Industry Committee on Nov. 1st, 2012

[The Chair, Conservative, David Sweet]

Good morning, ladies and gentlemen. Welcome to the 46th meeting of the Standing Committee on Industry, Science, and Technology.

We have a number of guests here: from Larus Technologies, we have Rami Abielmona, vice-president of research and engineering; from Open Text Corporation, we have Mr. Davies, chief legal officer and corporate secretary; from the Information Technology Association of Canada, we have Karna Gupta, president and chief executive officer; and from Canadian Manufacturers and Exporters, Martin Lavoie, director of policy, manufacturing competitiveness, and innovation.

We'll begin with opening remarks.

Mr. Abielmona, you have a maximum of six to seven minutes for your opening remarks. We'll go to questions after that.

Please begin.

[Rami Abielmona, Vice-President, Research and Engineering, Larus Technologies Corporation]

Thank you so much.

Good morning, Mr. Chairman and members of the committee. First, thanks very much for the opportunity to appear in front of this committee to discuss the experiences of our company, Larus Technologies, with regard to intellectual property in Canada.

Let me begin by briefly introducing our company. Larus was founded in 1995 by our current president, Mr. George Di Nardo, and we've established ourselves as a sensor networking and data fusion solutions company. We develop advanced systems for multi-sensor data aggregation, collection, display, exploitation, and fusion, mostly for defence and security.

We are Ottawa-based. We're entirely Canadian, and we have three core business areas: sensor networking and data fusion, software engineering consulting, and research and engineering. That's really why I'm here—the research and engineering part. We have developed significant software expertise and operational experience, both selling to and servicing DND, Canadian Forces, and NATO. We are also relied upon as the prime Canadian developers of many NATO standard agreements, or what are called STANAGs, that serve to establish and maintain interoperability between the allied nations.

The main issue our company has faced revolving around IP is in regard to IP protection funding in Canada. Funding is typically required for three phases that are involved in patent protection. The first phase is the filing phase, and Canada has done a very good job through IRAP and other initiatives of helping organizations such as ourselves to subsidize the cost of this phase.

The second phase is the prosecution of IP, and here we don't have as many funding channels. There is an existing gap for this phase.

The third phase is international filings, and again, here there are even fewer funding channels available in Canada. Typically, a company has to evaluate whether the invention in question is worth patenting. So we have to ask ourselves, is this novel? Is this non-obvious? Is this useful? But being an organization, a corporation, we have to also ask whether it provides a corporate competitive advantage. Does it reside with an identified target market as well?

If all of these are true, the company goes through the patent process, which involves, as you know, literature patent survey, invention disclosure, patent preparation through lawyers, and, obviously, filing of the patent. There are a lot of costs associated with this process. As I mentioned, IRAP has a fund called ARP, the accelerated review process, that supports Canadian companies when making the decisions to patent or not.

As I mentioned, very few programs exist for the prosecution, the enforcement, and/or the international filings of a patent, which carry significant legal fees. This is unlike other countries. China, for example, has special programs that are dedicated to international filings alone for their local companies. That allows them to better compete on the global stage, and obviously to better protect and hence to market these technologies as their own.

Of course, not all ideas or inventions that come out of R and D are patented. A company has to balance the costs and benefits of doing so. To protect an IP, we can go through a patent, we can go through copyrights, we can go through trade secrets, or we can go through public dissemination. We can simply publish it in a conference or journal, and no one else is allowed to patent it in that manner.

For SMEs, small and medium enterprises such as ourselves, it becomes a matter of cashflow management. Typically, Canadian SMEs would rather hire employees in Canada than invest hard-earned funds to file and protect their IP. Why do I say that? This is the core of my six to seven minutes. It's really the technology valley of death, TVoD—I come from a military defence market, so we like to acronymize everything.

It is an ever-growing problem in Canada. It was recently described by another researcher, Dr. Russell Eberhart. We invited him up to Canada to attend a conference, an IEEE conference called CISDA, in July here in Ottawa. CISDA stands for computational intelligence for security and defence applications. He gave a talk. He's from the U.S. He described a very similar thing that is happening in the U.S., but they're trying to resolve it, and I'll talk a bit about how they try to resolve it.

