Agriculture and Agri-Food Canada Intellectual Property Procedures (6 of 16)

Enforcement of Intellectual Property Rights

AAFC will be diligent in the management of its IP and enforce its rights when there is unauthorized use of AAFC IP. Management and enforcement, depending on the circumstances, may include:

• ensuring sound and diligent management and ongoing protection of AAFC's IP;
  
  
• securing the integrity of the IP, or preventing the loss of IP rights through diligent and prompt legal action against infringements;
  
  
• prosecuting infringement actions and securing a judgment for damages or for an accounting of profits;
  
  
• protecting AAFC's revenue from licenses by seeking court orders/ injunctions requesting the removal of unlicensed infringing products from the market that diminish sales of licensed products;
  
  
• assisting in protecting the markets of licensees by seeking court orders/ injunctions requesting the removal of unlicensed competition as a matter of fairness to licensees who obey the law and pay for their licenses;
  
  
• seeking court orders/injunctions to deter flagrant violations of IP;
  
  
• demonstrating to the public a determination to validate and exercise AAFC's IP rights;
  
  
• developing and executing a Licensee Audit Plan to assure that licensees are fulfilling their contractual obligations.

Strategy for Containing Patent Costs

Every decision associated with patenting that will result in a cost to AAFC must be reviewed and the business case evaluated. Industry partners must be identified and must agree to fund patent applications before they reach national phase entry (30 months from initial filing). AAFC will fund the drafting of the patent, the initial filing, and the Patent Convention Treaty (PCT) application - totaling approximately $20K.

The following principles will apply:

• Recovery of AAFC filing costs is a condition of all commercial licensees.
  
  
• No requests for re-examination at the United States Patent Office (USPTO) or other patent offices without an industry partner willing to cover allcosts.
  
  
• Deal with office actions in a timely manner, thereby not incurring extension fees.
  
  
• Patent agents must not incur costs without written AAFC approval. All actions must be approved by a delegated authority.
  
  
• US provisionals provide one year to identify industry licensee and investigate the business opportunity.
  
  
• Monitor the patent claims closely and abandon if the examination process is unfavorable.
  
  
• Regularly re-evaluate the business case for each technology.

Process for Deregistration of Varieties

Once a variety is no longer licensed, it should be deregistered in a timely and orderly fashion. The license may come to the end of its term or AAFC-OIPC may receive a written (formal) notice from the Licensee requesting termination of variety license.

It is essential to determine if the license was sole or non-exclusive, and whether the variety may have another licensee in a different territory. If the variety is licensed separately in another territory, that licensee should be consulted in the event there is an interest in taking on the territory that is being relinquished.

The following steps should be undertaken prior to deregistering a variety:

• verify receipt of outstanding royalty payments;
  
  
• determine how the variety fits into the marketplace. i.e. Has it been replaced by another variety? Is the termination a result of a poor revenue stream or an issue with the variety i.e. disease susceptibility;
  
  
• did the variety have Plant Breeders Rights (PBR)? Was the variety registered through Canadian Food Inspection Agency (CFIA-VRO) or Canadian Seed Growers Association (CSGA).
  
  
• consult the breeder about deregistration;
  
  
• summarize the situation and seek approval from the Director, OIPC to proceed with license termination.
  
  
• If the Director, OIPC approves termination then:
  
  
• Write a formal acknowledgement to the company.
  
  
• Notify CGSGA, Canadian Seed Trade Association (CSTA) about intension to deregister the variety. The license may end but deregistration could take a year.
  
  
• Determine if the company has met the termination requirements i.e. detailed statement of inventory, method of disposal of seed inventory, termination of sub-licensees.
  
  
• As required, work with the breeder for formal deregistration of the variety through the appropriate recommending committee.

Dispute Resolution

AAFC will make reasonable efforts to reach an amicable, negotiated settlement of any dispute concerning the interpretation of AAFC IP Policy, or application or operation of an agreement or contract. If settlement is difficult to achieve, the parties will seek settlement through mediation or arbitration, according to the procedures outlined in the Commercial Arbitration Act of Canada.

In its desire to secure and protect its IP assets, AAFC may need to resort to litigation. All such matters will be referred to AAFC Legal Services (Department of Justice). Decisions regarding litigation will be made on a case-by-case basis in consultation with Legal Services. In a case where AAFC finds itself named a defendant in litigation, the matter must be referred to AAFC Legal Services.

Conflict of Interest/Science Ethics

It is the policy of the government of Canada to minimize the possibility of conflicts between the private interests and the Public Service duties of employees, and to resolve any such conflicts in the public interest. Employees must take measures to prevent real, potential, or apparent conflicts in accordance with the principles of conduct and measures in the Values and Ethics Code for the Public Service.

