THE STANDING SENATE COMMITTEE ON BANKING,
TRADE AND COMMERCE
OTTAWA, Thursday, November 27, 2014
The Standing Senate Committee on Banking, Trade and Commerce, to
which was referred Bill C-8, An Act to amend
the Copyright Act and the Trade-marks Act and to make consequential amendments
to other acts, met this day at 10:30 a.m. to give consideration to the
Senator Irving Gerstein (Chair) in the chair.
The Chair: Good morning and welcome to the Standing Senate
Committee on Banking, Trade and Commerce. Today is the first meeting on Bill
C-8, An Act to amend the Copyright Act and the Trade-marks Act and to make
consequential amendments to other Acts. Known as the Combating Counterfeit
Products Bill, the purpose of Bill C-8 is to combat counterfeiting by amending
the Copyright Act and the Trade-marks Act to strengthen enforcement. The
amendments made by the bill enact new border enforcement measures and create new
civil causes of action and criminal offences.
We are very pleased to welcome the Honourable James Moore,
Minister of Industry, to speak about the bill. Minister Moore has had a most
distinguished parliamentary resumé, having served as a member of Parliament
since 2000. Minister Moore has held several positions in government. He served
as Secretary of State for the Vancouver Olympics, the Asia-Pacific Gateway and
Official Languages, thus becoming the youngest cabinet minister in British
Columbia's history and the fourth-youngest cabinet minister in Canadian history.
Before being appointed Minister of Industry in June 2013, he served as Minister
of Canadian Heritage and Official Languages for several years.
The minister will be with the committee for approximately one
hour, and his officials will be here to respond to questions for the balance of
The minister is ably accompanied this morning by Paul Halucha,
Director General, Strategic Policy Branch, Industry Canada; John Knubley, Deputy
Minister, Industry Canada; Superintendent Jean Cormier, Director, Federal
Coordination Centres, RCMP; and Peter Hill, Associate Vice-President, Programs
Branch, Canada Border Services Agency.
Minister Moore, welcome. The floor is yours, sir.
Hon. James Moore, P.C., M.P., Minister of Industry: Thank
you, Senator Gerstein, for the overly generous introduction, and thank you for
introducing the folks who are flanking me and who will assist me in answering
any questions that you and your colleagues may have with regard to Bill C-8.
Bill C-8, the combating counterfeit products act and our
government's effort to stop goods from entering the Canadian economy is
something that's been around for a long time and I think is something that needs
to be addressed. As this committee well knows, our government has worked hard to
modernize Canada's intellectual property laws to bring them into the 21st
century. As a matter of fact, I know some members of this committee were part of
the discussion about the Copyright Modernization Act when I was before the
Senate committee in that regard.
We promised to modernize Canada's Copyright Act, and our
government delivered on that commitment. We introduced and passed a bill that
balanced the needs of creators with those of consumers. But this was of course
only part of the solution.
Canada continues to open up new markets and expand trade around
the world. As you know, our government recently signed two of the most
comprehensive trade agreements in history with Korea and the European Union. The
latter will provide preferential market access to more than 500 million
consumers and to its annual $17 trillion in economic activity.
Technological change has made trade faster and more
sophisticated. The world is quickly realizing the importance of modern,
responsive and effective laws to ensure sustained economic growth and job
creation. We are no longer simply trading goods and resources to a few close
allies. In today's modern economy, we are trading physical goods and
intellectual property to more countries and more people, and we're doing so more
frequently. With this increased trade comes great opportunity and, of course,
reward, but equally responsibility. In trying to exploit these opportunities, we
cannot ignore the risks, namely those presented by theft and the resale of
Canadian intellectual property. We have already taken the necessary steps to
bring our domestic copyright laws in line with international standards.
As this committee well knows, having studied the issue on several
occasions, work remains to ensure that goods that violate Canadian laws are not
allowed into this country for commercial sale. Not only do such goods undermine
the business of legitimate Canadian companies, they all too often represent a
threat to the health and well-being of Canadian families.
The bill that's before you will amend the Trade-marks Act and the
Copyright Act and will give rights holders, border service officers and law
enforcement officers the tools they need to work together to directly confront
the growing threat of international counterfeiting and piracy. In today's world,
intellectual property rights are at constant risk. Counterfeit and pirated goods
are increasingly finding their way through our borders and into the Canadian
market. The retail value of counterfeit goods seized by the RCMP has steadily
increased from $7.6 million in 2005 to $38 million in 2012. That's a 400
per cent increase within only seven years. That is money and jobs that are being
taken away from Canadians.
To give you a context, let me also explain how counterfeit goods
can impact our lives.
First of all, counterfeit goods can threaten the health and
safety of Canadians. We are not talking just about counterfeit Gucci bags that
are sold on the street. Counterfeit airbags, toothpaste, children's toys, and
food and beverages all are illegal products that can put the health and safety
of Canadians at risk.
Second, there is a direct link between counterfeit goods and
Criminal groups use the profits from pirated goods to fund other
Third, counterfeit and pirated goods are a threat to economic
growth and jobs. When counterfeiters steal intellectual property, it is Canadian
businesses that are most affected. This is not just through lost revenue from
products gone unsold, but also the damage done to brand integrity. When
criminals bring counterfeit goods into the country, they are looking to make a
quick profit, and they tarnish the strong reputations forged by quality Canadian
Take for example Canada Goose, which has built a reputation as a
world-leading manufacturer of high-quality winter wear. Here is a company that
has spent valuable time, energy and money to create a brand that is known all
over the world and is synonymous with quality. Canada Goose's branding continues
to take a hit from subpar knock-offs coming into Canada from abroad. Here is an
example of a counterfeit Canada Goose jacket. I have here, by the way, also a
counterfeit Canadian hockey sweater, which is good quality and not far off from
what the real ones actually look like. But when they fall apart after the first
couple of washings and kids get upset, you can imagine how the retailers and
creators of these products feel when kids come back with products to their
parents that have fallen apart because they're counterfeit or they've been built
with materials that are dangerous to their health.
Kevin Spreekmeester, Vice-President of Global Marketing at Canada
Goose and Co-chair of the Canadian Intellectual Property Council, has said:
“Canadians have long been victims to the illicit counterfeit trade and the new
measures announced today should be welcome news for consumers, businesses and
Food & Consumer Products of Canada agrees that, and I quote:
Counterfeit goods are a very real threat to the health and safety
of Canadians. Their presence in the marketplace poses a risk to Canadians and
hurts our economy. Our members applaud this government for taking strong and
decisive action to address this.
The Canadian Manufacturers and Exporters also said, “We
congratulate the government on taking action to improve the business conditions
for companies investing and creating jobs right here in our communities.”
So the need for the legislation is quite clear. The legislation
that's before you for deliberation will give Canadian rights holders and law
enforcement the tools they need to confront this threat at the border and to
take action against those who profit from the trade of counterfeit and pirated
goods. It will give the authority to border officers to detain suspected
counterfeit shipments and notify rights holders of the detention of those goods,
whether the suspected goods are being imported or exported, in either direction.
It will create a new process called a request for assistance,
which will allow rights holders to work with border officers and request that
they detain commercial shipments suspected of containing counterfeit goods.
Mr. Chair, we undertook serious study and debate of this
legislation before the Parliament of Canada on the house side. The Standing
Committee on Industry, Science and Technology amended the bill to make it
stronger and to respond to stakeholder comments that had been raised. Bill C-8
also received, I should point out, all-party support coming out of the
Parliament of Canada, and I think that we can agree that these changes are
certainly necessary and long overdue. So this legislation has been studied. I
gather there has been some frustration noted about the shortness of time of the
proposed examination of this legislation. Obviously it's up to this committee to
decide its timelines. But the legislation is overdue. It was given thorough
study on the house side. We did accept reasonable amendments from opposition
parties about how the legislation can be improved, and they were certainly taken
into account. And ultimately when the legislation was put before Parliament for
a full vote, it had the support of all Conservative, all Liberal and all New
Democrat members of Parliament.
