Counterfeiting in the Canadian Market - Manitoba Chambers of ...

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According to a study by Frontier Economics,counterfeiting and piracy cost G20 governments morethan €100 billion a year in lost tax revenues and place2.5 million legitimate jobs at risk. 35 Another reporthas stated that “In total, if counterfeiting and piracycontinue to grow at current trends, it could be worthup to 1.7 trillion by 2015.” 36 In its report Counterfeitingand Piracy are Theft, the Standing Committee onIndustry, Science and Technology acknowledgedthat “tax revenue losses can no longer be assumedto be insignificant.” 37 Despite this acknowledgmentby a unanimous government committee and its callto action, no concrete steps have been taken by theCanadian government to respond to the problem ofcounterfeiting and improve its revenue situation.Revenue From Counterfeit Products FundsOrganized CrimeBecause these IP rights are valuable, people try to makemoney from them without the owner’s permission, oftenin ways that are best described as organized crime.This damages both the economy and society. Availabledata suggest a strong link between IP crime and otherforms of criminal behaviour, with offenders convicted ofcounterfeiting and piracy also found to be engaged in illegalmoney-lending as well as benefits frauds and anti-socialbehaviour. There is also evidence of the involvement of someengaged in IP crime in drugs, human trafficking, seriousfiscal and non-fiscal fraud and associated money launderingoffences.- Prevention and Cure: The UK IP Crime Strategy 2011.As the penalties associated with the commission ofcounterfeit offences are generally low, engaging incounterfeit production and distribution is a lowriskventure for criminal enterprises. Criminalorganizations are able to take advantage of preexistingsupply channels and can use the profits madefrom counterfeiting to fund other aspects of theircriminal operations. The sophistication of professionalcounterfeiters cannot be underestimated.In 2009, the Rand Corporation produced a 150-pagereport on the links between organized crime andcounterfeiting and piracy. In addition to demonstratinghow the easy money made by criminal organizationswhich traffic in counterfeit and pirated goods canbe used to fund other criminal enterprises includinghuman trafficking and drugs, the report called ongovernments to take positive action to respond to thegrowing role of organized crime in counterfeiting andpiracy. Specifically, this report called on governmentsto expand the definition of organized crime “toinclude large-scale counterfeiting tied to other criminalactivity. Laws should be enacted to grant investigatorsgreater authority to sustain investigations, conductsurveillance and obtain search warrants.” 38The RCMP has also observed links between organizedcrime and IPR offences. “OC [organized crime] groupsuse IP crime as another undertaking within theircriminal activities, often combining IP crime withother illegal business ventures. Evidence shows thattransnational OC groups are actively involved in IPcrime, and that IP crime has been linked to moneylaundering, drug trafficking, firearms smuggling, aswell as other types of crime.” 39 In November 2011, aninitiative by the RCMP and the CBSA lead to the arrestof eight individuals in Ontario and British Columbia.35 Frontier Economics “Building a Digital Economy: The Importance of Saving Jobs in the EU’s Creative Industries” March 2010. Available At:http://www.iccwbo.org/bascap/index.html?id=3536036 ACTA in the EU: A Practical Analysis, at p. 7. BASCAP/INTA37 Counterfeiting and Piracy are Theft: Report of the Standing Committee on Industry Science and Technology, June, 2007, p.7. Available at:http://www.parl.gc.ca/content/hoc/Committee/391/INDU/Reports/RP3060548/391_INDU_Rpt08/391_INDU_Rpt08-e.pdf38 Treverton, Gregory F., et al., “Film Piracy, Organized Crime and Terrorism” Rand Corporation, 2009. Available at: http://www.rand.org/pubs/monographs/2009/RAND_MG742.pdf (Rand Report)39 Project Strider, p. 11Counterfeiting in the Canadian Market | The Canadian Intellectual Property Council 13
In addition to the seizure of more than half a millioncartons of counterfeit cigarettes, authorities seizedover 6,000 kilograms of P2P, a key ingredient in themanufacture of methamphetamine. 40Counterfeit products are regularly found in shipmentscontaining other types of illegal goods. In October2010, CBSA agents in Vancouver suspected that ashipment contained counterfeit goods, and followinglegal requirements in Canada, called the RCMP in toinvestigate. The RCMP found that the shipment didcontain counterfeit shoes but that it also containedP2P. 41 Given the many examples of links betweencounterfeiters and Canada’s drug trade, any belief thatcounterfeiting is a victimless crime is clearly misplaced.cooperation on IPR. The Canadian IPR system, itnotes, “features several shortcomings… the weakunderlying political will—resulting in both the poorimplementation of existing legislation and in itsconsistent failure of reform legislation being enacted—is indeed very worrying from a developed country.” 43Canada cannot reasonably expect to attract investmentfrom the world’s top innovators if it is perceived asoffering lax protection for IPR, a key commodity in theinnovation economy.Canada’s Lax IP Regime Sends the WrongMessage to Our International PartnersThe lack of enforcement of IPR sends the wrongmessage to Canada’s trading partners and foreigninvestors that Canada is a country that does notsufficiently respect IPR. Canada’s trading partnershave taken notice of its poor record and are eager forthe government to legislate more advanced measuresfor enforcing IPR. In its annual Special 301 Report,the Office of the United States Trade Representative(USTR) has repeatedly placed Canada on its PriorityWatch List of countries that offer the weakestprotections for IPR. The USTR sees the strengtheningof Canadian customs enforcement as a majorrequirement for the Canadian government. 42The European Union has also been critical of Canada’sstand on IPR enforcement, noting in the Strategyfor Enforcement of Intellectual Property Rights in ThirdCountries of the Directorate-General for External Tradethat Canada is a “priority country” for strengthening40 National Post, November 1, 2011 “Eight Arrested in Ontario and BC in Asian Smuggling Ring Bust” Available at: http://news.nationalpost.com/2011/11/01/eight-arrested-in-ontario-and-b-c-in-asian-smuggling-ring-bust/37 Counterfeiting and Piracy are Theft: Report of theStanding Committee on Industry Science and Technology, June, 2007, p.7. Available at: http://www.parl.gc.ca/content/hoc/Committee/391/INDU/Reports/RP3060548/391_INDU_Rpt08/391_INDU_Rpt08-e.pdf41 RCMP Combating Intellectual Property Crime, June 6, 201142 USTR 2012 Special 301 Report p. 25. Available at: http://www.ustr.gov/sites/default/files/2012%20Special%20301%20Report_0.pdf43 Commission Staff Working Document, IPR Enforcement Report 2009 p.10. Available at: http://trade.ec.europa.eu/doclib/docs/2009/october/tradoc_145204.pdf14 Counterfeiting in the Canadian Market | The Canadian Intellectual Property Council
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