All AAFC staff must conform to the requirements of the Values and Ethics Code for the Public Service and to AAFC's Science Ethics. AAFC staff will ensure that their activities are conducted in support of the departmental objective of maximum benefit to Canada and Canadians, and not in support of personal interests or the interests of any third party.

License Compliance

AAFC will ensure that it receives a fair return on its IP investment by insisting on audit provisions in all licenses. AAFC will regularly monitor client royalty obligations and will reconcile revenues for contract compliance and reasonableness. In addition, AAFC will mitigate its exposure to financial risk though open communication with clients and standardized departmental collection procedures.

To further enhance licensee compliance, AAFC will employ the Risk Management Framework (Annex G), to monitor and analyze license activity on an annual basis. Royalty examinations will be conducted on a select group of licensees based upon this analysis.

Royalty examination is a multi-step process which will commence with an examination of royalty payments, royalty statements, industry reports and insight by the responsible OIPC Commercialization Officer to identify and assess AAFC's financial risk for the collection of royalties. The monitoring of licensee activity must be an ongoing process. Each licensee audit will conclude when the selected licensees are audited and the follow up action identified in the audit has taken place. The following steps will be undertaken:

• A copy of all duly executed licenses will be provided to the Assets Team which will enter the royalty due dates and contract details into the departmental Financial System.
  
  
• Finance will send a royalty reminder to the licensee prior to the due date of the royalty payment.
  
  
• The Revenue Management Unit will send reminders on over-due accounts and will work with the responsible OIPC Commercialization Officer to resolve discrepancies.
  
  
• Upon receipt of a royalty payment, a copy of the royalty statement will be reviewed by the responsible OIPC Commercialization Officer to confirm that the royalty rate cited in the royalty statement is in compliance with the License Agreement.
  
  
• Royalty receipts will be recorded inan IP management system and a quality control exercise will be performed annually to reconcile any delinquencies.

Abandonment and Related Assignment of Inventions

Pursuant to Clause 8.(1) of the Public Servants Inventions Act:

"The appropriate minister may on behalf of Her Majesty waive, abandon or transfer all or any of the rights in respect of any invention vested in Her Majesty by this Act or in respect of an invention made or to be made by any public servant, and may execute any instrument to give effect thereto."

The following apply after determination that retention of ownership of an invention does not serve the best interest of Canada. (Such a circumstance shall generally arise as a result of failure to license the invention, and further that the costs of retention are estimated to be more than the anticipated benefit-to-Canada that would accrue from retention of ownership. The determination of benefit-to-Canada should include an estimate of the value of the invention as public knowledge.)

1. All inventors will be notified of the determination that retention of ownership is no longer justified, and that appropriate abandonment actions are being contemplated.
   
   
2. AAFC may entertain assignment of ownership to the inventors subject to the following conditions:
   1. the invention is not being practiced by any emanation of the Government of Canada; and
   2. there is no anticipated situation that would require any emanation of the Government of Canada to practice the invention;
   3. there is little apparent benefit to Canada to be gained from conversion of the invention into public knowledge.
   
   
3. Further to 2, in the situation of a proposed assignment to an inventor or inventors who are employees of any emanation of the Government of Canada then the additional requirements must be agreed to and enforced:
   1. The employee(s) must not work on the invention or its exploitation during regular working hours.
   2. The employee(s) must not use government property or materials to exploit or develop the invention.
   3. The employee(s) must not seek guidance or financial assistance through any of AAFC's programs to fund this project.
   
   
4. In the special situation, where an employee or employees wish to pursue commercial development of an invention, (i.e.; conditions 2i, ii and iii do apply), and the department determines that this is the best available commercialization option, then the department may grant a commercially exclusive (sole) license to practice the invention if the employees resign at an appropriate time not later than the first sale of product.

Inventions and Innovations Awards

AAFC's Inventions and Innovators Award Policy is founded on the following three objectives:

• to promote creative efforts, scientific leadership and major research accomplishments in the area of agricultural science at;
  
  
• to foster an innovative culture and to promote science that is consistent with government priorities and the AAFC's mandate; and
  
  
• to create an equitable awards program that is open to persons employed by AAFC, whether involved in basic or applied research, and that does not require the generation of royalties for eligibility.

According to the Treasury Board Policy on Royalties and Fees from the Licensing of Crown-Owned Intellectual Property, AAFC receives all revenues from licensing Intellectual Property to offset the costs associated with incentives awards for technology transfer and other technology transfer activities undertaken by the Department. AAFC is committed to:

• return 80 percent of IP revenues from license fees, royalties, etc, directly to the AAFC Research Centre(s) which created the technology; and
• utilize 20 percent of the remaining IP revenue towards awards under the AAFC Inventions and Innovations Awards Policy.