Industry Committee on Oct. 30th, 2012

[Vladimir Gagachev]

At least in the first instance there isn't any, because if you plead ignorance or if the buyer knows that it's a counterfeit, it's not passing off. However, the way the RCMP get around it....

I'm not a lawyer; I'm an electrical engineer, but we have lawyers in our Canadian Anti-Counterfeiting Network organization. The way it's been explained to us by the lawyers is that they're being given a notice, so now they know it is counterfeit. Then they are being watched either at the store where they sell it or on their second attempt to pass it through the border. At that point they cannot claim ignorance any more. But at least at the first offence they get away with it.

[Mike Wallace, Conservative, Burlington, ON]

You use public works as an example, that you did a survey of 120 buildings and found 65 irregular or counterfeit items. Were they surprised? Or is it something that is not actually accepted in the industry but they know it's out there?

[Wayne Edwards]

I think they were surprised. The challenge that public works has is to investigate 5,000 buildings that the federal government has across the country. This was the beginning.

They wanted some help and some training at the beginning of their survey, to know how they could identify an authentic product from a counterfeit one. We gave them the training, and there were probably 65 people in the room. They had a webcast with, I think, another 150 people.

With that, they went on to start the process and we checked them after they had done, I think, 122 buildings. It was about 64 breakers that they had already found. The program is expected to take two years to complete and in that two years, obviously, if you use that same ratio, they're going to find hundreds of unsafe products. What's really scary is that some of these were in hospitals and some of these breakers are protecting life-saving equipment. People might be on a respirator or whatever, and if that thing goes faulty, their lives are at stake.

[The Chair, Conservative, David Sweet]

Thank you, Mr. Edwards.

That's all the time we have, Mr. Wallace.

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

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

Thank you, Mr. Chair.

Thank you to the witnesses for coming today.

My questions are to Mr. McDougall. I have a few general questions about the NRC before I move on to ask specifically about IP. Could I just ask you ahead of time, if you have any documents that you refer to, if you could table them for us as we move along? That would be great.

In an October 26 letter to your employees, you state that “we have continued the review of our research activities to ensure alignment with NRC's new directions”. I'm just wondering if you could tell us what these new directions are and where we might see where they have been prescribed by government.

[The Chair, Conservative, David Sweet]

Hold on for just a moment.

Go ahead, Mr. Lake.

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

On a point of order, Mr. Chair, I'm just curious as to the relevance to the study of that question. It really doesn't have anything to do with IP.

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

I just explained the—

[The Chair, Conservative, David Sweet]

That's not really a point of order, Mr. Lake. I don't know where it's going either. We'll see by the answer where we're headed.

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

Okay.

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

Just to repeat, you said there were going to be new directions. I'm just wondering what these new directions are, where we can see that they've been prescribed by government, and if you expect these changes to be discussed in Parliament.

[John McDougall]

Thank you for the question.

As most people probably know, I think, the NRC for the last couple of years has been undergoing a transformation really to align itself better with the existing act. The existing act, as I've described, requires us to undertake economic development essentially on behalf of Canada through technology and innovation. It mandates us to operate and carry out certain functions—for example, looking after Canada's astronomical facilities, ground-based. It requires us to provide services in the area of measurement and standards, which supports organizations like the CSA, for example, and so on.

The process we're in actually is to move away from less mission-oriented work—which was really largely scientist-driven—and more to work that does actually align with obligations under the act. That's essentially what's under way.

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

Where can we read about these new direction changes? Are there any documents? From what I've seen, there's not really much, and it's something that's being done internally rather than discussed publicly.

[John McDougall]

That's correct. Essentially, as I say, it's really a realignment to the existing act. We've had a lot of conversations with many people, including members of your caucus, for example, about some of the things we're doing. But it's more of a reorganization than it is a change of any mandate or whatever.

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

Okay.

In an interview with the CBC, the minister of state said that he hopes that the NRC will become a concierge service for industry and said he envisages it becoming “a one-stop, 1-800, 'I have a solution for your business problem'”.

Is this also your vision for the NRC, that it become a concierge service?

[John McDougall]

That is really specific to some of the things that are going on within IRAP. I might take a moment here just to outline the nature of IRAP, and how it works, as a preamble to answering that question.

The industrial research assistance program is a grants and contribution program that's delivered in, I guess I would say, probably several hundred communities around Canada through industrial technology advisers. Those advisers are empowered to provide financial support by way of a grant to companies that qualify. They also, at the same time, provide mentoring support about business practices that these companies are following.

The grants are used for technology development purposes, and the industrial technology advisers inevitably require, as a result, a fairly extensive knowledge of what's going on in Canada. Historically, they have been built around particular sectoral areas, so their strength is primarily a sector, or perhaps a platform technology.

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

You mentioned the IP, and that the NRC owns the IP. When you change the nature of the NRC, do you expect that you'll also have to change your policy regarding ownership of IP? For example, the companies contracting with the NRC or being served by the NRC, would they now own the intellectual property? Or is that something you would retain?

[John McDougall]

That's a very good question, actually.

If a customer of the NRC is a fully paying customer, they own the IP, and they do today. If we are collaborative, then there's a discussion, because the “benefit to Canada” issue becomes, obviously, more important. One of the things that we don't want to see is companies simply using the NRC as a mechanism to do something perhaps on a joint basis, which reduces the cost, that they simply take elsewhere. So there's a discussion about what the appropriate model or method or strategy might be.

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

Is there any kind of public document we could see that steers your decisions in these matters? Is it just on an ad hoc project-by-project basis, or are there any guidelines under which you make your decision?

[John McDougall]

The guidelines are very broad principles because they are things like “benefit to Canada”. The challenge is we tend to work fairly close to the marketplace, and usually every deal has a wrinkle in it that makes it a little bit different.

We could easily share with you some of the broad principles that we apply in making those decisions, if you wish.

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

Do you see more or less IP being owned by the NRC now under this new policy direction?

[John McDougall]

In the new arrangement one of the things we're looking for is more industrial financial involvement. With more industrial financial involvement, there will inevitably be more that will be paid for, and thereby owned, by industry as a proportion.

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

Okay. I'm just a little concerned that we'd be subsidizing business in this sense, that the NRC was paying for the research but the business owned the IP.

[John McDougall]

Yes, that's exactly what we're trying to preclude, actually. If the NRC has an investment in the process, then the Government of Canada, obviously, and the Canadian people, have an investment in the outcome too, and have to share somehow in that return.

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

Okay. Thank you.