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THE STANDING SENATE COMMITTEE ON BANKING, TRADE AND COMMERCE

EVIDENCE

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OTTAWA, Wednesday, May 18, 2022

The Standing Senate Committee on Banking, Trade and Commerce met with videoconference this day at 6:31 p.m. [ET] to study the subject matter of those elements contained in Divisions 5, 10, 11, 15, 16, 17 and 30 of Part 5 of Bill C-19, An Act to implement certain provisions of the budget tabled in Parliament on April 7, 2022 and other measures.

Senator Pamela Wallin (Chair) in the chair.

[English]

The Chair: Good evening, everyone, and welcome to this meeting of the Standing Senate Committee on Banking, Trade and Commerce.

My name is Pamela Wallin, and I am the chair of this committee. I’d like now to introduce the members of the committee, beginning with our deputy chair, Senator Colin Deacon, Senator Bellemare, Senator Gignac, Senator Loffreda, Senator Marshall, Senator Massicotte, Senator Ringuette, Senator Smith, Senator Woo, Senator Yussuff, and also joining us tonight is Senator Moncion.

Today we are continuing our examination of the subject matter of elements contained in Divisions 5, 10, 11, 15, 16, 17 and 30 of Part 5 of Bill C-19, the budget implementation act, 2022. In plain language, that means we are starting with the changes to the Copyright Act, and later we will talk about trade, patents and beneficial ownership. That’s just to help you follow along.

Our first panel tonight will focus on Division 16 of Part 5. Please join me in welcoming our guests, Michael A. Geist, Professor and Chair, Internet and E-commerce Law at the University of Ottawa; Jeremy de Beer, Professor, Faculty of Law and Director, Open AIR at the University of Ottawa; Andrea Kokonis, Chief Legal Officer at the Society of Composers, Authors and Music Publishers of Canada, or SOCAN, and with Andrea is Casey Chisick, who is also with SOCAN, but as a lawyer in intellectual property at Cassels Brock & Blackwell. Next is Chantal Cadieux, President of the Société des auteurs de radio, télévision et cinéma, or SARTEC, and she is accompanied by Stéphane Gilker, External Legal Expert. Finally, we have Gryphon Theriault-Loubier, Country Leader at Creative Commons Canada.

Welcome, everyone. Thank you for joining us this evening.

Before we begin, I would like to remind senators and witnesses to keep their microphones muted at all times unless recognized by the chair, and I will ask senators and witnesses to keep interventions brief because we have an awful lot of ground to cover this evening.

Let’s begin with opening remarks.

Michael A. Geist, Professor and Chair, Internet and E-commerce Law, Faculty of Law, Common Law Section, University of Ottawa: Thank you, Senator Wallin. Good evening, everyone. I’m a law professor at the University of Ottawa, where I hold the Canada Research Chair in Internet and E-commerce Law, and I am a member of the Centre for Law, Technology and Society. I appear in a personal capacity representing only my own views.

Respectfully, a single hearing is not enough to adequately deal with or address copyright term extension. That’s why the government’s 2019 copyright review devoted extensive time to the issue and provided a clear recommendation: If Canada must extend the term of copyright beyond the international standard of life of the author plus 50 years due to CUSMA, it should include a registration requirement for the additional 20 years. That approach, supported in the past by Justice Minister David Lametti, would provide those creators that want the additional protection with easy access to it and help mitigate against the harms that come from keeping works out of the public domain for a generation.

The committee recommendation is understandable in light of those harms. Economic studies on term extension and the public domain have found that the costs can run into the hundreds of millions of dollars. In the case of Canada, the majority of those costs will be borne by educational institutions and consumers, with most of the money flowing outside the country.

The historical impact is no less important. The list of notable Canadian historical figures whose works will be delayed from entering the public domain for a generation is breathtaking: prime ministers such as Diefenbaker and Saint Laurent; premiers such as Lévesque, Lesage, Smallwood, Douglas, Hatfield and Robarts; and Supreme Court justices, such as Laskin and Sopinka. In each case, their works and records would be delayed from entering into the public domain for 20 years.

The cultural impact, indeed the opportunity for a new generation to discover some of Canada’s greats, is also enormous. Gabrielle Roy, Margaret Laurence, Hugh MacLennan, and Marshall McLuhan are amongst the myriad of authors whose works will be locked out of the public domain as a result of this bill.

Research from around the world leaves little doubt about what term extension means for access to culture. Rebecca Giblin, an Australian professor, has found that there are more e-book editions of books in the public domain than when they are in copyright. When comparing costs, Professor Giblin found that U.S. titles in copyright are more expensive than Canadian public domain titles by up to 136%. Professor Paul Heald has found that works in the public domain are far more likely to be published and available in different forms to the public.

The inescapable conclusion is that this extension without mitigation measures will mean higher costs and less access to Canadian culture. Registration is a fair solution to the issue. In the alternative, I urge you to remove the copyright term extensions from this bill and give the issue the proper stand-alone study it deserves. There is still time to ensure compliance with CUSMA and properly mitigate the harms.

I look forward to your questions.

The Chair: Thank you very much, Professor Geist.

Jeremy de Beer, Professor, Faculty of Law and Director, Open AIR, University of Ottawa, as an individual: Thank you, honourable senators. We’re here to discuss a major law and policy change smuggled into a completely unrelated omnibus budget bill.

On May 4, you were authorized to examine this change and report your findings to the Standing Senate Committee on National Finance. As a copyright law professor, I hope I can assist you by first briefing you on how we got to this point and, second, explaining what practical options you can now consider.

First, the background: Since 1886, the length of copyright in Canada has been balanced at the international standard set by a convention called the Berne Convention. That term today is the life of the author plus 50 years. In practice, that’s typically more than a century of protection.

In 2016, Canada reluctantly agreed to extend the already-long length of copyright to life plus 70 years when it signed an Asia-Pacific trade deal, the CPTPP. In 2018, President Trump surprisingly pulled the United States out of that deal. All the remaining parties then suspended the term extension requirement, knowing longer copyright terms are not in their national interest.

Now, that doesn’t mean Canadian creators won’t get a windfall from term extension. Sure they will, which is why they support it. But the benefit to Canadian creators is tiny compared to the benefit to foreign creators, and all of the costs are borne by Canadian entrepreneurs, education communities and consumers of culture.

Canada’s reprieve from longer copyright requirements was short-lived. Accepting the U.S. demand for term extension was a condition of the new NAFTA, the so-called CUSMA. So although term extension is clearly not in Canada’s self-interest, avoiding it altogether is no longer a realistic option. That’s why the House of Commons Industry and Technology Committee was asked to study the problem as part of its copyright review in 2018.

On page 38 of its report, the committee unanimously observed that:

The Committee shares Mr. de Beer’s pragmatic perspective on term extension . . . . The Committee believes that requiring rights-holders to register their copyright to enjoy its benefits after a period equal to the life of the author plus 50 years would mitigate some of the disadvantages of term extension, promote copyright registration, and thus increase the overall transparency of the copyright system. . . .

But these parliamentarians’ unanimous recommendation was summarily dismissed with no transparent analysis or adequate explanation when, last summer, the government formulated legislative options to comply with CUSMA.

Instead, government policy analysts suggested several alternative safeguards — they called them “accompanying measures” — to mitigate these harms.

Now, sneaking this into the budget bill with none of the safeguards, let alone the registration safeguard unanimously recommended by the committee, is, in my view, simply wrong. And I submit to you that the reason this is being done through a Trojan Horse is that the government knows the policy change is poorly justified and very controversial.

If you share this discomfort, I offer you two options. One is to at least convey in your report, and directly to members of the House of Commons, Canadians’ disappointment with this process and demand future consideration of accompanying mitigation measures.

The second option, and the far better one, in my opinion, is to recommend or even insist to the Finance Committee that Division 16 of Part 5 simply be removed from the omnibus budget bill and re-tabled for meaningful consideration through our normal democratic processes. Thank you, honourable senators.

The Chair: Thank you very much, Mr. De Beer.

Andrea E. Kokonis, Chief Legal Officer, Society of Composers, Authors and Music Publishers of Canada: Good evening. My name is Andrea Kokonis, and I am Chief Legal Officer with SOCAN. I am appearing today with our external counsel, Casey Chisick of Cassels Brock & Blackwell.

SOCAN applauds the Government of Canada for making good on Canada’s commitment to implement copyright term extension without strings attached. The benefits for Canadian authors, composers and music publishers will be enormous.

To achieve these benefits, and to fulfill Canada’s obligations under CUSMA, term extension needs to be implemented immediately and without restrictions or conditions. Acting now will prevent more valuable works from falling into the public domain, taking millions of dollars out of the pockets of artists, and losing opportunities for reinvestment in the Canadian creative industries.

Canada is the only country in the G7 group of countries that does not have a copyright term of life of the author plus 70 years. Extending the term of protection now is critical to helping Canadian songwriters and music publishers expand and grow in international markets.

A shorter copyright term disadvantages our members in at least two ways: first, a shorter period for music publishers to recoup and reinvest revenues from the exploitation of copyright-protected works; and second, less incentive for foreign companies to invest in Canadian talent or the Canadian market.

