May 28, 1935

CON

Hugh Guthrie (Minister of Justice and Attorney General of Canada)

Conservative (1867-1942)

Mr. GUTHRIE:

Go ahead.

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CON
UFA

George Gibson Coote

United Farmers of Alberta

Mr. G. G. COOTE (Macleod):

Mr. Speaker, I am much impressed by the number of persons who have come to me during the last two or three years with representations regarding patents, and when the patent measure was introduced by the minister I wrote him and suggested that it would be in the best interests of the House of Commons

Patents of Invention-Mr. Coote

and all people concerned if the bill were sent to a select or special committee of this chamber. However that was not done. This measure was sent to the Senate, and I believe it has been considered by a committee of that chamber. There are one or two points however which I should like to bring to the attention of the house before the bill receives second reading.

I have been much impressed by the statements made by the hon. member for East Kootenay (Mr. Stevens) who has just taken his seat. I should like to impress upon the house that the people generally have an interest in most patents granted to-day. A great many patents, and particularly in industries such as the electrical industry, are the result of work of scientists and engineers employed by the electrical companies. Practically all of these men have received their training or education in some university which is at least in part kept up by the state. When these men secure employment in large corporations I believe they must sign agreements to the effect that the benefits of any inventions or discoveries they may make must go to the corporations employing them. If these men have been educated at least in part at the expense of the public it does not seem fair that the results of their discoveries should benefit commercial enterprises, or that the benefits arising from their discoveries should go to corporations. The public have an interest in all inventions which arise as a result of their labours. I believe the best way to deal with the matter would be to set up a board with power to determine the royalty which would be paid for the use of any patent, and to decide to whom the royalties should be paid'-whether to some corporation, an individual or to be divided and allow anyone to manufacture the article on payment of royalty. I have been convinced by representations made to me at different times that the public are paying a tremendous price for some of the patented articles that are in common use throughout the country and that the Patent Act is one of the corner stones of monopoly in Canada. About a year ago I had brought to my attention a certain type of grain cleaner used in western' Canada. In many instances this apparatus is installed on grain separators, the grain going through it as it comes through the threshing machine. The cost of the cleaner installed on the grain separator ranges from $420 to $460. I never heard of it being sold for less than $420. The implement agent in Calgary who told me about this said that he had taken the trouble to inquire what it would cost to have one of

these machines manufactured and installed on the separator, and he assured me that if it were not for the patent right interfering, this machine could be made and placed on the separator at a price which would enable him to sell it to the farmer at approximately $200. Let us assume that a royalty of $20 was paid to the inventor of that grain separator, and surely that would be considered sufficient for him. Then the invention would be available to the farmers at a cost of approximately $220, which is about fifty per cent of the price we are forced to pay to-day. It may be possible to overcome some of these things through administration by the methods suggested by the hon. member for East Kootenay, but it is the duty of this house I think to see that if possible some change is made in the act itself or in its administration so that these things will be available to the people at a price which we can afford to pay and which will also allow ample remuneration to the inventor himself.

As I said a moment ago the present Patent Act is one of the cornerstones of monopoly, and I think we are all agreed here that monopoly makes possible tremendous over-capitalization. Monopoly deprives the people of the beneficial effects of many inventions. Radio is an outstanding example. It would seem to me that any future invention for the improvement of radio would be useless to anybody except those who hold the patents under which the present radios have been built. So any inventor who perfects some improved process in regard to radio and patents it, is at the mercy of the radio holding trust. I do not know whether I am giving it the right name, but I am told that there is a holding company which holds these patents for the large corporations. If we were to change the act in the manner I have suggested so that anyone who was willing to pay a royalty to be determined by a government board might make use of any invention, I think that would go a long way towards decentralizing some of the big monopolies, and the decentralization of industry is something that is so desirable to-day.

