Mr. Speaker, I am pleased to begin the second reading of Bill C-29, a bill that makes technical amendments to the Patent Act. The changes provided in this bill are strictly technical and narrow in scope. I am hopeful that the House and the other place will have no problem passing this bill expeditiously.
It is very important that we move quickly on this bill for, although it deals with details that are of a technical nature, the jobs of many Canadians and the competitiveness of Canadian companies in a global marketplace could be stake if we delay.
Canada's reputation as a good place to invest and perform leading edge research and development may also be hurt if we do not move quickly to clear up the technical issues covered by the bill.
First, what the bill represents is a response to an unexpected court decision that has raised uncertainties about the status of some patents. It is designed to clear up the confusion about the patent fees and potentially the status of a significant number of patents. It is a measure to avoid clogging the courts with patent infringement lawsuits, and the sooner we pass the bill the sooner we can remove the element of uncertainty regarding Canada's patent regime.
I want to provide the House with some of the background that made these technical amendments necessary. The Patent Act is designed to protect the intellectual property of investors. The patent offer the investor a monopoly on the creation for a specific period. In this way we provide incentive for research and development so that people will invest the time and money it takes to devise and perfect a new product.
In order to apply and maintain a patent application or patent, a set of fees must be paid and these fees vary according to several factors. One of the variables today is the reason that we have a problem.
The fees paid for patent protection vary according to the size of an entity. If one is a small entity defined as an individual, a university or a business with 50 employees or less, the fees will generally be half of those of a large entity.
This distinction between small entities and large entities gave rise to the technical amendments that we seek to address. Those who filed patents and paid their fees always had to ask themselves whether they should be filing as a small entity or a large entity. On the surface, the definitions are straightforward, but over time the situation became much less clear.
What happens, for example, if a person starts off as a single individual inventor and his or her company grows quickly so that it becomes a large entity? What happens when, for instance, a person is a large entity with more than 50 employees but decide to break up into a company of smaller components, one of which maintains the patent? What happens when a person is a small entity but enters into an agreement with a large entity for exclusive use of one's invention?
Above all, with respect to the technical amendments before us, what happens if a person makes a mistake? What happens if a person files as a small entity and then realizes that he or she should have filed as a large entity instead?
Those are important questions for innovators, especially for individuals and small businesses who have the opportunity to use their ingenuity and innovation to grow a business.
The Commissioner of Patents is responsible for addressing the system and setting collective fees. In the past, in the case of small and large entities related fees, the commissioner acted on the principle that an entity that had made an honest mistake in determining the level of the fees should be given the benefit of the doubt. If the entity had submitted the incorrect amount in good faith and it was later determined that the amounts submitted was incorrect, the entity could top up the fees to maintain their rights in accordance with the act.
That was the practice and many individuals, small businesses and universities maintained their protection under the system that allowed for corrective measures, or so they believed.
However all this has changed as a result of a court case know as the Dutch case. In patent infringement suit brought against Dutch Industries by Barton No-Till Inc. and Flexi Coil Ltd., Dutch Industries successfully maintained that the patent had been abandoned because the proper fees were not paid. Moreover, the judge found that the Commissioner of Patents had no legal authority to accept top up payments.
The court decision means that the top up practice is no longer accepted. This opens a Pandora's box of potential legal trouble. It has created the possibility of a Dutch defence against patent legislation if a company is found to have used the top up policy in order to correct and oversight.
This case was appealed to the Federal Court of Appeal and on March 7, 2003 the court rendered its decision. The Federal Court of Appeal agreed with the lower court that late top up fees could not be corrected.
Furthermore, the Federal Court of Appeal ruled that the determination as to whether an applicant would be considered a small or a large entity is to be fixed at the time of entry into the patent regime. That interpretation by the court was inconsistent with the long-standing practice of fees varying over the life of a patent if the entity changed size.
This new interpretation meant that any applicant who had entered as a large entity and later became a small one, and paid commensurate fees, suddenly found themselves in the position of having underpaid the prescribed fees. These applicants and patent holders risk invalidation of their rights.
This creates a very difficult situation for holders of patents who may not have paid the right fee. We want to end this confusion. We want to remove the uncertainty as it relates to those who have used the flexibility as described. In fact, in August 2003 the government announced that it would amend the Patent Act to clarify the payment of certain patent fees.
The amendments contained in the bill provide a 12 month timeframe for patent holders and applicants who are negatively affected by the court decision to maintain their rights by making necessary top up payments. In effect, we are giving patent holders the right, for a 12 month period, to continue making the arrangements that the courts found they had no right to do under the current legislation.
The longer this legislation is delayed the more likely the number of patent infringement court cases would increase. This would have an adverse effect on Canada's reputation as a good place to do business. It would undermine our reputation as a country that protects intellectual property rights.
The intellectual property stakeholders have been consulted on these technical amendments and they support the patent provisions of the bill. I would urge hon. members to pass it as quickly as possible and remove the uncertainty.
The second issue dealt with in the bill involves the legislation that was passed in the last Parliament as Bill C-9, the Jean Chrétien Pledge to Africa Act. Hon. members who were present in the last Parliament will recall that this was an initiative to provide lower cost pharmaceutical products to least developed and developing countries. At its heart, the bill aimed at helping those countries fight HIV-AIDS, malaria, tuberculosis and other public health problems by giving them easier access to patented medicines.
Bill C-9 amended the Patent Act and the Food and Drugs Act. It provides the legislative framework that enables Canada to authorize someone other than the patent holder to manufacture a lower cost version of a patented medicine for export to a developing country. Canada was very proud to be one of the first countries to take such action.
However there was a technical oversight in that legislation, one which we seek to correct now. An expert panel, to be appointed by the Minister of Industry and the Minister of Health, was to be named to advise the government on which pharmaceutical products should be eligible under the regime.
In response to recommendations from some hon. members from across the floor, the government agreed that the appointment of this panel would be reviewed by a committee of the House. Of course, the other place also has a rightful responsibility in matters that come before Parliament, and a committee of the other place should have the right and authority to review these appointments as well.
Hon. members who were present during the final weeks of the last Parliament will recall the urgency of getting this humanitarian and life-saving legislation through Parliament before the election writ was dropped. There was no time to make the necessary amendments to Bill C-9 that would ensure the other place was given the same rights of review as the House. However the then minister of industry gave the other place her commitment that at the next available opportunity the government would correct that oversight in the new Parliament.
The next available opportunity is now. We wish to take advantage of the need to pass technical amendments affecting payment of fees to make a further technical amendment that would provide the other place with its rightful responsibility to review the appointments to the expert panel.
This is not a controversial measure. It is a step to do the right thing and correct an oversight of the last Parliament, an oversight that, were it not for the generosity and spirit of the other place, might have killed the bill at that time.
Both of the measures in Bill C-29 are very technical in nature. Neither of them is controversial. Both of them deserve swift passage and that is why I urge the House to focus sharply on the technical content of the bill.
This is not an overhaul of the Patent Act. It does not break new ground in how we protect and encourage innovation in Canada. I urge hon. members from both sides of this House to join me in voting for the passage of this bill as soon as possible.