TVoD occurs around what we call TRLs, technology readiness levels, and there are one to seven or one to nine levels, depending on what you look at.

[The Chair, Conservative, David Sweet]

Mr. Abielmona, slow down just a bit. The translators probably need a slower pace.

[Rami Abielmona]

No problem.

We are talking about five to seven TRLs, so the higher ends of the technology readiness levels, mainly due to the lack of support for transitioning out of R and D and into a prototype stage. We're funding R and D. We're funding all the way up to pre-commercialization. But when we get to the commercialization stage, the well runs dry. And it's becoming a very tough burden on Canadian SMEs. This has been expressed to this committee by other witnesses; I looked up the evidence for previous meetings and I saw it in one other meeting.

The TVoD is not to be confused with the commercial valley of death. That's a completely different thing. The commercial valley of death occurs when you've already launched the product. The technology valley of death occurs when you've just finished applied research and you want to get to commercialization. How can we mitigate that gap?

We can better define the programs. We can build in some risk mitigation, some risk reduction. But in the end the organization has to undertake the advanced technical development, or technological development, of the applied research it has finished.

If a company is not able to cross this chasm, it becomes a very big problem. First of all, the question is, if we are able to produce a patentable invention but don't have the means to commercialize it or to bring the invention to market, what's the value of patenting that invention in the first place?

The technology is at a prototype level. We've used up R and D funding, and whatnot, to get it to that level, but it's not yet mature enough to be commercialized. We don't have any funding for commercialization programs, as many as we'd like, to bring it to market. So if it fails, as I said, then it risks becoming stale and unoriginal, particularly in a high-tech world, where the development cycle is less than a year typically. Canada risks losing out to other countries on a lot of potentially valuable IP if we cannot help our local industries bridge this gap.

I'll tell you what the U.S. is doing. The U.S. set up the Small Business Administration, SBA, to run what they call the small business innovation research—SBIR—program. It's really targeted towards SMEs in the U.S. to research, develop, and commercialize their products and services. It allows the SMEs to be the front-line players. SME, to them, means fewer than 500 employees. They can sell to the U.S. government—including the Department of Defense, the U.S. Army, the U.S. Navy, and so on—without having to compete against the major defence contractors, which are, instead, obliged to line up behind SMEs and to partner with them for such opportunities and such programs. We don't have such a major thing in Canada.

Another program they launched is called the small business technology transfer—SBTT—program. It's really to bridge, again, the performance of basic science to commercialization.

I'm going to wrap up very soon.

Canada has SR and EDs. We have NRC-IRAP. We have NSERC. We have the Canadian innovation commercialization program, CICP. But we feel that we need more concentrated efforts to ensure that Canadian SMEs successfully cross this valley of death. It basically ensures that Canada has job growth, economic prosperity, and international presence.

I'll skip all the way to the bottom and just say that a recent survey was done in the U.S. by the Defense Advanced Research Projects Agency, DARPA, that tried to figure out the factors that determine a successful enterprise, especially in engineering and high tech.

I'll just mention this before closing. They found the following—

[The Chair, Conservative, David Sweet]

Mr. Abielmona, that will be it. We're way over time.

[Rami Abielmona]

Okay. Thank you for your time.

[The Chair, Conservative, David Sweet]

You'll have to squeeze in any other information in the questions.

Mr. Davies, please go ahead.

[Gordon Davies, Chief Legal Officer and Corporate Secretary, Open Text Corporation]

Thank you very much, Mr. Chair and honourable members of the committee, for providing Open Text Corporation with the opportunity to address you today. We are very pleased to contribute to this committee's study of the effectiveness of Canada's current intellectual property regime.

