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INNOVATE

C E N T R E F O R I N N O V A T I O N L A W A N D P O L I C Y

WHY REGULATENEW GENETICS?

W W W . I N N O V A T I O N L A W . O R G

ORIGINALITY IN CANADIAN

COPYRIGHT LAW

PAGE 14

18

INTERNET REGULATION AND

DISEASE CONTROL

24

THE PRICE WE PAY FOR

DRUG RESEARCH

26

MAGAZINESPRING 2004

CI Mag - cover 10 3/26/04 1:46 PM Page 3

Ronald J. Daniels, Dean University of Toronto, Faculty of Law (Chair)

The Honourable Mr. Justice Frank IacobucciSupreme Court of Canada

Dr. David Johnston, PresidentUniversity of Waterloo

Dr. Bryne Purchase, Deputy Minister Ont. Ministry of Energy, Science and Technology

Mr. Michael Fekete, PartnerOsler, Hoskin & Harcourt, Toronto Office

Mr. Richard Nathan, Managing DirectorGoodmans Venture Group

Mr. Kent Plumley, PartnerOsler, Hoskin & Harcourt, Ottawa Office

Mr. Barry Reiter, PartnerTorys

Dr. Claudine Simson, Chief Technology Officer and Vice PresidentMotorola Inc.

Mr. Barry Sookman, PartnerMcCarthy Tétrault

Dr. Douglas Wright, Former PresidentUniversity of Waterloo

Lisa Austin, Assistant ProfessorFaculty of Law, University of Toronto

Abraham Drassinower, Assistant ProfessorFaculty of Law, University of Toronto

Maryann Feldman, ProfessorJoseph L. Rotman School of Management,University of Toronto

Hudson Janisch, ProfessorFaculty of Law, University of Toronto

Trudo Lemmens, Assistant ProfessorFaculties of Law and Medicine, University of Toronto

Jeffrey MacIntosh, ProfessorFaculty of Law, University of Toronto

Richard Owens, Executive DirectorCentre for Innovation Law and Policy (Chair)

Jonathan Putnam, Assistant ProfessorFaculty of Law, University of Toronto

Anthony Wensley, Associate ProfessorInformation Systems and Accounting,University of Toronto

David Wolfe, ProfessorPolitical Science, University of Toronto

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Arthur Cockfield, Assistant ProfessorQueen’s University

Ian Kerr, Canada Research Chair in Ethics Law &Technology, Associate ProfessorUniversity of Ottawa

Carys Craig, Associate ProfessorOsgoode Hall Law School,York University

Richard Owens, Executive DirectorCentre for Innovation Law and Policy (Chair)

Jonathan Putnam, Assistant Professor,Faculty of Law, University of Toronto

Myra Tawfik, Associate Professor & Associate DeanFaculty of Law, University of Windsor

Margaret Ann Wilkinson, Associate ProfessorFaculty of Law & Faculty of Information & Media Studies,University of Western Ontario

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Executive DirectorExecutive EditorRichard Owens

Editor-in-ChiefJane Kidner

Cover PhotographerRoz Woodward @ Getty Images

ContributingPhotographersHenry FeatherEdward Gajdel

© Copyright 2004

Contributing WritersBita AmaniTony ClementAbraham DrassinowerMichael FeketeColleen FloodGreig HindsHudson JanischAriel KatzTrudo LemmensRex Makoto ShoyamaKathleen O'BrienRichard OwensJonathan PutnamAlexander StackLeah Theriault

Innovate is published by theCentre for Innovation Lawand Policy at the Universityof Toronto, Faculty of Law,and is sent to alumni of thelaw school, policy makers,jurists, government officialsand business leaders acrossCanada.

The views and opinionsexpressed herein do not necessarily reflect the position of the Centre forInnovation Law and Policy.

Readers who wish to beadded to the mailing list forthe Centre for Innovation Law and Policy’s regularannouncements, please forward your mailing address and e-mail [email protected].

Design / PrintingDUO Strategy and Design Inc.

Centre for Innovation Law and PolicyUniversity of TorontoFaculty of Law78 Queen’s ParkToronto, Ontario M5S 2C5

Tel: 416.978.3724 Fax: 416.978.2648

www.innovationlaw.org


executive director

The Centre for Innovation Law and Policy is more

than an academic research institute. Certainly, it

is that; our record of research on theoretical and

practical issues of innovation law and policy

grows ever longer. But work on the issues con-

fronting Ontario’s innovation economy is ineffec-

tive if it is cloistered in the academy, and our

research must be built on a foundation of under-

standing of emerging technologies and of the

businesses that commercialize them. Therefore,

we reach out, providing training to and networks

of the broader, non-academic community. And

so, Innovate Magazine was born.

Innovate is an open forum. Our authors describetheir own ideas and provoke questions like thosein this issue: Shouldn’t digital rights managementprotect copyrighted works for their entire durationof copyright? To what extent should biotechnologybe hampered by regulation? How do we solve theconundrum of equitable and affordable distributionof drugs, while sustaining a system that requiresenormous pools of capital to develop new ones?

The Centre for Innovation Law and Policy is proudto be integral to the nerve system of innovation inOntario. The Centre does too much to be capturedin any single magazine: to help round out the pic-ture, an excerpt from our annual report is includ-ed with this issue.

We are fortunate to find our home at theUniversity of Toronto, near the centre of one of themost vigorous areas of Ontario’s innovation econo-my – but by no means the only one. We benefitfrom collaboration on projects with institutionsacross the province, and from the thoughtful par-ticipation and guidance of scholars across Ontariounder the Centre’s Academic CoordinatingCommittee, the members of which are listed onthe inside front cover.

The Centre reaches into departments across thecampus of the University of Toronto, benefitingfrom the knowledge and insights of colleagues inPolitical Science, Economics, Business, ComputerScience, Engineering, Bioethics, Geography andelsewhere. We are also sustained by our ties toinstitutions, government and businesses – includ-ing sponsors like BCE, and Osler, Hoskin andHarcourt. We very much look forward to the flourishing of our relationship with the Province of

Ontario’s Medical and Related Sciences Discoverydistrict (MaRS), taking shape just beyond our lineof sight at the southern edge of the University ofToronto. We are delighted by our very fruitful collaboration with BCE through the Bell UniversityLabs Programme. We also look forward eagerly to thematuring fruits of our deepening collaboration withthe Information & Privacy Commission (Ontario).

Increasingly, the Centre’s work is driven by healthcare and emerging health care technologies. Therelease of the Centre’s report on privacy and elec-tronic health records, our collaboration on projectsinvolving evidence based medicine, nephrology,and rheumatology, evince this, as do our researchon the choice of medical technologies for publichealth care; our conference on genetic information;our recent, published symposium on the Harvardmouse; our internship on drugs and development;and our upcoming conference, with Gilbert’s LLP,on competition law and generic drugs.

Finally, perhaps what is best about the Centre isonly subtly revealed in the pages of this issue, andthat is its extraordinary collegiality. Enthusiasm forour work builds deep collegial bonds within andacross the departments and institutions. To planand write the contributions for this publicationcould not have been more pleasant or interesting,and the Centre is in the debt of its scholars fortheir extraordinary efforts in the face of over-whelmingly busy schedules.

Finally, deep and special thanks are due for theunflagging energy and vision of Jane Kidner, of theUniversity of Toronto, Faculty of Law, withoutwhose zeal and extraordinary skills Innovate nevercould have happened.

If you have any comment with respect to this mag-azine or the Centre, I would be delighted to hearfrom you.

RICHARD C. OWENSExecutive Director,Centre for Innovation Law and [email protected] line: (416) 978-7151

INNOVATE MAGAZINE • 1

Centre for Innovation Law and Policy

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18

14 26 11

contents

14features Why Regulate New Genetics? Genetic testing and the mapping

of the human genome are now facts of life. What regulatory controls need to attend

these promising new technologies? Professor Trudo Lemmens weighs in on this

important issue and argues for a stricter regulatory review system.

18 Sweat of the Brow, Creativity, and Authorship:Originality in Canadian Copyright Law Although origi-

nality is a basic requirement of copyright protection, its meaning under Canadian law

is currently uncertain. The confusion can be traced, according to Professor Abraham

Drassinower, to three different theories about the very meaning and purpose of

copyright law.

24 Internet Regulation and Disease Control The impact of

the SARS crisis was lessened by the Internet ‘s ability to facilitate rapid and wide-

spread sharing of information. Not so in China, however, where a stringent licensing

regime and thick blanket of laws prevented information sharing. Richard Owens and

Rex Makoto Shoyama comment.

26 The Price We Pay for Drug Research More than any other

consumer purchase, the acquisition of health-related products is governed by norms

and expectations that challenge the usual market allocation mechanisms. Professor

Jonathan Putnam writes that what is needed are stable policies that further Canada’s

health care objectives.

Privacy and confidentiality concerns are taking a front seat

in the debate over uses of genetic information. Are the

rights of individuals being eroded by advances in modern

medicine and new biotechnologies? In her digital image,

“man overlaid with DNA”, photographer Roz Woodward

illustrates these concerns.

ON THE COVER

22

22

columns

Perspectives: The Future of Health Care inCanada Ontario’s former Health Care Minister, Tony Clement, and health law

scholar, Professor Colleen Flood comment on the who, what, and how much, of

Canada’s publicly funded health care system.

32 Backspace Michael Fekete has the last word.

10 The Long and Short of It Four of the Centre’s graduate fellows offer insights into Canadian patent laws,

piracy, and copyright. See pages 10 to 13.

CI Mag - ver 10 3/26/04 1:46 PM Page 2

contributors

6

4departmentsBriefly 4 Stem Cell Research 4 Developing

Countries and Pharmaceuticals 4 Surveillance

Technology 5 Electronic Health Records

5 Innovation-Driven Organizations

6 Privacy vs. Security 6 Accessing Personal Data

8 Profile Jonathan Putnam

29 Noteworthy 29 Bell University Labs

29 The Next Wave 30 Dedication to

Expanding Human Capital and Technological

Materials 30 Distinguished International

Visitors Program 30 Reaching Out to China

30 Centre’s Students go on to Teach

30 Summer Fellowship Program 31 Grad

Students Tackle Issues in South Africa

31 Innovations Foundation 31 MaRS


It was an idea whose timehad come – a magazine toshowcase the burgeoningscholarship behind U of T’sCentre for Innovation Law

and Policy. However, capturing the diversityand breadth of ideas, research, events, programsand initiatives that take place at the Centre eachyear – all in just 32 pages – was a tall order.

Welcome to the inaugural issue of Innovate. Inthe following pages we offer a window into theminds of the Centre’s leading scholars. Youwill find articles that touch upon the latestlegal issues in new genetic technologies,patents, electronic health care records, copy-right, and internet regulation. However, thereis so much more to tell.

Fortunately, this is just the beginning. A semi-annual magazine, Innovate will strive to capture the leading edge ideas and initiativesat the Centre, as they happen. It will examinethe ways in which emerging technologiesintersect with laws and policies in today’sknowledge-based economy, an economy thatincreasingly knows no boundaries. It is a

magazine for everyone – for business leaders,academics, consultants, students, and interestedcitizens.

We hope you find Innovate an interesting readand an entry point into a new and excitingrealm. We welcome your ideas and input, and as always encourage you to e-mail us [email protected].

JANE KIDNEREditor-in-Chief

editor’s note

Trudo Lemmens, iLic.Jur., and LL.M.,S.J.D. (McGill) is assistant professorat the U of T Faculty of Law and theFaculty of Medicine, and is spendingthe academic year 2003-2004 inPrinceton as a member of the Schoolof Social Science, Institute forAdvanced Studies.

Abraham Drassinower, B.A., M.A.,Ph.D., LL.B. (Toronto), joined the U of TFaculty of Law in 1999 as AssistantProfessor. Drassinower's interestsinclude property, intellectual proper-ty, legal and political philosophy, crit-ical theory, and psychoanalysis.

Tony Clement is a 1986 graduate ofthe U of T Faculty of Law. In 1995 he was first elected as a Member ofProvincial Parliament for BramptonSouth, and in 2001 he was appointedMinister of Health and Long-TermCare. Currently he is a distinguishedvisiting scholar at the law school.

Colleen Flood, B.A., LL.B. (Universityof Auckland, New Zealand), LL.M.,S.J.D. (U of T, Faculty of Law) isAssistant Professor and a member ofthe Faculty’s Health Law Group. Herscholarship focuses on comparativehealth care policy and health carereform.

Michael Fekete is a partner in theToronto office of Osler, Hoskin &Harcourt LLP and a member of theCentre for Innovation Law andPolicy’s advisory board. His practiceis focused on information technology,software development and licensing,e-commerce and privacy.

Leah Theriault is an S.J.D. candi-date at the U of T Faculty of Law, anda Graduate Fellow of the Centre forInnovation Law and Policy.

Alexander Stack is completing hisS.J.D. at the U of T Faculty of Law inthe area of patent policy and the insti-tutional analysis of internationalpatent organizations.

Bita Amani is an assistant professorat Queen’s University Faculty of Law,and is continuing her work on herSJD at U of T on the patenting of life forms.

Jonathan Putnam is an assistantprofessor at the Faculty of Law andholds the Chair in the Law andEconomics of Intellectual Property atthe Centre for Innovation Law andPolicy. He holds doctoral, mastersand bachelors degrees in economicsfrom Yale.

