Science and Research Committee on April 27th, 2023

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Thank you.

Ms. Larose, I was wondering if you could elaborate on how Aligo Innovation enhances the IP assets of the 10 Quebec universities and their affiliated hospitals and research centres.

[Anne-Marie Larose]

First, Aligo Innovation ceased doing business in 2021 when Axelys was created. In Quebec, at present, there is only one commercialization company, which combines the staff from the three companies that existed before. My team at Aligo is now with Axelys. My excellent team has joined the staff of Axelys.

I can't talk about Axelys' business model, but I can talk about how we operated at Aligo. For each file or invention disclosure we received for commercialization, we had to establish a strategy and put in the necessary efforts, proactively, to find commercial partners. That involved a number of challenges, including the challenge of the lack of maturity in the universities' business and technology projects. That is a major obstacle.

At Aligo, we had an internal funding envelope that allowed us to do rapid prototyping and certain validations. When we talked to a business partner that was interested in a piece of IP, or if a start-up was having to persuade investors, we had the capacity to fund certain activities and proofs of concept in order to answer those questions rapidly.

You can't wait until you have a contract with the university and get the answer six months or a year later. This has to function in a business dynamic. That is what we did at Aligo, and we did it well. It is continuing at Axelys, but on a slightly different model.

[The Chair, Liberal, Lloyd Longfield]

Thank you very much.

Mr. Lemire, the floor is yours for six minutes.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you for your welcome, Mr. Chair. It is a pleasure and an honour for me to sit on this committee.

I had supported the discussions that led to the creation of this committee, although I was disappointed to see those subjects leave the Standing Committee on Industry and Technology. Still, I think it is for the best to address them here.

The important issue is the one identified by the people at Copibec regarding copyright protection. We heard from those people at the industry committee not so long ago. They also participated in similar studies at both the Standing Committee on Canadian Heritage and the Standing Committee on Industry, Science and Technology. Those committees produced excellent reports in 2019. One of the recommendations of the heritage committee, recommendation 18, says:

That Government of Canada amend the Act to clarify that fair dealing should not apply to educational institutions when the work is commercially available.

Can you talk to us about the importance to your industry of reviewing that act?

[Christian Laforce]

Mr. Chair, I am going to answer the question and Mr. Herman can add to my answer if he likes.

This law allows use with no limits or compensation for artists and book publishers. That also means that universities, in particular, could decide to use an entire book by claiming fair dealing based on classroom needs. The fact that no compensation is paid to the authors and publishers results in a loss of income to the publishing industry. That is in fact what we have seen for more than ten years now.

This loss of income impoverishes the publishing industry and the lack of money means a loss of reinvestment in discovering other artists and other publishers. So it truly impoverishes the Canadian publishing industry.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Consequently, I imagine that it has an enormous impact on the desire of some authors to publish their works.

Mr. Herman, in your opening remarks, you used the word "negligent". Do you feel that the government is hearing your call? Why is it taking so long for concrete measures to be taken to protect copyright?

[Gilles Herman]

Thank you for pointing out how long the process is.

The act was modernized in 2012. Of course, the recommendations of several commissions and committees were taken into consideration. In 2011, for example, representatives of the academic community said that the new act was working to pay royalties to copyright holders. The act included a five-year deadline for reviewing it, and so in 2017, the work began. We are now in 2023, but nothing has come of it. As you said, both the Standing Committee on Canadian Heritage and the Standing Committee on Industry and Technology submitted very good reports.

The situation is critical today. I would point out that the Canadian book and publishing industry contributes $750 million to the country's gross domestic product and that book sales bring in $2 billion. The industry is in crisis, for one thing, because the outlets in the academic world are shrinking before our eyes. We are talking about a $200 million loss in ten years, a direct loss for which there has never been any compensation.

The risk is that the education sector of tomorrow will no longer be teaching Canadian content, because Canadian publishers have will quite simply disappeared. The field is thus being left open to American, English or French publishers, who will be able to occupy our classrooms, and this is absolutely scandalous.