My name is Gordon Davies, and I'm the chief legal officer and the corporate secretary of Open Text, a corporation headquartered in Waterloo, Ontario, which is publicly traded on the TSX and NASDAQ. Open Text is a leader in computer software applications designed to enable enterprise information management, or EIM. EIM is a comprehensive set of best practices and technologies that address the needs of information workers by providing them with the right information during decision-making, analysis, procedure definition, or process execution. When executed properly, a sound EIM strategy results in significant productivity and efficiency gains, engaging customer experience, and a transparent and defensible information governance system. EIM includes suites of products such as: business process management; customer experience management; enterprise content management, which is the core of Open Text; discovery; and also information exchange.

Open Text's clients are global and include organizations in many fields, including those in the public sector, financial services, manufacturing, energy, and natural resources industries. We were founded in 1991 as a spinoff company by researchers at the University of Waterloo. Open Text has grown to employ more than 5,500 people globally, and it is Canada's largest software company. As I mentioned before, this is a global business with annual revenues in excess of U.S. $1 billion. Over the years, Open Text has won many industry awards recognizing its accomplishments, and it was again named one of Canada's top 100 employers in 2012.

Open Text is strongly committed to technology transfer between research institutions and industry, and to this end it has, among other initiatives, invested in many joint research and development projects with the University of Waterloo.

At the heart of Open Text's success as a company, employer, and innovator in the software field is its intellectual property. Open Text has more than 200 U.S. and 130 non-U.S. patents worldwide, including those in Canada. Open Text, like other information technology companies, relies mainly on trade secrets, including in particular prior art, copyright, and, to a lesser extent, patents, to protect its valuable intellectual property. Protecting intellectual property through trade secrets or by way of copyright is attractive because, one, the registration of copyright is optional and copyright can be enforced without registration, which is, in any event, relatively inexpensive; and, two, trade secrets, by definition, cannot be registered and there are no registration costs.

Patent protection, in contrast, can be less attractive because it is only available through a costly, application-based process. Additionally, patent protection is less crucial for companies such as Open Text who view patent protection primarily as a defensive tool rather than as a means to drive innovation. For instance, a patent portfolio may operate defensively and make competitors reluctant to enforce their own patent rights for fear of facing reciprocal litigation. As well, publicly disclosed applications and patents may create obstacles for competitors to seek patent protection for the same or related inventions. For these reasons, part of Open Text's primary methodology is to ensure that it has a robust system of creating, maintaining, and archiving all of its information and documentation related to an invention, or, as I mentioned before, prior art.

In terms of barriers to patent filing, for companies such as Open Text there are disincentives to making greater use of patents as a means to protect intellectual property under Canada's current intellectual property regime. As mentioned, the primary disadvantage of patents is that they are the most expensive and time-consuming type of protection available to innovators to both obtain and maintain. Companies such as Open Text must incur not only the costs of application fees and maintenance fees to achieve patent protection, but also face attendant legal costs at each step in the application process, and in any eventual enforcement, if that becomes necessary.

In addition, because Canada's patent law and application procedures differ from those in other countries, innovators face uncertainty and additional costs when seeking patent protection for the same or related inventions in multiple countries. Such disadvantages, in our view, may cause Canadian and multinational innovators to choose not to seek patent protection in Canada, but instead look to other jurisdictions to protect and commercialize innovative technologies.

In respect of reform, Open Text recognizes and appreciates the recent initiatives that have streamlined and increased the competitiveness of Canada's intellectual property regime. These developments include the patent prosecution highway program, an initiative that accelerates and reduces the costs of examination of patent applications under certain conditions, through bilateral agreements with foreign patent offices. Open Text also appreciates the government's efforts in the recent reform of the Copyright Act.

We believe, however, that Canada's patent protection regime can become more streamlined and efficient in protecting intellectual property. This can be achieved through further global harmonization of patent law, application requirements, and prosecution regimes. For example, harmonization of the requirements of the content and form of patent applications, together with harmonization of the law surrounding what constitutes a patentable invention, will reduce uncertainty and lower compliance costs when applications for the same or related inventions are filed in multiple countries.