Ariel Katz received his LL.B. andLL.M from the Hebrew University ofJerusalem and is currently complet-ing his SJD at the Faculty of Law,University of Toronto. In July 2004 hewill join the law school as AssistantProfessor and will hold the Centre'sChair in E-Commerce.

welcomes advertisementsINNOVATE Magazine

<

If you are interested in placing

an advertisement in our upcoming

issue, or would like a copy of our

media kit, please contact

Jane Kidner at [email protected]

or (416) 978-6702.PUBLICATIONS MAIL AGREEMENT NO. 40064892RETURN UNDELIVERABLE CANADIAN ADDRESSES TO:Centre for Innovation Law and Policy, University of Toronto, Faculty of Law 78 Queen’s Park, Toronto, Ontario, Canada M5S 2C5 email: [email protected]

CI Mag - ver 10 3/26/04 1:47 PM Page 3

LEGAL AND ETHICALISSUES IN STEM CELLRESEARCHThe Stem Cell Network is a new

Canadian venture that brings together

more than 50 leading scientists, clini-

cians, engineers, legal scholars and

ethicists to investigate the therapeutic

potential of stem cells for the treatment

of diseases that are resistant to con-

ventional approaches. Professor Trudo

Lemmens is one of those involved in

the Stem Cell Network. As part of his

research, Lemmens is comparing differ-

ent regulatory regimes around genetic

and stem cell research and helping reg-

ulatory bodies to weigh risks and bene-

fits and deal with conflicts of interest in

research and scientific development.

Lemmens’s work focuses primarily on

legal and ethical issues of research

involving humans and the regulatory

structure surrounding research in the

classroom setting. Can legal regimes

adequately deal with moral issues in

research? To what extent can or should

scientific activities be submitted to

social scrutiny? Lemmens continues to

probe these and other issues in his

research at the Centre for Innovation

Law and Policy. He is currently at

Princeton University and will return to

the Centre in September 2004.

The Centre’s ongoing program on the

issue of stem cell research includes

the Centre’s participation in the

Biotechnologie 2000 Cenference in

Lille, France, as part of a multi-discipli-

nary trade delegation; the 3rd Annual

Health Law Day on New Biomedical

Research; and most recently the 2003

Technology and Intellectual Property

(T.I.P.) Conference on the challenges of

regulating genetic technology, featuring

Professor George Annas (Boston

University Schools of Medicine and

Public Health), Professor Timothy

Caulfield (University of Alberta), and

Professor Rebecca Eisenberg

(University of Michigan Law School).

For more information on these and

other centre-sponsored events please

visit the Centre’s web site at

www.innovationlaw.org.

CENTRE STUDIESDEVELOPINGCOUNTRIES’ ACCESS TO PHARMACEUTICALSAs developing countries struggle with

controlling and preventing the spread of

AIDS, the World Trade Organization is

trying to find ways to supply sufferers

with less costly AIDS medicines.

Currently, nearly 29.4 million Africans

are affected with the disease. Many

argue that intellectual property law

bears some blame for the continuing

spread of the disease, and that without

barriers such as monopoly pricing of

patented AIDS drugs, drastically fewer

lives would be lost (the arguments are

not without their detractors). Canada

has proposed steps to deal with this

critical issue by amending its patent

laws, providing government funding,

and by trying to secure a commitment

from pharmaceuticals to waive patent

rights for generic AIDS drugs.

In a recent conference hosted

by the Centre, Fighting AIDS in Africa:

Getting Drugs through a Chink in the

Patent Wall, a panel of experts includ-

ing U of T professors Jillian Cohen,

Faculty of Pharmacy, and Jonathan

Putnam, Centre for Innovation, as well

as Richard Elliot, Canadian HIV/AIDS

Legal Network, explored ways Canada

can export cheaper, generic versions of

AIDS medicine to Africa. Cohen has

also teamed up with law professor

Rebecca Cook on a project that exam-

ines access to pharmaceuticals in

developing countries. And in February

2002 the Centre hosted Harvard lawyer

and biologist, Amir Attaran who argued

that other than in South Africa, patents

do not impede access to AIDs treat-

ment in Africa today.

Toronto law firm, Gilbert’s LLP, has also

joined forces with the Centre as part of

the Centre’s ongoing program on

Access to Pharmaceuticals. The

Gilbert’s Summer Fellowship

Program allows U of T law students to

work directly with developing countries

in the area of Intellectual Property and

Development. Last summer Gilbert’s

provided office space and funding for

first year student Adam Lewinberg to

explore and research issues relating

to developing countries and their

access to pharmaceuticals. For more

information on this program please

visit the Centre’s web site at

www.innovationlaw.org or Gilbert’s

site at www.gilbertslaw.com.

SURVEILLANCE

TECHNOLOGY

MONITORINGCANADIANS AT WORKA poll conducted by the Angus Reid

Group in 2000 concluded that Canadian

employees waste nearly 800 million

work hours each year surfing the

Internet for personal reasons. Concern

over the personal use of computers at

work has emerged as a major issue for

4 • INNOVATE MAGAZINE SPRING 2004

Centre for Innovation Law abriefly

CI Mag - ver 10 3/26/04 1:47 PM Page 4

employers, who are resorting to com-

puter surveillance technologies that

specifically target employee use of

information resources. Distinguished

academic visitor, Professor Michael

Geist, University of Ottawa, Faculty of

Law, says that although workers may

not realize that surveillance technolo-

gies quietly monitor their network activity

or even their every keystroke, the

results show that surveillance works.

In one study, more than 75 percent of

companies admitted that monitoring

their employees had helped them fight

personal use of the Internet during

business hours. These issues are

explored by Geist in his paper,

Computer and E-Mail Workplace

Surveillance in Canada: The Shift from

Reasonable Expectation of Privacy to

Reasonable Surveillance. Surprisingly

he says, the legal issues that accompa-

ny computer surveillance in the tradi-

tional workplace are often misunder-

stood. Many employers assume that

ownership of the computing equipment

and the right to set workplace rules

grant them an unfettered right to

monitor employees’ computer usage

provided that they disclose the practice.

However, Geist says a close examina-

tion of relevant statutes, case law, and

policy releases from leading privacy

agencies reveals that the matter is

open to debate.

Many cases suggest

that while notice is

indeed a necessary

pre-condition to

most forms of com-

puter surveillance,

notice alone is rarely

sufficient to support

the practice. Geist shared his research

findings at a lecture given at Osgoode

Hall Law School on February 6, 2003.

Under the guidance of the Centre’s

Academic Coordinating Committee, all


w and Policy …companies are beginning toinstall computer surveillancetechnologies that specificallytarget employee use of information resources.

In medical emergencies, response

time is always a critical factor. The

problem is magnified when the

‘patient’ finds herself in a foreign

country with no immediate access to

her medical records. In these cases,

quick access to a patient’s medical his-

tory is critical and can often mean the

difference between life and death.

Electronic health records are offering

a possible solution to the problem.

The Canadian medical community is

currently discussing ways to store

patients’ medical histories in electron-

ic health records with a goal, in part,

of providing faster response time in

medical emergencies around the

world. Yet despite their obvious

benefits, electronic records present

enormous challenges – including

accuracy, accountability, and privacy.

Who owns the record? How will the

electronic information be protected?

Should records be available to parties

other than health care professionals?

These are just some of the questions

that were addressed in a recent

roundtable discussion hosted by the

Centre for Innovation Law and Policy,

Osler Hoskin & Harcourt, and Bell

University Labs. Issues in Electronic

Health Records in Canada included

commentaries from Dr. Ann

Cavoukian, Privacy Commissioner

for Ontario, and David Pattenden,

CEO, Ontario Medical Association.

CREATION AND ADOPTION OF ELECTRONIC HEALTH RECORDS

CONTINUED >

CI Mag - ver 10 3/26/04 1:47 PM Page 5

Ontario Law Schools are cooperating to

share speakers and engage in collabora-

tive opportunites wherever possible.

RETAINING TALENT ATINNOVATION-DRIVENORGANIZATIONSIn order to survive and remain competi-

tive in today’s fast-paced work environ-

ment, businesses must constantly keep

up with the latest technology. At the

same time, innovation-driven compa-

nies are faced with the problem of

retaining valuable employees in an

economy where the bottom line

depends on the ability to keep talented

employees engaged. As part of the

Centre’s Business Issues in the

Innovation Economy Series,

Managing Human Resources in the

New Economy, panel experts exam-

ined legal issues and responses to the

risks and opportunities of the employ-

ment relationship in innovation-driven

businesses. Key points of discussion

included attracting and retaining

employees; reducing the impact of

departing employees; and addressing

ever expanding privacy concerns.

Moderated by George Vassos of

Kuretzky Vassos LLP, the session

also featured noted Toronto lawyers

Hugh Christie (Gowlings) and Connie

Reeve (Blake Cassels). For a complete

description of the conference and

copies of the papers presented

please visit the Centre’s web site

at www.innovationlaw.org.

PRIVACY VS. SECURITYPOST 9/11: PROTECTINGDEMOCRATIC FREEDOMAs the Internet grows, so do concerns

for protecting private information.

Computers can be vulnerable to outside

attacks from terrorists, viruses and

scam artists who seek ways to exploit

private and sensitive information.

Security breaches have gained interna-

tional significance as viruses are cor-

rupting home computers and bringing

down entire computer systems around

the nation. A number of internationally

recognized experts at the 11th CACR

Information Security Workshop &

3rd Annual Privacy and Security

Workshop agreed on the need for total

commitment to both privacy and security.

Richard Owens, Executive Director of


MORAL DILEMMA: AUTOMATEDMACHINES OR CONSUMERPROTECTION?

Internet search engines such as Google or Yahoo use “bots”

(derived from “robots”). Bots operate as agents, scanning

web sites for the key words. The most common bots are

“spiders” or “crawlers”, programs that gather web site con-

tent for Internet searches. A “shopbot” is a program that

shops around the web on your behalf and locates the best

price for a product. In the rush to digitalize and automate

machinery, the use of various applications (e.g. shopping

bots) could be an exploitation of human trust, and one profes-

sor says consumer protection measures should be consid-

ered. Dr. Ian Kerr, Canada Research Chair in Ethics, Law &

Technology, University of Ottawa, and frequent visiting lectur-

er at the Centre for Innovation Law and Policy, explores the

relation of technology and bots in his paper, Bots, Babes and

the Californication of Commerce. Kerr questions whether

the mere click of a mouse during the course of an automated

transaction is sufficient to bind a consumer to an online serv-

ice provider’s Terms of Service. With so much attention being

paid to the enforceability of online contracts, he says few

jurists seem to be demonstrating any interest in the conse-

quences of automated electronic commerce for people.

Despite the technological capability, Kerr contends that many

automated systems do not provide all of the information

necessary to put the consumer in a position to make fully

informed choices, and calls this disturbing trend the “califor-

nication of commerce”. Kerr calls for new laws to ensure

that the interests of everyday consumers are not exploited

by the web’s wide world of “bots and babes”.

CONTINUED FROM PAGE 5

CI Mag - ver 10 3/26/04 1:47 PM Page 6

the Centre for Innovation Law and

Policy, noted that following the terror

attacks of September 11, 2001, privacy

and security have become tools that

protect democratic freedom. Other

speakers such as U of T law professor

Kent Roach, author of a new book on

the September 11

terrorist attacks,

discussed the

mutually dependent

relationship of

privacy and security.

ACCESSING PERSONALDATA: CHALLENGE TOLAW ENFORCEMENTThe Internet and electronic files are

helping law enforcement officers and

national security agencies to investigate

and solve criminal activity including

drug trafficking, child pornography,

money laundering, and deceptive tele-

marketing. These very same technolo-

gies, however, are also posing signifi-

cant challenges to privacy, the protec-

tion of data, and freedom of speech. In

order to assist police and security offi-

cials gather information more efficient-

ly, the Department of Justice, Industry

Canada and the Solicitor General of

Canada recently introduced the “Lawful

Access Report” as part of an ongoing

legislative review to consider the

impact of new communication tech-

nologies on police and national security

investigations. This proposal aims to

update and extend police interception

capabilities and their search and seizure

of documentation. Centre student

Ziyaad Mia, who is conducting

research at the Centre for Innovation

Law and Policy, discussed these and

other issues in Lawful Access: How

deep should police dig into your

files (when looking for terrorists)?;

a presentation he gave at the U of T

Faculty of Information Studies.

ALAN MARKS MEDALWINNER PREDICTSTROUBLE FOR INTERNETCanadians take for granted that they

can pick up the phone and call a friend

in China. What they may not realize is

that numerous telephone systems

must work together to make that call

overseas. Similarly, airline passengers

all over the

world can take

comfort know-

ing that the

standardized

rules and sys-

tems of the

international

civil aviation

network ensure a safe flight. These are

two examples of public network infra-

structures that work together to pro-

vide a seamless, reliable service. Not

so with our Internet, says Centre gradu-

ate student, Craig McTaggart, who is

finishing his doctorate on the gover-

nance of networks. McTaggart says the

thousands of autonomous yet interde-

pendent computer networks that collec-

tively run the Internet operate under

few written rules. In fact, given the

Internet’s lack of a formal legal and eco-

nomic framework, one might wonder

how it can work at all, he says. The

rules that Internet Service Providers

(ISPs) follow, mainly take the form of

social norms, or unwritten understand-

ings of what they must do to help

make the Internet work. However, the

industry’s difficulty dealing with the

problem of spam, for example, illus-

trates the weakening force of these

norms in the face of the continuing

expansion and commercialization of the

Internet. Over the next five years or so,

McTaggart says a “self-governance

gap” threatens to stall the Internet’s

continued development. Craig

McTaggart is currently completing his

S.J.D. dissertation, The Internet's Self-

Governance Gap, under the supervi-

sion of Professors Hudson Janisch and

Michael Trebilcock. In 1999, he was

awarded the Alan Marks Medal for his

LL.M. thesis.


…the Department of Justice, Industry Canada and

the Solicitor General of Canada recently introduced

the “Lawful Access Report” as part of an ongoing

legislative review to consider the impact of new

communication technologies on police and national

security investigations.

