1935-05-28

[Stage Direction]
Mr. A. U. G. BURY (East Edmonton) presented the third report of the select standing committee on standing orders and moved that it be concurred in.
Motion agreed to.

[Stage Direction]
Hon. HUGH GUTHRIE (Minister of Justice) moved for leave to introduce Bill No. 75, respecting fair wages and hours of labour in relation to public works and contracts.
He said: On behalf of the Minister of Labour (Mr. Gordon), who is absent, I beg to introduce this bill. I may explain that the bill will operate as a repeal of the Fair Wages and Hours of Labour Act of 1930, and in addition to re-ena'oting many of the clauses of that act it will provide new sections to comply as far as possible with the recommendations of the price spreads commission. It makes provision for an eight hour day and a forty-four hour week upon government works and contracts, and it extends the federal government's policy of fair wages and the forty-four hour week to works and contracts towards which federal aid is granted by way of contribution, subsidy, loan, advance or guarantee, by providing that in all contracts hereafter entered into conditions shall be imposed which shall bind the contractors to maintain the same standard of hours and wages. These are the only changes in the bill.
Motion agreed to and bill read the first time.


[Stage Direction]
On the orders of the day:
Mr. A. E. ROSS (Kingston City):: I gave notice last night that I would ask the Minister of Railways a question in regard to a certain statement made in the house that private companies were paying 16 and 17 cents an hour. Inasmuch as there is a private company in my constituency I should like to know whether that statement is true and what companies are paying such low wages.


Hon. R. J. MANION (Minister of Railways) :: The hon. gentleman intimated last night during the discussion that he intended to ask this question, and just this minute the hon. member for Vancouver South (Mr. Maclnnis)

has sent across to me a letter which deals with the matter. The letter does not name any of the equipment companies which, so far as I know, would be interested in this work. It does name a small company, the Equipment Manufacturing Plant of Saint John, New Brunswick, which would not be affected, directly at any rate. However, in the meantime, in 'order to have the facta clear and to be able to assure the house that we shall be in a position effectually to carry out what I promised last evening to do, namely, to endeavour to see that fair wages and hours are involved in any of this work, I took the matter up with the president of one of the large equipment companies

I tried to get in touch with a second one but did not succeed-and I also discussed it this morning with Mr. Hungerford of the Canadian National Railways, who was before the special committee. I am authoritatively informed that in any contract let by the Canadian National Railways in connection with equipment the following clause is inserted, and has been throughout the years:
The workmen and labourers employed by the contractor in or about the works shall be paid such rates of wages as may be currently payable to workmen and labourers engaged in similar occupation in the districts in which the said works are being constructed.
Which covers the point. While I am informed that there has not been in the past at any rate- any such clause in Canadian Pacific contracts, the same labourers and workmen do the work and the same working conditions and rates of pay apply. However may I just close my statement by saying that the government will insist, so far as any of these contracts are concerned, on having a fair wage clause inserted. As the Minister of Justice has pointed out to me, at any rate the matter would come under the bill he has just introduced. Irrespective of that, the government undertakes to see that this clause is incorporated.


Mr. EULER:: The bill might not be passed. ROYAL CANADIAN MOUNTED POLICE



SEIZURE OF SCHOONER PAUL T.-DISCREPANCY BETWEEN ANSWER TABLED AND ANSWER HANDED TO MEMBER

[Stage Direction]
On the orders of the day:
Hon. P. J. VENIOT (Gloucester):: 
Hon. R. C. MATTHEWS (Minister of National Revenue):: This is the first time this matter has been drawn to my attention. Unfortunately I was away during the whole month of January; I was not in the house in January or February. I can assure the hon. member that I shall look into the matter and bring it up again.



MARKETING ACT


[Stage Direction]
On the orders of the day:
Mr. OLOF HANSON (Skeena):: I would like to ask a question of the Minister of Agriculture, but as he is not in his seat, I would ask the Prime Minister to answer the question which is based upon the application of the Pacific coast halibut fishermen to come under the marketing board. The question is:	Has
the council acted upon the recommendation of the marketing board to have the Prince Rupert halibut fishermen come under the marketing act, and if not, when might such a decision be expected from the government?


Right Hon. R. B. BENNETT (Prime Minister) :: The question is probably a little out of order for the reason that it is not competent to inquire what action council has taken until
that action is indicated by an order that may be passed. I may say for the information of the hon. gentleman that the question of determining the extent to which the parliament of Canada may exercise its jurisdiction over halibut or any other fish caught and dealt with within the boundaries of a province is one matter; interprovincial and national trade can be dealt with by the marketing act. As I am informed, the department is now obtaining the opinion of the law officers of the crown as to the extent to which the order sought may be made and still be within the competence of this parliament under the provisions of the marketing act. I think some definite action will be taken just as soon as that opinion is obtained, which will be within a day or two.



CANADIAN NATIONAL RAILWAYS

[Stage Direction]
On the orders of the day:
Mr. A. E. MUNN (Vancouver North):: I have a question I would like to direct to the Minister of Railways. As a member of the house I have been advocating for years that the capital structure of the Canadian National Railways should be adjusted. The auditors have sent in a special report on the Canadian National and I understand that copies are available only to members of the special committee. As a member of the house I and perhaps others would like to have a copy of this report. Would it be possible for us to get copies?


Robert James Manion: I shall look into the matter. The report is rather a lengthy one and the auditors themselves supplied us only with sufficient numbers for the members of the committee. However I shall look into the matter and see whether I can get a copy for my hon. friend. I think I can do that, but if many members wanted copies, some special arrangement might have to be made.


Mr. MACKENZIE (Vancouver):: They all want them.


Robert James Manion: If, as the hon. member for
Vancouver suggests, they all want copies, I shall have to arrange to get them printed or typed specially for the house and I shall be glad to do that; if I can.


Mr. JACOBS:: We want the report for summer reading.


Robert James Manion: Light summer reading.



POSTAL SERVICE-HOLIDAYS

Peter John Veniot: I would like to draw the attention of the Postmaster
Victoria Bridge Tolls

General to what I consider is an anomaly in the service. Before putting the question to him, I may say that I would not require an answer to-day because I know it would take a little time to look into the matter and an answer later on will satisfy me. I understand that under an order issued to the postal service in 1932, which I think is still in effect, on Easter Monday, the King's birthday and Remembrance day postal employees are required to give four hours' service without remuneration. Generally speaking, the rest of the civil servants are not required to do this. At Easter time and other legal holidays postal employees giving this extra time are allowed time off later on, but for the three holidays I have mentioned they are not allowed time off. I ask the Postmaster General (Mr. Sauve) if it is the intention to continue that practice, or would he consider placing the postal service on the same basis as other sections of the civil service. I am not asking that they be paid for that extra service, but that they be allowed four hours' leave at some other time.


Mr. SAUVE:: I shall consider the remarks
of the ex-Postmaster General (Mr. Veniot) and give an answer to-morrow.



PURCHASE OF FERTILIZER


[Stage Direction]
On the orders of the day:
Mr. A. E. MacLEAN (Prince):: I would
ask the Prime Minister if an application has been received from the farmers of Prince Edward Island in regard to a bonus on last year's potato crop or some assistance towards buying fertilizer for potato crops this year?


Richard Bedford Bennett: The Minister of Agriculture for
Prince Edward Island has brought the matter to the attention of the government and asked that some action be taken.
VICTORIA BRIDGE TOLLS On the orders of the day:


Mr. VINCENT DUPUIS (Laprairie-Napier-ville):: I would like to ask the Minister of
Marine (Mr. Duranleau) if an arrangement has been .made between himself and the committee on bridge toll reduction on the Victoria bridge to receive their delegates, as the acting Prime Minister (Sir George Perley) told this committee that this would be arranged by the Minister of Marine.


Hon. ALFRED DURANLEAU (Minister of Marine):: As my hon. friend is a member of the south shore tolls committee I thought he 
had been advised by the secretary that we have agreed to receive the delegation on Friday next after the arrival of the morning train from Montreal.



PREVENTIVE SERVICE SEARCHES

[Stage Direction]
On the orders of the day:
Mr. C. B. HOWARD (Sherbrooke):: May I direct an inquiry to the Minister of National Revenue (Mr. Matthews) ? I brought this same thing up a year ago. On the 24th of May, a public holiday in Canada, the mounted police stopped most of the cars on the highways throughout the eastern townships, and unloaded the passengers at great inconvenience to decent, law-abiding citizens. May I ask that if this practice is going to be carried on, he would at least see that the mounted police go to the border and do their work there, if he is not satisfied with the way his officials are handling the customs in connection with people entering Canada?


Robert Charles Matthews: The hon. member asked
a similar quf stion last year-


Charles Benjamin Howard: Certainly, the same thing
happened then.


Robert Charles Matthews: -and I inquired at the time and found that neither the department of National Revenue nor any of its officers issued any instructions whatever to the mounted police in regard to the matter to which the hon. member referred. While I have no information at the moment, I am sure the same situation exists now.



WEIGHTS AND MEASURES ACT

Hon. R. B. HANSON (Minister of Trade and Commerce) moved:: That the order of the house for second reading of Bill No. 46 to amend the Weights and Measures Act be discharged and the said bill withdrawn.
He said: I do this on the ground that the subject matter of this bill is included in Bill
No. 70, to amend the Weights and Measures Act.
Motion agreed to and bill withdrawn.



PATENTS OF INVENTION

[Stage Direction]
Hon. C. H. CAHAN (Secretary of State) moved the second reading of Bill No. 48, to amend and consolidate the acts relating to patents of invention.
Hon. FERNAND RINFRET (St. James):: Before second reading carries I want to say a few words. I might perhaps have avoided

Patents of Invention-Mr. Itinjret
doing it, as I was going to suggest that the discussion should take place when the bill is in committee. This bill was introduced in the Senate and received full consideration in the higher chamber. It was also before a special committee there, several witnesses were heard, and I think the bill comes to us in pretty good shape generally. I take this occasion to commend the practice by any government of introducing bills of this nature in the higher chamber, where work is less congested, because when such a measure comes to us a certain amount of consideration has been given to it, and that is for the good of both chambers. I may say further that the Patent Act is one which is always under consideration by a certain portion of the public, many amendments are sought from the department and the minister every year. When I was in charge of that department, on several occasions associations as well as individuals came to the department to secure extensive amendments to the act or to suggesting consolidation. Therefore if any principle is involved in this second reading, reserving any opinion as to the different sections of the bill, I favour this consolidation, with the hope that when adopted the measure may stand for several years without requiring further change. I think it might have been an advantage for this house to have had this bill considered in a special committee, but everyone will understand that at this late stage of the session that would not be feasible. In the hope that the house may be able to dispose of this measure in an expeditious way in committee of the whole I will not say anything further at present. I think we can well deal with the questions as they arise from section to section.


Hon. H. H. STEVENS (East Kootenay):: I do not rise in any spirit of criticism of this bill, but there is a matter which I understand is not dealt with in it, and as there would be no clause under which the matter could be brought up in the committee stage as far as I know, I would like to lay before the government one phase in connection with patents which I trust might be considered when the bill is before the committee. I refer to the practice of concerns in Canada, and I think the same practice is followed in other countries, of taking advantage of the Patent Act for the enhancement of the price of goods, to a degree perhaps unwarranted in the circumstances. I may illustrate the point by incidents which came to my attention some months ago and which were brought to the attention of the official in charge of the act at that time. These had to do with electric light bulbs. I want it clearly understood that I am not
bringing this matter forward at the present time merely to mention this incident, but it illustrates the point to which I wish to refer.
Electric light bulbs are manufactured in Canada under patents held by certain companies. They are sold, in the case of a one hundred watt bulb, at around 55 or 60 cents each. Dealers in this class of goods assert that they can buy the same general type of bulbs which have paid all the patent royalties and observed all the provisions of the law in the United States or in Holland, pay a duty of some thirty or forty per cent and sell them in Canada at from twenty-eight to thirty-five cents retail. I should complete the statement by saying that after observing the patent laws of the country where they were produced and paying the duty charged by the Canadian customs authorities and so on, when they sought to enter these bulbs through the customs, after an appeal to certain sections of the Patent Act, they were not permitted to import them into Canada because the patent rights in this country had been reserved.
The point at issue there is simply this: Under the international agreement regarding patents and trade marks, if a certain article has been manufactured in a foreign country, with all the provisions of the patent law of that country being observed, it ought not to be an offence to bring that article into Canada providing a reasonable protection is given through customs duties if that happens to be the government policy at the time. Having observed all the regulations in the country of manufacture and having paid the duty I submit it ought to be possible to import those articles into Canada. Under the law as it now stands, however, that cannot be done and in this particular instance the Patent Act serves really as a duty of about eighty per cent in addition to the twenty-five or thirty-five per cent charged under the customs laws.
My submission is that the Patent Act never should be used or permitted to be used as a supplementary customs duty or protection. I think that should be made clear. I should like to state also that in drawing this matter to the attention of parliament I only do so because now the act is in a major state of revision before the house. I am not criticising any government, past or present, in regard to the matter; I am bringing to the attention of the house a situation that has developed and been disclosed, so far as I am concerned, only during the past year. I have a good deal of information on the matter before me, and I should like to read briefly from a reference with regard to an investigation made by the federal trade commission of the United States, who in 1928 conducted an inquiry into the

Patents oj Invention-Mr. Stevens
question of electrical equipment and competitive conditions of the electric power industry. They found the electrical industry to be dominated if not controlled by an international group of electrical manufacturers, each member of which is the most powerful in its respective community. The members of this international organization exchange .patent rights, manufacturing processes and other trade secrets. This exchange is characterized by a division of territory, and I should like to direct particular attention to this:
This exchange is characterized by a division of territory, each company granting to the other exclusive rights in specified countries, described as exclusive territory; or nonexclusive rights in other countries described as non-exclusive territory, and reserving all rights in still other countries described as excluded territory. Such agreements practically eliminate any competition of a serious nature. For example, in the case of light bulbs, in so far as Canada is concerned no independent manufacturer can either manufacture or sell in Canada without being liable for suit for lrnringement of patents which are owned by the larger organization-represented in Canada by the Canadian General Electric Company Limited, and Canadian Westinghouse Company Limited. These two firms as members of the international group have been "given" a Canadian market, and by the mere threat of suit are usually successful in disposing of any likely competitor.
That statement was made in 1928 by the federal trade commission of the United States, so I am told, but the facts are slightly different to-day. I understand, though I am speaking subject to correction, that there are now five companies in Canada, but the other companies have been added only by licence of the older or larger companies, and all these are represented by one concern. When certain dealers brought in or attempted to bring in bulbs from foreign countries, in one case Holland and in two or three other cases the United States, this one concern brought suit against the importers, secured injunctions and subjected them to a great deal of loss and inconvenience.
I would have no criticism of these companies in protecting their patent rights in Canada providing they sold their goods to the public at a reasonable and fair rate. I am quite aware of the answer that may be made; I have not had time to look up the section of the act but I am quite aware that it does provide that the commissioner of patents, I believe under the instructions of the minister, may interfere, and I think he has power actually to fix prices where he has reason to believe that abuses have occurred. In practice however, this does not happen; as a matter of practice I doubt if there is any great interference.

There is another feature which I think ought to be taken into consideration in dealing with this matter. I had under my hand, and I sent forward to the proper official in the proper department, a long list of patents affecting these articles held by these companies; if I remember correctly the list included several hundred patents, or we will say in the neighbourhood of over one hundred; the exact number I have not in mind or under my hand. The question arises as to how many of these patents, frequently bought up and controlled by the larger corporations, are ever put into actual operation. Here again I quite admit that there is an answer. The answer is that if they are not put into operation within eighteen months or some certain limited period of time the commissioner may declare them open, but again that does not work in practice. The situation is quite obvious. A man perfects an invention and, if it is good, immediately it is sought after and secured if possible by one of the large corporations. They are strong and wealthy, if the new invention affects some invention they are already manufacturing in large quantities they can easily afford to pay a very large sum, comparatively speaking, for the invention. The individual is satisfied; he is paid off, and the patent now belongs to the large corporation. It is pigeon-holed and the chances are that no one in the country has any knowledge of it, except those in the patent office, but the patent commissioner is not there for the purpose of checking up to see whether or not patents are used. Unless someone brings the matter to the attention of the patent commissioner there is little likelihood of any action being taken. Here again I submit that in this general revision the act ought to be so changed that where patents have been issued some body, some official or some official body should be clothed with the authority, to follow up those patents to see whether or not they are used, and if they are not used for the benefit of the general public some explanation ought to be forthcoming as to why they are not used. I am convinced from quite a lot of thought and investigation I carried on in connection with the subject some six or eight months ago that there is a large number of patents particularly electrical patents and others in other lines of industry resting in the archives of many corporations which would be useful to the public, which ought to be put into operation and use, but which are not used because they conflict with some general and practical object now being manufactured in large quantities.


Mr. BOTH WELL:: May I ask a question?

Patents of Invention

Mr. Stevens


Henry Herbert Stevens: Yes.


Mr. BOTHWELL:: I should like to ask the hon. -member if the difficulty might not be solved by giving newspaper notoriety to patents after the time has expired within *which they are protected.


Henry Herbert Stevens: That is quite true, but it is not the point about which I am speaking. I am refering to patents which have not been used either before or after the expiry date. There is no doulbt about it however that publicity would do much to cure the difficulty, and I shall have a suggestion to make in that respect.
In the price spreads report reference has been made to placing the administration of the commercial side of the Patent Act-not necessarily the legal side, because there are -two sides, legal and commercial

under a body such as is recommended, namely the -trade and industry commission. In any case there ought to be an official body of some kind or a business department responsible for the administration of the commercial side of the patent law, so that they could keep track of and check on- patents which have been issued, ascertain to what extent they are being used or pigeon-holed as the case may be, or to what extent the holders of a patent right are abusing that privilege in the manner I have mentioned, namely, by virtually turning it into a secon-dary customs protection.
These are two matters to which I should like to draw the attention of the house, and I feel that unless it is done in this revision there is not much hope of having any remedial action taken for a great many years. It is true that the commissioner of patents may order the patentee- to supply the patented article within reasonable limits at such price as may be fixed by him and in accordance with the trade. It may be answered this afternoon that that provision in the act takes care of the situation. I submit that in the first place the practice demonstrates it is not done and in the second- place I submit that under the present method of administration of the act the patent commissioner is so engrossed with his other duties and with, shall I say, the vision of his duties which has grown up through the years that this feature of it is practically ignored or neglected, not with intent but simply as a matter of form and practice.
That is why I suggest that the matter should be considered seriously because I am convinced of this, namely, that in this one instance alone, the manufacture and sale in Canada of electric -light bulbs, the public
are paying a price which I would say is at *least 30 per cent or 40 per cent above that which they ought to pay for this class of goods. If it is true in this instance it may be true in a great many other instances. As a matter of fact I have not any doubt that it is true in other instances and therefore I suggest that -before this measure leaves the committee stage of the house some provision should -be made for an adequate protection of the consumer in regard to this matter. I again suggest to the government that they consider the placing of the administration of the commercial features of the act under some business organization or body, official or board whose duty it shall be to check on these commercial sides or features of the patent laws of the country.


Mr. CAHAN:: Mr. Speaker, this bill-


Mr. COOTE:: Will the minister not close the debate if he speaks?


Charles Hazlitt Cahan: I have not opened it yet; I have not had the opportunity.


Henry Herbert Stevens: He opened it when he seconded the motion.


Mr. GARLAND (Bow River):: I rise to a point of order. Does not the minister on the actual motion open the debate, and therefore is he not out of order in speaking at this time unless it is agreed that by his speech he closes the debate? He has already spoken.


Charles Hazlitt Cahan: I have no objection to the point of order standing. When the bill was called I rose in my place to make a preliminary introduction, but another hon. member caught the eye of the Speaker and proceeded. I suggest however that this debate on the details of the bill might better take place when we are discussing the separate sections.


George Gibson Coote: I do not wish to interrupt the minister nor do I raise a point of order, but I am simply trying to protect my right to speak. So far as I am personally concerned I should be very glad to have the minister make any statement in connection with the bill which he desires to make. Certainly I do not wish to interfere with that right.


Mr. GUTHRIE:: Go ahead.


Charles Hazlitt Cahan: Yes, go on.


