Industry Committee on Nov. 6th, 2014

[Mike Wallace, Conservative, Burlington, ON]

Have there been consultations with businesses that are charging for paper billing, so they will be ready for that change?

[Adam Scott]

This item has been very front and centre for some time. We have not had consultations. I would not be surprised to see a regulatory process flowing from this to ensure that compliance can occur.

[The Chair, Conservative, David Sweet]

Thank you very much, Mr. Scott.

Mr. Wallace, I know that I've been keeping it flowing quite a bit, but to be fair I'm trying to get maximum time for us to get what we need in this study.

Thank you very much to the witnesses.

We're going to suspend for three minutes and have the next panel come up.

[The Chair, Conservative, David Sweet]

Let's carry on with our meeting. I wanted to alert members. I know we've had some comments from the opposition on their concern with the process, but I wanted to make sure that all members knew that whether we're concerned with the process or not we have until.... The finance committee has basically the carriage of this bill. They've asked us to make recommendations. They have said that those recommendations may end up being amendments to the bill. Obviously they have a time limit that they're going to deal with for the bill. They've asked us to get input back to them by November 21. Yes, that is a short period of time. The reason I'm mentioning this now is that all members need to be cognizant of that if there are some concerns with the bill.

Where they would like to recommend an amendment, we need to be dealing with that now as we observe the bill. When we come back we'll have two meetings and then we'll have to make sure that a letter is drafted very quickly. It needs to be in both official languages to go back to the finance committee. That will be the process that we've been asked to work within.

Ms. Gallant, did you have a comment?

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Yes, Mr. Chair.

In the past it was the opposition who asked, when we had these budget implementation bills, to have it split up and dealt with individually at committee, so we're doing exactly as was desired. I think we should get on with this and be productive and make any amendments as seen fit.

[The Chair, Conservative, David Sweet]

Thanks, Madam Gallant.

We'll begin with introducing our witnesses for the second panel. We have from the Department of Industry, Denis Martel, director, patent policy directorate, marketplace framework policy branch; Agnès Lajoie, assistant commissioner of patents, Canadian intellectual property office; Jenifer Aitken, director general, investment review sector; Paul Halucha, Paul I think is a veteran of this committee, director general, strategic policy branch. From the Business Development Bank of Canada, we have Jean-René Halde, president and chief executive officer; and John Connell, vice-president, government relations.

If I break protocol please forgive me, but it would probably be easiest for me to just go left to right with opening remarks if that's okay folks.

I know Mr. Martel has some opening remarks. Would you go ahead and try and contain them to five minutes, please.

[Denis Martel, Director, Patent Policy Directorate, Marketplace Framework Policy Branch , Department of Industry]

Thank you for the opportunity to be here today to talk about the changes to the Patent Act and the Industrial Design Act.

As you know from the study of this committee on the IP regime in Canada, it concluded that Canada's IP's regime is strong. In many areas Canada provides more than the minimal requirement than what is required under our international obligations. As you've heard there were some areas where Canada's system could be strengthened. One area was regarding enforcement, and the government introduced Bill C-8 on combatting counterfeit products.

The other area that the committee identified was the need for support for Canadian businesses on the global stage to ensure that the administration of Canada's IP regime is internationally compatible and streamlined. To do so, the committee recommended that the government ratify key international IP agreements, including the Patent Law Treaty and the Hague agreement for industrial design. It is the latter recommendation that brings us here today.

The first step took place in January 2014, when the government tabled five international intellectual property treaties in the House, that had to do with trademarks, patents and industrial designs. This followed up on a recommendation by the Standing Committee on Industry, Science and Technology.

The first phase of the economic action plan contained the necessary amendments to comply with trademark treaties. Now, the second budget bill proposes amendments to the Patent Act and the Industrial Design Act.

