Federal Government Improperly Hoarding Patents

The Canadian Press (CP) is reporting that "federal departments and agencies are hoarding hundreds of patents and copyrights each year, violating the federal government's long-standing rules on so-called intellectual property" and quotes two recent reports to bolster its case.

Retired Auditor General Sheila Fraser.

The June 4th, 2011 CP article "Federal departments improperly hoarding patents, copyrights: report" indicates that the initial red flags were raised in a 2009 report from then auditor general Sheila Fraser.

This is likely referring to the 2009 Spring Reports of the Auditor General of Canada, which was tabled in the House of Commons on Tuesday, 12 May 2009. According to an April 19th, 2009 Office of the Auditor General of Canada press release, the second chapter of that report discussed:

... how intellectual property is managed in three federal science-based organizations—National Research Council Canada, Health Canada, and Fisheries and Oceans Canada.

The audit examined how adequately they manage intellectual property generated by their own employees and to what extent they comply with the federal policy governing intellectual property that arises under Crown procurement contracts; it also looked at the roles of Industry Canada and the Treasury Board Secretariat in monitoring the application of the policy.

Oddly enough, my October 10th, 2010 post "Overnight Success Plus IP Rights" focused on Toronto based CSA subcontractor Engineering Services Inc. (ESI) and discussed how unusual it was for a Canadian Space Agency (CSA) contractor to retain rights to intellectual property (IP) developed through CSA contracts.

Now it looks like the official government policy is to encourage contractors to retain those rights and it's been that way for decades.

Another view of IP.

The formal policy is listed as part the Treasury Board of Canada Secretariat website on the Policy on Title to Intellectual Property Arising Under Crown Procurement Contracts page. The CSA is a component of Industry Canada but was not directly assessed in the Auditor General's report.

Perhaps it should have been.

After all, the Auditor General report points to ongoing and endemic problems across a wide area.

These included problems with the the implementation, application, and monitoring of key policies to manage intellectual property including inaccurate reporting of IP ownership, lack of appropriate policies covering IP ownership, a lack of justification for crown ownership of IP and a lack of disclosure from crown departments relating to IP ownership.

And a second evaluation, prepared for Industry Canada by Ottawa-based consultants TDV Global Inc. last winter, found that Canadian rules and regulations are still being widely ignored or violated by the federal bureaucracy.

The December 2010 report found that few departments were even applying to the Treasury Board (as required for the exemptions) which would allow them to retain patents or copyrights. As well, only a very few had the proper and documented justifications in department files to account for their actions in doing so.

Who controls the intellectual property for this device?

However, the CP article provides no explanation as to why a report released in 2009 is only now being publicly re-examined and why independent consulting firm TDV was hired for the second assessment. Perhaps it's just that (up until now) there was simply nobody who had reason to energetically look for violations in this area by government departments.

Whatever the reason, noncompliance policing in this area was probably not a high priority for either Industry Canada or the Treasury Board.

Perhaps that will now change.

Before the current rules came into effect in the late 1980's, federal government policy was to retain ownership of most inventions developed through government contracts under a Crown corporation known as Canadian Patents and Development Limited (CPDL), whether or not the IP was developed by public servants or independent contractors.

The recent presentation below, from the MaRS Discovery District Entrepreneurship 101 sessions discusses the basics of Canadian IP law and how to approach IP in a strategic way.


CIBC presents Entrepreneurship 101 2009/10 - Week 17 - How to Protect and Commercialize Intellectual Property (IP) from MaRS Discovery District on Vimeo.