Mr. Chair, committee members, thank you.
I'll be making my comments in English.
However, do not hesitate to ask me questions in French.
Thank you for inviting me here today. I'm talking on a slightly different issue from what some of my colleagues have, although it connects up in several ways.
I'm a professor in the faculty of law at McGill University, where I specialize in intellectual property: chiefly patents, innovation, and biotechnology.
Just for the record, all of my funding comes from public sources, mostly grants or governmental institutions. I've provided advice to Health Canada, Industry Canada, Canadian Biotechnology Advisory Committee, World Intellectual Property Organization, World Health Organization, UNITAID, and the OECD.
I was also an expert on the Council of Canadian Academies' report on nanotechnology, which touched on some of the issues of precaution. In fact, the chair of the royal commission study, Conrad Brunk, was one of the committee members.
My goal here is simply to help the committee. I'll make a few remarks, but I'm open to questions, particularly related to patents and innovation. I have circulated a background document that should have been translated. I won't be referring to it directly, but it gives some background ideas.
First, I'm going to concentrate on patent law. The first thing to say is that Canadian patent law in the area of agricultural biotechnology is for all intents and purposes equivalent to that of our neighbours in the south and in Europe. There are technical differences, but the scope of patent law protects plants and animals, even though the patent law doesn't technically apply to them. It still provides the same amount of coverage.
The issue I want to talk about is uncertainty. I want to quote from Justice Binnie in a decision by the Supreme Court of Canada from 2000, in the matter of Free World Trust and Électro Santé. He said, “There is a high economic cost attached to uncertainty and it is the proper policy of patent law to keep it to a minimum”. So it's on those issues that I would like to speak.
I am not going to be advocating for or against particular biotechnologies. I think most of us agree that there are some biotechnologies, including genetically modified organisms, that are very helpful. I would think of plant-derived vaccines, which provide vaccine production at much lower cost and are much more stable and able to be transported in high-heat areas. And there are other technologies that we would mostly agree should not be pursued. Canada has decided with respect to BST and genetically modified wheat that we do not want to go forward with these technologies.
I'm taking it for granted that some biotechnologies are wanted and others are not, and what we need is a regulatory, including patent, regime that provides certainty so that we get the investments that give us the products we want. We also have laws that protect those who may be harmed by undesired uses of these crops. If we don't do these things, we will have under-investment by industry in the crops we want and under-compensation for those suffering harm.
There are a variety of uncertainties in patent law. I want to note that the uncertainties in patent law may pale in comparison to some of the uncertainties in regulations—the high cost of regulation, the absence of regulation with respect to genetically modified animals, and so on. But in respect of patent law, one of the risks and uncertainties I want to talk about is patent quality.
In the United States there were studies conducted showing that almost half of the patents that actually go to court have been ruled invalid, and I don't think we can say that Canadian patents are any better. In fact, they may be of lower quality, especially in areas of high technology such as biotechnology. So one worry is whether a patent is valid or not. That's a risk both for those who hold the patents and for those who might want to do research in the area covered by the patent.
This is a problem inherent in the patent system. One of the ways people have suggested to fix it is to invest more in the patent office, which Canada has done. Another way is to introduce an opposition procedure within the patent office so that those who wish to challenge a patent can do so. Europe has such a scheme, and the United States for the last few years has at least been debating it. Canada is significantly behind.
Another issue is freedom to operate. Until recently, only a few companies had the ability to introduce products on the market. One of the issues in biotech is that each generation of product sits on a platform of all previous innovations, and that means you need access to the patents that other companies have. For a long time this has been an issue, since only a few companies had enough financial ability to either license the technology in or take the risk that they would be sued. This would limit access to the market and innovation.
More recently, we have seen an increase in cross-licensing, so that more people can introduce products. We would like to see that continued in order to ensure that people are not put at unjust risk. We can do so through government policies that encourage cross-licensing, as well as better enforcement of our competition laws in fields such as this.
Another issue relates to the calculation of damages. This has been particularly important in the area of agriculture biotechnology. If a patent holder holds a patent over a crop over which there sits a patent, the calculation of damages in Canada is very uncertain. The courts, both the Supreme Court and the federal courts, have given us contradictory rules about how to calculate those damages. This could either lead to overcompensation--that is, the patent holder gets too much--or to undercompensation: that is, it's worth violating the patent because there will not be enough return. Clarifying the rules helps both farmers know what their risk is and the companies determine how much to invest.
Further, the entire area of agriculture biotechnology as well as areas such as nanotechnology or health biotechnologies raise an issue that the courts are the final determiners of the validity of a patent. Most judges do their best in trying to understand the science underlying biotechnology, but they are not trained. Most of them went into law because they didn't like science. While they do their best, if you read these cases you realize that there are sometimes misunderstandings and misapplication of scientific principles.
This is an issue that is inherent in any patent system. But again, an opposition process--which allows more disputes to take place within a patent office, which has greater expertise--could be beneficial.
I'm happy to answer any questions on patent law, but I will just end on that note.
Thank you.