This is to allow Canada to ratify and accede to the remaining two treaties: the PLT and the Geneva Act of the Hague agreement. The purpose of the amendments to the Patent Act and the Industrial Design Act is to give legislative and regulatory powers to accede to the PLT and the Hague agreement. Both treaties deal strictly with administrative matters. They do not consider substantive issues related to either patents or industrial design. Those two treaties are applicant-friendly. They require fewer forms, allow for electronic means of communications, notification of missed deadlines, and longer grace periods before sanctions could be taken.

Just to give a sense of the international agreement in terms of the Hague, it's an international registration system that provides an opportunity to obtain protection for industrial design in several jurisdictions with one single application.

There are many clauses in the bill, but essentially there are four key ones that I would like to highlight. They relate to the content of an application, to simplify what is required to submit; clarification of the rules of design when someone seeks a registration; clarification of the rules regarding requests for priority; and increasing the term of protection from 10 to 15 years.

The major benefits are to protect the designs in several countries by filing one application, which could be done in one language and paying one fee.

With regard to the Patent Law Treaty, it's also a treaty that is administered by the World Intellectual Property Organization, which aims to simplify and harmonize administrative practices among intellectual property offices around the world.

Some of the key amendments in the bill that I would like to highlight are the following: reduce the requirements to obtain a filing date, again, less information that the applicant is required to submit; require that an applicant be notified for a missed due date before action is taken; allow applicants to perform certain administrative tasks themselves; and introduce grace periods before sanctions that affect rights.

Collectively, those amendments and the ratification of the PLT would allow reductions in red tape, simplify filing requirements, reduce risk of errors and loss of rights, and bring lower costs.

Thank you, Mr. Chair.

[The Chair, Conservative, David Sweet]

Thank you, Mr. Martel.

If at all possible, I've had a reasonable request that you make reference to the section of the bill that you're speaking to. It would be easier for members who actually have the bill in front of them to get to it right away and deal with it.

Madam Lajoie, do you have some opening remarks?

[Agnès Lajoie, Assistant Commissioner of Patents, Canadian Intellectual Property Office, Department of Industry]

No, I don't have opening remarks, but certainly I can provide more detailed information and I'll make sure I make reference to clauses when answering.

[The Chair, Conservative, David Sweet]

Madam Aitken.

[Jenifer Aitken, Director General, Investment Review Sector, Department of Industry]

Thank you, Mr. Chair.

Hello.

I am the Director General of the Investment Review Division at Industry Canada.

I am here to speak to division 9 which contains amendments to the Investment Canada Act. These changes are found at clauses 186 to 190.

The first amendment in clause 186 removes an exemption from the notification requirements under the Act. It amends paragraph 10(1)(c) of the Investment Canada Act so that foreign investors will be required to file a notification under the act when they acquire a Canadian business through the realization of security on a loan.

This requirement applies where the acquisition is not subject to another federal approval. Other approvals could arise under the Bank Act, the Cooperative Credit Associations Act, the Insurance Companies Act, or the Trust and Loan Companies Act.

Proposed subsection 186(2) provides that part IV of the Investment Canada Act continues not to apply to this type of acquisition. Part IV is the part of the Investment Canada Act that governs reviews of foreign investments on the basis of their likely net benefit to Canada. The effect of these two subclauses, 186(1) and 186(2), is that this type of transaction will now be subject to notification under the act, but will continue to be exempt from net benefit review. This is a long-standing exemption from net benefit review, and is in place so as not to closely affect credit markets.

A notification is a form specified in regulations calling for information about the parties and the transactions. This means that through the administration of the Investment Canada Act, the government will now receive information about transactions in which a foreign investor has granted a loan to a Canadian business, the business has defaulted, and the lender acquires the business by realizing on security. This additional information will contribute to the data about foreign investment that is collected by Industry Canada.