In summary, Open Text believes that Canadian intellectual property reform, and particularly patent reform, should include initiatives toward global harmonization to achieve cost-effective and timely granting of high-quality patents. Innovators and employers such as Open Text would benefit from a competitive intellectual property regime that is predictable, cost-effective, and more consistent with regimes in other key jurisdictions worldwide.

Mr. Chair, on behalf of Open Text, we again thank the honourable members of the committee for the opportunity to make this presentation.

[The Chair, Conservative, David Sweet]

Thank you, Mr. Davies.

Now on to Mr. Gupta, for six to seven minutes, please.

[Karna Gupta, President and Chief Executive Officer, Information Technology Association of Canada]

Good morning, Mr. Chair, honourable members.

My name is Karna Gupta. I'm the president and CEO of ITAC, and I'm very pleased to be here on this intellectual property regime discussion. I have a personal interest because in a prior life I led Certicom, as their CEO, a small public company that had the largest patent portfolio in Canada, with 550 global patents. So the subject is very interesting.

We at ITAC speak on behalf of the Information Technology Association of Canada. We have about 350 members, 65% of which are SMEs. The topic of fostering innovation through IP is of particular interest to our constituents, given that 35% of the R and D spent in Canada is in ICT.

Having said that, there are always diverging views when you have a large membership. I'm going to comment on three specific areas: one area is on commercialization; the second is on education; and the third is on consultation.

On the commercialization side, with regard to innovation, there has been much discussion taking place within the committee about how to take ideas from a research stage across the valley of death to the commercialization stage, and how to keep that successful.

To promote the growth of ICT and IP-based firms in Canada, ITAC advocates a comprehensive government digital economy strategy. That is the underlying the framework. There is a tremendous opportunity for Canada to be the destination nation for both talent and investment. If we have a strategy to create the right conditions, innovation and entrepreneurship will happen.

The ICT industry is clearly a fast-moving and globally competitive market, and IP is a key asset in these companies. If you look at some of the recent studies done by MIT or Berkeley, you would see that 82% of the companies that have a high-value IP are backed by venture capitalists.

We understand that as a smaller market Canada is an office of the second filing for patent applications. At the same time, we need to encourage the Canadian industry to use the system. To do that, it is important that the Canadian patent process be efficient and in line with the global standards. Let me give you a couple of examples.

In Canada, the examination of patent application can be deferred up to five years after filing. The examination takes another two years. The deferral period makes it difficult for Canadian industry to assess the risk potential of infringement during this process. It's an incentive to move the production outside of Canada. In the U.S., the patents are granted in two to three years. We need to look at a shorter deferral period and ways to speed up the process overall.

Secondly, when the patents are filed in the U.S. first, Canada has a bilateral agreement to process Canadian patents faster than normal, which is typically 6 to 12 months, rather than years. We think this approach could be faster as well, and perhaps a more unified system is an option to keep pace with the globally competitive market.

Investment capital is critical to the success of the ICT industry. We have made a submission in this regard regarding the $400 million investment from the economic action plan to support the ICT industry working on patents. Again, I will draw your attention to the previous study, where today there are over 12,000 Canadian patents filed in the U.S., fewer than 5,000 in Canada.

Specifically on IP, it might also be helpful to look at ways to incent the revenue generation on patents, as in the U.K. What incentives can be provided to encourage the IP development and revenue-generating ideas? It's very important to drive the revenue generation of the patents through the commercialization phase rather than just patents for patents' sake.

On education and outreach, a number of witnesses have commented that more education on the IP regime is needed for business, and we hear this from our members as well. Stronger skills in IP management will lead to higher-quality patents and help avoid litigation. The officials from CIPO offer outreach programs, but lack time and resources. Associations like ITAC and others could help. There is an excellent opportunity to leverage existing organizations to create a broader outreach through these associations. We can be used as a portal for CIPO to take the patent issues out to the community and to the entrepreneurs themselves. It is a great way to maximize the resources we have to help Canadians and the industry.

Finally, IP is a complex field in terms of consultation. There is a balance to ensure consistency in patent evaluation decisions while at the same time adopting a forward-looking practice, one that can evolve with an industry like ours.

