351. Further to our formal communication to Members in document IP/C/W/613, Canada is pleased to present a proposal to re engage the TRIPS Council in discussions under the WTO Work Programme on Electronic Commerce. Canada's long standing perspective is that E-commerce provides new ways of doing business, opens new business opportunities, fosters new efficiencies, gives small and medium sized enterprises access to wider markets and for consumers provides increased competition and product choice.
352. Canada's proposal follows from the recent Ministerial Decision of 19 December 2015 made at the Tenth WTO Ministerial Conference, MC10, to continue work on the WTO Work Programme on Electronic Commerce "based on the existing mandate and guidelines and on the basis of proposals submitted by Members in the relevant WTO bodies as set out in paragraphs 2 to 5 of the Work Programme". Particular to intellectual property, Article 4.1 of the Work Programme originally established in 1998, this would be document WT/L/274, tasks to the TRIPS Council to "examine and report on protection and enforcement of copyright and related rights, protection and enforcement of trademarks and new technologies and access to technology". Canada's proposal also follows from the Nairobi Ministerial Declaration Guidance at paragraph 29 "to reinvigorate the regular work of the Committees" of the WTO. We note that formal TRIPS Council discussions on electronic commerce under the Work Programme last took place between 1998 and 2003, during which time Members engaged in constructive discussion on those provisions of the TRIPS relevant to the Work Programme as well as related developments in the international IP framework. The TRIPS Council documents and reports prepared by the Secretariat for those discussions would no doubt serve to continue as a foundation for future engagement in this area.
353. At the same time, in the intervening years since the last formal TRIPS Council discussions in 2003, we have seen remarkable advances at the intersection between intellectual property and E commerce with rapid growth in the role of digital technology and telecommunications, as facilitators of commerce in countries spanning all levels of development. IP continues to intersect with E-commerce in a number of ways. Not only do E-commerce transactions often involve the sale of IP protective goods and services, for example, music, films, pictures, software, books, etc., but IP also underlies the systems that make E-commerce work. For instance, the underlying systems and devices that facilitate and enable E-commerce transactions are often protected by a range of IP rights, for example, copyright designs, patents, integrated circuit designs, trade secrets, trademarks, etc.
354. With these developments in mind, we would welcome an exchange of views from the TRIPS Council Membership on the desirability of a dedicated standing TRIPS Council agenda item on the Work Programme on Electronic Commerce or an alternative option such as ad hoc discussions. In view of previous work in this area, renewed engagement on this topic could, for instance, allow Members an opportunity to share national experiences and national policy development efforts at the intersection between IP rights and E-commerce with a view to helping Members better understand and catalogue emerging global policy norms and developments in this area. This discussion could be guided by the range of issues covered under Article 4.1 of the 1998 Work Programme, such as national policy experiences on E-commerce relating to the protection and enforcement of copyright related rights and trademarks, as well as with respect to new technologies and access to technology. We remain encouraged that these avenues for discussion remains sufficiently broad and may serve to encourage the sharing of national experiences and practices across a full range of IP and E-commerce topics of interest to Members spanning all levels of economic development.
355. To provide an example of the type of information exchange and sharing of national practices that Canada envisages under this item at future TRIPS Council meetings, I would now be pleased to present on a recent innovative law enforcement initiative aimed at addressing the sale of counterfeit trademark goods over the internet. Following the presentation, Canada would welcome the views of Members on a proposal for a standing item or ad hoc discussions on E-commerce in fulfilment of the MC10 Ministerial Decision as well as comments and questions on the specific presentation that I am about to deliver.
356. My presentation will provide an overview of a recent innovative IPR and E-commerce initiative which we believe is having a very positive effect for consumers, IPR holders, credit card companies, banks and the government. The programme is titled Project Chargeback and is led by the Canadian Anti Fraud Centre – a small unit under Canada's national police service. The objectives of the programme are effectively threefold. It responds to complaints of consumers regarding deceptive E-commerce websites selling counterfeit goods. It refunds consumers that have inadvertently purchased counterfeit goods, including for example clothing or counterfeit pharmaceutical products. Third, it reduces overall profits of counterfeit sales, including by organized crime.
357. Slides 4 and 5 provide an overview of how the programme works. The crux of the initiative revolves around the worldwide zero tolerance chargeback policy adopted by credit card companies which require issuing banks to refund card holders that have unintentionally purchased and received counterfeit or pirated merchandise if they can provide confirmation by the right holder or law enforcement that the goods are not authentic. Once a product is confirmed counterfeit the credit card companies refund 100% of the original charge to the victimized consumer. The initiative relies on collaboration between the consumers, governments, credit card companies, IP right holders and banks. In terms of the general process, consumers that have inadvertently purchase a counterfeit product file a complaint with the Canadian Anti Fraud Centre providing information including the details of the goods (usually by submitting a photograph), website address of where they purchased the goods, the date and the amount of the purchase. Next, the Canadian Anti Fraud Centre confirms, often with the assistance of right holders, that the goods are not authentic and will relay the information to the credit card company and issuing bank to assess and initiate a chargeback which then typically results in the termination of the merchant account used by the website to process payments for the sale of counterfeit goods. This has the downstream effect of reducing the ability of counterfeit good sellers marketing their counterfeit goods to other potential customers. Also, the victimized consumer is constructed to not return counterfeit merchandise to the seller. By not returning the item, the counterfeit good seller subsequently loses the cost of the product and is unable to sell that item to someone else.
358. In terms of the impact in just one specific case of the programme, consumers recover 100% of the loss they occur in the counterfeit goods purchase. The counterfeit seller loses the sale of the product along with a US$25 chargeback fee per refund and likely termination of their merchant account by the bank or payment processor. In addition, a payment processor or bank could be fined for a high number of chargebacks and could lose access to Visa, Mastercard or other credit card companies. Further losses to the counterfeit good sellers include loss of the product which is not returned by the consumer, loss of the production costs of course and loss of the shipping costs, including shipping charges and packaging.
359. The results of the programme are significant and speak for themselves. Just to give you a few numbers: over the seven month period between 1 October 2015 and 30 April 2016, 7,460 consumers have recovered 100% of their losses, averaging between 300 and 350 dollars per victim. Since 2010, over 5,000 merchant accounts have been identified over half of these have been terminated. In addition, over the past two years, approximately 40 brick and mortar retail merchant accounts have been closed in Canada due to the programme. I have just provided a high level overview of the programme, but should Members or their colleagues at capital have more interest in the Project Chargeback programme, please refer to the website above or come speak with me or follow up. While this operation is quite small in terms of human resources, in fact only a handful of people operate this programme, we have already received interest from several countries that are interested in learning more to replicate the programme in their countries. I hope the presentation of interest to Members. We feel it is the type of national experience of interest regarding IP and E-commerce that could serve as a mere example of the sorts of presentations that other Members could make on IP policy initiatives of interest under the E-commerce Work Programme at future TRIPS Council meetings.
360. To conclude, in view of the MC10 Decision to renew work on the Work Programme on Electronic Commerce, as well as the Ministerial Decision instruction to the General Council to hold periodic reviews of the work of WTO Bodies, Canada would be interested in hearing the views of the Membership on the desirability of a standing item on this issue or ad hoc discussions at future TRIPS Council meetings.