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Michael Geist Blog
Michael Geist - Canada Research Chair of Internet and E-commerce Law at the University of Ottawa, Faculty of Law

Commercialization of IP In Canadian Universities: Barely Better Than Break Even Last week, Statistics Canada released its latest report on the commercialization of intellectual property in Canadian universities.  Canada spends billions of public dollars on research funding each year and the government has been increasingly focused on how best to commercialize the results.  While there are several possible approaches to doing this, the government and some universities have been focused on building patent and IP portfolios as part of a conventional commercialization strategy.  The alternative could be an open access approach - encourage (or require) much of the intellectual property to be made broadly available under open licences so that multiple organizations could add value and find ways to commercialize.  The universities might generate less income but would better justify the public investment in research by providing the engine for larger economic benefits.

Which approach is better?  The full commercialization approach has been tried in the U.S. with legislation known as Bayh-Dole and studies (here and here) have found that patents to universities have increased, but the increase has been accompanied by harm to the public domain of science and relatively small gains in income.

The Canadian Science and Technology Strategy similarly places its faith in commercialization through IP portfolios and licencing, yet the Statscan data suggests that this has also been ineffective. 

The latest report is based on survey data from 2008 which finds that the total IP income (primarily from licencing) at reporting Canadian universities was $53.2 million. The cost of generating this income?  The reporting institutions employed 321 full-time employees in IP management for a cost of $51.1 million.  In other words, after these direct costs, the total surplus for all Canadian universities was $2.1 million.  The average income per university from IP was only $425,000.  Patent applications and patents issued were actually down in the reporting institutions and there were less than two-dozen spin-off companies reported by the universities.

While few would suggest that there is no value in the IP commercialization strategy for universities - there is surely a role for it - the emphasis on this approach as the optimal method of benefiting from billions in public funding for research has consistently failed.  Rather, an effective commercialization strategy might recognize that the commercialization is better suited outside the university with funded research the engine for new innovation that is openly available to entrepreneurs without licencing barriers.  The public pays for the basic research and might ultimately enjoy far more benefits than the current break-even approach by having more open access to research results.

EU-Backed Study Finds Counterfeits Pro-Consumer, Rejects Company Complaints A new report funded by the European Union has concluded that counterfeits have pro-consumer effects while rejecting claims of losses by established companies.  The report concludes that most counterfeit purchases are not substitute for the genuine article and actually help promote the brand.  The report finds that the real cost could be one-fifth of previously calculated figures.

CRTC Mandates Wholesale Access for ISPs The CRTC yesterday affirmed an earlier decision requiring incumbents to grant wholesale access to faster speeds to independent ISPs.  The government could still overrule the decision within the next 90 days.

Conrad Black Case Targets Net Defamation Jurisdiction Standard Conrad Black's ongoing legal fight in the United States has attracted considerable attention in Canada, yet my weekly technology law column (Toronto Star version, homepage version) there is a side courtroom battle at home over alleged defamatory content on the Internet that merits closer attention.  The case, named Black v. Breeden, involves postings such as press releases and reports on the Hollinger International, Inc. website that Black claims were defamatory.  Several Ontario media organizations published the allegations contained in those releases.

When Black sued the company's directors, advisers, and one company employee for defamation, the defendants in the case brought a motion to dismiss on jurisdictional grounds, arguing that Ontario was not the appropriate venue for the case since both Hollinger and Black are located in the U.S.  After a judge dismissed the motion, the defendants appealed to the Ontario Court of Appeal.

In a unanimous decision this month, the appellate court upheld the ruling by the motions judge, concluding that Ontario was a suitable venue and that the defamation case could proceed.


Linkages between defamation and jurisdictional questions are not unusual, however, a novel issue before the court was how to treat content posted on the Internet that is accessible to a global audience.  The starting point for jurisdictional analysis in Canada is the real and substantial connection test in which courts consider whether the connection is sufficient to merit asserting jurisdiction over the dispute.

In this case, the court was urged to base its analysis on a "targeting test" (the defendants relied in part on a law review article I wrote in 2001 advocating the adoption of a targeting-based analysis) that would involve considering whether the postings targeted the forum rather than looking at where they were downloaded and read.

The targeting test posits that courts should not assert jurisdiction over online content merely because it is accessible. Rather, there should be evidence that the site actively targeted an audience within the jurisdiction. The criteria for determining targeting remains elusive, but courts have referred to the language and content of the site, terms and conditions posted on the site, as well as awareness that the site's content may have an effect within the jurisdiction. 

While the court concluded that it did not need to formally decide whether to adopt the targeting test, it was satisfied that the statements were in fact targeted at Ontario.  It noted that the press releases posted on the Internet specifically provided contact information for Canadian media and that the company "clearly anticipated that the statements would be read by a Canadian audience and invited Canadian media to respond."

