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Cablegate: Fight Against Counterfeit Goods Boosted in Ontario

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DE RUEHON #0466/01 3392023
ZNR UUUUU ZZH
P 052023Z DEC 07
FM AMCONSUL TORONTO
TO RUEHC/SECSTATE WASHDC PRIORITY 2278
INFO RUCNCAN/ALCAN COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 0068
RUEHHK/AMCONSUL HONG KONG 0030
RUEHHI/AMEMBASSY HANOI 0012
RUCPDOC/USDOC WASHDC
RUEAHLC/HOMELAND SECURITY CENTER WASHDC

UNCLAS SECTION 01 OF 03 TORONTO 000466

SIPDIS

SIPDIS
SENSITIVE

PASS USTR FOR SULLIVAN, MELLE, GARDE
PASS PATENT AND TRADEMARK OFFICE FOR JENNIFER NESS
USDOC FOR CATHERINE PETERS

E.O. 12958: N/A
TAGS: ETRD KCRM KIPR PGOV CA
SUBJECT: Fight Against Counterfeit Goods Boosted in Ontario

Ref: Toronto 461

Sensitive But Unclassified -- protect accordingly.

1. (SBU) Summary: On December 1, Toronto police seized C$10 million
in designer knock-offs on Toronto's black market. On December 4, a
significant four-day anti-counterfeiting conference in the Toronto
area included 120-150 law enforcement personnel, government
officials, and industry representatives from across Canada. Post
participation included CG's remarks describing U.S. IPR policy to
the audience and several media interviews. RCMP Superintendent
Ken Hanson said Canadian law enforcement officials lack formal IPR
training and lack enforcement resources. Liberal federal Member of
Parliament Roy Cullen described his standing committee's IPR
recommendations to the Harper government and his commitment to
strengthening IPR enforcement. Graham Henderson (President of the
Canadian Recording Industry Association (CRIA)) told us privately
that the federal government may introduce new legislation as soon as
next week. An article in the November 19 edition of "Canadian
Business" eloquently highlights that Canadian IPR enforcement policy
does not protect small Canadian entrepreneurs. Until the landscape
of IPR protection in Canada changes, only rights holders with very
deep pockets, such as movie or record studios or producers of
international designer labels, will be able to afford any IPR
protection at the retail level in Canada. End Summary.

--------------------------------------------- -
Police Seize C$10 Million in Counterfeit Goods
--------------------------------------------- -

2. (U) On Saturday, December 1, following a seven-month
investigation called Project Chameleon, Toronto police seized C$10
million in designer knock-offs on Toronto's black market, reportedly
the biggest single counterfeiting bust ever executed in Canada. The
goods, reportedly imported from mainland China, included counterfeit
wallets, purses, luggage, and clothing with designer labels like
Louis Vuitton, Gucci, Prada, Chanel, and Armani. Eight men were
arrested in a counterfeiting ring that involved an underground
manufacturing operation and distribution center using the cover of a
bridal shop.

--------------------------------------------
Anti-Counterfeiting Conference Trains Police
--------------------------------------------

3. (SBU) On December 4, 120-150 law enforcement personnel,
government officials, and industry representatives from across
Canada attended a four-day anti-counterfeiting conference held in
Markham, Ontario. Toronto Consul General was the opening speaker at
the conference, along with Liberal federal MP Roy Cullen,
Vice-Chair, Standing Committee on Public Safety and National
Security in the House of Commons; and Canadian Recording Industry
Association (CRIA) President Graham Henderson. The conference,
organized by Toronto-based lawyer Lorne Lipkus and his law firm,
Kestenberg Seigal Lipkus, is one in a series he organizes several
times a year across Canada. Lipkus' legal firm represents many of
the designers whose copied merchandise was seized in the weekend
raid in Toronto.

4. (SBU) The conference provides law enforcement officials and
government and industry representatives with practical knowledge on
investigating and conducting counterfeiting cases. Knock-off
designer goods and a broad range of mass market counterfeit consumer
goods such as extension cords, sneakers, and toys, were displayed at
the conference. Donna Karan, Timberland, Adidas, Hockey Canada,
Kenneth Cole, Calvin Klein, Vera Wang, Davidoff, and North Face also
provided handouts to help officials distinguish between genuine and
counterfeit goods.

