Combating Counterfeit Products Act


Mr. Speaker, it is a privilege to rise tonight to speak in support of Bill C-56, the combating counterfeit products act.

In fact, I am happy to advise this House that my remarks tonight mark a unique occasion when as a member of Parliament I can stand in this House and speak on a government bill on important public policy that I spent a considerable amount of time advocating for in life before politics. I spent several years of my professional life as a lawyer, combatting the rise of counterfeit goods and its impact upon public safety and our economy.

I am also extremely proud to now be part of a government moving to address the negative consequences of the scourge of counterfeit goods. I will use part of my time to talk about this experience. I think it is important for this House to hear real-world accounts from the private sector on why this legislation is needed.

I hope to show my colleagues that the inaction or delay suggested by my friends in the NDP is simply not acceptable. The member for Timmins—James Bay mentioned, several times, the challenges of litigation tonight in debate. That is something I will touch upon because I have led such litigation efforts in this area.

Counterfeit goods are putting public safety at risk. Counterfeit goods are impacting economic activity and revenues. Counterfeit goods can lead to job losses for Canadians. Counterfeit goods and the proliferation of trademark infringement, passing off, and piracy have also become some of the fastest-growing sources of revenue for organized crime.

For many years I was the in-house corporate lawyer for Procter & Gamble in Canada. Not only is P & G a respected global company with branded products that Canadians use in their homes every day, it is also the largest private sector employer in eastern Ontario. With manufacturing facilities in Belleville and Brockville, Ontario, and head office operations in Toronto, P & G employs thousands in Ontario and makes products that are shipped across North America and around the world. It might surprise this House to learn that every Swiffer pad in the world was made in Brockville, Ontario, just an hour from here.

These are important manufacturing jobs in Ontario. They are also critically important to the global economy and trade. Jobs like these in Canada and around the world are put at risk with counterfeit goods.

It was estimated, at the time I worked there, that the scourge of counterfeit goods cost P & G close to $1 billion annually in lost revenue. In these challenging economic times, that is $1 billion that is not invested in innovation, investment, or job creation. This is just the impact on one employer, so we can multiply that literally by hundreds of companies and employers that sell or distribute branded products across Canada.

In 2006, I was confronted with the ugly face of counterfeit goods in my job. Everything I will talk about now highlights the excellent work that P & G and other companies in the industry did to raise these issues. I should also add that I am not violating any solicitor-client privilege; I am talking about publicly known information.

While the company had long worked with law enforcement to investigate counterfeit batteries and some isolated personal care products being counterfeited and sold in Canada, a public health advisory from Health Canada on counterfeit toothbrushes led me to devote considerable time and energy to this file. This advisory came about when a Canadian purchased a counterfeit toothbrush at a value vendor and choked on the bristles that became dislodged when they began brushing.

For such a seemingly innocuous product, there was a serious risk of health. Counterfeit goods contain unknown ingredients or materials. They are made improperly. They have no quality assurance. They are often manufactured in unhygienic surroundings. Only a few months earlier, counterfeit Colgate toothpaste, in the U.S., was found to contain antifreeze.

These events led me to create a brand protection team for Canada. I was fortunate to have Rick Kotwa, a 30-year OPP veteran and head of security for the country, to lead our investigative efforts. I was also lucky to have Jennifer Cazabon, an extremely sharp regulatory scientist, who helped keep public safety and regulatory issues at the forefront of what we developed as a brand protection program. The president of the company at the time, Tim Penner, saw how important this issue was for the company. He empowered our team to investigate and isolate counterfeit distributors across Canada.

Over the next few years we worked diligently on these issues, and we were truly astounded by the size of the counterfeiting problem in Canada and indeed throughout the world. With the backing of a terrific corporate leader like Tim Penner, P & G spent considerable resources pursuing investigation and litigation against distributors and retailers in Canada, despite the fact that we knew we would rarely be able to collect damages or our costs. The company took a leadership position, like many did, in this fight against counterfeit products.

What became clear to me very quickly was that the laws and regulatory structures in Canada needed to radically evolve to address this new and growing risk to public safety and the criminal activities related to it. I began to work directly with the Canadian Chamber of Commerce, the Retail Council of Canada, the Food and Consumer Products Council, and the special purpose organization created for this very issue, the Canadian Anti-Counterfeiting Network.