So I would certainly urge all members of this committee to pass
this legislation to ensure that Canadian rights holders, customs officers and
law enforcement have the tools they need to fight counterfeiting and piracy
domestically and at our borders. Thank you very much for your time.
The Chair: Thank you for that opening statement.
The minister will be with us until approximately 11:30. Other
members of the augmented panel will be with us for the whole time.
Senator Hervieux-Payette: Welcome, Mr. Minister. I have
two questions. First, in your speech, you spoke about an increase from
$7.6 million in 2005 to $38 million in 2012. I find it absolutely absurd to
believe that the counterfeit goods market in Canada is only $38 million. I would
put it rather in the hundreds of millions.
What steps do we have to take to reduce this problem? You also
say that combating counterfeit goods is good news for consumers, for business
and for retailers. Which individuals will suffer the consequences in large chain
stores like Costco, for example, if they have counterfeit goods, in comparison
to small gift shops where most counterfeit items are likely to be found? Is it
the person selling them? Which individuals will be arrested and who will do
that? What mechanism to stop counterfeiting will be used?
Mr. Moore: It is complex. It depends on the circumstances
and the details of the investigation. The individuals are the ones who pay, who
handle the products and who have received benefits from the transactions. The
investigators will determine the best way of finding those who have profited
from this criminal act.
As for your first question, my answer is yes. Those amounts come
to us from the RCMP and, in my opinion, they are probably much higher. That is
the information we have at the moment. If the legislation were already in place,
as it is in other countries, the amount would be much higher because we would
have the ability to conduct the necessary investigations.
This bill will create disincentives for those who try to engage
in this kind of business practice. Superintendent, perhaps you want to speak to
the scale of the investments I mentioned — the growth of 400 per cent. The
senator suggested that may be an underselling of the facts.
Superintendent Jean Cormier, Director, Federal Coordination
Centres, Royal Canadian Mounted Police: Yes, certainly. I would like to
highlight that when statistics are provided, it's not always a good way to
measure the scope of the problems.
I am sorry, I will continue in French. Releasing the statistics
provides an indication of what we have detected, but it does not necessarily
indicate the magnitude of the problem. The figures we release come only from
what we have discovered. We recognize that what we have discovered usually
represents only a small part of what is going on.
As for effective steps to combat the problem, new legislative
measures are necessary. There are already court cases under way that demonstrate
the results of these kinds of investigations. New legislation would give us
additional tools that will help us in combating this plague, in collaboration
with our partners like the Canadian Border Services Agency.
Mr. Moore: It is a valuable point, senator; and some
international data is relevant. In 2012, keeping in mind the Canada-Europe free
trade agreement, border officials from the European Union detained over 90,000
shipments containing almost 40 million articles. This represents a value of
almost 900 million euros or $1.3 billion. The number of seizures of counterfeit
and pirated goods conducted by U.S. custom officials in 2012 reached almost
23,000 with a retail value of $1.2 billion. Counterfeit alcohol in the U.K. was
approximately $2 billion per year. Over one in five Japanese companies sustained
losses from counterfeiting in 2011.
Globally, this is a serious problem. Of course as you all know,
we've gone from Canada having binding free trade agreements with five countries
to 43 just in the last couple of years; so this area certainly needs addressing.
Senator Black: I have two questions for you, minister. My
first question relates to interventions made to various members of this
committee from our friends in the U.S. suggesting that the bill should go
further to empower our officials with the authority to examine goods in transit
to the U.S. Are you able to respond to that?
Mr. Moore: Yes. I've met with Ambassador Heyman, and
Secretary Pritzker was in Ottawa. I spoke with her on the subject matter in
Washington, D.C., last month as well.
The main objective of Bill C-8 is to protect the Canadian
marketplace; and goods destined for the Canadian marketplace will be confronted.
Frankly, the short answer is that we don't have a customs union with the United
States. We're a country of 35 million people. We have 293,000 kilometres of
coastline; we have the longest and most commercially successful border on the
planet with the United States; and we don't have a customs union. It's a bit of
a stretch for someone in the American administration — I made this clear to
them — to ask the Government of Canada and the Canadian taxpayers to act as a
border filter for all goods destined for the U.S. market.
We have procedures in place that will stop goods going into the
United States. The Food and Drugs Act, the Canada Consumer Product Safety Act,
the Transportation of Dangerous Goods Act and the Criminal Code provide powers
to the CBSA, Canada Border Services Agency, and the RCMP to stop goods headed to
the United States that may cause any damage possibly to an individual or to
public health and safety and so on. The idea that Canada would act as a customs
agent for the United States, frankly, is not on the table. The scope of the bill
will protect Canadians and the Canadian domestic market; and we think this bill
achieves that goal.
Senator Black: Certainly, this is important proposed
legislation; I clearly accept that. To my colleague's point, quite clearly
there's more work to be done. Therefore, it becomes a question of resources.
Second, do the CBSA and those empowered to enforce the
legislation have the appropriate human and financial resources to do the work
envisioned by this bill?
Mr. Moore: Yes. Testimony and evidence were provided to
that effect at the house committee. I'll certainly invite Mr. Hill and
Mr. Cormier to double down on what was said previously in a minute.
I would also point out the international scope as well. The scope
of Bill C-8 was requested of the Government of Canada in order for us to have a
seat at the table for the Trans-Pacific Partnership. Our relationship with the
United States on these cross-border issues in everything we've done from the
Beyond the Border agreement, the Windsor-Detroit crossing and the twinning of
the Ambassador Bridge, and the Regulatory Cooperation Council, we've worked very
well with the U.S. government, effectively to “de-thicken” the existing border
between Canada and the United States. And we think we've done that well.
This proposed legislation contributes to a more effective
relationship between Canada and the United States on raising Canada to the
international standard and meeting the standard that the American government
asked the Government of Canada to meet in order for us to move forward with our
participation in the Trans-Pacific Partnership negotiations. We've checked all
the necessary boxes and are doing what is appropriate to protect the Canadian
On the question of resources, I turn to Mr. Hill and Mr. Cormier
to speak for themselves.
Peter Hill, Associate Vice-President, Programs Branch, Canada
Border Services Agency: Thank you very much, minister. Yes, the agency is
sufficiently resourced effectively to implement this proposed legislation. The
CBSA has some 5,600 border service officers working on a day-to-day basis,
screening commercial shipments that come into this country. The agency currently
administers some 90 pieces of legislation on behalf of the Government of Canada,
and this legislation would give the CBSA the authority to proactively
temporarily detain shipments that are suspected of containing counterfeit or
pirated goods. We would integrate that work into our current practices, and we
believe that we have the officers and the training required for them to carry
out this work in a very professional manner.
Senator Ringuette: Good morning, Mr. Minister. I live in a
community in New Brunswick on the border with the state of Maine. I quite agree
with your position on the American border services. There are limits.
One of the first questions I have is on the data that you gave us
earlier in regard to what is happening in the EU, particularly in the U.K. Does
that data also give you where these shipments are coming from?
Mr. Moore: Some of it does, some of it doesn't. Mr. Hill
or Mr. Halucha might want to speak about some of the data and the international
dynamic of where goods are coming from. We know one large source, which is
Mr. Hill: The information we do have clearly indicates
that currently and in the recent past China, including Hong Kong, and Singapore,
India and Pakistan are some of the primary sources for counterfeit and pirated
goods that are coming not only to Canada but to North America.
We have very good relationships certainly at an agency-to-agency
level with our counterparts in U.S. Customs and Border Protection, as well as
with the Mexican customs officials, and they're seeing similar patterns of
Senator Ringuette: You already have a target of incoming
shipments that you can focus on in regard to policing counterfeit goods, do you?
Mr. Hill: I think, yes, we have a good domain awareness of
the threats and the patterns that need to be addressed further through these
enhanced tools that we would receive through this legislation.