Some copyright academics have argued that the government should make it mandatory for rights-holders to register their copyrights in order to benefit from an additional 20 years of protection. But adding a registration requirement would put Canada in breach of the Berne Convention, a fundamental principle of which is that protection of foreign works may not be made conditional on the observance of a formality such as a registration requirement to enjoy copyright protection.

Because of our international obligations, Canada’s Copyright Act has never required registration as a prerequisite to protection. And because other jurisdictions do not have a registration requirement for their copyright terms, Canadian creators would be unfairly disadvantaged. They would have to bear the cost of mandatory registration and the risk of losing protection for failure to register.

We should also keep in mind that Canada’s copyright registration system simply isn’t equipped to deal with a mandatory registration regime. It was designed for the existing voluntary regime, so a huge financial and time investment would be needed to upgrade and maintain the system to meet the demands of a mandatory regime.

SOCAN welcomes the extension of term of copyright protection to life of the author plus 70 years. We urge Parliament and the Senate to move forward with this important legislation today. Thank you for having SOCAN here to address this committee, and we will be happy to answer any questions you may have.

The Chair: Thank you very much, Ms. Kokonis.

[Translation]

Chantal Cadieux, President, Société des auteurs de radio, télévision et cinéma: Good evening. My name is Chantal Cadieux, and I am the President of SARTEC, the Société des auteurs de radio, télévision et cinéma. With me is Stéphane Gilker, a lawyer who specializes in intellectual property. I am an author and screenwriter by profession. I have spent most of my life writing series that are broadcast on the Radio-Canada public television network.

The father of my children, Jean-Marc Vallée, died suddenly last September. He was a director, but was also a member of SARTEC as he had written screenplays for numerous cinematographic works. So I am also speaking to you about division 16 of Bill C-19 as the executor of his estate, with the interests of our sons and of all children of authors at heart.

In memory of Jean-Marc and on behalf of myself and the authors represented by SARTEC, I would like to speak to you about the extreme importance of extending the general term of copyright protection in Canada to 70 years after the end of the year in which the death of the author, or of the last surviving author of a work, occurred.

On death, people generally bequeath their estate to their children, with no limits in time. As Canadian authors, we have only a limited legacy to offer them: for a 50-year term, which is 20 years less than the term prescribed in over 80 countries, including those with which Canada has close ties, like the United States, Mexico, the United Kingdom, France, and the 26 other countries of the European Union, where the term is 70 years.

Extending the term from 50 years to 70 years will not only bring our country into line with its obligations under the Canada-United States-Mexico Agreement, or CUSMA; it will finally offer our authors a term for their rights equivalent to the term enjoyed by their international colleagues, while also reflecting the longer life expectancy Canadians now have.

SARTEC is therefore pleased with the provisions of Bill C-19, since they are consistent with the recommendations we reiterated in our briefs for the five-year review of the Copyright Act in 2018 and in the consultation on how to implement the extended general copyright term of protection in Canada in 2021.

Nonetheless, we wish to vehemently state that, most importantly, Canada must not mitigate the effects of this extension by adopting accompanying measures in the form of new exceptions or limitations to our rights. Canada must instead take as our model the United States or the European Union, which have adopted mechanisms that enable authors to recover their rights after expiry of a reasonable period or where their rights are not being actually used.

I would like to thank the members of the Senate committee on behalf of SARTEC for giving us the opportunity to be heard concerning the term of protection of our rights in Canada. Mr. Gilker and I will be pleased to answer your questions.

[English]

The Chair: Thank you very much.

Gryphon Theriault-Loubier, Country Leader, Creative Commons Canada: Hello, everyone. Thank you for inviting me. We have already seen some brilliant input this evening, so I’ll keep my side short.

I would like to accomplish three things today. First, I’d like to recognize that in all likelihood we are all sitting on unceded traditional Indigenous territory. I’d like to suggest that any notions of property and ownership we discuss be mindful of this.

Second, I’d like to briefly explain the value Creative Commons and reiterate the official Creative Commons position on the matter before this panel.

Let me begin by saying that I am neither a lawyer nor a copyright expert. In fact, I would make a terrible lawyer, as you are about to find out. As the country leader of Creative Commons, my role is to advocate for a strong commons composed of a diverse group of creators who recognize that when we share, everyone wins. Today, I’m primarily here representing those creators.

Creative Commons provides tools such as our licences to allow creators fine-grained control over how their creations are shared. The licences effectively shift the popular notion of “all rights reserved” to “some rights reserved” where, for example, a creator can choose to share their work but only in a non-commercial scenario. Over a billion works utilize Creative Commons licences.

The official position of Creative Commons on the matter before this panel is that Canada should advance a robust public domain to support creativity and innovation for all. Specifically, Creative Commons believes we should consider that the term for copyright should be shortened rather than extended.

Creative Commons suggests that rights-holders should need to take active steps to maintain copyright, such as by registration, which we’ve already heard, to liberate what are otherwise effectively countless orphaned works.

Creative Commons would like to emphasize that we have an opportunity to promote a robust and thriving public domain by fostering public access to knowledge and culture.

Next, I’d like to take a moment to consider this issue from a perspective of not only the protections of the end product — that creative work — but to also consider where those works came from. In Theft! A History of Music, professors Jennifer Jenkins and James Boyle of Duke University explain in great detail that creative works, such as that of classical composers, Jimi Hendrix or even the United States national anthem, are not entirely novel creations but rather significantly derived from pre-existing material. They describe the public domain as the great wellspring of creativity that, in combination with owned material, forms a balanced ecosystem of the mind. It seems to me that today is a day for considering this balance, and decisions made may shift this balance for our future generations.

I have some interesting examples to share with the panel, time allowing, but for now I will yield the remainder. Thank you.

The Chair: Thank you very much for your presentation and your patience with our technical issues here.

I think we should jump immediately to questions, and I’m going to go first to our deputy chair to begin.

Senator C. Deacon: Thank you, witnesses. We have some difference of opinion that’s quite strident. I want to make sure that there is an understanding that it would be highly unusual for us to do more than put a strong observation in the budget implementation act as an unelected body in legislation that has passed the House.

In that light, there were some recommendations put up front in terms of observations. I’m very interested in our capturing the differences of opinion in observations. I know we’ve got to go further than that in understanding this, but that’s a good place for me to start.

The Chair: Yes, we can start there. We could actually say “no” to a budget; it doesn’t happen all that often.

Senator C. Deacon: It would certainly make headlines.

The Chair: Yes, it certainly would.

Mr. Geist: Thanks for that. I would observe that it’s also highly unusual to put an issue like this, that has little to do with the budget, in a budget implementation bill. And I think as Professor de Beer noted, it’s pretty obvious the reasons for that.

My view would be that to emphasize that the recommendation around registration is not to register the copyright, as was suggested by the representative from SOCAN, but to use the registration process for an additional 20 years. And I want to emphasize the point that this view, that this is fully consistent with international copyright law, is the prevailing view of copyright scholars from across the country, as well as our own Minister of Justice who has, himself, been widely recognized internationally as a leading copyright scholar.

We’re not talking about requiring initial registration. We’re saying that, to be consistent with Berne Convention, there is no registration for that period, but if you want the additional 20 years, you can register for that additional 20 years, an approach that is consistent with international law and has the effect of ensuring that SOCAN’s members can get that extra period of time. But the 99.9% of other works that would otherwise fall into the public domain, because there is little interest in extending the term, would fall into the public domain.

Senator C. Deacon: Thank you for the clarity.

Mr. de Beer: Thank you very much. Let me elaborate on my first suggestion, which is to make that strongly worded observation. That’s your first option.

I think the focus here can be on the process. I think the substance is complex. You’ve got a sense of that, so I’m not sure it’s realistic to expect this committee to really weigh in and take an opinion on substance.

If you’re interested in that, you can look at the unanimous recommendation of the House of Commons Industry, Science and Technology Committee on substance and potentially endorse that.

The other thing that is within the remit of this committee is to emphasize the importance of some of the accompanying measures — even if it’s not registration, which it ought to be, but even if it weren’t — in future legislation.

If this bill has to pass the way it is, as smuggled in through the omnibus budget bill, then a less bad option would be to recommend further subsequent steps in terms of mitigation measures. That’s also an option.

The only other comment I would make briefly on the registration issue is that it would indeed be cumbersome and it would be expensive and it would require efforts to set this up, but that’s precisely the point: We don’t have any other property right where there’s no registry of who owns what. Only copyright has this dysfunction, and this was an opportunity to really take a world-leading role in transforming that problem in a step towards a solution, and that’s the opportunity that’s now missed if this sneaks through the budget bill.

The Chair: Thank you. Those are two good clarifications.

Ms. Kokonis: Thank you. I will make a few points.

First, the Government of Canada has already agreed to copyright extension to life of the author plus 70 years in CUSMA and has to have it implemented by the end of this year. In CUSMA, Canada’s trading partners, the United States and Mexico, currently observe copyright terms of life of the author plus 70 years and 100 years, respectively.