Ongoing consultations with the business community are the best way to stay in tune with the market, to make sure the process is predictable but up to date. This is also a good way to ensure that the Canadian system does not become overly burdened with litigation, as it is in the U.S. As such, we propose that consultations with the industry become a regular part of Canada's IP regime.

In conclusion, we believe there is an opportunity to build on Canada's IP regime by ensuring a more consultative and consistent approach in line with the global markets. At the same time, it is vital to increase our focus on the big picture. Canada needs a comprehensive strategy to encourage IP development and commercialization to truly capitalize on the opportunities at hand.

To give you some statistics, on the innovation side Canada has been rated fifth in the world in terms of pure innovation. On the commercialization side we are a laggard and we are rated as twelfth. A significant amount of work needs to be done. How do you drive patent and the IP regime to move from innovation to commercialization and to sustaining it as a business?

I'll conclude my comments. Again, I appreciate the opportunity to present in front of the committee.

Thank you, Mr. Chair.

[The Chair, Conservative, David Sweet]

Thank you, Mr. Gupta.

Now we move on to Mr. Lavoie for six to seven minutes.

[Martin Lavoie, Director of Policy, Manufacturing Competitiveness and Innovation, Canadian Manufacturers and Exporters]

Thank you for having me today. My name is Martin Lavoie. I'm the director of policy, manufacturing competitiveness and innovation for Canadian Manufacturers and Exporters. We represent about 10,000 manufacturers and exporters across the country.

We applaud the committee for undertaking this study. We believe it's a very important one for us, especially in today's global economic environment.

I would like to focus my remarks on three specific issues of the IP regime that affect the manufacturing sector: the first one is counterfeiting; the second is the commercialization of research; and the third is tax incentives for business R and D, including the proposed changes to the SR and ED tax credit.

Starting with counterfeiting, one of the major weaknesses of Canada's IP protection regime as it relates to counterfeiting is the lack of prosecutorial resources for police and customs agents; in other words, the government does not allow enough resources to conduct searches at the border for counterfeit goods.

Beyond the problems it creates in our domestic market, this has a huge impact on Canada's exports. I would like to point out that both the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights as well as NAFTA require criminal enforcement and border measures.

The·Office of the United States Trade Representative, USTR, has a special watch list. It's called the “Special 301 Watch List”, and it has included Canada for the past several years for our failure to implement our international obligations or to take effective enforcement action against counterfeit and pirated goods, especially at the border. This watch list is an annual review of the global state of the protection and enforcement of intellectual property rights. In its latest version in 2011, it put Canada in a very select group of countries that also included China, Algeria, India, Russia, Venezuela, Pakistan, Belarus, and Thailand.

The 2011 report concludes the Canada section by stating:

The United States encourages Canada to provide for deterrent-level sentences to be imposed for IPR violations, as well as to strengthen enforcement efforts, including at the border. Canada should provide its Customs officials with ex officio authority to effectively stop the transit of counterfeit and pirated products through its territory.

We have been advocating since 2006 for more resources for customs agents to stop the transit of counterfeit products, and for a better share of information between enforcement authorities such as the CBSA and the RCMP.

I want to touch on commercialization of research without repeating what has been said before, both today and at other meetings. One particular aspect of what Mr. Gupta talked about was how to generate more revenues with the patents. Taking a quick look at the patents, you may realize that universities in Canada file many patents every year and they own many patents. Actually, the OECD says that Canada is a good performer in university patents. If you look at the Canadian patents database, you will find that in 2012 Canadian universities were issued 58 patents. Only one of them, however, allowed a third party to license it. In the last three years, there have been over 100 patents issued to Canadian universities and only three made licences available.

My point is that you can develop as many patents as you want. But if you do not actively seek a third-party manufacturer or an entrepreneur to prototype it, test it, and bring it to market, it won't be commercialized. When you take into account that universities spend more than $10 billion a year in R and D, including more than $3 billion that comes from the federal government, most of it from taxpayers, it is nonsense that more efforts are not being put into licensing these patents.