Senator Ringuette: Do we have any evidence that some
counterfeiting is being made in Canada for the Canadian market? That's also a
question mark in regard to this issue.
Mr. Moore: Sure. Intellectual property violations do
happen all the time. There are people who would take DVDs and CDs, for example,
and burn them and stamp them illegally and rip off our artists. I know you in
particular have spoken in the past and been quite articulate on the need to
protect our artists from that kind of theft that happens in Canada as well.
The copyright modernization act protects goods within Canada.
This is legislation that protects goods that are being shipped out of Canada or
goods that are coming into Canada. But I have no doubt that there are goods
beyond the cultural community that are being manufactured in Canada and sent
elsewhere. Goods are captured at the Canada-U.S. border quite frequently.
I'm not sure if you want to give examples of some of the things
you've caught in your nets over the years.
Mr. Cormier: Yes, I sure can. Over recent years the RCMP
has conducted investigations in Canada, in partnership with CBSA, which related
to the counterfeit manufacturing of goods in Canada. I have a couple of examples
here that I can provide. In one of them in particular, back in February 2014,
charges were laid in relation to a clandestine lab that was dismantled in
Longueuil, Quebec, by the RCMP and also CBSA. Upon investigation, steroid and
substances that could have been used to produce over 280,000 counterfeit pills
of a prescription-type drug were identified. The investigation was conducted in
collaboration with CBSA, as I mentioned, and the Longueuil police service and
led to the seizure of more than 15,000 counterfeit pills, 22,000 steroid pills
and 5 litres of liquid steroid. The packaging quality of the various products
looked deceptively similar to real packaging, and the seal and label used for
those products would have led a consumer to believe they were legitimate
Senator Ringuette: When you state there was $38 million
worth of counterfeit goods in 2012, would that include both what is made in
Canada and also shipments from foreign countries coming into Canada?
Mr. Cormier: Yes, the statistics for the RCMP that
produced those numbers would combine those, correct.
Senator Ringuette: But that would not include the Border
Services’ statistics, or yes?
Mr. Cormier: I'm not sure. Would they include your
Mr. Hill: I think it would. I'd have to actually verify
the answer to the question, but my sense is that it would include some of the
statistics that relate to the CBSA.
Senator Eaton: Thank you, minister, for coming.
You've made mention a couple of times about Canada's free trade
deals and specifically with the TPP, and gentlemen, you talked about China,
Singapore and Pakistan, all which are very much a part of the TPP. Will you have
agreements and do we have agreements with the EU, for instance, to work with
their police? Is it going to be hard for countries like China's own law
enforcement to crack down on the counterfeit? Will you have relationships with
them, or will you have to wait until the goods actually get to the Canadian
border to crack down on them?
Mr. Moore: How do I say this diplomatically? With some
countries, where there's a will there's a way. I'll say that. With other
countries, yes, we do have obviously much friendlier and cooperative
arrangements when it comes to the sharing of information. Obviously the entire
effort of the Beyond the Border agreement is to try to do that, to share
information with the United States because of the fluency of our economic
opportunities, north and south, across our border.
Of course it's a very different relationship in our ports of
entry, for example, at the Port of Vancouver and the shipment of container goods
and commercial goods coming in. One thing that's important to point out is that
this legislation is about commercial exchanges, not somebody who on an
individual basis goes to a country, visits a market that may have sketchy goods
and comes back with a product. This is about commercial quantities. Frankly,
otherwise, it would be impossible for Canada to have any kind of relationship
with people moving in and out of countries around the world.
Of course when you visit a country, you have to obey the laws of
those countries and not violate the intellectual property laws that impact
domestically in those countries.
Yes, obviously we work on having a more fluid and effective
trading relationship with all countries in the world, including sharing of
information, but I do think it's important to underline, again, that this
legislation is bringing us up to the international standard that other countries
already impose on themselves. Other countries have mirrored legislation to this
that is protecting their consumers from batteries like this that catch fire when
you put them in your phone. We don't have these protections. We need these
protections for our domestic market.
Senator Eaton: When you talk about international
standards, does that mean that most countries in the TPP are also up to
Mr. Moore: They are. We are ascending up to the standard
in order to be at the table. Certainly there are questions of enforcement —
enforcement sincerity, enforcement capacity and enforcement dynamics in
legislation that is different in jurisdictions around the world, to be sure, and
we're always mindful of that and it's always a pursuit. Not to put too fine a
point on it, we are lagging behind where we need to be domestically.
Senator Eaton: That's very diplomatic, minister.
Mr. Moore: We'll see how it gets translated by the media,
but thank you.
Paul Halucha, Director General, Strategic Policy Branch,
Industry Canada: Adding to the minister's comments about information sharing
with other countries, one of the key aspects of this bill is that it will
provide ex officio authority to border agents, allowing them to stop goods or
temporarily detain goods.
It also puts in place the RFA system that the minister mentioned
in his opening. This will effectively allow rights holders to register their
information at the border, which will be an extremely powerful tool for border
agents to share that information. If they have registered marks on there, it
will be easy for them to consult what's in the database and have discussions and
information exchanges with customs officials in other jurisdictions.
These are two examples of how this bill will support
international efforts to deal with counterfeiting.
Senator Massicotte: Thank you for joining us,
Mr. Minister, and thanks also to your colleagues. We are dealing with an
You mentioned the fact that Canada is on a list of countries not
taking necessary measures against counterfeiting and the fact that we are a
little behind in complying with international standards. Do you believe that,
given this bill and the budgets we have allocated, we will be able to catch up
and correct the problem? Is this enough?
Mr. Moore: Yes, it was our objective from the start to
adopt policies that would put us in the forefront on the international stage. We
have to look at the experience of other countries and the lessons we can learn
from the policies already in place in some other parts of the world. Of course,
our approach will allow Canada to reach those standards in our role as a G7
country that has unprecedented free trade agreements with other countries of the
world. We have to find the policies and the amounts of money we need.
I am told that, since our government was elected in 2006, we have
increased funding for border services by 26 per cent. It was important to do
that. Of course, demands on funding change, but this is one of the government’s
stated objectives: to do what it takes to get the money we need. The objective
of Mr. Hill and his team is to protect our borders. You heard Mr. Hill testify
that the agency has the funds it needs as well as the policies and
infrastructures it needs to put in place a Canadian approach.
Senator Massicotte: I kind of understand why the parties
are not affected; those who profit from the counterfeiting will be. It is
important to prohibit counterfeiting if it is unfair and we recognize that it is
unfair for those who have made any kind of product. I understand that it is a
difficult situation to manage. But why do we allow individuals to buy products
that everyone knows are counterfeit? Why is it legal to do that when everyone
calls the practice unacceptable and we are going to implement measures to stop
it? Is that a political call? In France, for example, it is clear that buying
counterfeit projects is against the law, even for individuals. Why is that not
the case in Canada?
Mr. Moore: It is illegal to sell them, but these are
In Canadian intellectual property law, these are private rights.
If you've created this hockey jersey and somebody is selling it and they're
counterfeiting your product, you as the creator of the good are protected within
Canada under the Copyright Act, and you can pursue someone who is stealing from
This legislation would now go after a person who is stealing from
you, creating a good and selling it elsewhere in the world, or stealing your
idea, creating it in country X and bringing it into Canada.
Those three dynamics, making it and selling it within Canada;
making it and exporting it from Canada; making it, selling it from abroad and
bringing it into Canada, two of those three criminal acts against your IP will
now be covered by virtue of this legislation.
Senator Massicotte: But when the tire hits the road is
when the consumer — it's basically greed. It's money. The consumer buys the
good. That's where the whole transaction is completed. Why is it not illegal for
the consumer, the retailer, the individual, to buy that good? He clearly knows
it's an illegal product. Why is that permitted?