Craig McTaggart

CI Mag - ver 10 3/26/04 1:47 PM Page 7

“Jon has been testifying as an expert witness on conduct

related to patent infringement, trade secret misappropriation,

intellectual property warranties, and anti-competitive behaviour.”


pjo

nat

han

profile

Before moving north of the border to join the U of TFaculty of Law in January of 2001, Jonathan Putnam,Assistant Professor at the Centre for Innovation Law andPolicy was eager to get to know first hand a country hehad initially envisioned as an endless stretch of vastspace. In contrast to life in Marblehead (population20,000), a quaint town just outside of Boston, Jon waspleased to find Toronto a wonderfully vibrant and cultur-ally diverse metropolis.

Jon’s academic vital statistics are impressive. He holds BA,MA and Ph.D. degrees in Economics from Yale University,and has taught at a number of prestigious institutions ofhigher learning including Yale College, ColumbiaUniversity School of Law, Vassar College, and BostonUniversity, Graduate School of Management. Today, Jon’steaching includes courses in property, intellectual property,and the regulation of competition in high-tech industries.

In addition to his teaching responsibilities, Jon plays akey role at the Centre for Innovation Law and Policy. AsChair, Law and Economics of Intellectual Property, one offour chairs endowed at the Centre, Jon feels privileged tohave such a close affiliation with the Centre – somethinghe considers as “one of the brightest aspects of my job”.When he is not teaching, Jon is contributing to the suc-cess of the many conferences, seminars and lectures theCentre sponsors each year. Most recently, Jon played akey role in a panel discussion: Fighting AIDS in Africa:Canada’s Proposal for Improving Access to Generic Medicines,where a panel of leading Canadian experts gathered tocontemplate the proposed amendments of patent laws topermit cheaper, generic versions of expensive drugs to bemanufactured here for export to Africa. Jon’s thought-pro-voking and insightful economic and legal analysis raisedimportant issues for both research-based and genericpharmaceutical firms.

In addition to investigating the competitive relationshipbetween generic and branded pharmaceutical firms, Jonis currently at work on a variety of intellectual property-related projects. He is in the process of revising andupdating his study of the international patent system,which represents the first time a value has been placed oninternational trade in patent rights. He is also at worktrying to measure the effects of information disclosure inthe new economy, as part of a broader effort to investigate

the economic role of trade secrets. At the annual Yale-Stanford Junior Faculty Forum, Jon presented his studyof the distinguishing features of digital copyright:increased licensing, increased post-contractual monitor-ing, and therefore increased price discrimination, whichfavors the bargaining position of copyright owners anddistorts the measurement of productivity growth in theinformation economy. Much of this research has beensponsored by grants from the Centre for Innovation Lawand Policy.

Still an active consultant, Jon has been testifying as anexpert witness on conduct related to patent infringement,trade secret misappropriation, intellectual property war-ranties, and anti-competitive behaviour. He argued suc-cessfully for the Supreme Court of Canada to review theFederal Court of Appeal’s decision in Apotex v. Wellcome.He also recently testified before the U.S. Federal TradeCommission/Department of Justice hearings on the rela-tionship between intellectual property and antitrust law.

As one would expect, the personal life of any member ofthe Faculty of Law is filled with more than academicstudy. After a hard day’s work, Jon goes home toMagdelaina, a beautiful two-year old baby girl he and hiswife adopted from an orphanage in Guangdong Provincein China. This experience has been so rewarding that Jonand his wife Jennie are in the process of adopting a sec-ond baby from the orphanage.

Seeing the United States through Canadian eyes for thefirst time has been an interesting, enlightening and attimes amusing experience for Jon. And while the Putnamsstill enjoy part of their summers near the beach inMarblehead, Jon considers Toronto, with all that it has tooffer, an ideal place to raise his daughter.

No matter where he is, the wide range of Jon’s expertiseand research continues to play a vital role in the institu-tions he is involved with. In March 2004, Jon plans tospeak at a conference in Michigan on the topic of compe-tition law and innovation barriers. In June, he will speakat a Centre-sponsored conference that examines competi-tion law in the pharmaceutical industry. For more infor-mation on Jon’s research and the upcoming conferencesvisit the Centre’s web site at www.innovationlaw.org.

BY SOOIN KIM

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jCI Mag - ver 10 3/26/04 1:47 PM Page 9


There is a widely held presumption in Canadian patent law thatthe general theoretical framework and “hot” issues are similar, ifnot identical, to those in the United States. However, the twocountries are at polar extremes among the industrialized coun-tries in how their patent laws work on their national economies.This difference renders much of the American analysis of patenttheory of marginal relevance in the Canadian context.

Patent issues in the (largely American) academic literature aregenerally viewed as a trade-off between the positive and negativeeconomic effects of patents. On the one hand, patents increaseincentives to both invent and invest in the marketing of inven-tions. On the flip side, patents increase the price of products(thus restricting their distribution), and deter competitors frominvesting in the economy or even performing research in relatedareas. In other words, there are both positive and negativeeffects of patent laws; and changes to patent laws that increaseincentives to innovate automatically deter competitors andincrease costs to the consumer. In the United States, discussionsabout patent laws largely focus on the proper trade-off of thesetwo competing interests and treat the effects of patent law as aclosed economic system. While this seems largely appropriate inthe United States, it is not the most appropriate approach inCanada.

The integration of the US and Canadian economies combinedwith the disparity in their size has an interesting impact onCanadian patent economics. Most innovative Canadian compa-nies are primarily interested in obtaining patents in the UnitedStates — the main market for their products. Indeed, manycompanies forgo patenting in Canada altogether in favour ofobtaining protection for their inventions in the US and Europe.Consider the following: in 2000, Canadians obtained 3,925 USpatents, while only obtaining 1,117 Canadian patents. UnitedStates applicants received 6,098 of 11,740 issued Canadianpatents, 52% of the total and 96% of Canadian patents weregranted to non-Canadian applicants. (In contrast, only 45% ofUS patents were granted to non-US applicants).

As a result, the positive effects of the patent system — theincentives to Canadian companies to invent or develop products— are largely out of the control of Canadian patent law. Instead,these incentives are provided by patent laws in the United States(and to a lesser extent Europe and Japan). What is more directlyunder the control of Canadian patent law are the negative effectsof the patent system on the public and on industry located inCanada. The direct correlation between the positive and nega-

tive effects of patent law that exists in the United States is largelyattenuated in the Canadian context. Because of this, a Canadiananalysis of patent law should focus on the negative aspects ofpatent laws, rules and procedures, and on minimizing deter-rence in Canada, and less on incentive effects.

Given North American economic integration and the constantcontinental battle to attract investments in innovative industry,Canada needs to be particularly critical of practices that system-atically create greater uncertainty or give patent holders greatereconomic deterrent power in Canada than in the United States.We need to compare the speed with which Canadian patentsissue compared to their American counterparts, the scope of theclaims in the corresponding patents and what subject-matter isbeing covered. Whenever a patent practice, whether internation-al or domestic, results in increased uncertainty or increasedpower to patent owners in Canada versus the US, the practiceneeds to be carefully scrutinized for potential change.

To judge the desirability of an impugned practice, law or policy,Canadian academics need to develop alternative positive theories for the existence of a robust Canadian patent law.Simply claiming that Canada has a patent law provides a thinframework for making sophisticated or persuasive policy recommendations on specific issues. By developing such theories, Canadian analysts can make a substantial and positivecontribution to international patent theory.

Alexander Stack is completing his S.J.D. at the University of

Toronto, Faculty of Law in the area of patent policy and the

institutional analysis of international patent organizations. He

is a lawyer and a registered patent and trade-mark agent, and

received the Flora S. and Jacob L. Newman Award for distinction

in the LL.M. Trade Regulation program at NYU.

A Canadian Approachto PATENT LAW

the long and short of it

BY ALEXANDER STACK

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..Most innovative Canadian companies areprimarily interested in obtaining patents inthe United States — the main market fortheir products. Indeed, many companiesforgo patenting in Canada altogether infavour of obtaining protection for theirinventions in the US and Europe.

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CI Mag - ver 10 3/26/04 1:47 PM Page 10


Most of us would agree that software piracy is a serious problemtoday. According to the Business Software Alliance the currentworldwide piracy rate is around 40%, and the total loss from pira-cy is around $13 billion (US). Indeed many believe that piracy isa major threat to our economy causing loss of jobs and incometax to governments, and threatening industry and innovation.

Why then, if piracy is such a huge problem, is so little beingdone to stop it? Why are many software products being distrib-uted without proper protection?

If you believe industry spokesmen, the lack of institutionalresponse is due, at least in large part, to operational difficultieswith the technology designed to address and prevent piracy. Inother words, as fast as the protective technology can bedesigned, it can be circumvented.

While this may seem at first glance to be a reasonable theory, analternative and more likely one is that software companies aremotivated to allow some piracy in order to increase the numberof users of their software. The theory goes like this: the morepeople who use the product, the more valuable it becomes. Theclassic example is the telephone. If there is only one person inthe world who owns a telephone set, the phone is not very useful,or thus valuable. However, the more people who decide to usethe telephone, the more valuable it becomes. This is known as the“network effects” and exists whenever the usefulness (thus value)that a user derives from consumption of a product increases alongwith the number of users of that product.

Many software products tend to exhibit network effects. One ofthe most important reasons for this is the advantage of compati-bility. Further, the more people who use certain software, themore complementary products and services are likely to bedeveloped. Network effects can even cause consumers to bewilling to pay higher prices and create potential new users whoare willing to pay. More importantly, software producers believethat network effects might eventually lead to the tipping of themarket towards their software allowing them to ultimatelymonopolize the market in a winner-take-all situation.

What does all of this mean for the laws relating to piracy? Theunderlying premise of copyright law is that any unauthorized useof software injures the copyright holder thus entitling him to aremedy. However, if piracy actually benefits the copyright holder, itmight be argued that no remedy should be granted. The problemwith such a proposition is that although some level of piracy benefits

the publisher, thebenefit exists only aslong as the rate ofpiracy is controlled.Therefore, the pub-lisher should beallowed to sue, atleast when the rateof piracy exceeds theoptimal. Moreover,since the networkeffects that benefitthe publisher are theresult of the aggre-gate of positive externalities that all users create, we cannot tellwhich defendant caused harm and which conferred benefit. Butsince the law requires that we treat similar cases alike, we musteither accept such defense with respect to every infringer or totallyreject it. Accepting the defense means that the publisher must pro-tect its software or risk losing its copyright protection.

Although there is no place for sweeping doctrinal changes in thelaw, there might be some small-scale applications. For example, insome circumstances judges who understand the true effects ofpiracy might be less impressed with assertions of irreparableharm, and refuse to grant a preliminary injunction or award exor-bitant statutory damages if they see that the law is mainly used tounfairly hold up the infringer. In addition, understanding howpiracy really works and what its true implications are is importantfor any policy maker. Such understanding could enrich the debateabout the scope and depth of intellectual property protection. Itcould contribute to making more informed decisions about pro-posals to strengthen intellectual property laws, to impose dracon-ian criminal penalties, to spend more public funds on enforcement,or to make the installation of anti-piracy hardware mandatory.

Ariel Katz is currently completing his S.J.D. at the University of

Toronto, Faculty of Law, and in July 2004 will join the Faculty

as Assistant Professor and Chair, Electronic Commerce, at the

Centre for Innovation Law and Policy. Ariel received his LL.B.

and LL.M from the Faculty of Law at the Hebrew University of

Jerusalem. His general area of doctoral research involves

economic analysis of competition law and intellectual property

law. He has allied interests in electronic commerce, and the

regulation of international trade.

PIRACY: Why is So Little Doneto Stop it?

BY ARIEL KATZ

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CI Mag - ver 10 3/26/04 1:47 PM Page 11


These days, it is hard to hear about copy-right law, without also hearing abouttechnological protection systems. It is nosurprise then, that those responsible forcharting the course of copyright law inCanada have weighed in on the issue.The House of Commons StandingCommittee on Canadian Heritage recentlyrecommended that the Canadian govern-ment ratify the international treaties thatgovern technological protection of copy-righted works: the World IntellectualProperty Organization’s Copyright Treaty(WCT treaty) and the WIPOPerformances and Phonograms Treaty(collectively, WIPO treaties). In doing so,Canada would be following the lead ofthe U.S. and the E.U. But this would bebad news for Canadians.

At first glance, technological protection sys-tems might not sound so bad. Digital con-tent is cheaply and easily copied and dis-tributed in our Internet connected world,so it seems reasonable for copyright ownersto use technological locks to make theseactivities more difficult. However, the expe-rience of the United States, which enactedthe Digital Millennium Copyright Act(DMCA) in 1998, is instructive.

More than preventing piracy, the DMCAhas been used to stifle competition andsilence researchers – professors have beenthreatened with lawsuits for pursuing theirencryption research, manufacturers havebeen sued for making compatible garagedoor openers and computer chips for non-proprietary toner cartridges, and computerprogrammers have been charged for creat-ing software that enables Adobe e-Books tobe read by third-party readers (such readersinclude, among others, assistive technolo-gies used by the blind). While not all ofthese attempts have been successful, thequestion for Canadians is whether theywant a law that invites such consequences.

Part of the problem with the DMCA is thatit went beyond the obligations imposed onsignatories by the WIPO treaties. Article11 of the WCT treaty states that signato-

ries: “shall provide adequate legal protec-tion and effective legal remedies againstthe circumvention of effective technologi-cal measures that are used by authors inconnection with the exercise of their rightsunder this Treaty or the BerneConvention”. Article 12 deals with protect-ing copyright management information.However, these provisions say nothingabout how individual countries are toimplement the provisions. Unfortunately,the E.U. has followed the U.S. lead in pro-moting overly broad enactments.

