Industry Committee on June 8th, 2017

[Prof. Richard Gold]

One of the underlying things of a patent pool is as people like Jim Hinton have said. He spoke at the committee two days ago and has done extensive research on what patents exist in Canada and who holds them. Part of the supercluster idea could be that you fund the development of strategic IP advice, which includes doing these searches, connecting to these big companies, and then the idea would be that this conglomerate or consortium of firms would purchase these patents with government support.

It's perfectly doable; it's just a question of resources that were too spread out, but the supercluster could be one mechanism to do it. I know Jim and his group are hoping eventually to get some funding so they can keep this up and provide this information up to date.

[Emmanuella Lambropoulos, Liberal, Saint-Laurent, QC]

Let's say these superclusters would use one building, have a cyber-hub, and have companies visit. Is that how it would work?

[Prof. Richard Gold]

I'll leave it to ISED to determine that. It doesn't have to be a physical structure. I'm imagining the supercluster as infrastructure, including broadband. It includes the services to collect the information; it connects with a patent pool of some sort, but I don't think it's physically located. It will still take place in the firms, but it's the glue that joins them together. That's how I envision it, but I'm not privy to what ISED is thinking and what they'll approve when the applications come in.

[Emmanuella Lambropoulos, Liberal, Saint-Laurent, QC]

Okay, thank you.

[The Chair, Liberal, Dan Ruimy]

You have two minutes.

[Lloyd Longfield, Liberal, Guelph, ON]

Thank you.

I just have a follow-up question for Mr. Gold.

You were using the word “charity” a lot in your presentation, and it got my interest. All charities are not-for-profits, but not all not-for-profits are charities. When we were setting up Innovation Guelph, we talked about the social benefit that we could provide if, as a not-for-profit, we were able to create a pool of funds from, let's say, innovations in Guelph. We could do that for education. We could use some things around whatever social benefits we thought the community needed for social innovation.

Were you specifically thinking charity, or were you thinking not-for-profit as a charity?

[Prof. Richard Gold]

In my specific remarks, I was actually talking about charities. I was thinking about things like the Michael J. Fox Foundation, or Wellcome Trust, or the equivalent—patient foundations here that have pots of money. They invest in research, but they don't get involved with the innovation part because of these tax rules.

What I'd like them to do is more impact investing, using the charitable money to further that. They might do so in the form of a non-profit—that might be the vehicle—but I'm trying to liberate charitable funds to invest in innovation.

[Lloyd Longfield, Liberal, Guelph, ON]

That's tremendous. I was hoping that would be the answer.

With regard to community foundation funds, there are a number of vehicles that we could provide social benefit to. They could provide money into innovation.

It's a very interesting wrinkle. Thanks for providing it.

[The Chair, Liberal, Dan Ruimy]

Are you good?

[Lloyd Longfield, Liberal, Guelph, ON]

Yes.

[The Chair, Liberal, Dan Ruimy]

Okay.

Mr. Dreeshen, you have seven minutes.

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

Thank you very much.

There are a number of things I have in listening to the discussions.

The first one is that when we talk about different charitable groups—I believe Mr. Longfield mentioned it as well with his observations about charities—you can have dollars that go into research that are against the national interests. We've seen that with charities and different groups that have gone after our oil and gas industries. We've seen that same type of thing happening in agriculture.

There are great ideas for setting this up. However, you have to make sure that the focus is in Canada's national interest. I think that's something we may want to keep in mind, as politicians who have to come up with policies.

Mr. Beney, you spoke about getting education out there so people understand how they can look at intellectual property and innovation—getting that literacy there. The suggestion was that we should have university people talking about this. I submit that it should be done a lot earlier than that.

I was a high school math and physics teacher. When I was teaching my calculus classes, I had professors come from universities. They'd say, “Well, your kids are going to know all they need as far as first-year calculus is concerned. What they aren't going to know is how to work together. Your classes should be set up in a collaborative way so that they're working on projects.” I think it has to start a lot earlier.

As you are talking to universities or trying to push this as far as universities are concerned, I'm wondering if you have some strategies that might enhance that.

[Stephen Beney]

It's interesting. IPIC has been looking at education programs that we could use to try to instill the idea of innovation at the high school level as well. You get into different aspects of who looks after these different levels of education. You have different systems. It's not quite as holistic as you might think in trying to get something through there. However, we have been looking at it. We have been talking to Ontario and trying to get some ideas on programs going into those high-school levels.

It's also the universities as well. Some tech transfer offices are quite knowledgeable in these aspects, and others less so. There is that aspect. I think there needs to be more co-operation across the universities to try to get everybody up to the same level.

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

Thank you.

Mr. Dusome, you had spoken about proof of concept centres. The Intellectual Property Institute of Canada presented some material to us. They spoke about it, and you recommended that we investigate that for potential business incubators.