George Gibson Coote: Mr. Speaker, I am much impressed by the number of persons who have come to me during the last two or three years with representations regarding patents, and when the patent measure was introduced by the minister I wrote him and suggested that it would be in the best interests of the House of Commons

Patents of Invention-Mr. Coote
and all people concerned if the bill were sent to a select or special committee of this chamber. However that was not done. This measure was sent to the Senate, and I believe it has been considered by a committee of that chamber. There are one or two points however which I should like to bring to the attention of the house before the bill receives second reading.
I have been much impressed by the statements made by the hon. member for East Kootenay (Mr. Stevens) who has just taken his seat. I should like to impress upon the house that the people generally have an interest in most patents granted to-day. A great many patents, and particularly in industries such as the electrical industry, are the result of work of scientists and engineers employed by the electrical companies. Practically all of these men have received their training or education in some university which is at least in part kept up by the state. When these men secure employment in large corporations I believe they must sign agreements to the effect that the benefits of any inventions or discoveries they may make must go to the corporations employing them. If these men have been educated at least in part at the expense of the public it does not seem fair that the results of their discoveries should benefit commercial enterprises, or that the benefits arising from their discoveries should go to corporations. The public have an interest in all inventions which arise as a result of their labours. I believe the best way to deal with the matter would be to set up a board with power to determine the royalty which would be paid for the use of any patent, and to decide to whom the royalties should be paid'-whether to some corporation, an individual or to be divided and allow anyone to manufacture the article on payment of royalty. I have been convinced by representations made to me at different times that the public are paying a tremendous price for some of the patented articles that are in common use throughout the country and that the Patent Act is one of the corner stones of monopoly in Canada. About a year ago I had brought to my attention a certain type of grain cleaner used in western' Canada. In many instances this apparatus is installed on grain separators, the grain going through it as it comes through the threshing machine. The cost of the cleaner installed on the grain separator ranges from $420 to $460. I never heard of it being sold for less than $420. The implement agent in Calgary who told me about this said that he had taken the trouble to inquire what it would cost to have one of

these machines manufactured and installed on the separator, and he assured me that if it were not for the patent right interfering, this machine could be made and placed on the separator at a price which would enable him to sell it to the farmer at approximately $200. Let us assume that a royalty of $20 was paid to the inventor of that grain separator, and surely that would be considered sufficient for him. Then the invention would be available to the farmers at a cost of approximately $220, which is about fifty per cent of the price we are forced to pay to-day. It may be possible to overcome some of these things through administration by the methods suggested by the hon. member for East Kootenay, but it is the duty of this house I think to see that if possible some change is made in the act itself or in its administration so that these things will be available to the people at a price which we can afford to pay and which will also allow ample remuneration to the inventor himself.
As I said a moment ago the present Patent Act is one of the cornerstones of monopoly, and I think we are all agreed here that monopoly makes possible tremendous over-capitalization. Monopoly deprives the people of the beneficial effects of many inventions. Radio is an outstanding example. It would seem to me that any future invention for the improvement of radio would be useless to anybody except those who hold the patents under which the present radios have been built. So any inventor who perfects some improved process in regard to radio and patents it, is at the mercy of the radio holding trust. I do not know whether I am giving it the right name, but I am told that there is a holding company which holds these patents for the large corporations. If we were to change the act in the manner I have suggested so that anyone who was willing to pay a royalty to be determined by a government board might make use of any invention, I think that would go a long way towards decentralizing some of the big monopolies, and the decentralization of industry is something that is so desirable to-day.
I do hope that before the act is allowed to receive its third reading careful consideration will be given to the proposal which I have made to set up a board to fix a royalty on patents, after which any person who is willing to pay that royalty may make use of the patent. That would allow the public to get the benefit of many of these inventions which to-day are possibly being withheld from us, either actually withheld through misuse,

Patents of Invention-Mr. Bothwell
or withheld because of the exorbitant price which is asked for them. There are one or two other objectionable features of the present Patent Act which I think ought to be changed, but I have emphasized the point which I think should be stressed at this moment on the second reading of the bill.


Charles Edward Bothwell: Mr. Speaker,. I have just one word to add to the question which I asked the hon. member for East Kootenay (Mr. Stevens). It does seem to me that a lot of our difficulties in connection with patents granted could be overcome if something in the nature of a publication were got out by the commissioner of patents showing when the time for manufacturing a patented article in Canada had expired. It has been generally stated that patents are pigeonholed, and as has been explained by the hon. member for East Kootenay, nobody has any particular knowledge of these patents. But if the commissioner of patents were compelled to give public notification either in the Canada Gazette or some other publication of the patents that had been granted and had not been made use of, it seems to me that a lot of the difficulty would be solved without the necessity of setting up any board.
There is also the other question of patents being held and being made use of to build up a monopolistic trade. I am not so sure that that could not also be overcome through the commissioner of patents by publication, and without the necessity of creating any extra board or setting up any committee or some business organization or body, giving the public an idea of what patents are in existence and which they may find an opportunity of making use of. Then the opportunity for competition will be given.


Charles Hazlitt Cahan: Mr. Speaker, this patent bill was introduced by me to this house in January of this year, and I then made some explanation of the nature and purpose of the amendments suggested in the bill. It really was one advance step in the matter of legislation relating to the Department of the Secretary of State. In August, 1930, when I assumed that office I found in the administration of that department that its effective operation was restricted somewhat by the legislation then in force, and experience from week to week and month to month suggested to me certain amendments.
In the session of 1931 I introduced amendments to the Copyright Amendment Act to comply with the obligations that Canada had
assumed under the Rome convention of 1928 to which Canada had adhered, and to provide for effective means of investigating and restricting the royalties, fees and charges of those companies and associations which controlled performing rights in music. In the same session I introduced to this house an act to amend the Naturalization Act, to protect Canadian women who married aliens and who did not thereby acquire the nationality of their husbands. That act as passed by this house was subsequently accepted by the imperial parliament, which made amendments to its own naturalization act in conformity with the amendments made by this parliament.
In the session of 1932 I prepared and submitted to this parliament bills to amend the Boards of Trade Act and also to amend the Patent Act; a bill respecting the civil service of Canada, and a very important bill indeed entitled An Act Respecting Unfair Competition in Trade and Commerce, which was to carry into effect a certain convention which had been entered into at The Hague by the previous government, and with respect to which that government had not, previous to going out of office owing to dissolution of parliament, been able to promote confirmatory legislation.
In the session of 1933 I prepared and introduced a very important bill, An Act to facilitate compromises and arrangements between companies and their creditors, the validity of which was questioned by one or more of the provinces, but which was subsequently upheld by the unanimous decision of the Supreme Court of Canada.
In 1934 I prepared and submitted to this house three very important measures relating to the Department of the Secretary of State: one, an act to amend the Oaths of Allegiance Act, which passed this house unanimously, although similar legislation was the subject of very acrimonious debate in two of our sister dominions; also an act to provide for a Bureau of Translations, with respect to which there were differences of opinion in this house; and also an act respecting dominion companies, which involved the redrafting of dominion company legislation to give better protection to the public and to insure the more prudent administration of the business affairs of these companies. And then came this last measure dealing with patents. In order to secure an improvement in the legislation with regard to patents, in the early years of this administration I asked a certain committee to organize and sit under the chairmanship of the senior judge of the Exchequer Court of Canada, and that committee advanced very admirable sug-



Patents of Invention-Mr. Cahan
gestions. It was however unable to come to an agreement as to whether in the improvements in our patent law we should follow the American legislation or should follow what many believed to be the best patent legislation existing, that is, the patent act of the United Kingdom.
In this bill many of the difficulties which arose in the administration of the Patent Act now in existence have I think been entirely overcome. It is true, as suggested by the hon. member for East Kootenay (Mr. Stevens), that the establishment of a patent monopoly in Canada by any patentee has hitherto enabled that patentee to maintain his monopoly, although reasonable efforts were not made for the effective working of the patent in Canada, that is, for the effective manufacture and sale in Canada at reasonable prices of the patented article. I found in the administration of that act, as suggested, that a foreign patentee who, under the international convention to which we are parties, has a right to apply within one year for a patent in Canada, has frequently obtained the patent in Canada without proceeding to the effective manufacture here under that patent, but he has in times past appointed an agent in Canada whose chief duty it was to conserve the monopoly rights in Canada of the foreign patentee, with the result that, although manufacture was not undertaken in Canada, the agent in Canada of such patentee was able to keep fully advised as to the importations of articles which infringed the Canadian monopoly and by exacting payment of a royalty in Canada, which was not regulated, was enabled to maintain in Canada very high prices for the articles manufactured abroad by the foreign patentee.
When this bill was introduced it contained some very stringent proposals to overcome these difficulties. Owing to the press of work here and the lack of legislative work in another branch of parliament, the bill was dropped here and introduced in the Senate. It was then brought before the Senate committee on banking and commerce. I attended that committee in order to watch its proceedings from day to day and week to week, and I do not think that in recent years in parliament any committee has ever shown the same active interest in a bill as was shown by that committee of the Senate. Day after day and week after week witnesses from all parts of Canada appeared before that committee and gave evidence with regard to the alleged evils which bad arisen by reason of the lack of certain improvements which were proposed in the bill. Finally, after several weeks, the bill
[Mr. Cahao.3
passed the committee of the Senate and the Senate, and is now before this house for second reading.
I do not intend at this stage to enter upon a discussion of particular sections of the bill. One difficulty I found in the administration of the act was that, except by the appointment of a royal commission under the Inquiries Act, there was no way by which the Secretary of State, or the patent commissioner, who was acting as the head of this branch of the Department of the Secretary of State, could ascertain definitely whether a certain patent was really being actively worked in Canada, that is, that the patented articles were being manufactured in Canada and sold at reasonable prices and under reasonable conditions. The result was that we introduced a new section which is found in this bill, that is, section 64, whereby the commissioner may at any time apply to any patentee for a return showing whether the patented invention is being worked on a commercial scale in Canada, the place where worked, the name and address of the person by whom the patent is being so worked, and the reasons, if any, why such patented invention is not being worked in Canada. And the failure to make complete answer to such a request is an admission by the patentee that the patented invention is not being worked. But that was not deemed quite sufficient, and so we proceeded with section 65, which is an entirely new section; and we there provided for certain compulsory licences in case of abuse, and also section 66, which is entirely new to our legislation, and which is a verbal reproduction of the English act, has been incorporated in this bill. And under these provisions I suggest that the evils, at least so far as they can be controlled by legislation, are being controlled in this act. I think an opportunity should be given to the department to ascertain whether it may not be effectively administered so as to obviate the evils which have been mentioned and some of which undoubtedly exist. I say personally, having been in that office now for five years, that so far as effective administration goes, an effective administration has been given under the several statutes then in force, and so far as an intelligent effort could be made to introduce remedial measures, to make the administration of the several acts more effective, those remedial measures have, as I have already suggested, been brought before the house.	_
This measure is I think the culmination of such efforts as I have been able to make to secure satisfactory legislation under which that branch of the department of the department of the Secretary of State could be effectively

Patents of Invention
administered. I believe this legislation, if enacted, will remedy the objections which some hon. gentlemen have made, and I trust the house in its wisdom will adopt this bill in almost its entirety so as to see if it can be so administered as to maintain intact our obligations under the international conventions to which we are parties, so as to preserve intact the reasonable rights of patentees, and so as to conserve effectively the public interest as to both the production or manufacture in Canada and the sale at reasonable prices in Canada of the patented article. I can assure the house that neither this nor any other measure which I have introduced has been introduced with any partisan purpose whatever. I have endeavoured to give the subject the most intelligent consideration that was possible for me, and also to give in the meantime as effective an administration of existing acts as it was possible to give.


[Stage Direction]
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Morand in the chair.
Sections 1 to 3 inclusive agreed to.
On section 4-Commissioner of Patents.
Charles Hazlitt Cahan: It will be seen that in the redrafting for the printer there has been an obvious mistake. Clause 4 now reads:
The governor in council may appoint a commissioner of patents who may and shall, under the minister-
I think the words " may and shall " should not both be included and I propose that the same words should be used as are applied to the same commissioner in the Copyright Act, the Trade Marks Act and other acts which the same commissioner is to administer. I would ask my colleague the Minister of National Revenue to move the following amendment:
That in section 4, in the second line of subsection 1, the two words "may and" be struck out; and that after the word "under" in the same line, the words "the direction of" be inserted.
The clause will then read:
Who shall, under the direction of the minister.


Robert Charles Matthews: I move accordingly.


Louis Édouard Fernand Rinfret: I have no objection to the amendment, but I want to say a word about the clause. By this clause the governor in council is entrusted with the appointment of the commissioner of patents. I may not be expressing the opinion of some hon. gentlemen who surround me, but personally I am not against the appointment of the commissioner of patents by the governor 92582-197}
in council. Under my administration I was called upon myself to recommend the appointment of a commissioner of patents and copyright, the late Mr. Richard. I do not recollect exactly how that took place, although
1	am under the impression that the civil service commission waived their right or privilege to appoint a commissioner and informed the government of that day they would accept its own appointee. I looked up the statute and found that the commissioner of patents is not included in the list of deputies or deputy heads contained in section
2	paragraph (c) of the Civil Service Act. The commissioner of patents is not a deputy or deputy head and therefore by the Civil Service Act the appointment of that commissioner is left to the civil service commission. In practice though, I have just mentioned a case where the civil service commission was content with the government naming their own appointee. The stand I take to-day is this: I think the governor in council should appoint the commissioner of patents; I think he is an important enough civil service official that his appointment should be made by the governor in council. I understand the matter cannot be remedied in this bill, but instead of having special provision to give the government the right to appoint the commissioner of patents, I would have preferred if he had been made a deputy head under the Civil Service Act. I consider the commissioner of patents and copyright is an important enough official that he should be considered a deputy head. It may be asked why I did not have this brought about when I was Secretary of State. My only reply is that I tried to do it and probably, if the Liberal administration had lasted five years as this government has done, we might have done it. But it is my personal opinion that the commissioner of patents should be a deputy head and therefore his appointment by the government should be a matter of formality under the Civil Service Act. However inasmuch as that has not been done, for the time being I may say-and I am giving only my personal opinion-I quite agree that the commissioner should be appointed by the government and not by the civil service commission.


Charles Hazlitt Cahan: I quite agree with the hon. gentleman. I might remind him that he did attempt to make the commissioner of patents deputy head, but I found on the file that his colleague the then Minister of Justice had reported that that attempt was ultra vires. So I was forced by the opinion given by the Minister of Justice of that day to take a different attitude. This provision I think
Patents of Invention

will remove all doubts as to the right of appointment. But as to whether or not he shall be deputy head will depend upon an amendment to another act which is not now before the house.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
Sections 5 and 6 agreed to.
On section 7-Staff.
Mr. RALSTON:: I see that the staff is to be appointed according to law. Is there any special provision in regard to this staff other than appointment by the civil service commission?


Charles Hazlitt Cahan: It is appointed by the civil service commission. But under the previous act the work was so increased that the government of which my hon. friend was a member, and their predecessors had to resort to orders in council in order to provide examiners and associate examiners in these classes, so I thought it better, as we have all these classes in the service, that the statute should definitely state that these shall be appointed. They are appointed, each and every one, by the civil service commission. The civil service commission acquiesced in the terms of this section for clarity only.


[Stage Direction]
Section agreed to.
Sections 8 to 14 inclusive agreed to.
On section 15-Register of attorneys.
Mr. SPENCER:: Is there any regulation
of fees or any limit to the fees allowed to patent attorneys?


Charles Hazlitt Cahan: There are no prescribed fees in regard to patent attorneys at present. The matter has so far been dealt with by clause 16 which provides that:
For gross misconduct or any other cause which he may deem sufficient, the commissioner may refuse to recognize any person as a patent agent or attorney either generally or in any particular case.
If any undue fees were charged and a complaint were made certainly it would be dealt with.


George Gibson Coote: Is there any provision for
bonding patent attorneys, or was any consideration given that when the bill was before the Senate committee? I remember a few years ago a man coming to Ottawa from western Canada telling me of having paid several hundred dollars to a patent attorney in Ottawa, even paying him for registering the patent in the United States, and he finally found that the attorney was misusing

his funds and had not registered his patent at all. I wondered whether any consideration was given by the minister in drafting the bill or by the Senate committee to -the question of bonding patent attorneys for the protection of their clients.


Charles Hazlitt Cahan: The only case of that kind which has come to my attention was a case where a fee was sent to a certain patent attorney in Ottawa and the letter was mislaid and the fee was not credited until after the complaint was made to the department. When the department took it up and evidence was produced that the fee had been mailed, a complete search was made by the attorney and by his private secretary, and it was found that that letter had been accidentally mislaid. But outside of that no complaint has been -made to me of malfeasance on the part of any attorneys in Ottawa practising before the patent office.


George Gibson Coote: In one case a man was in our office upstairs, and there did not seem to be any doubt of the fact that his money had been- taken by a patent attorney and had been misused. I think that was admitted at the time, which was a few years ago. I wondered whether it would not be possible to require all registered patent attorneys to be bonded for a reasonable amount. It would not be a very expensive matter for them, and certainly if many cases like the one I heard of have occurred some protection should be afforded to the public in that way.


Charles Hazlitt Cahan: If the hon. gentleman had brought such a case to the notice of the department during my regime I am sure we would have looked into it and obtained restitution of any fees improperly applied. I do not think it is necessary to go to the extent of bonding patent attorneys in Ottawa. The administration of the department is honest. In any cases which may arise the governor in council and the minister have ample authority to deal with any abuses.


George Gibson Coote: It is a little difficult to hear, and I would like to be sure; did the minister say that he has the power to deal effectively with any case of that kind which might occur?


Charles Hazlitt Cahan: I feel sure that we have, because the minister can refuse the attorney access to the patent office thereafter, may strike him off the list, may in fact disbar him as far as the patent office is concerned. Any patent attorney, rather than incur such chastisement, would certainly restore any fees which he had received, which fees are usually very modest indeed.

Patents of Invention


George Gibson Coote: I do not feel that I can prolong the discussion on this point, but I Buggest to the minister that the measures which he has said he can use remind me of the old case of locking the door after the horse is stolen.. From the statement the minister has made I do not think they would have any power to see that any man who had lost money by giving it to a patent attorney who did not use it properly would be able to get it back or get a proper accounting for the money.


Charles Hazlitt Cahan: As far as I know and as far as the deputy knows there has been no case in five years in which any patentee or applicant for a patent has lost any money in the way mentioned.


Henry Elvins Spencer: Some years ago a case was brought to my notice of a man in western Canada who had invented a very clever device, and sold it to a man simply on a matter of promissory notes. This second man came to Ottawa and got some patent attorney to take up the case, and although application had been made by the first applicant the attorney managed to get a patent for the second man before the first man had a chance. I think in such cases the patent attorney should be strictly dealt with. The original inventor failed eventually to get his patent, did not even get any money at all for it. He not only lost the patent, which was given to the second man, but the man who had done all the work was at a complete loss in every way.


Charles Hazlitt Cahan: As I said to the other hon. member who spoke, it was only under one of the amendments passed in 1932, that complete jurisdiction was taken over the patent attorneys who are practicing at the patent office. Under the amendments during very recent years, therefore, we have complete jurisdiction over these patent attorneys and I think that in that respect the act is working very satisfactorily indeed.


[Stage Direction]
Section agreed to.
Sections 17 to 25 inclusive agreed to.
On section 26-Who may obtain patents.
Charles Hazlitt Cahan: There are two amendments
to this section.


Mr. SUTHERLAND:: I move that subsection (2) of section 26 be amended by striking out the words "any person" in line 16 and by substituting therefor the words:
any inventor or his legal representative


[Stage Direction]
Amendment agreed to.
Donald Matheson Sutherland: I move that clause (b) of subsection 2 of section 26 be struck out, and the following substituted therefor:
(b) within twelve months after the filing of the first application for such patent in such other country or in any of such other countries.


Louis Édouard Fernand Rinfret: I read the notice of these amendments that appeared in the votes and proceedings of April 10. Perhaps the minister will just indicate in a few words what is the purpose of the amendments.


Charles Hazlitt Cahan: As a matter of fact in April I did give notice of certain suggested amendments. Members of this house and others throughout the country read those suggested amendments and suggested that clearer statements might be made. Clause (b) of subsection (2) of this section reads as follows at present:
(b) within twelve months after the filing of the application, or of the first application, as the case may be, for such patent in such other country or countries.
Those who were before the Senate committee have agreed that this can be more clearly stated in the words of the amendment, which amount to exactly the same thing.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
On section 27-Treaty or convention rights of applicants.
George Gibson Coote: Might I ask if there is more than one treaty or convention relating to patents which bind Canada in this connection?


