Assessing CSA’s Counterfeiting Activities
August 26th, 2013
[NOTE: As of 17 September, 2013, the CACN website has been deleted and as a result the numerous CACN links contained in this article are currently non-functional. Update here.]
In 2010, the CSA was caught selling illegal product certifications. Incredibly, by 2010 they had been selling these fake certifications for almost a decade. According to the Canadian Anti-Counterfeiting Network (“CACN”), “counterfeit” products are those “bearing unauthorized trade-marks […].” The term “counterfeit” is defined the same way by governments and the OED. By this definition, all of CSA’s modular building “certifications” between 2002 and 2010 are “counterfeit.” At RestoreCSA, we will take the CACN definition at face value.
The CACN “is a coalition of individuals, companies and associations that have united in the fight against product counterfeiting” in Canada. The CSA was counterfeiting between 2002 - 2010, whereas the CACN was founded in 2006. The CSA is a founding partner of CACN, and is currently one of only five entities represented on CACN’s Steering Committee. In other words, the CSA was heavily engaged in counterfeiting activity while at the same time launching an anti-counterfeiting network. That’s awkward.
So how did CSA’s statements on counterfeiting compare with their actions? Well, in 2003 the CSA stated that “products bearing unauthorized certification marks are often unsafe, create unfair competition to legitimate business and damage manufacturer’s reputations.” The CSA emphasized that “counterfeiting is an issue that requires our continued vigilance.” Indeed. It was the lack of “continued vigilance” which enabled CSA’s counterfeiting operations to go unchecked for nearly a decade.
Back in 2003, CSA promised to address the problem with “dedicated resources to special investigation and anti-counterfeiting, and we are taking an aggressive approach in detecting, exposing and punishing unauthorized use of our marks.” And further, “we encourage people to report products bearing a counterfeit CSA mark.” And further still, “We also offer training programs to help retailers understand product approval marks and detect counterfeit marks.” But CSA was actively engaged in counterfeiting activity when they made these anti-counterfeiting statements.
In 2004, CSA promised to “take action to curb the growing national and international problem of trade in counterfeit products.” In the year previous, CSA had even “formed an alliance with a leading intellectual property law firm which will position us well to protect the integrity of our marks.” RestoreCSA believes this statement to be a reference to the firm of Kestenberg Siegal Lipkus LLP, a company with longstanding ties to CSA and, once verified, enough bad baggage for a thoroughly entertaining feature on our website this fall.
In 2004-05, the third year of CSA’s selling of counterfeit certifications, they were boasting that they “will continue to build an international network of partners focussed on applying a zero-tolerance policy to fraudulent and counterfeit products bearing the CSA marks.” They reassured their readers that CSA’s job “is to protect the integrity of the CSA marks that the public has come to know and trust.”
To summarize, the CSA was making some rather bold statements about their abhorrence of practices they were quite fond of, they were aggressively fighting the very thing they were doing. This is the CSA we know from experience; a company of contradiction, wholly divorced of ethical consistency and integrity in practices; a company whose word is nearly worthless.
As a child of CSA, what does CACN think about counterfeit products like CSA’s? Well, they’re not pleased with them. “First of all,” they say, “if you purchase a counterfeit product, you are hurting the legitimate economy.” Then, ominously, CACN warns that “you may be funding organized crime”.
The CACN also warns that “counterfeiters spend nothing on quality control and therefore do not care about what happens to consumers who use counterfeit products such as electrical devices […]”. Further, “counterfeit products raise serious health and safety concerns, [especially] from counterfeit electrical products.” As to the counterfeiters themselves, “criminals manufacturing and distributing counterfeit products cut corners, use unsafe components and ingredients, conduct no safety testing, [etc.]. The result is a plethora of hazardous knockoffs that put Canadian consumers at risk.”
One should note that when CSA sold their illegal certifications they also “cut corners,” used “unsafe components,” conducted minimal or zero “safety testing,” and spent “nothing on quality control.” The result is so bad that the buildings CSA illegally certified do not pass Canadian code standards. Ironically, these are the same standards that CSA now claims ownership of.
The CACN specifically focusses on fraudulent certifications. “Products bearing counterfeit certification marks that do not meet applicable standards also pose safety issues.” And again; “Counterfeit certification marks undermine the system of standards and testing put into place by organizations such as CSA”. Even in their recommendations the CACN is blunt, demanding “legislation clearly defining trademark ‘counterfeiting’ as a specific criminal offence under the Trade-marks Act.” And further, CACN stresses that NAFTA requires “criminal procedures and penalties […] be applied at least in cases of willful trade-mark counterfeiting.”
