Evidence of meeting #30 for Industry, Science and Technology in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was patent.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

  • Sylvain Laporte  Commissioner of Patents, Registrar of Trade-marks and Chief Executive Officer, Canadian Intellectual Property Office, Department of Industry
  • Gerard Peets  Senior Director, Strategy and Planning Directorate, Strategic Policy Sector , Department of Industry
  • Konstantinos Georgaras  Director, Policy, International and Research Office, Canadian Intellectual Property Office, Department of Industry
  • Agnès Lajoie  Assistant Commissioner of Patents, Canadian Intellectual Property Office, Department of Industry
  • Denis Martel  Director, Patent Policy Directorate, Strategic Policy Sector , Department of Industry

9 a.m.

Conservative

The Chair David Sweet

I apologize. I just thought it would be good to clarify it if there are going to be other....

9 a.m.

Senior Director, Strategy and Planning Directorate, Strategic Policy Sector , Department of Industry

Gerard Peets

This is the practice of a firm developing multiple patents—it could be in the hundreds—surrounding a core technology. The example that's typically given is the cellphone, which can be the subject of a myriad of patents that cover various aspects of the technology. Some firms will use these as a defensive means of protecting their invention.

9 a.m.

Conservative

The Chair David Sweet

Thank you very much, Mr. Peets.

Mr. Richardson.

9 a.m.

Conservative

Lee Richardson Calgary Centre, AB

Thank you, Mr. Chairman. I was going to ask the same question.

There were two other points you made at the same time that you mentioned thickets. You mentioned two other examples. While we're at it, could you explain those as well?

9 a.m.

Senior Director, Strategy and Planning Directorate, Strategic Policy Sector , Department of Industry

Gerard Peets

Sorry, you're reminding me how we're in a little world here and we get used to certain things, one of which is non-practising entities. This is a reference to firms that obtain a patent pool—a bunch of patents—and their business is to monetize those through lawsuits, through litigation, through settlements, rather than actually inventing or marketing the things that are covered by the patents.

9 a.m.

Conservative

The Chair David Sweet

Thank you very much.

We now move to Mr. Laporte, please.

9 a.m.

Commissioner of Patents, Registrar of Trade-marks and Chief Executive Officer, Canadian Intellectual Property Office, Department of Industry

Sylvain Laporte

Thank you.

Now we'll talk about the administration of intellectual property. As I've mentioned before, we belong to the Canadian Intellectual Property Office, Canada's administrator for IP.

We have a very specific role, basically to examine applications for IP and to grant or register rights. Part of that role also has us manage the first appeals process. We do that for trademarks through our Trade-marks Opposition Board, and on the patent side, through the Patent Appeal Board.

Once we've exhausted those types of administrative activities, the only way to appeal some of our decisions is through the Federal Court.

Our mandate is very clear. We're there to deliver high-quality and timely IP products and services to our clients. We also have a mandate to improve awareness of IP with Canadian companies, and we have an international role to play with the World Intellectual Property Organization.

We've given you volumes for the year 2011-2012. It has been a slower year than usual because of the recession. We get, on average, about 100,000 applications for IP in a given year. It takes many years to go through the process, and what you see on the second line of the table on slide 2 is the number of grants that we will actually allocate in a given year.

If you look at the column for patents, you'll see that we've received about 37,000 applications. Those will not be processed for a number of years, but of the patents that we've processed—which we received a few years ago—we've actually granted 20,911.

What I'm also showing you here is the timeframe required to process an application from the day we receive it to the day a decision is made to either grant or not.

Something to note here is that on the patent side, we're showing 78 months. I just want to highlight the fact that in Canadian patent law, a user who files has up to five years to ask us to treat their application. About 25% to 30% of them wait for the fifth year before they ask us to do that. So this is not a record of our performance, because the users actually have quite a bit of leeway with respect to when they want to start the process. So this circumstance creates a situation of “patent pending” for the duration of the waiting period.

What I'd like to look at now is the global perspective of the IP situation. The three lines on the graph indicate that each type of the three main IP products has been experiencing quite a bit of growth over the last few years. All three of them are growing. The main reason for their growth is the BRIC countries, and in particular China, which has been pursuing a strategy of incremental filings for the last five or six years. In fact, China has seen a sevenfold increase in the number of their applications, so that has had quite a global impact on the IP community.

Now, for the Canadian picture, what I'm showing you in the graph at the top of the page are the Canadian applications. I've broken them down into the two types that we see. The dash lines represent Canadians applying for IP abroad, outside Canada. As you can see, they have experienced quite a bit of growth.

The line at the bottom shows the number of Canadians who apply in Canada. Clearly, we are in a situation where Canadian applicants are filing outside of Canada first.

