Evaluation of the Policy on Title to Intellectual Property Arising Under Crown Procurement Contracts

3.0 Findings

3.1 Relevance

This section of the evaluation contains an assessment of the relevance of the Policy. It evaluates the extent to which the Policy is consistent with the Government of Canada's approach to IP and whether it is an appropriate means of achieving its objectives.

3.1.1: Is the Policy consistent with the government's principles and approach to intellectual property ownership in the context of Crown Procurement?

This evaluation question was addressed through three areas of examination:

• Is the Policy consistent with the principles of the Government of Canada regarding IP ownership?
• Are the principles in the Policy consistent with Government of Canada priorities?
• Is the Policy consistent with other Government of Canada approaches to Crown Procurement?

Consistency with Government of Canada Principles Regarding IP Ownership

The Policy and its Implementation Guide both present a clear position, which can be summarized by the stated principle: "The Government of Canada believes that Commercial Exploitation of Intellectual Property is best achieved by the private sector." The Policy further states that this is in support of "… an overall objective of promoting economic growth and job creation in Canada."

The TBS Contract Policy Notice of July 17, 2000 that advises departments of revisions to the Policy reiterates these objectives and underlying principles.⁴ The Policy itself also refers to its consistency with the Contracting Policy principles. The Contracting Policy states in Section 2c that "Government contracting shall be conducted in a manner that will support long-term industrial and regional development and other appropriate national objectives."⁵

The Policy contains another important principle. According to Section 5.2, the Crown "should have the unlimited rights to use the Foreground⁶ it licenses through Crown Procurement Contracts". This is consistent with the fundamental principle in the Contracting Policy that "Government contracting shall be conducted in a manner that will ensure the pre-eminence of operational requirements."

At a practical level, procurement and policy officials were asked if there were any tensions or inconsistencies between the Policy and other government principles or approaches. The interviews did not find inconsistencies with other government principles or approaches.

An analysis of the Patent Act, the Trade-marks Act, and the Public Servants Invention Act, and the Copyright Act revealed that the Policy is consistent with legislation.

Consistency with Government of Canada Priorities

Speeches from the Throne were examined and no inconsistencies were found with the principles outlined in the Policy. The following table includes quotes from key documents that demonstrate the importance that the Government of Canada places on research and innovation, and the federal government's commitment to economic growth:

Exhibit 6: Speeches from the Throne and Crown Intellectual Property

Source	Quote	Analysis
2006 Speech from the Throne	"The Government will work diligently to build a record of results. It will promote a more competitive, more productive Canadian economy."	Highlights the federal government's priority of improving Canada's economy
2008 Speech from the Throne	"Our Government will start at home, working with industry to apply the best Canadian scientific and technological know-how to create innovative business solutions."	Shows general support for private sector innovation
2009 Speech from the Throne	"Our Government will spend what is necessary to stimulate the economy, and invest what is necessary to protect our future prosperity"	Highlights federal government's priority of improving Canada's economy
2010 Speech from The Throne	"To encourage new ideas and protect the rights of Canadians whose research, development and artistic creativity contribute to Canada's prosperity, our Government will also strengthen laws governing intellectual property and copyright."	Shows the importance Government places on IP in relation to prosperity

A review of strategic and policy documents from IC and TBS confirmed the consistency of the Policy with government priorities.

Consistency with Other Approaches to Crown Procurement

Other Crown procurement policies are also used for the purposes of achieving specific benefits which align to government priorities. Examples include the Policy on Green Procurement, the Procurement Strategy for Aboriginal Businesses (PSAB), and the Industrial and Regional Benefits Policy.

• The Policy on Green Procurement states: "It is the objective of this policy to advance the protection of the environment and support sustainable development by integrating environmental performance considerations into the procurement decision-making process."
• The Contracting Policy Notice on the PSAB (1997-6) states: "The objective of the PSAB policy is to assist Aboriginal business development by increasing Aboriginal business participation in the awarding of contracts by federal departments and agencies. The PSAB is intended to make use of the government's purchasing system to help Aboriginal businesses develop and grow."
• The Industrial and Regional Benefits Policy states: "The IRB Policy provides the framework for using federal defence procurement to lever long-term industrial and regional development within Canada."

