Government Agencies Retaining IP Rights In Violation Of Stated Policy

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A recent report claims that in 2009, 59% of the intellectual property rights in the work product of contractors hired by Canadian government agencies were retained by the agencies themselves. This is a departure from the goals of a government policy dating back to 2000, which states that such rights should remain with contractors.

The Policy on Title to Intellectual Property Arising Under Crown Procurement Contracts states that one of the socio-economic objectives pursued through Crown Procurement Contracts is the stimulation of economic growth through the commercialization of intellectual property. As the private sector is best placed to achieve this goal, the intellectual property rights in the work product (or “foreground”) of contractors should remain with the contractors, unless one of a defined list of exceptions is invoked by the Crown. The job of monitoring compliance with the policy rests with Industry Canada and the Treasury Board Secretariat.

The report entitled, The Evaluation of the Policy on Title to Intellectual Property Arising Under Crown Procurement Contracts, was prepared for Industry Canada by consulting firm, TDV Global, in December of 2010. Relying on data from the Government-Wide Procurement Reporting System, they found that while all departments were aware of the policy, the Crown continued to retain 59% of all relevant intellectual property rights overall. In some departments, this figure reached as high as 90%. The report declined to reach a conclusion on whether these abnormally high rates were “the product of erroneous data, the nature of the work, or a failure to comply with the Policy”. 95 contracts were reviewed as case studies, out of which 12 of were singled out as examples of the misapplication of the exceptions clause. This included “[t]wo contracts that claimed a national security exception when there was no evidence of any national security issue in the contract”. The report also found a lack of documentation detailing why exceptions were considered appropriate in specific cases. The report concludes by suggesting that the roles of Industry Canada and the Treasury Board Secretariat need to be more clearly defined to allow them to better fulfill their monitoring duties and that departments needs to be better educated on the best practices to follow while structuring contracts.

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