Yet another problem is that the DMCAuses blanket provisions to treat all copy-right industries alike, without taking intoconsideration that copyright industriesvary widely. Instead, in order to ensurethat copyright owners profit from theirworks while also minimizing the cost toconsumers, the anti-circumvention rulesneed to be tailored to suit the industry inquestion. The movie industry, for example,recoups the high cost of making movies bystaggering release dates of new moviesacross countries and across formats. Thebook publishing industry, on the otherhand, makes most of its profit from back-listed titles, and loses money on most newreleases. Sensibly then, we might want toallow region codes (which restrict consumeruse of DVDs to a particular geographicregion thus raising prices) on new movieDVDs, but not on old titles, as the justifica-tion for the region code no longer exists.

Recently in the U.S. there have been sev-eral new legislative proposals designed tonarrow the DMCA. The best course forCanada then would be to wait to see theeffect of these new proposals before sim-ply enacting DMCA-like provisions. If theCanadian Government insists on movingforward sooner, at the very least it oughtto follow a few recommendations:

1) Implement provisions that meet the barerequirements of the WIPO treaties, ratherthan patterning them after the unneces-sarily broad U.S. and E.U. provisions.

2) Make the technological protection provi-

sions as narrow as possible. Make themindustry specific, and only implementprovisions where an industry can showthat it has been or will be significantlyharmed if the provision is not imple-mented. Periodically review the provi-sions to see if others need to be added.

3) Give the provisions a ‘consumer protec-tion’ flavor by not only adding broadand robust exceptions, but by also man-dating that technological measures bereviewed for content to ensure that theydo not extend copyright’s traditionalboundaries. Fair dealing and otherexceptions should be preserved.

4) Specifically require that region codesexpire on new movie DVDs a few yearsafter first theater release. If the indus-try will not implement technologicalexpiry, mandate legislative expiry byallowing consumers to circumventregion codes. Allow consumers to cir-cumvent region codes on old titles.

The Canadian Government’s slow pace inimplementing the WIPO treaties couldactually work to its advantage, allowing itto learn from the mistakes of other juris-dictions, particularly the U.S.. Instead,the House of Commons StandingCommittee on Canadian Heritage hasstated that it wants the government tohave draft legislation ready by February2004. We can only hope that the govern-ment has the good sense to realize whatthe copyright industries have not: if youtreat your customers badly enough, theywill eventually turn against you. And thatis not in the copyright owners’ long-terminterest.

Leah Theriault is an S.J.D. candidate at

the University of Toronto and a Graduate

Fellow of the Centre for Innovation Law

and Policy. She has a B.Sc. and an LL.B.

from the University of Toronto, and an

LL.M. from Boalt Hall School of Law, and

was a teaching fellow at the School of

Information Management at UC Berkeley.

COPYRIGHT is Worth Saving …. from government legislatorsBY LEAH THERIAULT

CI Mag - ver 10 3/26/04 1:47 PM Page 12


Have you ever had to go to the washroom when there was a line-up? Did you jump cue, or merely adhere to the socially acceptednorm of using the restroom facilities on a “first come first serve”basis. IBM Corp. was granted a patent in 2001 for a system andmethod for providing reservation for restroom use on a firstcome basis; in particular on airplanes (No. 6,329, 919).

These are two examples of the unusual patents that the UnitedStates Patent Office has granted – and as a general rule, if youare able to get your invention patented there, it is a mere matterof time and bureaucratic administration to get the same patentin Canada. Of course, there are exceptions. Business methodshave remained unpatentable in Canada and as the CanadianSupreme Court of Canada’s judgment in the Harvard Mouse casedemonstrates, higher life forms also remain excluded.

Notwithstanding, inventions that provide little contribution oftrue ingenuity are increasingly rewarded with a patent right. TheWorld Bank, in its Discussion Paper on Intellectual PropertyRights and Economic Development notes a “surge in patenting”.The Report states that between 1985 and 1995, the number ofapplications for US patents by US inventors rose in absolute andpercentage terms faster than in any other decade. From the turnof the century to the 1980’s there was an average of 40,000-80,000 applications per year. By 1995, more than 120,000patents were applied for. This jump can be attributed in part togreater innovative activity that new technologies, like biotech-nology and semi-conductor chips, have enabled. It may also bea manifestation of the progressively more lax application of thestatutory requirements for patentability, a specialized appellatecourt, an under resourced and overworked patent office, and agenerally patent friendly judiciary.

No one would dispute that patents serve an important purposein society. The normative theory behind a patent grant is that itcreates a bargain with the Crown that should ultimately servethe public’s interest and enhance welfare. In the absence of suchan exchange, inventors might be inclined to maintain theirinventions as trade secrets in order to prevent the “free-rider”problem of second comers who could reap the benefits without

any investment in associated costs. Patents also provide anincentive for the early disclosure and dissemination of new tech-nology with sufficient detail to enable one with prior knowledgeand skill in the art to work the patent. As a result, they spur further innovative activity by allowing for improvements to bemade on the disclosed inventions. But is more better? Has thepatent system gone too far and issued too many patents, whichif challenged, may be held to be invalid?

Patent portfolios are used as security for financing research anddevelopment. Their validity is important to maintaining theintegrity of the system and their security value. Reports indicatethat the USPTO grants approximately 75% of patent applications,and that the courts invalidate some 46% of litigated claims. Yetless than 1/5th of 1% of all issued patents ever actually go tocourt primarily because of the prohibitive costs. Moreover, com-mercialization of new technologies may be slowed through thegrowing of “patent thickets” which entails overlapping patentrights requiring anyone seeking to commercialize new technologyto obtain and bundle licences from a variety of patentees. Largeentities with significant patent portfolios are able to intimidatelicencing fees from smaller enterprises who want to avoid thecosts of litigation and yet continue with exploratory research.

Patenting is big business. It comes as no surprise, then, that thispast summer a patent was granted for both the computer andthe process for drafting patent applications (No. 6,574, 645). Asa result, patent attorneys can now conceivably be sued forpatent infringement when they draft patent applications for theirclients. Patent attorneys might not be too pleased with this out-come, but admittedly it is an innovative way to put an end to allof this absurdity.

Bita Amani, assistant professor at Queen’s University, Faculty of

Law, teaches courses in intellectual property and torts, and is cur-

rently completing her doctorate in law at U of T Faculty of Law on

the patenting of life forms. Her research is being funded in part

by the Centre for Innovation Law and Policy and the SSHRC.

Has PATENTING

Do you remember eating a peanut butter and jelly sandwich as achild? Was the crust cut off? P&J sandwiches were popular becausethey wouldn’t spoil, were an economic and slightly nutritious offeringand kids generally loved the taste. Now, Smuckers holds the patent(No. 6,004, 596) for a product called “Uncrustables”.

BY BITA AMANI Gone Too Far?

CI Mag - ver 10 3/26/04 1:47 PM Page 13

WHY“RESEARCHERS FINDGENE FOR COLON CANCER”; “SCIENTISTSDISCOVER LINKBETWEEN GENETICMUTATION AND ADVERSEDRUG REACTION”; “STEMCELL RESEARCH OPENSDOOR TO TREATMENT OFSPINAL CORD INJURIES.” In the midst of many glorifying announcementsof major breakthroughs in medical research,arguments for caution, regulatory control andrestraint are often lost or brushed aside as thewhining of doom thinkers. Canada, as otherindustrialized countries, has embraced newbiotechnology, characterized by strong alliancesbetween governmental funding agencies, indus-try, academic researchers and health careproviders. This development comes, however, ata price; and it requires an appropriate regulato-ry response.

In Canada, the threat of legal action againstCanadian provincial governments by MyriadGenetics for allowing breast cancer genetic test-ing (allegedly in violation of their patents onspecific BRCA1&2 tests) indicates how com-mercial interests may clash with governmentalefforts to provide equitable health care toCanadians. But the example of Myriad Geneticsis not necessarily new. Public providers ofhealth care often have to negotiate with privateparties to find a balance between their economicneed to have a return on investments and thegovernment’s desire to limit health care expens-es. The benefits and shortcomings of our patent


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system remain a central point of discus-sion in the context of health care. Otherexamples indicate, however, even moredirectly how tensions exist between eco-nomic and public interests. These exam-ples show why the commercialization ofresearch and the marketing of new healthcare technologies such as genetic testingrequire regulatory control over both theconduct and outcome of research and itsmarketing.

Genetic testing is increasingly integratedin clinical practice, both as a diagnostictool and as a tool for predicting higher

risk for disease. Research in pharmacoge-nomics, which looks at the relationbetween specific genes and specific phar-macological products, is also showingpromise and may lead to the use of genet-ic testing to predict the efficacy andpotential side-effects of specific drugs inindividual people. New gene-chips arebeing brought to the market, allowing forthe simultaneous testing of people’sgenomes for a wide variety of geneticmutations, thus making genetic testingmore cost-effective. Notwithstanding thehype about these developments andabout the mapping of the humangenome, the potential of genetic technol-ogy is not yet fully realized. Much moreresearch remains to be done to obtain abetter understanding of gene-gene inter-action and of the interaction betweengenes and the environment.

Yet despite the limited progress, examplesabound of the commercialization of oftenvery basic genetic tests, and give us asense of what we can expect if no limitsare imposed. Philosopher Thomas Murrayreports of genetic testing companies solic-iting people to reassure themselves of theorigin of their off-spring with the slogan:“Call 1-800-WHO’S-THE-DAD.” Othercompanies are capitalizing on the desireof many African Americans to retracetheir ancestry with often misleadingpromises of providing genetic clues about

their “true origin” on the basis of genetictesting. Still others invite parents throughwww advertisements to submit sheets orunderwear of their adolescent children todetect whether they engage in premaritalsex. If markets for such tests can be creat-ed, what is to stop commercial campaignsdirected at future parents on prenataltesting for popular or “desirable” charac-terstics, even in the absence of solid sci-entific data supporting the tests. Do wereally want to see the commercial promo-tion of prenatal testing for height, otherphysical features, or in the future perhapseven “gay genes”? Commercial strategies

can prey on people’s desire for the ‘perfectchild’ or for ‘control’ over future health,while at the same time reinforcing anxi-eties and reinforcing views of what typeof genetic ‘deviance’ ought to be avoided.Concerns have already been expressedabout how the commercial promotion ofgenetic breast cancer tests are unnecessarilycreating anxiety and in some cases targetingwomen who should not undergo testing.And in 2001, the U.S. Equal EmploymentOpportunity Commission settled a courtaction against Burlington Northern Santa FeRailway related to their genetic testing ofemployees who filed claims for work-relat-ed injuries based on carpal tunnel syn-drome. The company had imposed suchtesting without appropriate consent andwhile the scientific validity of the tests washighly questionable.

Various professional and ethics guidelinesindicate that genetic tests should only beconducted after sufficient genetic coun-selling and with support provided bytrained medical professionals. Those testsshould stay within the health care con-text, and should not be pushed by aggres-sive commercial campaigns. Further, areview structure is needed to allow for anindependent analysis of the implicationsof allowing certain forms of genetic test-ing. In most countries, drugs and medicaldevices undergo review before enteringthe market. A regulatory review system

for genetic testing would allow us to eval-uate the risks and societal implications ofnew genetic technologies and determinethe parameters of their use. The reviewshould focus on the following questions:Who can conduct genetic testing? Whocan order it? For what purpose can it bedone? What is the impact of this testing?Who has access to the information gainedby the test? How will the information bekept, and for how long? These questionsshould be at the core of the review of anyform of genetic testing before approval isgiven for its use.

The introduction of a review structurewill, however, only be valuable if the sci-entific basis of its decisions is reliable.And this is where another aspect of com-mercialization comes into play. The samepartnerships between academia-industry-government that have been heralded ashaving contributed to major scientificbreakthroughs and the development ofnew biotechnology are also partially heldresponsible for creating significant con-flicts of interests and for undermining theintegrity of the scientific process.

More and more research is directly con-trolled by industry, which inevitably has afinancial interest in the outcome of theresearch. Academia itself is also increas-ingly entering into partnerships with theprivate sector. Academic institutionsbecome more and more dependent onprivate sponsors, either for full funding ofresearch or for matching funding. Undermatching funding schemes, researcherscan only obtain funding from governmen-tal funding agencies if they also obtainthe same amount in matching funding.Through this funding mechanism, gov-ernments increasingly encourage private-public partnerships. In many areas ofmedical research, academic researchersare setting up spin-off companies to com-mercialize their research findings.Researchers and academic institutionsoften obtain stock in these companies.


PHILOSOPHER THOMAS MURRAY REPORTS OFGENETIC TESTING COMPANIES PUSHING PEOPLE TO UNDERGO POTENTIALLY DISTURBING TESTINGWITH THE SLOGAN: “CALL 1-800-WHO’S-THE-DAD.”

CI Mag - ver 10 3/26/04 1:47 PM Page 16


IT HAS TO BE

RECOGNIZED, HOWEVER,

THAT REGULATING

GENETICS TECHNOLO-

GIES WILL ALSO

CREATE IMPORTANT

SOCIAL AND MORAL

RESPONSIBILITIES.

AND WHILE IT WOULD

BE UNWISE TO LEAVE

THE DEVELOPMENT OF

GENETIC TECHNOLO-

GIES AND THEIR USES

UP TO MARKET

FORCES…

There are concerns about the impact of thesedevelopments. Commercial interests obviouslyhave an impact on the prioritization withinresearch. For example, if financial interestsdrive scientific endeavours, chances are slimthat research will focus on diseases affecting pri-marily the homeless, or developing countries, orthat it will look at the efficacy of therapies thatdo not involve new technology or patentabledrugs. Studies also increasingly show how com-mercial interests may have an impact on theoutcome of the research, the research design,the publication of negative trial results, and theconduct of researchers. Several studies haveshown how commercially sponsored research ismuch more likely to conclude that the drug orthe medical technology of the sponsoring com-pany are effective. Various research controver-sies also suggest that commercial interests mayaffect the way researchers deal with researchsubjects. They may be tempted to underesti-mate the risks involved in a trial and misrepre-sent these risks to potential research subjects.