Mr. Halucha: You're talking about if a retailer is
purchasing, the individual purchasing is —
Mr. Moore: No. If Joe comes off the street and goes into a
kiosk and buys this one hockey jersey, why isn't the purchaser committing a
Mr. Halucha: The objective here is to deal with the market
effects of counterfeiting. There are linkages to innovation. We want to have
firms innovating, as the minister said in his opening. If I've spent money to
develop a product and it's been undermined in the marketplace, what's effective
— and I think this is demonstrated in all sorts of areas of law — is to go after
the commercial scale, to get it off the marketplace.
Mr. Moore: There is not much realism here. Are you
committing a crime? Yes. But are you necessarily?
If I go in and buy this battery, do I know I'm committing a
crime? It's a counterfeit good. There is a plausible deniability; the Canon logo
is exactly as the Canon logo is. The font is exactly the same. It's in both
official languages, looks like, smells like, probably acts like. I don't know.
Are you committing a crime? I suppose.
If somebody wants to buy this jersey for $25 rather than $125,
which is probably what a typical price would be, are they complicit in it?
Maybe, maybe not. Good luck proving it.
Senator Massicotte: I appreciate that, but in a crime, as
you know, you have to acknowledge you're making a crime.
In some countries like France, for instance, I brand these. They
have a lot of luxury goods and it's their producer.
Canada Goose is a very international product. If we treasure that
ingenuity, that creativity, shouldn't we do like other countries where the
consumer clearly knows — I'm not saying if he doesn't know and he's innocent,
but when you buy goods on the street and the guy opens up his curtain and wants
to sell you a watch or whatever, unless you're asleep at the switch, you know
this is an illegal product.
Mr. Halucha: It's the practicality of enforcement as well.
In talking with rights holders, many of them won't even go after small-scale
One of the improvements we made in the bill in committee was to
add the ability, once CBSA has obtained information that a good is infringing at
the border, they can share it with the rights holder with the objective of
actually getting an out-of-court settlement.
Practically, there is not going to be an incentive for a rights
holder to go after individual after individual to try and get small damages in
court. What they want to be able to do is get the product off the market.
I would also note as well that in the civil causes of action in
the bill, we've expanded where the rights holder can take action. Currently
under Canadian law it has to be on the market before a rights holder can take
action. We've expanded that so it can be anywhere from the point of manufacture
to distribution, anywhere along the supply chain. This is all with the objective
of keeping it off the market so that it never gets in the consumer's hands.
Lastly, I would just say that one of the benefits of the bill
being in the public domain is that it has increased education in Canada on the
effects of counterfeiting.
I think there is a perception that counterfeit goods are often
cheaper, and frankly, they're not. Consumers are often buying goods at top
dollar and only then finding out that they've actually received a counterfeit
product when, as the minister said, after three washes it falls apart or it
degrades quickly or malfunctions or, in the case of an electrical product, it
actually could catch fire or something like that. There really is an important
education element to this that we are trying to pursue as well.
Senator Massicotte: I appreciate that practicality. We
have a lot of laws, including stopping at a stop sign. It doesn't mean you have
a cop at every stop sign. There are laws that we encourage people to follow
knowing we can’t police every stop at a stop sign.
Mr. Moore: That sounds like a focused Senate private
Senator Bellemare: Thank you, Mr. Minister, and
congratulations on your bill. I believe that the economic benefits will be
greater than the costs.
I would like to pursue the issue of the costs. My sense is, and
in the light of your replies to Senator Black and Senator Hervieux-Payette, that
this bill has no financial consequences. Do I understand that correctly?
Mr. Moore: It is certainly too easy to say that there will
be no consequences. There are costs, of course. We have discussed them with the
agencies and they tell us that they have enough money to enforce these powers.
This also touches on the questions that Senator Black asked. One of the reasons
our approach is more effective for taxpayers, and also for Mr. Hill and his
team, is that we do not have the same approach as the United States in engaging
those who break the law. They have the responsibility. So basically, costs are
involved only if there is an investigation and legal proceedings.
I would like Mr. Hill to talk a little about the agency and what
it is doing to get things moving with the money available so that we get a bill
that will set guidelines for the policies we want.
Mr. Hill: This model is the detention model as opposed to
the U.S. seizure model. Right off the bat, the government is not responsible for
paying the costs associated with goods that are detained or seized. In the model
that we're proposing, it's the rights holder who would be responsible up front,
through the request for assistance process, to take responsibility for goods
that are temporarily detained to allow the rights holder to pursue civil
proceedings through the court if they choose to do so. That's one point.
Secondly, yes, there are certainly costs when you're expending
resources to this activity. As I mentioned, it is part of the ongoing activity,
in many respects. Our commercial examination is ongoing, and this will be
integrated into those activities. We will, of course, train our officers to deal
specifically with this legislation and to detect pirated goods. The process that
will be established will ensure very effective information exchange between
rights holders and the CBSA. Through that exchange of information, we will, over
time, develop a much more robust and mature capacity to detect indicators for
pirated goods. There is a training aspect.
One of our operating principles is pushing the borders out as
part of our modernization. We do establish information-sharing arrangements with
other governments. As the senator questioned with respect to China, I would like
to highlight that, as a result of the Prime Minister's recent trip to China, we
have established a customs mutual assistance arrangement, agency to agency, with
When you look at complementary measures such as this, we're
finding ways to risk manage and to focus on areas of high risk and facilitate
the flow of people and goods that are lower risk and therefore expending fewer
resources on low risk and focusing precious resources on areas of high risk.
Senator Bellemare: Mr. Minister, does the bill comply with
the agreement on counterfeiting that we have with Europe? Are they connected?
Mr. Moore: Yes, those involved in this kind of business
will be aware that their intellectual rights will be protected in Canada, just
like copyright for those who wish to invest in Canada.
Senator Lang: My first question is about the CBSA and
enforcement. For members' information, we are in the process of completing a
study of the Canada Border Services Agency in the Standing Senate Committee on
National Security and Defence. We have had a review of the CBSA that's been
under way for a number of months this past year.
I want to go back. First of all, perhaps you could explain to us
how the system works right now. Right now, we have identified $38 million, I
believe, of counterfeit products. I'm assuming we have laid charges. With the
system the way it works now, on the ground, who actually goes and does the
investigation and lays the charges, and how is it going to change now with the
Mr. Hill: In the current system, basically the CBSA does
not have the authority to detain goods that are suspected of being counterfeit
or pirated. This bill will provide the CBSA with that authority to temporarily
detain goods that are suspected of being counterfeit or pirated and set in
motion a process whereby, first, if the agency suspects that there is serious
criminality or organized crime involved in that shipment or importation of
pirated goods, we would refer that to the RCMP, and they would have leadership
with respect to pursuing a criminal investigation, and second, if there are
suspicions that the products raise health and safety concerns, then the agency
would refer that to Health Canada.
If neither of those agencies determines that there is reason to
pursue an investigation, then the CBSA would have the authority to refer that to
a rights holder. As Paul mentioned earlier, the request for assistance is a
process whereby a rights holder at the outset will register their trademark
through the Canadian Intellectual Property Office housed in Industry Canada, and
then they may submit in advance a request for assistance to CBSA. Therefore,
when we detect a suspicious shipment, we will go into our database, see that
there was a request for assistance from that rights holder and refer the matter
That's the structure of the process that we would have in place.
We have, as you would imagine, standard operating procedures for our officers so
that they have clear direction on what their accountability and responsibility
is within a management structure at the agency. I hope that answers your
question in terms of how we would pursue these particular cases.
John Knubley, Deputy Minister, Industry Canada: It is
important to understand broadly in the bill that the processes that were trying
to put in place and the intent of the act are very much trying to balance
against abuse, on the one hand, and ensure, on the other hand, due process. It's
important that senators recognize this is how it's been designed. We're trying
to keep this balance and have built in a number of safeguards on the side of
We've already talked about a few of them, and I won't go through
all of them. Criminal provisions apply only to commercial-scale activity. The
detention authority that was just referred to is temporary. That allows a
well-functioning border and yet respects the presumption of innocence in the
case that is examined under the process of law. Court oversight is applied.
