Public Accounts Committee on Nov. 16th, 2009

[Pierre Coulombe]

You used the term ”outside contracts“. That is what the Auditor General highlighted in her remarks. I have to say that the NRC is not a big player in those contracts because the majority of the contracts we award are not about intellectual property. That property belongs to us to a greater extent than to the contractors who work with us.

However, it may be possible to generate technology through those contracts, which is why we have implemented the Auditor General's recommendations in that regard.

As to what would happen if the NRC had more money, I have to tell you that there is not necessarily a correlation between more budget and more inventions. Inventions come from researchers, right? I am not about to say that if you double or triple the budget you will get twice or three times the number of inventions.

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

According to your report, you seem to have done a lot with very little. That is why I was asking: if you had a little more, could you help other departments?

[Pierre Coulombe]

Help other departments? That is a slightly different question. I should tell you that, in terms of the protection of intellectual property, we are already working with the Canadian Space Agency; we provide our services for their property. We are also working with Health Canada on their process of awarding patents. We also work here and there with other departments, helping them as they work to gain access to intellectual property.

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

Thank you.

[The Chair, Liberal, Shawn Murphy]

Mr. Christopherson, please.

[David Christopherson, NDP, Hamilton Centre, ON]

Thank you, Chair.

Thank you all for your attendance today. I know next to nothing about this subject, other than what I've read. I'll say that right up front.

I have a couple of macro questions for the Auditor General.

It's hard to project, but is it your sense that we might have been better off if we had not decentralized?

[Sheila Fraser]

I really can't respond to that. This is a policy decision that was made some 15 years ago, and clearly responsibilities were given to individual departments and agencies. We would have expected to see more management of intellectual property throughout government.

[David Christopherson, NDP, Hamilton Centre, ON]

Do you have any sense of what they do in other jurisdictions, other countries?

[Sheila Fraser]

No. We didn't look at that.

[David Christopherson, NDP, Hamilton Centre, ON]

Okay.

It was interesting. When I was reading through all of this, I have to admit that my own politics kept coming through, because the emphasis was always on justifying why the crown was keeping it, while my starting point was always that if the Canadian taxpayer paid for it, the pressure ought to be the other way; it ought to be to justify why we're giving it away, given how much money is at stake.

I have two questions for anybody who wants to jump in, and don't leave too long a lag. First, what criteria are used? Is there a rule of thumb, or what are some of the things you look at to determine whether ownership will remain with the crown and with the Canadian people or go to private interests?

Second, are there specific areas that automatically go to the private sector? In other words, is something a given because of the nature of the work or perhaps because it's historical, or is everything examined in a one-off?

As well, if intellectual property is created as a result of a contract that's paid for by the Canadian people, is that reflected in the money paid to the contractor, or is it a bonus situation if they come across something and convince the government to let go? There's a nice little bundle that generates money for them over and above the contract.

[Paul Boothe]

First of all, I'll go back to one of my earlier comments, that when people think about intellectual property, they think about some great invention or something, and often when, for example, the NRC or the Communications Research Centre creates intellectual property, that's actually what it is. However, the main goal for many of the contracts that we have isn't to create IP; they're to get something done. Some IP may be created, and that's an extra that comes from it.

Those kinds of things are not our core business. That's not why we entered into the contract, and I think that's why we believe the policy should be for it to go to the private sector unless there is a good reason to do otherwise. Basically, the process is that we ask whether this fits into any of these exceptions, whether it is a national security issue, and whether we have to publicly disseminate it.

[David Christopherson, NDP, Hamilton Centre, ON]

I'm sorry to interrupt, but help me understand why the starting point is to give it away and why it's by exception that you keep it, rather than the other way around.

[Paul Boothe]

What I would say is that most departments, in the normal course of their business, are not in the business of commercializing intellectual property.

[David Christopherson, NDP, Hamilton Centre, ON]

I appreciate that, but it's money; it's value. It just seems to me that if the people's money paid for it--if Canadian taxpayers paid for it--and there's a benefit derived, then the starting point ought to be that it stays with the Canadian people, and only by exception would it go back to the other. I don't understand why you would give away.... It looks to me as though we just give away money if it doesn't fit into certain pigeonholes or certain needs that we have. Our desire is to get it out the door and let it go to someone. I it's worth money, why?

[Sheila Fraser]

Chair, could I try to give some element of response?

From what I understand from the policy, I think government recognizes that government itself is perhaps not the best to commercialize things. As was being explained earlier, many of these contracts don't say they are to develop an intellectual property; they're maybe to develop a new computer system or a new whatever. If there can be further use and commercialization that can go on beyond what government may need, it's better that the private sector do it.

There is an issue, though, that we're bringing up. When these contracts are made, there should be, to the extent possible, some identification of potential intellectual property, so that the government protects itself. In this way the complete title doesn't rest necessarily with the private sector, and if government wants to modify something, it doesn't end up paying the private sector for something it has already paid for, and it has access to those rights. There could be other considerations that go into that. It's very important that this be recognized up front and that there be some thought given to what will actually happen to intellectual property that comes out of these things.

[David Christopherson, NDP, Hamilton Centre, ON]

As we say in Hamilton, do we always retain a piece of the action? When there's an IP recognized, is there always a licence? If there's money being made somewhere, is there always some of that money being paid back to the Canadian treasury through licensing or some other fee?

[Sheila Fraser]

In the contracts we looked at, there was not always a clause that outlined what would happen to intellectual property, which could mean that eventually there could be disputes with contracts.

[David Christopherson, NDP, Hamilton Centre, ON]

But what a great opportunity, if you have a nice big chunk of money, for bright people to sit down and say, “One of the ways we can do this is to find a new way of blah-blah”, with the intent of doing that, recognizing that in many cases the government's not going to ask for their piece of the action. Is that not possible?

[Sheila Fraser]

It's possible.

[David Christopherson, NDP, Hamilton Centre, ON]

And is that part of your concern?

[Sheila Fraser]

I would say yes. Our concern is that there needs to be management over intellectual property and management in these contracts. This is an issue that needs to be thought through up front, and the government needs to protect itself in this process.

[David Christopherson, NDP, Hamilton Centre, ON]

When you say “protect” I understand “without duplicate cost”. I'm going to listen carefully to what others have to say, but it seems to me we're approaching this the wrong way. There's a huge benefit to the Canadian people who are paying the freight for the work to be done. We ought to get a piece of the action if we don't actually hold control outright. I'm not hearing that from any of you.

I understand that it may not be part of core government, but if Canadian taxpayers' money has developed it and there's money to be made, they should get their piece of the action. I'm repeating myself, but your approach is the opposite. It's that we'll only keep it internally for the Canadian people by exception.

Does anybody have any idea how much money may have already gone out there because there was no licensing, control, or ownership? Does anybody have any idea how many entities have made more money through the IP end of it than on the original contract?

Thank you.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Christopherson.

Mr. Saxton is next, for eight minutes.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you, Mr. Chair.

Thank you to all of our witnesses for coming here today.

My first question is to the Auditor General. Is this the first time your office has done an audit on this subject?

[Sheila Fraser]

I believe this is the first time we've looked at IP specifically. It is an issue that has come up in previous audits, which is what provoked this audit. I know the question of IP came up when we did an audit in Agriculture in 1999.