The table at the bottom is not about applications now. It's about patents that have been approved, so patents that are in force. The first two lines represent the Canadian experience. The first line in the table, “Canadian patents in Canada”, shows the number of Canadians filing in Canada. As you can see, from 2005 to 2010 there has been substantial growth in that.

The number for Canadian patents abroad is substantially higher than the number of patents in Canada, and there's quite a bit of growth there too. In fact, Canadian patents in force have been growing at about 30% since 2005.

What's interesting here is that when we compare the number of Canadian patents in force to the number for the worldwide picture, you can see at the bottom of the table that Canada owns about 1% of patents globally.

We saw a slight decrease from 2006 to 2010. It's relative to global growth, but in essence, Canadian growth kind of meets global growth. We're within a few decimal points. We're losing a little bit of ground, but not too much. We're maintaining the global growth momentum here in Canada.

Because Canadians apply globally, it means that foreigners also apply globally.

I just want to highlight some of the peculiarities that we're seeing here in Canada with respect to the distribution of domestic IP and foreign IP. If I look at the patent filings, in terms of the 36,900 applications we receive in a year, 88% are from foreigners and only 12% are from Canadians. That makes us, in Canada, an office of second filing.

Offices of first filing, such as the United States, China, Korea, and the EU, will actually receive patents before we will, making them an office of first filing. That is usually explained by the interest companies have in filing in their biggest market first. Then they come to offices of second filing. Offices of second filing would include Canada, which is one of the largest in the second filing group, the U.K., Australia, and countries that are usually close to us, from that perspective.

To give you an idea of how many domestic patents the U.S. receives, where we are at 12%, the U.S. IP offices receive about 52% of their patent applications from Americans themselves.

Clearly IP is a global play, particularly with respect to its administration. From an administration perspective, it is essential for us to be well plugged in to other countries and that we spend a great deal of effort harmonizing our intellectual property activities so that it's a lot easier for Canadians to file abroad and a lot easier for foreigners to file in Canada. If that balance is not well achieved, it doesn't make Canadian companies very competitive and it makes it hard for foreigners to invest in Canada.

We have quite a number of activities with the World Intellectual Property Organization. We collaborate on quite a number of committees with them.

We also engage in bilateral agreements. One in particular that I'd like to bring to your attention is something called the patent prosecution highway. We basically give credit for the work done by another country. We have a bilateral agreement with the Americans, for example. If the application that comes to Canada is the same as one filed in the U.S., instead of taking 78 months to process, on average, it takes about six to 12 months. So we greatly accelerate the granting of the patent. That puts the company looking at this service in a very good position to commercialize its goods in Canada a lot sooner.

I'd just like to highlight some of the contributions CIPO makes to innovation and to helping SMEs, in particular, leverage the IP framework to their benefit.

In terms of what we do when we look at granting IP rights on a timely basis, we keep in mind that quite a number of our applicants actually are looking to commercialize their goods. So the sooner we can get to a decision, the better it is for them in terms of taking their goods to market.

Second, the principal thing we do when we examine a patent application, for example, is look at the scope. Typically we get applications that ask for a big scope, because if we grant it, they'll have a monopoly on a whole lot more play.

What we do, through a number of intricate cycles, is bring the scope down to the essence of the innovation, or the invention in the case of a patent. When we take that play from what we typically receive down to what we typically grant, we're looking at the quality of the patent. That's what we call the quality or the “scoping” of the patent. When we don't scope properly, what you will see is a situation where there's no clarity in the market. That will usually lead to litigation.

When companies take each other to court they're using that money, but not necessarily for the purposes of developing new products or for capital investment. We want to make sure that we scope the applications and grant the patents in the best way possible to make sure that we bring certainty to the market.

The third thing that I'd like to bring to your attention with respect to our contribution to innovation is basically what we call incremental innovation. When someone applies for an IP the value proposition is that we will exchange with you, Mr. Inventor, in the case of a patent, a 20-year monopoly in exchange for public disclosure. The public disclosure then is, in essence, to be used by other innovators and other inventors. If the first applicant with the first idea actually commercializes their idea and they create jobs and build a plant there's economic growth and that's good. From an incremental perspective, now if someone takes the idea, reshapes it, adds something to it, and they get another patent and they create jobs in a plant and something else, that's economic growth as well. So that incremental cycle is really at the essence of the value proposition that we look for.

In conclusion, clearly the administration of IP continually evolves. It is truly a global play. I want to leave you with the notion that at CIPO we are quite committed to making sure that we are always going to be in line with helping the innovators out there in Canada.

Thank you, Mr. Chairman.

9:10 a.m.

Conservative

The Chair David Sweet

Thank you very much, Mr. Laporte.

Everybody was well educated on the two presentations.

We'll go now to our first round of questioning with Mr. Braid, for seven minutes.