Charles Hazlitt Cahan: There is one convention,
to which Canada originally adhered. At subsequent meetings of the parties thereto certain amendments have been made, and unless the amendments proposed at subsequent meetings are adopted by Canada the old convention remains in force according to its terms. Canada has acceded to each amendment so far made with the exception of those that were suggested at the meeting of the representatives of those countries held in London last July. This act will enable Canada to carry into force such amendments as were proposed at that meeting if the government of Canada adheres to the amendments so adopted.


George Gibson Coote: Might I ask whether Canada could abrogate her adherence to that treaty by giving notice? What are the provisions in that regard?


Charles Hazlitt Cahan: The treaty to which Canada is a party is the convention that was signed at The Hague on the 6th November, 1925. That is the last convention to which Canada
Patents of Invention

adhered and the Canadian ratification was deposited on the first of May, 1928. This convention has been before this house and I think is available at the distribution office unless the supply there has been exhausted. Article XVII bis provides:
The convention shall remain in force for an unlimited time, till the expiry of one year from the date of its denunciation.
This denunciation shall be addressed to the government of the Swiss confederation. It shall only affect the denouncing country, the convention remaining in operation as regards the other contracting countries.
So one year's notice is necessary.


[Stage Direction]
Section agreed to.
Sections 28 and 29 agreed to.
On section 30-Address of applicant and representative to be stated.
Charles Hazlitt Cahan: There is a slight error in this section: I do not think it requires a motion. In the eighth line these words appear:
Such name and address of such person so appointed-
I suggest that the first " such " should be changed to "the." It would then read:
The name and address of such person so appointed.
I believe that would be better English. I think this is a misprint.
Section as amended agreed to.
Sections 31 and 32 agreed to.
On section 33-Improvements may be patented.


Henry Elvins Spencer: May I ask the Secretary of State if many of the suggestions he made when the bill went to the senate were not accepted by that chamber?


Charles Hazlitt Cahan: As a matter of fact, after frequent sessions day after day covering a period of several weeks the amendments as adopted and the bill as it issued from the Senate met with the unanimous approval, I think I may say, of all parties interested who appeared before the committee from any part of the country. As my hon. friend will recognize, many of these amendments were drafted hurriedly, and in two or three cases only they were drafted in obscure terms. The amendments I am suggesting to-day are by way of clarification only, without affecting in any degree the decisions arrived at before the Senate committee, which so far as I am aware were unanimous.


Henry Elvins Spencer: I take it that the main
principles the Secretary of State aimed at were accepted by the Senate.
[Mr. Cahan.l


Charles Hazlitt Cahan: I think with the exception
of one contention which simply relates to the substitution of an "and" for an "or" that they were finally adopted by the Senate committee and the Senate, and I think they were approved by all who appeared before the committee as being a fair and equitable adjustment which should be left for satisfactory experiment.


Henry Elvins Spencer: May I ask the Secretary
of State to what exception he has referred?


Charles Hazlitt Cahan: There is one section in this bill in which the substitution of the word "and" for the word "or" has a very great significance. It has reference to the patenting of the substance which is the result attained by a patented process. The matter is referred to in section 40 of the bill, and perhaps the hon. member would be content to discuss it when we reach that section.


Henry Elvins Spencer: Yes.


[Stage Direction]
Section agreed to.
Section 35 agreed to.
On section 36-Examination.
Mr. iGERSHAW:	Possibly my question
does not come under this section, but I should like to ask the minister if he has any control over so-called patent attorneys. A number of people advertise in the papers as being patent attorneys. Inventors have confidence in their own invention and often support that confidence with a good deal of money. In many cases nothing comes of the expenditure. I have known several inventors who have lost large sums of money and whose inventions have not become saleable. Has the minister any control over such matters?
Charles Hazlitt Cahan: 'If the hon. member would
look at sections 15 and 16 he would find that the commissioner, under the direction of the Secretary of State, has complete control. As a matter of fact, upon making examination of the manner in which some of these attorneys were conducting their business and particularly the sort of advertising they were doing a considerable number of names have been omitted from the list. I believe the supervision and control is quite sufficient to eliminate evil and1 perlnicious practices.


[Stage Direction]
Section agreed to.
On section 37-Divisional applications.
iMr. RINFRET: I understand that this is a new clause, and that it points out that from now on patents shall be granted for one invention only. Perhaps my question is

somewhat technical, but it sometimes happens that inventions are complex, and although an invention may be for one purpose it may comprise different new parts. In such event would it be necessary for an inventor to obtain patents for each part of the invention?
Charles Hazlitt Cahan: I am afraid I could not
answer the question in that indefinite way. An application shall be made for only one invention, and the patent shall issue for one only. If it is disclosed however in the course of investigation with respect to an application that two inventions are involved, then there will be an issue of a separate patent for each invention and each invention will be treated! on its own merits. But a practice which has sometimes prevailed for the purpose of confusing officials and the public, namely that of making one application for several inventions, is now discouraged.


[Stage Direction]
Section agreed to.
Sections 38 and 30 agreed to.
On section 40-Chemical products and substances.
Charles Hazlitt Cahan: I shall now make an explanation of the point raised by the hon. member. In the second line of section 40 the word "and" now appears. An amendment substituting "and" for "or" was made some years ago when the Patent Act was before this house for revision. Its significance is that when the war broke out the British government found that certain chemical products were controlled under German inventions, and that the disclosures made at the time the applications for patents were pending at the British patent office were not sufficient to enable the British government, after the patents were forfeited, to manufacture or produce the same substance. Under the method which had prevailed prior to that date if an applicant received a patent for a chemical process the patent included the product produced by that process. The British authorities did not agree to continue that provision of their law, namely that the patenting of a process would ipso facto confer a patent for the substance produced by the process. This parliament decided otherwise at a previous revision. Now if a patent of a process is obtained in Canada, then that patent extends and applies to the product produced by that process. That does not obtain in England, but I believe in other countries the patent applies to the product.
After a discussion lasting one or two days the committee of the Senate decided that as parliament knowingly and wittingly had come
Patents of Invention
to a decision in 1918 to that effect, and as that provision had been continued and maintained throughout the subsequent years it was inadvisable to make an innovation in our law with respect to it. So that if a patent is secured by a process over a certain substance thereby produced, then in Canada the product is also patented unless it is otherwise produced, and the assumption is that when it is produced it is produced by the patented process unless the contrary be absolutely shown in the courts.


Henry Elvins Spencer: I would ask the Secretary of State if it has been found that many countries do not recognize the patent laws.


Charles Hazlitt Cahan: I think all the leading
countries of the world are now parties to the same convention to which we are a party. I could easily look up the list. There are four pages of signatories to this convention.


Henry Elvins Spencer: Do they live up to the
spirit of the agreement?


Charles Hazlitt Cahan: I think they try to. We
have had no complaints whatever during the last five years from Canadian patentees, that is, from patentees resident in Canada, that on applying to foreign patent offices they have not received their just rights under the terms of the outstanding convention. Complaint has not been made in five years.


Mr. GARDINER:: Arising out of the explanation which the minister has just given with reference more particularly to chemicals produced by a patented process, what would happen in the case of a certain chemical that had been produced by one process if another patented process came into existence? Would the one receiving the (patent have the control of that product irrespective of the fact that the product might have been produced by different methods prior to the granting of that patent?


Charles Hazlitt Cahan: Under our law as it has stood for some eighteen years it is assumed that if the product produced is identical, then that it is produced by the patented process which produces that substance. I see what is in the hon. gentleman's mind. We fought that out for days, but we have decided to maintain the law as it is, and any arguments to the contrary did not prevail.


Robert Gardiner: With further reference to that matter, Mr. Chairman, even if a company has received a patent for a certain process of manufacturing a certain drug or chemical, in the event of this drug or chemical being produced by other processes it does
Patents oj Invention

appear to me to be ridiculous merely because of the fact that this company gets a patent for a new process of producing this commodity, that it should be given patent rights over the whole commodity. That seems ridiculous to me.


Charles Hazlitt Cahan: The difficulty is in ascertaining the facts. We have excluded from the operation of the act all chemical processes of producing products which are intended for food or medicine, except as specifically provided in subsection 1. Subsection 2 says:
(2) In an action for infringement of a patent where the invention relates to the production of a new substance, any substance of the same chemical composition and constitution shall, in the absence of proof to the contrary, be deemed to have been produced by the patented process.
That is an assumption which is created by statute, and the final judgment of the Senate committee was that that was a fair assumption under the circumstances. Of course, that assumption may be rebutted by positive evidence.


[Stage Direction]
Section agreed to.
On section 41-Refusal by commissioner.
Louis Édouard Fernand Rinfret: This is a new clause? I understand that by this clause the commissioner when he is satisfied that the applicant is not by law entitled to a patent may refuse it. At first sight it might be asked why that was not in the old act. In my opinion it was because it did not seem desirable to give the commissioner the discretion of deciding a point of law, but I understand now that if the commissioner is satisfied that the applicant is not entitled to the patent he may refuse it. The commissioner decides and passes on that himself. Is not that giving him too large a discretion?


Charles Hazlitt Cahan: I do not think so. Section 41, which is new, prescribes that when the commissioner does refuse a patent he shall give notice by registered letter addressed to the applicant or his registered agent, notifying such applicant of such refusal and of the ground or reason therefor. That is new. The practice has been simply to notify the refusal. Now he notifies the refusal and gives his ground or reason for the refusal, and thereupon, as heretofore, the applicant has the right of appeal to a judge of the exchequer court for a final decision.


Louis Édouard Fernand Rinfret: The applicant has no appeal under any further section?


Charles Hazlitt Cahan: Oh yes. The applicant can always appeal over the refusal.


Louis Édouard Fernand Rinfret: I see that is provided in section 43.


[Stage Direction]
Section agreed to.
Sections 42 to 44 inclusive agreed to.
On section 45-What patent shall contain and confer.
Henry Elvins Spencer: Would the Secretary of State kindly give us an interpretation of this section?


Charles Hazlitt Cahan: The section reads:
Every patent granted under this act shall contain the title or name of the invention, with a reference to the specification, and shall, subject to the conditions in this act prescribed, grant to the patentee and his legal representatives for the term therein mentioned, from the granting of the same, the exclusive right, privilege and liberty of making, constructing, using and vending to others to be used the said invention, subject to adjudication in respect thereof before any court of competent jurisdiction.
The only new provision there is the words underlined, "in this act prescribed." This section has been the basis of the patent law of Canada for all time. The only change is that we have introduced entirely new conditions with respect to the manufacture and sale, and the price at which the article is sold, and therefore to make it clear that the grant of the patent would confer no overriding rights the words were introduced "subject to the conditions in this act prescribed," so that the conditions subsequently stated and prescribed in the act will apply notwithstanding the terms at which the patent is granted.


Henry Elvins Spencer: Is there anywhere in this act a limit put on the special profits that can be charged on account of the patent?


Charles Hazlitt Cahan: Section 65 on page 25 imposes certain terms and those are the terms iprescribed, as referred to in the section now before the committee. For example, paragraph (c) of subsection 2 provides:
If the demand for the patented article in Canada is not being met to an adequate extent and on reasonable terms;
These terms include price, conditions of sale, use and the rest.


Henry Elvins Spencer: Who decides what reasonable terms are?


Charles Hazlitt Cahan: There is a long provision [DOT]which we shall reach in a few moments in regard to the patent. The commissioner may [DOT]make full inquiry, at the instance of any

party, and may make a finding, but that finding is subject to appeal to an exchequer court judge. So that the exchequer court judge has the final adjudication in the matter.


George Gibson Coote: Section 45, which we are now discussing, makes it possible for certain corporations to obtain an absolute monopoly of certain things which are in general use in Canada. It grants "the exclusive right, privilege and liberty of making, constructing, using and vending to others," and so on. Nothing has been left out which would grant them the very widest and most exclusive rights of every kind. I should be very much obliged if the Secretary of State would explain why it is advisable or necessary to give any patentee the exclusive right of vending to others any invention. Surely when he has the exclusive right of making, constructing and using any invention the right to vend it might be left open. It may be that there is some good reason for putting in this provision, but I have never yet been able to understand why any patentee should be given the exclusive right of vending to others. If he can set the price on the article that ought to be enough.


Charles Hazlitt Cahan: A patent is a monopoly and it is in the terms a complete monopoly; it always has been a monopoly since the days that patents were first granted by the crown or by any governmental authority. It is a monopoly and a subsisting monopoly, and one which by international convention we are bound to maintain within certain limits prescribed by the convention. What we have done in section 45 is to grant a monopoly, but we grant it subject to the conditions in this act prescribed; and in the subsequent sections we have gone as far as any act in existence of which I know, or to which I can gain access and prescribed conditions which would relieve such monopoly of its most prejudicial features. I have gone as far as I can.


George Gibson Coote: For my part I object to section 45. Possibly when we have seen the conditions to which the minister refers and which appear in subsequent sections we shall find this section less objectionable; it may be that I shall be convinced then that the section is all right. At the moment, however, I am very much opposed to giving this exclusive right. The right to vend is particularly objectionable. I do not see why we should use all the powers of the state to grant such a monopoly. We are extending a great privilege to any inventor when we
Patents of Invention
patent his invention and safeguard it so that he gets a reasonable reward for his work and we prevent anyone from robbing him of the benefits of the invention. But to grant him the exclusive right to vend it to the general public is objectionable. Are we required by the international convention to put in these words or words to this effect in our Patent Act?


Charles Hazlitt Cahan: Undoubtedly we are. If parliament decides at some time or other to give a year's notice and withdraw from the convention, that is a matter for discussion and decision, and such a decision would be very farreaching. I may assure the hon. gentleman, however, that having granted the patent, as prescribed by this section,-and the section is no more farreaching than the Patent Act of the United States or of Great Britain or of France-then we have gone as far as we may under the convention in prescribing the working conditions for the purpose of rendering the monopoly as-


George Gibson Coote: As innocuous as possible.


Charles Hazlitt Cahan: -as prejudicially inoperative as possible.


Robert Gardiner: Seeing that this is the really important section, or one of the most important sections, will the minister say that the subsequent sections containing the conditions under which the patent may be granted will take care of the situation outlined this afternoon by the hon. member for East Kootenay on the second reading?


Charles Hazlitt Cahan: I understood the statements of the hon. member for East Kootenay to refer to abuses which had arisen with respect to the existing Patent Act, and of those abuses I am fully advised; I have been aware of some of them for five years. We have gone as far as we can, in drafting this bill, to provide ways and means of obviating these abuses and we have prescribed remedial measures. I found no lack of disposition on the part of the Senate committee to deal with such abuses, but we took the very best legal advice available and decided that we really could not effectively go further than the British parliament had done in prescribing remedies for the same abuses. The others are clauses 64, 65 and 66; those are the entirely new provisions which we have introduced. It will be noticed that there is down the left margin a long black line from page 23 to page 29 covering clauses 64, 65, 66, 67, 68, 69 and 70. Those clauses are entirely new to Canadian legislation.
Patents of Invention


Henry Herbert Stevens: I have been waiting
patiently until we got to those clauses to which reference has just been made, but I would not like the impression to exist that those clauses not yet under discussion adequately deal with the points raised, because to my mind they do not and I am prepared, when the proper time comes, with the permission of the chair to discuss the matter. But if we are to discuss it now, I would also like to have the privilege of expressing my views at this stage. However I submit it would be better to discuss the question when we come to the clauses. I want to say definitely that the clauses mentioned do not adequately deal with the matters to which I referred on the second reading.


Robert Gardiner: Will the minister object to the clause standing until we go through the conditions under which patents are issued? We can come back later to clause 45.


Charles Hazlitt Cahan: I do not think clause 45
should stand because it is necessary to a patent act and we cannot change it except by abrogating our international obligations. But I was not discussing clauses 64, 65, 66 or 67; I was simply answering a question courteously asked so as to indicate those other clauses to which I have referred as dealing with the prescribed conditions. I think clause 45 should pass. Let us deal with the other clauses when we come to them.


Louis Édouard Fernand Rinfret: I think the hon. member for East Kootenay is quite right. There is nothing new in clause 45 except that it states that from now on that clause will be subject to the conditions prescribed in the act. So I think it would be quite proper if we discuss the new conditions when we reach them, that is when we reach the clauses at the end of the bill. Clause 45 is merely an adjustment clause, nothing else.


George Gibson Coote: Those of us who are not
very familiar with the Patent Act may admit that there may not be anything new in clause 45, but perhaps there should be something new. We are drafting a new act, and I would like to raise the question in committee as to whether, when we are passing a new act, we should not correct some of the mistakes or abuses that have crept in under the old act. I think the wording is very objectionable and is one reason for some of the monopolies existing in Canada; the bill says that the patentee is going to have the exclusive right, privilege and liberty not only of making, constructing and using the patent but even of vending it to other people. He is to be able

to set down the conditions of sale, whether the article can be used or not after it is available for sale. He might set down certain conditions which might prevent anybody from making any use of the article. That is how I interpret those words. If my interpretation of them is wrong I hope the Secretary of State or his predecessor in office may give some better explanation of them. What is meant by the exclusive right of vending to others anything in Canada that has been patented? I would like to know that.


Charles Hazlitt Cahan: The words are clear to any person who understands the English language.


George Gibson Coote: If I understand the English
language it means that the patentee can set down all the conditions of sale absolutely and the people of Canada are helpless.


Charles Hazlitt Cahan: He can, subject to the conditions prescribed in this act.


George Gibson Coote: The prescription ought to be very close to clause 45,, because anyone who reads it would take it that the patentee has the exclusive right and might not scan very carefully the four or five pages at the back of the bill.


Charles Hazlitt Cahan: You have to take the bill as a whole.


George Gibson Coote: As far as I am concerned, if clause 45 passes, it should pass on division.
Section agreed to on division.
On section 46-Patents for inventions by persons in public service.


George Gibson Coote: Is there any change in this clause?


Charles Hazlitt Cahan: The changes are all noted by underlining the words.


[Stage Direction]
Section agreed to.
Section 47 agreed to.
On section 48-Term of patent.
Robert Gardiner: Was any consideration given to any other term than seventeen years for the life of a patent? What is the usual procedure in other patent acts the world over? Is the period seventeen years or is there any difference?


Charles Hazlitt Cahan: It had been eighteen years in Canada and it has been so in certain other countries. Seventeen was a mean figure; we reduced the term from eighteen to seventeen years.	*

Patents of Invention


Robert Gardiner: Does the minister remember any other country where the term of life of a patent is much less than ours? What is the shortest number of years in any other patent law in any other country?


Charles Hazlitt Cahan: I remember we had the case before us of one country in which the term at the time was sixteen years. I contended that eighteen years was perhaps too long a period, and finally it was agreed in the Senate committee that with regard to all future grants the term should be seventeen years. We provide however in subclause 2 of clause 48 that with resipect to those applications which had been filed before the coming into force of this legislation, the original term of eighteen years should be adhered to.


[Stage Direction]
Section agreed to.
Sections 49 and 50 agreed to.
On section 51-Assignee or personal representatives may obtain patent.
Charles Hazlitt Cahan: To this clause there is an amendment which I think will commend itself to the committee. It is in subclause 3 which reads:
No such assignment shall be registered in the patent office unless it is accompanied by the affidavit of a subscribing witness or established by other proof to the satisfaction of the commissioner that the assignment was signed and executed in his presence by the assignor.
That draft failed to take into consideration that in most of w<hat I may call the Latin countries, the authentication of a document is made by a notary and we should recognize that, so that I am suggesting this change which will be moved by my colleague, the Minister of National Revenue:
That subsection 3 of section 51 be deleted and the following substituted therefor:
No such assignment shall be registered in the patent office unless it is accompanied by the affidavit of a subscribing witness or established by other proof to the satisfaction of the commissioner that such assignment has been signed and executed by the assignor.
So that if it had been subscribed before a notary in France or Italy, or in the province of Quebec, the commissioner would be satisfied.


Robert Charles Matthews: I move accordingly.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
On section 52-Patents to be assignable.
Charles Hazlitt Cahan: To clarify the section, there is another amendment to the same effect, as follows:
That subsection 3 of section 52 be deleted and the following substituted therefor:
No such assignment, grant or conveyance shall 'be registered in the patent office unless it is accompanied by the affidavit of a subscribing witness or established by other proof to the satisfaction of the commissioner that such assignment, grant or conveyance has been signed and executed by the assignor and also by every other party thereto.
This would permit of execution before a notary.


