Industry Committee on May 10th, 2012

[Kennedy Stewart, NDP, Burnaby—Douglas, BC]

Thank you, Mr. Chair, and thanks very much for this very enlightening discussion. I have two questions. I'm going to ask them both at the same time, maybe the first one to Mr. Peets and the second one to Mr. Laporte. This will give you a little time to think about your question. I'd just ask in advance that if you have any supporting documentation, you perhaps apply it to substantiate your answers.

Mr. Peets, I think of things in terms of cause and effect often. My adage is that if you can't measure it, it doesn't exist. We've heard a lot about IP and we've had some great ideas about accounts, filings, and the length of time it takes to process. But I want to know more about the effect, which according to your presentation is innovation. I want to understand the link between the patent, the IP process, and all the information we've been given today, and innovation in a sense.

What is innovation? How do you measure it? And can you provide any information establishing a link between our IP structure and laws and whether they are good or bad for innovation?

That's my first question. I only have five minutes, and so have you.

Mr. Laporte, I'm interested in IP filings by universities and colleges. We've talked about IP filings by business almost exclusively, but I'm very interested in this as a way of funding universities and colleges, which could use this to capitalize themselves.

I'm wondering whether, from your survey or information, you know what percentage of the total Canadian IP filings or grants are held by universities—or partly held by universities, perhaps between professors and the university—and how we stack up internationally in that sense. Are the universities in Britain or the U.S. getting more patents than we are?

Then, there are impediments to filing. Lack of knowledge is one thing—or lack of thought about filing for patents is something that you indicate you found through your survey. I'm wondering whether you have any ideas as to what else may be stopping universities from actively participating in this process.

Maybe we can hear Mr. Peets first.

[Gerard Peets]

I'll let Denis answer.

[Kennedy Stewart, NDP, Burnaby—Douglas, BC]

That's great, a new voice. Thank you.

[Denis Martel, Director, Patent Policy Directorate, Strategic Policy Sector , Department of Industry]

Thank you.

I'll pick up on some of the points that were already raised, just to package them.

Innovation is about bringing new products and new services to market. If you take a patent on IP, as we discussed, you get the right, but it comes with disclosures. By protecting the right, people can recoup their investments; they can get financing by virtue of owning those rights.

So there is action to get financing, which is key to support innovations, and there is protecting those investments, as we said, on a longer timeframe to recoup the investment, whether done in R and D or through other aspects of inventing.

The disclosure aspect is key, as we mentioned, in follow-on innovations. Other companies can look at the patent and improve. That's how the system works. There is a bit of a debate about where you put the line of protection in ensuring that there is quality. Some people would say that it may impede innovation, but overall people think this is the right system to promote it.

[Kennedy Stewart, NDP, Burnaby—Douglas, BC]

Okay.

Mr. Laporte, you have only a minute and 15 seconds. I'm sorry for the rush.

[Sylvain Laporte]

I'll be really quick, then.

With respect to percentages of university holdings and whatnot, in terms of applications for this past year, three or four universities are among the top 20 applicants, and they probably totalled in number close to 70 applications out of the 36,000.

Now, 36,000 includes the foreign applications, so we'd need to recalculate the percentage of university holdings among the Canadian applicants. I would guesstimate at this point that around 1% of Canadian holdings would be from universities.

With respect to impediments, I was with York University just last week talking to their tech transfer folks and their VP of research and development, and we talked about impediments. One of the key impediments for university researchers is the dissonance in synchronization between “publish or perish” and the 18-month non-disclosure that we have.

Synchronizing those two can be a bit difficult for them, when a professor has pressure to publish; whereas we go “hmm”. So there's a bit of dissonance there that has to happen. It's an impediment that they work around. It's not a showstopper, but it has caused them some anxiety.

[The Chair, Conservative, David Sweet]

Thank you very much, Mr. Laporte.

Now we go on to Mr. McColeman for five minutes.

[Phil McColeman, Conservative, Brant, ON]

Thank you for being here. It's very complex, as you say.

My questions really have to deal with thinking of myself being in a position where I have an invention or an idea and I would like to get it protected, and I want your perspective on this. It seems that the system is such that it actually promotes litigation in some ways because of the complexities. Is that a fair comment?

[Gerard Peets]

I'll start on that one.

I don't think the system promotes litigation, but the system is designed to provide private rights to businesses and people, and then it's up to the right holder to enforce his or her rights. What that means is that, when you get legitimate disagreements between people, they have to go to court. The system is designed to use civil litigation as a backstop to sort everything out.