I note Mr. Geist and Mr. De Beer have referred to the House of Commons Committee on Industry, Science and Technology’s report that came out as a result of the statutory review of the Copyright Act in 2019. I would also point this committee to the Heritage Committee’s 2019 report, Shifting Paradigms, which did recommend extension of the term of copyright without any ancillary measures, including without a registration system.

I will note that the extra 20 years of registration — and whether or not the registration system could attach to the extra 20 years of term extension — is, in my view, too narrow an interpretation of the Berne Convention and is contrary to the spirit of the Berne Convention.

I will also note that SOCAN has a works registration system between works that are registered by our own direct SOCAN members in Canada and through affiliations with approximately 200 other countries in the world. We have a view of all songs in registration, and the cost of that system, honestly, is very costly. I cannot even imagine beginning to implement a registration system now.

Lastly, I’ll point out that Canada right now sits with countries such as Afghanistan and North Korea in observing the bare minimum of life of the author plus 50 years. Thank you.

[Translation]

Ms. Cadieux: Perhaps Mr. Gilker could answer. It is his turn.

Stéphane Gilker, External Legal Expert, Société des auteurs de radio, télévision et cinéma: So I won’t reiterate everything the President of SOCAN has said. I completely agree with all of that. I have to admit I’m surprised to hear that all of the experts in Canada apparently agree with the positions stated by Mr. Geist and Mr. de Beer. My books must not be the same as theirs, because the exact opposite is true, including all the citations in Mr. Geist’s brief. In fact, even Mr. Lametti says the international system would have to be changed to do that, and all the authors say it isn’t possible to do it.

In fact, the only thing that Canada could do, without going too deeply into the technical aspects, would be to provide that Canadian authors be required to register their works for the final 20-year period. At the national level, it can be done, with respect solely to authors from other countries that had a protection term shorter than 70 years in Canada, that is, several countries that we never deal with — yes, it could be done. However, if the opposite were done, if a registration system were put in place for the final 20 years, that would be absolutely prohibited by all of the free trade agreements. I would be happy to provide you with documentation of this. In fact, all of Mr. Geist’s articles say exactly that.

On the basic question, Statistics Canada tells us that Canadians’ life expectancy has risen by 22 years in the last 100 years. A 50-year term was adopted 100 years ago; 100 years later, we are adding 20 years when lifespan has increased by 22 years. We haven’t even caught up.

As a final point, it is quite clear that this is not a matter of choice. There is an obligation under CUSMA, but I would remind you, senators, that 80 countries, including all the countries in the European Union, already did this a very long time ago.

So if there are concerns regarding the balance of trade, for example, we should instead be supporting bills like other bills currently being considered that promote Canadian culture. We must not claim that the fact that a work is protected by copyright means that it isn’t accessible; it’s appalling to think that. On the contrary, copyright was created to enable artists to create works and earn a living. Thank you.

[English]

Mr. Theriault-Loubier: Thank you very much. I appreciate the opportunity.

To clarify the position of Creative Commons — and I should clarify that this is a global organization that’s analyzing policy across the globe and making specific Canadian recommendations — it has stated that they believe in, similarly to what we have heard from other parties tonight in regards to registration, supporting a strong public domain and reinforcing those values across Canada.

Hopefully, that is clear enough. If there is additional clarification you require, I am happy to provide it.

The Chair: Senators, as you can see, we have done the first half-hour. I am going to ask you to direct your question specifically to one person.

[Translation]

Senator Massicotte: I think my question should be addressed to Mr. Geist.

We have heard Ms. Kokonis give us her opinion. Certainly, the government always tells us that the agreement negotiated with Mexico and the United States does not allow us to do otherwise. We have negotiated, and are part of, an agreement that is very important to our country, but that isn’t relevant. We have to deal with it. However, some people are saying this isn’t true, it isn’t the case. Who is right? Would we be entitled to say no without offending our neighbours? Is this left to our discretion, or not?

[English]

Mr. Geist: Thank you so much for the question, senator.

To be clear, under CUSMA, no, we don’t have an option in terms of ensuring that creators can have access to life of the author plus 70 years. We do have flexibility in terms of how it is implemented. CUSMA does not specify that it must be implemented in the way that it is implemented in the budget implementation act. There is that flexibility; in fact, in other trade agreements over time, the U.S. has tried to be far more specific about how it gets implemented.

I believe Canada, as part of the negotiations, made an express effort to ensure that there was some flexibility in how Canada went about implementing it, ensuring that creators who wanted that level of protection would be entitled to get it, but not necessarily following precisely the same model, let’s say, that the United States had.

So there can be an equivalency in the approach that we take. I believe that flexibility does exist in the trade agreement that we’ve signed.

Senator Loffreda: Thank you. My question is to Creative Commons Canada. You stated it this evening, but in your submission to the government as part of the public consultation on how to implement Canada’s CUSMA commitment to extend the general term of copyright extension, you submitted that:

There is no reason for copyright protection to last as long as it already does—let alone be further extended. In fact, we argue for the term of protection to be significantly reduced.

So you did state that you had some examples to share. You also argued that the costs of a term extension would outweigh the benefits. I wonder if you could further elaborate on those statements. How did you come to that conclusion?

Mr. Theriault-Loubier: These recommendations are assembled, as I mentioned, through Creative Commons’ headquarters, so these would be through individuals such as Lawrence Lessig who are considered cornerstones in copyright legislation, I would argue. I would say that’s the origin of it.

In terms of costs of registration or maintenance, I believe that the public domain essentially has infinite value. It is very difficult to be attaching a price tag to supporting the public domain. It’s a very difficult decision. I appreciate that’s a decision you will all have to make. What was the remainder of the question? Have I addressed it?

Senator Loffreda: How did you come to that conclusion? What evidence do you have, and what was the argument you had? In fact, you argued for the term of protection to be significantly reduced.

Mr. Theriault-Loubier: In that initial submission, which was on March 12, 2021 — for anyone curious about looking it up — was referring to briefs from Eldred et al v. Ashcroft and some work by Milton Friedman. This is all documented in the submission, so I won’t go into great detail about it for the sake of time, but the Creative Commons headquarters has suggested that the costs of extension just outweigh the benefits, flatly stated.

You can review these various papers by various economists for further details on that. I would be happy to dive into that, but I’m conscious of time here.

The Chair: Thank you.

Senator Ringuette: Thank you. I guess I have some observations. One is that after 19 years in the Senate, this is certainly not the first time, nor will it be the last time, that I see a measure from a trade agreement being introduced in a budget bill.

The second thing is that I’m a very practical person. I’m wondering about this 20-year extension; when a person is dead, how would they register for that 20-year extension?

I’m Canadian. I’m pro-Canadian in my reading, even though you all said that over 80 countries in the world have life plus 70 years. But how does it harm the public interest to keep money in the pockets of creators and their families for a little longer in Canada? Where is the harm?

Casey M. Chisick, Partner and Co-Chair, Intellectual Property, Cassels Brock & Blackwell LLP, as an individual: I’d like to address one of the elements of that question, and it has to do with how authors who are deceased will register for the additional term of protection. It’s a great question.

The reality is that it is the heirs and the estates of the authors who would have the onus of registration. It is precisely those rights-holders who have inherited the copyright and who are intended to benefit from the term of protection after the author’s death who are most vulnerable and least likely to be aware of the requirement to register.

Registration, simply put, is a trap for the unwary when it comes to copyright law. That’s why most countries around the world do not have any form of mandatory registration. In fact, the only country that has even a partially mandatory system is the United States, which leads to all sorts of other complexities that I would be happy to explain if time permits.

But for now, the point is simply this: Registration as a mandatory requirement, even for claiming the extension, will simply have the effect of causing vulnerable rights-holders — the most vulnerable rights holders, those who are intended to benefit from the work created by their parents and their grandparents — to lose that protection and the economic benefit that it was intended to confer.

Senator Ringuette: Thank you.

Mr. Geist: I did hear the senator ask for a couple of comments in response to her comments.

I would make two points. First, with respect to who registers, we have just heard from those who are proponents of this extension how valuable it is to the creators to have this additional time.

The heirs literally have 50 years to go ahead and register the extension. If this is as valuable as is suggested, surely those who are benefiting from it can find one moment over a 50-year period to do so.

With respect to the benefits, what is the harm? The harm is this: I’m not, as I’ve said, suggesting that there shouldn’t be that additional 20 years. The point is that the overwhelming majority of works are not commercially valuable at that point in time; by extending all of them, what you are doing for the 0.1% of works that may still have commercial value is taking 99.9% of the works and making them inaccessible for an additional 20 years. Finding a solution that allows those that want the value to have them, while at the same time preserving those works that no longer have commercial value, should be, in my view, the policy goal that ensures broader benefits within Canada.

Senator Woo: Thank you to our witnesses. Professor de Beer, what are the other mitigation measures that might be offered as observations, and would these be trade compliant with CUSMA?

Mr. Chisick, if we went ahead with the registration system, what is your expectation of a trade action or a challenge from our friends in the south with respect to our obligations under CUSMA?