The next amendments are provided under clause 187, which contains amendments to the confidentiality provisions in section 36 of the act. Section 36 contains strict confidentiality provisions with certain exemptions that permit limited disclosure of information, for instance in the context of a net benefit review. These amendments in subsections 187(1) and 187(2) will permit disclosure of the notices that are issued at each stage of the national security review process in the act.

Proposed subsection 187(1) lists the notices that can be sent during a national security review process, and permits disclosure of information in these notices. Proposed subsection 187(2) permits disclosure of the effect of a Governor in Council order at the end of a review. Subsection 187(3) provides for protection of information in a Governor in Council order if the disclosure of information would prejudice the investor or the Canadian business.

The effect of these amendments will be to provide discretion for more information to be disclosed about the process of national security reviews, while continuing to protect confidentiality of investors' information or national security information. For example, the government will be able to disclose that a notice has been sent to an investor that an order for review may be made, that no order has been made, or a notice that an order for review has been made, or that an order has been made after a review. These provisions create a discretion, but not an obligation, to make such information public.

Finally, there are some amendments to the Economic Action Plan 2013 Act. These amendments provide authority for amendments to the regulations under the Investment Canada Act to allow flexibility to extend timelines for national security reviews under the act. One of these amendments is being repealed, but the others will remain in place and will be used when the regulations are amended. This is a housekeeping change that is required for the national security review regulations. The authorities remain in the act and the Economic Action Plan 2013 Act, to provide for extensions to the national security review process time periods that were announced in 2013. These will provide the government with additional flexibility in the time taken to conduct careful and thorough national security reviews.

Thank you.

[The Chair, Conservative, David Sweet]

Thank you very much, Ms. Aitken.

Now on to Mr. Halde.

[Jean-René Halde, President and Chief Executive Officer, Business Development Bank of Canada]

Mr. Chairman, distinguished committee members, thanks for the invitation to appear.

The proposed amendments to the Business Development Bank of Canada Act were foreshadowed in a report by the Minister of Industry tabled in Parliament on June 16, 2014. They can be characterized as a fine-tuning of the act and would not change BDC's mandate, nor would they alter our focus on small and medium-sized enterprises. Rather, they would enable us to better fulfill our mandate by authorizing certain activities that BDC is presently unable to perform and that are in the interests of Canadian entrepreneurs.

BDC is proud to serve over 30,000 entrepreneurs through about 100 business centres throughout the country.

Our clients employ over 690,000 Canadians and generate revenues of nearly $200 billion. Of our clients, 16% are exporters and generate export revenue of over $22 billion.

BDC is a long-term lender and investor, with a greater appetite for risk than regular financial institutions. While we are profitable and pay dividends to the government, our primary focus is serving the needs of Canadian entrepreneurs, and the proposed amendments would allow us to do that better.

Let me elaborate on three amendments, division 12 of the act.

First, BDC would now have the ability to provide financing directly to a foreign subsidiary of a Canadian firm, which is what some entrepreneurs need to grow their business.

Second, there would now be a provision allowing BDC to invest in foreign-registered venture capital funds only when managed by Canadians with an ongoing commitment to invest in Canada.

Third, we would be able to increase our support to entrepreneurs through third-party organizations, which have better access to a certain type of client. It would allow us, for example, to deepen our collaboration with Futurpreneur, formerly known as the Canadian Youth Business Foundation, and reach out to more young entrepreneurs.

The other amendments would introduce additional very modest changes to better position BDC to support entrepreneurs and modernize the bank's governance arrangements.

I'd be happy to respond to any questions that you may have on the amendments, or any of BDC's operations.

[The Chair, Conservative, David Sweet]

Thank you very much.

Colleagues, we'll try the four minutes again and try to get some time at the end as Monsieur Côté has asked to talk about business.

Mr. Daniel, are you up first?

[Joe Daniel, Conservative, Don Valley East, ON]

Sure. Thank you, Chair.

Thank you, witnesses, for being here.

