Public Accounts Committee on Nov. 16th, 2009

[Andrew Saxton, Conservative, North Vancouver, BC]

So since 1993 when the processes were changed, some audits have been done on this subject.

[Sheila Fraser]

This is the first comprehensive audit that has been done of IP management.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you.

My next question is for the chief human resources officer of the Treasury Board, Ms. Meredith. On page 8, paragraph 2.11, the Auditor General states:

in 1993, the federal government decentralized the management of intellectual property and did not provide coordinated central guidance or support to federal entities.

Can you tell us why that support was not given after 1993?

[Daphne Meredith]

I think the intent was to put the management of IP into departmental hands, where we felt the interests of departments were aligned with managing it well. As we know, there was a policy in place that called for tracking in relation to IP in a way that wasn't done, and the Auditor General's useful report pointed that out. That's something we're responding to now. Our view is that with adjustments to the reporting we can very much improve the way we're managing this activity and this resource.

[Andrew Saxton, Conservative, North Vancouver, BC]

In hindsight, do you think decentralizing it was a good idea?

[Daphne Meredith]

I think the decentralized approach can certainly work, and through our diligence and response to the Auditor General's report we can certainly make it work well.

The area I'm primarily interested in as chief human resources officer is the awards to public servants for their activities as inventors and innovators in the public service. That's one area where again, quite justifiably, the Auditor General has suggested that we're not tracking those awards adequately. I completely agree. To me, though, the issue is who should be primarily responsible for setting some guidelines around awards.

As I mentioned in my remarks, we're working with groups of public servants who are primarily interested in innovation and invention, so that they can provide guidance in that regard. They have the greatest interest in tracking it and the greatest interest in advising their deputy ministers on what the guidelines should be. We think proper management could well call for them to take a more active role in that regard rather than through our dictating from the centre and managing it very much in a centralized approach.

[Andrew Saxton, Conservative, North Vancouver, BC]

Since deputy heads have the responsibility to administer these policies, what role does Treasury Board play?

[Daphne Meredith]

I think we're a cheerleader. In the case of awards, providing awards to public servants who achieve is very much a deputy head responsibility. We would encourage them to offer awards, because we think that's part of sound management. With a well-motivated and mobilized community of innovators, scientists, we think deputies will be encouraged to offer awards to those who are achieving.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you.

My next question is for the president of the NRC, Monsieur Coulombe.

The Auditor General seemed quite satisfied, for the most part, with the approach the National Research Council took in managing its intellectual property assets. Based on your experience, what advice would you have for other federal agencies and departments?

[Pierre Coulombe]

We are already collaborating with many departments. As I mentioned, we do the work on IP for the Canadian Space Agency, we work with Health Canada, and from time to time we provide advice to other departments on the way to manage IP.

As the Auditor General mentioned, we are quite willing to increase our collaboration with other science-based departments. As I mentioned in my remarks, we are the organization in government that creates the most IP, because of the very nature of our work. I recognize that, as Health Canada mentioned, some of the research activities that science-based departments have are connected to the regulatory function. I can understand that it's not often obvious to connect regulatory science with IP and patents. So in that context, NRC already offers the capacity to support those departments in managing their IP in a better way.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you.

What are some of the challenges the NRC faces in working with the private sector on intellectual property, and how do you overcome those obstacles?

[Pierre Coulombe]

As was mentioned, industries want to have access to IP. So when we license them, it's quite important that we can guarantee those companies that we are the owner of the IP so that in future litigation we're not going to be at play. One has to realize that when we conclude a licence agreement with a company, it's not that they won that matters a lot. But if that the company is making a lot of money out of that technology, competitors may be looking at where this technology has come from--who the real owner is. So it's very important that we are in a position to demonstrate to companies that have licences from us that we are the true owner, and that we did due diligence to make sure there is no possible way the licensee will be sued by their competitors on the basis that the IP does not belong to us. So these are complex negotiations, and access is one aspect.

Sometimes a company will want to have exclusive access to our technologies. That can be a matter of debate, because some of the IP we own can have applications in many industry sectors. I'll give you an example of a technology we could license to the aerospace sector. They could ask for exclusive rights to that technology, but if we know that this piece of technology could also have application in the automotive sector, we will refuse to give them exclusive rights on the whole of the technology. We may claim that we'll give them exclusive rights for aerospace, but we will retain the right to license this technology to the automotive sector, which obviously is not the same line of business. Therefore we're not penalized by adding restricted access to the technology. We keep the right to offer the technology to other industry sectors if we believe it has applications in other sectors.

These are the challenges we face with the industry.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you.

[The Chair, Liberal, Shawn Murphy]

One more question.

[Andrew Saxton, Conservative, North Vancouver, BC]

This is somewhat related to Mr. Christopherson's question. What steps is the NRC taking to increase revenue from licensing of intellectual property?

[Pierre Coulombe]

We would start with a good agreement with the industry that is the licensee. That would mean negotiating good royalty rights that take into consideration what is usually paid in each of the industry sectors in which we play. Secondly, if we want to increase revenue from licences, we need to increase the number of licences we sign. That's why we are very active in making sure that patents we own find their way into the industry.

