Industry Committee on June 1st, 2017

[Dr. Michael Geist]

I would just start by noting that I think everybody agrees that respect for copyright in educational institutions and respect for the creators is important. One really nice thing about open access, especially in many disciplines in which virtually everything now is published as open access, is that the author has given permission to use these works. We're not talking about it. Part of the frustration, I think, from within the educational community is that you have some groups demanding payment, in a sense, for works that the authors themselves have said effectively ought to be made available. Of course, the public has also paid for and funded them.

The issue of patent trolls is a significant issue for many businesses, certainly in the United States, but elsewhere as well. The reference is by and large to entities that scoop up patents. They are not themselves, in many instances, the inventor or the creator or the innovator; they are simply trying to acquire some of that innovation, that patent, and then use it in an aggressive manner, often to try to exact from various parties licensing terms or other sorts of payments.

If our goal within the patent system is to try to incentivize new kinds of innovation, patent trolls aren't doing that. They're not creating anything new; they are simply using the legal system, in a sense, to try to capture as much revenue as they can without any of that creativity.

We've seen in the United States, where patent awards are so large, that the threat from patent trolls is significant. There are real concerns that the same kind of thing can move up here. Of course, Canadian businesses operating in the United States have faced precisely this. Research in Motion is the classic example in the Canadian context. It faced this to the tune of hundreds of millions of dollars.

We haven't done much to try to address concerns about misuse or abuse of intellectual property in Canada. There are copyright elements here, there are trademark elements, and there are also patent elements. In my early remarks, I tried to touch on a number of different kinds of things that we could do that would seek to dissuade patent trolls from operating here in Canada. I know there have been some discussions already within the government around the necessity for this.

As we think about both an IP strategy and a copyright reform strategy, I think we ought to be mindful of some of the things the Supreme Court of Canada has said about the need for balance concerning intellectual property; that at times it may just as much mean ensuring that there is not misuse or abuse of that intellectual property as ensuring that people have the effective tools and rights that they need.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

You spoke of the Competition Act.

Am I out of time?

[The Chair, Liberal, Dan Ruimy]

Yes, I'm sorry. We're going to move to Mr. Masse.

You have seven minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

I'll continue with that as well, because this is one of the concerns that I have.

I recently had an experience in which a small business T-shirt maker was being sued by Duke University for the letter “D” variation they have on a T-shirt for the Detroit Tigers. It's a home business, and I'm sure he's making some money from this, but a variation of the letter “D” is now something he's in the court process defending. He feels that he's going to be successful, but Duke University, if anyone knows their alumni association as well, is set to be able to go to court at any time.

There is a case in which the “notice and notice” issue is emerging, and as well in a court case that will be going on, I guess, if Rogers has to decide whether they appeal.

Can you highlight for the committee and for the general public what's going on with that and what the minister could do to eliminate patent trolling in that aspect?

[Dr. Michael Geist]

That highlights another area of IP abuse, in this case really copyright abuse. As many of you may remember, the 2012 copyright reforms, which will be the subject of much discussion with the copyright review that starts later this year, included a fairly innovative approach known as “notice and notice” in terms of trying to find a mechanism to ensure that rights holders had a mechanism to address allegations of infringement online while at the same time trying to safeguard the privacy and free speech interests of Internet users, trying to find a way to balance. While in places like the United States we've seen a takedown system that is often referred to as a “shoot first and aim later” approach, where often legitimate content is taken down without any court oversight, our approach instead involves Internet service providers like Rogers and Bell and others. Rights holders who believe their copyright has been infringed can send a notification to the ISP, who is obligated to forward that notification along to their subscriber, but not to disclose the identity of the subscriber.

Two things have emerged in the last number of years since that took place that have been problematic. One, people are using that system to send demand notices to settle. That's something that was never envisioned. What it means is that you get literally thousands, in some instances hundreds of thousands, of Canadians who receive notifications, don't know much about copyright, get immediately really scared about the notice, and pay when there is no obligation to do so.

The system was never designed...or it was not even thought that it would function in this fashion. Part of the problem was that the then government, the Conservative government, was supposed to introduce regulations as part of this. Those regulations never came. We simply put the law into place.

There is an easy fix. It's the regulations that are missing that would preclude or prohibit the ability to include those kinds of settlement demands in the notices. That was never really envisioned as part of the system.

The other problem that's come up, which you highlighted in the Rogers case, is that we've started to see, in a sense, IP trolls try to identify the individuals themselves, and using the court system, in a sense, to try to force ISPs to disclose the identity of their subscribers. They are doing this en masse, affecting thousands of people. Again, it's something that I don't think was ever envisioned. Indeed, in the off-loading of this, what it means is that there are major costs that are ultimately now being borne by subscribers themselves, because the ISPs are being forced to bear this, and they are undoubtedly passing it along to their customers.

[Brian Masse, NDP, Windsor West, ON]

The connection to what I'm worried about is with the legitimate new copyrights emerging and then, similar to the customs revenue agency, we as MPs have seen offshore companies even use that brand to shake down Canadians because they get scared about basically being sued by the real thing. It's to the point where in my community and in many others—I work with the police on this—people actually go out in the middle of the night to buy credit cards for people who are shaking them down as part of the settlement. That's how intricate the system is. CRA has a whole fraud division related to this.

I'm worried about it going to the next level with this type of thing. There are legitimate companies—well, “legitimate” being companies who use it under the law, and some would say “under” the law.

Mr. Chair, how much time do I have left?

[The Chair, Liberal, Dan Ruimy]

You have two and a half minutes.

