and we have three questions and a quick supplementary from Senator Campbell.
Senator Campbell: I need a clarification. I'd like it know when U.S. customs are seizing articles coming to Canada, because they don't go through U.S. customs; they go through Canadian customs. They don't stop at the U.S. side.
Mr. Lipkus: In the examples I have been involved in, if there is a customs seizure notice that is actually destined for the Canadian marketplace, what happens is — and I'll use China as an example, because it's so common — the Toronto business decides to import counterfeit merchandise. It comes overseas through a U.S. port. The U.S. customs looks at that merchandise, sees a problem with it and here is what happens. The rights-holder that has filed their recordation —
The Chair: Thank you, Mr. Lipkus; the question has been answered.
Senator Massicotte: Two questions. I think all of us, or at least I see a significant problem with the burdens and recourse of counterfeit goods. You talked about the counterfeit goods quite a bit and you talked about the in-transit stuff.
You say the government did not ask your opinion, but I presume you must be aware of why it is that they did not take your advice on these two issues? You did have discussions with them. What was their response? Sometimes we learn that there's a good argument why they didn't implement those two. Does anybody know?
Mr. Lipkus: I don't know, but again —
The Chair: Is that the answer to the question: I don't know? Thank you. Next question, Senator Massicotte.
Senator Massicotte: This issue is about trying to control the supply side. How about the demand side? Are there any places in the world — I think France is an example — where it's illegal for the consumer, the buyer, of the goods? Is that a good suggestion? Is that something we should look at?
Ms. Danzig: The bill, as drafted, has been changed to make it not okay to possess for commercial purposes.
Senator Massicotte: Not okay to possess.
Ms. Danzig: Possess counterfeit.
Senator Massicotte: I'm talking about the consumer. It's not illegal for the consumer to own counterfeit goods, but why have that exemption if the consumer knows?
Mr. Evans: There are two difficulties with that. First, you're asking companies to sue their own market on an individual basis. As we all discussed, litigation is extremely expensive and you're asking me to go after each person in this room because they possess counterfeit, and that is if they know. I mean no disrespect, as I'm not accusing you of buying counterfeits.
Second, consumers often believe they're buying authentic goods. I have sat in a presentation with in-house counsel who said they brought a counterfeit product and a genuine product to their branch manager and he could not identify which was which. It required an electron microscope to be able to say this has our key ingredient and that is our shampoo.
Senator Hervieux-Payette: We're talking about imports. How about having our own people fabricating counterfeit merchandise? What is the percentage difference between what is imported and what we are shipping abroad? Are they very active or is it not a very good business in Canada to be a counterfeiter? How do we catch them?
Ms. Danzig: We catch them using the same traditional policing and investigative methodologies as we use in any other criminal enterprise. I believe that the greater impact on the Canadian market is from imports coming into Canada as counterfeit goods. That is not to preclude the fact that we don't have homemade counterfeiters in this country, because we do.
Senator Hervieux-Payette: A gentleman before talked about all the counterfeit in art, mostly of the painting masters. Do we have the tools to address this question?
Ms. Danzig: To make an assessment?
Senator Hervieux-Payette: Not just assessing but if they cross the border with it. Somebody said that you need experts and equipment to do that. When we talk about pieces of art that are worth a lot of money, you need experts and special equipment. How do the people at the border identify this art? Everything that goes through the border will automatically be thought of as legitimate.
Ms. Danzig: It's anticipated that there may be other indicia within the skill set of the border enforcement personnel to assist them in identifying whether something is authentic or counterfeit, such as value for duty that has been declared on the product and other things.
If indicia are raised or if they have a reason to suspect that a product coming into the country is counterfeit or pirated, then the mechanisms in the bill are such that they will be empowered to call on the expert to assist them in making that determination. It doesn't end with the customs officer; it begins with the customs officer.
Senator Hervieux-Payette: Besides the fact that we need a shorter procedure, do we have enough people with the knowledge and capacity to identify all these concerns, or do we have a shortage of manpower?
Ms. Danzig: That question may be more appropriate for customs. I don't know the answer.
Senator Hervieux-Payette: You're not aware that there is practically no inspection at the border because they don't have enough people to proceed with that.
Ms. Danzig: Whatever the percentage of inspection taking place presently is, the bill will empower customs officers to include within that level of inspection the opportunity, should they identify an issue as it relates to counterfeit or pirated goods, to then take steps to address that. It may not provide for an increase in resources to address the issue, but at least while they're looking at whatever percentage they're looking at, these issues will come within their purview and mandate to address.
The Chair: Thank you, Ms. Danzig. Our time is up but we have a concluding question from the Chair of the Senate Finance Committee, Senator Day.
Senator Day: I'm just wondering about the points you're making so very clearly. This made-in-Canada bill isn't made in Canada, but is reflective of international convention that we're a part of; and there is some model legislation. Are you aware of the international convention on piracy and anti-counterfeiting?
Ms. Danzig: I am aware of certain international — yes.
Senator Day: Canada has signed onto this, and it has been rejected by the U.K. and Europe. In this proposed legislation that we're looking at, are points that you have a concern about in there because of our obligations under this international convention?
Ms. Danzig: My understanding is that one of the international conventions is about trade-related aspects of intellectual property rights, TRIPS. TRIPS mandated Canada to create a system that gave ex-officio power to customs. The bill, from what we understand, is partially in response to compliance with our TRIPS obligations.
I'm not aware of obligations that require an administrative procedure. Perhaps my colleagues are aware.
Senator Day: Or not.
Ms. Danzig: Yes.
Mr. Lipkus: With the greatest of respect to the drafters of the bill, this was the minimum level of competency to comply with ACTA. If this were truly about keeping counterfeits off the marketplace, all the changes that we were requesting would be there, because then it would be about keeping counterfeits off the marketplace.
Mr. Evans: I don't think I have anything to add to that.
Senator Day: Thank you very much.
The Chair: To our panel: You have been outstanding witnesses and very helpful to the committee. On behalf of every member of the committee, I would like to express our great appreciation for your appearance here today.
(The committee adjourned.)