Border officers don't make decisions on infringement at the border. There is a
process that takes place.
On the damages themselves, I know there is this issue around
statutory damages, but we believe that, from a safeguard prescriptive, it's
better to pursue these damages through the court so that rights holders would
have to prove damages. Again, we're trying to get this balance between
recognizing abuse and pursuing it versus ensuring due process.
Senator Lang: If I could direct myself to another area
here, and that has to do with the actual country where the products were
manufactured. I'll use a pragmatic example. Let's say we have a shipment of toys
that arrives in Vancouver and you detain that particular shipment. You find
that, yes, they have contravened the various laws that we have. We've identified
the company that has manufactured those products. What relationship do we have
with other countries to go back to the country and say, “Look, this company has
been identified. It has been caught shipping illegal products to our country.
What are you going to do in your country to stop that particular organization
from manufacturing these and sending them to our country?” Do we have any
agreements in that context?
Mr. Moore: It depends on the country. For countries with
whom we have free trade agreements, this is partly bound into those agreements.
With other countries, it's a more challenging pursuit. If somebody sends in a
bunch of hockey sweaters with Canada spelled with a “K” and they get held at the
border, they are held at the border. We notify the person whose IP has been
stolen and let them know. The goods are held for 10 days. The person whose items
have been counterfeited can inspect them and decide whether they want to pursue
action against the person who was trying to import the items. There still is
autonomy of state power, so we don't have the right to impose or enforce laws in
other countries around the world. This is why the engagement of the Prime
Minister, ministers, members of Parliament and senators on these parliamentary
associations going to other countries and raising the issue of IP in certain
countries, China, for example, I will not be shy, is important. It is seen by a
lot of people in those countries as something of concern that needs to be
addressed if they are going to continue to build trade capacity.
As you know, China is in the process of trying to move forward
with a free trade agreement with Australia. A big source of debate in Australia
is what this means in terms of IP going forward. We pay close attention to those
debates to see if there are some things we can do to have better protection of
Canada's IP at home by having a better relationship with these countries
Senator Lang: You referred to the agreement just signed
between China and Canada. What was is it?
Mr. Hill: It’s a mutual assistance arrangement.
Senator Lang: That would be perhaps the stepping stone. If
we identify those illegal products, we would have a path to pursue in respect of
trying to ensure that they don't continue manufacturing IPs and just put them in
a different container ship.
Mr. Moore: It's about the sharing of information.
Mr. Hill: It's a sharing of information provision that, I
believe, over time raises incentive for countries, in this case China, to take
action to enforce their domestic laws.
The Chair: Minister, the focus of this bill seems to place
emphasis on consumer goods and intellectual property. Forged art is becoming an
area of concern. Is this encompassed in Bill C-8?
Mr. Moore: I would think so, yes. I wouldn't see how it
Senator Ringuette: As a follow-up to Senator Lang's
question, with regard to prosecution in Canada, the onus is on the owner of the
trademark or the patent. Is there a constitutional jurisdiction issue that
doesn't allow joint prosecution with the federal government in respect of the
consumer protection section of this issue?
Mr. Moore: I'm sorry; do you want to take another run at
Senator Ringuette: There is always a little grey area in
terms of jurisdiction and consumer protection, whether it's a federal or
provincial area. In some parts of Canada we have both.
The onus is on the trademark owner to decide whether to prosecute
the manufacturer in the event of a detained shipment. Could we not go a step
further to the matter of consumer protection with regard to counterfeit? At the
end of the day, we want to protect the consumer against these counterfeit goods.
Why are we not looking at joint prosecution to reaffirm our seriousness in
respect of counterfeit?
Mr. Moore: There isn't a need for joint prosecution as
it's purely a federal jurisdiction. Certainly, if the CBSA or the RCMP need any
assistance if charges are to be laid when a person's rights have been violated,
then certainly they would engage with any local law enforcement to gather any
necessary information to pursue such an investigation.
Senator Massicotte: Minister, this is a stupid question.
You described earlier the need to cooperate. It dawned upon me that we're
heavily reliant upon imported goods from China. The poor, small businessperson
can't sue everybody that he sees or he'd be in the courts all the time. We
advise China that the counterfeit goods are from their country, so execute your
laws. Is it against the law in China or is it against the law in Canada to
produce goods that you know probably duplicate somebody else's IP that is not
registered in your country? The party did not register in Canada for some
reason. Is it against the law to produce those goods?
Mr. Moore: That's why you have to register your IP.
Senator Massicotte: Some people might say they'll
concentrate in the United States. They have no IP in Canada or China. My point
is that you can point to China where the IP is not registered, which would be
the case frequently. They can execute only the laws in place, which means you
can talk to them a hundred times and it won't make a difference.
Mr. Moore: It's a good question, but my instinct is to say
that is why you have to register your IP and be careful about it. In some cases,
there is a bit of a grey area because an idea may not be quite so easily
defined. I suspect that it would be up to a court to decide whether an IP has
been violated and up to a declared rights holder to suggest that his rights had
Senator Massicotte: But if no IP is registered, I sense
from your answer that there would be nothing prohibiting those producers from
producing those goods, including in Canada.
Mr. Moore: As was raised a minute ago, including our stop
signs and speed limits, we live in a system of voluntary law compliance; and if
you get caught, you get punished.
Mr. Knubley: I'm not an expert, but I hear, particularly
from firms that go to China, that they will register their IP and the challenge
they have is when it goes to court and what happens when they pursue it in
The Chair: Minister, on behalf of the committee, thank you
very much for your appearance today.
Now joining Mr. Halucha, Superintendent Cormier and Mr. Hill are
Michael Ryan, Senior Analyst, Copyright and Trade-mark Policy Directorate,
Industry Canada; and Megan Imrie, Director General, Commercial Program
Directorate, Programs Branch, Canada Border Services Agency.
There will be no further opening statements, but we are going to
continue on with questions.
Senator Tannas: I would like to build a little bit on what
Senator Black was asking earlier. First of all, I certainly have understood that
the Vancouver and particularly Prince Rupert ports trumpet a competitive
advantage, a significant cost advantage, to shippers to ship goods from Asia
through our ports and then down to Chicago. That actually is a cost-effective
method that is attractive.
I wonder if you could give us some colour on how many people,
what the cost, what the implications would be of doing what Senator Black has
mentioned that our American friends would like us to do, which is to provide a
far more thorough screen on goods in transit. Have you done any modelling? Can
you give us any sense of what that might entail?
Mr. Hill: I'll ask my colleague to assist in responding to
your question. I would like to point out that we shouldn't underestimate the
importance and the advantage of the information that we will be able to share
with the Americans. We won't be seizing in-transit goods en route to the U.S.,
but in the course of our activity under the bill as proposed, the information
that we obtain, we envisage in some cases providing that to the U.S. So we would
reseal the container, it would carry on through to its destination under the
customs seal, and the authorities, our partners in U.S. Customs and Border
Protection, would be waiting to receive that container with the foreknowledge
that we've been able to provide them around the suspicions and the information
that we have been able to obtain as a result. It's important to understand that
that information is extremely important and also a cost-effective element to the
model. I'll turn to my colleague to comment further.
Megan Imrie, Director General, Commercial Program Directorate,
Programs Branch, Canada Border Services Agency: I definitely concur with
that. The only thing I would add in terms of volumetrics — you were asking about
modeling — just to give you a national picture, CBSA clears over 14 million
commercial shipments a year. Based on advanced information and intelligence and
targeting, we conduct over 200,000 examinations. The volumetrics are quite high.
The other point I would make is that if there are issues of
concerns in Prince Rupert, Vancouver, Montreal or Halifax, if there are
currently issues of criminality, if there are products that are unsafe, we are
able to refer those to Health Canada or RCMP and take action. And we would just
agree that we do. We get a lot of advanced information on shipments, which
allows us to perform our duties in terms of the risk management approach.