Mr. de Beer: Thank you, Senator Woo. I will give one of the examples and it was the solution to the problem of orphan works. It’s a problem that I’ve published on in a number of different studies for the Government of Canada and the Copyright Board. It is essentially the problem that Professor Geist pointed out, which is that the vast majority of works by that point in time are no longer in commercial circulation and they’re no longer commercially exploited. That’s the same reason why we heard a suggestion that those rights should actually revert to the creator. The truth of the matter is no one knows who owns the works because the system is so dysfunctional that there is no registry you can use to figure out who owns what at that time.

One of the mitigation measures would be a proper system to deal with what is called an orphan works problem. That’s one of the measures that was identified as possible by the policy analysts who ran the consultation last summer, which was simply ignored as this was shoved through the budget bill with no mitigation measures whatsoever. That’s one example this committee could observe would be urgent to address if this term extension goes through.

Senator Woo: Mr. Chisick, would you add that to the list? Would that also be CUSMA compliant together with a registration system?

Mr. Chisick: Senator Woo, thank you for the question. I want to begin by saying it’s difficult for me to speculate as to the likelihood of a trade action by the United States under CUSMA. If anything has been learned from the last number of years in the United States, it’s very difficult to predict at any given time what trade measures might be taken and what actions might be taken or tariffs imposed. So I don’t want to speculate about that.

But I do want to say this: The risk is far greater than a risk of a trade action under CUSMA because what we’re talking about today is a measure that would be in breach of an international convention to which there are more than 80 parties around the world, and that’s the Berne Convention.

It’s very important to recognize that, although my friends Mr. Geist and Mr. de Beer are referring to some sort of consensus among intellectual property scholars that this would not be Berne compliant, I agree with Mr. Gilker — that’s by no means a unanimous consensus. There are many copyright experts, including some here today, who disagree with that assessment of Berne.

The argument that a registration requirement simply for the last 20 years of the 70-year protection period would not be in breach of Berne is so narrow that it loses the meaning and intent of the treaty, which is that the copyright must be available to rights-holders automatically and without formality. To parse the term of copyright as though that were somehow a meaningful distinction — with respect to my friends — is simply an untested and unacceptably narrow reading of that treaty. That’s precisely why there is no other country in the world that has imposed a registration requirement as a condition of claiming an extension term, precisely because that would be an obvious violation of the Berne Convention. That’s in spite of the fact that the international standard that has emerged over the last 25 years is not life plus 50 years, as Mr. Geist suggested, but rather life plus 70 years without registration or other formalities.

[Translation]

Senator Bellemare: My question is for Ms. Cadieux and Mr. Gilker. I am sympathetic to your opinion because you are authors and you represent authors. I think that is very important and I am also an admirer of Mr. Vallée, so I am biased in your favour. I’d like to know whether you represent the opinion of the Société des auteurs de radio et télévision et cinéma. Does that society represent the majority in your sector?

In other words, my question is simple: I know you understand the bill in relation to your current needs, but do you represent the position of SARTEC? How big a role does this society play in the creative universe in Quebec at present?

Ms. Cadieux: Yes, we represent all the francophone authors in Quebec and Canada, and yes, it’s the position of the authors. I’m not a lawyer by training, I would point out, I’m an author and screenwriter, so it’s very important to me. You mentioned your admiration for Jean-Marc Vallée. I’m currently in the process of managing his estate. It’s very complicated. When we talk about registering works for the 20 additional years requested, these are things that ordinary mortals don’t know anything about.

I would find it hard to imagine my sons having to register their fathers’ works. I think this is complicating our lives. Their father worked very hard and promoted Quebec around the world, and then they would have problems getting the same rights as other heirs in other countries, to secure what they have inherited from their father. They aren’t necessarily going to do that kind of work; they may be creators like him, but maybe not. It’s always extremely complicated — copyright is complicated in general. I’m an author and I often get lost in it all myself, and that’s why Mr. Gilker is here. He understands more about the law than I do. Myself, I’m really speaking with my heart. We represent the creators, and obviously, what we want is to make it easier and be like all our international colleagues, and be entitled to the 70 years.

Mr. Gilker: Very succinctly, I want to say that the brief we prepared was not written only on behalf of SARTEC; it was also for the Association des réalisateurs et réalisatrices du Québec and the Writers Guild of Canada. A lot of people are represented by SARTEC, but there is also the Société des auteurs et compositeurs dramatiques, a organization that brings together screenwriters who promote Canadian culture around the world.

[English]

The Chair: Before we go back to Senator Colin Deacon, I have a couple of follow-ups I’m trying to clarify. On the registration issue — and this would be to Professor Geist or Professor de Beer — are you saying there is no registration system here?

Mr. de Beer: Currently that’s correct. Registration is optional and voluntary. The overwhelming majority of copyrighted works — and copyright arises automatically when you create a doodle — are not currently registered. Any registration is purely voluntary, which is why no one knows who owns what in terms of access to cultural works.

The registration proposal, to make this concrete — and my condolences, Ms. Cadieux, about your late husband — that copyright would then expire at the end of 2071. That’s under the current system. What we’re talking about now would be an extension of that copyright to make it expire in 2091. If you want protection for those extra 20 years, all you have to do is register.

I agree it’s a complex system to set up. I also agree there are differences of legal opinion about this, which is why this ought not to be rushed through an omnibus budget bill. That is the central point.

The Chair: This is unlike when you buy a house or vehicle; that all has to be registered.

Mr. de Beer: That’s exactly the problem.

The Chair: I have a question, and I will put it to Ms. Kokonis. You’ve heard the arguments here on public interest and the fact that there are so many works — the papers of prime ministers, judges and other famous people — where the ownership is obviously not clear, given the fact that there is no registration system. What is the argument against denying the public interest or the public access to that for an even longer period of time?

Ms. Kokonis: Thank you for the question, Senator Wallin. I confess I’m not quite sure I follow the comments that we’ve heard about works not being accessible or available. With respect, I believe that’s a myth. I believe that works are available and accessible. The question is whether or not the copyright owner — the authors, the creators — are compensated for the additional term of protection. So in my view, this is not a question of accessibility or availability of works.

I would also like to note that, frequently, works that do fall into the public domain are still packaged and sold by companies that may want to use them. So I will just note that costs are not necessarily passed on to those that are seeking access, availability and use. Thank you.

The Chair: I need some clarification on that. Professor Geist, you are the one that made the point that there are many people whose work we cannot have access to under this system, and you have been challenged. Can we hear your response?

Mr. Geist: Thank you for that, Senator Wallin. There are consistent studies from academics from around the world that have actually dug into the data, and it seems to me that they have, in fact — and I cited at least a couple of those global experts from Australia, the United States and elsewhere — tested exactly what we just heard from Ms. Kokonis and found that there is a difference in access and cost when works are in the public domain as opposed to when they are still in copyright.

With respect to public access to those works, there is a history of, at times, those controlling the works creating limitations on their broader access to researchers and others in the public, and to the prospect of making them more broadly available to the public. Once they enter into the public domain, those limitations are gone.

To be clear, we’re not talking about commercial value in this case; we’re talking about access to Canadian history and culture.

We had an earlier question about what associations stand where. There is a reason that the historical associations, the archivists, the educators, the librarians and others who are concerned with our living memory are, in fact, unanimous on this issue, expressing consistent concern about the implications this has for access to Canada’s historical records.

The Chair: Thank you for that.

Senator C. Deacon: In my head, I do separate out creators from publishers, and I think I’m correct to do that because the person who controls copyright can quite often be very different than the creator of that copyright.

So here’s a question that came to my mind when you were speaking, Ms. Kokonis. You spoke about the fact that there is a lower incentive for foreign investment in Canadian content. I’m very interested in Canadian investment, Canadian content and Canadian exploitation of Canadian content, so I don’t mind if there is a disincentive, I have to say. But I would like you to dig into that. You felt that creators would be disadvantaged — and they may well be — but that there was reduced incentive for direct foreign investment. I want to understand that, even though I’d rather have Canadian investment.

I’ll leave my opinion off the table.

Ms. Kokonis: Thank you, and I will pass this one to Mr. Chisick.

Mr. Chisick: Thank you, senator. It’s important to understand the economics of creation, if you will.

The role of the publisher, the record label or other intermediaries in the creation of content is very simple. They invest in the creation of content, and the funds that finance that investment are the funds that are created — the revenue generated by the exploitation of content.

In the music world, for example, music publishers continue to license works for the life of copyright. Older works are often just as valuable, if not more valuable, than the Billboard top 40. They continue to collect revenue in the form of royalties and licence fees from the exploitation of those works. It is that revenue that’s reinvested into the creation of new content by emerging songwriters who rely on that direct investment, particularly in the early stages of their career, in order to enable them to live while they create and in order to enable them to support their families while they create.

So the investment opportunity that’s created by the extension of copyright term will allow publishers who are investing at the outset of those relationships to continue to generate the revenue that will allow them to continue to invest in the creation of new work by Canadian creators.

That includes Canadian publishers, who rely on that revenue every bit as greatly as their foreign counterparts. It is a myth to suggest that all this leads to is an outflow of royalties to other jurisdictions. What it leads to first and foremost is the reinvestment by publishers and others in the creation of Canadian content right here in Canada.