I do hope that before the act is allowed to receive its third reading careful consideration will be given to the proposal which I have made to set up a board to fix a royalty on patents, after which any person who is willing to pay that royalty may make use of the patent. That would allow the public to get the benefit of many of these inventions which to-day are possibly being withheld from us, either actually withheld through misuse,

Patents of Invention-Mr. Bothwell

or withheld because of the exorbitant price which is asked for them. There are one or two other objectionable features of the present Patent Act which I think ought to be changed, but I have emphasized the point which I think should be stressed at this moment on the second reading of the bill.

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LIB

Charles Edward Bothwell

Liberal

Mr. C. E. BOTHWELL (Swift Current):

Mr. Speaker,. I have just one word to add to the question which I asked the hon. member for East Kootenay (Mr. Stevens). It does seem to me that a lot of our difficulties in connection with patents granted could be overcome if something in the nature of a publication were got out by the commissioner of patents showing when the time for manufacturing a patented article in Canada had expired. It has been generally stated that patents are pigeonholed, and as has been explained by the hon. member for East Kootenay, nobody has any particular knowledge of these patents. But if the commissioner of patents were compelled to give public notification either in the Canada Gazette or some other publication of the patents that had been granted and had not been made use of, it seems to me that a lot of the difficulty would be solved without the necessity of setting up any board.

There is also the other question of patents being held and being made use of to build up a monopolistic trade. I am not so sure that that could not also be overcome through the commissioner of patents by publication, and without the necessity of creating any extra board or setting up any committee or some business organization or body, giving the public an idea of what patents are in existence and which they may find an opportunity of making use of. Then the opportunity for competition will be given.

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CON

Charles Hazlitt Cahan (Secretary of State of Canada)

Conservative (1867-1942)

Hon. C. H. CAHAN (Secretary of State):

Mr. Speaker, this patent bill was introduced by me to this house in January of this year, and I then made some explanation of the nature and purpose of the amendments suggested in the bill. It really was one advance step in the matter of legislation relating to the Department of the Secretary of State. In August, 1930, when I assumed that office I found in the administration of that department that its effective operation was restricted somewhat by the legislation then in force, and experience from week to week and month to month suggested to me certain amendments.

In the session of 1931 I introduced amendments to the Copyright Amendment Act to comply with the obligations that Canada had

assumed under the Rome convention of 1928 to which Canada had adhered, and to provide for effective means of investigating and restricting the royalties, fees and charges of those companies and associations which controlled performing rights in music. In the same session I introduced to this house an act to amend the Naturalization Act, to protect Canadian women who married aliens and who did not thereby acquire the nationality of their husbands. That act as passed by this house was subsequently accepted by the imperial parliament, which made amendments to its own naturalization act in conformity with the amendments made by this parliament.

In the session of 1932 I prepared and submitted to this parliament bills to amend the Boards of Trade Act and also to amend the Patent Act; a bill respecting the civil service of Canada, and a very important bill indeed entitled An Act Respecting Unfair Competition in Trade and Commerce, which was to carry into effect a certain convention which had been entered into at The Hague by the previous government, and with respect to which that government had not, previous to going out of office owing to dissolution of parliament, been able to promote confirmatory legislation.

In the session of 1933 I prepared and introduced a very important bill, An Act to facilitate compromises and arrangements between companies and their creditors, the validity of which was questioned by one or more of the provinces, but which was subsequently upheld by the unanimous decision of the Supreme Court of Canada.

In 1934 I prepared and submitted to this house three very important measures relating to the Department of the Secretary of State: one, an act to amend the Oaths of Allegiance Act, which passed this house unanimously, although similar legislation was the subject of very acrimonious debate in two of our sister dominions; also an act to provide for a Bureau of Translations, with respect to which there were differences of opinion in this house; and also an act respecting dominion companies, which involved the redrafting of dominion company legislation to give better protection to the public and to insure the more prudent administration of the business affairs of these companies. And then came this last measure dealing with patents. In order to secure an improvement in the legislation with regard to patents, in the early years of this administration I asked a certain committee to organize and sit under the chairmanship of the senior judge of the Exchequer Court of Canada, and that committee advanced very admirable sug-

Patents of Invention-Mr. Cahan

gestions. It was however unable to come to an agreement as to whether in the improvements in our patent law we should follow the American legislation or should follow what many believed to be the best patent legislation existing, that is, the patent act of the United Kingdom.