Thus, the leveraging of procurement practices to create additional social and economic benefits is consistent with similar approaches in the Government of Canada.

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3.1.2: Is the Policy an appropriate means of achieving the objective?

Objectives Sought

The Policy has the objective to "increase the potential for the commercialization of IP created by contractors in the course of their work under Crown procurement contracts." However, it recognizes that the primary objective of Crown procurement contracts is to receive the deliverables and to be able to use these deliverables (and any IP that arises from these contracts) for Government of Canada activities. Therefore, the Policy must balance government, contractor and public interests. The Policy was also developed to provide greater clarity concerning exceptions and to improve reporting and monitoring.

Means Chosen and Possible Alternatives

The Policy was approved by the Treasury Board of Canada, and monitored jointly by IC and TBS. An Implementation Guide was developed by IC using input from PWGSC, IC, TBS, the Treasury Board Advisory Committee on Contracting and the Federal Partners in Technology Transfer. The Policy mandates Deputy Heads to implement the Policy in their departments and agencies but does not mandate performance reporting beyond the collection of the statistics that can be found in the GWPRS IP Report.

There were several alternatives available in 2000 to achieve the objectives. Instead of developing a policy, the Government of Canada could have pursued an Act of Parliament or introduced regulations. Alternatively, it could have issued guidance in various formats. Examples from other countries help to illustrate potential approaches that were available:

1. Laws and Regulations: IP ownership in the United States is addressed by a mixture of legislation and regulation. The Bayh-Dole Act was enacted in 1980 to address IP ownership arising from government-funded research for small-to-medium enterprises and academia. In addition, the Government Services Administration, Department of Defense, and National Aeronautics and Space Administration jointly administer the Federal Acquisition Regulations, which were issued under the authority of the Office of Federal Procurement Policy Act of 1974.
2. Guidelines or General Guidance: The United Kingdom provides guidelines such as the "Intellectual Property in Government Research Contracts Guidelines for Public Sector Purchasers of Research and Research Providers" issued by the Patent Office. These guidelines include a Policy Statement and "guidance" but they do not carry a strongly worded mandate.In Australia, certain provinces in Canada and most US state governments, there is no common government-funded approach to IP ownership arising from procurement contracts. Instead, general guidance is provided that advises against IP ownership by the government unless necessary, but it permits departments, ministries and agencies to develop their own policies.
3. Case-by-Case Approach: Ontario does not have a consistent policy that applies to all ministries. Major procurements are handled on a case-by-case basis. Similarly, IP is managed in British Columbia by a centralized IP Program which reviews requests to license Crown owned IP on a case-by-case basis.⁷

Appropriateness of Policy

The following indicators were used to assess whether the Policy was appropriate:

• Do internal stakeholders perceive the Policy as appropriate?
• How does the Policy compare to other government procurement approaches (e.g. Green Procurement)?
• How does the Policy compare to procurement and IP ownership approaches used in other countries or provinces?

Perceptions of Stakeholders

Virtually all interviewees felt that the Policy was a reasonable tool to use that did not produce an unnecessary burden on the implementing departments. Heads of Procurement found that the Policy was useful to their operations and did not disrupt the contracting process. They said that legislation would be too prescriptive and cumbersome, while a guideline would be too lax. The Policy did not place a noticeable financial or administrative burden on departments for implementing, managing or reporting. In each of the four departments studied in the Case Studies, no significant implementation expenses or administrative delays resulting from the Policy were noted by department officials.

Policy specialists in IC felt that the use of a Treasury Board approved policy provided support in influencing the behaviour of other departments, particularly in regard to monitoring of the use of Crown ownership exceptions. The Policy also leveraged the reporting capabilities of PWGSC.