Robert Charles Matthews: I move accordingly.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
Sections 53 to 60 inclusive agreed to.
On section 61-Prior inventor must disclose his invention to establish priority.
Charles Hazlitt Cahan: There is a change in that.
Clause (b) deals with two things. First, it must be established that:
before the issue of the patent, such other inventor has made application for a patent in Canada or in any other country ...
And then it goes on to deal with two specific things. I thought it better for the sake of clarity that we should divide subsection (b) into two paragraphs, so that the amendment will be:
That in section 1, subsection 1, clause (b) be deleted and the following substituted therefor:
(b) such other inventor had, before the issue of^ the patent, made an application for patent in Canada upon which conflict proceedings should have been directed;
That deals with one particular phase of it.
or that
(e) such other inventor had at any time made an application in Canada which by virtue of section 27 of this act had the same force and effect as if it had been filed in Canada before the issue of the patent and upon which conflict proceedings should properly, have been directed had it been so filed.
That deals with the two separate things by two separate paragraphs. I submitted that to the attorneys who were discussing it before the Senate committee, and it is agreed that this makes for greater clarity.


Robert Charles Matthews: I move accordingly.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
Section 62 and 63 agreed to.
On sections 64 and 65-Conditions.
Henry Herbert Stevens: May I suggest that clauses 64 and 65 be considered together because the remarks I would like to make concerning them will more or less run together. If it is not contrary to the rule I would like to refer to both clauses.
Patents of Invention


Charles Hazlitt Cahan: I do not think there is any objection.


Henry Herbert Stevens: What I am about to say I say without any reflection upon anyone, the Senate committee that considered this bill or anyone else. But the new law as it stands is in fact actually weaker in respect to the matter to which I refer than was the old law. In order that we may have a better appreciation of this point, which I might describe as the use of the Patent Act to obtain additional customs protection by holders of patents, I would like to read a letter which certain attorneys, Messrs. Macfarlane, Thompson & Littlejohn of Toronto, acting for the Canadian General Electric Company, wrote to a firm in Vancouver, and there was also a similar letter to one in Ottawa and one in New Brunswick that came to my attention. In the body of the letter there appear some sixty-two very long numbers of patents, which I will not read, but with the consent of the committee will include in the record. This indicates how complicated these matters may become. The letter is dated Toronto, May 14, 1934, and reads as follows:
Re Canadian General Electric Incandescent Lamp Patents
Our clients, the Canadian General Electric Company, Limited, have instructed us to request you to discontinue the purchase and sale of incandescent electric lamps, which they are informed you are merchandising and which are an infringement of Canadian letters patent which they own, covering drawn wire, tungsten filaments, incandescent lamps, together with leading-in wires for the same, among which patents are the following:
167,329,	176,742,	185.854,	189,568,223.518,	173,027,	231,645,	253,489,177,227,	185,855,	190,194,	209,751,182,730,	235,407,	166,120,	177.881,192,772,	197,329,	223,517,	184,875,214.160,	166,536,	176,010,	182.732,197,330,	188,091,	202,296,	244,346,166,121,	179,117,	209.752,	252,159,272,154,	274,027,	276,080,	280.161,280,346,	285,331,	285,338,	169,936,290,355,	292,544,	293,975,	293,977,293,982,	295,524,	297,598,	297,599,298,834,	299,533.	
198,329,
169,276,
223,516,
186.072,
239.865, 188,141, 212,365,
265.866, 280,166, 288,139, 293,979, 298,832,
At the present time, the only manufacturers licensed and authorized to manufacture lamps under these patents are:
Canadian General Electric Co. Ltd.
Canadian Westinghouse Co. Ltd.
Canadian Laco Lamps Limited.
Service Lamp Co. Ltd.
Our clients allege that you have been handling lamps of American manufacture which they assert are an infringement of the above letters patent, and examination of said patents will no doubt satisfy your solicitors and yourselves of the position of our clients in this matter. Accordingly we will appreciate your 
early reply that in view of the same you have discontinued the purchase and sale of lamps which infringe the said patents.
Failing to hear from you by Monday, May 28th, we have received definite instructions to commence proceedings in the exchequer court of Canada for the protection of our clients' interests under their patents, and for the recovery of damages which they may have sustained through your merchandising lamps .which infringe said patents.
Yours very truly,
MacFarlane, Thompson & Littlejohn.
It will be noted that the complaint is that they have been handling lamps of United States manufacture, and the second point is that they have been merchandising lamps, not manufacturing, not infringing on the rights of others, but simply merchandising or selling. Their third assertion is that this is an infringement of the letters patent. I direct the attention of the committee to the extract I read from the investigation of the federal trade commission of the United States. I intend to repeat only part of it. It will be noted that this investigation has this to say:
The members of this international organization exchange patent rights, manufacturing .processes and other "trade secrets." TMb exchange is characterized by a division of territory, each company granting to the other exclusive rights in specified countries.
I ask the committee particularly to notice those words. Further it says:
Such agreements practically eliminate any competition of a serious nature. For example, in the case of light bulbs, in so far as Canada is concerned no independent manufacturer can either manufacture or sell in Canada without being liable for suit for infringement of patents which are owned by the larger organization.
My submission in the first place is that the contention of this firm of solicitors, acting for the Canadian General Electric incandescent lamp patent, is really based upon this international agreement rather than any bona fide infringement of the law, as I shall try to show in a moment. In other words, this company in conjunction with the General Electric in the United States and the other companies that form this international cartel have farmed out the territory of the world, Canada being farmed out to these four firms I have mentioned, and any one who impinges upon the limitation of territory decided by the cartel is penalized by our courts through the Patent Act. The pbwers of the Patent Act that they invoke are, I submit, very narrow. As I read the correspondence and dealt with some of these cases when I was in the Department of Trade and Commerce I was amazed to find the extent-I do not want to be offensive;

Patents of Invention
I almost said the audacity-to which these Canadian firms used the law for their own purposes. I am not speaking now, shall I say, in any privileged place, because I had a talk with the general manager of the Canadian General Electric Company who in my presence frankly took the position that he was quite entitled to all the advantages of the law that he might desire. I put to him the point I raised here; I said, " For the moment I am not concerned with the infringement of patents from a bona fide standpoint. What I am concerned with is your use of the patent law to obtain an additional one hundred per cent protection." That is the point with which I am concerned, and he was unable to show me that his prices were not as I have indicated, namely, sixty cents for a given article with a discount of five cents to certain buyers, and therefore fifty-five cents to some, whereas a similar article after having discharged all the obligations under the patent laws of the United States-to the same company, by the way, and its affiliates-with regard to royalty and so forth, having strictly observed the law and having paid the Canadian customs duty, could be sold in this country for twenty-six cents.
It is obvious that in Canada the companies are taking advantage of, first, the agreement parcelling out the territory and then of the patent law in order to make those agreements good, thus penalizing the importer. There was the case of a gentleman in Ottawa named Feldberg. A judgment was obtained against him without his knowledge; his solicitor, the late Moses Doctor, died!; a judgment was obtained) against him for some S160, I think, and he was precluded from dealing in these articles. There was also a firm down in New Brunswick who took up the matter with me and with others; they were faced with the proceedings I have mentioned here.
For the moment the point I wish to emphasize is this:	powerful institutions
possessed of, and capable of possessing themselves still further of, certain inventions are thus able to preclude what might be called a reasonable traffic in these things, and to maintain an unwarranted price. The minister says these matters are adequately dealt with in sections 64 and 65 of the bill. I invite the committee to follow me for a moment; I will try to make my statement clear and not too lengthy. It will be seen that section 64 takes the place of section 40 of the old act, and I should like to indicate what the old act contained and how it provided for this situation. I will admit that the provision was not put into operation and
therefore was not made effective, but there were certain powers contained in section 40 of the old act, as follows:
Every patent, except those governed' by the provisions of this act relating to the granting of patents to persons in the public service, shall be subject to the following conditions:-
Then it goes on:
(b) Any person interested may present a petition to the commissioner alleging that the reasonable requirements of the public with respect to a patent invention have not been satisfied or that the patentee has failed to manufacture adequately the patented invention in Canada, and praying that the patentee be ordered to supply the patented article at a reasonable price or grant licences for the use of the invention on reasonable terms.
Note those words. Then the commissioner shall consider the petition, and the section continues:
-shall proceed to hear and determine the matter, and if it is proved to his satisfaction that the reasonable requirements of the public with respect to the patented invention have not been satisfied or that the patentee has failed to adequately manufacture the patented' invention in Canada, the patentee may be ordered by him-
Note these words:
-to supply the patented article within reasonable limits at such price as may be fixed by him and in accordance with the custom of the trade-
I quote further:
-or to grant licences for the use of the patented invention as may be fixed by him-
Later it provides:
-the commissioner may, with the approval of the minister, instead of hearing and determining the matter himself, refer the petition to the exchequer court, which shall have jurisdiction in the premises and may make such order thereon as the commissioner is authorized to make under this section.
I pause to direct attention to this: Under that old section the commissioner did have certain powers. I state very frankly that I do not think they were used very extensively, but if it were found that there was an abuse by a patentee with regard to price he had power to order the supply of the patented invention within reasonable limits at such price as might be fixed by him, and further it might be taken to the exchequer court. Unless I am corrected in this-and I welcome correction if I am wrong-the question of the exchequer court is excluded from the new sections. I shall now read section 64, and although I shall not attempt to read the whole of it I shall read so as to get the sense of it.
The commissioner may ... require the patentee ... to transmit and' deliver to the
Patents of Invention

commissioner within sixty days from the date of such notice, or within such further time as the commissioner may allow, a return stating:-
(a)	whether the patented invention is being worked on a commercial scale in Canada, and the place where the name and address of the person by whom the patented invention is being so worked; and
(b)	the reasons, if any, why such patented invention is not being worked ...
And so on. That is substituted for the clause to which I previously referred. It will be, noted that section 64 does not meet the case in anything like the degree that the deleted section 40 of the old act did.
I now come to section 65, to which considerable reference has been made this afternoon. Section 65 reads in part as follows-and I would ask the committee to note it carefully as I proceed:
The attorney general of Canada or any person interested may at any time after the expiration of three years from the date of the grant of a patent apply to the commissioner alleging in the case of that patent that there has been an abuse of the exclusive rights thereunder and asking for relief under this act.
I pause there. In the first place it will be noted that such application can be made only after three years. It may be argued that that is not unreasonable, but I ask, Mr. Chairman: Why the limitation of three years? I want the committee to note this point-and this is known by all patent attorneys; it is known well by all those who engage in or are dealing with patents-that in the case of an article such as an electric light bulb, or in fact any other article of that type, there are constant new parts or patents or inventions being made.
I hold under my hand a statement giving a list of these numbered patents to which I formerly referred. I shall read only a few so as to indicate their variety. Hon. members will recall that the notice given to the dealer who imported was given under a certain list of 62 patents which were therein named. These 62 patents covered articles along these lines-and I shall not read all of them, because they are contained on two full sheets of foolscap; I shall read only a few so as to give the committee an idea of their complicated nature. They are sealing-in wires, methods of making tungsten wires, metal filaments, incandescent lamps, tungsten alloys, electrical lamps, base for incandescent lamps, filament supports, process of manufacturing non-sagging helical bodies of highly refractory metals-that's a mouthful. Then the list goes on: Multiple of incandescent lamps, tipless incandescent lamps, process for sealing

in wires, appliance for forming filaments, stem making machine, tipless incandescent electric lamp, and so on.
I shall not read them all. The point is that if during the period of three years or about the expiration of that time another patent is added to those entering into the manufacture of the lamp, then the individual cannot apply for another three years. And if during that three years another patent is secured and applied to the manufacture of this lamp he is put off for another three years.
I am told by competent authorities that that three year clause in the bill virtually make impossible the steps indicated in subsection (I) of section 65.
If the committee were interested I could outline others of these patents. They run from 1916 down to the present date. Almost every intervening year between 1916 and 1933 showed patents invoked in the courts by this company to stop the firm in question from selling the lamps. I am not dealing with theory; I am dealing with cases. Mr. Chairman, is it not recognized by the committee that when you say the attorney general of Canada or any other person may at any time after the expiration of three years make application that the likelihood or possibility of doing that is practically nil?
Now we shall proceed with the section, from that point. Subsection (2) reads:
The exclusive rights under a patent shall be deemed to have been abused in any of the following circumstances.
I shall not read them all, because most, of them are designed very definitely to protect the rights of patentees and do not constitute a protection of the public. I am not complaining about that but I merely dismiss the subject with that statement. One paragraph to which the minister referred a while ago I shall read, however, namely paragraph (c) of subsection 2.
(2) The exclusive rights under a patent shall be deemed to have been abused in any of the following circumstances:-
(c) if the demand for the patented' article in Canada is not being met to an adequate extent and on reasonable terms.
I direct the attention of the committee to the expressions " adequate extent " and "reasonable terms." What chance has any person to demonstrate those conditions when he is opposed by four great corporations, two of which are very large and two somewhat smaller. I submit that the possibility of proving that the public are not being adequately supplied would be impossible, because the chances are they would be. Then,

Patents oj Invention
"reasonable terms"-what	are reasonable
terms? I submit that this abuse has been going on, and that a price of sixty cents is not a reasonable term. However it is allowed to go on, and nothing is done. Under the old act there was power to deal with the matter, but nothing was done. Attention was called to it, and still nothing was done. Therefore I say I am justified in stating to-day that the difference between thirty cents for the imported article, after paying the duty, and sixty cents for the domestic article is considered in Canada reasonable terms. I submit those are not reasonable terms, and that any company in Canada which receives a protection of 40 per cent should be able to operate on that basis. In the present instance I believe the protection is 40 per cent; the Minister of National Revenue has the tariff at his fingertips, and he will correct me if I am wrong. Surely that is sufficient protection for any concern in Canada manufacturing incandescent lamps. I do not object to protecting Canadian industry, having in mind the extent of the American market as compared with the Canadian market, and the cost of mass production as compared with more limited production. I have no objection to that at all, but I do submit that 40 per cent is sufficient. I go further, however; if it is not sufficient, then let us put the protection in the customs tariff, where it ought to be. Let us come before parliament, raise the tariff and give our reasons for it. But do not give permission to a great corporation or group of corporations to secure a protection amounting to 150 per cent or 200 per cent, in the guise of a patent right.
One point further: It will be noted that so far as I can find this is the only protection taking the place of the old act. I confess that I am a layman and am not supposed to understand the law, but so far as I can understand it I can find no obligation resting upon the commissioner to whom this application is to be made to give any decision in the matter at all. It may be there, but so far as I have been able to read it, I cannot find where the commissioner is called upon to .make any finding in the matter. It must be remembered that the appeal is by the attorney general of Canada or by any interested person to the commissioner of patents. That is the form of the appeal, and it must be proved that the products are not sold on reasonable terms. But there is no obligation on the commissioner to do anything in the mattar at all. What I submit is that so outstanding and so glaring is this abuse of the patent law that there ought to be in this new act a very definite section,
something that will be beyond all cavil and beyond all possibility of evasion that will deal with this situation. This is not the first time that I have had this matter up, and I do urge now as a member of this house, as I have done before, that this committee should before this bill passes take the necessary steps to have this abuse of privilege removed and reasonable protection given to the consumer in regard to this matter and, of course, in regard to other matters to which for the moment I do not choose to refer.


Mr. BLAIR:: I am sure, Mr. Chairman,
that we all appreciate heartily what the hon. member for East Kootenay (Mr. Stevens) has just said because it means so much to the Canadian people. Patents are a great handicap on our industries in this country. They are similar in their effects to an excessive tariff from which we receive no revenue. There are in this country subsidiaries of large American firms. Go to some of the smaller shoe factories in Toronto, for instance, and inquire what machines on the floor of their factory they own. You will find that in many of our Canadian cities our factories are using American machines and on that machine they pay royalties. The royalty is of two kinds: one is a time royalty and the other is a utility royalty, and in case the firm sells shoes below a certain price the American firm has the power so to adjust the time royalty or the utility royalty as to fix the price at which those shoes shall be sold. We are at the mercy of these large American concerns with subsidiaries in this country, just as the hon. member has said. They have their hand on the levers of our factories, and they dictate the price at which we shall sell our products by adjusting the royalties on their patents. What is more, while it brings in no revenue to this country, it results in centralizing our manufactures. There was a time when mowers and binders and other agricultural implements were made in our rural towns and villages, but patents have gradually destroyed these industries in our rural towns, and the manufacturing of these implements has become centralized in such large firms as the Massey-Harris Company. There we have a large dinosaur, one of those animals that have grown so large that they have ceased to be useful. It is almost impossible for the Massey-Harris Company to manufacture a few implements only. They have to manufacture them by the thousand because their plant has been built up for the purpose of doing an export trade, and at the present time our export trade is largely destroyed. I am sure that
Patents of Invention

any official of the Massey-Harris Company would tell you that the big plant of the Massey-Harris Company in Toronto cannot manufacture a binder as cheaply as it could be manufactured in the rural towns, and they will tell you that the reason is because of their large power requirements and the large labour force that is necessary to keep such a big plant going. In consequence they have to charge a higher price than we used to charge in our towns and villages when we were manufacturing these implements. I feel that patents and tariffs are great handicaps.


Mr. STITT (Nelson):: What section are
we on, Mr. Chairman?


The CHAIRMAN:: Section 65.


Bernard Munroe Stitt: What has that got to do with tariffs?


Raymond Ducharme Morand: I would ask the hon.
gentleman to keep close to the question before the chair.


John Knox Blair: Section 66 was also discussed by the hon. member for East Kootenay, and if the hon. member will read it-


Bernard Munroe Stitt: I can find nothing
about tariffs in section 66.


John Knox Blair: I was saying that the patent
law was similar in its effects to tariffs. Patents aTe a handicap on our industries, a sort of a tariff from which we derive no revenue. They cause the centralization of our industries, the very thing we wish to avoid. They put us at the mercy of large American companies which by charging royalties raise prices exorbitantly. As I said before, the effects of our patent law spread throughout the country and are similar to the effects of a high tariff from which we derive no revenue. All nations recognize now that tariffs are too high, and this is one kind of a tariff that places a great handicap on Canadian industry, and which leads to us being charged exorbitant prices.
At six o'clock the Speaker resumed the chair and the house took recess.
After Recess
The house resumed at eight o'clock. PRIVATE BILLS



SECOND READINGS

[Stage Direction]
Bill No. 65 for the relief of Isabelle Hume Sadlier Rice.-Mr. Garland (Carleton).
Bill No. 66 for the relief of Mary Frances Isobel Brown Gauthier.-Mr. Factor.

Bill No. 67 for the relief of Amy May Wells Gorman.-Mr. Bell (St. Antoine).
Bill No. 68 for the relief of Charles Michael McGuire.-Mr. White (Mount Royal).

[Stage Direction]
Mr. G. G. COO'TE (Macleod) moved that the house go into committee on Bill No. 14, to amend the Foreign .Insurance Companies Act, 1932.	f
Motion agreed to and the house went into committee, Mr. Ernst in the chair.
On section 1-Surrender of policy.
Mr. CHURCH:: Inasmuch as I come from an industrial constituency, where a large number of people are out of work and are affected by the bill, I wish to say a word on their behalf. We hear a good deal about what the insurance companies have done for the people of this country, but we hear very little, if anything, of what the people have done for these companies. Ten years ago I contended that there should be a board of some sort over all such companies. I had on the order paper at that time a resolution to prevent them from taking trust funds and premiums and investing them in common stocks all over the world some of which stocks have proved since the depression nothing but South Sea bubbles. The government at that time did not see fit to adopt that proposed regulation, with the result that millions of dollars in premiums and trust funds invested the world over were lost in whole or in part not only investments by them on this continent but in all countries bordering on the seven seas. I have a bill also with reference to lapsed policies and the rates of interest thereon.
I submit that the house should adopt this bill because loan companies, mortgage companies, insurance companies and banks can no longer expect to receive the higher rates of interest which they have been charging in pre-depression days. This particular bill, by lowering interest rates and similar bills with reference to mortgages, loan companies and banks, would do more to get the people out of the mire than any other agency. It far transcends any other agency I can think of. Many skilled workmen, bricklayers, carpenters, plasterers and others have been out of work now for four or five years. When you talk about commercial rates, on insurance there is no commercial rate so far as these insurance companies are concerned. They are a law unto themselves. It was said on

Foreign Insurance Companies
April 12 that it would be interfering with the credit of the banks and with their business if we passed this bill. Now when a person is in financial difficulties the first agency he gets in touch with is a chartered bank, and the banks are a very important institution in the riding I represent. The policyholder gets a loan from a bank first and so cannot borrow from an insurance company after on a policy. Even bank managers cannot lend a hundred dollars to a retail merchant without authority from head office. If they do no one knows what they charge; they do not charge seven per cent because there is no adequate check or regulation governing them. These insurance companies are largely a law unto themselves. I have before me the annual report of the superintendent of insurance, which contains many quite interesting pages, giving the investments of every company in the country and throughout the world. It seems to me that the time is coming in Canada when the two old parties cannot fail to see the handwriting on the wall, because the working classes will not stand more of these high rates, whether they are charged by banks, mortgage companies, loan companies or by shark loan companies incorporated by this parliament in the last six or seven years and which cannot, by the widest stretch of the imagination be regarded as works for the general advantage of Canada. They get their charters from parliament and then go back and charge enormous rates of interest.
Again, I urge that there should be a federal regulation board over these insurance companies. In 1924 I proposed a trade commission which would take cognizance of such companies and have power to regulate them and their investments. Would it not have been a blessing if we had had a board before the depression of that sort which could have regulated investments in common stocks of insurance companies throughout the world? It would have saved the policyholders in losses by the companies hundreds of thousands and even millions of dollars.
I would point out that during the last few years rapid strides have been made in preventive medicine, science and surgery, as well as in many other departments of public health. Years ago there was no inspection of either milk or food or restaurants or abattoirs, but health departments everywhere have discovered the value of preventive medicine, with the result that the death rate has declined very appreciably indeed. I have returns from the federal United States health department disclosing some interesting figures, 92582-198
but I will not take that up to-night; instead I want to refer to the University of Toronto monthly, May issue. Referring to this particular problem, it says:
It is interesting to compare the expectation of life at the end of 1933 with that at the end of 1929 and earlier periods. The expectation of life at birth in 1911 and 1912 was 46.63 years; in 1919 and 1920, 51.14 years; in 1929, 55.78 years; and in 1933 it had reached the level of 59.19 years. It is evident that the upward trend of improvement has continued in spite of hard times.
The rates of insurance in this country are altogether too high and the dividends allowed in reduction of premium per annum are not as much as they should be. The inspection of these companies is also not what it should be. In the United States an investigation into Wall street and banks, insurance and brokers and stock companies, was conducted by the United States senate. We have in this country to-day a senate that is nothing but an anachronism. If the Canadian senate had done work similar to that which the United States senate did two years ago we would never have required a mass buying committee. The people of this country want relief from the high rates charged by mortgage companies, loan companies, banks, and insurance companies; such institutions cannot expect in the future to get the high returns or high money which they have always collected in the past. The day of "high" money has gone, in view of the borrowing by the federal government, the provincial governments and the municipalities and in view of the action taken by the banks in reducing the rate of interest on their depositors' moneys. All the money which the banks have to lend is their depositors' money and all the moneys which the insurance companies have to lend is the premiums paid by the policyholders or trust funds.
This bill is a step in the right direction and I am hoping in the future something further may be done along the lines of benefit to the working people in the matter also. Some people are always talking about what these foreign and domestic insurance companies have done for this country. What have they done to pull this country out of the mire? Have they done anything about housing or construction? No. Have they done anything in the way of lending money for reconstruction? No. T^iey are making it all the harder for small business men to borrow money on real estate investments and other forms of securities. At Gravesend Beach, Brooklyn, New York, the New York Life has lent $25,000,000 for the building of small homes and flats for the benefit of the working

31 IS

Foreign Insurance Companies
classes who live on that particular island. It has lent that money without any federal, state or municipal assistance. In view of all the policyholders have done for that company, it is trying to do something to pull the United States out of the mire by lending this money in the hope that it will create work for some of the policyholders who cannot pay their annual premiums and for skilled workmen, to take them off the dole. In that way the New York Life is trying to do something for its policyholder's; it is trying to create work on that island, to relieve the housing and reconstruction situation and to come to the help of the government. Did anyone ever hear of an insurance company, foreign or domestic, in this country coming to the help of the federal government or the provinces or the municipalities? No; they are hoarding up all this wealth to spend it without the proper regulation which there should be over these companies as they like. In the session of 1927, when the late Mr. Robb was Minister of Finance, I proposed that there should be some regulation over these companies. He was a very good minister for the people, and at that time when I sat on the other side of the house, I asked him why there should not be a revision of the insurance law every ten years just as there was of the Bank Act. I asked him: Did he propose to wait until there was an episode similar to that of the Home bank among the insurance companies before any adequate modern insurance legislation would be passed to control these companies with proper inspection and regulation.
As regards these mortgage companies, loan companies, some of these shark loan companies that are operating in the city from which I come and that have been chartered by this parliament, and some of whom, as the hon. member for Battle River (Mr. Spencer) says, are charging as high as 42 per cent-I can tell them that the day of "high" money is gone by. In view of the depression, the insurance companies instead of issuing pamphlets to influence members of parliament would be doing something in the right direction if they lent money for housing and reconstruction, and reduced rates all along the line. As a policyholder in these companies I have received a document which I think is an intimidation of a member of parliament. It is published by the president of the Canadian Life Insurance Officers' Association under date of April 26 last and is addressed to me as a policyholder and as a member of the house. It reads:
An important measure is before the house m which you are directly interested as a

member of the house and doubtless as the holder of a life insurance policy as well. We refer to the proposal to reduce the rate of interest charged on policy loans.
Most of the members have no doubt received a copy of this printed document which is headed:
Memorandum with respect to the rate of interest charged on loans on . life insurance policies.
The headings of the different paragraphs are:
1.	Policy loans not ordinary loans; life insurance companies not bankers.
2.	Interest rate in policy contract applicable long distance into future.
3.	Lowering interest rate injurious to policyholders.
4.	Danger of "run" on insurance companies.
There could be a much greater danger or
a " run " on some of them the way they invested in common stock the world over.
5.	Companies would be forced to change investment policies.
6.	Low interest rate wouid encourage borrowing for speculative purposes.
7.	Policy loans work to disadvantage of companies.
8.	Heavy expense involved in handling policy loans, individual policy loans small.
9.	Policy values required to be reduced.
I look on this as nothing but an effort to intimidate a member of parliament by urging him by these reasons addressed to him as a policyholder. These particular gentlemen who are the officers of these companies are simply trustees for these funds. They have invested in common stocks the world over without any adequate regulation and with an utter contempt for the policyholders whose funds they administer with great loss to the company. Not only should this bill pass, but we should have similar ones in regard to the banks, loan companies and mortgage companies. If we did something like that, we would be encouraging the building of houses and reconstruction in a way that would make a good effort toward bringing the people of this country out of the mire.


George Gibson Coote: May I say just a few words in suppprt of this bill which I introduced some time ago? It was changed in the banking committee and was reprinted. I am given to understand that the reprinted bill has not been generally distributed among the members, and if there is a supply of copies on the table, I would suggest that the reprinted bill should be made available to the members of the committee. It is not on my file and some of the members have told me it is not on theirs, and so that the members may not be under any misapprehension, I hope the reprinted bill will be distributed.

Foreign Insurance Companies
This matter of the rate of interest which should be charged on policy loans was very carefully considered in the banking and commerce committee. We had several sessions of the committee; the life insurance companies were .well represented by a delegation of insurance men, with very eminent counsel to speak for them. I regret that the insurance companies when they circularized1 the members of the house did not include me in the list; I did not get one of the circulars to which the last speaker referred. May I put the matter briefly to the committee in this way; first I would stress the importance of this matter to the people of Canada who are forced to borrow on their life insurance policies-


Mr. DUFF:: Before my hon. friend proceeds, he says, and it is true as far as I am concerned, that this amended bill is not on, our files. It seems to me that we should adjourn the consideration of this important matter until we have the bill before us. I do not know whether I am in order in moving that the committee rise, but I think it is only right that we should have the bill before us. If I am in order I move that the committee rise and report progress.


Henry Elvins Spencer: Before you put that
motion, Mr. Chairman, I believe that the reprinted bills have been distributed to the desks but not put on the files. I found mine beside my file.


The CHAIRMAN (Mr. Ernst):: These bills are not reprinted when amended. I have read the section. It is an amendment to the Foreign Insurance Companies Act, and provides that interest shall be at the rate of five per cent. The original draft said1 four per cent.


Arthur Edward Ross: It is most unusual that these
amendments are not before us. I do not think it ever happened before that the chairman merely read the amended clause and the committee dealt with it.


Richard Burpee Hanson: Could we have a statement of the exact position? I confess that I am at a loss.


William Gordon Ernst: The
bill is No. 14. I shall read the original clauses which went to the banking and commerce committee:
1. The Foreign Insurance Companies Act, 1932, as amended by chapter thirty-six of the statutes of 1934, is further amended by inserting the following section therein immediately after section thirty-nine thereof:-
39a. (1) In the case of life companies, whenever any holder of a policy other than a term or natural premium policy has paid three or 92582-1981
more annual premiums thereon or their equivalent half-yearly or quarterly premiums and fails to pay any further premium or desires to surrender the policy, the premiums paid shall not be forfeited, but he shall be entitled to receive a paid-up and commuted policy for such sum as the directors ascertain and determine, or to be paid in cash such sum as the directors fix as the surrender value of the policy; such sum in either case to be ascertained upon principles to be adopted by by-law applicable generally to all such cases as occur, or extended insurance under the policy for a period proportionate to such cash surrended value.
That clause was deleted in its entirety by the banking and commerce committee. Then clause 2 of the original bill read:
(2)	The sums so ascertained and the duration for which insurance may be extended, based upon the assumption that the policy is not subject to any lien by way of loan or otherwise, shall be inserted in the policy and form a p_art of the contract between the company and the insured.
That was also deleted.
(3)	In the event of the policy being subject to any such lien when default is made in payment of a premium as aforesaid, such lien shall be taken into account in fixing the cash surrender value and the paid-up and commuted policy herein referred to.
That was also deleted.
(4)	Until the policyholder elects to accept such cash surrender value or such paid-up and commuted policy, such cash surrender value shall be applied by the company to maintain the policy in force at its full face value until the whole of the surrender value under the policy is exhausted.
That was also deleted.


Mr. ARTHURS:: Is it not a fact that the original bill was all deleted except one clause?


William Gordon Ernst: Yes.


James Arthurs: Many hon. members have objected to clauses which they read from their files, which clauses have already been deleted.


William Gordon Ernst: Well, if I may just finish: Under clause 5 as originally drafted interest was to be payable at the rate of four per cent per annum on loans on insurance policies. That was changed and the present bill substituted. The bill was reprinted as reported from the committee. The reprint places the rate of interest at five per cent, defines interest, and also fixes a period of time, saying that the section shall not apply to any loan or unpaid balance thereof made under an agreement executed or advanced automatically under any policy issued before January 1, 1936.


Richard Burpee Hanson: In view of the explanation made and1 the very great
Foreign Insurance Companies

change that is (proposed, I think this bill ought to 'be distributed to the members before it is further considered, and that it should stand over for that purpose.


William Duff: I move that the committee rise.


George Gibson Coote: I understood-


William Gordon Ernst: This motion is not debatable.


George Gibson Coote: But there is a point of order involved. I understood the hon. member for Antigonish-Guysborough (Mr. Duff) to rise to a point of order, but after he raised the point, of order he made a motion. I suggest that that procedure is not available to any hon. member of this committee. I relinquished the floor to the hon. member only because he said he was raising a point of order. If there is a point of order involved I should like to know what it is. This bill was amended in. the committee and was ordered to be reprinted. I simply suggested that apparently the reprint was not available to all the members, but the bill has been reprinted; the reprints must be in existence somewhere. It was for the information of hon. members that I suggested that the copies might now be distributed to hon. members who have not got them. The bill was passed by the banking and commerce committee long ago; surely we might now consider it.


William Gordon Ernst: I have to call the hon. member to order; the motion is not debatable.


George Gibson Coote: Well, I raise the point of order that the hon. member for Antigonish-Guysborough raised a point of order and after he had thus succeeded in getting the floor he made a motion, which procedure was not in order.


William Gordon Ernst: The motion has been renewed since, and it is now before the committee.


George Gibson Coote: But surely I should have the right to the floor when it was taken from me in that way. I suggest that I have the floor until some hon. member can prove a point of order. I am in your hands, Mr. Chairman.


Hugh Guthrie: Would it not be just as well if this bill should stand until Friday? Copies of it are not at hand now, and we shall have them then.


George Gibson Coote: I should like first to ask the officers of the house if there are not plenty of copies of this bill available. It is difficult

enough for any private member to get a public bill through this house; we have only two hours a week, and then private bills take precedence. The last two nights devoted to private and public bills were taken up in the discussion of the question whether a divorce bill should be restored to the order paper. It would appear to any outsider, and even toi members of this house-


William Gordon Ernst: I have to call the hon. member to order; the motion is not debatable. The motion is that the committee rise, report progress and ask leave to sit again when the bill is reprinted.


George Gibson Coote: I rise to the point of order
that when I had the floor it was taken from me on a point of order, and after I had lost the floor to the hon. member (Mr. Duff) simply because he raised a point of order, then the motion was made. I suggest that a motion cannot be made in that way


William Gordon Ernst: The motion has been made and is before the chair.


George Gibson Coote: How can it be before the
chair if the rules are properly enforced? How did I lose the floor except that the hon. member raised a point of order which I suggest was absolutely wrong? I suggest that I have the floor now and that no motion can properly have been made, when the debate was interrupted simply on a point of order. No disposition was ever made of the point of order.


William Duff: On the point of order, I am
quite willing for my hon. friend to continue his speech, but he put the words in my mouth and I thought I was helping him out. He said there was no bill before the house. I thought that by raising the point of order and moving that the committee rise I wTas helping the hon. member out in his argument. If he wants to continue his speech that is quite satisfactory to me for the time being.


William Gordon Ernst: Then the motion is withdrawn for the time being.


George Gibson Coote: I was simply trying to suggest to the committee the importance of this bill to a certain class of people in Canada, those policyholders who are finding it difficult to keep their premiums paid, some of whom have had to borrow money to keep their policies in good standing. In the banking committee the superintendent of insurance told us that before this act was introduced rates running all the way from six per cent to ten per cent were being charged by insurance companies in Canada on policy loans.

Foreign Insurance Companies
I certainly think this is a matter on which this house should come to a decision and in connection with which we should lay down a maximum rate of interest which the insurance companies may charge.
These companies were very well represented before the banking committee by very able counsel, and this section of the bill was passed by a good majority, setting the minimum rate at five per cent. If the reduction meant only one per cent-and it means more than that -it would mean a saving of $2,500,000 to certain policyholders who are borrowers. The companies cannot earn a rate of six per cent on any other investment they can make today. Certainly they cannot net six per cent on their mortgage investments; I doubt if they can net five per cent. Why they should want to charge their own policyholders on guaranteed loans like this-as a matter of fact the policyholders are only borrowing their own money-a higher rate of interest than they can earn on any other class of investment is quite beyond my understanding. Last year one of the biggest companies in Canada averaged 4-08 per cent on all their investments. If they have any money coming in to-day to invest in dominion government bonds they cannot earn much more than three per cent. Why charge the poor policyholder who wants to borrow at a rate of six per cent? Some companies charge seven per cent and others charge even more.


Richard Burpee Hanson: I should
like to ask the hon. member a question. What will be the effect on the profits of the policyholders who do not borrow if the rate of interest on loans to policyholders is reduced?


George Gibson Coote: I think the net result would
be to reduce their earnings by a very small fraction indeed. Let me suggest this to the hon. member: Why should any policyholders who do not need to borrow want to make this inordinate profit out of the poor policyholders who do need to borrow, and who are really only borrowing their own money? I know it has been suggested, and it has been stated in newspaper articles, that we are in danger of ruining the insurance companies by setting the rate so low that all the policyholders will want to borrow money. That is rank nonsense. Why, the insurance companies were pretending to lend money at one per cent less than the banks, years ago, and there was no run on the insurance companies for money. Who is going to borrow from the insurance companies rather than the banks simply because he can get the money at one-half per cent or one per cent less? I am told that to-day a good deal of money is being lent
by the chartered banks at five per cent, and the chartered banks of Canada cannot have loans as safe as the loans that are made by insurance companies to their own policyholders. The companies cannot possibly lose. Why should we allow them to charge a higher rate of interest than anyone else in Canada is able to earn, and higher than they can get anywhere else in Canada? For the life of me I cannot understand that. I do not believe any class of people in this country want to borrow on their insurance policies unless it is necessary. Most of the people who borrow, so the superintendent of insurance told us, are small policyholders who borrow to keep their policies intact, or to keetp their houses from being sold over their heads, or to keep themselves off relief. As a matter of fact today the insurance companies 'are handling approximately as much of the savings of the Canadian people as the chartered banks are handling. We have compelled the chartered banks to reduce their interest, through the legislation passed last year. They have reduced the interest to their savings depositors, and I think we must secure a general lowering of interest rates all along the line wherever it is possible. Here is one place where it is possible.
One of the companies making a strong fight against this bill has used the money of the policyholders in a way that I do not think would be approved by any of us. They have put $21,000,000 into a head office building, yet some of the men connected with that company would say, "You will ruin us if you put us in a position where we have to lend the policyholders all the money they want to borrow at a rate as low as five per cent." They have millions of dollars invested in bonds that do not yield more than three and a half per cent; they have millions of dollars invested in the bonds of countries other than Canada that are not worth fifty cents on the dollar; t'hey have millions of dollars invested in industrial stocks and bonds that are not worth fifty cents on the dollar. The other day one man said to me that perhaps one reason they are fighting this measure is that they need this rate of interest to make up their losses through bad investments. So far as I am concerned I do not propose that they should be allowed to charge more than five per cent to mlake up their losses in other ways. I do not know why they want a higher rate. We have life insurance in Canada for the benefit of the people, not for the benefit of these great companies, and by this bill we are not endangering any company. We know this government would not allow any insurance company to fail; we have had proof of that.
Foreign Insurance Companies

These companies have so much money coming in that they do not know what to do with it, but if anyone wants to borrow on his insurance in order to keep his premiums paid he must pay six per cent and in some cases eight per cent. The largest company in Canada charges eight per cent on automatic loans to-day, and only three months ago, up to the time this bill was introduced, one company was charging ten per cent. They stopped charging ten per cent simply because this bill was brought in.
I appeal to the members of this committee to quit fooling in connection with this bill and to vote on. it. If they do not want it they can vote it down; if they want it they can put it through, but the committee should not rise now when the bill can come up only twice a week. There are quite a number of public bills on the order paper; any time any members choose to put up a fight in connection with a divorce bill here it can go on for two or three weeks, and during that time we have no chance to consider any public bills introduced by private members. I appeal to the committee either to pass this bill or to turn it down. I do not want to indulge in any more argument; I rose to-night only because I thought perhaps there was some misunderstanding in connection with the bill. I know some of the members were looking at the old bill. I would not object to letting the bill stand if it was for the purpose of getting further information, but I think the main purpose in putting the bill over would be, "Well, if it is put .over to-night that is one less opportunity to discuss it." I do appeal to the members of the committee to pass the bill.


William Duff: In this free parliament we are allowed to express our opinions freely, and there should not be any insinuations made with regard to what any member of this house thinks in regard to any measure coming before it. Of course I am not surprised that my hon. friend from Macleod (Mr. Coote) should wind up his argument by practically trying to leave with the public the idea that certain members of this committee and this house do not want to have this matter properly discussed. The trouble with my hon. friend is that he seems to be going around in a circle. When he first rose to his feet fifteen or twenty minutes ago he told the committee that this .bill had not been reprinted. Until he made that statement I did not know whether or not it had been reprinted. I looked up my file immediately and found I did not have it. Some other hon. members sitting around me made the same statement, and consequently I felt- that before the matter

was further considered it was my duty, out of respect to hon. members who did not sit on the banking and commerce committee, to see that they had an opportunity to be seized of the facts, particularly when one bill went to the banking and commerce committee and a much different bill is now being discussed. I do not know why the hon. member should complain. It is true that the bill is important, and in view of its importance I move that the committee rise.