Mr. Champagne, in whose hand the pen sits for making the legislative changes, should be asked why has not yet done anything about this. He is constantly being asked to do it.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Actually, you do know that I sent a letter to Mr. Champagne in October in which I asked him to take a position. When he appeared before the Standing Committee on Industry and Technology, I asked him questions about the urgency of enacting a bill that will protect copyright. He replied that the issue was important and he was working with his colleague Mr. Rodriguez, who has heard the views of the industry and universities. He said that this was one of his priorities, that he was going to continue working with the industry, that he had respect for creators, and so on.

In my opinion, there is another problem, and that is the academic view. I have trouble understanding why they see this as an additional expense. Why does the academic community not value copyright? Book publishing promotes the transmission of knowledge and makes it possible to give the creators financial compensation.

Why are the universities so resistant to this?

[Gilles Herman]

It is essentially a financial problem. The universities have decided to save money on the backs of rights holders. There is no other way of seeing it. In most of the countries with which Canada does business, copyright is respected. I would clarify that when I talk about the situation in Canada, I am talking about Canada with the exception of Quebec. In Quebec, the provincial government has always upheld copyright. Universities and educational institutions in Quebec continue to pay their royalties.

Frankly, outside Quebec, royalties have disappeared. We have trouble understanding why universities, that promote intellectual creation, do not support this. Just like patents and any invention that is made in research laboratories, intellectual production should be valued. So it's a matter of saving money.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you.

Once again, I congratulate you on your perseverance!

[The Chair, Liberal, Lloyd Longfield]

Now we have Richard Cannings for six minutes at the end of this round.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you to the witnesses for being here. This has been very interesting.

I'd like to follow up with Copibec's testimony.

I'm an author myself, and I get payments every year from Access Copyright. My first question is this: How are you related to Access Copyright? Are you the Quebec version of that? Is Access Copyright more for the anglophone community of authors and producers?

[Christian Laforce]

It's more a geographic issue. We represent Quebec publishers and authors that are within Quebec, and we have a reciprocity agreement with Access Copyright, which serves the rest of Canada.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you.

I'm so glad we are talking about copyright here, because it is an issue of IP. I have had more experience in this realm, because, as you were saying, I've seen my copyright payments really slashed over the last few years. Fortunately for me, I have never written books to make a living, but I know friends of mine, constituents of mine, do depend on those payments to make a living, and it has been very difficult.

I'd like to get a clarification on what you said about Quebec. From what I understood from your last statements, the Quebec government has stepped up to pay Quebec authors these copyright payments, but outside Quebec is where we've seen the losses.

[Gilles Herman]

I'm delighted to know that you are an author yourself and receive royalties from your writing. You will understand that if an excerpt from one of your books is used in an educational institution in Quebec, you will receive royalties through Access Copyright, which is our partner, but if your work is used in a Canadian university, you will probably not receive royalties.

The unique feature of Quebec lies in the fact that its government adopted a unanimous motion to defend copyright. So when the time comes to negotiate licences with educational institutions in Quebec, the general state of mind means that the institutions have not yet dared to withdraw completely from copyright. However, the royalties have still fallen by half in the last ten years, and we do get the feeling that the educational institutions are looking at the rest of Canada and saying that ultimately they too should maybe just withdraw and save money on this point. It's a matter of time.

The Copyright Act is a federal statute. It is not a practice that goes on in Quebec at the moment, and that is supported, but there is nothing to prevent the educational institutions from simply withdrawing tomorrow, as the rest of Canada has done.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

I heard some mention in your testimony, before I began, about what was going on in the rest of the world. How do other countries handle copyright in terms of universities, colleges and grade schools using materials? Is this same issue there, or are those copyright funds sent out more thoroughly?

[Gilles Herman]

The image of Canada internationally has definitely suffered when it comes to copyright. People now talk about the Canadian flu when they discuss this issue.

As recently as yesterday, at a round table, I was talking with the director general of the International Publishers Association. In answer to the question of what he thought about the copyright situation in the world today, he said that we must not do what Canada does. That shows you the state of mind about what Canada represents today to our partners when it comes to copyright.