I would like to thank these organizations, and their member companies, for championing these issues for many years. At these meetings, I got to know many of them, particularly Lorne Lipkus, someone who for more than a decade has been a lean, mean counterfeit-busting machine. He has raised public awareness on this issue more than anyone else in Canada. I thank these people. Our government is listening, with Bill C-56.

The Canadian Anti-Counterfeiting Network released its road map for change on counterfeiting and piracy in 2007. CACN, industry and employers across Canada have engaged with government in the years since 2007. There have been several years of careful consideration and consultation on these issues, at a variety of levels. Our government has listened, and Bill C-56 attempts to address the public safety risks and economic damage caused by counterfeiting. While the New Democrats continually rise tonight to say that more time is needed to explore or debate these issues, I say that the time to act is now.

Our government has been listening, particularly to Canadian employers and their industry groups, and documents like the road map. I want to highlight a few specific sections from the road map that are addressed by Bill C-56, and I would remind this House that it was released in 2007.

The combating counterfeit products act would provide better tools to investigate commercial counterfeiting and help to reduce trade in counterfeit goods by providing new enforcement tools to strengthen Canada’s existing enforcement regime. These are specifically cited as recommendations 1.1 and 1.2 in the road map. The act would provide new criminal offences for the commercial possession, manufacture or trafficking of trademarked counterfeit goods, as per recommendation 1.4.

The act would create new offences for trademark counterfeiting, equipping law enforcement agencies and prosecutors with the tools they have been asking for to combat this problem. That is recommendation 4.1 from the road map.

Finally, the last item I will highlight is that this act would give border officers the authority to detain suspected shipments and contact the intellectual property rights holders. They would be able to do this because intellectual property rights holders would be able to file a request for assistance with Canada Border Services Agency. This in turn would enable border officers to share information with intellectual property rights holders regarding suspect shipments so they can be tracked. This addresses recommendations 6.2 and 6.4.

This bill is indeed the culmination of several years of consultations and direct advocacy from Canadian employers, and industry groups like the Canadian Anti-Counterfeiting Network and the Canadian Chamber of Commerce, among others. I have highlighted specific portions of this proposed legislation that have come directly from these consultations.

Canadians must know that purchasing counterfeit goods is not a victimless crime. That purse and those watches fuel criminal activity. Counterfeit goods actually feed criminal networks around the world and are fast becoming the lifeblood for these organizations, which in turn bring tremendous harm and oppression to people in Canada and around the world.

In the last few years, Interpol has directly connected profits from counterfeit good sales to the funding of terrorism. In 2005, the RCMP declared organized crime to be the primary actor in the field of counterfeit goods sale and distribution in Canada.

In 2005, the U.S., Canada and Mexico, at the security and prosperity partnership meetings, addressed this issue as a major economic and public safety issue that fuelled organized crime across North America.

Finally, it is important to also note that in 2006, the U.S. trade representative placed Canada on the special 301 watch list for the 12th consecutive year. That is a trade watch list, because the intellectual property rights regime and regulatory structures in Canada were deemed inadequate. I might note that in 2006, that was the 12th year, almost perfectly coinciding with the previous Liberal government’s time in office.

Our laws and regulations had not been addressed in a generation and criminal organizations were taking advantage of our weakness. Our trade partners were demanding that we get serious. Bill C-56 is part of our effort to get serious on combatting counterfeit goods.

Since our government came to office in 2006, we listened to employers, including the CACN and other groups, consulted through road map documents and various public groups and forums and what has been produced is Bill C-56. It is a balanced attempt to update our intellectual property rights regime in Canada.

Going back to what got me into this area, the Canadian who was fooled into buying the counterfeit brush. which steered my career down this path, was fooled because the criminals were literally stealing the good will associated with Procter & Gamble’s toothbrush brand. The intellectual property behind the brand, from the trademarks to the industrial designs, were being used by criminal organizations to trick people into buying shoddy products that had not been manufactured in the way the brand would expect. These criminal groups could then funnel these profits into other criminal enterprises and even terrorist activities around the world.

In the last few years when I became aware of this issue, a few areas scared me, literally, out of sleep. Many believe the dog food crisis years ago in Canada was fuelled by counterfeit ingredients from a Chinese producer.

