Industry Committee on June 6th, 2017

[The Chair, Liberal, Dan Ruimy]

Sorry. You dropped off at “prototype”.

[Stephen Susalka]

Sorry.

By developing a prototype, you are providing a better resource for a licensee, whether it's that venture capitalist who might fund a new company, or perhaps a company that might be interested in licensing that intellectual property. That's an area where I think, again, Canada is well poised with their polytechnics and other relationships to further develop that intellectual property to allow it a better chance to be commercialized downstream.

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

I think that ties in well for Mr. Porter and what you were talking about with the WCIO and the 40-member consortium, trying to tie in the prototypes that you see, and the ability for people to work forward there.

I wonder if you could expand on what you had spoken about with IP, copyright and trademarks, and so on, and where that ties in to the way in which our polytechnics and our universities try to work together in order to secure the technology ownership.

[Kenneth Porter]

There are two parts there, so I'll go back just a bit to the WCIO and the matchmaking that we do between academic capabilities and industry needs. Regarding the illustration you provided with the football games in the U.S., this kind of work is a contact sport, and it's a person-to-person sport.

When we first started thinking about WCIO, we thought we would go to academic institutions and provide a list of the strength of the research enterprise, go to industry and ask what their needs were, put that in a database, and everybody would find each other. That didn't work at all. What did work was hiring these eight people from Winnipeg to Vancouver who learned the capabilities and the needs in their region. They also speak to each other on the phone once a week so that they can share this information across provinces and then put the opportunities and the capabilities together. It took that level of involvement to get our seven projects. It's really slow, meticulous, and painstaking work. That's that part of it.

As for copyrights and trademarks, we haven't expanded to the polytechnics yet. Polytechnics are a critical component to the industry-academic relationship with respect to prototyping, fabrication, and all the wonderful things that they offer, which is unique to Canada over the U.S., and a strength that Canada has over the U.S. as far as the comparable community colleges that the U.S. would have are concerned, which are not to the degree that we have at our polytechnics here.

With respect to copyrights and trademarks, that is a new effort. It started about three years ago in Calgary, and I think it's spreading across Canada. York University is a leader there. David Phipps has organized Research Impact Canada. It is an opportunity and a campaign to let folks across a university know there are opportunities for them to play in this arena, in intellectual property, by partnering with industry in ways to expand the reach of their research beyond publication and presentation. Now I know all 13 deans on our campus, not just in science, engineering, and medicine, which is with whom I would have worked exclusively five years ago.

We were very fortunate in Calgary. We have a wonderful example of a social enterprise. In disclosures through technologies that we get, 95% of the time we have a licence to an existing company, and they would have the infrastructure to commercialize a particular invention, and 5% would go to start-up companies where all the infrastructure has to be created. In the social sciences and the clinical sciences, there's nobody to take your idea forward except for you, and so the reverse happens, and for 95% of social innovations, you have to form your own company if you want to spread it through the marketplace.

We have a great example of that at the University of Calgary. It's a program called LivingWorks. It's an approach to suicide prevention. It was developed over 15 years of academic research in the 1970s and 1980s. They became known as world leaders in suicide prevention but exhausted their ability to disseminate their program through academic channels. They knew there was a demand worldwide, and if they wanted to meet that demand, they had to do it through the private sector, so they formed a company in 1990 and are still operating. They have about three dozen employees in Calgary. They have tens of millions in revenue. They deliver their program 150,000 times a year. They have headquarters in Australia, North Carolina, and Calgary. Just last year they sold their company.

That's a tremendous example of using the private sector to expand the impact of that program.

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

Thank you very much.

[The Chair, Liberal, Dan Ruimy]

Thank you very much.

We're going to move to Mr. Masse. You have seven minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you, gentlemen, for being here.

It's an interesting process we've gone through to get here.

I represent Windsor West, which is the automotive capital of Canada, across from Detroit, Michigan. We have very much integrated economies with the United States. What's interesting is that one of the reasons we have the auto sector is that we were bicycle manufacturers. When Henry Ford built the car, they looked for people who could weld, understood gears, and so forth. That's where the automotive industry became proficient. Detroit and that area is also now becoming a cycling industry again, as well as maintaining auto.

The point I'm getting at is that for innovation and for the investment we make as taxpayers through subsidization of education, subsidization of grants, subsidization of, even later on, tax incentives such as our SR and ED tax credits, and so forth, there is the eternal frustration at the end of the day, in a riding such as mine where tool and die and mould making, for example, is the best in the world, of eventually having to end up being a fixer of Canadian technology that has now been transplanted to China, or even to South Korea, versus the products that we actually could have been manufacturing at home.

Mr. Hinton, I'll let you start with regard to this issue. For me, at the end of the day, I want the manufacturing jobs to be part of the process. I believe that also is where further innovation takes place. I don't think it all takes place on a computer screen; it also takes place on the shop floor, where people are actually hands on, doing the work with the product and finding different ways to use it. My eternal frustration is doing the front-loading of it, and then it isn't transferred to good, sustainable jobs in which Canadians have made their own personal financial investments by going to college or university.

With that, we've undermined even some of our own Canadian innovation by subsidizing products that are manufactured elsewhere, which then compete against Canadian products that were doing quite fine in the market.