May 10th, 2012 / 9:10 a.m.

Conservative

Peter Braid Kitchener—Waterloo, ON

Thank you very much, Mr. Chair.

Thank you to all of our witnesses for being here.

Thank you to Mr. Peets and to Mr. Laporte for two excellent presentations. I think you've really helped to kick off our study very effectively. These presentations have underscored not only how interesting this subject area is but how important it is to the Canadian economy. This committee has a real opportunity to help shape the policy process with the objective of strengthening our IP regime in this country. Thank you for getting us started so well.

Actually, I had a hard time narrowing down the questions I want to ask.

Mr. Peets, I'll start with a few questions for you.

You talked about stakeholders within the IP landscape. At a high level, could you explain and describe who those stakeholders are?

9:10 a.m.

Senior Director, Strategy and Planning Directorate, Strategic Policy Sector , Department of Industry

Gerard Peets

Sure. To some extent, different parts of IP have different stakeholder groups, and then to some extent, they share them in common and span the groups. For example, the copyright debate is often framed in terms of the copyright rights-holder businesses, and those are some of the businesses that I mentioned earlier: the film industry, the publishing sector, the recording industry, photographers, etc. There are individual artists and individual creators, and they are often bundled as the rights-holder groups.

On the other side, in the copyright area, there's what we generally refer to as the user group—users and consumers. That represents individual people who buy copyright material, that represents institutional users such as the education sector, and that represents advocate groups for user and consumer rights. Then in copyright there's also a group that can be referred to as intermediaries. To the extent that copyright, in particular in a digital environment, has strong linkages with the use of the Internet, ISPs and things like search engines are important stakeholders in that group. There are also broadcasters and others.

In the area of patents, any business that involves invention and the use and marketing of invention has something to say about patents. We often say that the kinds of business sectors that depend most on patent are those with high upfront investments, long product times, and low costs of imitation. An example would be the pharmaceutical sector, but also the high-tech sector. Although the high-tech sector has some shorter product development times and shorter product lives, patents are nevertheless a big issue for them as well, and there's a different range of issues that presents itself there.

Turning to trademarks, there are businesses of all kinds. Every business needs to identify itself and needs a means of identifying its products, and businesses are concerned about the issue of counterfeiting and about the issue of enforcing the trademarks.

So that's a fairly widely felt priority in the business community, and that's the main thing on trademarks.

9:15 a.m.

Conservative

Peter Braid Kitchener—Waterloo, ON

Thank you. We've touched on this issue of patent thickets already. What is it about the current environment that has created the need for sectors to create patent thickets, and what can we do about it?

9:15 a.m.

Senior Director, Strategy and Planning Directorate, Strategic Policy Sector , Department of Industry

Gerard Peets

I think my colleagues will want to jump in on this one too, if that's okay.

I could perhaps get started by offering that patent thickets, as a phenomenon, aren't novel to the current day and age. They are emerging as an issue in some sectors, and we're hearing from businesses that they are an issue. It has been noted that patent thickets arise when there is an upsurge in innovation in a particular area.

We understand the first patent thicket, in fact, revolved around the sewing machine, and the solution in that case revolved around bundling things together so as to rationalize and condense it. But the fact is, when there are a lot of inventions happening, and multiple inventions go into a single product like a cell phone, this is a phenomenon that we tend to see.

9:15 a.m.

Commissioner of Patents, Registrar of Trade-marks and Chief Executive Officer, Canadian Intellectual Property Office, Department of Industry

Sylvain Laporte

I'd like to add that patent thickets happen principally in the States and in the U.K. where they allow patenting of software, where things tend to move quite fast and it's very important to secure your position in the market, and they do that a lot through IP.

We don't see a lot of thicket evidence here in Canada because of the laws that we have. But because of the foreign nature—as I've explained before—of our businesses, a lot file in the U.S. where there are thickets. So although it's not happening in Canada, it's still quite a concern to businesses in Canada that file outside of the country.

9:20 a.m.

Conservative

Peter Braid Kitchener—Waterloo, ON

Mr. Peets, I think one of your first statements right at the beginning of your presentation was that you and your team spend a lot of time thinking about how IP can be improved in Canada. So, how can IP be improved in Canada?

9:20 a.m.

Senior Director, Strategy and Planning Directorate, Strategic Policy Sector , Department of Industry

Gerard Peets

I could answer this by going back to some of the things that we hear. As I mentioned, the most widespread feedback we get from a variety of people is that copyright modernization is overdue. So that's been a priority, and that is currently the priority.

The second thing is that Canada recently signed the Anti-Counterfeiting Trade Agreement, which relates to the enforcement of IP rights. The business community has identified IP rights enforcement as a priority. I think you'll probably be hearing that from witnesses, down the road.