Senator C. Deacon: Do you believe that Professor Geist is close to being accurate with his perspective that 99% of works at the end of the 50 years have no commercial value?

Mr. Chisick: No, I don’t think that’s accurate at all, and I think that Ms. Kokonis could speak to that even more specifically than I can.

The reality is that in the music world, for example, the works that are registered in SOCAN’s system continue to generate royalties consistently throughout the life of copyright. As I said a moment ago, some of the most valuable compositions in the SOCAN repertoire also happen to be older compositions that continue as evergreen copyrights and continue to generate revenue right through to the end of the term of copyright, and that will continue.

Senator Marshall: These are just two quick questions. The amendment — and I think somebody already alluded to this — is very odd. It’s in an omnibus bill, and it’s only one amendment. Should we be reading something into the timing of the amendment? Are they trying to meet a deadline, or is there something there we should be aware of? Can you speak to that?

Also, this is just one amendment. Should there be more? I realize that some of the witnesses support the amendment and some don’t, but it’s a stand-alone amendment. Should there be more?

Mr. Chisick: Senator Marshall, there is a deadline. The deadline is the end of this year for implementation of term extension under CUSMA, and it’s important to add that it’s the deadline for full extension.

There have been other amendments. Amendments were already made to the Copyright Act last year to partially implement the requirement of term extension. This is the final amendment that’s needed to complete the job and put Canada into compliance with its obligations under CUSMA as it’s required to be by the end of December. There are no further amendments required after this one is complete, and it’s for that reason that implementation through the budget implementation act is fully appropriate.

This issue has been fully studied both in the negotiation of CUSMA and through consultation and submissions to various committees of Parliament. This is now the end and final stage of full implementation of term extension as required.

Senator Marshall: Why wasn’t it made earlier? Why is it coming in at the tail end?

Mr. Chisick: It’s coming in at the tail end because Parliament was studying the issue and consulting broadly with stakeholders in order to ensure that the extension was being implemented in an optimal way.

When I hear my friends refer to a lack of study and a lack of consultation, I just don’t understand where that’s coming from because there were over 200 submissions received when the government studied this very issue. They studied it very carefully, delayed implementation of this last piece until now and the government is now prepared to proceed with the implementation of its requirement under that treaty.

Senator Marshall: Is this phase two? Is this the final phase?

Mr. de Beer: Mr. Chisick is absolutely correct. The deadline is this end of this year. He’s also correct that this issue has been studied and that there have been consultations on this.

What he omits to mention is the reason this is going through a budget bill is because Division 16 ignores the recommendations by parliamentarians in the House of Commons Industry, Science and Technology Committee report, and it ignores the differences of opinion that were expressed on the mitigation options. If those were taken seriously, this wouldn’t sail through a budget bill. That is, quite honestly, what’s uncomfortable.

You asked what else should be in this. Another example of a mitigation measure, to respond to Senator Woo’s earlier question, would be a limitation on the astronomical statutory damages for infringing copyright during the extended period of protection. That was one of the options proposed that’s not contained here.

The Chair: Thank you very much.

Senator Loffreda: I wanted to continue with Creative Commons Canada. They are a globally headquartered organization.

I would like you to elaborate on the registration requirement. What would be your reply to being in breach of the Berne Convention and the fact we are not equipped in terms of the huge investment in time and financial resources? I would like to have your opinion and have you elaborate on that.

Mr. Theriault-Loubier: I can speak to that as someone who is not a legal expert.

Previously, you had asked about proof on costs, and I talked about a couple of articles I could offer if we had time to get into them. I’ll give you a few seconds on that to start.

The article being cited in the submission we made is by Rufus Pollock. This was a calculation of optimal term of copyright. Based on a novel approach, they defined a formula, and in terms of the abstract, a high-level overview, they say:

Using existing data on recordings and books we obtain a point estimate of around 15 years for optimal copyright term with a 99% confidence interval extending up to 38 years.

That is, obviously, substantially shorter than any current copyright term.

I can’t defend the author. I didn’t write the article, but you’re free to attack Rufus, if you like.

In terms of Berne, I would defer to Mr. Geist on that. He seems quite informed. Mr. Geist is familiar with the Creative Commons licenses. He uses them. I believe he could speak to that accurately.

Mr. Geist: I would note that there have been significant studies, and we just heard reference to a couple of those.

The Eldred case that was referred to earlier is a U.S. Supreme Court case in which many notable economists did some of that economic assessment — Rufus Pollock has done some of the same — to arrive at the conclusions that they have. Part of the reason they highlight those costs is that, with all respect to Mr. Chisick’s comment that somehow it’s not 99% of works, let’s recognize that copyright, as Professor de Beer noted earlier on, torrents to everyone whenever we create something. The doodles, the notes I’m writing — all of this is subject to copyright protection.

It may be that amongst published songs we’re not talking about 99%, but the point is that this is not a term extension for published songs; it is a term extension for all copyright works. The notes that you are taking now, the myriad of things that get created by millions of Canadians every day — all of that is now subject to this.

Frankly, 99.9% is an underestimation given the sheer amount of creativity that takes place, all of which gets locked down. On this notion that somehow all of this is tied to future investment, the point of investing in the area is that nobody knows precisely what will have value. The majority of it does not — we do know that going in — so whether it’s protected until 2071 in one case, as Professor de Beer noted, or 2091, in a world in which we’re looking at companies’ quarterly returns, the notion that somehow this drives investment decisions is laughable.

It might drive decisions in terms of buying old expired works, but in terms of new kinds of creativity, there’s nobody that woke up this morning thinking they wanted to write the great Canadian novel or an awesome Canadian song and decided, “You know what? I’m going to do something else, because my heirs only have 50 years of protection after I die rather than 70 years.”

The Chair: Thank you for that. Mr. Chisick, I literally will give you 30 seconds because we’re over time.

Mr. Chisick: That’s all I need, Madam Chair. All I want to do is refer the committee to an important study by Professor Marcel Boyer, one of Canada’s eminent economists and a member of the Order of Canada, who examined many of these economic issues in a 2020 paper that I can share with the clerk, and has a very different perspective on these issues that have been examined and the investment issue that Professor Geist has just proposed as being laughable.

The Chair: Thank you for that. Please send it along. We will look at those other parliamentary reports as well.

Witnesses, thank you. I know this has been very complicated with so many moving parts here, but it has been superb to share your insights into this. Thank you so much for joining us, and, of course, we’ll keep you posted.

We will go to our second panel. We will focus on Divisions 17 and 30 of Part 5. Division 17 is about patents and trademarks, so we will shift focus, and Division 30 is about beneficial ownership.

Let me just run through the list to discuss Division 17. We will hear from Darrel Pink, CEO of the College of Patent Agents & Trademark Agents; and in a few moments, to discuss Division 30, we will hear from James Cohen, Executive Director of Transparency International Canada; and Marc Tassé, Senior Advisor, Canadian Centre of Excellence for Anti-Corruption, and Professor, Faculty of Law, at the University of Ottawa.

We will discuss Division 17 on patents and trademarks, and we’ll hear from Mr. Darrel Pink.

Darrel Pink, Chief Executive Officer, College of Patent Agents and Trademark Agents: Good evening, senators, and thank you very much for allowing me the opportunity to speak with you briefly tonight. I assure you that the discussion you’re about to have with regard to Division 17 will be far less controversial than the matter you recently addressed.

The College of Patent Agents & Trademark Agents was established by the Government of Canada in 2018 to provide a national regulatory framework for members of the patent agent and trademark agent profession. About 30% to 35% of those professionals are lawyers, but the others are not, and until the establishment of the college, there was no professional regulation for them. This was part of the government’s strategy to promote innovation and to extend and protect intellectual property in all its forms across Canada.

So the college was established by legislation. The first board was appointed in 2019. I was retained in early 2020 to take on the task of establishing the college, literally in every respect — we were building an entity from scratch — and the act was proclaimed on June 28 last year.

As with all new entities, especially in an area where the federal government lacked experience, there are only three federally regulated professions in Canada. There’s the College of Immigration and Citizenship Consultants, which I’m sure members of this committee are very familiar with. It has been notorious in Canada for the last number of years. And there’s a very tiny college dealing with land surveyors, which is also part of this omnibus bill.

When the College of Patent Agents and Trademark Agents began to operate, we identified a number of areas where the legislation was devoid of certain things and where there could be a number of additional protections. We began discussions with government — with Innovation, Science and Economic Development Canada, formerly Industry Canada, in particular — about how some of the deficits or the deficiencies might be addressed, and they fall into two broad categories.

There are a series of governance reforms that are included in this division that are essential to allow the college to operate as an effective corporate body. For example, the provision of statutory immunity for the directors and decision makers in the college, especially in the area of discipline, is vital. It’s common in all professional regulatory bodies that there’s such protection afforded to those decision makers, and that was added.

There are some other fairly routine amendments which gave the board of directors the kind of power and authority that they require in order to operate a corporation.

Then there are a couple of other matters that allow, again, the college to just operate effectively.