Senator Tannas: Just to clarify, I think we heard that
regardless of where they're going, if they're in transit and if they fall within
those designations then it doesn't matter? You've got the ability to act and
always have had the ability to act?
Ms. Imrie: That's correct.
Senator Tannas: You mentioned entering and forwarding
information. Do you do that currently now, or is this an enhancement coming via
Mr. Hill: As Megan pointed out, we do that when we come
across these cases in the course of carrying out our existing mandate. Currently
we're looking for national security threats, maybe chemical, biological,
radiological material, and we are certainly looking for contraband, weapons and
illegal drugs. In the course of carrying out those examinations, if we come
across suspected counterfeit or pirated goods, then we would provide that
information to our partners.
This bill gives us the authority to actually target for that,
which is an important step forward in terms of modernizing our framework and
aligning with frameworks of many of our trusted traders across the world.
Essentially there's no reason that Canada should be lagging behind in this
business, and this will help us align and modernize our practices.
Senator Tannas: Thank you.
Senator Ringuette: Earlier, I asked a question in regard
to the shippers. Now I'd like to ask a question or two in regard to the Canadian
Mr. Cormier, you are in the best position to answer these
questions. From what you have observed, and from the data you have gathered in
connection with the action you have already taken with that figure of
$38 million, can you easily identify those receiving these shipments in Canada?
Are those recipients wholesalers? Do they represent chains, major retail chains,
or is the intention to sell online?
Mr. Cormier: Thank you for your question. Before answering
it, let me clarify one point that was raised about the statistics given earlier
about the $38 million. I think you wanted to know whether they were RCMP
statistics or in combination with the CBSA. I should clarify that they are RCMP
statistics but they may contain referrals from the CBSA.
Now let me answer your question. I think that the CBSA could also
do so because they are the first point of contact for the large containers
arriving in Canada. I do not know if you want to comment, but I could then add a
comment about the procedures necessary for identifying recipients.
Ms. Imrie: I can try to answer your question. The program
we are going to implement will contain information that we will receive and
share with the rights holders, that is, those who are registered as rights
holders with the Canadian Intellectual Property Office.
Senator Ringuette: Perhaps my question was not clear. What
I really want is a picture of the amount of $38 million that has been
identified. What kinds of recipients in Canada are waiting for those shipments?
Mr. Cormier: The answer is yes, you identified them
yourself. Are they wholesalers, retailers, chains? The answer is yes, all of the
above. The recipients can come in various types.
Senator Ringuette: You know that for a fact?
Mr. Cormier: We know for a fact that the largest
quantities come from wholesalers. That is why we need to identify the
recipients, of course. It is a major process that involves the CBSA. It also
involves investigations that can be complex. The reason we want to seek new
tools in the bill is so that we can have new investigative options that will
move the more complex investigations forward.
Senator Ringuette: In the merchandise that we have been
told is worth $38 million, was there any food?
Mr. Cormier: I do not have that information. Nor do I know
whether we have access to it.
Mr. Halucha: The largest category that was reported was in
textiles. I can't remember if food was on the list, but it was not one of the
principal areas. It's principally consumer products that are the highest.
In terms of the criminal offence that's been added in as a result
of this bill, there is a component that you have to do it knowingly. There's a
mens rea part of the offence. You can't be found guilty if you've
inadvertently signed a contract with a supplier who turns out to be a
counterfeit goods dealer and you find out later. There is that. That's a really
important protection in the act.
From the perspective of your question of who's going to pay the
costs if I've been in good faith trying to source a product and I find out as a
result of an RCMP investigation or as a result of an action by the rights
holder, and I imagine in most cases particularly the big box chains have
obviously an incentive to maintain quality products and they're not going to be
sourcing for counterfeit goods, I would expect that if they are inadvertently
caught up, that it would be as a result of their having unknowingly signed these
kinds of contracts.
Senator Ringuette: Again, in regard to that $38 million
and some of them going through a court process, was the court process done by
the Canadian trademark owner?
Mr. Cormier: The trademark owner is usually the victim, so
certainly the victim has to be willing to pursue the matter for us to go ahead
with the criminal investigation. It is part of the consideration.
Senator Ringuette: Maybe you don't have that detail with
you, but I —
Mr. Cormier: I can tell you how many cases were
prosecuted, for example.
The Chair: We could come back to that.
Mr. Cormier: Okay, sure.
Senator Ringuette: Thank you.
The Chair: Mr. Ryan, you had a comment?
Michael Ryan, Senior Analyst, Copyright and Trade-mark Policy
Directorate, Industry Canada: It might help clarify. These prosecutions are
led by the Crown, and the trademark owner would be a relevant witness to
identify that the rights in play are their rights, and they can identify as
evidence, but it's the Crown prosecutors and the police that are conducting the
prosecution and investigation.
Senator Ringuette: So we're changing that process right
Mr. Ryan: No, we're actually adding more tools with
respect to what the police may investigate — a greater deal of importation,
manufacture and selling. We're also providing the opportunity for access to
information for rights holders where the Crown isn't seeking to prosecute to
allow rights holders the opportunity to pursue their rights civilly.
The Chair: Senator Ringuette, I'll put you for second
Senator Massicotte: We can see that cooperation between
countries is a basic condition for success. With that in mind, when counterfeit
goods are in transit in Canada to the United States, and the other way round, we
have the right to advise our American colleagues that a shipment of counterfeit
goods has arrived. I accept that. So, when a product from Asia goes through
Canada on its way to the United States, are our verification procedures as
thorough as if the product was being shipped to Canada?
Ms. Imrie: In terms of in-transit goods, normally it would
only be if, as Mr. Hill discussed, there was a shipment of concern from a
national security perspective — criminality, contraband, elicit weapons. Those
would be areas where we would focus our attention on in-transit goods.
In terms of goods that would arrive in Canada for import into the
country, we would administer the 90 acts of Parliament that apply to Canada,
which could include other government departments such as CFIA, Health Canada,
et cetera. There are more provisions that we would administer on import than
Senator Massicotte: In your reply to Senator Tannas, you
said that, if you received an in-transit product destined for the United States,
you would advise them, but that would be exceptional because, basically, you do
not check those products. We help the Americans by the luck of the draw. In
terms of international cooperation, that is not a lot.
So let us look at an example in the opposite direction, where
goods bound for Canada are shipped via the United States. Do the American just
set the product aside without checking it, as we do, or, at very least, do they
check the country the shipment comes from, since we are talking about
cooperation between countries on this matter?
Ms. Imrie: It would be important just to underline that,
with respect to this bill, we would be protecting the domestic market in terms
of the laws of Canada. Canada wouldn't be enforcing our domestic provisions with
respect to IP and vice versa. I don't know, Paul, if you would like to add to
Senator Massicotte: That's not my question. What I was
getting at is that the Americans have made the valid point with most senators
here, and we've met them, to say, “Goods are coming into Canada for a
destination in the United States. Please help us. When you see counterfeit
goods, please advise us. Please exercise the authority you have to minimize
those goods.” You're saying we have the authority to advise them, but we don't
take any particular procedures or inspections to increase the discovery of
counterfeit goods. Okay, so that's our position. But they make a valid complaint
and they make a valid request, in my opinion, to seek our assistance. On their
side, if goods come from China in transit through the United States to Canada,
are they helping us in the way they want us to help them?
Ms. Imrie: There is a great deal of information that goes
on between Canada and the U.S. currently, and the Beyond the Border initiative
is definitely strengthening that, whether it's joint targeting in terms of risks
or information sharing with respect to Beyond the Border. We will definitely
leverage those initiatives that we have in place to further strengthen
information sharing. This bill in particular would be one where we can look at
greater information sharing as we move forward.