We believe that all patents granted to universities or professors should automatically make licences available in the database to any third party on a non-exclusive basis, if possible, and that universities should actively promote these licences in the private sector.

I would also agree with Mr. Gupta that our associations could be helpful to universities in pushing the dissemination of this information through our respective members.

My third point is about business R and D, particularly the tax environment in which businesses compete as they perform R and D.

From a basic economic perspective, businesses maximize their investment in R and D if, one, they make profits, and, two, they compete in an environment where taxes maximize their cashflow.

On the profitability side, we're not the sector that has made the most profit in the last 10 years. Since 2001, the annual average revenue growth in our sector has been 0.3%, which is the second lowest in all sectors of the economy.

However, some tax measures undertaken by all levels of governments, including the decrease in the CIT rate, of course R and D tax credits, federal and provincial, the accelerated capital cost allowance for machinery and equipment, and so on, have helped businesses going through rough times by maximizing the after-tax cashflow available, despite low revenues.

The changes proposed to the SR and ED tax credit, first, are a huge concern for our members. It's more particularly the reduction of 5% in the rate for large businesses, and the elimination of capital expenditures from the tax base eligible for the tax credit, which are the two main concerns we hear more often from our members. The manufacturing sector accounts for 55% of all business R and D in the sector. Combined with Mr. Gupta's sector, we're about 90%. So of course we'll be among the most hit by these two measures. We're also very capital-intensive, I'd like to point out.

We estimate that all the proposed measures by the federal government in the SR and ED tax credit will reduce the R and D tax incentives in Canada by $750 million a year, starting in 2016-17 when all the measures are implemented. According to our latest management issues survey, 69% of our respondents said that as a result of these changes they will reduce R and D spending in Canada, while another 20% said they will start to look at other jurisdictions to see what kinds of tax credits they offer for R and D.

Talking about other jurisdictions, this week we published a report that compared the R and D tax credits for large companies across the OECD and some other emerging markets. We found that the international competitiveness of our R and D tax credit will fall from number 13 to number 17, just as a result of the 5% decrease in the investment tax credit rate. What is even more of a concern than the actual rank is to look at the countries that will now be ahead of us. We're talking about countries like Brazil, China, and Turkey, which not only offer bigger market size and lower labour costs, but they will now offer a more generous tax credit for R and D.

These are our concerns. I thank you for inviting me, and now I will shut up.

[The Chair, Conservative, David Sweet]

Thank you very much, Mr. Lavoie.

Now we'll move on to questions. Our first round is for seven minutes.

We'll begin with Mr. Braid.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Thank you very much, Mr. Chair.

Thank you to all of our presenters for being here this morning. Once again, I think it is another highly qualified and high-quality panel, so thank you.

Mr. Davies, thank you very much for being here from Open Text in Waterloo. I think Open Text is, in terms of success stories in Canada, one of our country's best-kept secrets. I appreciate your being here.

How many employees do you have in the two buildings in Waterloo?

[Gordon Davies]

I think in the two buildings in Waterloo we would have in excess of 800 employees today.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

How many do you have internationally?

[Gordon Davies]

Internationally, with our recent acquisition of a company called EasyLink, we're now over 5,000 employees.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

I listened with interest to the debate at Open Text between whether to patent or whether to copyright. I presume that you perhaps use copyright more often because you're a software company and that would be appropriate with respect to that type of technology. Could you just help us understand what thought process the company goes through in terms of determining that decision point—whether to patent, whether to copyright?

[Gordon Davies]

First of all, we certainly use patents less for protecting our intellectual property, but I have to say, as I said in my comments, that to a certain extent that's because of the cost and expense of the process we're required to go through. We place significant importance, as a result of that, in the prior art of all the documentation and copyright that would surround an invention, and we use that as our primary step in terms of protecting the intellectual property.