One study even indicated that insider tradingseems to occur in clinical research. This should notcome as a surprise. The drug and biotech industryis one of the most profitable industries. A billiondollar price tag is attached to bringing a new drugor medical technology quickly to the market.

If scientific research is to provide the basis forweighing the validity and value of new technolo-gies and therapies within a commercial environ-ment, it should be appropriately regulated tostrengthen its independence. Not surprisingly,various funding agencies, such as the NationalInstitutes of Health; professional organizations,such as the Canadian Medical Association; andeducational organizations, such as the AmericanAssociation of Medical Colleges have called forincreased vigilance with respect to conflicts ofinterest and for improvements to the reviewprocess. Whether conflicts of interest affect theconduct of researchers and the integrity of theresearch process is increasingly recognized bythese organizations as a serious concern.

As in other countries, there is room forimprovement in Canada. The funding agenciesas well as Health Canada rely for the most parton the work of Research Ethics Boards (REBs),which are currently not strictly regulated.Although they have a public policy mandate ofprotecting the rights and well-being of researchsubjects and the integrity of the research process,they can be qualified as largely volunteer bodies,functioning with only loose professional stan-

dards and without appropriate educational andtraining programs. Even more problematic isthat the very same REBs that are supposed toreview conflicts of interests are themselvesincreasingly affected by these conflicts.Commercial REBs have mushroomed in North-America, offering research review and subsequentapproval as a commercial product against pay-ment of a substantial fee. And to the extent thatthe line between industry and academia is blur-ring, academic REBs are submitted to the samepressures as REBs set up by commercial researchcompanies for whom approval of research hassignificant financial implications.

Commercial interests in the research and mar-keting of new technologies do not only exist inthe context of genetics. A better regulatorystructure should not focus exclusively on genet-ic research or on marketing of genetic testing.But genetic testing raises specific societal con-cerns dealing with stigmatization, discrimina-tion and potential eugenic implications of thetechnology. Some forms of genetic research maybe stigmatizing, not only for individuals partici-pating in the research, but also for family mem-bers and members of ethnic groups. Further,some forms of this research are value laden, andit seems inappropriate to allow marketingstrategies to have too great an impact on socie-tal values. A regulatory review of these newtechnologies should, therefore, involve not onlya control of the validity of the scientific data andof the quality standards of the laboratories con-ducting the testing, but a detailed review of theirimpact on societal values. As with drugs andmedical devices, this review should also lead to adetermination of the parameters of their use.

It has to be recognized, however, that regulatinggenetic technologies will also create importantsocial and moral responsibilities. And while itwould be unwise to leave the development ofgenetic technologies and their uses up to marketforces, there is something uncomfortable about theidea of governmental review and ‘approval’ ofgenetic testing. In a recent discussion with a jour-nalist about the need for regulating the use ofgenetic testing and genetic information, she askedwhat the difference was between a governmentalreview committee and the advisory committeesthat were part of eugenic governmental policies inthe previous century. This poignant question indi-cates how important it will be to have a reviewsystem that remains critical of the valuesexpressed through approval or disapproval ofgenetic testing and that integrates solid humanrights standards in the evaluation process.

This article is a substantial revision of an article published under the same title in Reform: A Journal of National and International Law Reform (2003, Issue 83).

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On the one hand, the “sweat of the brow” or “industrious collec-tion” school holds that labour or industry, even in the absence ofcreativity, may be sufficient to make out a finding of originalityfor copyright purposes. For example, the labour invested in thecollection of the information that makes up an ordinary phonedirectory is, on this view, sufficient to give rise to copyright pro-tection. The phone directory is original in the sense that it wasnot copied from another person’s work. The fact that the pro-duction of an alphabetically arranged phone directory is a mere-ly mechanical and automatic task requiring no creativity doesnot affect the directory’s copyrightability.

On the other hand, the “creativity” school holds that a finding oforiginality is impossible in the absence of creativity. The stan-dard of originality requires at least minimal creativity. To be sub-ject to copyright protection, a work must be not-copied and

minimally creative. More precisely, the creativity requirementsubsumes the not-copied requirement. The result is that labouras such is not sufficient. It is true that the standard of creativityis not by any means high – but it is there. This means thatmerely mechanical arrangements of pre-existing material, even ifnot copied, are still not original. On this view, a garden varietyphone directory lacks originality. One can therefore copy it withimpunity. It is public domain material regardless of the labourinvested in its production. One might say that, from the stand-point of the creativity view of originality, copyright law protectscreations, not mere productions, and ordinary phone directoriesare produced, not created.

Many regard the doctrinal battle between the sweat of the browand the creativity schools as a far deeper theoretical encounterbetween two different and incompatible versions of the very

Section 5 of the Canadian Copyright Act provides, inter alia, that copyright shall subsist

in “every original literary, dramatic, musical and artistic work.” Originality is thus a cardi-

nal requirement of copyright protection. Yet the basic features of the originality

requirement in Canadian copyright law are currently uncertain. This uncertainty is

often viewed as a manifestation of a long-standing and ongoing struggle between two

different doctrinal schools.

CONTINUED >

ORIGINALITY IN CANADIAN

COPYRIGHT LAWBY ABRAHAM DRASSINOWER

Sweat of the Brow,Creativity, and Authorship:

The following is an extract from an article by Professor Drassinower that will appear

in the inaugural issue of the University of Ottawa Law and Technology Journal later

this year. It is printed by kind permission of the UOLTJ. Readers interested in

the full version of the article should visit the Journal’s website for information:

www.commonlaw.uottawa.ca/tech/html/lawjournal.html

CI Mag - ver 10 3/26/04 1:48 PM Page 19


Our current confusion regarding the originality doctrine is the result of the concurrent influence in our jurisprudence of not two, but three,different and incompatible theoretical visions ofthe very meaning and purpose of copyright law.

meaning and purpose of copyright law.This encounter is often construed as onebetween a ‘misappropriation’ model ofcopyright law – for which fairness to theauthor as labourer is the central and ani-mating concern – and a ‘public interest’model of copyright law – for which theproduction and dissemination of authori-al works in the name of the public inter-est is the central and animating concern.[... ...]

I want to establish that our current confu-sion regarding the originality doctrine isthe result of the concurrent influence inour jurisprudence of not two, but three,different and incompatible theoreticalvisions of the very meaning and purposeof copyright law. My point here is toinsist upon the presence in our jurispru-dence of a third vision of copyright law,which I will call the ‘authorship’ model. Iwill then argue that the authorshipmodel, because it is not framed in termsof an opposition of author and public,offers a vision of copyright law for whichrespect for authorship is consistent withthe cultivation of the public domain. Theupshot of my discussion is an affirmationof originality as creativity from the stand-point of the authorship model. [... ...]

[The struggle between “sweat of thebrow” and “creativity” is presently

embodied in CCH Canadian Ltd. v. LawSociety of Upper Canada, a case heard onNovember 10, 2003 and currently onreserve at the Supreme Court of Canada.Although] many regard the current incar-nation of the sweat of the brow/creativitystruggle as an encounter between the mis-appropriation model and the public inter-est model, previous incarnations of thatstruggle are best characterized as anencounter between the misappropriationmodel and the authorship model. The classic House of Lords decision inWalter v. Lane is the archetypal instance of that earlier version of the struggle.[... ...]

Five judgments were delivered at theHouse of Lords. Four (Earl of HalsburyL.C., Lord Davey, Lord James of Hereford,and Lord Brampton) found in favour ofthe plaintiff. Lord Robertson dissented.We may [for present purposes] regardLord Halsbury’s judgment as a paradig-matic “sweat of the brow” judgment; andLord Robertson’s dissent as a paradigmat-ic “creativity” judgment.[... ...]

What is at stake [for Lord Halsbury] isnot ‘authorship’ in any special sense, butrather the “grievous injustice” involved in the misappropriation of another’s effort– in reaping where another has sown.

[... ...] Lord Robertson’s judgment [on theother hand, is] premised on an affirma-tion of the specificity of the labour ofauthorship, and, therefore, on a distinc-tion between mental products per se, andthe specific works of authorship.[... ...]

The two different interpretations of theoriginality requirement that emerge fromthe encounter between Lord Halsburyand Lord Robertson in Walter v. Lane,then, correspond to two different visionsof the very purpose and meaning of copy-right law. Whereas Lord Halsbury’s sweatof the brow approach affirms a view ofcopyright as concerned with the misap-propriation of another’s labour, LordRobertson’s creativity approach affirms aview of copyright as concerned with therecognition of authorial dignity. What wehave [... ...] is an encounter between themisappropriation model and the author-ship model.

There is, of course, a third vision of copy-right law operating in our midst: the pub-lic interest model. [... ...] The author hasrights not because of the inherent dignityof authorship, nor because of the inherentfairness in rewarding labor and prevent-ing its misappropriation, but ratherbecause the public interest in the produc-tion of intellectual works requires theserights as incentives for production. If

CI Mag - ver 10 3/26/04 1:48 PM Page 20


these incentives were not necessary, the author would have norights arising either from her dignity or her labour. [... ...]

[In its judgment in the CCH Canadian case, the Federal Court ofAppeal tried to strike a balance between competing views, yet]the ambivalence that traverses the Court’s construction is strik-ing: the Court cannot frankly adopt a public interest orientationbecause it wants to be fair to the author, but it cannot be unam-biguously fair to the author because it wants to account for thepublic interest. The effort to be fair to the author finds itselftrumped by the public interest, just as the public interest cannotproceed unobstructed by scruples about fairness. Thus, althoughthe Court formulates its task as that of finding an equilibrium, itseems destined to find an uneasy compromise that may fail tosatisfy either of the stated goals. [... ...]

As we shall see by way of conclusion, Lord Robertson’s author-ship model contains the promise of a genuine convergencebecause it suggests the possibility of conceiving the irreducibleprinciple of authorial dignity as a principle that contains its owninternal limit. [... ...]

The authorship model thus reconfigures the opposition betweenauthor and public that informs the encounter between the mis-appropriation model and the public interest model. From thestandpoint of the authorship model, those two models are butflipsides of each other in that each presupposes an oppositionbetween author and public. By contrast, the authorship modelchallenges the shared presupposition that structures the debate.It neither takes sides in terms of the perceived oppositionbetween author and public, nor attempts to “balance” theassumed poles as if they were heterogeneous or incommensu-rable values, but rather seeks to resolve that opposition into atheory of copyright able to grasp both aspects of the

author/public relation within the larger whole of which they areequally necessary parts.

Neither the concept of the ‘author,’ nor that of the ‘public,’emerges unchanged from this reconfiguration. Under the aegisof the authorship model, the author is creative rather than mere-ly productive. At stake is the author’s intellectual relation to herwork, rather than her relation to others as competitors for thevalue of her labour. The requirement of originality thus policesthe difference between the generality of a person’s labour andthe specificity of her authorship, granting copyright protectiononly on the basis of her authorship, and leaving other aspects ofher possible entitlements arising from her mere labour to otherlegal regimes, such as that of unfair competition. But this nar-rowing of the concept of the author is necessarily paralleled by anarrowing of the concept of the public. At stake is not the gen-erality of the public interest as such but rather the specificity ofthe public domain as a matter of copyright law – that is, as amatter of the fair interaction between persons considered intheir equal capacity as authors. Under the aegis of the author-ship model, the relevant domain of the public is the domainspecified in and through the recognition of the defendant’s equaldignity as an author. The irreducible principle of authorial dig-nity recognizes and generates its own self-limitation under therubric of equality. As Lord Robertson put it, “the word ‘author’… seems to me to present a criterion consistent with the widestapplication of the Act to all who can claim as embodying theirown thought, whether humble or lofty, the letterpress of whichthey assert the authorship [italics added].” From the standpointof authorship, then, fairness to the author in not at odds withthe public domain. On the contrary, authorial right and publicdomain appear as aspects of a single concept. Being fair to theauthorship of each is being fair to the authorship of all.

At stake is the author’s intellectual

relation to her work, rather than

her relation to others as competi-

tors for the value of her labour.

CI Mag - ver 10 3/26/04 1:48 PM Page 21


perspectives

Ontario’s former Minister of Health and Long Term Care, Tony Clement, and health

law scholar, Professor Colleen Flood, along with Greig Hinds, comment on the

priorities, challenges, and hope for our country’s ailing health care system.

Just What the Doctor Ordered?

BY TONY CLEMENT

The F

The pre-Christmas headlines in Canadian newspapers said it all:“Health care spending hits more than $120 billion,” said one, report-ing on the annual report of the Canadian Institute for HealthInformation (CIHI). Further analysis showed that health expendi-tures represented 10% of Canada’s GDP in 2003, matching the all-time high reached in 1992 and keeping Canada 4th among compa-rable OECD countries.

What does it all mean? As a former Ontario Health Minister, CIHI’sstatistics are a depressingly familiar refrain: in Canada there are toomany health care demands chasing too few public resources. It isnot, however, a case of too few dollars; quite the opposite. Indeed,CIHI's report makes it clear that public and private investments inhealth care represent more and more of Canadians’ tax dollars anddiscretionary income. Of course, Canadians may be perfectly at easewith this: in a democratic and affluent society, why not spend moreon the health and wellness of its individuals?

The key question becomes whether health expenditures pass the testof being sustainable, accountable and accessible. In other words, ifthe current $120 billion health care price tag is enough money, thenis it being spent wisely and with its intended consequences?

For example, CIHI reports that over 30% of all health spendinggoes to the nation’s hospitals. That is down from 45.2% in 1976, asmore services are offered in non-hospital settings, and as morehealth services come into being, such as organized home care. Yet,hospitals are still a big chunk of the health care budget. It becomesaxiomatic that greater accountability and performance measurementare keys to ensuring hospital budgets are sound and effective.