The more significant amendments relate to the regulatory approach that the college is taking, and I want to stress that the college is committed to being a leading, best-in-class, modern and professional regulator. That is embedded in many of the structures that the college has, most notably that all the decision-making bodies of the college are made up of a majority of members of the public.

On the board of directors, the investigations committee and the discipline committee, more than 50% of the members are from the public rather than from the profession. That’s unique and creates a degree of independence for the college that is vital.

Second, there’s a very clear distinction between the governance, the board of directors and the other committees of the college with a requirement that none of the board participate in the regulatory work, per se. That’s, again, crucial to create independence for the regulatory decision makers.

The second piece of Division 17 deals with a number of important changes to allow the complaints investigation and discipline system to operate most effectively. Key changes allow for some initial decisions to be made at the outset by the registrar, giving authority in emergency situations for the investigations committee to suspend or restrict the licence of a licensee, and, in both instances, with appropriate appeals.

Finally, the act enables the two leading regulatory committees, the investigations and discipline committees, to establish policies and rules of procedure for themselves so that they can operate most effectively.

We are well on our way to building what we do describe as a modern, risk-based and outcomes-focused public interest regulator. I could spend a lot of time describing each of those descriptors, but time doesn’t allow, but this act advances that goal.

The Chair: Thank you very much.

James Cohen, Executive Director, Transparency International Canada: Madam Chair and members of the committee, thank you for inviting me to speak to you today.

Transparency International Canada is a registered charity and is the Canadian chapter of Transparency International, the world’s leading anti-corruption movement.

In 2021, Transparency International Canada and our partners were pleased by the federal government’s announcement to establish a publicly accessible registry of beneficial ownership by 2025.

We were very pleased to see that Finance Minister Freeland sped up this timeline to 2023 in this year’s budget. In the budget announcement, Minister Freeland also stressed the importance of data verification for the registry and scalability for provinces. We applaud the government for these efforts and look forward to supporting the government in any way we can with thinking through technical and legislative components of establishing such a registry.

We were also pleased to see announcements by the government in the budget for a federal beneficial ownership property registry, the requirement for lenders issuing mortgages to adhere to anti-money laundering regulations and the beginning of the establishment of a financial crimes agency in Canada.

For today specifically, on components of Bill C-19, it is our understanding that the measures of data collection are the first step of establishing a registry. Specifically, Division 30 of Part 5 lays out the amendments to provide powers to allow the federal corporate registrar to collect beneficial ownership information from federally registered companies.

We recognize that these amendments are a necessary step to empower the federal corporate registry, and they will be followed by further technical legislation on implementing a registry in a later budget implementation act.

As noted, we are ready to be part of the consultation on the technical and legislative thinking and do hope the government will have an open and transparent consultation process.

While it would have been ideal to have an agreement in place with all provinces and territories already to work on the beneficial ownership registry with the federal government, we believe that it is okay for the federal government to take a leading role.

While not the focus of today’s hearing, I would be remiss if I did not also address Division 31 of Part 5, dealing with economic sections. In Part 441, section 5.6 — Payment out of Proceeds Account — lays out the only purposes that the disposition of property forfeited by the government may be paid out towards. All the purposes listed are noble causes to pay out seized funds from kleptocrats who would hide their dirty money in Canada, including reconstruction of foreign states, restoration of international peace and security and the compensation of victims.

I would urge senators to also think of preventative measures that repurposed assets could go towards, including supporting local and global civil society and investigative journalists who fight corruption.

I would also note the importance of Canada establishing a publicly accessible beneficial ownership registry in order to make the goal of Division 31 of Part 5 possible. Without transparent beneficial ownership data and the resources to monitor that data, Canada will have an exceptionally difficult time actually seizing and freezing any assets that are the results of global kleptocracy.

The importance of beneficial ownership transparency is also required for effectively enforcing the proposed act in Division 12 of Part 5, the prohibition on the purchase of residential property by non-Canadians act.

Without beneficial ownership transparency for not just companies but trusts, as well as nominee transparency, there remain many loopholes for foreign individuals to mask their identities and purchase Canadian property.

At a $10,000 fine for breaching this act, this will be seen as a slight cost of doing business for crooked individuals.

Thank you, and I’m happy to answer any questions.

The Chair: Thank you very much.

Marc Y. Tassé, Senior Advisor, Canadian Centre of Excellence for Anti-Corruption, and Professor, Faculty of Law and Telfer School of Management, University of Ottawa, as an individual: Madam Chair and members of the committee, I would like, first of all, to thank you for the opportunity to contribute to the committee review.

[Translation]

My remarks will be in English, but I will be happy to answer your questions in French or English.

[English]

I have worked for the past 30 years as a forensic accountant and a law school professor at the University of Ottawa, and I’m an expert in combatting financial crime.

We all know that by money laundering, tax evasion and other financial crimes put Canadians at risk and put our economy at risk at the same time. It is essential that Canada make beneficial ownership more transparent in order to prevent and dissuade abuse from secretive beneficial owners hiding behind opaque corporations and trusts.

I totally support what Mr. Cohen just said about the fact that there are some loopholes; we need to keep in mind that Canada needs to send a clear message that it will not be a jurisdiction of choice for professional enablers that are paid millions to hide billions, because right now there are way too many chief loophole officers out there, and we need to change that.

I’m very happy that the government has committed to make the federal registry publicly accessible and also accelerated its implementation to the end of 2023.

Nevertheless, as was pointed out by Mr. Cohen, provinces and territories must come on board and must harmonize with the federal regime for it to be truly impactful.

It will be crucial that the federal government work with the provinces and territories to advance a national approach to a beneficial ownership registry similar to other countries, such as the United Kingdom.

It is also important that corporations be proactive in ensuring that the director of Corporations Canada is kept informed and that the public registry eventually be complete and accurate in a timely fashion. Why? Because companies that wish to abuse the system or evade sanctions can delay updating, recording and sending the information to the director by simply relying on the annual requirement and not taking proactive means to update the registry.

Therefore, in closing, I would like to thank you for your time, and I sincerely hope that my comments will be helpful in preventing abuse of private corporations and also put an end to Canada’s reputation as the snow-washing capital of the world. Thank you very much, and I will be happy to answer any questions you may have.

The Chair: Thank you all very much. That is all very, very helpful.

We will begin our questioning with Senator Deacon, the deputy chair. I will take my leave and he will handle the questions going forward.

Senator Colin Deacon (Deputy Chair) in the chair.

The Deputy Chair: Thank you, chair, and thank you, witnesses. I have to say, Mr. Cohen and Mr. Pink, you both deserve a gold medal for your ability to cause legislative change within one year of legislation being introduced. I don’t think that’s ever happened in the history of this country, and so I think there’s going to be a number of us wondering how on earth you’ve accomplished that.

If I can, I’m going to direct my question to a fellow Nova Scotian, Mr. Pink. I’m quite surprised by the very prescriptive nature of the legislation versus regulations enabled by the legislation. Can you explain to us why that is the case and why there couldn’t have been a different approach taken? Thank you.

Mr. Pink: I think, senator, there could have been a different approach, but this was the approach that the department took in developing this. The college is independent, and as a result of that we’re not on the inside of the legislative drafting process. There are many things that the college would have liked to have seen and that I personally would have liked to have seen added to this legislation, and I acknowledge that it’s quick and early in the life of the college.

I see this as an iterative approach and that, as we establish our reputation and our practices, there will be greater room for things to be done through subordinate legislation as opposed to prescription in the statute. There are a variety of ways of approaching regulation, and the department chose this one.

The Deputy Chair: So you don’t have a sense of why this was done in this manner? Did you not question that, or were you not provided information as to why this direction was taken?

Mr. Pink: We didn’t see the language until the bill was introduced.

The Deputy Chair: Interesting. Thank you very much and thank you for your work in that regard.

Senator Woo: For Mr. Pink, I note the innovation that you will have at least half or more than half of members of the public sitting on your investigations and disciplinary committees. Will it be difficult to find individuals to be on those committees who have the knowledge and experience to do investigations and to subsequently adjudicate?

Perhaps I should pause, depending on how long your answer is. If there’s time, I’ll go to a second question for Mr. Cohen.

Mr. Pink: I’ll be very brief. We’ve engaged in a national recruitment process for all our committees, and we have been overwhelmed with the quality of individuals who are prepared to come forward and provide their talent and expertise in the work of the college.

This particular initiative of government in terms of protecting and advancing IP, its role in the economy and a range of related issues are very intriguing for literally dozens of Canadians, very well-qualified people who have joined our committees. We will appoint our first committees next week, and their names will be in the public domain, and you and your colleagues will see how incredibly lucky we are to have people with such knowledge and skills.

Senator Woo: Thank you, Mr. Pink, that’s very encouraging good news that you’ve shared with us.

For Mr. Cohen, on the freezing, seizing and repurposing provisions of the budget implementation act, these provisions go beyond what our colleague Senator Omidvar had proposed in her parallel private member’s bill in that the seizing, freezing and repurposing provisions extend not just to individuals but also to entities; in other words, corporations, state-owned organizations and even the central bank.

Do you support that extension of the provisions, and would you agree that it’s desirable to also seize, freeze and repurpose assets of entities that, in theory, belong to the country as a whole and not just to individual kleptocrats?

Mr. Cohen: Thank you for the question, senator. I would have to think further on that. Today, as I was preparing for Division 30, I just happened to review the whole bill and came across that one section looking at the emergency seizures act. I would have to think further to give a proper answer.

Senator Woo: Fair enough. You baited me, and I took the bait, but fair enough. Thank you.

[Translation]

Senator Gignac: My question is for Mr. Tassé.

If I understand correctly, access to this public registry will increase transparency and also, I believe, Canadians’ confidence in the system. You gave the example of the United Kingdom, but was Canada one of the lowest ranked, on a scale of one to ten? Are there examples of scandals or other things we might have seen in recent years, as a result of which we could avoid this kind of situation? Thank you.

Mr. Tassé: Thank you for your question.

To answer your question as to where Canada stood, I would say that on a scale of one to ten, Canada stood at about four or five. We were not really champions in our field. We were having some problems.

First, you all know that it is very easy to incorporate a company; it takes 15 minutes. It’s easier to incorporate a company than to get a library card.

Second, when we don’t know who the ultimate beneficiary is, if nominees are used, the danger is that if the nominee is a lawyer, we will never be able to know who the ultimate beneficiary is because the lawyer will tell you they can’t say, because of professional privilege. So therein lies a problem. If we want to follow the money, if we want to know where the money went to create the company, when lawyers’ trust accounts are used, it becomes impossible. It’s more than improbable, it’s impossible — the lawyer won’t tell you. We have witnessed various situations. At present, we impose sanctions on people, but what are we going to sanction? We’re going to impose sanctions on what we know belongs to those people, from the registries. If the person uses a nominee or the nominee is a lawyer, we will never know who the person is.

We’ve had lots of scandals. A lot of Canadian companies, jewels in the Canadian or Quebec crown, have unfortunately been named for the wrong reasons. They had used shell companies that were owned by nominees, and the nominees were lawyers in countries like Switzerland. There was really no way of knowing who the ultimate beneficiary was. Facilitation payments and bribes have always been very attractive, very unfortunately.

[English]

The Deputy Chair: Thank you very much, Mr. Tassé.

Senator Loffreda: I’ll continue on anti-corruption, and my question is for James Cohen, and maybe we can get his opinion with the view from Transparency International Canada.

The government argues that the amendments to the Canada Business Corporations Act are being proposed in order to avoid having anonymous Canadian shell companies being used to conceal the true ownership of assets and making them vulnerable to misuse for illegal activities.

In your opinion, how much of an issue might this be here in Canada? Is there any data that shows Canadian businesses are vulnerable to such illegal activities? Do you feel these amendments adequately address this issue?

Mr. Cohen: Thank you for the question, senator. I’m going to start by saying there is no silver bullet to solving corruption or anti-money laundering. While something is a highly valuable tool, it will not be the tool to stop everything. I want to make sure that is crystal clear.

In terms of whether it is a problem in Canada, yes, absolutely. Canadian intelligence has estimated that between $43 billion and $114 billion a year is laundered through Canada. Through Transparency International Canada’s own studies, we looked at real estate markets in Vancouver and the Greater Toronto Area. In 2016 in Vancouver we looked at the 100 most valuable properties in the greater Vancouver area, finding that in almost 50% of cases no one knows who the owners are. They’re either through offshore companies or even Canadian companies, nominees or trusts, and some of these are linked to money laundering cases. The RCMP themselves have cited that the anonymous use of corporations is one of the most often used tools for money laundering crimes.

Within the Greater Toronto Area, we looked at real estate transactions between 2008 and 2018 as part of a risk assessment. We were not looking at the actual amount of money that has been laundered — because that is very difficult to do — but the risk assessment of the amount of money and the proportion of corporations buying real estate in the GTA. This is a very high number that should be concerning for Ontarians and Canadians writ large because this is a national issue. You can’t address it, say, with the Cullen Commission in British Columbia and think that we have clamped down on our issue.

To repeat what Marc Tassé and I have said, while it’s great that the federal government is taking a leadership role in establishing the registry, it is also very good that they will make this scalable. Had they just waited for the provinces to come on board, maybe this would be delayed. Hopefully, we will see a number of provinces jump on board. Quebec has already passed legislation for beneficial ownership information on their corporate registry. We definitely hope that the Government of Quebec will harmonize with the federal government.

We certainly hope that after the Cullen Commission is completed the Government of British Columbia will see fit to green-light a corporate beneficial ownership registry in line with the federal government. We hope to see other provinces align as well.

Senator Marshall: I will continue with the beneficial ownership registry. Perhaps Mr. Cohen and Mr. Tassé can answer my questions.

Last year, Mr. Cohen, when you testified I had to go back through previous budgets. I went back as far back as 2017, so every year the government has made a commitment towards addressing money laundering and the ownership registry. I am hoping we are getting closer. There are a couple of things that a departmental official mentioned when we met with her last week that I would like your opinion on.

First, she was saying that the objective of the beneficial ownership registry is to enable transparency around the beneficial owners of companies that are regulated under the Canada Business Corporations Act.

I know, Mr. Cohen, you kind of addressed that when you responded to Senator Loffreda, but I would like to hear both of your views on that because if the provinces don’t come on-side then the purpose of the registry will be undermined. I would like to hear your views of it again, and also those of Mr. Tassé.

The other question I have is that the government set the deadline for the end of 2023 to have the registry in place. I would like to hear your views as to whether you see that as a practical deadline. She had indicated they still have to do systems development and get the provinces on-side, et cetera, but that’s not my area of expertise, so I would be interested in hearing both your views on those two questions. Thank you very much.

Mr. Cohen: Thank you, senator. On the issue of provinces and the federal government, just to reiterate, the federal registry is only the fourth- or fifth-largest corporate registry in the country. If the federal government made a registry on its own and we stopped there, that would not be effective in addressing our money laundering problem in Canada. You need the provinces — especially the big provinces of Ontario, B.C., Quebec and Alberta — but you also need the small provinces. Let’s remember that for our neighbours south of the border, some of the worst secrecy jurisdictions in the U.S. are small states such as Delaware, South Dakota and Nevada.

This is the problem. You can’t take this as an isolated, localized issue. You have to look at it from a national perspective and even an international perspective. I will say that on the need to get the provinces on board.

In terms of the 2023 deadline, we were exceptionally pleased to see the government speed up the deadline from 2025. It is possible the consultations will happen this summer to get legislative proposals in place. Our coalition, along with our partners at Canadians for Tax Fairness and Publish What You Pay Canada, has been looking, for a number of years, as you said, since the government made these announcements, to develop technical proposals, look at the privacy implications of the registry and make legislative proposals. We’re more than happy to contribute to and participate in consultations to get this ready for 2023.

Mr. Tassé: If I may add to what Mr. Cohen was saying, it will increase the transparency for sure. The only issue once again is here we’re talking risk mitigation; we cannot talk about risk elimination. If bad actors continue to use nominees, how will we be any further ahead with that registry? If the professionals such as accountants act as nominees, then they have to report it. But what if the nominees are lawyers? You will end up with a registry that will make you a list of lawyers. You might have a situation where there are 276 companies that all have the same head office, which is a law firm, and the same lawyer as the director, so it’s really questionable.

The Deputy Chair: Thank you, Mr. Tassé. That was a very important final point, so I’m glad you made sure to add that in.

[Translation]

Senator Massicotte: I would just like to say something to Mr. Cohen and Mr. Tassé, to begin: Congratulations, because the corporate registry is so important for our image and our situation; hats off to you. I encourage you and congratulate you. Don’t give up. I know what kind of a threat this can be.

[English]

Let me ask a question of Mr. Cohen. We talked about the freezing of assets in recent cases of Russia and so on. There was a program on television last week where they were actually talking about that law which already exists in the United States. It’s not as simple as what we would like to believe. To my comfort, it’s not as simple as we would like to believe. Today our disfavour is with Russia, but we see the dislike for our enemies all the time.

In this case, the program was saying that, in spite of the law existing in the United States to allow them to seize the assets, for them to gain real beneficial control of the asset or the yacht or whatever, international law does not permit that you take away the asset and then you run away with it.

You have to prove that it was actually bought or possession was gained by legal means, which means it seems to be a lot more complicated than we think it is. Frankly, I think it’s a good idea because otherwise everyone will accuse every other country of the fact that, no, this is an asset. “You’re not a good fellow, so you must have stolen it and I’m going to take it all.” You can’t live that way. Do you want to comment and clarify that? It seems to be totally contrary to what Canadians are thinking.

Mr. Tassé: You brought in a really good point: Where did the money come from? If you want to seize something, you need to prove where the money came from — that it came from an illicit source. The biggest challenge is all about where the money comes from. You tried to follow the money and, oh, the money came from the trust account of a lawyer. Now you’ve hit a dead end because you cannot know how the money came to be in the trust account of the lawyer. On the other hand, if they used their bank account and transferred the amount without going through the lawyer’s trust account, and they’re not using the lawyer as a nominee, then — that’s right — this new registry will help us identify where the director is and still be able to go ahead and maybe seize some of those assets.

