Industry Committee on May 15th, 2012

[Michel Gérin]

There is an entrepreneur from Chicoutimi who wrote this book, Innover c'est bien... breveter c'est mieux!--To innovate is good...to patent is better!

She started getting patents in her business. At first she was afraid. Then she made money out of it and wrote this book, describing the five myths that entrepreneurs have about the patent system. She explains in easy-to-understand terms that you don't need to be afraid. IPIC has been supporting a tour that she's doing in Quebec.

More of this can be done. It's just a question of fear. If you want to design a building, you'll hire an architect. If you need an engineer, you'll hire an engineer. If you need a patent or trademark, you'll hire an agent. It's no different from other areas of doing business.

[Mark Eisen]

I can just add that I think an equilibrium would have to be reached, because without the innovators there would be no work for the lawyers.

[Dr. Ruth Corbin]

What you're hearing is that we need an IP frame of mind in the country and that the government may be a first step and doesn't need to be thinking about tactical policies. I may sound trite, but it's not trite. In this case, it's to set a vision for the country and to set explicit objectives. You are the leaders in the country, and people listen. What Graham talked about in a corporate culture is that the president says something and the employees hang on every word. The government sets a vision, objectives, and policy and reiterates it and then, like environmental stewardship, it becomes part of the culture of the country, and you get the innovation and you get the focus on monetization, through leadership.

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

Well, that was one question. I've got one more.

Mr. Henderson, you talk about the 2007 report. Of course it's a different situation here now in a majority government from in a minority government. We saw the challenges in moving forward the copyright legislation in previous Parliaments. Now we're actually debating it on third reading in the House.

What can we learn from our experience with the copyright legislation? It was very complex, with many different sides and points of view. Are we looking at a similar situation in terms of the broad range of viewpoints? As we want to understand this, who should we be calling before the committee?

[Graham Henderson]

Well, obviously there's going to be a broad range of voices you're going to want to hear from. As I've sat here listening to some of the comments being made, I can think of multiple witnesses. I would be delighted to submit to the committee a list of people who would be here in a moment, I think, if offered the opportunity to talk about the importance of a patent system or trademark enforcement or whatever it might be.

Whatever the reasons these 19 recommendations that were unanimously embraced and thought to be important at the time didn't come to fruition, well, we now have an opportunity to do that. I would suggest that with the current government, as fractious as it may seem to some people on the inside, we do sense that there's a spirit of working toward things. The House of Commons seems to be a more civil place these days. Despite differences, I would hope that when we start from the base that everybody basically seems to agree--these were unanimous recommendations--can we start to move forward with them? I've got to think that in the current environment maybe we can. But it's not just that. I should also say—

[The Chair, Conservative, David Sweet]

Thank you, Mr. Henderson. I'm sorry, we're way over. I appreciate it. Unfortunately, the time is always the thing we have to deal with here.

[Graham Henderson]

I'm sorry. You're right.

[The Chair, Conservative, David Sweet]

Mr. Regan, for seven minutes.

[Geoff Regan, Liberal, Halifax West, NS]

Having paid my Barristers' Society fees in Nova Scotia this week, I want to say that I'm certainly pleased to hear the comment about more work for lawyers and that it's a good thing. You never know in this business.

Dr. Corbin, you talked about the importance of monetization, but you've also mentioned the issue of how to address new social norms that develop over time while copyright reform is stalled. When I'm thinking of cultural and ethical issues and how our society looks at intellectual property—because we have a lot of piracy—the culture says it's okay to download from Pirate Bay or a music sharing site for free: music, movies, what have you. There's a group of people in Canada who see this as virtuous.

In your view, what methods have been successful in changing attitudes toward piracy and changing the culture?

[Dr. Ruth Corbin]

The biggest success story I've heard of came from the lips of Colm Feore, one of our celebrated actors, when he agreed to be interviewed for the report. He believes in the sharing of art, and yet he understands the need to protect the artist's rights. He talked about coming into a room when his son was sending off downloaded songs to a bunch of his friends and didn't understand what was wrong with that. Mr. Feore said to him, “You see, you send those songs off to your friends, they send them to other friends, and somewhere along the line I can't get you that bicycle for Christmas”.

You've asked me what I've seen besides this entertaining story. It's parents understanding what the rules are. I think parents don't quite know. I think it's fair to say none of us really know what the rules are to teach our kids, but once we know what they are, as trite as it may sound, it's a way of thinking to engender respect from kids as they're growing up, but first by an understanding and a knowledge of what our rules are. Hopefully the copyright reform bill will now help people start talking about the clarity of the new rules.

[Geoff Regan, Liberal, Halifax West, NS]

I was going to ask what you would do about that, but I guess what you're saying is your hope is that the new bill will spark some discussion.

[Dr. Ruth Corbin]

Let's hope it's more than a hope. You don't want to just have empty chatter here, but a way of talking. Perhaps, again, it can start from government, education, communication programs, and interviews with journalists to get the laws and the knowledge in the minds of all of us, so we can begin to respect them.

[Geoff Regan, Liberal, Halifax West, NS]

It seems to me it's unlikely that the fact that the new bill is passed would spark the kind of discussion you're talking about, but if there are prosecutions and that becomes public, perhaps.... I don't know what's going to spark that kind of discussion in families.