[Brian Masse, NDP, Windsor West, ON]

Okay.

I want to move on to another topic. I worry about some of the research we have on subsidization. Subsidization comes from not just the taxpayers helping a student get to university or college. Some will never afford that opportunity. The gate is right there at the get-go. There's a gate for those who can't afford it. Then there's a potential gate, if you have projects that have a corporate sponsor or research geared to that, where they would have more access to service and distribution networks.

Mr. Nantel, you described certain ideas that you find stupid and so forth. There's a gate there as well.

I guess what I worry about in research and innovation, not only with regard to things for the market, is the loss in pure science, and also in this science, of the ability to fail. That's actually led to some of the greatest innovations of humankind, everything from solving diseases to giving us French fries and potato chips and other things. I worry about that in all of this.

I'm sorry I took so much time. I'll turn it over now to Mr. Nantel and then quickly across.

[Dr. Marc Nantel]

We're perfectly happy to fail.

[Voices]

Oh, oh!

[Dr. Marc Nantel]

The thing is that it's more the potential of the idea that we evaluate. If it succeeds, will it have a chance to create jobs, good economic development, good training for the students? In some projects, we try our best and they don't actually achieve the desired output. That's cool. It means we're trying hard enough. If we never fail, we're not trying hard enough. We're not being innovative enough.

When I was being a bit candid and saying that sometimes we don't do a project because it's—

[Brian Masse, NDP, Windsor West, ON]

It was funny, I mean—

[Dr. Marc Nantel]

We look at the potential of that project, should it be successful. Sometimes the potential is really tantalizing, but it's a riskier project and sometimes they don't work.

[Christine Trauttmansdorff]

I might just add to this that the footprint of the applied research that's going on in colleges is a very small portion of the overall investment that Canadians make in research. The investment on fundamental research is in the order of between $2 billion and $3 billion a year in post-secondary. We have something in the order of $50 million or $75 million of that coming into the college system, so we don't feel as though rejecting a project is putting that entire system at risk.

[The Chair, Liberal, Dan Ruimy]

Thank you very much.

Mr. Jowhari, you have seven minutes.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you, Mr. Chair.

Welcome to all the presenters. It's great to see all of you for the first time. I guess that answers the question, Mr. Bindra.

We talked about IP and tech transfer probably using a relatively new terminology and knowledge transfer within the domestic context. I would like to take it to the international context. I'd like to start with Professor Geist.

Internationally, do you think we have a balance when it comes to technology transfer?

[Dr. Michael Geist]

I'm not sure what you mean by—

[Majid Jowhari, Liberal, Richmond Hill, ON]

Do we have a balance or an imbalance in IP and tech transfer internationally?

[Dr. Michael Geist]

Do you mean Canada, as compared internationally?

[Majid Jowhari, Liberal, Richmond Hill, ON]

Yes.

[Dr. Michael Geist]

I think we have success stories, but I think there are lessons to be learned from other countries as well.

As an example, I'm just back from Israel where I teach a course between my University of Ottawa and the University of Haifa. Its focus is on global technology policy. One of the focal points was talking a lot about cyber and cybersecurity there. As you probably know, Israel has been an incubator for some of the leading technologies and some of the leading companies.

One of the things that was most interesting about it was that we met with a number of councils and a number of companies focused on this. Much of the technology and the cutting-edge IP comes out of the military, unsurprisingly, and the people who are doing this are kids who are coming out of the military. There is a particular unit focused on some of these cyber issues and they quickly move from the military into developing some of these companies that are now world leaders, in many instances.

The question came up, “Well, what does the military do about the intellectual property?” The answer was nothing. What it wants to do is to ensure that this gets out. They actually believe that the development of companies in the private sector and better technologies will also help from a security perspective, not just those companies, but it will help society more broadly. There is an interest in ensuring that happens.

My point here is that, in some ways, the military functions much like our educational institutions, or like universities and colleges ought to function. The focus is not on how we hoard our IP or commercialize our IP. It is rather on how we do our best to transfer that knowledge, so that there are broader benefits. That can come from a number of different ways. If our primary metric is patents, licences, or revenue, coming back to these institutions, then we're measuring the wrong thing.

[Majid Jowhari, Liberal, Richmond Hill, ON]

I'm going to go back to an article that you had published. I'm going to refer to your website.

You had indicated that Canada is a net importer of IP and has a net loss, as it concerns domestic technology transfer. What do you think we should do, as a country, to make sure that we change that trend?

[Dr. Michael Geist]

I don't recall the particular post. I write a lot of posts.

It may well have come within the context of copyright, to bring back Mr. Masse's point around some of the copyright issues.

[Majid Jowhari, Liberal, Richmond Hill, ON]

It came in the context of trade, which leads me to the next question.

[Dr. Michael Geist]

A lot of the trade and a lot of the IP where the imbalance comes from, from a Canadian perspective.... There are really two sources. One is on the copyright side and that can be attributed to things like Hollywood movies and stuff like that. On that front, my argument, and I believe many would agree, is that we need to continue to ensure that Canadian copyright policies reflect Canadian national interests. Notice and notice is an example of how we say that we need to ensure that Canadian rules best apply in this context.

The other challenge we face, and people like Jim Balsillie have focused a lot on this, is that many of the largest technology companies in the country are branches of foreign players. When we start taking a look at the numbers, part of this stems from the fact that some of the biggest players are really U.S. players or international players that have Canadian branches here. We do some really innovative stuff here, but ultimately, when you take a look at where some of that transfer is taking place, we become a net importer rather than an exporter.