I'm just going to focus primarily on the patent and industrial design aspect. It's obvious that around the globe our designs are being copied, used, and replicated, etc,. and loss of revenue and intellectual property is taking place daily.

My question is, really, by joining these treaties and the Hague agreement, and harmonizing Canada's IP framework, how does this impact the international community?

[Denis Martel]

The key benefits of ratifying those treaties are mainly for Canadian businesses, the innovators. They have been developed internationally to develop a system to facilitate...and some administrative provisions, as we indicated. By acceding to those treaties, Canadian businesses and innovators will have, on the administrative side, less burden so it will facilitate their jobs. It's friendlier. We have provisions to reduce some of the paper burden, for example, by having electronic filings. The act still refers to paper documents. Some reductions of costs.... We talked about the grace period. It also can facilitate foreigners if they want to file industrial design in Canada, and the same thing for the patents, because we're talking about national rights so foreigners come to Canada, and it helps to bring inventions from outside to Canadians. It helps both on the innovations and on the use of technology for design.

[Joe Daniel, Conservative, Don Valley East, ON]

In Canada most of our businesses are small and medium-sized businesses, and our government is obviously looking to make sure that we can facilitate or assist in making sure that our small and medium-sized businesses can develop and thrive.

How will streamlining these application processes for Canadian small businesses be affected?

[Agnès Lajoie]

If I may, I would like to add the notion that ratifying those treaties is adding safety nets for the applicants. By doing that, we minimize the risk of applicants, including, of course, small and medium-sized businesses, to lose rights if, for example, they don't comply fully with the filing requirements. For example, the PLT allows applicants to get a filing date even if the filing fee is not paid. It can be paid later and they can secure a date. Actually you can find another example under clause 137. It's a new notification system for advising the applicants where a fee or an action has to be taken. Instead of saying, “Okay, you should have known,” now there's a notification system. By doing so— of course, there are other potential examples—we are making sure that applicants are aware, and it adds certainty for them and also for third parties.

[Joe Daniel, Conservative, Don Valley East, ON]

Obviously, there's a cost element to doing these filings. Is it going to be cheaper than filing a patent in the normal process?

[Agnès Lajoie]

Presently, we're not planning to reduce the fee to file a patent application but applicants will now be able to do certain actions themselves that they were not allowed to in the past. For example, now they will be able to pay their maintenance fee themselves. It's a real benefit because right now only the patent agent or authorized correspondent can do this on behalf of the applicant. By doing so, the applicant is fully accountable and responsible to maintain their file and may, potentially, save some legal fees with their agent. There are definitely savings in this specific operation.

[The Chair, Conservative, David Sweet]

Thank you very much.

Now on to Mr. Masse, for four minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

I appreciate your intervention in terms of the process. I was just curious, though, as to whether or not the minister will be responding to any recommendations that we have. The normal process, historically, in this House, has been that each committee has been independent to itself, often then reporting to the House of Commons, and then getting a ministerial report.

What we're doing here is we're going to be sending a shopping list or some recommendations to another committee. In my opinion, we become subservient to the finance committee because we could always give recommendations, that's always an option, and we're being requested to do so, but we can't make amendments. There's a big difference in those two processes. I'm hoping that whatever we do at the end of the day, the minister will directly respond to this committee's recommendations because I think it's important.

I want to continue with the patent question that we have here because it is very important, for manufacturing, where I come from, and also for this country. What countries are we having a particular problem with in terms of patent protection right now? What identified countries are violating Canadian patents?

[Denis Martel]

I wouldn't say that we have any problems, like the—

[The Chair, Conservative, David Sweet]

Mr. Daniels, on a question of procedure.

[Joe Daniel, Conservative, Don Valley East, ON]

Thank you, Chair.

This process has been the regular process that we've done for quite a bit of time. We've done this in the spring where we've actually gone to the finance committee to do all of these things. This is nothing new that we're doing. I'm not sure what these concerns are that are being raised now. We need to continue with our same process.