Comparison to Other Government of Canada Approaches

When assessing policy options, it is important to note that TBS and Public Service Human Resource Agency of Canada launched a broad review of Treasury Board management policies and issued the Foundation Framework for Treasury Board Policies in 2005. The Framework defines the objectives of policies, frameworks, directives, standards and guidelines. According to this document, policies "… explain what Deputy Heads and their officials are expected to achieve" whereas directives "… explain how Deputy Heads and their officials must meet the policy objective." Directives are mandatory and are directed at functional specialists and managers.

The Policy is directed to Deputy Heads. It explains what is expected (that ownership vest with contractors as a default) but it also informs how it is to be obtained (e.g. it provides exceptions and information on licensing). As such, the Policy does not adhere to the new definition of a policy. Instead, it more closely resembles the new definition of a directive.

Comparison with the Policy on Green Procurement

Although both policies were approved by the Treasury Board of Canada, the Policy is co-administered by IC and TBS while the Policy on Green Procurement is administered by PWGSC with the support of other departments. Despite these differences, both policies:

• Use government procurement to further a policy objective while, at the same time, seek to ensure value-for-money;
• Establish core principles; and
• Place responsibilities on Deputy Heads.

A detailed analysis of the similarities and differences between the two policies appears in Appendix I.

While both policies seek to achieve similar objectives, their approaches are quite different. First, the Policy on Green Procurement focuses on an outcome but it is not prescriptive on how that outcome is achieved. In contrast, the Policy establishes very specific requirements (including detailing the specific exceptions that can be used) but it sets out a broad final outcome. In addition, the Policy also has more limited reporting requirements. The Policy on Green Procurement has formal reporting requirements that require departments to develop metrics and include these metrics in their Departmental Performance Reports. If the Policy were to follow this example, then there would be greater visibility into these kinds of procurement decisions and close attention would likely be paid to the quality of the data.

Comparison with Other Countries and Jurisdictions

The Environmental Scan examined IP ownership practices for government contracting in Australia, the United Kingdom, the United States, and Canadian provinces (see Appendix F). The Environmental Scan compared the default policy position for ownership and the mechanisms used for implementation.

Overall, the policy direction taken by Canada is different from the default position of many of the Provinces (i.e. Crown ownership) and two other countries (the United Kingdom and Australia), but it is similar to that of the United States. However, all countries and jurisdictions that default to government ownership for IP also encourage their contracting authorities to consider whether or not they really need to own the IP. Most governments also state that they believe getting IP into the hands of the private sector is beneficial to economic growth. Among the jurisdictions that follow a different approach, Australia is currently moving toward a "contractor owned IP" default position for information and communications technology contracts.⁸ Similarly, Ontario is in the process of revisiting its approach. Recently the province has entertained the possibility of developing a policy similar to that of the federal government.⁹ In this context, the Government of Canada position of granting default ownership of IP to contractors (except when an exception is invoked) appears to be reasonable. Similarly, the use of a whole-of-government policy (rather than a statute or regulation) appears in line with approaches taken by other jurisdictions.

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⁴ Contract Policy Notice 2000-2, File No. 3800-007-001, paragraph 12. (Return to reference 4)

⁵ Contracting Policy Section 2c www.tbs-sct.gc.ca. (Return to reference 5)

⁶ Foreground is defined as all Intellectual Property first conceived, developed, produced or reduced to practice as part of the work under a Crown Procurement Contract. Policy on Title to Intellectual Property Arising Under Crown Procurement Contracts. Section 4. (Return to reference 6)

⁷ Core Policy Manual Sections 6.3.4(f), Government of British Columbia. (Return to reference 7)

⁸ IP Intellectual Property Principles for Australian Government Agencies Section 8.(a) revised October 2010. (Return to reference 8)

⁹ Presentation to ITAC, May 27, 2010, Marian Macdonald, ADM Supply Chain Management, Government of Ontario. (Return to reference 9)