Public Accounts Committee on Nov. 16th, 2009

[Derek Lee, Liberal, Scarborough—Rouge River, ON]

Okay, it's cash for ideas. It works, and the employees like it. Somebody figures out a better way to sharpen a pencil and there is a bonus award.

[Paul Boothe]

That's it.

[Derek Lee, Liberal, Scarborough—Rouge River, ON]

That's great.

For contractors, it's different.

Have we reached the point where all government departments know what to do with it when an asset of intellectual property has been innovated, found, or recognized? Have we reached that point yet, or are we still working on it?

[Paul Boothe]

We're definitely still working on it. That's partly why we're sitting here today in front of you.

[Derek Lee, Liberal, Scarborough—Rouge River, ON]

Okay. I don't want to be too hard on anybody, but that was my impression when the Auditor General shows up and says, “Hello, what are you doing?” and nobody knows. We don't even have a dynamic working definition yet.

If I'm a contractor with the government, I may come up with something. I have a $10 million contract and I come up with it, and you guys in government may not recognize it.

[Paul Boothe]

May I answer that?

The problem with it is that intellectual property has such a broad definition.

[Derek Lee, Liberal, Scarborough—Rouge River, ON]

I know. It's air.

[Paul Boothe]

Just to give an example, inventions, literary works, designs and models, patents, trademarks, copyrights, industrial designs, circuits, plant breeders' rights, all those are under the broad umbrella of intellectual property.

[Derek Lee, Liberal, Scarborough—Rouge River, ON]

Why don't you go for the easy stuff first, the low-hanging fruit, and get that out of the way? In the second tier, go for something else; and in the end, deal with the literary innovation.

[Paul Boothe]

Industry Canada is now maybe a bit farther along than some other departments because the laws around intellectual property are in our portfolio, but basically the way it works is that you get a contractor to do something, you agree that there is some intellectual property there, and then the policy is that, all other things being equal, the contractor has the right to exploit and commercialize that property.

But as the Auditor General said, there are some exceptions to that. Last year was the first year that we got really good data on this, so we looked at the Industry Canada data. We had 222 contracts of over $25,000. Of those, 50 contracts were identified as having some intellectual property associated with them: 32 in which the contractor wanted to keep that intellectual property and try to commercialize it; and 18 in which the crown retained the ownership.

The Auditor General said we had to make sure we had good reasons to do this. Just in round numbers, 44% of the ones we retained were kept because we had to disseminate them publicly, and if we gave ownership of the IP to the contractor, we couldn't do that. So it was in the interests of transparency that we kept this relatively small number of IP rights with the government.

[Derek Lee, Liberal, Scarborough—Rouge River, ON]

I see how complex it is.

I will close with this question: does there exist within any one department, or in government generally, a central listing of these IP assets, or are they just scattered all over Ottawa and the country? As a citizen, or if I were the Auditor General, where could I check to see how many IP assets existed in a particular department, and in what categories? Could I find that anywhere?

[Paul Boothe]

I think you'd have to go department by department.

[Derek Lee, Liberal, Scarborough—Rouge River, ON]

Some departments don't even have anybody looking after this, right?

[Paul Boothe]

They are catching up fast.

[Derek Lee, Liberal, Scarborough—Rouge River, ON]

Okay, I'll stop there. Thank you.

[The Chair, Liberal, Shawn Murphy]

Thank you, Mr. Lee.

Go ahead, Madame Faille, for eight minutes.

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

Thank you, Mr. Chair.

I want to thank all of you for appearing before the Standing Committee on Public Accounts.

I have a number of questions. There appear to be different ways to improve intellectual property management. Among other things, the Auditor General said that Public Works and Government Services Canada seemed to be doing a good job when it is the contracting authority regarding the various external contracts and when it is a matter of identifying intellectual property. The report also states that the department negotiates before entering into a contract.

As for NRC, it says in the action plan that you take the time—probably with each contract—to ensure that appropriate contracting language is used. I am not sure if you do it on a case-by-case basis. But, as far as the other departments go, it says that you prefer to use a strategy rather than standardized clauses.

So, depending on where you are in the department, there seem to be different strategies for identifying intellectual property in contracts. I would like to hear Ms. Fraser's thoughts on that.

[Sheila Fraser]

Mr. Chair, this situation reflects the fact that intellectual property management was decentralized in 1993-94. Every department is responsible for its own management; in other words, each establishes its own policy and method for training its staff in terms of identifying these things and, obviously, managing them afterwards.

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

I am asking because here we are 20 years after decentralization and the departments are all managing their intellectual property identification practices differently.

I have read up on what the private sector expects regarding intellectual property. It expects a departmental coordinating committee. Here, we are talking about setting up a centre of expertise in the different departments.

How is all that being coordinated? Could you explain how it works, Ms. Fraser?

[Sheila Fraser]

I believe there is or will be a committee of associate deputy ministers who would see to the coordination. In addition, to avoid a situation where each department is re-inventing the wheel, it would be a good idea to consult with National Research Council Canada, for instance, as it has a number of policies and so forth. I am certain that during the audit, the council indicated that it was happy to share its experience and available materials, rather than having each department re-create policies and such. Obviously, they would need to be adapted to the context of each department, but the more information that is shared, the better off everyone will be.

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

In terms of coordination, the committee has not been around long enough to adequately manage.... It is not that advanced, unless I am mistaken.

[Sheila Fraser]

When we did our audit, that coordination was not in place; every department was doing its own thing.

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

My other question has to do with the current economic climate. Of course, when you put policies in place during an economic downturn, you expect that the federal government's contract management activities will create jobs or, at least, an emphasis on intellectual property that will in turn create jobs, economic activity.

I was wondering if you could tell us how many spin-off companies had been set up to commercialize new technologies identified at National Research Council Canada.

You mentioned an economic contribution of $500 million and 600 jobs, but how many actual spin-off companies were created? And how many innovation licences went to existing companies? I am talking about licences that went to existing SMEs or big companies, permitting them to use a new technology. Do you have that information?

[Pierre Coulombe]

Over a period of almost 10 years, the National Research Council Canada has created about 65 companies as a result of its researchers' work. In my presentation, I gave the example of IMRIS, now well established in Winnipeg. It was set up to bring to market a technology, developed by the council, that enables magnetic resonance imaging to be brought into operating rooms. That is one example, but there are many others. In the same period, the companies have been able to raise half a billion dollars in venture capital.

Among the companies we create, some are very successful; others unfortunately less so. IMRIS is an example of a successful company. Novadaq is another example. Those two companies are now publicly traded.

We also grant licences each year. Last year, we signed just over licence agreements with Canadian companies for technologies developed by NRC. We grant the licences so that the companies can bring the work done by NRC researchers to market. Averaged over a number of years, we grant about one hundred licences per year.

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

If you had more money, do you feel that the potential would be greater still? We are talking about what you are doing at the NRC, but we are also dealing with a report from the Auditor General indicating that other departments are doing less well. We are talking about outside contracts of about $1 billion. Would it be possible to do much more?