May 28, 1935

CON

Robert Charles Matthews (Minister of National Revenue)

Conservative (1867-1942)

Hon. R. C. MATTHEWS (Minister of National Revenue):

The hon. member asked

a similar quf stion last year-

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LIB
CON

Robert Charles Matthews (Minister of National Revenue)

Conservative (1867-1942)

Mr. MATTHEWS:

-and I inquired at the time and found that neither the department of National Revenue nor any of its officers issued any instructions whatever to the mounted police in regard to the matter to which the hon. member referred. While I have no information at the moment, I am sure the same situation exists now.

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WEIGHTS AND MEASURES ACT

CON

Richard Burpee Hanson (Minister of Trade and Commerce)

Conservative (1867-1942)

Hon. R. B. HANSON (Minister of Trade and Commerce) moved:

That the order of the house for second reading of Bill No. 46 to amend the Weights and Measures Act be discharged and the said bill withdrawn.

He said: I do this on the ground that the subject matter of this bill is included in Bill

No. 70, to amend the Weights and Measures Act.

Motion agreed to and bill withdrawn.

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PATENTS OF INVENTION


Hon. C. H. CAHAN (Secretary of State) moved the second reading of Bill No. 48, to amend and consolidate the acts relating to patents of invention.


LIB

Louis Édouard Fernand Rinfret

Liberal

Hon. FERNAND RINFRET (St. James):

Before second reading carries I want to say a few words. I might perhaps have avoided

Patents of Invention-Mr. Itinjret

doing it, as I was going to suggest that the discussion should take place when the bill is in committee. This bill was introduced in the Senate and received full consideration in the higher chamber. It was also before a special committee there, several witnesses were heard, and I think the bill comes to us in pretty good shape generally. I take this occasion to commend the practice by any government of introducing bills of this nature in the higher chamber, where work is less congested, because when such a measure comes to us a certain amount of consideration has been given to it, and that is for the good of both chambers. I may say further that the Patent Act is one which is always under consideration by a certain portion of the public, many amendments are sought from the department and the minister every year. When I was in charge of that department, on several occasions associations as well as individuals came to the department to secure extensive amendments to the act or to suggesting consolidation. Therefore if any principle is involved in this second reading, reserving any opinion as to the different sections of the bill, I favour this consolidation, with the hope that when adopted the measure may stand for several years without requiring further change. I think it might have been an advantage for this house to have had this bill considered in a special committee, but everyone will understand that at this late stage of the session that would not be feasible. In the hope that the house may be able to dispose of this measure in an expeditious way in committee of the whole I will not say anything further at present. I think we can well deal with the questions as they arise from section to section.

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CON

Henry Herbert Stevens

Conservative (1867-1942)

Hon. H. H. STEVENS (East Kootenay):

I do not rise in any spirit of criticism of this bill, but there is a matter which I understand is not dealt with in it, and as there would be no clause under which the matter could be brought up in the committee stage as far as I know, I would like to lay before the government one phase in connection with patents which I trust might be considered when the bill is before the committee. I refer to the practice of concerns in Canada, and I think the same practice is followed in other countries, of taking advantage of the Patent Act for the enhancement of the price of goods, to a degree perhaps unwarranted in the circumstances. I may illustrate the point by incidents which came to my attention some months ago and which were brought to the attention of the official in charge of the act at that time. These had to do with electric light bulbs. I want it clearly understood that I am not

bringing this matter forward at the present time merely to mention this incident, but it illustrates the point to which I wish to refer.

Electric light bulbs are manufactured in Canada under patents held by certain companies. They are sold, in the case of a one hundred watt bulb, at around 55 or 60 cents each. Dealers in this class of goods assert that they can buy the same general type of bulbs which have paid all the patent royalties and observed all the provisions of the law in the United States or in Holland, pay a duty of some thirty or forty per cent and sell them in Canada at from twenty-eight to thirty-five cents retail. I should complete the statement by saying that after observing the patent laws of the country where they were produced and paying the duty charged by the Canadian customs authorities and so on, when they sought to enter these bulbs through the customs, after an appeal to certain sections of the Patent Act, they were not permitted to import them into Canada because the patent rights in this country had been reserved.