It looks as though that's what you do, so I'm wondering if you can expand on some of the best practices that you've seen. Are there issues, maybe pitfalls that we should be aware of, and perhaps ways in which you're trying to work around any difficulties that you see?

Could you give us some ideas about how we should be looking at the proof of concept centres?

[Ritch Dusome]

The first thing is that this needs to be done in a cooperative manner, meaning that anything that is described will actually have an academic focus, an industry focus, and an SME focus and that you will be solving a real-world problem that someone at some point wants to spend money on. If it doesn't have those fundamentals, then it's not a good proof of concept.

SMEs topically come to CENGN because they can't afford the infrastructure, but which we've been able to provide through our large-member industry base. In that way, I think it is providing a pretty significant advantage to these companies.

There's the injection of university and college talent. I'm a huge fan of colleges as well, because of the practicality of what their students are trying to do. They're able to contribute much sooner to the economy because typically they're looking for a job much sooner.

The whole proof of concept, in my view, is the way to demonstrate whether you have something real or not. There's nothing wrong with this “fail fast” mechanism, whereby if an idea is not a good one—and believe me, not every one is—you fail fast. It's actually an advantage to these small companies: “I thought I had something and—do you know what?—I don't.” Please, then, go on to the next one, because your next one might be a good idea.

[Scott Smith]

It's fail fast and cheap.

[Ritch Dusome]

Exactly. Fail as fast as you can.

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

Thank you.

Mr. Gold, you spoke about the university model and some of the issues you have with it. You mentioned that the patents often end up going to trolls, and we've had some discussion on that. I think the more we talk to various organizations that have had some experience in this, the more we will learn about it so we know what it is all about.

Can you give us some examples, then, of things that small businesses or any group should be concerned about when it comes to patent trolls?

[Prof. Richard Gold]

So far, because of the way our litigation system works, there's not as large an incentive, as there is in the United States, to come here. The fact that the U.S. has jury trials is really the most anti-foreign IP rule the U.S. has, because juries will naturally side with their own. It makes it very difficult.

RIM faced this. There's no way RIM should have lost. They did, partially because of the jury system. The U.S. patent system is unfair to foreigners in a way that ours isn't, because we have a much more regularized system.

Having said that, when universities come out with poor-quality, vaguely worded patents, they probably won't stand up. The only people wanting them will be trolls, who will use them to assert against a small Canadian firm—or any other firm— in a demand for money. They never want to go to court, but the SMEs don't have the resources, the hospitals don't have the resources. We saw this around gene patents, for which we had U.S. firms asserting patents in Canada that probably are invalid. They were invalidated in the United States, but nobody here.... A hospital is not going to spend $3 million from the health care system to defend.

That's really where the problem is. We need to stop these poor-quality patents getting through. Partially that's the patent office's responsibility, but they're under-resourced; they don't have enough time. Getting the universities not to apply for them is a good first step.

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

Are there any other solutions that governments can take a look at? Sometimes you have to be a little more heavy-handed, or maybe you have to be talking about international agreements or trade discussions. Is there anything you see in these that a person might do to put a bit of pressure on all of the actors in this regard?

[Prof. Richard Gold]

We want to maintain a high-quality patent system and not decrease the requirements we have in Canada. There is a lot of international pressure for Canada to make it easier to get patents. We need to resist it. The higher the quality of patents and the higher the standards required, the more the integrity of the system is there. If we had lost in the whole Eli Lilly dispute, for example, it would have resulted in Canada's giving away patents quite easily. The Supreme Court of Canada is about to decide. Hopefully, they won't change the rules to lower the threshold, but those are the things you need to resist. In international trade agreements, we mustn't diminish our flexibility to make sure that we can impose international standards, but impose them rigorously. That's the best way to stop poor-quality patents, which are what feed trolls.

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

Okay, thank you.

[The Chair, Liberal, Dan Ruimy]

Thank you very much.

We'll move to Mr. Masse for the final seven minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair, and thank you again to our witnesses here.

One of the issues we heard about in the United States concerned a difference with the Bayh-Dole Act. I'll start again with our visitors, Mr. Ring and Mr. Gold.

Does Canada need legislation that is a little bit more prescriptive? It may not be exactly like the Bayh-Dole Act, but is it enough just to build the superclusters themselves and then support them with financing? Or, do we also have to look at a legislative approach, either for information sharing or, I guess, a very clear set of rules that are modernized and identifiable for more of the internal but also the external innovation, namely foreign capital and so forth, that we might start?

I'll ask Mr. Ring to start and then Mr. Gold, and the go across the table.

[Marshall Ring]

I must profess to not being as educated as my counterparts on the Bayh-Dole Act, so maybe I can take the second seat on this and leverage what I hear.