Measures of health care spending are useful to a point, but must beexamined in a context. Our population is growing due to net immi-gration and aging, matching trends in every Western society, withthe possible exception of the United States. Over the next 12 to 15years, those aged 65 and older will double in Ontario, and the agecohort represents close to 50% of all health expenditures. The rateof growth is even higher amongst the 80 years and older cohort.Hence demands for sophisticated and accessible health care willonly grow. And, since we are speaking of the Baby Boomers reach-ing their retirement years, the demands for greater choice in qualityhealth care will grow as well. For the past 40 years, Boomers areused to getting what they demand, and this will colour the inter-generational and political debate in the not-too-distant future.

The conclusion has to be that governments of all political stripesface increasing demands for health services, demands that will become

deafening when the Baby Boomers reach their years of prime health careconsumption. We have some time to deal with these challenges, but notvery much time. In the meantime, Health Ministers would do well toreject the siren song of “tinkering around the edges” in response tohealth care challenges. Roy Romanow's prescriptions veered into thisarea, claiming that health care spending would be sustainable if only thefederal government restored its share to 25% of the total funding.

While more federal funding would be helpful in the short-run, it doesnot address the fundamental issue, namely that, under currentcircumstances, health care spending exceeds both inflation andgrowth in GDP by a substantial margin. If current trends contin-ue unabated, governments will be forced to choose betweenmore health care spending and less education, infrastructure andother governmental priorities.

Moreover, the priorities within a huge organization like aMinistry of Health are constantly competing. When I wasMinister, it always amazed me how we could allocate $28 billionand still have a long list of unfunded priorities. Many of thesehad waited years for an extra slice of the health care pie, andwould not be considered frills. For instance, the funds to moveforward with more community mental health programs has beenpromised for decades, and has yet to be meaningfully delivered.

Priorities setting also needs more data for a Minister to make acorrect decision. There is not an advocate who graces theMinister's doorway who is not only convinced of a program'sintrinsic worth, but also that “it will save the health systemmoney over the long-run.” But how do we measure this? Whathospital program is no longer needed because of the funds allo-cated for a new wonder drug, and so on?

With all of the challenges our society faces there are no easy answers.Nonetheless, I remain an optimist. The pace of discovery and techno-logical change has opened up new vistas of health and healing,unimaginable just a decade ago. Demographic and fiscal pressures arenot yet emergencies, and with proper planning and innovation can besuccessfully met. All that is needed, is the will of opinion leaders anddecision-makers to embrace change. We should support their efforts ifwe value an accessible, sustainable and accountable health system.

Tony Clement is a 1986 graduate of the Faculty of Law, University of Toronto. In1995 he was first elected as Member of Provincial Parliament for Brampton South,and in 1999 was appointed Minister of the Environment (Ontario). In 2001 he wasappointed Minister of Health and Long-Term Care, and oversaw the province's hospi-tals and long-term care facilities, the Ontario Health Insurance Plan, and communitycare access centres.

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Five commissions in the last five years have investigated thefuture sustainability of Medicare in Canada: the Fyke Report inSaskatchewan, the Clair Report in Quebec, the MazankowskiReport from Alberta, the Kirby Report (produced for theSenate), and last, but by no means least, the RomanowCommission.

Despite the different ideologies of the governments that appoint-ed these men, all have confirmed the fundamental principles ofCanada’s publicly funded Medicare. It is a system where accessto important medical care is distributed on the basis of need,rather than ability to pay, and services covered under Medicareare financed almost exclusively through general taxation rev-enues. But profound questions linger and will continue to lingerlong after the many volumes of commission reports have gath-ered dust. Specifically, these questions are: What health careservices should be publicly funded; Who chooses the aboveservices; and How are these decisions made?

These issues are now more urgent as the First Ministers’ HealthAccord of 2003 accepts that the core of publicly fundedMedicare should expand beyond the traditional sectors of hospi-tal and physician services and into home care and eventuallyinto prescription drugs. As the categories of services that mayreceive full public funding broaden, who decides what particularservices within those categories should, or should not, be pub-licly funded?

With respect to the question of “what” services to fund, it isimpossible to generalize given the different resource constraintsand values. A human rights approach, as epitomized in theConvention on Economic Social & Cultural Rights, is vital fordetermining a basic minimum of access to health care. However,as a country develops, it expands its medical care systembeyond the “core” demanded by international human rights con-ventions to a much larger, and more ambiguous, “core”.

An increased choice in health care delivery options due to tech-nological or pharmaceutical advancements can fuel this ambigu-ity. How does one decide on which delivery option to choose? Isit a simple cost decision? For example, if a surgical operationcosts $150,000 but only has a 5% chance of success, should thisbe publicly funded? Or, if a new drug achieves the same healthoutcome at a 20% higher cost than the existing drug on themarket but has fewer, or even no, side-effects, should this bepublicly funded?

In theory, the choices or decisions made should be a function ofpublic values, available resources, and information regarding rel-ative costs and health benefits. For example, if we spend an extra$150,000 on health care, that money will not be available for edu-cation. We must ask ourselves, does the health care system benefitfrom that funding, as compared to the benefit that the educationsystem would have received from the same amount of funding?

It seems clear, however, that decision-making about what is pub-licly funded in Canada’s Medicare is not made like this. Instead,the choices are a function of accidents of history and long-heldaccommodations between governments and the medical profes-sion; inflexible and inadequate regulations and law; and turf pro-tection and lobbying by different stakeholders and interest groups.

The clear task facing governments, then, is to recalibrate healthcare decision-making processes so that scarce health resourcescan be used to meet the actual health needs of the population,rather than meeting the self-interested desires of pressure groupsand lobbyists. A team of 13 interdisciplinary scholars – led byProfessors Tuohy, Stabile and Flood at the University of Toronto,and funded by the Centre for Innovation – are exploring thesequestions and holding various conferences and lectures at theCentre over the course of a three-year program of research.Their analysis begins in Ontario and will work its way throughthe other provinces.

Professor Colleen Flood, along with U of T Professors Carolyn Tuohy (PoliticalScience) and Mark Stabile (Economics), is Co-Principal Investigator on a three-year research project jointly funded by the Canadian Health Services ResearchFoundation and the Ontario Ministry of Health and Long Term Care. The Project,“Defining the Medicare Basket of Goods and Services”, will examine the deci-sion-making processes used in the Canadian health-care system to determinepublicly funded health goods and services. Project Manager, Greig Hinds, isresponsible for coordinating the research effort and publicizing its results.

BY COLLEEN FLOOD AND GREIG HINDS

The WHO, WHAT AND HOW MUCHof Publicly Funded Health Care

e Future of Health Care in Canada

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OOne hears such wonderful things about the accomplishments ofthe revolutionary Cuban government – universal medical care,free food, near perfect literacy rates! How could this small, poorisland nation have achieved things our own, far richer countrycannot?

Spend a little time in Havana, and it becomes perfectly clearhow Fidel’s government can boast of such accomplishments. Itsimply makes them up. Social order is most easily attained bysweeping unpleasant truths under the rug, and nothing aboutthe true condition of the Cuban people is pleasant.

This, it turns out, was the logic underlying China’s earlyresilience and calm in the face of the growing SARS epidemic.Deny, and hope no one notices that things are not as they seem.Only it turns out, surely to no one’s great surprise, that denyingreality – especially when reality is a highly virulent new disease – isnot a very effective strategy, even in the short term.

Contrast China’s early response to Toronto’s. Such a fuss seemedto be made in the media that no one would come to the city. Asthe epidemic progressed, the news was full of criticisms of theresponse of the authorities, often from within the health careestablishment itself. Some medical officer or other seemed to beissuing a statement every few minutes.

Yet, amidst this apparent chaos, a successful public healthresponse quickly emerged. Where it was not so successful, thelessons were there for all to see and will be available next time.

We often talk about freedom of speech in an abstract way, as areflection of the dignity of the human individual, as an insepara-ble incident of citizenship. It is very much those things. But it is

also an important part of what makes society resilient, by per-mitting the rapid sharing of socially useful information, and itsaccelerated processing into knowledge. Now, the Internet is acritical part of this process.

While the city of Toronto’s municipal government was the first to goonline with information (www.city.toronto.on.ca/health/sars/index.htm),all public health authorities and all levels of government inCanada created up-to-date and extensive web sites providinginformation on SARS. The Internet facilitated the quick andorderly dissemination of facts about the disease, and preventa-tive techniques for it. Private chat groups and web sites dedicat-ed solely to the discussion of SARS sprang up, in some casesspecifically to help alleviate the fears and stress experienced byall (http://www.sarssupportcentre.net/). This free flow of infor-mation meant that self-diagnosis and self-quarantine were farmore likely to occur. The Internet is fast, easily updated, cheap,and extraordinarily efficient in making necessary informationwidely known.

In the People’s Republic of China, such information sharingabout SARS was damped under a thick blanket of laws. TheInternet as seen through the eyes of a citizen of the PRC is verydifferent from that which we see here in Canada.

In China a vast licensing regime governs the right to publishnews and opinions on public issues. This licensing systemextends into cyberspace, as burdensome licenses are required forsuch endeavors as opening up an Internet café. Even publishingto a personal, non-commercial web page requires the authoriza-tion of the government, (as mandated by Article 6 of the InterimProvisions on the Administration of Internet Publication, 2002).Special cadres of police enforce these rules with varying levels of

Internet Regulation & Disease Control

BY RICHARD C. OWENS AND REX MAKOTO SHOYAMA

Lessons that Toronto can pass on to Beijing

CI Mag - ver 10 3/26/04 1:48 PM Page 24


enthusiasm, depending on the mood of the moment.Thus, the disease control benefits that Toronto found in cyber-space were not afforded China. Firstly, the government was verytight-lipped about the outbreak of SARS to begin with.Secondly, the inability of Chinese residents to access and shareinformation over the Internet had greatly compromised the abil-ity to broadcast information at a fast enough rate to help containthe disease.

Web chat discussions were also not particularly helpful in Chinabecause all electronic bulletin boards are required to be licensedand monitored for inappropriate content, (Articles 8 and 11 ofthe Provisions on the Administration of Internet ElectronicBulletin Services, 2000).

The overly broad laws in China restricting use of the Internetare such that according to Article 17 of the Interim Provisionson the Administration of Internet Publication, 2002, it is a crimeto spread “rumors” via the Internet. Conveying SARS-relatedinformation to friends could constitute such an offence. Whyrisk it? Surely the government will look after public health?Chinese society learned to its shock that this was not the case. Itmight prove to be that, as we have heard from Chinese residents,the sense of betrayal over SARS will do more to force fundamen-tal changes in access to information in China than anything else.

Toronto has a population of less than 5 million people. In ametropolis like Beijing, with over 13 million people, it is perhapseven more critical that information travels rapidly, more rapidlythan disease can propagate. It is time for China to invest in infor-mation, because the benefits of free information far outweigh itscosts. The speed, ease of access, and economical viability of anInternet free from the burdens of over-regulation are vital to dis-ease control and the health and safety of the Chinese people, andall people.

IN THE PEOPLE’S REPUBLIC OF

CHINA, SUCH INFORMATION

SHARING ABOUT SARS WAS

DAMPED UNDER A THICK BLANKET

OF LAWS. THE INTERNET AS SEEN

THROUGH THE EYES OF A CITIZEN

OF THE PRC IS VERY DIFFERENT

FROM THAT WHICH WE SEE HERE

IN CANADA.

CI Mag - ver 10 3/26/04 1:48 PM Page 25

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OK, class, here’s a pop quiz. Supposetwo firms are racing to discover a newpharmaceutical treatment. Each firminvests $100 today in research; thewinner will receive $250 next year inprofits. The cost of capital to fund theresearch is 25% per year. The winnerwill earn a tidy return of (250 - 100) /100 = 150% per year on its investment.Obscene, right?

Wrong. But before I tell you why, letme share with you the point of today’slesson. Perhaps more than any otherconsumer purchase, the acquisition ofhealth-related products and services isgoverned by norms and expectationsthat challenge the usual market alloca-tion mechanism. Nowhere is that challenge mounted with greater officialbacking than in Canada, where univer-sal health care is a basic right. Yet theraw swells of supply and demand rushpast legal mandates no less than theBay of Fundy surges over the tidalsands. That is why intelligent policy-making towards the development ofnew drugs rests on a kind of economicjujitsu: if one is to reach a public end,one must deflect private means in thatdirection. Too often, pharmaceuticalpolicy treats economic incentives as itsconscripts rather than its employees. Atthe Centre for Innovation Law and

Policy, the goal is to construct stablepolicies that further Canada’s uniquehealth care objectives within the universal resource and behavioural constraints faced by any government–and, indeed, by any citizen.

The basic impulse to regulate economicactivity past the point of no return isillustrated in our opening example.Politically, who can defend 150% profitrates? Why isn’t 149% – or 15% –enough? Shouldn’t the winning firms’shareholders have to shoulder the bur-den of equitably distributing healthcare benefits along with the rest of us?In short, given that we have the goldenegg, why not at least give the goose ahaircut?

But an economist approaches the prob-lem at an earlier point in time, beforethere is an egg and before we knowwhich goose will lay it. Thus: each firmhas a 50% probability of success, whichmeans that its expected return, at thetime it makes its investment decision, isonly 0.5 x $250 + 0.5 x $0 = $125.That implies an expected rate of returnon the firm’s $100 investment of 25%–exactly its cost of capital. If the winningreturn of $250 were reduced by even$1, the expected return would be toosmall to justify the initial investment.

BY JONATHAN D. PUTNAM Chair, Law and Economics of Intellectual PropertyCentre for Innovation Law and Policy

Think you know your health-care policy? Convinced that

the high price of pharmaceuticals is to blame for the

skyrocketing cost of health care? Glad to see Canada

exporting its inexpensive drugs to the United States,

and developing countries like Zimbabwe?