The point at issue there is simply this: Under the international agreement regarding patents and trade marks, if a certain article has been manufactured in a foreign country, with all the provisions of the patent law of that country being observed, it ought not to be an offence to bring that article into Canada providing a reasonable protection is given through customs duties if that happens to be the government policy at the time. Having observed all the regulations in the country of manufacture and having paid the duty I submit it ought to be possible to import those articles into Canada. Under the law as it now stands, however, that cannot be done and in this particular instance the Patent Act serves really as a duty of about eighty per cent in addition to the twenty-five or thirty-five per cent charged under the customs laws.

My submission is that the Patent Act never should be used or permitted to be used as a supplementary customs duty or protection. I think that should be made clear. I should like to state also that in drawing this matter to the attention of parliament I only do so because now the act is in a major state of revision before the house. I am not criticising any government, past or present, in regard to the matter; I am bringing to the attention of the house a situation that has developed and been disclosed, so far as I am concerned, only during the past year. I have a good deal of information on the matter before me, and I should like to read briefly from a reference with regard to an investigation made by the federal trade commission of the United States, who in 1928 conducted an inquiry into the

Patents oj Invention-Mr. Stevens

question of electrical equipment and competitive conditions of the electric power industry. They found the electrical industry to be dominated if not controlled by an international group of electrical manufacturers, each member of which is the most powerful in its respective community. The members of this international organization exchange .patent rights, manufacturing processes and other trade secrets. This exchange is characterized by a division of territory, and I should like to direct particular attention to this:

This exchange is characterized by a division of territory, each company granting to the other exclusive rights in specified countries, described as exclusive territory; or nonexclusive rights in other countries described as non-exclusive territory, and reserving all rights in still other countries described as excluded territory. Such agreements practically eliminate any competition of a serious nature. For example, in the case of light bulbs, in so far as Canada is concerned no independent manufacturer can either manufacture or sell in Canada without being liable for suit for lrnringement of patents which are owned by the larger organization-represented in Canada by the Canadian General Electric Company Limited, and Canadian Westinghouse Company Limited. These two firms as members of the international group have been "given" a Canadian market, and by the mere threat of suit are usually successful in disposing of any likely competitor.

That statement was made in 1928 by the federal trade commission of the United States, so I am told, but the facts are slightly different to-day. I understand, though I am speaking subject to correction, that there are now five companies in Canada, but the other companies have been added only by licence of the older or larger companies, and all these are represented by one concern. When certain dealers brought in or attempted to bring in bulbs from foreign countries, in one case Holland and in two or three other cases the United States, this one concern brought suit against the importers, secured injunctions and subjected them to a great deal of loss and inconvenience.

I would have no criticism of these companies in protecting their patent rights in Canada providing they sold their goods to the public at a reasonable and fair rate. I am quite aware of the answer that may be made; I have not had time to look up the section of the act but I am quite aware that it does provide that the commissioner of patents, I believe under the instructions of the minister, may interfere, and I think he has power actually to fix prices where he has reason to believe that abuses have occurred. In practice however, this does not happen; as a matter of practice I doubt if there is any great interference.

There is another feature which I think ought to be taken into consideration in dealing with this matter. I had under my hand, and I sent forward to the proper official in the proper department, a long list of patents affecting these articles held by these companies; if I remember correctly the list included several hundred patents, or we will say in the neighbourhood of over one hundred; the exact number I have not in mind or under my hand. The question arises as to how many of these patents, frequently bought up and controlled by the larger corporations, are ever put into actual operation. Here again I quite admit that there is an answer. The answer is that if they are not put into operation within eighteen months or some certain limited period of time the commissioner may declare them open, but again that does not work in practice. The situation is quite obvious. A man perfects an invention and, if it is good, immediately it is sought after and secured if possible by one of the large corporations. They are strong and wealthy, if the new invention affects some invention they are already manufacturing in large quantities they can easily afford to pay a very large sum, comparatively speaking, for the invention. The individual is satisfied; he is paid off, and the patent now belongs to the large corporation. It is pigeon-holed and the chances are that no one in the country has any knowledge of it, except those in the patent office, but the patent commissioner is not there for the purpose of checking up to see whether or not patents are used. Unless someone brings the matter to the attention of the patent commissioner there is little likelihood of any action being taken. Here again I submit that in this general revision the act ought to be so changed that where patents have been issued some body, some official or some official body should be clothed with the authority, to follow up those patents to see whether or not they are used, and if they are not used for the benefit of the general public some explanation ought to be forthcoming as to why they are not used. I am convinced from quite a lot of thought and investigation I carried on in connection with the subject some six or eight months ago that there is a large number of patents particularly electrical patents and others in other lines of industry resting in the archives of many corporations which would be useful to the public, which ought to be put into operation and use, but which are not used because they conflict with some general and practical object now being manufactured in large quantities.