[Phil McColeman, Conservative, Brant, ON]

I understand that, and it's more from the point of view of a couple of people I know who have tried to get their ideas and inventions off the ground, and often they don't have the resources to hire the legal expertise. Do you find that much, in terms of the frustrations of people who are coming to you right out of the gate?

[Sylvain Laporte]

I'll take a crack at that one.

We have basically two types of applicants. We have those who are represented by a professional IP agent—who is typically a lawyer with an engineering background, if it's in the patent world—and we have unrepresented applicants.

If you do hire a lawyer, as I mentioned before, the costs will vary, but $20,000 to $25,000 is likely in the range of what you're going to pay. If you come in unrepresented, you don't get that counsel. The IP world is very complex from a legal perspective, and some of our more troublesome application processes have been with people who have been unrepresented, because they don't understand the law.

We actually do encourage our applicants to hire a good IP agent to represent them. Basically, if your idea is worth protecting, it's worth protecting right. Even if you're unrepresented and you do get a patent, does the patent represent the scope that it should? Are you still well protected? Because you didn't have benefit from legal counsel, you may not have the result you were anticipating. So we do encourage that our folks seek counsel.

[Phil McColeman, Conservative, Brant, ON]

That leads me into the next question. Mr. Laporte, you mentioned in your presentation that the difference in the laws is the reason why there's a 39-month U.S. period of time for the process, and in Canada it's 48 months. Am I correct in interpreting that's what you said?

[Sylvain Laporte]

Actually, what I said was that we have different tests that are based in law that we have to conduct. The law doesn't state that we take 49 months and they take 38.

[Phil McColeman, Conservative, Brant, ON]

No, but it's the differences in the law that cause us to have more tests and more questions, and require us to spend more time.

[Sylvain Laporte]

Different, not necessarily more, but different. We look at things differently than they do, and the amount of time it takes to process an application is also probably a whole lot more dependent on the administration, on how many people you have going through the applications.

It's a question of efficiency and also a question of receiving applications that are requesting a whole lot more than they really should, and it takes seven iterations to bring you down to the invention. There is a whole lot of time that is spent on that iterative process.

I wouldn't read that the 48-month period is the result of our act. It's the result of a lot more variables than just the act itself.

[Phil McColeman, Conservative, Brant, ON]

Right, and that kind of leads me to my last question. Originally, I had no expectation of what the numbers were in terms of the number of applications, the need for processing, the need for resources. What kind of resources does our government have in place to handle these numbers? Can you give me a sense of the scale of the bureaucracy that it takes to handle this?

[The Chair, Conservative, David Sweet]

I apologize, but we're over our time on that as well. We'll have to leave that for another question or certainly you can respond to that after the fact, as well.

Now we'll go on to Mr. Masse, for five minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

I'd like to go back to one of the things that I thought was really interesting in your presentation, Mr. Laporte, about the five years to apply for patent pending, an issue that's being discussed. You were saying that 30% asked for an examination right away, but 25% wait until the five-year mark.

Is that an impediment to us in getting things to market? When one-quarter of all those applications wait until the end of five years—and I know you said comparing us to other countries is like comparing apples and oranges—should that five years be reviewed in terms of processing? If one-quarter of applicants are saying they'll file and wait until the very end, that's a little alarming in my opinion.

[Sylvain Laporte]

You have to understand that the business folks who make the application also make the decision to wait. Clearly, in their business and their industry, it's beneficial to wait. It's not necessarily an impediment. There is a reason for that to happen. It could be that you may have a weak patent and you want to keep the patent pending as long as possible.

It would be interesting to look at the makeup of the 25%. I don't know that we've done that.

[Brian Masse, NDP, Windsor West, ON]

That was going to be my next question. Is there a particular segment of patent applicants that dominate that 25%?

How did we arrive at five years? Why not four years? Why not six years? How long has it been five years in Canada?

[Sylvain Laporte]

Since 2004.

[Brian Masse, NDP, Windsor West, ON]

Since 2004...and what was it prior to that?

[Agnès Lajoie]

When we implemented the system with the request for examination in 1990, it was seven years. We reduced it to five years in 2004.

[Brian Masse, NDP, Windsor West, ON]

What was the objective of reducing it to five years in 2004? What was the specific objective to be accomplished?

[Agnès Lajoie]

As Mr. Laporte said, it was to reduce the period of uncertainty and to make sure that—based on what we had observed during those years—those applications are examined in a timely manner.