In this bill many of the difficulties which arose in the administration of the Patent Act now in existence have I think been entirely overcome. It is true, as suggested by the hon. member for East Kootenay (Mr. Stevens), that the establishment of a patent monopoly in Canada by any patentee has hitherto enabled that patentee to maintain his monopoly, although reasonable efforts were not made for the effective working of the patent in Canada, that is, for the effective manufacture and sale in Canada at reasonable prices of the patented article. I found in the administration of that act, as suggested, that a foreign patentee who, under the international convention to which we are parties, has a right to apply within one year for a patent in Canada, has frequently obtained the patent in Canada without proceeding to the effective manufacture here under that patent, but he has in times past appointed an agent in Canada whose chief duty it was to conserve the monopoly rights in Canada of the foreign patentee, with the result that, although manufacture was not undertaken in Canada, the agent in Canada of such patentee was able to keep fully advised as to the importations of articles which infringed the Canadian monopoly and by exacting payment of a royalty in Canada, which was not regulated, was enabled to maintain in Canada very high prices for the articles manufactured abroad by the foreign patentee.

When this bill was introduced it contained some very stringent proposals to overcome these difficulties. Owing to the press of work here and the lack of legislative work in another branch of parliament, the bill was dropped here and introduced in the Senate. It was then brought before the Senate committee on banking and commerce. I attended that committee in order to watch its proceedings from day to day and week to week, and I do not think that in recent years in parliament any committee has ever shown the same active interest in a bill as was shown by that committee of the Senate. Day after day and week after week witnesses from all parts of Canada appeared before that committee and gave evidence with regard to the alleged evils which bad arisen by reason of the lack of certain improvements which were proposed in the bill. Finally, after several weeks, the bill

[Mr. Cahao.3

passed the committee of the Senate and the Senate, and is now before this house for second reading.

I do not intend at this stage to enter upon a discussion of particular sections of the bill. One difficulty I found in the administration of the act was that, except by the appointment of a royal commission under the Inquiries Act, there was no way by which the Secretary of State, or the patent commissioner, who was acting as the head of this branch of the Department of the Secretary of State, could ascertain definitely whether a certain patent was really being actively worked in Canada, that is, that the patented articles were being manufactured in Canada and sold at reasonable prices and under reasonable conditions. The result was that we introduced a new section which is found in this bill, that is, section 64, whereby the commissioner may at any time apply to any patentee for a return showing whether the patented invention is being worked on a commercial scale in Canada, the place where worked, the name and address of the person by whom the patent is being so worked, and the reasons, if any, why such patented invention is not being worked in Canada. And the failure to make complete answer to such a request is an admission by the patentee that the patented invention is not being worked. But that was not deemed quite sufficient, and so we proceeded with section 65, which is an entirely new section; and we there provided for certain compulsory licences in case of abuse, and also section 66, which is entirely new to our legislation, and which is a verbal reproduction of the English act, has been incorporated in this bill. And under these provisions I suggest that the evils, at least so far as they can be controlled by legislation, are being controlled in this act. I think an opportunity should be given to the department to ascertain whether it may not be effectively administered so as to obviate the evils which have been mentioned and some of which undoubtedly exist. I say personally, having been in that office now for five years, that so far as effective administration goes, an effective administration has been given under the several statutes then in force, and so far as an intelligent effort could be made to introduce remedial measures, to make the administration of the several acts more effective, those remedial measures have, as I have already suggested, been brought before the house. _

This measure is I think the culmination of such efforts as I have been able to make to secure satisfactory legislation under which that branch of the department of the department of the Secretary of State could be effectively

