Canada faces IP shortfall in the face of piracy: panel

TORONTO – While Canadian inventors have patented more than one million inventions, the Internet has opened the door to illegal file swapping and the infringement of intellectual property. In Canada, more should be done from educational, legislative and enforcement perspectives, said panelists at a roundtable on IP in the Digital Age held last week.

Software piracy, for example, isn’t just a problem in China or Malaysia. In Canada, there’s a 36 per cent software piracy rate, said Susan Harper, license compliance manager with Microsoft Canada Co. in Mississauga, Ont.

The Centre for Innovation Law and Policy with the University of Toronto’s Faculty of Law is working to improve the quality of policy development and transfer that knowledge into the private sector. Without IP rights, innovators are not able to appropriate the value of their inventions, said Richard Owens, the centre’s executive director. “IP rights allow us to put fences around software,” he said. “The wild card right now is the Internet and the ease of undetected copying.”

But the complexity of IP rights doesn’t help, he added. IP policy reform has actually undermined the message by allowing private copying and a blank media levy. In other words, its sends a mixed message: copying is bad, except in some cases.

For young inventors, the patent process is difficult to comprehend, said Anthony Chiarelli, a 17-year-old high school student from Hamilton, Ont., who has developed a Windows-based solution that allows medical professionals to accurately view medical images on PDAs.

“IP laws are in place for a reason,” he said, adding they don’t just help large companies like Microsoft, but also young inventors like himself. Chiarelli is part of Young Inventors International, a non-profit organization that helps young inventors protect their IP rights.

For software companies, the financial impact can be severe. Autodesk is a software and services company with seven million users around the world. “The sad thing is, of those seven million users, for every seat we sell there are five seats that are pirated,” said Rob Hoffmann, product marketing manager with Autodesk in Ottawa.

“We produce a tremendous amount of IP every year,” he said, adding the company earns $1 billion in annual revenues. So what is the impact? Less money means it’s unable to hire additional developers to continue to make enhancements to the software. “It has a much broader impact than just the company,” he added. It also means there’s less tax revenue being generated and less trade taking place internationally.

Upside Software, a company that creates contract management software, has the same problem. Some 35 per cent of its revenues are spent on R&D, so if revenues go down due to pirating, the company has less to spend on it, said Ashif Mawji, president and CEO of Upside Software in Edmonton.

“There’s a direct impact,” he said. “If you don’t support the company, they don’t get the full revenue potential – think about the tax impact.” It also means the cost of piracy is factored into product pricing. If everyone paid for songs off the Internet, for example, competitive pressure would force prices down (from say, 99 cents a song to 25 cents).

Instances of piracy discourage local investment, said Owens, and prevent the developing world from exporting products – in essence, it keeps poor people poor.

While there are court-based remedies to IP infringement, it takes a phenomenal amount of time and money to exercise your rights in the courts, he said. And the penalties aren’t severe enough, added Mawji. Jail sentences would help bring the message home.

Autodesk is working with the Business Software Alliance to crack down on piracy, including measures such as auditing and taking legal action.

Where we see the greatest gains from R&D is in the U.S., said Owens, where IP laws are the toughest in the world. “Let’s at least keep it up to date (in Canada),” he said, adding that we should be able to update IP laws as the need arises. “We’re not doing a very good job at that.”


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