moved that the eighth report of the Standing Committee on Industry, Science and Technology, presented on Thursday, November 23, 2017, be concurred in.
Mr. Speaker, intellectual property is a complex term, so let me start with a bit of a definition. Intellectual property, or IP, is a creative work, such as a design or a manuscript, for which the creator has rights and can apply for a patent, copyright, or trademark. The Conservative Party of Canada recognizes that a robust IP regime is critical for Canadians to not only make a living off the research and creative ideas, but also bring those innovations to market and improve lives in Canada and around the world.
Regulations and laws related to IP protection try to strike a balance between providing firms an incentive to innovate and promoting a competitive market. There are three models of IP used by Canadian universities: institution-owned, creator-owned, and co-ownership models. For more background, technology transfer refers to a formal transfer of rights from scientific research to another party in order to use and commercialize new discoveries and innovations resulting from that research. IP protection is key to technology transfer because it allows researchers to publish the research and still provide industrial partners with the incentive to commercialize their inventions and retain their competitive advantage. Essentially, a good IP strategy lets researchers and innovators work collaboratively on ideas and enter into partnerships. The government's role is to keep the marketplace as competitive as possible, with low taxes and fewer regulatory hurdles for our country's innovators.
A few weeks ago, the Liberal government unveiled its long-awaited IP strategy. Included among the changes are the creation of a governance regime for patent and trademark agents, $30 million to create a third party patent pool to acquire IP that Canadian firms could access, and $17.5 million over five years to set up a government team of IP advisers. In total, the Liberals' IP strategy will cost Canadians more than $80 million. In my opinion, as the Conservative Party's science critic, this IP strategy is a confusing approach that has too much government involvement in the private sector. The patent collective or patent pool idea is a complex system that requires merging private sector interests. Therefore, the government should not have its hands in this.
Many with a keen interest in innovation, myself included, are unsure how this IP strategy will ultimately help Canada's innovation sector. The president of the Intellectual Property Institute of Canada, Grant Lynds, told The Hill Times that the government's patent pool leaves his group with many questions and that the government's goal is not clear because the government did not specify which patents and which licensing firms would form the collective. This overall IP strategy is typical of the government, which often makes promises to Canadians without sufficient consultation with the Canadian public. It then rolls out legislation and strategies that have not been fully thought out. We are seeing this right now with the Liberals' marijuana legislation.
Another point this strategy left out was creating an innovation box, which would provide a tax incentive to encourage firms to develop and implement Canadian inventions and innovations. The Intellectual Property Institute of Canada suggested using this, which is a strategy used in the United Kingdom, France, the Netherlands, and other European countries. China, a country leading the world in innovation, subsidizes IP and has a higher rate of IP filings. Despite claims by the government to have consulted with all stakeholders on this issue, the innovation box suggested by the Intellectual Property Institute of Canada was not mentioned in the strategy at all. Instead, the Liberals focused on the patent collectives as the main announcement.
The Liberals committed to setting up and managing a patent collective, which is an immensely technical process not commonly managed by a government. In procurement and funding research, the federal government generally does not retain intellectual property resulting from those transactions. It is unclear what IP the government has to offer to users, and there is no clear strategy for how the government would go about acquiring further IP that would be useful to Canada's innovation sector. We have witnessed from many mishaps, such as the Phoenix pay system debacle, that the government has neither the agility nor the technical know-how to effectively manage something as complex as a patent collective.
Like the superclusters program, the proposed patent collective is the latest addition in the government's heavy-handed, top-down approach to Canadian innovation, which essentially amounts to picking winners and losers. On the one hand, the government supports selected businesses with public dollars, while on the other hand it continues to make life more difficult for businesses outside of its chosen few, with increasingly higher taxes and more red tape.
Earlier this year, the Liberals announced their superclusters initiative, which divided $950 million among five consortiums of businesses in a variety of industries. There were problems with this program from the start, mainly with the transparency of the initiative. We do not know who participated in the selection process that resulted in the five consortiums. Was it the innovation minister's political staffers or federal bureaucrats? We do not know.
The program amounts to insiders in Ottawa picking winners and losers. While the government touted the job-creation potential of this initiative, the reality is that outside the minister's chosen industries, we have seen a dramatic loss of jobs across Canada. Tens of thousands of energy workers are still out of work in my home province of Alberta.
In The Globe and Mail, Mark Milke wrote that, “'Superclusters' is just [a fancy] name for...corporate welfare”. The article states:
Almost $1-billion in new corporate welfare for the newest political interference in the marketplace, this for so-called “superclusters,” i.e., for locales where politicians hope industries and universities will create the next Silicon Valley.
He went on to call the superclusters initiative a government-sponsored Ponzi scheme. I tend to agree with this view. The government has no hand in private industries and should not be picking winners and losers. The government spent almost $1 billion on this initiative, and I suspect most individuals will not see much benefit from the investment.