Do you have any suggestions on how we get around this and how we perhaps do more enforcement with regard to our expectations? We signed treaties about IP, intellectual property rights, with countries that regularly abuse those things, and we're pressured to do more. Canada is seen as an outlier in many respects; meanwhile, some of those countries in the world habitually have industries with state government support, either direct or indirect, and non-tariff barriers that make it even more complicated for Canadians who just want to make a better widget and produce it in their own community.

[James Hinton]

Thank you for that comment. Actually, before I got into law, I worked for heavy truck manufacturing in Woodstock, Ontario. We made parts for heavy trucks, for International Truck and Engine, in Chatham, which is no longer there, and Stirling, in St. Thomas, where the same sort of thing has happened. I worked on the shop floor as an engineer. I understand that these are great jobs.

The focus we need to have is this. Jobs are the success story of having great technology be ours. We don't own this intellectual property. We have a very small fraction of the freedom to operate. If you don't have the IP, you don't have the freedom to operate and so you're subject to the international players that have this IP. You don't have the control and you don't have the opportunity to keep the jobs where you want them. The recent report that I was referencing said that 58% of IP that's generated in Canada is now foreign owned.

This is what we do. We are creating all these great ideas, but because we don't own them, we don't have the opportunity to exploit them, control them, keep them in Canada to benefit...and to keep refuelling those jobs in future R and D. We don't have this freedom to operate. We don't have the IP. It's a constant struggle and we're just reinvesting in the end game of getting more jobs. What I would like to see more focus on is keeping the ownership of the technology, the IP that we're creating, and then we'll be able to keep refuelling with those manufacturing jobs as well. That's the first point.

The second point is that when we're getting into these trade agreements—you're thinking about NAFTA, you're thinking about TPP that's coming on again, and you're thinking about the China agreement that's being negotiated now, and CETA that's come along in the past—a lot of that is focused on our Canadian domestic IP rules.

As I said in my remarks, the Canadian IP rules are almost insignificant to Canadian companies. We're sitting here fighting about an insurance policy on a house that we don't own. We don't have any property and we're tweaking these things. Maybe there's a balance between the innovators and the users in Canada, but that's not helping Canadian innovators. Canadian innovators have to play by the international rules.

What do we do when we're going into those places? How can we get a better leg up when Canadians are trying to commercialize globally so we can retain the ownership for Canadian companies? That's one thing we've researched in the patent collective. You collect the critical mass of IP, patents. You create freedom to operate, buy up U.S. patents, and license them so the members are not subject to those patents. They have the freedom to operate under those patents as a collective. The collective will be able to benefit and won't have to take licences individually. They will have that freedom to operate, to go into the U.S. markets and exploit the technology there, and then bring that value back into Canada and refuel those jobs that you mentioned earlier.

[Brian Masse, NDP, Windsor West, ON]

Do I have any time left, Mr. Chair?

[The Chair, Liberal, Dan Ruimy]

Fifteen seconds.

[Brian Masse, NDP, Windsor West, ON]

Really quickly, on International Truck, in Chatham, the government actually stepped in and helped to save it. We had defence procurement that went to Texas and then they defaulted on that. We lost one of the best manufacturing facilities in Canada.

You can't let that go.

[The Chair, Liberal, Dan Ruimy]

Thank you very much.

Mr. Baylis, you have seven minutes.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

I'd like to start with you, Mr. Hinton, and your concept of a patent collective or a sovereign patent fund. I imagine the first step in doing that would be to collect the information, to actually pool the information before we even start talking about any other things. Is that correct?

[James Hinton]

This is basic IP strategy 101. You have to know what you're going into, what you own and what you don't own, who your competitors are, what you want to see, and what your objectives are. When we do this for companies, we do an IP map for the country. You can map out to see what we have, what our competitors have, and what we need to deal with, and what we would need to acquire, what the foundational patents are. In the AI space, in the last five years, we've gone from hundreds of files to thousands—

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

If we talked about starting this concept of yours, first of all, we need to know what we have. Even before we start buying foreign patents, I would imagine we at least need to know what we've invested in Canada. Would that be a good starting point?

[James Hinton]

Yes, some of those numbers are public, so we can pull those together, but the actual government-invested IP, this IP map of what universities have bought or invested in, is a good research—

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

We don't have that right now.

[James Hinton]

Not from what I understand, no, and I was asking about that.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

Good. Yes, I understand.

I would turn to Mr. Porter.

As you mentioned, some of our universities that we're funding don't even have the obligation to report. You used the University of Waterloo as an example.

[Kenneth Porter]

They don't have the opportunity to share revenue. I think the obligation to report is there, but since the revenue is not shared, I think it's ignored.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

We're struggling to collect the data. If we were to try to go down a path of, first of all, building a concept of a database, a patent pool, we'd first of all need to collect that information. We're talking about an obligation to report between the inventor and the university, but the university is in no way obligated to report back to the federal government that's funding it.

[Kenneth Porter]

We can search the patent databases and get that information.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

We could theoretically search Canadian and U.S. patent databases and try to reverse engineer it—

[Kenneth Porter]

Yes.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

—but they're not actually forced to do that, to disclose it.