CI Mag - ver 10 3/26/04 1:48 PM Page 26


““The $100 would not have been put towardsbetter health care, but towards some other,more profitable, project.

The requirement that a proposed economicpolicy be justifiable ex-ante–before we seethe egg–and not just ex-post, is known as“dynamic consistency.” Only policies that aredynamically consistent will continue to yieldthe same public benefits from private actionsover the long term.

So, who are the real losers from policies thattransfer the returns to success away fromtheir natural claimant? The answer is not, inthe main, the shareholders of the successfulfirm. The real losers are us–and our chil-dren. If we think of a promised return as akind of social contract, then reneging on thatpromise certainly has consequences for theparticular shareholders who expected a high-er return. But the real problem is that allthose other firms who must decide whetherto invest or not will build into their calcula-tions the government’s opportunistic breachof its contract. They will, other things equal,reduce their future investments. And thosereduced investments will yield fewer success-ful drugs over the long term. In legal terms,it is the precedential effect of injustice, notthe injustice itself, that brings the greaterharm to society in the long run.

An important outworking of the conflictbetween the promise of a certain return andthe temptation to renege on that promise liesat the nexus of patent policy and competitionpolicy. Patent policy is built on the premisethat “high” prices are good, because theyinduce investments that improve the qualityof life. Competition policy is built on thepremise that “low” prices are good, becausethey increase consumers’ access to desirableproducts. Competition policy treats pricesthat are “too high” as evidence of consumerharm. By focusing on things that are relative-

ly easy to observe, like the price of pharma-ceuticals relative to their cost of production,rather than on less visible quantities like theinvestment necessary to induce the discoveryand on the initial probability of that invest-ment’s success, competition policy risksdynamic inconsistency and reduced long-term investment in new drugs.

One sees disturbing evidence of this short-sighted approach to pharmaceutical develop-ment in recent U.S. court decisions andantitrust complaints brought by the FederalTrade Commission (which regulates competi-tion among pharmaceutical firms). The factpattern common to these matters has beenthe settlement of litigation between a so-called “branded” firm (which typically holdsmultiple patents on a marketed pharmaceuti-cal) and a generic firm that wishes to pro-duce the same drug more cheaply, if thepatents expire or are invalidated. The under-lying action is patent infringement againstthe generic firm; the settlements typicallyinvolve payments from the branded firm tothe generic firm, in return for the genericfirm remaining off the market. Under thisarrangement, market prices stay high, ofcourse. The stated justification for these settlements is that if the generic firm entersthe market and is found to infringe thepatent, it will not be able to afford the dam-ages that will be awarded by the court for the(typically lengthy) interval of infringement,and will instead go bankrupt. In protectingthe branded firm’s uncertain interests, thegeneric firm certainly loses its own profits, forwhich the branded firm must compensate it.

Private plaintiffs have alleged that theseagreements amount to no more than nakedprice fixing, because the two firms have con-spired to deprive consumers of the benefitsof (possibly infringing and therefore illegal)competition. In endorsing and pursuing thisposition, the FTC claims that consumers

An important outworking of the conflictbetween the promise of a certain returnand the temptation to renege on thatpromise lies at the nexus of patent policy and competition policy.

The Centre for Innovation

Law and Policy is planning

a one-day conference,

co-sponsored with Gilberts

LLP, on “The Intersection of

Pharmaceutical Patent and

Competition Law: The

Complexities Emerge.”

Among the speakers, Prof.

Putnam will be joined by

leading Canadian and U.S.

academics, practitioners and

government policymakers.

Sessions will include: “The

State of Play in Canada and

the U.S.”; “Achieving the

Innovation-Access to

Medicine Balance”; “The

Case of Patent Litigation

Settlements”; and “What

is the Proper Role of

Competition Law in the

Pharmaceutical Industry?”

The date will be announced

soon. For details, please

contact Centre for

Innovation Law and Policy

administrator, Carol Oblak,

at [email protected],

or visit the Centre’s web site

at www.innovationlaw.org.

””

CONTINUED >

CI Mag - ver 10 3/26/04 1:48 PM Page 27


have the right to competition and lowprices, without reaching the merits ofthe patentee’s claim for infringement. Ineffect, this policy reduces the returns topatent protection after the invention hasbeen made, because prices are, or maybe, “too high.” The policy is dynamical-ly inconsistent.

The U.S. is not alone in submitting tothe political pressure to reduce health care prices by reducingpatent rewards after the fact. The Ontario government recentlyannounced that it would not respect the Canadian patent issuedto Myriad Genetics, which Myriad claims requires the provinceto purchase breast cancer screening kits only from Myriad.Instead, the province will offer its own test at one-third the cost.

The political belief that drug prices are “too high,” relative tosome benchmark like production cost, at a selected moment intime, is one example of a more general phenomenon. Otherbenchmarks include prices in other jurisdictions, or prices onsimilar products. For example, pharmaceutical manufacturersfrequently “price discriminate” across countries by charginghigher prices in countries with higher average incomes, andlower prices in countries with lower incomes. They can general-ly prevent arbitrage, or reselling, from a lower- to a higher-priced country by a combination of the patent law and regulato-ry regime in the country where the drugs would be resold.

The global advantage of this practice is obvious when one con-siders the alternative: if drug manufacturers could not preventreselling across country markets, then prices would converge toa single average price in the single world market. Foreseeingthis, the manufacturer would simply charge the average priceeverywhere. Poorer countries would be worse off because theirprices would rise; rich countries would be better off becausetheir prices would fall. The inability to prevent re-importation iscited by the manufacturers of anti-HIV drugs as the main reasonwhy these drugs are not available at low prices in Africa, wherethe need is greatest.

In Canada, where prices are regulated under the Patent Act by thePatented Medicine Prices Review Board, prices are generally lowerthan in the U.S. As a consequence, Canadian pharmacists havefound a lucrative export market for certain drugs, particularlythose that can be used without close supervision of a physician,and those that lend themselves to purchase over the Internet.Pharmaceutical manufacturers, in turn, have threatened thesepharmacists with cutting off their supply, arguing that such salesviolate their U.S. patent rights. Canadian pharmacists haveresponded by complaining that such “refusals to deal” violate

Canada’s competition laws, but thus farthe Competition Bureau has disagreed.

Another benchmark sometimes cited bythose who claim that high pharmaceuti-cal prices are unwarranted is the price ofsimilar products, sometimes even prod-ucts with the same active ingredient. Forexample, the heart medication diltiazem,originally marketed as Cardizem, is off-

patent and can be manufactured by any qualifying generic firm.But Cardizem was originally sold in a twice-a-day formulation.Because patient compliance plays an important part in the drug’sefficacy, the manufacturer subsequently developed a once-a-dayformulation with the same active ingredient but a different“release profile” after ingestion. The once-a-day formulationremains patented. Such manufacturers are criticized for, in effect,extending patent protection on the underlying active ingredientpast the original patent’s expiration. One might think that theavailability of the generic twice-a-day substitute would keep theprice of the once-a-day version down, but that is not the case: theonce-a-day version has been adopted as the medical “standard ofcare.” Is its price too high?

In the end, the answer to this question is implicit in the choice ofprice benchmark, which is, after all, where we look to see if somelegal or social norm has been violated. In doing so, it is best first tolook in the mirror. The fundamental reason that pharmaceuticalprices are “high” is that consumers are willing to pay for them,either directly or through their taxes. Consumers are willing to paythese prices because the drugs they buy provide the best healthoutcomes among the available alternatives. Evidently, prices are“low” when compared to the next-best choice.

In other words, the most important benchmark is the one weadopt in choosing our level of care: “I am entitled to the besthealth outcome available.” That may be so: as the Romans usedto say, “de gustibus non est disputandum”– there’s no accountingfor taste. But if we are going to indulge that taste in a free market, we cannot be surprised when our purchases are pricedaccordingly. And we should remember that the availability todayof cheap generic drugs – whether they constitute the “best” levelof care or not– was induced by the “high” prices paid by ourparents when the drugs were patented.

An old line has it that an economist is a parrot trained to say,“Supply and demand! Supply and demand!” Thus, the economicapproach to pharmaceutical prices says this: Given our demand forthe best health care, the surest way to reduce prices is to increasethe supply of acceptable substitutes. We do that, not by reducingthe rewards to successful suppliers, but by increasing them.

The political belief thatdrug prices are “too high,”relative to some benchmarklike production cost, at aselected moment in time, isone example of a more gen-eral phenomenon. Otherbenchmarks include pricesin other jurisdictions, orprices on similar products.

CI Mag - ver 10 3/26/04 1:48 PM Page 28


noteworthy

BELL UNIVERSITY LABSThe Centre’s ability to forge bonds acrossdisciplines and sections is highlighted byits partnership with Bell Canada and theestablishment of the Bell University Lab(BUL) in law and policy in June 2002.Funded by Bell, the BUL is a collaborativeresearch program designed to createopportunities for the transfer of ideasbetween Bell Canada and Universitiesthroughout Canada. It is Bell Canada’smost significant investment in external R & D to date.

Under the direction of the Centre’sExecutive Director, Richard Owens, andlab manager, Rajen Akalu, the BUL hasbeen involved in a wide variety of projectsincluding providing legal and policy analy-sis in areas such as digital rights manage-ment and the wireless delivery of healthcare information. One of the more recenthealth-related initiatives to come out ofBUL’s collaborative efforts is the design ofa wireless handheld device that will enableclinicians to obtain clinical evidence at the‘point of care’. Projected future usesinclude the ability to provide on-line pre-scriptions and the access of patient infor-mation electronically. Other projects at theBUL include the development of tele-homecare technology for chronically-illpatients. One such project involves the at-home monitoring of patients requiring reg-ular dialysis treatment. Once completed,

the technology designed at the BUL willprovide health care workers with the abili-ty to monitor patients in their homes fromremote locations such as hospitals anddoctor’s offices.

BUL manager, Rajen Akalu, holds an LL.Bfrom the University of East London and anLL.M from the London School ofEconomics and is admitted to practice lawin New York. He regularly writes on thetopics of digital rights management, privacyand Internet law, and is responsible forthe overall management and strategicdirection of the lab, and the lab’s repre-sentation to other academic departments,government agencies, and private sectorstakeholders. For more information aboutthe BUL and the Centre and upcomingconferences and workshops, including a workshop on open source software forthcoming in May 2004, please contact Rajen Akalu at [email protected].

THE NEXT WAVEThe fourth Annual Privacy and SecurityWorkshop, oraganized by the Centre, the University of Waterloo, and theInformation and Privacy Commission, andsponsored by Bell Canada, Bell UniversityLaboratories, Microsoft, and others, washeld on November 6 & 7 at the Universityof Toronto Faculty Club. A range of guestspeakers explored privacy issues and newtechnologies in Privacy and Security:

The Next Wave. In keeping with theambitious standards of past workshops,the workshop attracted more than 40leading practitioners, academics, technolo-gy experts and authors to discuss theirideas, insights and solutions. Panelists

included law professor Lisa Austin of theUniversity of Toronto, Caspar Bowden ofMicrosoft Europe, Marit Hansen of theIndependent Centre for Privacy Protectionand Professor Michael Geist of theUniversity of Ottawa. The workshopsshowcased both private and public sectorleaders in an interactive case-studyapproach that explored the competingthemes of privacy rights and security inthe aftermath of terrorism and war, andfeatured privacy enhancing technologiesavailable for organizations managing per-sonal information. Highlights of the work-shop included Ann Cavoukian,IPC/Ontario, who spoke on “Being on theNext Wave of Privacy: Avoiding theWipeout”, and Colin Bennett, Universityof Victoria, on “Governance of Privacy”.

DEDICATION TO

EXPANDING

HUMAN CAPITAL ANDTECHNOLOGICALMATERIALSThe Centre and Bora Laskin Law Librarycontinue to expand and build comprehen-sive resource materials in many subjectareas in which laws, legal institutions and

policies affect, or areaffected by, innova-tion and technologicalchange. Supportingthe curriculum andresearch initiatives ofthe Centre is

Librarian and Administrator, Sooin Kim,

who joined the Centre in April 2003. Sooinholds a Masters at the Faculty ofInformation Studies, and gained valuable

One of the more recent health-related initiatives to come out of BUL’s collaborativeefforts is the design of a wireless handhelddevice that will enable clinicians to obtain clinical evidence at the ‘point of care’.


Sooin Kim

CI Mag - ver 10 3/26/04 1:48 PM Page 29


experience as a reference librarian at Fasken Martineau’s lawlibrary before joining the Centre. Sooin provides reference andresearch services, library training sessions, and is responsible forthe Centre’s web site. Her research explores the legal aspectsrelated to the liability of information professionals, such as theconsequences of misinformation/ wrongful interpretation and theduty of care of a librarian.

THE CENTRE REACHES OUT TO CHINAThe Centre’s influence continues to be felt beyond Canada’s bor-ders. In November 2003, Richard Owens was invited toTsinghua University in Beijing, China (known as the M.I.T. ofChina) to present at the International Conference on IntellectualProperty Protection of High Technology. The two-day conferenceon November 15 and 16 focused on the treatment of the intellectual property in the collaboration between Universitiesand Industry and featured Owens on the “Commercialization of University Intellectual Property”. A copy of that paper will soon be made available on the Centre’s web site at www.innovationlaw.org. While in Beijing, Owens also gave awell-attended talk on biotech patents in Canada and the HarvardMouse Case, and later traveled to Shanghai where he taught an intensive course on the law of information technology atFudan University.

