Intellectual Property Crime

Please see: The Counterfeit Report
In partnership with the Canadian Anti-Counterfeiting Network (CACN), a new poster campaign has been rolled out to educate consumers, retailers and the public in general, about the dangers and economic costs associated with counterfeit products as well as its connection to organized crime. View the posters.

Intellectual Property (IP) crime -- copyright piracy and trademark counterfeiting – is a growing international phenomenon that generates huge losses for legitimate industry, the economy and the Government of Canada.

According to Interpol, this type of crime has confirmed links to organized crime and terrorism. The Royal Canadian Mounted Police (RCMP), the Canada Border Services Agency (CBSA) and other Canadian law enforcement agencies are committed to undertaking coordinated action to counter the threats posed by IP crime.

Penalties and Trends

• Under the Copyright Act, the
  maximum penalties for unauthorized manufacturing, importation or distribution of copyrighted products
  are a $1 million fine and five years in prison.
• Between 2001-2004, in partnership with other government departments and the private sector, the RCMP conducted over 1,800 investigations involving counterfeit goods in Canada.
• During the same time period, the RCMP laid over 2,200 charges against individuals and more than 100 charges against companies. Municipal and provincial police services have also investigated and laid charges for Intellectual Property crimes.
• Pirated and counterfeit products worth tens of millions of dollars have been confiscated. These seizures represent a significant increase in enforcement activity. Even more troubling is the fact that they seem to signal an explosive increase in the sheer number of counterfeit goods now being smuggled into Canada.

Counterfeit Goods Now More Dangerous

• Counterfeit products are now much more diverse than they used to be and often involve serious, even potentially deadly, health and safety risks.
• Counterfeit electrical products, pharmaceuticals, automotive parts, and food products have entered the Canadian market.
• Unlike in the past, Canadian consumers now frequently fail to realize that they are purchasing counterfeit goods. The criminals producing these products put so much effort into disguising a product’s appearance that it can be very difficult to determine whether or not a product is genuine.
• Since counterfeiters spend no money on research and development, marketing, taxes or quality control, they operate with huge profit margins and can therefore offer their goods at what appear to be bargain prices.

Addressing the Problem

• To truly stem the flow of counterfeit goods entering Canada and to protect the Canadian public, the RCMP and its partners need the cooperation of private industry and the general public.
• Copyright holders are encouraged to monitor the marketplace and take legal civil action against retailers that are involved in pirating and counterfeiting their products.
• If it is suspected that the piracy or counterfeiting is being conducted on a commercial scale by importers, manufacturers or wholesale distributors, the matter should be reported to the RCMP.
• The RCMP is particularly interested in situations where criminal organizations are believed to be linked to the illegal distribution of counterfeit goods, or if the goods pose a serious threat to public health or safety. In order to identify pirated or counterfeit goods, and to effectively facilitate court processes, the full cooperation of rights holders is required.
• The general public should understand that if a deal seems too good to be true, it probably is.
• Consumers are encouraged to report suspected pirated or counterfeited goods to the company that owns the rights to the product so the company may take appropriate action.

FAQs

1. Why should I worry about buying a counterfeit product?
First of all, if you purchase a counterfeit product, you are hurting the legitimate economy – this means lost jobs and lost tax revenue. Second, you may be funding organized crime or a terrorist group. Finally, counterfeiters spend nothing on quality control and therefore do not care about what happens to consumers who use counterfeit products such as electrical devices that catch fire, pharmaceuticals that contain no active ingredients, or children’s clothing that is not fire retardant.

2. How can I ensure that the product I’m buying is not counterfeit?
Some indicators to watch for include the price being much lower than average, spelling mistakes on the product or packaging, products that are normally sold in packages being sold individually, shoddy appearance of the product or package, or products (particularly electrical products) that have no name brand. In addition, if you buy products from a reputable retailer, there’s less chance they will be counterfeit.

3. What should I do if I suspect that I’ve purchased a counterfeit product?
As a first step, you should check on the internet to determine if Health Canada or the manufacturer has issued any warnings about the product. Sometimes, however, the retailer is aware that the product is counterfeit and may even tell you you’ve bought a “ knock off,” or words to that effect.

4. What if I suspect the retailer isn’t being honest?
Most manufacturers use web sites as part of their marketing strategy – web sites allow you to contact manufacturers directly to express your concerns. Normally, the manufacturer will offer to examine the product and may then initiate an appropriate response.

5. If I contact the police or the company because I think I’ve purchased a counterfeit product, can I get into trouble?
The implications of purchasing a product knowing it is counterfeit are outlined in the response to question #1. Possession of counterfeit items is not a criminal offence in Canada as long as there is no intent to distribute them.

6. I have a friend who downloads music from the internet. Is he breaking the law?
Downloading music for personal use is currently not a criminal offence in Canada. However, this legislation is constantly being challenged and it would be wise to check often to ensure that the laws concerning this practice have not changed.

7. Where can I get more information about crimes involving counterfeit goods?
Many private sector organizations have their own websites – organizations such as the Canadian Recording Industry Association, the Canadian Anti-Counterfeiting Network, the Canadian Association Against Software Theft and the International Anti-Counterfeiting Coalition. Law enforcement agencies such as Interpol also have websites that deal with Intellectual Property crime.

8. When does the RCMP investigate counterfeit products?
According to the RCMP's protocol with Justice Canada, our priority for investigating counterfeit products targets commercial manufacturing, importation and distribution. Investigations at the retail level are generally dealt with in the private sector through civil processes.

The RCMP focuses on intellectual property crime investigations that are very large scale or in which there is a possibility we'll be able to "target upwards"– in other words, expand our investigation beyond the retail level to target the highest possible level responsible for counterfeiting (e.g. the wholesale distributors of a counterfeit product or the product's importers or manufacturers). The RCMP is particularly interested in investigations that involve health and safety risks or organized crime groups.

9. Who in the RCMP can I contact for more information about intellectual property crime offenses?
The RCMP has designated the following Intellectual Property Crime coordinators in each region of Canada: