Evidence of meeting #42 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 games.
A recording is available from Parliament.
11:25 a.m.
Conservative
The Chair Conservative David Sweet
Thank you very much. That's the limit on the time.
Thank you very much, Ms. Lank and Mr. Lake.
Now we're moving on to Madam LeBlanc.
11:25 a.m.
NDP
Hélène LeBlanc NDP LaSalle—Émard, QC
Thank you, Mr. Chair.
My thanks to the witnesses for their presentations.
Ms. Lank, it is my turn to ask you questions now. In your brief, you said:
it is not helpful offensively or defensively, but I missed the first part.
Could you tell us a little more about that statement?
11:25 a.m.
General Counsel, Desire2Learn Incorporated
When one talks about patents, one talks about offensive use and defensive use. It gets back to this issue of mutual destruction. If we have a patent, we can say to a competitor that if he continues doing something, we're going to sue him or make him pay us licence fees. That's an offensive use. If, however, they come after us and say that they're going to sue us, we can say that if they sue us, we're going to sue them back, because they're infringing. Had we had Canadian patents, it would not have been helpful because we were sued in the U.S.
Could we have gone back and sued our competitor in Canada? Yes, we could have. What would that have meant? Probably not much. It wouldn't have hurt them in the pocketbook. It wouldn't have hurt them much in the marketplace. The difference in patent litigation costs on both sides of the border is astronomical. It's unbelievable. We were given an estimate when we were sued in Canada that, from the time of filing through all the discovery and everything we had to produce, it probably would be about $500,000. I think our costs in the U.S. ended up exceeding $10 million.
11:30 a.m.
General Counsel, Desire2Learn Incorporated
In Canada, the estimate would have been about $500,000, and in the U.S. I think we ended up spending a little over $10 million.
11:30 a.m.
NDP
Hélène LeBlanc NDP LaSalle—Émard, QC
You are showing us that there really is a cultural difference between Americans and Canadians.
You also spoke about the importance for companies to be well informed before they confront that type of situation. What do you think should be the role of the federal government? The government has material dealing with intellectual property, patents, and so on. In your opinion, what should the role of the federal government be, and how could it be improved?
11:30 a.m.
General Counsel, Desire2Learn Incorporated
That is a very difficult question to answer. Again, John and I were talking about this yesterday. He was speculating that perhaps the government could fund initial patent applications for start-ups as a concrete example. That is one way. Education, education, education. We have to make sure that young entrepreneurs, and older entrepreneurs for that matter, are aware of what can happen. We have to make them aware of the differences of geography, that if you are going to go south you have to play with the big guys and risks can increase as well as rewards. As a practical matter, it's a very difficult question to answer.
11:30 a.m.
NDP
Hélène LeBlanc NDP LaSalle—Émard, QC
I have one last question.
A witness who appeared before the committee mentioned that it might be good to have an intellectual property consultant in the government. The consultant would have an office set up to help companies with intellectual property matters.
11:30 a.m.
General Counsel, Desire2Learn Incorporated
When the litigation started, some of the people in the company said that we should get the Canadian government to help us. We quickly learned that we were on our own. There was no such person in the Canadian system we could identify who could give us some help. I think that may be a good suggestion, to have somebody to call to ask what we do now. We do that when we're looking at putting our business in other jurisdictions. The Canadian embassy in Colombia has recently been very helpful to us. In Brazil they have been helpful to us. This is one area where there really wasn't anybody in the Canadian government to turn to. That might have been helpful.
11:30 a.m.
NDP
Hélène LeBlanc NDP LaSalle—Émard, QC
Our study is also about innovation. How do you see patents on intellectual property? Does that help innovation or hinder it?
11:30 a.m.
General Counsel, Desire2Learn Incorporated
The company's position is that software business method patents don't help innovation. They are used more in business wars than to truly protect something that is unique and novel.
One of my favourite things about Canada is the Robertson screw. A software patent is not a Robertson screw that should be entitled to protection by the government. However, I don't think there are any Canadian software suppliers who would take the position that, because of that, we're never going to file for a patent. This gets back to if you can't beat them, join them. That's why as much as we are not fond of software patents, of business method patents, we are filing for them. This gets back to the defensive use.
I'm never going to say that we would never sue anybody, but we want to use our arsenal far more defensively than offensively.
11:35 a.m.
Conservative
The Chair Conservative David Sweet
Thank you very much. That's all the time for that round.
Now we go on to Mr. Braid for seven minutes.
11:35 a.m.
Conservative
Peter Braid Conservative Kitchener—Waterloo, ON
Thank you very much, Mr. Chair. Thank you to both of our witnesses for being here this morning.
Thank you very much, Ms. Lank, for coming up from Kitchener-Waterloo today and sharing the experience and expertise from Desire2Learn Incorporated. It is greatly appreciated.
I have a question about Blackboard Inc. to start. Is Blackboard Inc. still in business in the U.S.?
11:35 a.m.
General Counsel, Desire2Learn Incorporated
Blackboard Inc. is still in business. Interestingly, within the last several months, they have had a layoff of about 200 people. They had been publicly traded. They went private about eight months ago, I think. Yes, they are still in business.
11:35 a.m.
Conservative
Peter Braid Conservative Kitchener—Waterloo, ON
How does your market share in the U.S. compare to theirs?
11:35 a.m.
General Counsel, Desire2Learn Incorporated
Our market share has increased. Their market share, we believe, has decreased. We used to be able to get a lot more information when they were public, of course. Now they're in the same position that we are; we're not public.
Our market share has increased against Blackboard's. We're facing other competition now in the marketplace. We're also getting into areas we had not been in historically, so we're running up against other competitors. Right now we're really focusing on corporate, associations, and those sorts of industries, those sorts of verticals. We're finding different players in the market.
Blackboard suffered greatly from the litigation. We ended up with the white hats in the marketplace because of the litigation. We were very public with it. We had a patent log where we posted every filing in the court system, which Blackboard didn't like very much. We posted it whether it was good or bad. It was simply up there. It was a unique approach that I don't think we would have taken if we were in a business to business scenario, but our clients were educators. They were public servants. They wanted to know what was going on. I think we won the PR war, as well as ultimately winning the litigation after a very long slog.
11:35 a.m.
Conservative
Peter Braid Conservative Kitchener—Waterloo, ON
To use a Texas metaphor, you had an Alamo and you won, but it was a little bloody and messy and time consuming.
11:35 a.m.
General Counsel, Desire2Learn Incorporated
Yes, and it was distracting for the organization. The U.S. judicial system is so dependent on depositions, documents and so forth. We had to produce all of our senior leadership at one time or another for one or more depositions. Every deposition takes time to prepare. There was document reviewing as well. It really and truly is distracting.
11:35 a.m.
Conservative
Peter Braid Conservative Kitchener—Waterloo, ON
Regarding the objective of filing patents in the U.S., we've heard testimony from other company representatives who have been here. Some argue that they file in the U.S. because that's their largest market. In terms of Desire2Learn, are you filing in the U.S. because that's your largest market, or are you filing because this is an important defensive mechanism, or is it a bit of both?
11:35 a.m.
General Counsel, Desire2Learn Incorporated
It would definitely be both.
Let me be clear. We do not ignore the Canadian patent system or the trademark system. With trademarks, for example, it is our standard practice to file both in the U.S. and Canada at the same time, always. We want trademark protection in both places.
Patents are a lot more expensive to file than trademarks. We're a bit more selective. We're a bit more careful on the timing. But I do not believe our company would ever secure only a U.S. patent. We would always want protection in Canada and in other countries as well.
11:40 a.m.
Conservative
Peter Braid Conservative Kitchener—Waterloo, ON
Absolutely.
With respect to the U.S. process, are you using the provisional patent system in the U.S.? Do you have any thoughts or perspective on that process? We don't have a provisional system in Canada. We've been hearing about this at our committee hearings as well. Some people are speaking to the provisional system as a best practice.
Could you share your perspective?
