Auditor General slams DFO and Health Canada for IP policies and management

NRC a notable exception

The federal government is in the dark when it comes to knowing whether the objectives of its own intellectual property (IP) policy are being met, according to a new report from the Auditor General of Canada. The report points to Industry Canada and Treasury Board Secretariat as the main culprits for not adequately fulfilling their obligations to monitor the policy's applications.

The AG report examines just three departments and agencies — the National Research Council (NRC), Department of Fisheries and Oceans (DFO) and Health Canada (HC). It finds that NRC fares best, having effective IP exploitation and transfer as well as significant revenue flow through licensing. On the other hand, DFO and HC have either outdated policies or policies that have not been implemented due to lack of resources.

Industry Canada (IC) and Treasury Board (TB) are responsible for monitoring the application of the Policy on Title to Intellectual Property Arising Under Crown Procurement Contracts – one of three key policies governing government IP – but the system has never been properly implemented. A 2004 assessment found a lack of understanding of the policy and misreporting of IP. The policy's central reporting system was modified in 2007 but an evaluation to determine whether it was working properly was delayed from 2008 to 2011.

award system broken

"Eight years after the Policy on Title to Intellectual Property Arising Under Crown Procurement Contracts was revised and expanded, the federal government is still not in a position to know if the objective of the Policy is being realized. Industry Canada and the Treasury Board of Canada Secretariat have not adequately monitored the application of the policy … have not yet evaluated the Policy (and) there are significant errors in the data due to a lack of understanding of intellectual property management." – Auditor General report

Another policy that has encountered major problems is the 1993 Award Plan for Inventors and Innovators. The AG found that while the entities under investigation has made awards, only the NRC had made any substantial awards to innovators ($1.7 million), while HC and DFO awarded $2,000 and $24,000 respectively. None of the departments reported their awards to TB, however, leaving the government in the dark as to whether the appropriate financial incentives were in place. The entities also did not consistently identify whether or not IP was expected to result from contracts.

While the criticism of NRC was relatively minor in nature, the AG found serious problems with how HC and DFO handled IP. It concluded that both "do not adequately justify Crown ownership of intellectual property" and "are not fulfilling their obligations as a contracting authority".

For internally generated IP the AG gives the NRC good marks for having a workable policy that includes guidance for roles and responsibilities for its management, disclosure, ownership and protection. HC developed a draft policy but has not implemented it, ostensibly due to a lack of resources. DFO has a policy in place, but it only pertains to portions of the department leaving the Canadian Coast Guard, Canadian Hydrographic Service and parts of the science sector without one.

NRC has offered to leverage its management framework and expertise with IP to support government-wide management of IP and "plans to engage senior level entity officials to explore opportunities and possible options".

criticism not new

The AG report is the second in the past year to lambaste the government's handling of IP. Last summer, RE$EARCH MONEY reported on a study conducted by Stargate Consultants Ltd that detailed what it considered a litany of shortcomings including outdated policies, lack of resources to adequately protect IP and inadequate disclosure of policies that remain place (R$, July 28/08).

Report co-author Thomas Clarke says the AG report doesn't go nearly far enough and ignores many of the weaknesses he found by Stargate in its 2008 report and an earlier study conducted in 1993.

"Although it did touch on some of the major failures in IP management, it did it in such a way as to keep people sleeping on the issues," says Clarke. "Its coverage of the awards policy is weak ... The Canadian Public Service Agency is all for scrapping the IP awards policy (but) if they do that ... government might as well forget about government-to-industry tech transfer that generates any revenues for government labs or government inventors/innovators."

For their part, NRC, DFO and HC all agree with the recommendations and have committed to improving their performance where specified by the AG.

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