Patents of Invention

administered. I believe this legislation, if enacted, will remedy the objections which some hon. gentlemen have made, and I trust the house in its wisdom will adopt this bill in almost its entirety so as to see if it can be so administered as to maintain intact our obligations under the international conventions to which we are parties, so as to preserve intact the reasonable rights of patentees, and so as to conserve effectively the public interest as to both the production or manufacture in Canada and the sale at reasonable prices in Canada of the patented article. I can assure the house that neither this nor any other measure which I have introduced has been introduced with any partisan purpose whatever. I have endeavoured to give the subject the most intelligent consideration that was possible for me, and also to give in the meantime as effective an administration of existing acts as it was possible to give.

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Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Morand in the chair. Sections 1 to 3 inclusive agreed to. On section 4-Commissioner of Patents.


CON

Charles Hazlitt Cahan (Secretary of State of Canada)

Conservative (1867-1942)

Mr. CAHAN:

It will be seen that in the redrafting for the printer there has been an obvious mistake. Clause 4 now reads:

The governor in council may appoint a commissioner of patents who may and shall, under the minister-

I think the words " may and shall " should not both be included and I propose that the same words should be used as are applied to the same commissioner in the Copyright Act, the Trade Marks Act and other acts which the same commissioner is to administer. I would ask my colleague the Minister of National Revenue to move the following amendment:

That in section 4, in the second line of subsection 1, the two words "may and" be struck out; and that after the word "under" in the same line, the words "the direction of" be inserted.

The clause will then read:

Who shall, under the direction of the minister.

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CON

Robert Charles Matthews (Minister of National Revenue)

Conservative (1867-1942)

Mr. MATTHEWS:

I move accordingly.

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LIB

Louis Édouard Fernand Rinfret

Liberal

Mr. RINFRET:

I have no objection to the amendment, but I want to say a word about the clause. By this clause the governor in council is entrusted with the appointment of the commissioner of patents. I may not be expressing the opinion of some hon. gentlemen who surround me, but personally I am not against the appointment of the commissioner of patents by the governor 92582-197}

in council. Under my administration I was called upon myself to recommend the appointment of a commissioner of patents and copyright, the late Mr. Richard. I do not recollect exactly how that took place, although

1 am under the impression that the civil service commission waived their right or privilege to appoint a commissioner and informed the government of that day they would accept its own appointee. I looked up the statute and found that the commissioner of patents is not included in the list of deputies or deputy heads contained in section

2 paragraph (c) of the Civil Service Act. The commissioner of patents is not a deputy or deputy head and therefore by the Civil Service Act the appointment of that commissioner is left to the civil service commission. In practice though, I have just mentioned a case where the civil service commission was content with the government naming their own appointee. The stand I take to-day is this: I think the governor in council should appoint the commissioner of patents; I think he is an important enough civil service official that his appointment should be made by the governor in council. I understand the matter cannot be remedied in this bill, but instead of having special provision to give the government the right to appoint the commissioner of patents, I would have preferred if he had been made a deputy head under the Civil Service Act. I consider the commissioner of patents and copyright is an important enough official that he should be considered a deputy head. It may be asked why I did not have this brought about when I was Secretary of State. My only reply is that I tried to do it and probably, if the Liberal administration had lasted five years as this government has done, we might have done it. But it is my personal opinion that the commissioner of patents should be a deputy head and therefore his appointment by the government should be a matter of formality under the Civil Service Act. However inasmuch as that has not been done, for the time being I may say-and I am giving only my personal opinion-I quite agree that the commissioner should be appointed by the government and not by the civil service commission.

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CON

Charles Hazlitt Cahan (Secretary of State of Canada)

Conservative (1867-1942)

Mr. CAHAN:

I quite agree with the hon. gentleman. I might remind him that he did attempt to make the commissioner of patents deputy head, but I found on the file that his colleague the then Minister of Justice had reported that that attempt was ultra vires. So I was forced by the opinion given by the Minister of Justice of that day to take a different attitude. This provision I think

Patents of Invention

will remove all doubts as to the right of appointment. But as to whether or not he shall be deputy head will depend upon an amendment to another act which is not now before the house.

