Value of government laboratories hampered by outdated IP policies

New policy or legislation urged

A new report lambastes the government for inadequate policies governing intellectual property (IP) flowing from federal science-based departments and agencies (SBDAs). Commissioned by Industry Canada, the report says current policies and procedures fail to support effective technology transfer or S&T collaboration while best practices are routinely ignored. Starved of resources to protect patents and lacking any central authority to oversee government practices, government scientists are not motivated to manage IP and recent data suggest invention disclosures are declining.

Prepared by Stargate Consultants Ltd, the report contains a litany of shortcomings including inadequate incentive measures and policy failures related to government IP management. It concludes that new policies and resources are required to realize the benefits of inventions generated by federal laboratories.

The failure of government to act is all the more alarming, given Canada's early lead in this area with the 1973 Public Servants Inventions Act and the importance IP management and technology transfer were afforded in the 1996 federal strategy — Science and Technology for the New Century. The latter document committed the government to act on several fronts to encourage and facilitate knowledge and technology transfer by becoming more open and industry friendly. Little action was ever taken and the current government has committed to reviewing IP policies in its 2007 S&T strategy — Mobilizing Science and Technology to Canada's Advantage.

"It (the report) is a hit on the policies. We've known about these problems for years and nothing happens," says Thomas Clarke, Stargate president and the report's co-author along with Jean Reavley. "The 2007 strategy said it would take a look at the policies but there's no meat behind it. There's no one in charge so it's a piecemeal approach … This government is not anxious to advertise that they are not doing what they should be doing.

The report notes that Canada's current IP policy for government labs — the 1973 Public Servants Inventions Act — is so badly out of date that it covers inventors but excludes innovators and research areas such as software development. That makes any royalty payments to software developers or innovators technically illegal.

In contrast, the US Federal Technology Transfer Act of 1986 makes tech transfer "an intrinsic part of the duties of every federal scientist and engineer." It also established a compulsory royalty sharing system not only for inventors but innovators. Canada has no such mandatory provision in its policies.

Clarke recommends that the government consider establishing a central authority for managing government IP and S&T collaboration, with responsibility for making changes to IP acts and policies, collecting annual performance statistics and developing frameworks or guidelines to assist SBDAs in what and when to patent and identify best practices. In addition, a government-wide policy or legislation for IP ownership generated under a collaborative S&T agreement should be explored.

The lack of up-to-date or effective policies have led to a situation where each SBDA has developed its own approach, leading to inconsistent and often very different views as to how IP rights should be assigned in cases of collaboration and what rewards are most appropriate for encouraging invention disclosure and tech transfer. Clarke argues that if the government is unwilling to update and improve current IP and collaboration policies, it should look south for the next-best solution.

"We should take the US route and go to legislation as an alternative to central authority and base the legislation on best practices," he says. "The legislation becomes the central authority. The government totally rejects the legislation route and has gone the policy route which hasn't worked because it's so out of date."

"The clumsy financial mechanisms of government are not flexible enough when dealing with private sector partners ... (It) must decide that technology transfer and S&T collaboration is not just "window dressing" but sufficiently important to both the Canadian economy and the welfare of Canadians and "put its money where its mouth is." — IP Management Report

Inaction has led at least one department to go its own way. In 2007, AAFC discontinued use of the Treasury Board (TB) policy on awards to inventors and inventions and crafted its own awards plan. The AAFC policy considerably enhances potential remuneration for departmental employees. It also allows scientists to compete for awards regardless of whether the invention generates a revenue stream — an acknowledgement of public good IP that is not covered by the Treasury Board's 1993 awards plan.

However, abandoning the TB policy that favours scientists "who have an orientation to industrial technology transfer type R&D projects" and making scientists compete for awards will, in Clarke's view, lead to systemic problems that may make many scientists wish for a return to the old Treasury Board policy. "They threw the baby out with the bathwater," says Clarke. "The department addressed a glaring gap but instead of adding they substituted."

Adding to the problem of tech transfer and S&T collaboration within government is a general lack of resources to cover the costs of patenting and patent maintenance fees. In many cases, the costs of patenting are taken from laboratory research budgets, effectively punishing researchers who attempt to protect their IP. The underfunding problem of tech transfer offices is acute despite the policy of returning IP royalty and licensing streams. This is often insufficient to fund tech transfer operations, however, leading to a situation which recent reports and data have identified as a major impediment to tech transfer.

Current legislation also does not guarantee that IP revenues earned by a laboratory will be returned for use on future R&D. Clarke says those revenues that actually do make their way back to the originating lab are illegal under the 1993 Treasury Board policy.

"For technology transfer, drawing on research budgets is a killer. If government is serious about it, they should put their money where their mouth is," says Clarke. "

The report makes several more recommendations, including the need for surveys of the SBDAs to determine whether scientific staff are satisfied with current policies, identify practices or policies that "greatly dissatisfy the scientists" and pinpoint solutions to barriers. Another survey is also recommended for companies that have engaged in federal collaborative S&T projects in the past five years to gauge business attitudes to the current environment.

Clarke is also critical of the access to government S&T collaboration IP policies and procedures. He argues that this information should be available on all SBDA web sites, complete with contact names and numbers.

"The government should ask itself why no one is doing anything. No one is responsible for technology transfer and right now it's nice and easy for the bureaucrats," he says. "It needs to be industry friendly but in Canada it's bureaucrat friendly."

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