But right now, that’s the problem with international law. When we say to listen to the lies and follow the money trail, now we have an issue because the money trail has hit a dead end. That’s the biggest challenge.

Mr. Cohen: Thank you for the question. I couldn’t speak to the specific law on jurisdiction — about being able to go after assets jurisdictionally. That said, to Professor Tassé’s point about the resources and technical tools required, I would take this opportunity to talk about the beneficial ownership registry as one tool we need if we want to even investigate, as you say, and show the evidence that we are, in fact, seizing assets that are tied to kleptocracy and make that paper trail.

Also, Canada needs to better fund its white-collar crime investigative powers. There has been a large focus on the Financial Transactions and Reports Analysis Centre of Canada, or FINTRAC, over the years. It is perfectly appropriate to fund FINTRAC, but we also have to support funding for the RCMP to conduct proper investigations and for our securities regulators and our investigators. It’s not just a matter of funding, but of human resource structuring. I’ve been seeing articles from the RCMP that they are looking to laterally hire experts on financial crime, which is excellent and something they need to do. I hope that Public Safety Canada’s reviews, as was noted in the budget, that look into a financial crime agency dig into these kinds of root- and systems-level issues that we’ve been facing over the years. I hope that we can have the opportunity to direct them to properly conduct these kinds of investigations, as you rightfully say.

Senator Massicotte: Mr. Cohen, in answer to my question, you said you have to prove that it’s part of the oligopoly system of Russia. But just because you may be a member of — our communications companies in Canada are oligopolies, but we don’t put them in jail.

You have to do more than simply prove they’re part of that circle. You have to prove that the asset was bought with illegal funds or maybe lost funds. Isn’t that the case? We use those words very loosely, but is that not the case?

Mr. Cohen: I didn’t say that it’s just for oligopolies. I’m referring to all kleptocracy, and that does connect specifically to corruption and to actually abusing one’s position of power and stealing from the state, whether it’s Russia or another country. I’m not specifying any country; I’m looking at this from a very systems-level perspective. We need the resources to look at the kleptocratic individuals, and, as Mr. Tassé has been emphasizing, their enablers have to be held accountable for allowing the kleptocracy to happen.

The Deputy Chair: Thank you very much, Mr. Cohen.

Senator Yussuff: Let me first thank our two witnesses.

For all the people who have been working and trying to get this registry set up, it has been many years in the making to see the first part of this starting to happen, and we can all feel excited that something good is happening. But there is a huge gap between what the registry will provide in terms of information and, of course, the challenge of how that information will be used in a way to deal with some of the issues that have been brought forward by law enforcement agencies and others in regard to Canada being a haven for money laundering and corrupt individuals using this country as a safe haven for their crimes.

Going forward, given the role of the director once he or she is appointed, do you see the director having the authority to share the information they receive broadly with other agencies in regard to going after these individuals? That’s if we are able to know who they are in regard to dealing with some of the issues that have been identified in terms of money laundering, crimes committed in other countries and money laundering in Canada.

How do you see the agency acting? How will the director facilitate the things we need to see happen to show that this will get at some of the issues that have been identified in many other agencies around the world?

Mr. Cohen: Not only would the registrar have the power to share information in a method that is compliant with privacy laws, but we will need to ensure the registrar has the power to be proactive in their own right. We need to give the registrar the powers to proactively review the data that’s coming into the registry, investigate it and distribute any punishment that comes into the legislation for the violation of intentionally inaccurate information or information that is shown to be connected to money laundering.

This is one of the cases, say, with the U.K. registry. The United Kingdom had the first publicly accessible registry and lacked this proactive investigative power. It’s something that they’re looking to review.

The land ownership registry in B.C., while a huge step forward and something that should be applauded, also still has that gap. That’s something we hope to see fixed in British Columbia.

The Deputy Chair: Thank you very much, Mr. Cohen.

Senator Smith: My question is for Mr. Cohen and Professor Tassé.

Years ago — and Senator Massicotte would remember this because I think we were both on the same committee as very young and up-and-coming senators on the Banking Committee — we had a visit from the RCMP and FINTRAC. At the time — this goes back to 2010 or 2011 — FINTRAC was facing some challenges. I’m listening to everything, and I think it’s fantastic to have the college and people doing investigations.

But there has to be an enforcement arm that will be connected and very strong. It’s great to have people who are analyzing things, but unless you have an enforcement arm that has the powers to get in there, dig around and take that physical action, this may be one of those things where, 10 years from now, we’ll still be talking about what we started and have not had any success because we have not combined the analysis with the actual enforcement. Could you comment on that?

Maybe I’m completely wet, but I remember we talked about this. We had visits, and the problem in terms of the enforcement side seems to be the same problem 10 years later that was there back in 2010. Maybe you can comment on that and tell us if you know more about the relationship with the RCMP and FINTRAC. What can we glean from that in terms of a positive direction moving forward?

Mr. Cohen: Directly to your point — thank you for making that observation, senator — there needs to be resources put into investigative powers, and prosecution powers as well.

I’m going off anecdotal evidence, and this is why I look forward to Public Safety Canada’s consultations on establishing a financial crimes agency that was mandated in the budget. My understanding is that there are not enough resources put into prosecutions on, let’s say, white-collar crime in Canada. That’s not to say anything against those prosecutors who are working in the area. The question is: Do we have enough prosecutors and do they have the right incentives to go after highly complex cases?

We hope that having beneficial ownership transparency will help them in their investigative powers, but we have to look at the resources needed — not just to say, “Aha, there is money laundering happening,” but to actually create the punishment and stop it. I agree with you that that can’t be short-changed once we have the registry.

Mr. Tassé: I agree with Mr. Cohen. I will go back to the basic issue I have had for many years: How will you prosecute me if you don’t know who I am?

It’s true that the RCMP and FINTRAC have been saying for a long time that we need a public registry to know who owns those companies. Right now, what you will have is a registry of good people, the people who are the real owners and have no problem saying they are the real owners. But are you going to have a registry of people who hide behind nominees? I think that will be tough. How will you identify the beneficial owners if you still have nominees who do not have to disclose who they are representing? That’s the big issue.

Senator Smith: That leads us into the issue of the relationship between the registries and the colleges and the enforcement group. What’s the next step? Congratulations, you’re setting up the registry, you’re setting up the college, but we know that there have been challenges with FINTRAC and the RCMP over time. What steps need to be taken so that you folks can actually mobilize and get to that next step? Maybe it’s premature, but is there a plan?

Mr. Cohen: I’m not sure I entirely follow the question, especially on the colleges.

The Deputy Chair: Senator Smith is asking what the plan is to make sure we increase enforcement action in the future. What recommendations do you have?

Mr. Cohen: So far, there is no specific plan. Our focus has been heavily on the beneficial ownership registry.

As I said, if Public Safety Canada does a thorough review in their establishment of a financial crimes agency, we might see that maybe a new agency isn’t required, but that all we need is to actually just increase the resources that have been called for by our investigative and prosecutorial services for ages. That might come out of that review, and then we can have that plan to boost resources adequately.

Senator Loffreda: Mr. Pink, do you feel the government has struck the right balance in managing statutory immunity and the responsibility and accountability of certain persons in fulfilling their responsibilities, such as members of the board and employees? I would like you to elaborate on that.

Mr. Pink: We have had many discussions with respect to what should be included in statutory immunity. I think the provisions that are in the bill both meet and perhaps even exceed our expectations in terms of the scope — and, in my view, the appropriate scope — to protect those who are doing this work at the board level, at the decision-making level in terms of the committees and, at the staff level, those who investigate their immunity.

I have been a legal regulator my entire career. I know that people don’t like to be investigated by their professional regulator, and there will always be individuals who will seek to attack those who are doing what they are statutorily mandated to do. This provides key protection, because it allows the college to stop and the court to say, “You cannot sue these people, because they are immune.” That doesn’t mean that if the college messes up it’s not liable, but the individuals are protected and that’s what’s important.

The Deputy Chair: Thank you for the clarification on that point, Mr. Pink. It is very helpful.

We have come to the end of our questions, but I have one last one to Mr. Cohen.

In the package of items needed to move forward, I want to ask about the value of digital identity from an individual identification standpoint as one of the tools. Since you’re here, I thought I would ask you. I see your eyes looking up. Maybe we’re off base on that.

Mr. Cohen: No, digital ID is often talked about and is a very important component of beneficial ownership transparency. There are a lot of experts who could talk deeply about this. I know a little bit about it, but yes, it is very important.

The Deputy Chair: Dynamite. Thank you. I just wanted to see if I could get that information from you. It was helpful for me in the work I’m doing.

Thank you, Professor Tassé, Mr. Cohen and Mr. Pink. If you have any insights into the secret sauce or the lessons learned that have allowed you to cause legislative changes within a year and that have moved so quickly through government, we want to know how to do that too. Congratulations in your work in that regard.

Senators, we are at the end of our time today. Thank you to our witnesses for appearing this evening, and thank you to our translators, stenographers, analysts and clerk.

(The committee adjourned.)