While the previous Conservative government made targeted investments in 2011 in lung-, breast-, and ovarian-cancer research, we gave earmarked funds to the granting councils to disburse through a peer-reviewed process, not by handing over tax dollars straight to private companies. Similarly, when we invested in quantum computing, it was not through funds awarded to the Institute for Quantum Computing, a public research institution associated with the University of Waterloo.
The Conservative Party supports the creation of a process to allow the patent holder to restore time lost on 20-year patent protection due to delays in government approvals. Conservatives support small and medium-sized businesses and their need to commercialize innovation. Because of this, we support a shorter and simplified process.
In fact, the previous Conservative government created a stronger record on IP that aligned us with international standards. During that time, we passed and ratified anti-camcording legislation, legislation around the proceeds of crime, regulations for copyright offences, the Copyright Modernization Act, WIPO Internet treaties, the Combating Counterfeit Products Act, and legislative changes to implement five IP treaties. As well, we extended the term of copyright protection for sound recordings, provided IP agent-client privilege, and laid the foundations for the Liberals to table CETA and to ratify the Marrakesh Treaty.
Already in Canada small businesses face tremendous hurdles to be successful. The government tried to make it even harder, with the small business tax proposal from last year.
Adding another layer of government bureaucracy to IP just does not make sense. Conservatives recognize that small businesses generally do not maximize the benefits of their IP assets as a result of a lack of knowledge, limited staff, and high costs. We need to help small businesses however and wherever we can. Conservatives are committed to creating a low-tax and streamlined regulatory business environment that will not only retain Canadian innovators but also attract innovators from abroad. Ensuring that innovators can translate their creations to market is the key to a strong innovation sector.
Furthermore, the government's patent collective to acquire IP that would be accessible by Canadian firms is bound to be a bureaucratic quagmire. The government described it as:
a way for firms to share, generate, and license or purchase intellectual property. The collective approach is intended to help Canadian firms ensure a global “freedom to operate”, mitigate the risk of infringing a patent, and aid in the defence of a patent infringement suit.
I prefer the explanation by Richard C. Owens, a Munk fellow at the Macdonald-Laurier Institute, who compared the patent pool to the government's setting up “a program to help a canoe builder to acquire the right screws”.
Patent pools form sometimes to help a group of large corporations with product development. However, the government's proposal is for smaller firms, which are unlikely to have a shared interest in the first place. Richard C. Owens described the patent pool as a “one-stop, online listing of public sector-owned intellectual property available for licensing or sale”. Again, this creates hurdles for small businesses, which will probably be unable to afford the purchase of the IP from a third party.
Additionally, as previously stated, it is unclear what IP the government currently possesses that it could offer but also what incentive there would be for owners of profitable or cutting-edge IP to sell to the government for its collective, when they could license those properties themselves.
We are already experiencing a brain drain of innovative thinkers who are going to the United States, where the red tape is not as rigorous as it is in Canada. This patent pool does not address the problem and will ultimately hurt the Canadian economy when these people move south of the border with their ideas.
As I mentioned earlier, the budget also included $21.5 million to create a team within the federal government to work with entrepreneurs and help them develop strategies for using intellectual property and expanding into international markets. When it comes to assisting private sector innovators and quickly translating their ideas to market, it is difficult to believe that the solution is more bureaucracy. In the Financial Post, Richard C. Owens wrote, “try to imagine the business person desperate, naive or confused enough to get involved with such a lot.”
In my role as shadow minister for science, I have toured many labs, innovation hubs, and universities, and I have had the pleasure of sitting down with some incredibly inventive creators. I have seen first-hand that Canada has no shortage of bright minds. However, the panel behind Canada's fundamental science review found that “twice as many Canadians have won research-related Nobel prizes while working in the U.S. as have been awarded to Canadian-born or foreign-born scientists working in Canada.” To me, this statistic reads that we have no shortage of talent to draw from, but we do have a problem converting ideas into usable goods or systems that can be inserted into the lives of individuals in Canada and around the world.
Economist Jack Mintz noted, “Our regulatory environment is becoming infamous for its unpredictability and hostility to new projects”. We know that this is certainly true for the Kinder Morgan Trans Mountain expansion project, which may fail because of the government's incompetence. It is also true for our innovators who own intellectual property. For all the talk and money the government throws at innovation objectives, it forgets that the innovation sector is largely made up of small firms that are small businesses first and foremost. These innovative firms are not immune to the struggle other businesses are facing in this country due to the government's increasing tax burden.
Earlier this month, the Conference Board of Canada gave Canada a C for innovation. This grade was because of weaknesses and a lack of investment by the private sector. This is not surprising, because we know that the government has created a lot of restrictions and red tape within the private sector. A high tax rate, when compared with new, lower taxes in the United States, will drive more businesses south of the border. We know that we have immense talent and innovative thinkers in Canada. However, we continue to lag behind other countries in innovation because of a lack of support from the government. Canada has never had an issue with creating innovative products; it is our ability to commercialize them that is inhibiting our success in being a leader in innovation and reaping the economic success around the world.