Raymond Ducharme Morand: Shall the motion carry?


William Gordon Ernst: On a point of order may
I ask this question:	Does the mere fact of
agreeing to a motion that the committee rise automatically result in the bill being killed?
Mr. 'COOTE:	Yes.


Raymond Ducharme Morand: The motion is not
debatable.
Motion negatived on division.


Raymond Ducharme Morand: I declare the motion
lost.


James Arthurs: Before the bill passes to
a further stage I should like to say a few words. As it was first introduced and brought before the banking and commerce committee I found myself opposed to certain clauses. Now however I am just as much in favour of the clauses in the present bill. It seems to me ridiculous that including costs any man should be charged rates of 10 per cent or 12 per cent upon money which is rightly his. These loans are made only upon the surrender value of an insurance policy. If he chose, a man could surrender the policy and accept the money. On the other hand he may choose to borrow a few dollars for the purpose of keeping his policy in force or for other reasons, and in the past he has been charged seven per cent and in many cases much more. I say there is no security so ample as that given by the borrower; it is surer than Dominion of Canada bonds because, as I previously stated, the policyholder is borrowing his own money. The insurance companies are most anxious to keep it that way; they do not wish to have policies surrendered, and at the same time they are attempting to secure much greater interest than they could possibly secure from the best securities they hold. I am in favour of the reduction in the rate of interest, and would1 be content to vote for even a larger reduction.


Some hon. MEMBERS:: Question.

Foreign Insurance Companies


James Layton Ralston: Mr. Chairman, this matter has been discussed at least by some hon. members of the committee as if it were a case between insurance companies and borrowers.


James Arthurs: That is what it is.


James Layton Ralston: I submit that is not the
position at all. As I understand the situation, insurance companies receive ten per cent of the profits which are made, the balance of the profits going to the policyholders. It seems to me now, as it seemed to me before the banking and commerce committee, that the bill might more properly be opposed by policyholders than by the companies. The companies which were there at that time, I take it, were representing the great mass of policyholders who were not borrowers, rather than the companies themselves, because as I say they are very little interested in the rate of interest received.


James Arthurs: Are not these borrowers who continue to be policyholders as much interested as anybody else?


James Layton Ralston: Yes; I shall deal with
that in a moment. Speaking for myself, I am representing a policyholder and I believe representing quite a mass of policyholders who are not in favour of trust funds which have been created for the protection of their wives and children being exposed to compulsory borrowing by people who may wish to use it for other than emergency purposes.
In the first place my point is that the insurance companies are not vitally interested in this bill, but that those who are interested are the mass of policyholders who have placed their fund's in insurance companies in order that their wives and children might be protected. It seems to me we are getting off on the wrong foot when we speak of it as if it were a battle between insurance companies and borrowers. It seems to me, in the second place, that we are regarding this bill as having something to do with the general movement afoot in Canada to reduce interest rates. I am in favour of the reduction of interest rates both on commercial and on mortgage loans, but I would hasten to point out, if I may, that this is not in the same class. These loans are compulsory loans which must toe made and which cannot be refused by the companies and they are made out of trust funds accumulated for the benefit of dependents of the policyholders. It seems to me they are in an entirely different category from loans made by commercial banks, or mortgage companies from which' we expect1 and want to get the lowest possible rates.
The fund which has been created is one which has been paid in by policyholders throughout the dominion. I learned from figures given a few days ago in an address delivered by the Secretary of State that policies aggregating about six billions of dollars are outstanding in Canada. This fund has been created by the great mass of policyholders in order that their wives and children may be protected. The proposal now is to make it as easy as possible for any policyholder to come in and say to a company, "I want you to lend me money at four per cent," or five per cent, as the case may be, notwithstanding the fact that he may have to pay six per cent to a bank.


William Gordon Ernst: Is it not the business of insurance companies to invest their funds to the best possible advantage?


James Layton Ralston: It is.


William Gordon Ernst: Is there any safer loan at a greater remuneration than five per cent?


James Layton Ralston: They have a perfect right to invest their funds in any security which they think fit and which falls within the terms of the act. But the first duty of an insurance company is not to make money on its loans but to see to it that funds are liquid and available for payment to beneficiaries under policies. That is the principle which I submit may not be observed if it is made easy for policyholders to compel insurance companies to give loans on policies at low rates.
I gave an example in the banking and commerce committee. It seems to me that if Mr. A has paid in money on his policy and expects his wife and children to benefit from those payments, in the event of anything happening to him, he has some interest in seeing that Mr. B is not encouraged to draw out money from the company and thus to deplete the fund. He is interested in seeing that Mr. B is not encouraged by being able to go to the company and obtain a loan at a rate lower than that at which he could obtain a loan from a bank.


James Arthurs: In the alternative the policyholder who is desirous of borrowing could withdraw all his interest in the policy. The policyholder who desired to borrow a small sum could, if he chose, take the cash surrender value of the policy.


James Layton Ralston: I do not wish to make it any easier for me or anyone else who is a policyholder to get the money out. I submit what we should do is not to encourage but to discourage borrowing on policies. While it

Foreign Insurance Companies
is true that from time to time in selling policies companies stress the point that the policyholder will be able to borrow money on his policy, it seems to me that that is not the primary purpose for which a policy is written; it is not the primary purpose for which a policy is sought. The principle of protection, is the one which should govern, rather than the principle of being able to get ready money through a loan on the policy.
I suggest we should be careful to see to it that any person who borrows on a policy is not encouraged to do so by reason of the fact .that he can get the money at a cheaper interest rate than could be obtained at a bank. Mr. B should not be encouraged to borrow. The general principle should be kept in mind that borrowing on insurance policies should be for emergency and not for commercial purposes. I believe hon. members of this committee know that during the boom time of 1929 and early 1930, a good deal of borrowing on policies was done which should not have been done. That borrowing was carried on, however, because it was easy to get money on account of an insurance policy. If the rate of interest is such that it makes it expensive to borrow there is at least a deterrent, a brake, if not a complete bar to the borrowing on these .policies. I submit that if we make it easy to borrow on insurance policies it means in some cases that in times of stress and strain we may have a situation such as arose in the United States not very long ago, when the government itself had to step in and prevent borrowing on insurance policies in order to save the companies from liquidation. What does this mean? It means that if a company gets a run on its policies by reason of the fact of a loan being obtainable at a low rate of interest, it will have to dump its securities to meet these loans, and this endangers the very trust fund of which that company is trustee for the benefit of the policyholders and beneficiaries. It is not a quetsion of the interest of the .companies. It is a question of the interest of the mass of policyholders. It is not a question of a general reduction in interest rates. It is a question whether or not we shall, as far as we can, preserve intact a fund that has been created primarily, not for the purpose of being drawn on from time to time for ordinary commercial purposes, but for the protection of the wives and children of policyholders.


Arthur Edward Ross: May I ask the hon. member
who has just taken his seat (Mr. Ralston), who seems to be well up in this subject,

which I am not, what .would be the effect upon the companies who have group insurance if members of such groups of industrial workers were allowed to borrow on such policies? Would not the withdrawal of one seriously affect the position of the whole group?


James Layton Ralston: I am not in a position
to answer that question. I do not know whether under group insurance policies contain the privilege of borrowing or not. I rather imagine they do.


Charles Hazlitt Cahan: Not for individuals.


James Layton Ralston: Not for individuals, I should think.


Mr. YOUNG:: I was much impressed with the arguments of my hon. friend from Macleod (Mr. Coote) in support .of this bill, but there was one point on which I would have to disagree with him. He said that insurance should be for the benefit of the insured, if I heard him aright. I do not think so. I think it is for the benefit of the beneficiaries. I understand that a man's life insurace is almost the only asset he can leave to his wife and family of which his creditors cannot deprive him, and if you make it easier for the creditors to get hold of that insurance policy I do not think you are going to benefit the beneficiaries in any way. The creditors cannot take the insurance away from the wife and family, but they can go to the man himself and say, "Why are you paying us seven per cent interest when you can borrow from the insurance company at five per cent? Why not borrow on your policy and pay us off?" They might induce him to borrow from the insurance company and thus take away from his wife and family an asset that the creditors could not touch in any other way. For that reason I think this bill should be opposed.


Mr. WHITE (London):: It seems to me that the crux of this bill lies in the question of fixing interest rates. I think it would be very unwise to fix interest rates at the present time. At no other time in the history of economics have interest rates been so uncertain as they are at present, and no one can. tell what interest rates will be six months or a year from now. Most life insurance policies are issued for long terms, twenty or thirty or forty years, and to pass a bill fixing interest rates at any given figure I think would be unwise. The insurance companies are bound by their policies to make these loans when they are requested; they cannot refuse them; they have to make them, and if they have to make

them at the rate of five per cent when money might be at six or seven per -cent it is not very hard to understand how the insurance companies would soon be called upon- to act the part of bankers. The insurance companies would then have to keep liquid reserves to a far greater extent than they do at the present time. They would have to invest their money in such a way that it could be -called on if necessary. I am told that in the United States there was an insurance company, perhaps more than one,, that wias in a very serious position during this last depression because of a run on the company for loans on its policies. If t-his bill were to pass, the insurance companies would then be competing with banks an-d loan companies in making small loans.
Something has been -said about the insurance companies -charging eight per cent. I understand that it is a six per cent interest rate an-d a charge of two per cent for service. It seems to me that a more equitable charge for service would have been a -certain fixed charge per month levied by the insurance company, instead of a .percentage rate, and had that been the -case I think we would never have heard of an eight per -cent interest rate being charged. The companies do not want this business. I would be in favour of -denying the right to the policyholder to borrow on his policy, rather than put this bill through and fix the interest rate. If this bill passed, the effect undoubtedly w-ould be to increase the number of -loans and -possibly the amounts of the loans, particularly if the ordinary interest rate rose. The borrowings would then be so large, as has been sta-t-ed, that instead of being an insurance company it would foe merely a ba-nker in charge of bank accounts which might be drawn upon- to the full extent at any moment.
The insurance companies are charged with levying high interest rates. I am told that six per cent is now the ruling rate, and that rate was fixed by the insurance companies in agreement among themselves before this bill was presented to the house. It seems to me, Mr. Chairman, that the more w-e interfere in matters of this kind the harder we shall make it for insurance companies to carry on their work.
Progress reported.



PATENTS OF INVENTION

[Stage Direction]
The house resumed consideration in committee -of Bill No. 48, to amend and consolidate the acts relating to patents of invention-Mr. Cahan-Mr. .Morand in the chair.
Patents of Invention
Charles Hazlitt Cahan: Mr. Chairman, at six o'clock I was about to rise to reply to certain remarks of the hon. member for East Kootenay (Mr. Stevens). I wish to emphasize again that this bill as it is now before the house, with the exception of two or three verbal amendments, which are due perhaps to the negligence of the printer or draftsman, was approved after nineteen sittings of the banking and commerce committee of the senate and after an investigation of the facts unprecedented in my experience in respect of any public bill of this nature. I appreciate the fact that the hon. gentleman received from someone information with regard to an alleged grievance in respect of patent rights on electric bulbs. If the party who suffered from an abuse or alleged grievance had addressed himself to the Secretary of State, even under the existing act, I am sure I could have suggested administrative measures which would have served to overcome the abuse specified; or if the person suffering from the abuse had applied to the commissioner for an investigation under the existing act, I am satisfied that remedial measures could have been obtained which would have afforded very considerable redress at least.
The number of elements in an electric light bulb is seven: (1) a base; (2) the globe; (3) a filament support; (4) lead-in wires; (5) an alloy for a filament; (6) a getter for the removal of gases during the baking of the filament within the lamp; (7) the sealing of the lamp. How there could be with respect to one type of bulb some sixty odd patents outstanding surpasses my comprehension. The hon. gentleman suggested that under the bill before the house the term of three years is given during which the patentee may erect his factory, equip it with machinery and proceed with the manufacture of the article in respect of which the patent subsists, and he said that with regard to any patented article the fact that improvements may be patented from time to time renders it impossible to revoke the patent or to give compulsory licences to third parties to manufacture under any patent because of the oontinued improvements made from year to year. This argument is fallacious at least in this respect, that a commissioner or the exchequer court under the old act or under the present proposed consolidated act could in case of abuse license the manufacture of any type of bulb up to the last improvement-and improvements are not so rapid in the manufacture of electric bulbs that the manufacturer, under all the patents existing for three years before the application, might not manufacture a very
Patents of Invention

excellent bulb which would prove satisfactory under most conditions and circumstances. But my hon. friend, if I understood him aright, referred to the three year clause as an evil which should be remedied by the measure now before the house. Let me say first that the three years is given from the date of the granting of the patent within which the patentee may proceed with the proposed manufacture by erection of his factory and the equipment of it with machinery; and that three year provision exists in the Patent Act of every leading country in the world. It has been found by experience in all countries that, if an average term is to be fixed, three years is the most satisfactory, and in fact so satisfactory has that term been found that in the international convention for the protection of industrial property, which was signed at the Hague on November 6, 1925, and ratified by Canada on May 1, 1928, and which convention is adhered to by nearly every leading country in the world, it is provided in article 5 that there shall be at least a term of three years within which the patentee shall be allowed to proceed in his preliminary arrangements for the manufacture of the article patented. Article 5 provides:
The importation by the patentee into the country where the patent has been granted of articles manufactured in any of the countries of the union shall not entail revocation of the patent; nevertheless each of the contracting countries shall have the right to take the necessary legislative measures to prevent the abuses which might result from the exercise of the exclusive rights conferred by the patent, for example, failure to work.
These measures shall not provide for the revocation of the patent unless the grant of compulsory licences is insufficient to prevent such abuses. In no case can the patent be made liable to such measures before the expiration of at least three years from the date of the grant of the patent.
That three year period, which is accepted by all leading countries in the world, is the period we are bound to grant under the international convention to which we are now parties. But when we sought to find remedial measures against possible abuses which might arise, and remedial measures which are within the terms of the international convention to which we are parties, we turned to the latest revision of the Patent Act of the United Kingdom. We sought to take advantage of the vast store of experience which the patent office of the United Kingdom has acquired. Since this convention was framed and ratified by the United Kingdom as well as by Ganada there has been a revision of the Patent Act of the United Kingdom in which they have provided very satisfactory and, I think,

salutory and efficient measures to overcome the abuses which may develop from the patent monopoly. So that the senate has adopted verbatim, at the suggestion of the department of the Secretary of State and the patent office, the provisions which are now found in sections 65, 66, 67, 68 and 69 of this bill. In respect of these sections, though only two of them are now before the committee, I may say by way of explanation that the English provision is in one section, section 27, a very lengthy section; and in order to facilitate references to it we divided that section 27 into four parts. Therefore section 65 of this bill is identical with subsections 1 and 2 of section 27 of the English patent act, with one exception, Under the English act any person interested may apply to the commissioner in case of an abuse, but in Canada; so widespread in territory, we have introduced one slight change, namely, giving to the attorney general of the dominion the right to take proceedings ab initio. It is desirable, I think, to maintain responsible government in this country and to provide not only that the Secretary of State shall be responsible to the government of which he is a member and to parliament in respect of the administration of the act, but that the Attorney General of Canada shall be responsible in respect to the initiation of proceedings to abolish or to remedy abuses arising under the act.
I do not wish to state personal opinions in dealing with a government measure such as this, but my own view is that in framing general acts to deal with prevalent evils, a mistake would foe made if you should attempt by general acts to deal with specific instances which have arisen, and which can be remedied by an efficient administration of the general act by the person responsible to the government and to parliament of such administration. The enactment of general laws is necessary, but with regard to the administration of general acts, in my experience, the end may be accomplished by establishing that ministers of the crown in certain capacities shall be directly responsible to the crown and to parliament for the efficient administration of those acts. That principle or policy we have endeavoured to incorporate in the bill now before the committee.


James Layton Ralston: I understand also that
alternatively any person interested still has, as well as the attorney general, a right to appeal.
Mr. CAHAN; Certainly. I explained that in England the individual must take the initiative. In this bill we deemed it desirable
MAbT 28, 1935
Patents of Invention
to provide that not only any person interested in the patent, but also the Attorney General of Canada, as representing the public interest, should be authorized to intervene. With that exception section 66 of the bill is practically identical with subsection 3 of section 27 of the English patent act; section 67 is identical with subsections 4, 5 and 6 of section 27 of the English act; section 68 is identical with subsections 7 and 8 of section 27 of the English act, and section 69 is identical with sections 9, 10, 11 and 12 of section 27 of the English act. By adopting those provisions which arise .out of the accumulated experience of the English governments and of the English patent office, not only have we taken advantage of such experience, but still further there are published and available to the public the decisions given by the officer who holds in England a position similar to that of the commissioner of patents. Those decisions are published from week to week and month to month, and while they do not form a guide which must invariably be followed, they will certainly afford a guide to the administrative officer who has charge of the administration of this particular act. Therefore I submit again that we have taken the very best advice with respect to this bill; we have adopted the results of a long accumulated experience under the English act, and we have, in the terms in which this bill is expressed, given to the administrator and to the responsible officers of government, the Secretary of State to whose department it is attached and to the attorney general of the dominion, full power to correct those abuses.
There are other provisions which we shall consider as we proceed, but there are certain of them to which special consideration might be given. In the case of an abuse of the rights under this measure, I laid particular stress in my opening remarks upon section 65, subsection 2, paragraph (c), which is to this effect that if the demand for the patented article in Canada is not being met to an adequate extent and on reasonable terms-* and those terms cover not only price but rental, royalty and all other terms connected with the patent-then, the commissioner can proceed and under this bill he may exercise the right to revoke the patent if the granting of compulsory licences to third parties does not prove an adequate remedy for the abuse or the evil complained of.
Another expressed intent of the English act is to encourage the manufacture of the patented articles in the United Kingdom, and in subsection 3 of section 65 we have used the exact terms of the English act, changing
"United Kingdom" to "Canada." This subsection, which will be found at the top of page 26 of the bill, reads:
3. It is declared with relation to every naragraph of the next foregoing subsection that, for the purpose of determining whether there has been any abuse of the exclusive rights under a patent, it shall be taken that patents, for new inventions are granted not only to encourage invention but to secure that new inventions shall so far as possible be worked on a commercial scale in Canada without undue delay.
The three years' delay is one that must be given unless we are prepared to repudiate our international agreements.
There are other terms which will be found on page 27, and I should like to call attention particularly to section 66, paragraph (d):
If the commissioner is satisfied that the objects of this and the last foregoing sections cannot be attained by the exercise of any of the foregoing powers-
That is, powers which are given to them of granting involuntary licences to other competitors and the like.
-he may order the patent to be revoked, either forthwith or after such reasonable interval as may be specified in the order, unless in the meantime such conditions as may be prescribed in the order with a view to attaining the objects of this and the last foregoing sections are fulfilled.
That .is a very arbitrary power; it is nevertheless a power which may be exercised in case the patentee abuses the rights which are conferred upon him. I may not have the opportunity or privilege of enforcing this new measure, but I say with perfect confidence in view of my experience in connection with the patent office for the last four and a half or nearly five years, that in the terms of this proposal I can find remedies, adequate remedies, for every abuse which has been brought to my notice during that time. I am sure that if my successor will make himself thoroughly conversant with these terms, and if he is supported by the government of which he is a member, he can find adequate remedies for such abuses as those of which the hon. member for East Kootenay has complained. With that sincere conviction, and in view of the time that has been given to the framing of these provisions and to securing their consistent application to the objeots which we have in view, I trust that the House of Commons at this late date will not undertake any haphazard amendment of this bill.


