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Time for a made-in-Canada solution: What the RIM case shows us about the country’s patent laws, Richard Gold & Tina Piper, The Globe and Mail, March 2, 2006

The explosive Research in Motion trial has left business people and investors trembling about the fate of their beloved BlackBerries, and it has made the once-arcane world of patents a front-page story. But the controversy surrounding the Waterloo-based company also points to much bigger questions about the state of Canadian patent law in general.

Patent policy is critically important to the country's business and universities, and the RIM case shows just how far Canada is lagging behind its competitors in this area. If Canada doesn't act soon, its lack of effective patent laws will increase the productivity gap between itself and nimble competitors like the US, Europe and Australia.

As the RIM case has revealed, our American neighbours are more than willing to adapt their patent law to respond to modern technological and economic realities. During the course of the proceedings, a US court expanded the rights of a US patent owner to cover RIM's activities taking place in Canada. This unprecedented extension of US patent law to Canada shows just how far that country is willing to go to use patent law to benefit its industries. To the same ends, the American Congress is considering a patent reform bill touted as the most comprehensive change to US patent law in half a century.

Meanwhile, our other competitors are hardly standing still. The Australian Law Reform Commission recommended 50 changes to Australian patent law to meet challenges posed by new technologies. The European Union has doggedly attempted to streamline its patent process to create a European-wide patent. Japan revamped its patent laws in the 1980s. All of these activities point to the importance that our competitors place on patent law. Where is Canada in all this?

Parliament can begin by recognizing the standard patent strategy which other countries are pursuing. Namely, we should recognize that total costs associated with the patent system (ie monopoly pricing and administrative expenses) are meant to be lower than the benefits we obtain in the form of access to new technology. The US heavily subscribes to this view by strategically expanding patent rights to secure market advantages for its leading information technology, pharmaceutical and technology industries. Canada should not be shy to do the same. But in doing so, we should not follow the US script but develop our own tale. The solution begins by recognizing our own economic and innovation position in the world in order to formulate a made-in-Canada patent policy.

Keep in mind that a patent is only valid in the country that granted it, meaning that innovators seeking to protect their invention in Canada, the US, Europe and Japan must file for a patent in each place. As a result, while American firms patent first in their own country, most Canadian companies first patent inventions in the much larger US market and sometimes do not even bother patenting in Canada at all. This is understandable given that Canada represents only about 2% of the total sales of most technology products while the US is the world's biggest technology market.

Thus, there is a fundamental difference then between Canada's innovation economy versus that of the United States: American companies both invent and sell in the US while Canadian companies typically invent at home and sell abroad. Canadian patent and innovation policy needs to take account of this reality if we hope to create legislation that can maximize benefits for our country's companies, researchers and citizens. The (very logical) “invent here, sell there” distinction that is inherent to Canadian research patterns has direct implications for our patent policy. In response, we propose two principles to guide our lawmakers when (and if) they decide to devote some much needed attention to our country's patent and innovation policy.

First, because Canada's strategic advantage lies in research and not the size of the market it offers, our patent laws should encourage public and private sector researchers to invent in Canada and sell abroad. Canadians patents should be carefully scrutinized before they are granted to ensure that the monopoly they create does not restrict access to knowledge and research tools. In other words, our researchers should be left free to innovate with relatively few impediments.

Second, patent law should not obstruct the administration of our public health care system. Since Canada's share of the technology market is so small, it is unlikely that broader patent rights would attract outside investors seeking to profit on new medical technologies created in this country. On the other hand, expanded patent rights would lead to more medical products being sold to the Canadian health system at monopoly prices. Canada should therefore be capable of weighing potential benefits associated with increased patent protection against costs to the health care system that would be created if such protection was introduced.

Unfortunately, Canadian patent law does not do this. The federal government has lacked the political will to modernize the Patent Act and Canadian courts too often simply follow their US cousins. At the same time, the BlackBerry case has shown us that American patent law is dynamic and evolving while here the status quo prevails, leaving Canada caught like a deer in patent-pending, high-intensity, US manufactured headlights.

Dr. Richard Gold is an Associate Professor at McGill University's Faculty of Law and Director of the Centre for Intellectual Property Policy. Tina Piper is an Assistant Professor at McGill University's Faculty of Law.

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