Interestingly, the defendants also raised an alternate argument, asking the court to establish a new exception to the real and substantial connection test for the Internet.  They argued that downloading the offending content was effectively the ‘completion' of the defamation.  Given the possibility of downloads in multiple jurisdictions, the defendants argued that many places could theoretically assert jurisdiction, leading to widespread legal uncertainty.

The court rejected the argument, concluding that judges were perfectly capable of sorting through the issues and ensuring fairness for both sides.  In doing so, it allowed the Black defamation suit to proceed while also providing Internet users and the legal community with greater insight into when Canadian courts will assert jurisdiction over defamation that occurs online.

James Moore on the Private Copying Levy "As technology changes, the levy is not an effective mechanism to compensate copyright creators for possible theft of their work. For that reason, our Government has not included an expansion of the private copying regime to iPods and other devices in our recently proposed amendments to copyright. Instead, we have included strong measures to deter and prevent all forms of piracy in order that creators can be rightly compensated for their work through market mechanisms."  Full letter here.

Google, Yahoo Concerned About Bill C-32's Enabler Provision The Wire Report reports (sub required) that Google and Yahoo are concerned with the "enabler" provision in Bill C-32.  The provision is designed to target sites that facilitate but the search engines fear it could have unintended consequences.

CRA Cracks Down on eBay Seller The Canada Revenue Agency has fined a B.C. man $68,000 for failing to report sales on eBay.

Next ACTA Round To Be Vice-Ministerial Level Meeting The Japanese media is reporting that the next round of ACTA negotations in Tokyo will be a Vice-Ministerial level meeting, providing further confirmation that countries expect to conclude the agreement at the late September meeting.

CIPPIC Says Facebook Failing Privacy Promises CIPPIC argues that Facebook has failed to comply with the privacy commitments it made as part of last year's settlement with the Privacy Commissioner of Canada.

"Legislative Guidance" on Fair Dealing: The Plan to Reverse CCH? My post this week on several writers groups objections to Bill C-32 has generated considerable discussion, with some taking me to task for focusing on their letter's warning of "unintended consequences,""years of costly litigation," and "serious damage to the cultural sector."  Instead, they argue that I should have focused on the call for additional "legislative guidance" on the fair dealing reforms.  After all, who could be against greater clarity in the law?

In the discussion that has followed, I believe that it has become increasingly clear that the "legislative guidance" is not really about the fair dealing reforms found in C-32, but rather fair dealing more generally. Unfortunately, the writers' letter only speaks of their concerns and does not provide any specific policy or legislative reform recommendations that would clarify their intentions. However, with the government having opened up the fair dealing provision, those groups may see an opportunity to reverse the Supreme Court of Canada's CCH decision that characterized fair dealing as a user right and established guidelines for its interpretation. 

Why do I arrive at this conclusion?


First, there is no need for greater guidance on the meaning of "education" and, even if there was, the guidance would be unlikely to change the groups' concern with its inclusion in fair dealing. By using the word alone, the government has sent the signal that it means education in the broad sense.  In fact, this is consistent with the Supreme Court of Canada, which ruled in Vancouver Society of Immigrant and Visible Minority Women v, M.N.R.:

There seems no logical or principled reason why the advancement of education should not be interpreted to include more informal training initiatives, aimed at teaching necessary life skills or providing information toward a practical end, so long as these are truly geared at the training of the mind and not just the promotion of a particular point of view...there is no good reason why non-traditional activities such as workshops, seminars, self-study, and the like should not be included alongside traditional, classroom-type instruction in a modern definition of “education."

The groups could hope that legislative guidance would limit the scope of who qualifies under "education", but given their aversion to some fair dealing uses within traditional education venues such as universities, colleges, and secondary schools, this can't be what the writers groups have in mind. Any limitations on the scope of education would surely not exclude those institutions, yet they are precisely the institutions that seem to matter the most to the writers groups.  If the scope is designed to include those educational institutions, legislative guidance might mean dropping the reform altogether, but that isn't guidance - it's gutting the reform.

If legislative guidance is not about the scope of education, what is it about?  I think the answer lies in an attempt to codify into law the fairness criteria established by the Canadian courts to determine whether a particular use meets the fair dealing standard.  As I have repeatedly noted, the mere fact that education would be a recognized fair dealing category does not mean that all educational uses qualify as fair dealing.  Rather, any use must still meet the fairness test.  It is this test - which is not even part of Bill C-32 - that the writers groups likely want to target.  Given recent comments about the need to pay for any commercial use, the groups likely want to rewrite the fairness test to specifically exclude any commercial use from meeting the fairness criteria. That would mean rolling back the CCH decision so that fair dealing would actually become far more restrictive in Canada than is currently the case (and much more restrictive than the U.S. fair use provision which has no limits on categories and does allow for the possibility of commercial fair use).

