Industry Committee on May 5th, 2014

[Anne Minh-Thu Quach, NDP, Beauharnois—Salaberry, QC]

Thank you very much, Mr. Chair.

I'd like to thank you for being here, Mr. Halucha.

You spoke about the fact that people were consulted and that some small businesses had concerns. You also questioned whether the benefits will accrue equally, if this will be fair for small and medium-sized businesses.

Did the government take the concerns of small and medium-sized businesses into account? How will these amendments to the Trade-marks Act affect small and medium-sized businesses as well as large companies?

[Paul Halucha]

I'll start, and I'll allow Darlene to add onto it.

Generally, for large corporations, the advantages to them will be immediate, to the extent that you have companies right now that are protecting their trademark in many jurisdictions, and then do that through the Madrid Protocol, and then are required to do a special process for Canada. They will no longer have to do that. They can just do it as part of their regular Madrid Protocol applications.

In terms of the benefits for small businesses and medium-sized businesses, I think you have to take a step back in terms of looking at what export markets those companies are going into. Everyone would agree that in Canada we need to grow our businesses better; that's the cornerstone of our innovation policy. To the extent that you're facilitating and making it easier for those companies to make the decision to not only sell in Canada, but to sell abroad, being a party to this system can only encourage them and benefit them in doing that.

It makes it easier for them. It simplifies it. There was a great part of the parliamentary debate that took place on April 7, before the committee. Madam Rempel was talking, and she quoted an IP agent who was part of our 2010 consultations. He talked about what he's doing. He has exclusively small businesses as his clients, and they would inevitably come in and talk about, after they protected their IP in Canada, how they would do it internationally. The quote was, “When I advise that we cannot do so without use of a local agent, the cost for which can be quite substantial, many of them decline.”

The fact is that often the difficulty of seeking and acquiring protection abroad is enough of a disincentive that a company may decide that it's not worth it, and stay in Canada.

I'll turn it over to Darlene to talk to you on the reduction of the paper burden, which is obviously a cornerstone of these treaties.

[Darlene Carreau]

In addition to the savings that a company may achieve by using Madrid—and we do know that small and medium-size industries do use Madrid in other jurisdictions—there's also some streamlining and harmonizing being done in the Canadian trademark office. Even if a company is not using Madrid, but simply wants to file only in Canada, we have streamlined and harmonized the process with other jurisdictions.

The Singapore law treaty is really about creating minimum requirements in Canadian trademark offices so that businesses don't have excessive red-tape burdens to comply with. For example, if you were filing in Canada and you had foreign registration, you'd have to file a certified copy, and there would be a government charge around that. As well, if you were represented by a lawyer, the lawyer would charge for filing that.

Another example we've already talked about is the declaration of use, a form that has to be prepared by businesses. There is a compliance cost to that and there are government fees for it. You might also file for extensions of time, for which there are government fees. In addition, you might pay a lawyer to prepare the declaration of use and prepare extensions of time to file that declaration of use. Those are some of the costs we're talking about taking out of the system.

[Anne Minh-Thu Quach, NDP, Beauharnois—Salaberry, QC]

Thank you.

My next question is also about small businesses. In my riding, Beauharnois—Salaberry, it is primarily the small businesses that are creating jobs and stimulating the economy.

From what I understand, trademark holders will now have to pay for each classification. Does the government intend to offer financial assistance to small businesses that will have to pay the required classification costs for all of their products?

I'd like to ask another question right away, so that you can answer both of them at the same time.

I'd like to hear about the use of those rights. There is talk of eliminating the requirement for companies to prove that their trademark is being used. If companies no longer have to provide that proof, can we expect that there will be an increase in legal disputes, as was the case in Europe, for example?

Please answer both of those questions.

[The Chair, Conservative, David Sweet]

We're way over time on that one, so we'll see how we make out at the end. If we have some time at the end, maybe you can cover those questions off.

We are moving on to Mr. Braid, for five minutes,.

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

Thank you to our department officials for being here today.

I want to start with a question about the Madrid Protocol. I want your confirmation on this. A company would want to register a trademark in another country other than Canada because they're interested in selling their product in that market, is that essentially the bottom line?

[Paul Halucha]

Yes, that's correct.

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

Through the Madrid Protocol, the fact that companies can apply for various trademark protections in various countries through a single application must be extremely beneficial. This is where the streamlining comes in, where the reduced costs come in, in terms of application fees, legal fees. Is that correct?

[Paul Halucha]

Yes.

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

In a riding like mine, I have a lot of high-tech start-ups. I would see this as being particularly beneficial for Canadian high-tech start-up companies who want to devote their financial and talent resources to the development of their technologies and not to paperwork and red tape.

[Paul Halucha]

I would absolutely agree with that. Actually, there are very few ICT companies that can survive in only the Canadian marketplace. Certainly everyone I meet with has an export strategy. That's a key part of their growth plan because they very quickly hit the limits in Canada.

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

Great.

What would the consequences be if Canada did not implement the measures under these various protocols?

[Mark Warawa, Conservative, Langley, BC]

That is a good question.

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

Thank you, Mark.

[Paul Halucha]

Well, the consequences would be the exact reverse of all the benefits we've talked about. The compliance cost savings we're talking about would not materialize. The easy access and the ability to register in foreign jurisdictions with one filing and one language and paying one fee would not materialize. The benefits in maintaining their portfolio abroad would not materialize.

I'd also add that we did a series of round-table meetings with ICT companies over January and February, and the biggest concern we heard from them was not trademarks. I don't remember anyone raising that as an issue. They're very much focused on patenting and their ability to protect their innovations, so to the extent that they're investing in IP, I think their money is better spent there.

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

Absolutely. That's a great point.

If we don't implement any of the measures of these protocols, would Canada be offside from a WIPO perspective?

[Paul Halucha]

We don't have strict international obligations to implement the protocols. The way the process is sequenced is that we would only accede to the treaties; that is, we would only agree to implement them legally in Canada, at the point when we had undertaken the administrative regulatory and legislative changes to be in a position to join the system.

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

Okay.

The key reasons we want these three protocols implemented is the benefits they will have to Canadian companies, and to Canadian companies that want to register their trademarks not only in Canada but around the world. Is that correct?

[Paul Halucha]

Yes, that's the motivation.

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

Which of the three protocols is the U.S. currently a full signatory to? Have they implemented the measures of these three protocols?

[Paul Halucha]

Yes, the United States is a party to all three.

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

They're our largest trading partner. It would seem to be a slam dunk that Canada would want to do the same and have a level playing field for our companies that do business across the border.

[Paul Halucha]

I can't disagree with that. I agree.

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

Okay.

A couple of years ago, this committee did some great work through a study of intellectual property. Did any of the work of that committee's report or the recommendations lead to any of these suggested changes?

[Paul Halucha]

Yes. The committee undertook eight excellent sessions and heard from a variety of witnesses. One of the recommendations was actually that Canada ratify all of the treaties that were listed in the budget, the first three of which are in the BIA.