Mr. Henderson, you're shaking your head furiously.

[Graham Henderson]

Yes, because I don't think there are going to be prosecutions.

[Geoff Regan, Liberal, Halifax West, NS]

Fair enough.

Let me go on.

Professor de Beer, I just mentioned the Pirate Bay. I understand there is a recent Forbes article that talks about the fact that the most downloaded show this year is an HBO show called Game of Thrones, which you may be familiar with. Apparently it's been downloaded more than 25 million times since early April through BitTorrent. This goes back a bit to the question of not only culture but also what the models are that work and don't work. Some critics have said that HBO is taking the absolute wrong model by trying to put this on and charging $4 per viewing and so forth, and when it's been downloaded 25 million times at $4 a pop they've lost theoretically $100 million. I don't know if that's a proper way to measure it. Maybe you can respond to that.

I guess the question is can we, as legislators, craft legislation that would not only break down impediments to innovation but also provide information to companies to ensure they have revenue streams?

What are the solutions to that?

[Prof. Jeremy de Beer]

I actually am familiar with the program because I subscribe to HBO. My wife keeps telling me to cancel the subscription, but I keep it anyway, because I love that program.

First, I have to emphasize that it's a very different issue from the other aspects of science and technology innovation that we've been talking about here today. So the problems facing HBO are very different from the problems facing an SME in computer engineering in Waterloo or innovation in extraction of bitumen from the oil sands or something like that. They are very different.

What I would urge the committee to do is not to conflate the moral and economic and policy reasons to address illegal downloading from BitTorrent with the IP strategy to deal with innovation in science and technology. Separate those issues.

There is one area where they overlap, though, and that is in the facilitation of legal alternatives. I believe that the key to facilitate market alternatives is to simplify and streamline licensing procedures.

I happen to teach a course on the digital music business. If you were an entrepreneur trying to establish a new legal site to sell downloads, you would find that the process is so complex because there are so many different rights holders to deal with. If we could work toward streamlining and simplifying that process.... I appeared before the Supreme Court of Canada in a case last December arguing that the court should do precisely that, and hopefully it will. That is the message: streamline.

[Geoff Regan, Liberal, Halifax West, NS]

That reminds me of what Mr. Henderson said. I want to ask him how he would streamline the patent approval process. It's not quite the same thing, but you did—

[Graham Henderson]

To bring us back to that, I agree there is a real distinction between the two. I actually think we dealt with the one, in large part, through the copyright reform act. In a certain sense, that job can be pushed off to one side. There are things we have to follow up.

As far as patent reform goes, I'm not a patent lawyer. That question might be better directed to my friends here. But I would say that at the CIPC we have a very big umbrella. It includes a lot of companies for whom patents are very important. It was one of my specific recommendations. But you should call them.

[Geoff Regan, Liberal, Halifax West, NS]

If we have time, you directed the question to your colleagues, so I'll let them consider it.

[The Chair, Conservative, David Sweet]

No, I'm sorry, Mr. Regan. We're over seven minutes. If it were solely up to me, Mr. Regan....

Now we're on to five-minute rounds.

Mr. Carmichael, go ahead for five minutes.

[John Carmichael, Conservative, Don Valley West, ON]

Thank you, Chair.

Thank you to our witnesses for appearing today.

We have so little time. Let me start with Madame Corbin.

In your opening remarks you talked to board governance and some of the gaps or the ineffectiveness. I wonder if you could go a little deeper into that. Is it strictly an education issue, or is there more to it?

[Dr. Ruth Corbin]

First of all, the data show that business is the weak link in our innovation. That might be surprising. We are praised for our investment in knowledge industries. But business itself is not keeping up with the business productivity of other countries.

Why is it not happening? In my experience, it is not happening at the board level because boards of directors themselves are not properly tuned in to the immense value of intellectual property. Intellectual property is now easily between 70% and 80% of the saleable assets of most modern corporations, even corporations not in the business of creativity. Yet because it's invisible, as our first questioner asked, it's hard for boards to get around it.

Here's what's straightforward to do: put it on the agendas of boards of directors colleges. It's not on the Rotman agenda, and it's not on the McMaster agenda. It's not on the governance guidelines of the TSX or of the securities regulators in each of the provinces.

You get what you measure. You tell people this is what the performance metrics are, and that's what you will get back. It's as simple as that. It's worked for businesses ever since they discovered that mantra.

[Graham Henderson]

But it's also businesses' job.

[John Carmichael, Conservative, Don Valley West, ON]

Right. But your point is it becomes a responsibility of boards, then, to get educated, to understand it, and to then go to work and commercialize it, develop it, etc.

Carrying on from that—and I'll open it up to the whole group—how can we encourage businesses to be more deliberate and to tap into the revenue potential they have in their existing IP portfolios? I haven't read them, but I will gladly take copies.

[Graham Henderson]

That was the reason Lucas and Manley put together the Coalition for Action on Innovation, which published its report in 2010. There is now an association, the Centre for Business Innovation, which was opened under the auspices of the Conference Board of Canada. I'm a steering committee member there. That was an activity initiated by business. Business stepped up to the plate and said, “Notwithstanding the fact that there are things government can do, there are things we have to do to be better at this”.