Irony has been awfully thick in this article and, if we’re honest, its been a source of amusement also. But CACN isn’t done yet. Consider the following statement: “CSA exemplifies the increasing problem with counterfeit and pirated products internationally and in Canada.” This CACN statement was made in 2006, at the height of CSA’s counterfeiting activity; its an instance of profound, if unintended, accuracy. They continue: “CSA has had an audits and investigations group since the 1970’s. The purpose of this group is to prevent the misuse of the CSA certification mark by legally licensed manufacturers that must commit to adhere to certain manufacturing practices and standards as a condition to applying the CSA mark to their products.” But we now know that the aforementioned spending on quality control didn’t exist, making the adherence to practices and standards nonexistent. “With safety being CSA’s paramount concern, it adopted a zero-tolerance policy and has developed an aggressive anti-counterfeiting program over the past few years.” This is also nonsense. The CSA was not verifying standards; instead they were selling certifications; their paramount concern was not safety, it was revenue. Yet “CSA has invested considerable resources to build alliances with law enforcement, investigative firms, law firms and other associations, and has been a driving force in the organization and operation of CACN.” In other words, the CSA is aggressively enforcing laws and standards on other companies while exempting themselves from those same laws and standards. Sound familiar?
The counterfeiting activity at the CSA involved international manufacture of modular buildings, the illegal certification of such buildings at source, false sign-off of compliance with Canadian regulations, and facilitation of the importation into Canada of falsely certified products for subsequent use by Canadian citizens. That’s a lot of organization. According to the CACN, “when one considers that manufacture and international distribution require organization and that there will normally be numerous people involved in the commission of the offence, the main purpose of which is for the financial benefit of the people involved, the need to emphasize criminality should be clear.” And further, “the problem arises from the fact that criminals manufacturing and distributing counterfeit products are generally driven solely by the desire for profit.”
And what about CSA’s victims? “At the least,” says CACN, “consideration should be given to ordering that perpetrators pay the hard costs resulting from the seizure, storage and destruction of the [counterfeit] products.” RestoreCSA is advised that CSA has not paid any such hard costs, nor has any restitution been paid to their victims.
This is all quite aggressive, but CSA’s friends at CACN aren’t done yet. As regards the people behind the banner, the individuals at CSA who make the decisions and cash the cheques, the CACN advocates that “significant penalties, including fines and imprisonment, […] be provided with a general stipulation that the penalty should, at the least, deter by ensuring that the activity has been unprofitable.” RestoreCSA is advised that CSA has not repaid any of the monies taken from manufacturers in payment for what they thought were genuine certifications.
Recently, a company was caught using counterfeit UL safety stickers to sell products, an American version of CSA’s fake stickers. The company was hauled into court and the judge at that trial was particularly plain-spoken. He stated as follows; “what I am most concerned about is the counterfeit […] safety stickers. That is despicable because what ends up in the public’s hands is something that is frankly going to be dangerous, we are talking about electrical appliances that cause fires [which are then dressed] up with false labels and false safety certificates. [This] causes me great pause, such pause that if it was an individual who pled guilty before me today my starting point would be a term of imprisonment in a federal penitentiary, without a doubt […] I am left with a very bad taste in my mouth from what I have heard here today.”
Notice how strong all of these statements are? Consider that Canada’s Consumer Product Safety Act deals very specifically with counterfeit safety stickers. Quoting the Act; “No person shall package or label a consumer product… a) in a manner -including one that is false, misleading or deceptive- that may reasonably be expected to create an erroneous impression regarding the fact that it is not a danger to human health or safety; or b) in a manner that is false, misleading or deceptive regarding its certification related to its safety or its compliance with a safety standard or the regulations.
The CSA did indeed sell illegal product certifications from 2002 - 2010. The CSA did indeed help launch the CACN, an anti-counterfeiting entity. The CACN defines counterfeiting as the selling of unauthorized marks. By CACN’s own definition, one of its founders was caught engaged in conduct the CACN was founded to fight.
As yet however, the CACN has taken no action against CSA. The CACN website contains a long list of counterfeiting news articles going back to 2010, but they have omitted any mention of their founders counterfeiting activities, even though these activities were high profile national news in 2011. They have even protected CSA’s position on the CACN Steering Committee. Mr. Doug Geralde, CSA’s Director of Corporate Mark Integrity, is currently a member of the CACN Steering Committee and, presumably, he is still influencing actions taken against counterfeiters like CSA. It should be self evident that this level of hypocrisy badly undermines CACN credibility.
RestoreCSA is committed to a total recovery of the CSA organization, including and especially the returning of that regulatory entity to operation within the rule of law. Ironically, in this article at least, the CSA itself and its own sponsored entity are more aggressive in their positioning and more condemnatory in their statements on the conduct of companies like CSA than we have been at RestoreCSA.com. Time will tell if either entity will close the gap separating their strong statements from their hypocritical conduct.