Henry Herbert Stevens: I regret that the minister takes the attitude he does. In my opening remarks in regard to this bill I pointed out
312S
Patents oj Invention

very definitely that I was not criticizing this government or any other government regarding the administration of the Patent Act in this respect. I drew particular attention to the fact that it was a subject that had not apparently been considered. As a matter of fact I discussed it with one of the members of the senate committee, who told me that the matter had not risen there, and it was too late then to have the matter considered. If there is any language that I can use that would disabuse the mind- of the Secretary of State (Mr. Cahan) of the thought that there is any desire on my part to embarrass either him or the government or to delay the committee, I should 'be very glad to use that language.
I am not unmindful of the excellence of the British act. I would like to pass a vote of thanks to the Secretary of State for including those sections in this act. I think it is excellent; there is nothing wrong with it at all. In regard to my reference to the three year period-and by the way when I referred to that I pointed out that that was the section which had been cited, that and section 64, as replacing the old section 40 in the previous act-I pointed out that section 40 in that act did contain provisions that might have partly dealt with this subject, but that they were repealed. The argument of the Secretary of State in effect is that the term of three years is put in the English act and this act for the purpose of protecting the patentee during the time of bringing into operation the manufacture of the patent. I know that; everyone knows it. But the reason I cited that was that he had previously cited it with subolause (c) as an answer to the matter I had brought forward.
Now the hon. gentleman says that had this matter been brought to his attention he would gladly have attended to it. He suggested that some individual had brought it to my attention. Well, three concerns brought it to my attention when I was Minister of Trade and Commerce. I did not invite the matter; it came to me. I immediately addressed a letter to the Secretary of State under whom the administration of the law properly came. I have in my hands a copy of the letter, which is on the files in the Department of Trade and Commerce and on the files of the Secretary of State. I shall read it, because it does indicate at least that the matter was brought to the attention of the proper authorities on July 30. 1934, nearly a year ago. I submit that the letter itself cannot be said to be other than a very proper letter passing from one department to an-

other. It is addressed to the Secretary of State:
My Dear Colleague:
I enclose copy of a file dealing with the complaint of Morris Eeldberg of Ottawa; also the North Shore Electric Company of Vancouver. I would particularly draw your attention to the letter of Messrs. Macfarlane, Thompson & Littlejohn, dated the 14th May, in which they as solicitors for the Canadian General Electric Company request the North Shore Electric "to discontinue the purchase and sale of incandescent electric lamps'' which they allege is an infringement of Canadian letters patent covering certain of the parts that -enter into the making of electric lamps. Then follows a long list of patent numbers1.
The question arises in my mind:	Is the
Canadian General Electric using all the processes or devices covered in these patent numbers?
If they are not, is it an infringement of the Patent Act for a person to buy them in the United States and bring them into Canada, having paid the regular duty?
Also, if the manufacturers in the United States have a right to manufacture or have paid royalty on these lamps, have not the owners of the patents received full compensation, and -how can they ask for a second royalty or prohibition of right of sale simply because the lamps are brought into another country ?
Does the right of a patent used or unused convey an inhibition against a person buying the article as patented from some other person who has the right to manufacture the same?
These are some of the questions that occur to my mind arising out of these letters.
I also enclose a memorandum of one of my officers who looked into the ease, and a list of the patents with a description of them, which has been secured from the records.
Lastly, you will notice I am asking the national research council to make an examination of some of these bulbs so that I may be advised' as to whether or not the complaining company is using the patents which they allege they control.
I would appreciate your kind consideration of these various matters.
I received no acknowledgment or answer, and no notice was taken of that letter. Attached to it was a memorandum from one of the trade commissioners in the office of the Department of Trade and Commerce- I have it under my hand-in which he went into the matter, so it was not sent over as a haphazard or carelessly drafted communication ; a full page report made by a competent officer on the facts of the case was attached to my letter, together with copies of the letters of those who complained.
I had no power to deal with the matter; I simply passed it on to the proper officials for their consideration. The matter has not been attended to; nothing has been done. This is the first opportunity 1 have had of discussing the matter in connection with the

Patents oj Invention
revision of the act. To-day, therefore, in moderate and respectful terms, as I thought, I suggested that in this revision we might consider providing against this abuse. As one point I particular^ drew the attention of the government to this, that it is obvious that these four companies-and there are only four, as I indicated this afternoon-are taking advantage of the Patent Act to enhance the price of electric bulbs in Canada by over one hundred per cent above the duty paid price of the article landed in Canada. I submit that that is not a joke; it is something that ought to be considered. Surely this parliament is not going to calmly pass a complete revision of the Patent Act now and wholly ignore the abuse of that power. This afternoon I read, and I am going to read part of it again because 1 think perhaps the committee are not yet thoroughly seized of the situation, this letter from MacFarlane, Thompson and Littlejohn, solicitors for these four companies, a copy of which I sent to the Secretary of State. They say:
Our clients, the Canadian General Electric Company, Limited, have instructed us to request you to discontinue the purchase and sale of incandescent electric lamps. .. . Our clients allege that you have been handling lamps of American manufacture which they assert are an infringement of the above letters patent-
I have also read into the record part of a report of the federal trade commission of the United States which officially declares that these companies, the chief company in Canada being the Canadian General Electric Company, a subsidiary of the General Electric of the United States, have an international cartel. This international cartel not only deals with the interchange of patent rights and privileges; it also allocates territory. The federal trade commission put it in this way:
The members of this international organization exchange patent rights, manufacturing processes and other "trade secrets." This exchange is characterized by a division of territory, each company granting to the other exclusive rights in specified' countries-
Then it goes on to say:
For example, in the ease of ligTit bulbs in so far as Canada is concerned, no independent manufacturer can either manufacture or sell in Canada without being liable for suit for infringement of patents which are owned by the larger organization-
What I am submitting is this, that the patent act as drawn at present and in its revised condition permits the General Electric and these three other companies, all acting in concert, to enhance the price of these bulbs to Canadian users more than one hundred per
cent beyond what it should be, and we have no redress. Now we are calmly, coolly and deliberately sanctioning that situation; that is what parliament is doing. I want to say to the government and to the Secretary of State that I am just as anxious as they are to get this bill through, 'but surely there is no occasion to invoke the influence of the government to: have the bill rushed through the committee now just because I suggest that we should put back into this act some of the wording that appeared in section 40 of the old act, and so galvanize the act into activity and life. That is all I ask. It is a simple matter. It is nothing revolutionary; it is simple justice to the consumers in Canada.
Let me show the committee what this means. I have under my hand the quantities of these bulbs that are produced in Canada, regular tungsten lamps. The round figures for the last few years were as follows:
1926		13,000,000
1927 		14,900,000
1928		17,000,000
1929		17.000,000
1930		17,700.000
and so on. When I come to importations, however, I find that the only importations are arc lamps to a certain limited number, incandescent filaments, certain parts that go into the lamp, and incandescent metal filaments. These are imported, together with the small electric head, side and tail lights for automobiles, which are not manufactured here.


Mr. REID:: I wonder if the hon, member
would answer a question, just for information. In view of the fact that the United States imported about ten million light bulbs from Japan I wonder if the hon. member lias any information as to whether Japan is included in that cartel he mentions.


Henry Herbert Stevens: I cannot answer that
question with accuracy, but I can give my understanding of the situation. I speak subject to correction, if my hon, friend will accept it in that way. I believe Japan does not recognize patents at all. They simply ignore patents; you can take anything into Japan and manufacture it. That is really how they are barging into the export business of the world with such terrific effect, I make that statement subject to correction, but I think it is accurate.
We see, therefore, that this is a lairge business. I admitted this afternoon, as I admit now, that the manufacture in Canada cannot reach the volume it reaches in the United States, and' therefore these bulbs probably can be manufactured more cheaply in the United States than in Canada. But
Patents oj Invention

surely forty per cent protection should1 be sufficient. I say very definitely and Clearly that if a duty of thirty per cent or forty per cent is not sufficient for the 'General Electric and these other companies in the manufacture of these articles in 'Canada,, then there should be no duty and the market should be wide open. That seems to be a sufficient duty to protect them. This is a simple article. I am probably overstating the fact when I say that, but this is a comparatively familiar rather than a rare article. No doubt there are certain complex operations that enter into its manufacture, but it is something that is in daily use. I earnestly protest to-day, as I protested when I was a minister of the crown-there is the letter -that it is not reasonable-


Robert Gardiner: Would1 the hon. member permit a question at this point?


Henry Herbert Stevens: Certainly.


Robert Gardiner: The hon, member said
the committee should take sufficient time to reintroduce a portion of the old act; I think he mentioned section 40. I should like to ask a question that seems pertinent. Of what use would it be to put a portion of section 40 back into the act when we have been operating under that act for many years past and that section has never been enforced?


Henry Herbert Stevens: I dealt with that question this afternoon; I will deal with it now perhaps a little more pointedly, and I thank the hon. member for bringing it to my attention. Yes, I submit that if we cannot do better we should reinstate a portion of old section 40 in this act. My hon. friend asks what good that would do, in view of the fact that it has been in the act right along and has not been enforced. This afternoon I said there were two phases to the administration of the Patent Act. One is the technical phase, the legal side dealing with patent attorneys and highly technical and legal matters pertaining to the issuing of patents. During my term in this house it is on that phase of the question that the patent commissioners in Canada have concentrated their attention. But there is another side to the patent law. The hon. member who followed me this afternoon, whose constituency I have forgotten for the moment, very pertinently pointed out that certain large corporations-for instance, those engaged in the manufacture of binders, which contain certain knotters and other parts of a more or less complicated and highly protected character-grew to their present large dimensions very largely because they controlled the
[Mr. Stevens.J
patents. The hon. gentleman suggested that smaller manufacturers who might desire to produce some of these farm implements that contain these more or less technical and delicate parts, could not do so because they could not get the right under the patent laws. I believe it would be better for this country if we had a wider distribution of manufacture, for instance of farm implements and I will illustrate what I mean by that. It will serve to show what the hon. member has in mind and what I wish to emphasize, that more attention must be paid to the commercial side of the administration of our patent laws. What is the effect upon the farmers of our present system of manufacturing farm implements in Canada particularly the farmers of the west who are largely engaged in the growing of grain? Well, simply this, that the two big manufacturing companies, the Massey-Harris Company and the International Harvester Company, developed their business under high pressure salesmanship methods to the point where they had an output of about $30,000,000. I believe that is the figure, but some of my colleagues will correct me if I am overstating it. Recently that output dropped down to about $6,000,000, but in both these great institutions the overhead is carried into the unit production of $5,000,000 on the same magnitude as it was when they were manufacturing on a basis of $30,000,000 That is, on the imit basis the overhead charge was multiplied about six times The result has been that while the cost of raw material has fallen and while the cost of labour has fallen the actual reduction in the price of farm implements has been very small indeed. From the standpoint of economics it can be argued that we must take care of overhead, that that is sacrosanct. But is it fair or is it just; are we as a parliament warranted in perpetuating a law or a statute which makes such a course, shall I say obligatory, or imposes it upon the country?
What I would like to say is this: The administration of the commercial side of the patent law in my opinion should be placed under a board known as a board of trade and industry. If parliament does not like that I am quite willing to support any other reasonable suggestion, but I do say there should be commercial administration of a section or portion of this law. The same applies to many other statutes. They should be under the same body, department or branch of department. I am looking at it from the standpoint of the consumer or, in the case of farm implements, from the standpoint of

Patents of Invention
the farmer, so that these large corporations cannot store up in archives and freeze up in their vaults a large number of processes. I cannot speak with certainty based upon statistical investigation, but I am told on the best authority that many of these large corporations have valuable patents in their archives, patents which have never been used, which would be useful to the public and of which the public are entitled to have advantage. The use of these patents would result in lower prices of articles and, further, in an improvement in conditions. I am told over and over again, however, and I have discussed the matter with some of the: principal men in these industries, that when a new process or new device is invented those who are manufacturing the article at present on the market which would be displaced by the use of the new device will spend very large sums of money to keep the new article off the market, I say a search should be made in the archives of these institutions.
I know the bill contains a clause which states that the commissioner of patents may insist that documents be filed showing what patents exist, and whether they have been used or have not been used. I am quite aware of that. What I am saying is that there ought to be some responsible body, board or branch of a commercial department which would look after this matter from a commercial standpoint and which would be in a position to stand between the public and those who are: taking advantage of the public.
Coming back to my main point, I contend that there is a grave abuse of the Patent Act which is going on continuously and that no attempt has been made to rectify it. To-day when I bring the matter to the attention of the committee we are asked not to deal with it, and are told that the present revisions will be adequate. I submit that paragraph (c) of section 65 read in conjunction with the introductory paragraph and the other parts of the section will never be interpreted as applying to this condition. There is not a chance of its being so interpreted. "If the demand for the patented article in Canada is not being met to an adequate extent and on reasonable terms"-that is done after "the Attorney General of Canada or any person interested" has laid the matter before the commissioner of patents. We have a ruling in the present instance from the commissioner of patents that in his opinion there was no violation. I submit there was -a violation, and I submit that no commissioner should be empowered to brush aside an additional duty of 125 per cent placed upon the cost of
articles consumed by everybody. Such a condition should not exist without some efforts being made to correct it.
When I opened my observations I said I was not placing any blame upon the government, and I was not. But I say now, before I sit down, that if this bill is pushed through without notice being taken of these facts, then those who are responsible for pressing it through must take the responsibility in the country for what injustice may have been done.


Edward James Young: Mr. Chairman, I d,o not
think any person will accuse me of being partial to the views generally held by the hon. member for East Kootenay (Mr. Stevens), but in this matter I believe he is right. I do not mean by that that I am in favour of setting up a trade and industry board to administer the commercial side of the Patent Act. There are plenty of men now in the employ of the government, plenty of officials who could and should be entrusted with the efficient administration of the act. The abuses of the Patent Act outlined this afternoon by the hon. member for East Kootenay are scandalous. That any company or corporation should be dissatisfied with a duty of thirty or forty per cent land so take advantage of the privileges extended under a patent act as to gouge another one hundred per cent out of the people of Canada, and not only that but to deny them the right of buying the article from any other sources and deny them the right to bring it into the country, even when they comply with the law and pay the duty, is unthinkable. This parliament never intended that that condition should exist, and if they knew about it the people of Canada would not stand for it.
My good friend the Secretary of State says that any abuses existing to-day could be removed by an efficient 'administration of the act. Quite so. But I do not think we will get efficient administration of the act by leaving it, as he suggests, to responsible ministers of the crown. Attorneys-general and ministers of the crown are not always the best administrators of law of this kind. If they were all like the Secretary of State, and if all of them had the same high sense of duty and the same fearless courage, perhaps we would get the desired results; but all ministers of the crown are not like him. Only this year the royal commission on price spreads did ask a responsible minister of the crown for certain reports of the combines investigator into certain alleged combines, and those reports were flatly denied the commission. The reason the commission asked for the reports was that our investigations led us to believe that abuses
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prevailed similar to those outlined this afternoon by the hon. member for East Kootenay. But the minister to whom I have referred flatly refused to give the reports. Under the circumstances I do not think a responsible minister of the crown is a proper person to enforce legislation of this kind.
It is true that any consumer or any person who suffers may make eh appeal. Who is the man who suffers? It is the individual consumer. The amount it costs him to have an unfair practice existing is small, when considered individually; collectively it must amount to millions of dollars. To each individual however the amount is so small that he cannot afford to go to the expense of digging up the necessary information to make a complaint. I support the suggestion of the hon. member for East Kootenay that some responsible official should be placed in charge, and that it should be his duty to investigate these matters. When it is found that such abuses do exist, in my opinion the people who practice them should be denied all patent rights, and any patents they hold, when abusing them in that way, should be taken from them.


Peter John Veniot: Apply the same principle
to high tariffs.


Charles Hazlitt Cahan: Mr. Chairman, replying to the hon. member for East Kootenay (Mr. Stevens), I understood him to say that the letter which he says he sent to me was dated July 30. Is not that correct?


Henry Herbert Stevens: July 30, 1934.


Charles Hazlitt Cahan: July 30, 1934. About the first week in August I found on my desk a letter which is no doubt the letter to which the hon. gentleman refers. It was a matter with respect to which I thought there should be some consultation with him and with the law officers of the crown. I made inquiry and I found that my hon. friend had left Ottawa for the west and it was then useless for me to write and send after him letters addressed to a destination which I did not know, and I did not meet- the hon. gentleman again imtil late in the autumn; I think it was late in October.


Henry Herbert Stevens: Was that immediately
after the by-elections that he conducted in Ontario?


Charles Hazlitt Cahan: I did not meet him immediately after those by-elections. The next time we met was late in certainly the latter part of October. In the meantime this complaint received very careful consideration and I will say that the fact of the complaint being made

was one reason why we adopted the changes which I have indicated in this bill in connection with its administration. I have had some experience with blue sky laws in the central western states of the United States, and after that experience I still believe in responsible government; that is, in the administration of public acts by members of the government who are responsible to their colleagues in the government and to parliament, and it would take a very great deal of argument to change my opinion in this respect.
If it is deemed advisable to place the administration of this act under some such board as my hon. friend indicates, then the proper way to introduce such administrative action is to constitute such a board and to state in the terms of the act constituting it what its powers are, otherwise such act wiould have no special reference to the administration of this act, which is administered by a commissioner under the supervision of a minister of the crown. But section 40 of the Patent act, as it now exists and then existed, did not permit either the minister or the commissioner taking cognizance of such an alleged abuse as that stated in the letter to which my hon. friend refers, except upon the filing of a petition by a person interested, and that is why we place now the responsibility upon the attorney general of Canada with regard to the institution of such proceedings. Section 40 of the existing act proceeds under Ob) to say:
Any person interested may present a petition to the commissioner alleging that the reasonable requirements of the public with respect to a patented' invention have not been satisfied,
or that the patentee has failed to manufacture adequately the patented invention in Canada, and so forth. Under the present act the basis of the commissioner's action is the presentation of a petition to the commisioner, and the parties to whom my hon. friend has referred never presented a petition, never instituted proceedings. If they were aggrieved all' they had to do was to write a petition to the commissioner, not in formal terms but in any terms that came within the provisions of the act, alleging that these abuses existed. But there was no petition presented, and no such initiative taken in the letters which the hon. gentleman sent to the department with his letter, which I understand from my hon. friend was dated July 30. It certainly was received at my department, but only after my hon. friend had left Ottawa for his expedition into the west, and when I had no opportunity of consulting with him.
But in order that the department might have jurisdiction to deal with such matters

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we have in this bill enlarged that section, as I have stated, by expressing that the attorney general of Canada or any person interested in the patent may initiate these proceedings, and that change is made for the express purpose of allowing a minister of the crown to bring the matter before the attorney general of Canada, who at the public expense can take the proceedings which heretofore depended upon private initiative. In making that change I think that we have obviated certain difficulties which have confronted us under the existing act.
As to the customs duties imposed upon electrical machinery and instruments I cannot discuss those at the present time. If they were very onerous, if they led to abuses, who rather than the Minister of Trade and Commerce should bring such matters to the attention of the government of the day, and although I sat assiduously in council I do not think I am violating any oath of office by saying that I do not recall at least, either in council or out of council, that my hon. friend ever brought such matters to the consideration of his colleagues.
But if there is any amendment which is now suggested to these clauses, why not let us have the suggested amendment and let us consider it on its merits. I tell this house with all the sincerity and faithfulness of which I am capable that I believe in adopting here the terms of the Patent Act which the long experience of the officers of the United Kingdom has found adequate to remedy just such or abuses similar to those complained of, adopting that very language, and then, by adding to the English Act the provision with regard to the attorney general of Canada taking initiative on behalf of the body politic at the expense of the treasury, I am going just as far as I can see that it is possible for us to go in providing efficient remedies.
I simply say again that under our Patent act as it is now proposed to be amended, with the cooperation of the attorney general of Canada as a colleague, I certainly believe that that act can be efficiently administered not only on the technical side, but also to compass the whole matter of commercial advantage which my hon. friends have in view. I cannot say any more than that. I am simply expressing my sincere opinion after four or five years' experience.


Robert Gardiner: May I ask if by the attorney general in this act is meant the Minister of Justice?


Charles Hazlitt Cahan: Yes. The difficulty I had was to find in the old act some authority: on the part of the attorney general to intervene, and we have provided in several sections of this act that he may now intervene and initiate proceedings on behalf of the general body politic.


Robert Gardiner: I would like to ask the minister a question or two for information. The hon. member for East Kootenay (Mr. Stevens) this afternoon and this evening cited a case where an importer had imported electric bulbs into this country and had been communicated with by the solicitors of the Canadian General Electric, who pointed out to him that these bulbs imported into this country were an infringement of the patent rights of the General Electric. I do not know what has been the final result of that communication, but the question I want to put to the Secretary of State is this. Suppose the General Electric Company in the United States controls the larger volume or a very large volume of the patents in connection with electric bulbs; suppose it creates a company in Canada, the Canadian General Electric, to which it transfers the right to manufacture from patents owned by the parent company in the United States; and suppose that for various reasons the bulbs sold in Canada, manufactured by the subsidiary of the American company, are sold at a very much higher price than those sold by General Electric in the United States: is there anything to prohibit an importer importing into Canada electric bulbs made by the General Electric Company of the United States, the parent of the subsidiary company in Canada to which it has transferred its patent rights?