That said, though, we have been going through a patent program in the last couple of years where we're trying to file more patents, particularly in Canada. We have a number of people in R and D in the Waterloo region, and in order to encourage innovation within the company, we are encouraging the filing of more patents, and you've seen in the last couple of years now that we're starting to file 10 to 12 patents a year, whereas in the past we were primarily focused on the copyright, as you indicated, as well as prior art.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

You spoke about the notion of looking at and exploring harmonizing some of Canada's IP processes and regulations with other international jurisdictions. I want to ask if you could just elaborate on that a little bit, and perhaps indicate some specific examples of where and what we might harmonize and which jurisdictions offer best practices in this regard.

[Gordon Davies]

Certainly from our perspective, and because we're an acquisitive company, Open Text is created by.... Over 50 companies have been acquired over the past eight to ten years. A lot of the patents that we will receive as a result of that M and A initiate in the United States. As a consequence of that, we do look at whether we should also file the patent in Canada or file the patent elsewhere as well. But to be candid, it's not the filing cost, and it's not the maintenance cost related there either; it's actually the legal cost inherent in being the second filer in Canada.

The reason for that is the regime is different. There's a different form. There's a different analytic in terms of what's a patentable idea. It requires us to get experts in Canada. You can't really just take the work product that's already been done in the U.S., apply it within the Canadian context, and get a similar protection level here. You really have to engage experts and go through an entirely different process to try to achieve the same result.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Mr. Gupta, thank you for being here. Good to see you again. I want to come back to a point you made, a suggestion you offered in terms of collaborating with CIPO to help with outreach efforts. I think that's a really neat, collaborative, and innovative idea. Here's your opportunity to go for it. Tell us why you think this is an important suggestion, how it might work, and what consultation, if any, you've done so far.

[Karna Gupta]

Thank you for the question.

I think CIPO did submit in their documentation that one of the issues they're facing is outreach and getting to the community with the information they have. There are multiple organizations around the country, and a lot of them are of a national nature, like ITAC, which would present information technology across Canada. Open Text is our member.

To reach the large constituents.... Of our membership, 65% are SMEs. We do have a fairly active SME outreach, and we run several programs in each of the provinces and territories.

If CIPO wants to get the information out about how and what needs to be done, just from a knowledge point of view, one way to do it is to use the associations to get the information out. Often it could be done through a portal. I'll give you an example in this case. A similar thing happened with EDC, for example. EDC does serve our SMEs significantly when they do overseas business, but their reach is limited because they are all inbound calls. We are in fact working with EDC to establish a portal so they can have a push to the community in terms of what they offer.

We're of the belief, in ITAC's current management and in the board of directors, that a big part of the issue in Canada is that we need to connect these separate dots that are out there. Everybody is trying to do good things in goodwill, but the dots are not necessarily connected properly. So if we can connect some of these pieces to reach out to the community, we can add a tremendous value, even on a consultation. If you run a forum in New Brunswick, CIPO could be one of the guest speakers, or they could have their portal and local community entrepreneurs could come and see what they need to do, because the patent process in Canada is very complex.

As the colleague here mentioned, the searches you have to go through, whether it's an infringement search, a prior art search—there are a bunch of searches. It is a very complex process. Smaller companies often cannot do that, and they struggle. By the time they get something done...post-revenue, it's very hard. So there is room to collaborate and get the information out through the associations.

[The Chair, Conservative, David Sweet]

Thank you, Mr. Gupta.

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

Now I hand the floor over to Ms. Leblanc.

You have seven minutes.

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

Thank you, Mr. Chair.

I want to thank the witnesses for being with us today.

In my riding, LaSalle—Émard, 6,000 jobs depend on the manufacturing sector. Here we are talking about 120,000 jobs in the greater Montreal area. That sector has been hard hit in recent years and we have seen a large number of businesses close their doors. Many of those jobs have disappeared.

Bill C-45, which is before the House of Commons, proposes changes to the research and development program. As I mentioned, research and development lead to innovation. As regards the changes, there is a reduction from 20% to 15%, among other things, and capital expenditure eligibility is being amended. We touched briefly on that aspect.

I would like you to give us more details on the consequences this will have for your members, particularly for our competitive power, especially with the United States.