--------------------------------------------- -
Law Enforcement Lacks Resources to Enforce IPR
--------------------------------------------- -

5. (SBU) RCMP Superintendent Ken Hanson told conference attendees on
December 4 that Lipkus' conferences fill an important educational
need for the law enforcement community because Canada lacks formal
police training on investigating counterfeit merchandise. Hansen
said IPR crimes are reaching epidemic proportion in Canada, and
police at all levels need more resources to fight these crimes. He
told the audience that the RCMP does not focus on investigations of
retail counterfeit operations, instead focusing its investigative
resources on large shipments, retail operations that will help them

TORONTO 00000466 002 OF 003


crack a distribution network, cases that affect public health and
safety (such as counterfeit pharmaceuticals and unsafe electrical
equipment), or cases affecting national security. He noted that
this approach is similar to the strategy the RCMP uses to prioritize
illicit drug investigations.

6. (SBU) Hansen said the RCMP expects the private sector to use
tools such as Anton Piller orders (a court order for search and
seizure of evidence) or cease and desist orders to combat
retail-level counterfeit activities. Hansen said that with stronger
IPR legislation and greater financial and manpower resources, the
RCMP and other Canadian police forces would be able to more
effectively deal with the organized crime rings that profit from
counterfeiting.

------------------------------------
Federal Parliament Recommends Action
------------------------------------

7. (SBU) Liberal federal MP Roy Cullen, a Toronto-area MP, told the
group that the Standing Committee on Public Safety and National
Security has asked the Harper Government to amend the Trademark Act,
the Copyright Acts, and the Customs Act, to better protect IPR in
Canada. He called for a change in mandate for the Canada Border
Services Agency (CBSA) to allow Canadian border officials to seize
and destroy counterfeit goods on entry into the country. He also
called for better cooperation between Canada and the U.S. on IPR
issues, and suggested the government conduct a public awareness
campaign to teach consumers how to identify counterfeit goods and
explain how organized crime profits from IPR violations. Cullen
said he hopes that Industry Minister Prentice will make IPR a higher
priority than his predecessor. He said he recommends formation of a
high-level Assistant Deputy Minister (ADM) Committee to advance IPR
policy across ministries in Ottawa.

8. (SBU) Cullen noted that his committee had focused on the public
safety aspects of IPR, while the House Standing Committee on
Industry, Science and Technology had focused on the economic aspects
of IPR and has forwarded specific recommendations to the federal
government. The government's response to the committee reports
largely agreed with the findings and pledged government efforts to
increase IPR enforcement, update Canada's copyright laws, and work
with international partners to address counterfeiting on a global
level.

------------------------------------------
CRIA President Calls for IPR Policy Reform
------------------------------------------

9. (SBU) CRIA President Graham Henderson emphasized that IPR is the
backbone of innovation, and that public policy must protect IPR,
both federally and provincially. He pointed to the recent report
issued by the Ontario Chamber of Commerce (OCC), "Protection of
Intellectual Property: A Case for Ontario," (reftel) as a roadmap
for provincial IPR policy reform. Henderson emphasized his belief
that counterfeiting and piracy cost the Canadian economy at least
US$22.5 billion per year, US$9 billion of which likely is lost in
Ontario alone (ref (A)). Henderson said that public tolerance for
copyright violations inhibits IPR protection in Ontario, and Canada
as a whole. A recent poll indicated that infringing copyright laws
by illegal downloading or through buying pirated movies was
considered more acceptable to Canadians than was stealing office
supplies from work. He echoed Cullen's recommendation that the
federal government establish a high level inter-departmental
committee to coordinate IPR policy across government agencies.

--------------------------------------------- -----
Canadian IPR Policy Does Not Protect Entrepreneurs
--------------------------------------------- -----

10. (U) An article in the November 19 edition of "Canadian Business"
eloquently highlights that Canadian IPR enforcement policy does not
protect small Canadian entrepreneurs. The article discussed a
British Columbia entrepreneur who designed a rubberized lifting
strap that allows weightlifters to lift more by giving them a better
grip. He patented the product, but comparable products have begun
popping up on the market. Without the financial backing to launch a
legal challenge, the patents are a moot point. The article ends by
quoting the entrepreneur, "'I'm starting to consider abandoning the
patent route,' says McBride. 'One thing I've learned is that it
might not be worth the time and expense. And unless you have
millions to fight it, you don't really have any protection.'"

TORONTO 00000466 003 OF 003

11. (SBU) Comment: Cullen and Henderson were optimistic that
progress to improve IPR protection is being made in Ottawa.
Henderson told us privately that the federal government may
introduce new legislation addressing the findings of the standing
committees as soon as next week. Improving the legal framework for
IPR protection is important. Additional law enforcement resources
and public education about IPR protection are also needed. Until
the landscape of IPR protection in Canada changes, only rights
holders with very deep pockets, such as movie or record studios or
producers of international designer labels, will be able to afford
IPR protection at the retail level in Canada. End Comment.

NAY

© Scoop Media

 
 
 
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