Based on recent media coverage, people unfamiliar with Canada could be forgiven for assuming that all Canadians sport pirate eye-patches while searching for counterfeit treasure. The "Canada as a piracy haven" meme has been floated with disturbing frequency in 2007 with regular claims that Canada is home to rampant music downloading, illegal movie camcording, counterfeit product purchasing, and outdated copyright laws.
These reports invariably present a distorted picture – digital music sales grew faster in Canada last year than in either the United States or Europe and music downloading on peer-to-peer sites for personal purposes is arguably compensated through a private copying levy that generates tens of millions of dollars each year. Moreover, movie camcording in Canada affects roughly three percent of Hollywood films (not 50 percent of camcorded films as initially alleged) and Canadian copyright law is consistent with international treaty obligations.
Nevertheless, the cumulative effect of the piracy coverage has left some officials humming "Blame Canada" and wondering whether the country deserves to be classified as a rogue nation when it comes to intellectual property matters.
Last week, counterfeiting was in the spotlight as Canadian Recording Industry Association President Graham Henderson delivered a major address on the issue on behalf of the Canadian Anti-Counterfeiting Network. In conjunction with the speech, the Pollara polling firm released the results of a survey conducted for the CACN that found that 28 percent of Canadians have knowingly purchased counterfeit products.
Henderson’s speech painted a grim picture, describing the Canadian economy as a "marketplace that has been infiltrated by counterfeits and pirated goods, endangering consumers and compromising our prosperity. Our marketplace for ideas is in a shambles, and we need to fix it." He added that organized crime is responsible for most counterfeiting activities and that counterfeiting poses health and safety risks to individual Canadians.
It should be noted that few people support counterfeiting. Indeed, if the allegations linking organized crime and health and safety concerns to counterfeiting are accurate, there would surely be widespread backing for an enforcement framework to address the issue. However, according to a previously secret RCMP report obtained under the Access to Information Act, the reality is that counterfeiting, though a concern, may not be as significant a problem as the CACN suggests.
The RCMP’s Criminal Intelligence Directorate completed the report in late December 2004. The secret assessment of intellectual property crime in Canada, titled Project Sham, warned that IP crime was on the rise around the globe and that there was a lack of awareness and training among Canadian police forces.
The report called into question claims that organized crime lies behind all Canadian counterfeiting, instead noting that their involvement varies throughout the country. For example, it concluded that in the Northwest, "only a few cases could be classified as organized crime; for the most part, IP crime there involves people who are ‘trying to make a dollar.'"
Similarly, the CACN makes much of the health and safety concerns associated counterfeiting, pointing to dangers posed by fake pharmaceuticals and electrical extension cords (the counterfeit cords allegedly fail to meet safety standards). The RCMP report acknowledges the concern, yet concludes that "in Canada, there are no indications of any serious incidents whose causes have been traced to counterfeit goods."
Closer scrutiny of the Pollara study also provides reason to doubt there is "cause for alarm," as the company says in its media release. While 28 percent of Canadians acknowledged that they had knowingly purchased counterfeit goods (an additional 12 percent learned of counterfeit purchases after the fact), the survey also found that the most commonly purchased counterfeit products were clothing, watches, sunglasses, and handbags.
Some may believe it is wrong to walk around in fake Ralph Lauren shirts, wear fake Rolex watches and fake Oakley sunglasses, and carry a fake Louis Vuitton handbag, yet this hardly constitutes an economic crisis. The reality is that this issue affects few, if any, Canadian name brands and virtually none of the counterfeit products are actually made in Canada (the RCMP report concludes that 90 percent of counterfeit products in the GTA are imported).
From the markets in China to street vendors in New York, there is unquestionably a thriving industry selling knock-off products of famous name brands. This phenomenon is not unique to Canada nor is there reason to believe, as Henderson stated last week, that it "robs many Canadians of their ability to earn a living" and "dims the light of innovation that is essential to our future economic prosperity." In fact, the real harm to the economy may be the baseless claims of Canada as a pirate nation that sow seeds of doubt for prospective investors and distract policy makers from more important economic concerns.
Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law. He can reached at email@example.com or online at www.michaelgeist.ca.