Senator Massicotte: My question is very particular to
goods in transit. If goods in transit come to Canada territorially, legally, but
they are destined for the United States, we don't do very much about it unless
we are aware of a problem. Is the reverse the case? Do the Americans examine all
the products that enter their country, irrespective of whether they’re destined
for us or for them? Is there a difference in treatment? Are they making a more
detailed review of those issues, more than we are, and therefore their complaint
would be valid? I just want to know what they do for us there.
Ms. Imrie: Paul, did you want to add to that?
Mr. Halucha: I'm not an expert on how the U.S. administers
its border relationship. I would just say what the minister said, which is that
we're not in a customs union. Intellectual property rights are actually
territorial, and that's what this bill is about. It is about intellectual
property rights. To the extent that the U.S. is stopping shipments coming into
Canada where they have concerns that they are counterfeit and someone's rights
are being violated, it's not the Canadian laws they are applying in the United
States. They are effectively applying U.S. laws on goods that are coming into
Senator Massicotte: Goods that are physically in Canada,
in transit to the United States, that are clearly counterfeit goods, it seems to
suggest that our laws don't allow us to stop those goods, even if the final
consumer is not Canadian.
Mr. Halucha: That's what this bill is providing authority
to the customs agents to do, to stop goods because there is an IP crime.
Senator Massicotte: Even if it’s not destined for Canada,
it's against Canadian laws to ship it through Canada?
Mr. Halucha: There's an exception in the bill, which is
essentially the reason why the U.S. authorities have been coming to see you and
have come to see us as well. The exception says that if there are only IP
concerns, then Canadian authorities will pass on information. We will not detain
those goods pursuant to our laws.
Senator Massicotte: Is that against our laws?
Mr. Halucha: If it's not destined for the Canadian
marketplace, if there are concerns that it could enter the Canadian market, then
effectively that's potentially a smuggling offence. They can stop it.
Senator Massicotte: I make the observation — I'm not an
expert — that the answer I'm getting is amazing to me.
Therefore, counterfeit goods, counterfeit drugs that come into
Canada, are physically here at the Port of Montreal or wherever, and are clearly
counterfeit, including IP registered here, but you say we don't have the right
to stop those goods because they're not destined for the Canadian consumer.
Mr. Halucha: The example you're giving is a counterfeit
pharmaceutical. There are already existing legislative authorities in Canada for
the border agents to stop those goods. They don't need additional authorities
pursuant to this.
Senator Massicotte: How about a hockey sweater?
Mr. Halucha: A hockey sweater where the only violation was
a trademark, then the border agent in Canada could certainly contact the
relevant authorities in the United States.
Senator Massicotte: But he cannot seize those goods?
Mr. Halucha: Not on the basis of just an IP offence coming
into the Canadian marketplace.
Senator Massicotte: So it's against the law?
Mr. Halucha: If there's a health and safety concern.
Senator Massicotte: Even if they are not destined for
Canada, for Canadians, it's against the law?
Mr. Halucha: But whose law?
Senator Massicotte: Canadian laws, for a pharmaceutical.
Mr. Halucha: If it's not coming into the Canadian
marketplace, then what right do we have to apply our laws?
Senator Massicotte: Even a pharmaceutical product?
Mr. Halucha: A pharmaceutical product is different. On
health and safety concerns, if that was the cause for the concern, then it could
Senator Massicotte: Even if it’s not destined for
Mr. Halucha: Correct.
Senator Massicotte: What do we do to catch those goods?
Ms. Imrie: Certainly if there are, as I mentioned, health
and safety concerns in terms of shipments transiting our country, if there is
criminal activity, currently we have the authority to administer many acts of
Parliament, including those with Health Canada, et cetera.
So we would, again, rely on the tools that we have currently,
manifest information, advance information we would receive on shipments,
intelligence that we would have from ourselves, our partners internationally,
and also the indicators that our Border Services Agency use to determine whether
there's an issue of concern. Those would be the focus of our examinations and
inspections, and we would take action to make referrals to our partners.
Senator Bellemare: My question has to do with the proposed
amendments to the Copyright Act and with the distribution of costs. As I
understand it, from now on, the costs of the storage, the handling and the
destruction of goods impounded by customs, all those costs will be the
responsibility of the rights holders, rather than of the importers, who are the
ones committing the offence by importing counterfeit products.
Is it not a little unfair to make the rights holders bear those
costs? What happens if the rights holders are not located in Canada? If the
rights holders’ property is in Europe or the United States, are importers going
to be able to pick up their shipments without paying a cent? Who pays what? Is
there not a degree of unfairness in the way the costs are levied?
Mr. Halucha: In terms of the RFA system, the two principal
bases on the system are, first, that there's a presumption of innocence. We
always use the word “importers.” We don't make the assumption that they are
counterfeiters. That's a determination made in the court; it's not made at the
border. The RFA system is going to be put in place to benefit rights holders.
They don't have an obligation to register on it. If it's in their interest and
they choose to do so, then they are able to do it. It will give them the ability
to get the information at the border, to pursue civil causes of action.
It really is in their interest; and as you heard the minister
say, it's a private right, intellectual property rights.
The first principle underlying the border is that you're innocent
until you're proven guilty, and the courts make that determination. The second
one is that because it's a private right, it's up to them to bear the costs of
the temporary detention.
In terms of whether it's unjust or not, I would note that if they
do make a determination and they acquire these goods with the objective of
enforcing their rights in a court, they are able to get damages awarded by a
court, including those costs. We've made it very explicit in the legislation
that the costs of detention, the costs of storage can be recouped by them in a
court of law. So they have that opportunity. It's not an obligation that they be
part of the system. Second, they have the ability to recoup those costs in
Senator Bellemare: Rights holders are small businesses.
Inventors do not have the financial means to absorb those costs. Does this mean
that counterfeiting will continue to go unpunished? In other words, what is
going to happen if the person whose property rights have been violated does not
have the means to take those steps, because that can happen?
Senator Massicotte: That is often the case.
Senator Bellemare: What is going to happen?
Mr. Halucha: You're asking in the specific case of small
and medium-sized businesses? If they've made the determination that it's in
their interest to use the RFA system, then they need to have the resources to
enforce their rights. That's not different than if they found the goods on the
market in Canada. If all of a sudden they were in a store and they saw
counterfeit versions of their goods being sold, they would still have,
effectively, an access-to-justice problem. They would have to have the resources
to enforce their rights. That's how the legal system works in Canada.
Senator Bellemare: Are they going to have to take out a
loan or go into debt in order to have their rights upheld? Can the situation get
to that point, or is it possible for the government to intervene?
Mr. Halucha: It's a private right in Canada.
Senator Massicotte: However, as you mentioned before, the
Crown has the right to prosecute counterfeiting. In which cases will the Crown
decide to help a small business? Surely, you have a policy or guidelines in
place? If so, the Crown may get involved, but what are the criteria?
Mr. Halucha: At the beginning, I would say that you're
absolutely right. If there's a counterfeiting network that is potentially
producing the goods of a large number of small and medium-sized businesses and
an RCMP investigation decided to target that network, then the costs would be
borne by the Crown, and the determination there is that there is a higher
standard, there's a criminal network that needs to be addressed.
Senator Massicotte: So that's the criteria, a criminal
Mr. Halucha: Yes.
Mr. Cormier: We are mainly going to focus on the organized
crime groups involved. If they are involved and if the victims are a number of
small businesses, we will certainly help them. As for the investigation, the
prosecutor and the court case, those costs will remain with the court.
I would also like to take this opportunity to confirm that, in
the statistics we provided earlier, there were no food products. In addition, in
Canada, from 2005 to 2012, there were 164 convictions in counterfeiting cases.
Senator Massicotte: Mr. Cormier, what part of your annual
budget is available for Crown prosecutions?
The Chair: I'm sorry, that was not a supplementary. I'm
putting you on second round.
Senator Hervieux-Payette: I have a question for you,
Mr. Cormier. How many extra people will be necessary, after this supposedly
results-oriented bill is passed, given that you are going to get additional
resources for national security and several other mandates of yours?