In most countries, in Europe in particular, there are collective rights societies. Once again, the education sector is one of the main users of content and excerpts of content. So that is where the money comes from. Today, Canada has a poor image and is a black sheep, to such a point that publishers have already withdrawn from the Canadian market. Oxford University Press has withdrawn from the Canadian market and stated that it would no longer do business with Canada because Canada does not respect its rights. Gallimard, which is really not a minor publisher in France, has already said the same thing.

The present situation really is a source of concern.

[The Chair, Liberal, Lloyd Longfield]

Thank you, Mr. Cannings.

Mr. Lemire, I feel like I'm back on the industry committee with you. We've had these conversations.

We'll go over to Mr. Soroka, please.

[Gerald Soroka, Conservative, Yellowhead, AB]

Thank you, Mr. Chair, and thank you to all the witnesses for coming today.

I'd like to start off with Ms. Larose.

You mentioned that Stanford University is now self-funded because of the royalties they are receiving, even though it took 20 years. Are other universities able to do this or is that just an anomaly?

[Anne-Marie Larose]

That’s a very good question.

Stanford University began its technology transfer activities nearly 40 years ago, so, for quite a while now. One must be patient when it comes to transferring orphaned intellectual property, as I mentioned. It’s a lengthy process, and obtaining substantial royalties is time consuming. You also have to understand that Stanford University has a critical mass of cases. It alone receives 500 invention disclosures per year, while all of Quebec’s universities combined receive the same number. So that’s an important consideration.

Stanford University generates interesting statistics because of the volume. In fact, 1% of the cases bring in significant revenue, and between 2% and 5% generate revenue of about $100,000 per year. So it’s not a lot. I’ll let you do the math for Quebec with its 500 invention disclosures per year. The important point is that these statistics are fairly consistent across the board. In fact, I’ve worked with Belgium, France, and other groups, and they’re essentially the same statistics in terms of benefits, efforts, and royalties.

Stanford University is indeed in a class of its own, not only because of the critical mass of cases, but also because of the critical mass of its expertise devoted to technology transfer, as an example…

[Gerald Soroka, Conservative, Yellowhead, AB]

I'm sorry to interrupt, but I only have five minutes.

I see there are other factors to consider as well. Thank you for that.

I'll go to Mr. Desai before I run out of time.

My colleague Ryan Williams asked you a question about other tax changes. Could you please send more information in writing, if you have some to share with us?

[Neil Desai]

I'd be happy to do that.

[Gerald Soroka, Conservative, Yellowhead, AB]

I have a question for you, sir. You said there are several failures within the structure we are producing right now for getting the commercialization of IP. Could you please give us examples of where the failures are and how we could make improvements?

[Neil Desai]

Absolutely.

I think you have to go to the first principle. What is the general unit to successfully commercialize IP?

We've spent a lot of the discussion today on universities. I think they are extremely good generators of ideas that become intellectual property, but to see commercial success, as in a lot of the examples that have been given here, the basic unit is a company. I worry that our system doesn't incentivize researchers to actually create companies.

We gave the example of Stanford previously. There are streams for researchers to take without having to leave the academic institution, with opportunities to create companies. That's how you get virtuous feedback loops over a span of 40 years.

You can see along the way these structural points I am making. They are hyper-technical, but they are obvious at the same time. There are disincentives today at universities to commercializing IP. If you step away from your research bench, you can lose your research grant or your opportunity to get tenure. There are structural barriers in the academic systems.

I mentioned taxes on the growth of a company, but I think we can go even further upstream to see why folks choose not to even try to commercialize their IP when we have so much IP just sitting out there being gobbled up by foreign entities or just sitting on shelves because people don't know about it, as with like companies like mine.

[Gerald Soroka, Conservative, Yellowhead, AB]

Would you say, then, that these companies aren't even worried about universities trying to patent or do contracts with them because universities have such stringent regulations? These companies will work with companies such as Huawei, but they're not even worried about having to patent or about the potential for national security risks when working with companies like this...if the regulations aren't changed.