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Amendment agreed to. Section as amended agreed to. Sections 5 and 6 agreed to. On section 7-Staff.


LIB

James Layton Ralston

Liberal

Mr. RALSTON:

I see that the staff is to be appointed according to law. Is there any special provision in regard to this staff other than appointment by the civil service commission?

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CON

Charles Hazlitt Cahan (Secretary of State of Canada)

Conservative (1867-1942)

Mr. CAHAN:

It is appointed by the civil service commission. But under the previous act the work was so increased that the government of which my hon. friend was a member, and their predecessors had to resort to orders in council in order to provide examiners and associate examiners in these classes, so I thought it better, as we have all these classes in the service, that the statute should definitely state that these shall be appointed. They are appointed, each and every one, by the civil service commission. The civil service commission acquiesced in the terms of this section for clarity only.

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Section agreed to. Sections 8 to 14 inclusive agreed to. On section 15-Register of attorneys.


UFA

Henry Elvins Spencer

United Farmers of Alberta

Mr. SPENCER:

Is there any regulation

of fees or any limit to the fees allowed to patent attorneys?

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CON

Charles Hazlitt Cahan (Secretary of State of Canada)

Conservative (1867-1942)

Mr. CAHAN:

There are no prescribed fees in regard to patent attorneys at present. The matter has so far been dealt with by clause 16 which provides that:

For gross misconduct or any other cause which he may deem sufficient, the commissioner may refuse to recognize any person as a patent agent or attorney either generally or in any particular case.

If any undue fees were charged and a complaint were made certainly it would be dealt with.

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UFA

George Gibson Coote

United Farmers of Alberta

Mr. COOTE:

Is there any provision for

bonding patent attorneys, or was any consideration given that when the bill was before the Senate committee? I remember a few years ago a man coming to Ottawa from western Canada telling me of having paid several hundred dollars to a patent attorney in Ottawa, even paying him for registering the patent in the United States, and he finally found that the attorney was misusing

his funds and had not registered his patent at all. I wondered whether any consideration was given by the minister in drafting the bill or by the Senate committee to -the question of bonding patent attorneys for the protection of their clients.

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CON

Charles Hazlitt Cahan (Secretary of State of Canada)

Conservative (1867-1942)

Mr. CAHAN:

The only case of that kind which has come to my attention was a case where a fee was sent to a certain patent attorney in Ottawa and the letter was mislaid and the fee was not credited until after the complaint was made to the department. When the department took it up and evidence was produced that the fee had been mailed, a complete search was made by the attorney and by his private secretary, and it was found that that letter had been accidentally mislaid. But outside of that no complaint has been -made to me of malfeasance on the part of any attorneys in Ottawa practising before the patent office.

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UFA

George Gibson Coote

United Farmers of Alberta

Mr. COOTE:

In one case a man was in our office upstairs, and there did not seem to be any doubt of the fact that his money had been- taken by a patent attorney and had been misused. I think that was admitted at the time, which was a few years ago. I wondered whether it would not be possible to require all registered patent attorneys to be bonded for a reasonable amount. It would not be a very expensive matter for them, and certainly if many cases like the one I heard of have occurred some protection should be afforded to the public in that way.

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CON

Charles Hazlitt Cahan (Secretary of State of Canada)

Conservative (1867-1942)

Mr. CAHAN:

If the hon. gentleman had brought such a case to the notice of the department during my regime I am sure we would have looked into it and obtained restitution of any fees improperly applied. I do not think it is necessary to go to the extent of bonding patent attorneys in Ottawa. The administration of the department is honest. In any cases which may arise the governor in council and the minister have ample authority to deal with any abuses.

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May 28, 1935