In order to enforce Bill C-8, you received a budget for
additional resources, as did the customs service. How many additional people
will be part of enforcing this law?
Mr. Cormier: There will be no additional people employed
in order to enforce this act. That is the way things are in the RCMP. The
priorities we deal with change daily. We have to assign our resources
accordingly. The cases passed on to us have to be prioritized in the same way
and at the same time as our own.
Senator Hervieux-Payette: How many hours of training are
you going to provide so that people can enforce the legislation? Are you going
to hold a series of meetings with officers on the ground to tell them about the
modalities in the new legislation?
Mr. Cormier: There are different ways of communicating
information with investigators when legislation is amended. With advances in
technology, it is possible for us to provide online courses. The information is
also circulated via email. In addition, we will certainly deal with the
enforcement of new legislation in future courses.
Senator Hervieux-Payette: Of your two services and the
businesses whose trademarks are stolen, where do the greatest numbers come from?
Do you start most proceedings or do they come from those whose trademarks have
been stolen? Basically, do you deal with most of them or do you get 20 per cent
and they get 80 per cent? Who registers complaints most often?
Mr. Cormier: Who registers complaints most often?
Senator Hervieux-Payette: Yes.
Mr. Cormier: Most complaints are passed to us by border
services. We are more interested in large quantities that have an impact on
Canada. So we give a higher priority to cases involving organized crime, both in
Canada and internationally.
Senator Hervieux-Payette: Will this legislation
substantially reduce the time that has to elapse between the seizure, the
charge, the verdict and the penalty assessed? Is that going to be improved? The
courts in Quebec are generally looking at a two-year backlog in almost all
cases. Let us say that, tomorrow morning, just before the holidays, Canada had
to handle another case involving Canada Goose products. Say we see steps being
taken in the market or your colleagues making seizures on the border. How much
time will it take to stop the bleeding?
Mr. Cormier: The case and the investigations can be
complex. We work with the tools we have been given. They are what we have in our
toolbox for investigations. I am not sure that the length of the investigations
can be reduced, but these new tools will certainly help us.
I would like to make one point about Canada Goose. The
counterfeiting is not necessarily done in Canada. A lot of people are involved.
They find a website offering those kinds of products for sale and they buy them
online. I am sure that you are aware of the Canadian Anti-Fraud Centre, located
in North Bay. They have an established process. A lot of people are calling
them. The number of calls from people turning to the centre is increasing. There
is a process for helping the victims by advising them about the steps they have
to take. The information they receive is shared with authorities internationally
and with the banks that issue credit cards so that they are aware of the fraud
cases. The banks or the groups managing the credit cards are stopping payments
for the products. They are cutting down on fraud that way. It is not just a
matter of enforcing the law and going to court. Sometimes, there are other ways
to solve the problems. It is what we call having another recourse.
Senator Hervieux-Payette: In terms of enforcing the law,
have you developed a communication plan so that, from now on, victims will know
that it will be easier to prevent fraudsters from selling counterfeit goods in
the Canadian market?
Mr. Cormier: In part, the solution lies in prevention,
education and pretty aggressive advertising. We already have advertisements
explaining that buying counterfeit goods encourages organized crime. That is the
kind of message we are putting out.
Senator Hervieux-Payette: Could you send us the
communications budget for enforcing the law?
Mr. Cormier: I do not know if we have a separate document,
but I can certainly check.
Senator Ringuette: Mr. Ryan, I would like to go where we
were earlier in regard to prosecution. You were indicating in regard to the
statistics of $38 million in 2012 that it was mostly Crown prosecuted. Did I
read that correctly?
Mr. Ryan: Yes.
Senator Ringuette: Why was it only prosecutions by the
Crown, if we're looking at counterfeiting?
Mr. Ryan: I think there are two important elements to keep
in mind. There is the criminal aspect, which is that the RCMP is responsible for
investigating and referring cases to the prosecutors, but also there is the
civil side, and that's a private action. The RCMP doesn't take a role in the
enforcement of private rights.
There's a lot of case law with respect to right holders seeking
enforcement of their rights in the Federal Court, but that's enforcement of
their private rights, as opposed to the criminal offences and criminal remedies
which the RCMP is taking care of.
Senator Ringuette: Of the $38 million, how much would have
been a criminal Crown prosecution?
Mr. Ryan: The statistics being provided are the RCMP
Senator Ringuette: This would only be the —
Mr. Ryan: Crown, RCMP enforcing —
Senator Ringuette: — criminal.
Mr. Ryan: Correct.
Senator Ringuette: Where do you draw the line between what
is criminal, what is trademark and what is consumer protection with regard to
Mr. Ryan: There are multiple angles, and it depends on the
nature of the goods themselves. The bill talks about the commercial-scale
importation, manufacturing and sale. That's the commercial-scale element and the
knowingly selling a counterfeit product that brings into —
Senator Ringuette: Those counterfeit, commercial,
high-volume imports, who will decide if they relate to criminal activity or
trademark activity? It could also be both. What will happen then?
Mr. Ryan: In that case, what's envisioned is we're trying
to target things crossing the border. What's always most important in that case
is the state interest in those goods. It will be referred to the RCMP, and
whether it meets within their targeting, if it's an investigation that meets
their qualifications in order to pursue it and, if not, Health Canada could also
be brought in to see if this is something they're interested in pursuing. If
not, then the rights holder has an opportunity to move forward and enforce their
Senator Ringuette: It will be border services that will
decide, depending on the items, which direction to take.
Mr. Ryan: They will decide who to refer the matter to.
Senator Ringuette: In fact, it could be all three related,
criminal, trademark and consumer protection. Thank you.
The Chair: Is there a concluding short, snappy question
from Senator Massicotte? It has to be short, as usual.
Senator Massicotte: Like all my questions. Of your total
annual budget, what is dedicated to pursuance by the Crown to help against
Mr. Cormier: For the RCMP, I wanted to indicate — and I
don't know if you're referring to the $38 million mentioned — the $38 million is
not the budget. That is the value of goods seized.
Senator Massicotte: That's why I'm asking the question.
Mr. Cormier: That is not our budget. The budget is part of
the entire federal policing budget for the RCMP. I would have to provide you a
global figure on that.
Senator Massicotte: Good stuff. Could you forward it to
the clerk so we can get that?
Mr. Cormier: Absolutely.
Senator Massicotte: You see, chair, my questions are
The Chair: Absolutely. Mr. Halucha had a final comment.
Mr. Halucha: I wanted to make a point. We've been talking
a lot about accessing the court, and obviously that's an extremely important
part of this legislative framework that we are bringing forward for your
I also note that one of the important amendments made in the
House of Commons dealt with how the information could be used when it's been
provided to the border guards and the interaction between them and the rights
holders. We've clarified that they can actually use that information for the
purposes of getting an out-of-court settlement with the importer.
Again, we are making a lot of assumptions because you tend to
think about the most extreme example where it's someone who has knowingly
imported, but there are cases where someone has imported and thinks they have a
good supplier and the first time they find out they potentially have imported a
counterfeit good is when they have a lawyer in their office telling them that
their goods have been detained at the border and now they have a problem on
What we need clearly in the legislation, and it was a good change
that Parliament made, is to ensure that information exchange can happen between
the rights holder and the importer for the purpose of an out-of-court
settlement. This would allow for the rights holder to quickly enforce their
rights. There is no cost on the Crown. The goods would be moved quickly off the
border. Effectively that's the way the system would work I think in most cases.
When we did consultations on the bill we were told that 90 to 95 per cent of the
cases where their goods are detained, that these out-of-court settlements are
the way for clearing it. That is their first response. I think it's very
important to add that last part of it.
The Chair: Thank you, Mr. Halucha. To our panel, on behalf
of all members of the Senate Banking Committee, we express our appreciation for
your appearance today. You have been very helpful in our study of Bill C-8. This
meeting is concluded.