Canada: Parliamentary Committee Issues IP-Based Recommendations To Promote Innovation

On March 18, 2013, the Canadian Parliament’s Standing Committee on Industry, Science and Technology (referred to as “INDU”) published a report titled “Intellectual Property Regime in Canada” (the “Report”). INDU, which is composed of twelve members of Parliament, was mandated in the spring of 2012 to study the intellectual property (“IP”) regime in Canada and how this regime contributes to advancing innovation.

After hearing from approximately fifty witnesses, INDU issued in the Report several recommendations to the Government of Canada relating to Canada’s IP regime. Many of these recommendations seek to encourage the government to undertake further study of aspects of Canada’s IP regime and promote awareness of this regime. INDU also issued specific recommendations, some of which are summarized below (as categorized in the Report).

Specific Challenges Facing the Canadian Pharmaceutical Industry

INDU recommended that Canada ensure the pharmaceutical IP regime strike a balance between encouraging investment in the development of new and innovative drugs while ensuring Canadians have access to affordable pharmaceuticals. More specifically, INDU recommended that Canada undertake an independent, evidence-based review of challenges facing the brand-name pharmaceutical sector in Canada to determine appropriate next steps.

INDU’s high-level recommendations appear to reflect the diverging views of witnesses regarding the pharmaceutical IP regime. For example, the witnesses disagreed about Canada’s negotiations with the European Union for the Comprehensive Economic and Trade Agreement. Members of the innovative pharmaceutical industry noted that CETA presents Canada with a unique opportunity to make necessary improvements to harmonize Canada’s life sciences IP regime with Europe and, in so doing, become the only country in the world with favoured trade status with both the USA and the EU. Specific improvements sought by pharmaceutical innovators include an effective right of appeal in invalidity proceedings, an extension of data protection regulations from 8 years to 10 years, and the availability of patent term restoration. In contrast, the generic pharmaceutical industry opposes the EU’s demands for increased IP protection.

Canadian Intellectual Property Office and Government of Canada Policy and Programs

INDU specifically recommended that Canada ratify key international IP agreements, namely the Patent Law Treaty, the Madrid Protocol for the International Registration of Marks, the Singapore Treaty on the Law of Trade-marks, and the Hague Agreement Concerning the International Deposit of Industrial Designs. In the Report, INDU noted that there is a very strong consensus among witnesses consulted that better collaboration and improved harmonization internationally with respect to IP protection is needed.

INDU also recommended that Canada develop consistent IP policies for the aerospace industry across all government departments, make policies relating to foreign collaboration more flexible, and strengthen procurement policies by negotiating IP rights when purchasing foreign aircrafts.

Streamlining the Intellectual Property Process

As part of a review of domestic and international patent frameworks, INDU recommended that Canada identify ways to strengthen patent quality, enhance patent disclosure, and improve the efficiency of the system for enforcing patent rights. In addition, INDU recommended that Canada work with the Canadian Intellectual Property Office (“CIPO”) to introduce regulations and legislation that will reduce the time it takes to grant IP rights and bring Canada in line with other countries. In the Report, INDU noted the witnesses’ concerns regarding the high cost of obtaining and defending patents. Some solutions discussed (though INDU issued no recommendations in this regard) include: the Patent Prosecution Highway, terminal disclaimers and short deferral periods; a Canadian version of the U.S. provisional patent application; specialized IP courts or non-judicial administrative procedures; and, increased online accessibility and searchability of CIPO’s database.

INDU also recommended that Canada should only consider expanding patentability to new subject matter when there is clear and demonstrable benefit to Canadians and competition. In this regard, the Report acknowledged the debate regarding whether business methods and software ought to be patentable.

One witness suggested that Canada consider adopting legislation preventing “patent trolls” (a.k.a. non-practicing entities or patent assertion entities) from obtaining court injunctions. The same witness also noted that, as patent trolls have to date not been particularly active in Canada, the issue was not an urgent one. INDU made no specific recommendations in this regard.

Piracy / Counterfeit / Trade-marks / Copyrights

INDU recommended that border/customs officials and the Royal Canadian Mounted Police be provided with appropriate authority to address piracy and counterfeiting, and that border/customs officials be permitted to share information with rights holders regarding suspected goods. For example, the Report notes that ex officio powers for border/customs officials to seize merchandise is standard in other jurisdictions.

INDU also recommended that civil and criminal remedies be introduced for trade-mark counterfeiting. The Report noted the gap between the Trade-marks Act and the Copyright Act with respect to such remedies. While INDU did not recommend specific civil trade-mark remedies, the Report noted the absence of statutory damages under the Trade-marks Act.

To balance a more aggressive approach, INDU recommended that criminal remedies be applied to trade-mark counterfeiting or copyright piracy involving activities which are wilful and on a commercial scale; excessive fines for individuals not acting in this manner would be inappropriate. INDU also suggested that compensation may be needed in cases where seizure is not warranted.

INDU also recommended that the Trade-marks Act be amended to restrict the scope of official marks to important national government symbols and to narrow the definition of public authorities. In this regard, the Report noted that the current official marks provisions have been at times abused by governments in ways that stifle innovation and distort markets.

Industry / Academy / Government Collaboration

INDU recommended that Canada encourage universities to work together to develop template agreements so as to provide greater certainty to businesses entering into partnerships with university researchers. INDU also recommended that government laboratories work together to develop similar template agreements.

Summary

While INDU’s Report proposes improvements to Canada’s IP regime, it also highlights ongoing debate about how to use this IP regime to effectively promote innovation in Canada. The Government of Canada will now have to tackle this issue, as INDU has issued a request for government response pursuant to Standing Order 109. The Government will have to present this response within 120 days of INDU’s Report.

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