Industry Committee on Oct. 18th, 2012

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

Let us turn to research and development. We are talking about innovation, intellectual property, and research and development. There are going to be changes to federal research and development programs. Could you tell me what the impact of those changes will be on your industries?

[Diane Lank]

Again, I'm not sufficiently familiar with what changes you're talking about. Perhaps you could give some examples.

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

For example, tax credits are going to go from 20% to 15%. They will also no longer consider your investments in capital, for example, in fixed asset costs. Could that have on impact on your kind of business?

[Diane Lank]

I'm not a tax accountant, either. I'm not a patent lawyer.

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

Okay.

[Diane Lank]

I would think it may have an effect. I know that we rely on credits for helping our company grow.

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

Yes, okay.

[Jason Kee]

Because the bulk of the changes were aimed at a form of R and D that doesn't really happen that much in the games industry—we're much more labour based; we're not capital intensive in the same kind of way—the changes don't have that significant an impact. We're a little concerned about it. Again, it's an issue of balancing the proper combination of a tax credit regime on one hand, and the funding on the other hand. This was a reallocation of some money from one to the other, and I think there's a logical policy rationale.

We're a little concerned that it may be weighting it one way over another one, but we're still working with similar fellow associations and trying to assess the impact.

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

Thank you very much.

I did not want to put you on the spot. You are actually confirming that, in your area, the consequences may not be the same as in the manufacturing sector, or other industrial sectors.

But we are in a global environment now. We have touched on our relationships with the United States, Europe and so on. Do you feel that the Canadian intellectual property regime should be harmonized with a more global system? That is, should it be more like the one in the United States or Europe? Or do you think that is unnecessary?

[Diane Lank]

In a perfect world, the United States and all the countries would have a more harmonized system. It is expensive for a company like ours to try to stay abreast of the differences between Brazil, the United States, Europe, India, Australia, New Zealand. It's very costly. There aren't any easy answers to that.

Should it be harmonized? Yes, but with what system, I don't know. Canada, given its size, is in that position where, for our company at least, if we want to operate in both Europe and the United States, we have to deal with both. Preferably, Canada wouldn't be a third way. They would be harmonized with one or the other, and we do a lot more business in the U.S.

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

Thank you.

[The Chair, Conservative, David Sweet]

Time is up.

Mr. Kee, if you want to answer that quickly, I'm certain that we'd give you that latitude.

[Jason Kee]

Thanks.

We should be trying to harmonize to the extent possible simply because it's a cost issue. It's very difficult to operate in different jurisdictions out of different regimes.

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

Thank you very much.

[The Chair, Conservative, David Sweet]

Thank you very much.

Now we'll move on to Mr. Carmichael for five minutes.

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

I'd like to just start with Ms. Lank. Earlier in your testimony you talked about—I hope I have the reference accurate—the cottage industry that we've created in patent development with lawyers and those who can lead the way in helping to create the right patent path for small business. You talked about a six-person start-up and it wasn't on your radar in those days. Probably today it more likely is on the radar just because it's got such a profile.

When you talked about the cottage industry and if you'd had someone to show you the way, is that an industry-related issue or is that more a government-related issue? You mentioned going to Brazil. You had the Canadian embassy there to help show you the right path. Was it similar with our Canadian embassy in the U.S.? Was it not there or did you just not think to take advantage of it at the time?

[Diane Lank]

I think there are sufficient similarities between the U.S. and Canada in that you don't have, for example, the language issues that you have with Brazil or Colombia.

To the best of my knowledge, we never sought the assistance of the Canadian embassy in the U.S. We will, from time to time, primarily on immigration and visa issues, write to them to see if they can help, but typically we have not dealt with the Canadian embassy in the U.S.

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

Extending on that, you talked about product being sold to you at tech-competitive prices, as a new technology. When we look at universities today, I get the impression from the testimony we've had from a number of universities that are actively engaged in helping to create these clusters of development and innovation that they are trying to provide that path to development, creativity, and ultimately to some form of commercialization, whether it's selling it to another entity or whatever.

Are we seeing enough leadership in the academic world in building that type of cluster, in either of your spheres?

[Jason Kee]

In terms of the games industry, certainly the games industry has been explosive in its growth over the past few years. We have at least 260 institutions across the country offering games-related programs at varying levels. Some are more advanced than others.

The challenge has been not so much the leadership as the direction of that leadership, in some cases. Sometimes the collaboration with industry is not as strong as it should be. Frankly, industry wears that as much as academia does. Sometimes the graduates who are being produced aren't that qualified to work in the industry, because they've been taking courses that aren't as relevant as the schools think.

Certainly in the deployment of advanced research that's happening at the universities, it's research that's very interesting to the researchers, but it doesn't necessarily have either commercial viability or commercial viability that's useful to the industry. We've had a real challenge there.

Partly it's also very different cultures. In the tech sector generally, we're very fast-paced, very entrepreneurial, very dynamic. This is not how I would normally describe an academic environment. Culturally there can be some real challenges.

I do think there is a tremendous opportunity. Part of that issue of us not talking with each other as well as we should be is part of the challenge that some of the institutions have been facing with commercializing their R and D.

[Diane Lank]

I would agree with Mr. Kee on that.

We work closely with some of our local institutions. We have the University of Waterloo, Wilfrid Laurier, and the University of Guelph. There have been discussions, but as I said, the first IP purchase that we're undergoing is with a U.S. client, not with any of those, which I think is interesting. And they came to us.

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

They came to you because of your experience, your distribution.

[Diane Lank]

Yes. They were a client, and they really liked what we were doing. They said that they had developed this idea and how would we like to commercialize it for them.

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

Good. Thank you.

How much time do I have left?

[The Chair, Conservative, David Sweet]

About 30 seconds.

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

I'm done.

Thank you.