This strategy is actually even more dangerous than it appears at first blush. While the writers groups are focused on the new education exception in C-32, codifying the fairness criteria would apply to all fair dealing categories.  This would mean restricting the use of fair dealing for research, private study, news reporting, criticism, and review (as well as parody and satire, which are also included in C-32).  To take one recent example, the decision to treat song previews as consumer research for fair dealing purposes would be overturned since it involves a commercial use. I fear the call for legislative guidance is not about clarifying the meaning of "education" but rather code for overturning the CCH decision and leaving in its wake a fair dealing provision that may have additional categories, but faces far more restrictions once the fairness test is applied.

Has the U.S. Caved on Secondary Liability in ACTA? Following the ninth round of ACTA negotiations in Lucerne, Switzerland in July, it became apparent (after the updated ACTA leaked) that the U.S. had caved on some of its demands to include DMCA-like anti-circumvention language in ACTA.  The ACTA provisions still go further than the WIPO Internet treaties by mandating the inclusion of provisions to address circumvention devices, but the treaty moved much closer to the EU approach and became more consistent with the WIPO Internet treaty flexibilities. This represented a major shift for the U.S. and was clearly a loss from what it hoped to achieve within ACTA.

With the tenth round of ACTA negotiations now complete, there is no leaked document (yet), but there are rumours that the U.S. has now caved on secondary liability.  If true, this would represent an even bigger setback for the U.S., which included references to a three strikes and you're out approach in the initial drafts of the Internet chapter. Secondary liability has proven consistently problematic, however, since many ACTA countries deal with the issue in different ways. The rumour now is that provision will be very general in nature, leaving considerable flexibility in implementation.

The ACTA partners committed last week to trying to wrap up the negotations when they next meet in Japan late in September.  Having backtracked on many of its key Internet chapter demands, the U.S. is clearly desperate to conclude a deal. The battle over the scope of the treaty remains, however, and that issue is the one that will ultimately determine whether a final text is concluded one month from now.

Estimating the Economic Impact of Google Book Search A new article forthcoming in the prestigious Journal of the Copyright Society of the USA attempts to estimate the economic impact of Google Book Search on the publishing industry.  The study finds no evidence of negative impact and some evidence of a positive impact.

Writers Groups Attack Fair Dealing Reform in Copyright Bill Several writers groups have written to Industry Minister Tony Clement and Canadian Heritage Minister James Moore to criticize elements of Bill C-32.  The letter focuses on the fair dealing exception for education:

From our perspective the biggest weakness in the bill is the addition of the word ‘education’ to the purposes of “fair dealing” without clear legislative guidance on how this amended provision of the Copyright Act will work in conjunction with other, more specific exceptions for education. We think that this new fair dealing provision will result in serious damage to the cultural sector and to Canada’s embryonic knowledge economy and, together with other new exceptions, negatively affect Canada’s professional writers.

The letter adds "we see that without further clarification of some provisions there will be unintended consequences and years of costly litigation."

It is important to emphasize again that this is fear mongering that is simply inaccurate. 


There is no real uncertainty about how the addition of education will work in conjunction other exceptions such as research and private study.  The courts have ruled that the exceptions should be interpreted broadly, so that education - like research and private study - will be broadly defined. 

However, the courts have also ruled that the assessment of fair dealing is a two-part test.  First, does the dealing qualify under one of the categories of the fair dealing?  With the C-32 reform, the few remaining educational activities currently outside of the scope of fair dealing will almost certainly qualify as a potential fair dealings. But that alone is not enough.  The second part of the test is whether the dealing itself is fair.  This involves a fairness inquiry with a six part analysis identified by the courts.  The reforms in C-32 do not affect this part of the test.  This was recently confirmed by the Federal Court of Appeal, which, in discussing C-32, concluded that the education fair dealing reform "serves only to create additional allowable purposes; it does not affect the fairness analysis."

So there is no real uncertainty or likelihood of serious damage here. The reforms will expand the scope of fair dealing categories such that some additional educational uses will qualify for a fairness analysis. The fairness analysis does not change with this bill, however.  It is always possible that there will be litigation on fair dealing - Access Copyright just won a major case on the issue - but the norms will not change with C-32 and there is no reason to believe that the bill will open fair dealing litigation floodgates (unlike the digital lock provisions, which are likely to face a constitutional challenge). 

Opposition to the inclusion of education is therefore based on fears that there are currently educational uses that fall outside the current list of categories that a fairness analysis would determine are fair uses. A balanced copyright approach - not to mention the Supreme Court of Canada - dictate that these uses should not require prior permission or compensation.  If the writers groups are against fairness and balance in copyright, they should say so, rather than trumpeting misleading claims about the effects of the fair dealing reforms.

Postmedia on Access Copyright Tariff Proposal Postmedia covers the mounting concern over the Access Copyright tariff proposal with a story on how the tariff could stifle Internet users and researchers.

Was No Copyright the Real Reason Behind Germany's Industrial Expansion? Many people have written to point to this interesting article in Der Spiegel, which points to a new book that concludes that German's rapid industrial expansion in the 19th century may have been due to the absence of copyright law.