So increasing the number of licences is a good way for us to increase revenue. Once we license, it is then the responsibility of the company to exploit the technology. We have other rules. For instance, if you have not been successful in generating revenue from this technology within a given timeframe, we may remove the licence and give the technology to another company that can potentially have a better outcome by exploiting it.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you very much.

[The Chair, Liberal, Shawn Murphy]

Thank you, Mr. Saxton.

Before we go to the second round, I have a couple of questions.

Ms. Meredith, paragraph 2.11 of the report talks about the decentralization that occurred in 1993. It goes on to state:...the federal government decentralized the management of intellectual property and did not provide coordinated central guidance or support to federal entities. This presented challenges for federal government organizations, which had to develop their own infrastructure, including internal policies...

When I look at the whole advent of events since 1993--and I would support that decentralization policy--it seems to me that in developing the internal policies.... And now we have the auditor's report that a lot of the departments did not have any policies and weren't aware of the situation. It was a hodgepodge. Certain other agencies or departments seemed to have policies. But when I look at it from a pan-government point of view, Treasury Board would have been responsible for developing these pan-departmental policies on IP. I acknowledge that certain departments used it more than others, but they all should have been aware of it.

Your evidence here today is that you're a cheerleader. But I would have thought you would be a band leader in this whole thing over the years, not only in developing the policies but in making sure that all departments were adhering to the policies.

Do you not see the same role for Treasury Board as I do?

[Daphne Meredith]

I was speaking specifically of our role with respect to awards for innovators and inventors.

The policy on intellectual property is, in a sense, one that we're a partner in with Industry Canada. They are the subject matter experts in that area and, as you can imagine, have an interest in IP being managed well across government. So it's one of those few policies among the Treasury Board suite of policies that actually have a highly interested ministry attached to them, which is Industry Canada. So when we create the policy and provide guidance to departments, much of the input comes from Industry Canada, which is why Mr. Boothe was talking about the policy on title today.

[The Chair, Liberal, Shawn Murphy]

Industry Canada is not a central agency, so who is it there in the central agencies or in the overall machinery of government to assist the departments—acknowledging that some departments do not have a large IP presence? But someone should be there to assist them and make them aware of the importance of this issue, to tell them that they should have a policy and that they should be following the policy.

Perhaps I can direct this question to Mr. Boothe. Who in the machinery of government is responsible for doing this? Up until the Auditor General's report, it hadn't been done. So who is it? Is it Industry Canada, Treasury Board, or someone else?

[Daphne Meredith]

I would say it's both. For example, in 2007, when we recognized that the data were not being collected as they should have been against procurement contracts and IP contained therein, we started to address that jointly. I think it helps to have a joint approach, because we use our interdepartmental networks to get the message out. For example, we have one that meets on contracting. Assistant deputy ministers get together to discuss contracting, and we can talk to them about changes to this policy through that forum. But there are also science and tech fora that would be chaired more by Industry Canada, and we use that, as well, as a network to help manage the issue.

[The Chair, Liberal, Shawn Murphy]

Ms. Meredith, from my years on this committee, I'm always a little concerned when I hear the answer that it's a shared responsibility. My experience is that anytime a responsibility is shared, it's shirked.

In terms of other departments following this, Mr. Boothe, do you see Industry Canada having an overall responsibility to see that Fisheries and Oceans or some of the agencies have a policy and are following a policy? Do you see that as a role of your department?

[Paul Boothe]

First of all, the reason we are involved in this, separate from other departments, is that the Minister of Industry has responsibility for national legislation related to IP. That's why we are subject matter experts in intellectual property. But basically we have improved the data collection. We have revised the implementation guide. We've added FAQs to teach people in all departments how to make this work, and we're developing another tool where people can go online and figure out in a specific practical case whether the particular circumstances warrant an exception or not.

Who is responsible? Deputy heads are responsible, but with the Treasury Board, we will be measuring, starting with the 2008 data, whether they're doing it. All the deputy heads will get these reports, which will go to the Treasury Board, and they will know whether they're up to snuff.

So we have an important role to play. We're not there to wag our fingers at other departments or ourselves if we're not doing a good job; we're there to measure whether it is being implemented. We're there to help people learn how to implement it. Then the deputy heads are accountable to the Treasury Board and ultimately to Parliament on whether they're doing what they're supposed to do.

[The Chair, Liberal, Shawn Murphy]

One final question I have relates to the issue of data sets, and we've talked about that before. The government creates horrendously large numbers of data sets and the Deputy Minister of Fisheries indicates that is part of the IP.

Everything that Statistics Canada produces I would classify as IP, but in some cases it's released to the public, and that would be in the national interest, in the public interest. In other cases it's sold to the public, the interested public. Is there any policy that differentiates what is sold and what is released without any charge? Is that policy out there? How do we know what gets out for free and what is sold? The government does create, as you all know, a tremendous amount of information.

[Paul Boothe]

There is a policy, but I don't know it well enough to state it to the committee. I'm sure we could get the chief statistician to answer that question in writing and provide it to you.