Counterfeit electrical goods have been seized and found by the Canadian Standards Association, not just before being put in homes and hospitals, but after they have been installed, where counterfeiters have stolen the intellectual rights and trademarks that the CSA uses in its seal and that electricians across the country have learned to trust when they install things in people’s homes. Electrical goods are counterfeited.

Aircraft and military parts in the U.S. have been found to be counterfeit, not only putting the lives of the operators, the men and women in uniform, at risk, but putting people in and around their use at risk as well.

This problem is vastly greater than a handbag or a watch. It is public safety, first and foremost, and it is combatting organized crime on a secondary level.

The proposed bill will give border officers additional tools to work with government partners—Health Canada and the RCMP—as well as intellectual property rights holders to better ensure that commercial shipments are free from harmful counterfeit goods or from counterfeit labels.

Shipments of any provenance that do not meet the standards or that affect intellectual property rights will be detained and investigated and will not be permitted to get out to the Canadian consumer.

We also need to protect intellectual property in Canada to allow our businesses to invest, innovate and create jobs. The last time the Trade-marks Act was substantially updated was in 1954. There is now a wide range of possibilities for businesses to differentiate themselves. This bill recognizes the new and innovative ways that businesses use intellectual property to distinguish their goods and services from those of competitors.

These rights holders are employers and employ thousands of Canadians across the country. Protecting their intellectual property rights protects jobs. Sounds, scents, holograms, position marks, colours, numerals, figurative elements, 3D shapes, textures and now even taste are commonplace in the world of intellectual property. This bill would specifically allow for the registration of these non-traditional trademarks, giving them the same level of protection as a traditional mark.

Finally, the bill would improve the reliability of information found in the trademark register. It would simplify the overall trademark registration process by streamlining some of the requirements and removing all impediments to the use of electronic documents. It is important for Canada to have a trademark register that is accurate and up to date. This bill would allow the Canadian Intellectual Property Office, or CIPO, to easily and quickly correct blatant and obvious errors after registration, instead of the intellectual property rights holder having to go through the time and expense of seeking an order from the Federal Court.

While the central focus of this bill is the criminal, civil and border enforcement measures, there must be a high level of legal certainty that a legitimate owner’s registered trademark is valid in order to get the most out of that regime. By streamlining certain registration procedures, this bill would ensure a high level of effectiveness, efficiency and validity for Canadian trademark owners, while saving them time and money in the process.

For example, if a Canadian business owner wishes to register his or her trademark, which was previously registered in another country, he or she will no longer need to provide certified copies of the foreign registration as proof. This would save both time and money, as applicants would no longer have to contact the foreign intellectual property office and pay a fee to obtain a certified copy.

In opposition proceedings, an applicant must reply to a statement of opposition with a counter-statement that responds to each allegation. With this bill, the counter-statement would need only state that the applicant intended to respond to the opposition, thereby lessening the burden on applicants when the opposition would be first filed.

Rules on the registrability of a trademark would be made clear. A key element in trademark law is that a trademark must be distinctive. That is, it must be capable of distinguishing the goods and services of the business from those of other businesses. The bill would ensure that any trademark that would be registered would meet the distinctiveness requirement.

Currently an application for a certification mark, which guarantees that a good or service meets certain standards, must be based on actual use. The bill would allow applications for certification marks based on the proposed use, thereby harmonizing with the approach taken by other types of trademarks.

In 1954, the last time this act was touched, it was difficult to imagine that electronic communication and the dissemination of documents would be so prevalent, so the Trade-marks Act and its provisions were very much paper-based. The bill would remove paper requirements and would allow for the filing and handling of all documents electronically.

I cannot assure the House enough that Bill C-56 is not only critical to the public safety of Canadians. Whether they brush their teeth in the morning, feed their pets or turn on their lights, they need to know the marks and seals that they have come to trust are legitimate and that people abusing this trust will be prosecuted to the fullest extent of the law.

We must also recognize that by shutting this door to counterfeiters, we are also shutting the door to criminal organizations. They have quickly moved in and found the margins, and the ability to operate by stealing the intellectual property of Canadian employers allows them a means to fuel their criminal organizations and activities, including terrorism, which our government spends millions of dollars combatting.

This bill is a good attempt at getting our regime updated. We have listened to industry.

I would be pleased to answer questions or comments from my colleagues on this important legislation.



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