Industry Committee on May 10th, 2012

[Peter Braid, Conservative, 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?

[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.

[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.

[Peter Braid, Conservative, 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?

[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.

[The Chair, Conservative, David Sweet]

Thank you, Mr. Peets.

I'm sorry for the time that we are always restrained here.

Now to Madam LeBlanc, for seven minutes.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

Good morning, and thank you all for being here to educate us on this topic. It is quite interesting.

Mr. Laporte, as far as patent applications go, you said that Canada is one of the countries where people go—

—“as a second filing”. That is what you had mentioned.

Could you explain the difference between a first filing and a second filing in terms of patents?

[Sylvain Laporte]

When a business owner is considering spending a lot of money, especially if theirs is a small business, they look at where they should file an application first. Their first consideration should be where their biggest market is. They know it costs between $20,000 and $25,000 to file an application. If a small business takes in $500,000 to $1 million, some $20,000 or $25,000 is a pretty hefty sum. The owner's first consideration has to be the markets where they want to sell their goods or services.

In Canada and elsewhere, people file applications in the biggest markets first. That is not unique to Canada; we see it in other countries as well. Canadians will file in the U.S. or Europe, for instance, before filing in Canada. They can apply in a number of countries. But what it comes down to is money, resources. When a business has limited resources, its top priority is to protect the market where its goods are going to sell. That is why a business would go somewhere else before Canada.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

Basically, it boils down to the type of market we offer, and not so much a bad intellectual property regime.

[Sylvain Laporte]

Precisely.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

Will companies that apply first in other countries, then apply for a patent in Canada, or will they opt for another market?

[Sylvain Laporte]

It is entirely up to them.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

I wonder about something else. Intellectual property and innovation often go hand in hand; in fact that is, to some extent, the objective of our study. The question has been asked as to where Canada stands in the innovation rankings.

Would you say that Canada's industrial base is not the place where people file intellectual property applications? We do a lot of resource development, and we have a manufacturing base. Would that be why we don't see intellectual property developing here or are there other reasons?

[Sylvain Laporte]

That's an excellent question. Canada's industrial base is a bit outside my area of expertise. I can tell you that, in terms of intellectual property filings, we recently received numerous applications from Alberta in the field of natural resource development. There isn't really a limit or a noticeable interest, one way or the other, from one industry to another in Canada.

Canadian companies were surveyed about intellectual property in 2008. It turned out that some 80% of companies had not had any intellectual property filings because they didn't know what it was all about. They were asked if they knew what intellectual property was, and they answered “no”. They were also asked if they knew what a patent was, and they said “yes”. What the survey told us, then, was that we needed to do a better job of educating Canadian companies about how to use intellectual property. We have been working on that for a number of years now. People in Canada are somewhat in the dark when it comes to intellectual property.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

Would you say that some companies are concerned about taking on something of this nature? Does the process scare some companies off?

[Sylvain Laporte]

Round tables are currently under way with business owners. We just finished one in Quebec with a business owner who had used the IP regime properly. She told us that business owners were quite apprehensive about the whole thing because it takes a lot of money and because they have heard all kinds of stories. They are under the impression that they can still be taken to court even if they have a patent, and that if that were to happen, it would cost them even more. So why bother at all? These sorts of fears prompt each business owner to make a decision with their own situation in mind.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

Could you provide the committee with the survey you mentioned?

[Sylvain Laporte]

Yes, that would not be a problem.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

You said it's from 2008.

[Sylvain Laporte]

Yes, 2008.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

Do you have any plans for another one? Do you intend to do it regularly, asking companies about the matter?

[Sylvain Laporte]

To be honest, it's a bit tough to carry out such large-scale surveys. Right now, our focus is on round tables. Several rounds of talks with business owners are planned. We talk to business owners who are innovating but have not used the intellectual property regime.

We also talk to business owners who are innovating and have used the regime. We want to know whether they received satisfactory service and whether their objectives were met. After the IP rights were granted, did the patent or trademark generate the benefits these businesses were expecting?

[The Chair, Conservative, David Sweet]

Thank you very much, Monsieur Laporte, Madame LeBlanc. It's a full seven minutes.

Now we'll go on to Mr. Lake for seven minutes.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

It's going to be tough to ask all my questions in seven minutes.

I'm just trying to understand the chart on slide 4. I'll focus on the second and third rows of the chart where it says, “Canadian patents in Canada” versus “Canadian patents abroad”. I'd just like to get an idea of what that's a function of. When you first look at it, it looks like for every one Canadian company filing a patent in Canada, there are four that are filing patents abroad. Or is it just that for every Canadian company filing a patent in Canada, they are also filing in four other countries? I just would like to get a clarification on what those numbers mean.

[Konstantinos Georgaras, Director, Policy, International and Research Office, Canadian Intellectual Property Office, Department of Industry]

Thank you for the question.

Indeed, for this particular number here, we do rely on the World Intellectual Property Organization to provide the figures. We do know well the number of patents within Canada. It's difficult to track how many Canadians are applying outside. So the World Intellectual Property Organization does survey all other intellectual property offices and provides this number.

These are the number of grants that are currently in force. There is some double-counting that is going on here. So there are some numbers that identify both a patent within Canada and a patent abroad, but they are indeed the same patent, the same idea. There is subsequent work that the World Intellectual Property Organization is doing to help eliminate this double-counting, and that information is available.