The productivity gap between Canada and the United States will threaten our economy, and it already is. This new IP strategy from the Liberals does nothing to address this gap. It is just more red tape and government involvement at a time when we need the opposite: We need a government that will create a more competitive business environment for innovators, allowing their ideas to succeed.
We know how business-friendly our current government is. I know I just mentioned the Trans Mountain expansion project, but it is worth repeating. A private sector company wanted to invest billions of dollars in the Canadian economy to build a pipeline, which would help thousands of unemployed energy sector workers get back to work. The federal government did not support this early enough. It did not step in to stop one provincial government's crusade against the pipeline. Now, we just learned that the Liberal government is pledging millions of taxpayer dollars to incentivize the company to still build the pipeline here. I assume it is millions of dollars, because the Liberals will not tell us how much. Let us imagine that. A company wants to invest in Canada, and the government is so inactive on this file that now public money will be used to prop up the project. Even if Kinder Morgan wants to complete the project, it will still be up against much red tape.
As an Albertan, I have been immensely interested in this project. I think it should be built because it is in the national interest of Canada. However, all the actions taken during this process show the world that under the current government Canada is not a place to invest as a private sector company, and this will have implications for IP owners and firms around the world.
Not getting the IP strategy right will have huge implications for the economy. IP-intensive industries account for approximately two million jobs, or 13.6% of all jobs in the Canadian economy. They also make up 25% of the GDP, which accounts for $332 billion. As well, 40% of all exports can be attributed to IP-intensive industries.
When dealing with IP, we need to strike the right balance to encourage innovation and creativity while attracting more investment, providing businesses with clarity, and promoting consumer confidence. This was not done in the overhaul of the IP strategy.
As a member of the Standing Committee on Industry, Science and Technology, and as the official opposition shadow minister for science, I have met with many stakeholders in this industry. Most private sector stakeholders would like to see their flexibility maintained with regard to IP ownership.
Colleges and polytechnics feel their best IP policies are aligned to the understanding that commercial exploitation of IP is best achieved by the private sector. Many leaders within the private sector have advocated for more funding for intellectual property and technology transfer and have pointed to statistics that show a strong correlation between research funding and invention disclosure. Essentially, industry stakeholders are looking for less red tape and more education.
As well, this IP strategy is costing Canadians a lot of money. The government has committed almost $85 million for this strategy, including $2 million just to conduct a survey to determine whether Canadians understand intellectual property. Hopefully, with so much being spent on the survey, the government will actually listen to what stakeholders tell it and not ignore the information as we usually see.
One of the most common themes I hear from my constituents when door knocking is how much government Canadians have. Most people would agree government has too much involvement in our lives, the current government even trying to tell Canadians how to think and punishing them when they do not agree with it. This IP strategy is yet another example of too much government involvement and it shows how much out of touch the Liberal government is with everyday Canadians.
The government is getting too involved in the lives of innovators and I think it will have the opposite effect of what the government wants to achieve with this strategy. Too much government involvement will deter our innovators and perhaps turn them to the United States rather than encouraging them to go public with their ideas right here in Canada. This will hurt our economy and ultimately all Canadians who stand to benefit from intellectual property.
The Liberals are a proponent of big government. They have been criticized for acting morally superior and not making time for people who do not share the same viewpoint as them. Our Minister of Environment even said in a media interview that she had no time for people who did not completely agree with her exact policy ideas on how to combat climate change. Imagine a member of cabinet, whose purpose is to represent all Canadians, not willing to listen to people who do not share her viewpoint.
The Liberals want government involvement in every aspect of Canadians' lives, which discourages a healthy free market. The government's role is to set up and enforce society's basic rules. After that, citizens should be free to make their own decisions and co-operate with each other to provide for their wants. The government should not intervene on each and every problem.
As with the case on this IP strategy, the government will likely create more problems than it solves with the patent pool. That is what big government does, creates more problems than it solves.
After the Liberal government released its first budget in 2016, Maclean's magazine declared that big government was back. The author of the article wrote the “move toward a government-led economy was evident...”. This is clear by the ease at which the Liberal government will run deficits.
At the end of Prime Minister Stephen Harper's time in office, he was praised for his work in having the federal government become less active in the daily lives of Canadians and replacing big government programs with direct benefits. This is the type of government most Canadians prefer.
The government needs to step back, give the private sector the room it needs to innovate. It does not need the government to tell it how to do that. What these people need is for some outlets to provide advice on how to maximize their IP protections and ensure a low tax and streamlined business environment that will enable a quick transition of ideas to marketable goods and services.
The Liberal government's approach to IP is typical of its heavy-handed approach to most things, with more government than necessary. In the case of intellectual property, less is more. The new rules will not help innovators come up with more profitable IP; it will actually hinder them. It is time for the government to step back and let Canadians develop and execute their innovations, which will in turn drive growth in all sectors of our economy.
I appreciate the opportunity to speak to this very important issue, and I will end with one quote, “That government is best which governs least, because its people discipline themselves.”