Send draft IP enforcement guidelines back to drawing board, says CATAAlliance

The Canadian Advanced Technology Alliance (CATAAlliance) is rallying against proposed new guidelines for intellectual property enforcement, warning that the Competition Bureau’s heavy-handed approach to enforcement will discourage innovation, particularly by smaller companies. The CATAAlliance highlighted its concerns in a June 15 letter to Industry Minister John Manley, saying that the bureau’s draft Intellectual Property Enforcement Guidelines (IPEG) threaten Canadian companies involved in patents, copyrights and trademarks. "CATAAlliance fears that inappropriate application of the Competition Act to intellectual property rights will have a chilling effect on the knowledge-based industries," president John Reid writes in an open letter to Manley. "There is a risk that a misunderstanding by the Bureau of the significance of IP and the dynamics of its role in the new economy will place Canada’s growth at risk. We urge that Industry Canada work closely with the Competition Bureau to ensure that nothing of this nature occurs." The proposed guidelines attempt to identify anti-competitive behaviour that would trigger an investigation and legal action by the Competition Bureau. While intended primarily to discourage dominant companies from exercising undue market power, the CATAAlliance is concerned the guidelines are too far-reaching. For example, companies that develop a technology which is a commercial success could, under the new rules, be forced into open licensing and other business practices if the bureau decides the company enjoys a dominant position. In his letter Reid argues that many "anti-competitive" practices such as exclusive licensing are necessary in order to offset the financial risks involved. "The risk in the exclusive licence question is that the Bureau will penalize success. It will not concern itself about a license to develop and market a new product in a new market. The license will only come to its attention if the owner succeeds. To intervene at that point would have a profound impact on the incentive to perform R&D in Canada." writes Reid. David Paterson, executive director of CATAAlliance, says the bureau doesn’t seem to understand current technologies or business cycles. In an interview with Canadian NEW MEDIA, Paterson also stressed that no companies within Canada have the size or scope to run into the difficulties currently being encountered by Microsoft Corp and the U.S. Department of Justice. "The technology changes so fast. By the time the competition bureau realizes there’s a problem, it’s likely that a major new change is about to take place, and the technology which had been the dominant technology utterly wiped out," says Paterson. "We’re telling them that they need to rethink this very seriously. They don’t have a good grip on it, and they need to back off." The organization also takes exception with the bureau’s attempt in the guidelines to provide hypothetical situations of companies that violate the IP rules, and how the bureau would respond. The examples are all local, and as Paterson points out, most Canadian IT and new media companies export their products. "The new economy is global. People don’t compete in national markets, they compete globally. None of the examples cited by the Competition Bureau has anything to do with what goes on outside Canada. They’re all localized, and they’re irrelevant, solely on that basis. That’s not the way the world works." CATAAlliance hasn’t made specific proposals to the Competition Bureau other than sending the draft guidelines back to the drawing board. Paterson says competition law is a more general legal framework than laws designed to protect the exercise of IP, and that the more specific regulation should guide the Competition Bureau when it is contemplating potential action against a company.

Send draft IP enforcement guidelines back to drawing board, says CATAAlliance

News | 06/28/2000 4:00 am EDT

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