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?

John William Bell

Mr. BOTH WELL:

May I ask a question?

Patents of Invention

Mr. Stevens

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CON
LIB

Charles Edward Bothwell

Liberal

Mr. BOTHWELL:

I should like to ask the hon. -member if the difficulty might not be solved by giving newspaper notoriety to patents after the time has expired within *which they are protected.

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CON

Henry Herbert Stevens

Conservative (1867-1942)

Mr. STEVENS:

That is quite true, but it is not the point about which I am speaking. I am refering to patents which have not been used either before or after the expiry date. There is no doulbt about it however that publicity would do much to cure the difficulty, and I shall have a suggestion to make in that respect.

In the price spreads report reference has been made to placing the administration of the commercial side of the Patent Act-not necessarily the legal side, because there are -two sides, legal and commercial

under a body such as is recommended, namely the -trade and industry commission. In any case there ought to be an official body of some kind or a business department responsible for the administration of the commercial side of the patent law, so that they could keep track of and check on- patents which have been issued, ascertain to what extent they are being used or pigeon-holed as the case may be, or to what extent the holders of a patent right are abusing that privilege in the manner I have mentioned, namely, by virtually turning it into a secon-dary customs protection.

These are two matters to which I should like to draw the attention of the house, and I feel that unless it is done in this revision there is not much hope of having any remedial action taken for a great many years. It is true that the commissioner of patents may order the patentee- to supply the patented article within reasonable limits at such price as may be fixed by him and in accordance with the trade. It may be answered this afternoon that that provision in the act takes care of the situation. I submit that in the first place the practice demonstrates it is not done and in the second- place I submit that under the present method of administration of the act the patent commissioner is so engrossed with his other duties and with, shall I say, the vision of his duties which has grown up through the years that this feature of it is practically ignored or neglected, not with intent but simply as a matter of form and practice.

That is why I suggest that the matter should be considered seriously because I am convinced of this, namely, that in this one instance alone, the manufacture and sale in Canada of electric -light bulbs, the public

are paying a price which I would say is at *least 30 per cent or 40 per cent above that which they ought to pay for this class of goods. If it is true in this instance it may be true in a great many other instances. As a matter of fact I have not any doubt that it is true in other instances and therefore I suggest that -before this measure leaves the committee stage of the house some provision should -be made for an adequate protection of the consumer in regard to this matter. I again suggest to the government that they consider the placing of the administration of the commercial features of the act under some business organization or body, official or board whose duty it shall be to check on these commercial sides or features of the patent laws of the country.

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CON

Charles Hazlitt Cahan (Secretary of State of Canada)

Conservative (1867-1942)

Mr. CAHAN:

Mr. Speaker, this bill-

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UFA

George Gibson Coote

United Farmers of Alberta

Mr. COOTE:

Will the minister not close the debate if he speaks?

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CON

Charles Hazlitt Cahan (Secretary of State of Canada)

Conservative (1867-1942)

Mr. CAHAN:

I have not opened it yet; I have not had the opportunity.

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CON
UFA

Edward Joseph Garland

United Farmers of Alberta

Mr. GARLAND (Bow River):

I rise to a point of order. Does not the minister on the actual motion open the debate, and therefore is he not out of order in speaking at this time unless it is agreed that by his speech he closes the debate? He has already spoken.

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CON

Charles Hazlitt Cahan (Secretary of State of Canada)

Conservative (1867-1942)

Mr. CAHAN:

I have no objection to the point of order standing. When the bill was called I rose in my place to make a preliminary introduction, but another hon. member caught the eye of the Speaker and proceeded. I suggest however that this debate on the details of the bill might better take place when we are discussing the separate sections.

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UFA

George Gibson Coote

United Farmers of Alberta

Mr. COOTE:

I do not wish to interrupt the minister nor do I raise a point of order, but I am simply trying to protect my right to speak. So far as I am personally concerned I should be very glad to have the minister make any statement in connection with the bill which he desires to make. Certainly I do not wish to interfere with that right.

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May 28, 1935