Former Centre Fellow, Scott Guan, now a practicing lawyer at Huand Hu in Shanghai, was instrumental in establishing and further-ing the Toronto-Fudan relationship. In December 2003, law profes-sor Hudson Janisch teamed up with Guan to teach an intensivecourse at the Faculty of Law, Fudan University. For Janisch, the

intensive course was part of a month-long researchtrip to China which took him to Hong Kong and Beijingas well as Shanghai. His objective was to interviewlegal scholars and regulatory officials at the Office ofthe Telecommunications Authority (OFTA) in HongKong and the Ministry of Information Services (MII) inBeijing and to give lectures at the Hong KongUniversity of Science and Technology (HKUST) andthe Beijing University of Posts andTelecommunications (BUPT).

The challenge for the course’s 22 participants (all graduate stu-

dents in Fudan’s well-respected International Law Program) was

how to relate telecommunications and international trade-in-servic-

es to what they already knew. Particular emphasis was placed on

how trade-in-services has an impact on domestic law and regula-

tion, and the difficulties it creates for China where the legal system

is only beginning to grapple with issues of economic and technolo-

gy regulation. The success of the course has already prompted

plans for future cooperation between U of T’s Centre for Innovation

Law and Policy and the Faculty of Law at Fudan University.

DISTINGUISHED INTERNATIONALVISITORS PROGRAMThe Centre continues to attract international scholars as partof its Distinguished International Visitors Program. An inter-national authority on issues related to technology, Professor Dan Burk, University of Minnesota Law School, taught anintensive course on Patents, Technology, and Society in January 2003. Professor Carlos Correa, Director of Scienceand Technology Policy and Management at the University ofBuenos Aires, taught International Trade Law, and law pro-fessor Peter Menell, University of California at BerkeleySchool of Law (Boalt Hall), taught Intellectual Property in theDigital Age. Neil Netanel, the Arnold, White & DurkeeCentennial Professor at the University of Texas School ofLaw, taught International Intellectual Property and deliveredthe keynote address at the Centre’s 4th Annual Technologyand Intellectual Property (TIP) Group Conference. ThisFebruary the Centre welcomed Peggy Radin (Stanford LawSchool) and Rebecca Eisenberg (Michigan Law School). In collaboration with the Centre, conferences are also heldat universities across Ontario. This past June the Universityof Windsor hosted a conference on the North American FreeTrade Agreement; Professor Torremens from the Institute forPrivate International law spoke at Osgoode Hall Law Schoolon intellectual property and the European Union; andProfeessor Ysolde Gendreau, Université de Montreal lectured at the University of Western Ontario on “TheExportation of Copyright Models”.

CENTRE’S FELLOWS GO ON TO TEACHThe Centre is pleased to report that five of its fellows havesecured teaching positions at universities across Ontario following their graduation. Ariel Katz, who is currently completing his SJD, will join the U of T Faculty of Law in thespring 2004, and will hold the Centre for Innovation Chair inElectronic Commerce. Notably, Ariel is the fourth tenure trackhire from the Centre - funded SJD program. Other centre fellowswho have gone on to teach at universities across Ontario includeJane Bailey (University of Ottawa); Carys Craig (York University);Bita Amani (Queen’s University) and Remy Nwabueze (Universityof Ottawa). As well, the Centre’s Graduate Fellowship Programcontinues to attract top international graduate students who aredoing their thesis work in the area of innovation law and policy.Eight graduate fellowships were awarded for the 2002-2003 academic year. In addition to their formal studies, students benefitby their involvement in Centre projects, collaboration with faculty,and presentations at Centre conferences.

SUMMER FELLOWSHIP PROGRAMThe Centre is involved in a wide variety of research and studentinternship activities in the area of innovation law. The SummerFellowship Program provides second year law students enrolled at allsix Ontario law schools with the opportunity to gain exposure to inno-vation law and policy in a variety of settings. Students spend part of

Prof. Hudson Janisch

CI Mag - ver 10 3/26/04 1:48 PM Page 30


the summer working at a law firm, and the other partworking in a Firm-Partner Innovation Organization, aPublic Interest Innovation Organization, or as a researchassistant to a participating faculty member. The numer-ous non-profit advocacy organizations and non-govern-ment organizations include, for example, theElectronic Privacy Information Center (EPIC), a publicinterest research centre in Washington, D.C., and theBerkman Center for Internet & Society, a researchprogram at Harvard University. Other institutionsparticipating in the program include the Informationand Privacy Commission, and the Copyright Board.

GRAD STUDENTS TACKLEISSUES IN SOUTH AFRICAThe Centre for Innovation Law and Policy continuesto attract talented graduate research fellows fromaround the world who engage in innovative researchon both domestic and international issues. TracyCohen, Brenda Murphy and Shumani Gereda, arethree such students who are each focusing theirresearch on critical issues facing South Africa today.

Graduate fellow Tracy Cohen has just successfullydefended her doctoral dissertation on telecommu-nications and international trade in South Africa.While Canada long ago deregulated its telecommu-nications market, South Africa has only begun thetransition from monopoly supply to gradual compe-tition in fixed line services. Tracy’s research exam-ines South Africa’s commitments under the WTO’sGATS Agreement, an international trade agreementthat came into effect in 1995 and aimed to gradual-ly remove all barriers to trade in services.

Brenda Murphy is examining the regulation of e-commerce in South Africa and in particular theregulatory models that have been proposed in theSouth African Electronic Communications andTransactions (ECT) Act, 2002. Since 1999, morethan a half million new users have logged onto theInternet in South Africa, and much of that is con-sumer activity. This increased usage has createdthe need for regulations to protect consumers.Brenda’s work aims to help South Africa in thedesign of mechanisms that will effectively regulateits e-commerce.

Shumani Gereda is currently researching the legalimplications of paragraph 6 of the DohaDeclaration, which allows countries with sufficientHIV/AIDS drug manufacturing capacity to issuecompulsory licenses for the production of genericdrugs for export to developing countries. Prior to

this Declaration, each WTO member state wasonly permitted to issue compulsory licenses for thepurposes of serving their domestic markets. As aresult of this Declaration, Canada is in the processof amending its patent legislation to allow for theexport of drugs to African countries.

U OF T INNOVATIONS FOUNDATION APPOINTS NEW CHAIRIn February, 2004, Richard Owens, ExecutiveDirector of the Centre for Innovation Law andPolicy, was confirmed as the new Chair of theBoard of the University of Toronto InnovationsFoundation. The UTIF is the intellectual proper-ty commercialization arm of the University ofToronto. Staffed by over 20 professionals withbusiness and technology expertise, UTIF is aleader in the field of technology commercializa-tion, and was founded in 1980 to helpresearchers capitalize on unique technologyopportunities. The appointment will facilitate theexchange of ideas about the complex process ofcommercialisation between the Centre and theFoundation, and further demonstrates how theCentre continues to be woven into the fabric ofOntario’s innovation economy.

THE CENTRE TEAMS UP WITH MaRSThe Centre for InnovationLaw and Policy has partneredwith the Medical and RelatedSciences (MaRS) DiscoveryDistrict. MaRS was foundedby leaders from Canada’sacademic, business, and scientific communitieswith the goal of improving Canada's global com-petitiveness and prosperity in innovation mar-kets. It will improve the connectivity betweenscience and business communities, and createthe focus for a crucial high technology cluster inthe heart of Toronto, surrounded by the com-bined research might of the University ofToronto and the many nearby hospitals. CILPwill bring its educational and research mandateto bear on the planning, network building, andoperations of MaRs. Together, MaRS and theCILP are dedicated to ensuring that Canadiansachieve the full economic benefits of theirinvestment in innovation in medical and relatedsciences.

<

STRATEGICPARTNERSHIPS

A number of renowned world-

wide intellectual property

organizations have formed

strategic partnerships or have

expressed interest in partner-

ships with the Centre:

• The World Intellectual

Property Organization

(Geneva, Switzerland)

• The Max-Planck Institute

(Munich, Germany)

• Stanford University (Stanford,

California)

• The Institute of Intellectual

Property (Tokyo, Japan)

• The National Institute for

Science and Technology

Policy and Strategy Studies

(Hanoi, Vietnam)

• Learning Information

Networking and Knowledge

Centre (Wits University,

Johannesburg, South Africa)

• Fudan University

(Shanghai, China)

• Berkeley Centre for Law and

Technology (University of

California at Berkeley School

of Law)

CI Mag - ver 10 3/26/04 1:48 PM Page 31

Collecting personal information and monitoringthe behaviour of an individual are no longerlabour-intensive tasks. With access to the rightdatabase or online tools, little more than a fewstrokes on a keyboard may be required.

These threats to privacy are compounded by thegrowing ubiquity of personal information.Advances in technology, including electronicpayment systems, cellular telephones, electronicmail, the Internet and online commerce, haveresulted in more and more personal informationbeing created and stored.

Further, the anonymity of paying by cash, using a payphone or mail-ing a letter is increasingly becoming a distant memory from the past.

All of this has resulted in a fundamental rethinking of therole of government in protecting privacy. Politicians whocampaign on a platform of “smaller government” and “lessred tape” are enacting laws that limit the collection, use anddisclosure by business of virtually all categories of personalinformation. Arguably, this government action representsone of the most significant attempts to regulate commercesince the enactment of employment standards legislation inresponse to harsh working conditions prevalent in the earlystages of industrialization.

The privacy laws currently in force and those being consid-ered reflect a significant challenge for public policy makers.Although there are some policy issues that can be viewed asclearly “black” or “white”, infinitely more are shades of grey.As a result, a delicate balancing act is required, with the pri-vacy rights of individuals being balanced against the legiti-mate needs of organizations to collect, use or disclose per-sonal information in the course of their operations.

The necessity of balance, which is expressly recognized inCanada’s federal privacy law (the Personal InformationProtection and Electronic Documents Act), creates a critical rolefor public policy-focused organizations and experts from numer-ous disciplines. An electronic health records project co-spon-sored by the Centre for Innovation Law and Policy and Osler,Hoskin & Harcourt LLP provides an example.

“Electronic health records” is used here to refer to the deployment oftechnology to convert traditional paper-based records of patients, intodigitized records. This digitization process offers many advantages,including better healthcare (due to increased accuracy of and accessto health records), less cost to taxpayers (due to improved efficienciesin managing information) and better science (due to the ability tocombine data in ways likely to lead to new scientific discoveries).

Digitization, of course, also creates new or enhanced privacy risks.The possibility for theft of large amounts of personal informationincreases. The possibility of invisible theft (i.e., the stealing of infor-mation without actually removing anything physical) arises. Thenumber of individuals with access to health information grows (dueto the infrastructure required to maintain a large database).

The Centre and Osler have brought together participants in thehealth, heath informatics, government, policy, privacy and privacylaw fields to consider how to balance the benefits and risks in thecontext of Ontario’s evolution toward an electronic health system. Aroundtable discussion last year will soon be followed by a secondroundtable and the publication of one or more related reports.

The goals of the Centre and Osler are not to provide answers tothe privacy issues or to advocate policies. Rather, the intent is tofacilitate the identification of the issues and to provide a record ofthe perspectives offered by experts which can be used to facilitateinformed policy development.

Observations from the initial roundtable discussion include:• It is unlikely that a single form of consent will be appropriate

for every collection, use and disclosure of patient personalinformation; the form of consent will need to vary accordingto the circumstances.

• The content of an electronic health record might be defined byboth doctors and patients; a record could contain a “core dataset” determined by doctors (information needed for emergencytreatments) and discretionary information selected by patients.

• It may not be appropriate to impose an absolute securityrequirement for electronic health records; security will needto be balanced against cost.

• Different levels of security might be required for differentclasses of patient personal information (anonymous, pseudonymous or patient identifiable).

As expected, our discussions have not identified solutions to theprivacy issues raised by the digitization of health records.However, they have confirmed our views on the importance offacilitating dialogue in the privacy arena. For the public-policyjunkies out there, hang-on. There will be no shortage of privacyissues in the digital age.

Michael Fekete is a partner in the Toronto office of Osler, Hoskin

& Harcourt LLP and a member of the Centre for Innovation’s

advisory board. His practice is focused on information technology,

software development and licensing, e-commerce and privacy.

Michael has extensive experience advising industry - leading and

emerging companies develop and exploit technology products

and e-commerce solutions.

backspace

Spam. Spim. Online tracking. Identity theft. New

threats to privacy. Old threats manifested in new ways.


CI Mag - ver 10 3/26/04 1:48 PM Page 32

IN THE NNEEXXTT IISSSSUUEEEnhancing Human Beings Through Computer Implants

“Cyborg” – a six million dollar man – or a mere freak? Centre scholars weigh

in on the legal and ethical issues involved in enhancing human beings

through computer implants.

Coping with Technology

The Centre for Innovation Law and Policy is helping Ontarians cope with an

increasingly technological society. In the next issue, we take a closer look at

what makes this process tick and how to make the most of the new world

we live in.

Making Sense of File Sharing

The bounty of free music on the Internet is turning into the scorched earth

of litigation for downloaders. The Canadian Recording Industry Association’s

Richard Pfohl and the Centre’s Richard Owens comment.

Innovation Clusters

Political scientist Professor David Wolfe – the reseacher at the helm of

Canada's ambitious cluster network and analysis program – has teamed up

the Centre. Read more about Wolfe, and the Innovation Systems Research

Network, in our next issue.

SUPPORT OUR EFFORTS WITH YOUR FINANCIAL CONTRIBUTION

Please consider making a financial contribution to the Centre for Innovation Law and Policy, in support of innovative research, scholarship, and student programs. All donations are tax deductible.

To make a donation, please send your cheque to:

Centre for Innovation Law and Policy78 Queen’s ParkToronto, Ontario, Canada M5S 2C5

or call the Centre’s Executive Director, Richard Owens at (416) 978-7151.


NEW GENETICS?

Centre for Innovation Law and PolicyUniversity of TorontoFaculty of Law78 Queen’s ParkToronto, Ontario, Canada M5S 2C5

www.innovationlaw.org

Piracy Patents Policy Confidentiality

WWW. INNOVATIONLAW .ORG