Charles Hazlitt Cahan: The answer is very simple.
The patent which covers the territorial jurisdiction of the states of the American union and its territories is one patent; the patent which covers Canada is another patent. You may not, while a patent is in force in Canada, import from abroad that same patented article and bring it into Canada without a licence from the patentee of the Canadian patent. That is so in this and in every other country with the exception, possibly, of Japan; and it is so because we are bound by an international convention which so provides. But the remedy is this. In the first place, if the Canadian company holding the Canadian patent does not adequately supply the market in Canada, then under this act the Canadian patent may be revoked; and in the second place, if the Canadian patentee

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does manufacture in Canada so as to supply adequately the requirements of the Canadian market and yet charges in Canada an unreasonable price for the manufactured product, then he may be compelled under this bill to reduce his price or to suffer the penalty of having his Canadian patent revoked. These are the remedies which we are now prescribing, and they have no particular reference to the duties imposed upon the import of electric bulbs. I do not know what those duties are. If those duties are too high, I, for one am prepared to consider the question of their reduction on its merits, as I always endeavour to do with respect to the imposition of protective duties for the protection of this market. But I have never, so far as I know, advocated the protection of the Canadian market in cases where I really believed that the Canadian producers were abusing that privilege and taking advantage of this market. I have always held that remedial measures should! be found for that. But, in respect of this bill, I think we are prescribing effective remedial measures. If later this government and this parliament or another government and another parliament desire to place the administration of this act under some special board which is more or less irresponsible to the government and to parliament, that is a matter for parliament to decide; it is a matter with regard to which I now offer no opinion. But that measure for the creation, constitution and organization of a. board may be adopted under legislation separate and distinct from this particular legislation which is now before the house; and the passing of this bill does not in any way prevent parliament in its discretion from enacting legislation which will create and constitute such a board as that suggested.


Henry Herbert Stevens: I will make one further
suggestion. The hon. gentleman said he would be willing to consider the revision of the tariff. That has nothing to do with it. It does not matter what the tariff is, under the act as it is you cannot import these articles, and that is the point. They are using this act as a prohibitive tariff; that is what it amounts to. When I referred to their selling these articles at a price that amounted to an advance of 125 per cent over the duty paid price, I merely meant to indicate the extent to which the abuse of the act had gone. I should like to submit this to the Minister of Justice. Section 65, we are told, adequately deals with this aspect of the matter, but I claim frankly that it does not. Subsection 1,

upon which the Secretary of State has fastened as his argument, reads:
The Attorney General of Canada or any person interested may at any time after the expiration of three years from the date of the grant of a patent apply to the commissioner alleging in the case of that patent that there has been an abuse of the exclusive rights thereunder and asking for relief under this act.
All that does is to provide that the Attorney General of Canada or any other person may apply to the commissioner of patents and say that an abuse has occurred. But there is nothing in the section to say what the commissioner shall do; that has been deleted under the old section 40. I will suggest that we reinstate the major part of subsection (e) of the old section 40. I will move that following subsection 1 of section 65 of this bill there shall be a new subsection, which might be made 1 (a), and which will read:
(la) The commissioner shall then consider the petition and if the parties do not come to an arrangement between themselves, shall proceed to hear and determine the matter, and if it is proved to his satisfaction that the reasonable requirements of the public with respect to the patented invention have not been satisfied, or that the patentee has failed to adequately manufacture the patented invention the patentee may be ordered by him to supply the patented article w'ithin reasonable limits at such price as may be fixed by him and in accordance with the custom of the trade to which the invention relates as to the payment and delivery, or to grant licences for the use of the patented invention as may be fixed by him, in either case within and after such time as may be fixed by him and on pain of forfeiture of the payment.
I move that that clause be added to section 65.


Charles Hazlitt Cahan: In the meantime, while the hon. gentleman is drafting his amendment, I suggest that section 65 should stand until we see the exact terms of the proposed amendment, and as sections 65 and 66 are the ones under discussion and we agreed that those sections might be discussed together, I suggest that we proceed with section 67.


Raymond Ducharme Morand: Section 64 is not carried.


Charles Hazlitt Cahan: I understand that there is no serious objection to section 64. Suppose we pass section 64 and let sections 65 and 66 stand for the present until we see the exact terms of the amendment.


Louis Édouard Fernand Rinfret: I am afraid that sections 65 to 71 inclusive are all connected, and I do not think we should undertake to discuss section 67 until we have disposed of sections 65 and 66.

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Mr. C.AHAN: Suppose, for the purpose of taking up the remaining three-quarters of an hour, we reserve sections 65 to 71 inclusive.
Section 64 agreed to.
Sections 65 to 71 inclusive stand.
Sections 72 to 80 inclusive agreed to.
On section 81-Validity of patents.


Charles Hazlitt Cahan: I have a suggestion to make as to a slight change in this section. I think, after mature consideration and consulting with counsel, section 81 may be better expressed in this way, and I would ask the Minister of Pensions and National Health to move this amendment for me:
That section 81 be struck out and the following substituted therefor:-
81. Every patent heretofore or hereafter issued shall be deemed to have been properly issued if all the conditions of the issue of a valid patent which may have been or shall be in force, either at the date of the application therefor or at the date of the issue thereof, have been satisfied; but any provisions in force from time to time relating to the continued validity of patents after issue shall apply to all patents whenever granted.
The object of this section is that if everything in regard to an application for a patent has been completed, then that patent may be valid if granted in accordance with the terms of the application or granted under the new act, but any provisions in force from time to time relating to the continued validity of patent after issue shall apply to all patents whenever granted. I think that is a clear statement.


Donald Matheson Sutherland: I move accordingly.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
Sections 82 and 83 agreed to.
On section 26-Who imay obtain patents.
Charles Hazlitt Cahan: May I revert for a moment to section 26? This afternoon I drafted two short amendments to this section but subsequently on a discussion of the -matter with counsel, it was thought I could express that in clearer language in one amendment. I moved two amendments, in which there seemed to be some slight inconsistency, and I would ask the Minister of Pensions and National , Health to move the following amendment:
That, in section 26, subsection 2, as now amended, be struck out and the following be substituted therefor:-
(2) Any inventor or legal representative of an inventor who applies in Canada for a patent for an invention for which application for patent has been made in any other country by such inventor or his legal representative before the filing of the application in Canada shall not be entitled to obtain in Canada a patent for that invention unless his application in Canada is filed,
_ (a) before issue of any patent to such inventor or his legal representative for the same invention in any other country; or
(b) within twelve months after the filing of the first application by such inventor or his legal representative for patent for such invention in any other country.
I do not think there is the slightest difference in meaning, but this draft is more concise and -more free from ambiguity.


Mr SUTHERLAND:: I move accordingly.


William Duff: Why is it necessary to use
the word "legal"? Why not say "any inventor or his representative"?


Charles Hazlitt Cahan: Because in the beginning of the bill we defined who could represent the inventor and we used the term "legal representatives", which includes heirs, executors, administrators, guardians, curators, tutors, assigns and so forth, so as to cover the possibility of a man dying and his executors.being able to proceed in his place, or, if he died without leaving a will, so that his heirs could intervene and proceed in his place.


James Layton Ralston: It does not mean lawyers.


Charles Hazlitt Cahan: No; I think "legal representative" is the proper term.
Amendment agreed to
Section as amended agreed to.


Louis Édouard Fernand Rinfret: Before we go back to the contentious clauses I should like to call attention to one clause we have just passed, No. 78. There seems to be a discrepancy between the marginal note and the section. Is there a technical mistake there?


Charles Hazlitt Cahan: I think it is the side note
that is wrong. The side note is not a part of the statute.	.	.


Hugh Guthrie: The law clerk of the
house corrects those notes.


Charles Hazlitt Cahan: The bill has passed through
various changes and apparently an old side note has been kept.
Progress reported.
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WEIGHTS AND MEASURES ACT

[Stage Direction]
Hon. R. B. HANSON (Minister of Trade and Commerce) moved the second reading of Bill No. 70, to amend the Weights and Measures Act.
Motion agreed to, bill read the second time, and the house went into committee thereon, Mr. Morand in the chair.
On section 1-Inspector.
Louis Édouard Fernand Rinfret: I understand the minister
is bringing in another bill?


Richard Burpee Hanson: The order for the other bill was discharged this afternoon; it now forms part of this bill. That is the section defining a cord. We shall meet it in due course.


[Stage Direction]
Section agreed to.
Sections 2 and 3 agreed to.
On section 4-"Cord" defined.
Richard Burpee Hanson: This is new. Never before has there been a standard cord in Canada. We have had a great many representations on the matter, and it is thought wise to define what a cord is for legal purposes.


[Stage Direction]
Section agreed to.
Section 5 agreed to.
On section 6-Articles in vessels.
Richard Burpee Hanson: This is
a section which carries into effect one of the recommendations of the royal commission.


[Stage Direction]
Section agreed to.
On section 7-Director may be appointed.
Mr. POULIOT:: This is a new job.


Richard Burpee Hanson: No. The amendment corrects the title. If hon. gentlemen will look at the annotation on the opposite side they will see that the amendment corrects the title of the administrative officer in charge of this branch of the work of the department. He is called now a director of weights and measures instead of superintendent, but it is the same officer.


Edward James Young: What is the "local standard?"


Richard Burpee Hanson: The local standard is the standard of weights and measures that is used by the inspector in the various districts. It is derived from the departmental standard here in the department at Ottawa, which in turn is derived from the dominion standard which is the standard of weights and measures.
rMr. Cahan.]


Mr. CAMPBELL:: There is only one
standard?


Richard Burpee Hanson: It is the same standard.


[Stage Direction]
Section agreed to.
Section 8 agreed to.
On section 9-Regulations.
Richard Burpee Hanson: There is a slight amendment which I desire to offer to section 9. Section 52 of the act provides that the governor in council may from time to time make regulations concerning a large number of specified actions, the guidance of inspectors and so on. It is proposed by the bill to add subsection (k), the measurement of wood; and subsection (1) the weight of wrappers or containers of articles sold by weight'-this arises I think out of the report of the price spreads committee-and subsection (m) the weight and quantity of contents of and markings upon packages or containers of goods, wares or merchandise at time of sale. It appears that no penalty clause has as yet been provided for the enforcement of the provisions of new clauses (1) and (m) of section 52. To take care of that situation and of the other subclauses of section 52 it was thought well to give to the governor in council the power to make regulations respecting the imposition of penalties for contravention of any regulation made thereunder. Some objection may be taken to doing it in that way, and there is another way to handle it, that is to provide a substantive penalty for any case not provided in any clause of the act. This is the way the Department of Justice have advised that this matter should be handled. Therefore I am going to ask my colleague to move an amendment to section 9 by adding at the end thereof the following subclause:
(n) the imposition of penalties for contravention of any regulation made hereunder.


Hugh Guthrie: I so move.


Mr. FRASER (Cariboo):: May I ask the minister if it is under these regulations that fees are imposed for the inspection of scales?


Richard Burpee Hanson: It is a provision of section 52 that the fees are imposed by the governor in council under the power of regulation.


John Anderson Fraser: I would like the minister to consider a question which has worried me from time to time in regard to the imposition of these charges. This act is framed for the protection of the public, but

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you make the individual who owns the scales pay for the inspection. I do not think that is fair, and I suggest that under this section and at this time consideration should be given to the removal of the charges for inspection of scales. I do not refer only to the actual amount collected, which is not very large; I want to point out to the minister that in collecting this money and making the returns more than half the time of the inspector is taken up, which limits the work he is able to do in connection with the inspection of scales. The fees collected are not large but they occasion a great deal of clerical work on the part of the inspector, who has to make out reports from time to time. In view of that and the further fact that the fees are imposed on the owner of the scales for the protection of the general public I think these fees should be removed entirely.


Richard Burpee Hanson: I should
like to observe in the first place that any representation made by an hon. member who is in the mercantile business, such as the hon. member for Cariboo '(Mr. Fraser), naturally would receive a good deal of consideration, but I am advised that this section has been in the act since the first act was drawn in 1875. Of course it does not commend itself to me by reason of its antiquity alone, but this practice is followed in every country that has an inspection service; the service takes care of the cost of the operation. That is a principle we have on the statutes in connection with a great many other public services performed by governmental agencies for the protection of the public. The one that occurs to me immediately is in connection with the insurance act. If my memory serves me aright the entire salary of the superintendent of insurance is collected from the insurance companies. This is a service imposed on trade for the protection of the public, and at the moment I would not say it was wrong. The section in question is 53; I was in error when I said it was section 52. Section 53 reads:
The governor in council may. from time to time, make a tariff of fees to be paid to the inspectors for inspecting and stamping weights and measures, balances, beams and other weighing machines, under this act.
2.	The order in council containing such tariff and regulations and any repeal or amendment thereof, shall be published in the Canada Gazette.
3.	The said fees shall form part of the consolidated revenue fund of Canada.
*With respect to one other observation made by the hon. member, that over half the time of the inspectors is taken up in collecting fees and making reports, I am advised by
departmental officers that this is not quite correct, that it does not take half but only a modicum of their time. I do not think any case has been made out for making this a free service.


Mr. MERCIBR (St. Henri):: What is the charge?


Richard Burpee Hanson: There is
a sliding scale. The ordinary scale is usually about $2.50, but the tariff runs from $20 in the case of a track scale down to 50 cents. I do not think the tariff is undiuly high.


Paul Mercier: And how
many times a year is an inspection made?


Richard Burpee Hanson: At least
once a year, under the law, but in view of what has taken place in the past I do not think that is often enough, and an effort is being made to have these inspections made more often.


John Knox Blair: Us the inspector's assistant paid?


Richard Burpee Hanson: If the inspector employs a carter or someone like that he is paid a per diem rate by the department. I do not think that is charged to the retailer.


Thomas Reid: In the case of gasoline pumps, a man may have four or five pumps; the inspector comes along and the man must pay $10 or $12.50. I have received many complaints in this regard. A man with only one pump pays only $2.50, but a man handling four or five kinds of gasoline is charged $2.50 for each pump, and I think that load might be lightened a little.
Mr. HAN0QN (York-Sunbury): I have had no official complaint in that respect; this is the first time I have heard of that matter during the six months I have been in office.
Mr. RE'ID: I brought up the question last year and was given very little satisfaction.


Richard Burpee Hanson: The departmental officers think that is a fair charge, and it has been fixed after long experience. I said I had received no official complaint; I did have a complaint from a retailer of gasoline living in a country district. He said his sales were very small, as naturally would be the case, but on the other hand the department had to send an inspector twenty miles to inspect that pump, and the fee did not cover the cost. I think we find that condition applying in all sorts of services; the man who has a large number of gasoline tanks
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probably pays a little more than he should, but he makes up for the man in the poorer locality, so to speak, on the same principle under which we operate our free school act in New Brunswick.


Mr. CASGRAIN:: In view of the disclosures made before the price spreads committee do the government intend to have more frequent inspections of scales?


Richard Burpee Hanson: That is the intention.


Joseph Philippe Baby Casgrain: How frequently?


Richard Burpee Hanson: Just as frequently as we can. If the government will give the department more money we will have more inspections made.


Paul Mercier: Once a
month?


Richard Burpee Hanson: I do not think it would be fair to ask a man to pay for twelve inspections a year, but the intention is to stiffen up the inspections and have them made more frequently.


William Duff: You do not want to stiffen up the scales or they will not weigh properly.


Richard Burpee Hanson: We try to keep them just and true. In recent years the vote for this service has been cut down, even previous to 1930. I think it should be increased in order to provide more frequent inspections for the protection of the public.


Hugh Guthrie: What are the revenues?


Richard Burpee Hanson: The
revenues arc quite substantial. I think in all recent years the consolidated revenup fund has carried forward a profit of at least $100,000 annually from this service. In the past year the revenue was $403,448 and the expenditure $291,983, leaving a profit on the service of $1111,465.


Paul Mercier: Were many scales confiscated?	*


John Knox Blair: A great many complaints have been made with regard to the inspection charges on gasoline pumps. The inspectors charge for going from one station to another, even when the tanks are only a short distance apart. Sometimes within a few rods you will have as many as fifteen pumps, and we think the charges are a little excessive. The inspector also charges for the man who accompanies him, who transports whatever apparatus he has with him. It has been suggested to me by several persons that the local

chief of police or the village constable could very well look after this matter so that the inspector would not need to come once a month or even once a year.


Richard Burpee Hanson: I am quite sure that in my hon. friend's constituency we could trust the chief of police or the local constable, but I do not think that would be a good policy to pursue for the protection of the public generally. With respect to the particular matter to which the hon. gentleman has alluded, namely the charge for moving from one set of pumps to another, that practice has been abolished for the last two years, so that that complaint, if such it was, can no longer be made.


Mr. SENN:: I think that subsection (m) of this clause provides for authority to standardize packages by weight. Has any consideration been given to standardizing packages of canned goods according to size, so many inches high and so many inches in diameter?


Richard Burpee Hanson: We submit that that should not come under the Weights and Measures Act. It should come under the Meat and Canned Foods Act, which is controlled by another department of government.


Mark Cecil Senn: Are you not given authority here to standardize by weight?


John Anderson Fraser: Let me repeat that I do not admire the stand the minister has taken respecting the antiquity of the measure. This is the time for change; we have a new minister, and he should be cleaning up his department. It is a good time for the new minister to show that he has new measures.


Joseph Philippe Baby Casgrain: You will have to change the minister again.


John Anderson Fraser: We had better give this fellow a chance to see what he can do. I am not very critical as to the amount of the charge, but I do suggest that after all the department is making nearly one hundred per cent profit.


Richard Burpee Hanson: Oh no.


John Anderson Fraser: My point is that if the department would do away with the collection of those fees and the reporting of them to the department it would give its officers an opportunity to cover their territories in less time and to do more work. I do not think the department would be

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endangering anything. I admit I have not as much information on the subject as I probably should have, but I should like the minister to assure me that during the next year he will review the situation, thoroughly.


Some hon. MEMBERS:: Oh, oh.


John Anderson Fraser: Oh, yes, he will; there is no doubt about his being in a position to review it. During the next year he will review the matter and see whether or not his departmental officials will agree with my suggestion, namely that it would be in the interests of the department to remove these small charges, thereby giving his officials an opportunity to cover their territories. I am not arguing against the inspection of scales, because I believe that is a very proper service. I do know however that during the year 1934 the inspector was not able to get into my district, and he told me the reason was he had too much territory to cover, and that a great deal of his time was taken up in reporting these charges. It is all very well to say it does not take up much time, but I happen to know it does take a great deal of time. The inspector must spend many hours of overtime to do his work and to look after the .reporting of these charges.


Richard Burpee Hanson: I shall
certainly give the matter consideration, but it is my view that the making of a charge and the earning of money by the department makes for efficiency in the service. I am afraid that if no charge were made the inspection might not be just as strict as it ought to be. After all this is a service for the protection of the public, and I contend it should be an efficient service. On the principle of not paying for the service, I should have to foe convinced by sound arguments that the country should stand an expenditure of half a million dollars yearly for the protection of the public, without any return. I believe the taxpayer has a right to this protection.. Evidently it was the idea of the legislators who brought the measure into being in the first instance that the people who have and use the scales should pay. That principle has been in force for sixty years, and I should not like to promise to do away with it without having behind me a very large body of public opinion.


James Layton Ralston: I believe we were considering an amendment to section 52. As I understand it the amendment provides that the governor in council is to have power to impose penalties


Richard Burpee Hanson: It provides for the imposition of penalties for the contravention of any regulation made under section 52.


James Layton Ralston: As I understand it there are penalties provided in sections 63 and 64. Section 63 provides a penalty for giving short weights, and section 64 a penalty for the use of false or unjust weights, scales, and so on. Are there not other penalties provided in the act?


Richard Burpee Hanson: There is
a penalty in connection with section 61, for using other than dominion weights; in section 62, for selling articles otherwise than by avoirdupois weight; in section 65, for fraud by the use of false weights; in section 66, for the making or selling of false weights, and in section 67, for using unstamped weights. There is no penalty in connection with section 68.


Mr. ELLIOTT:: Section 63 carries a
penalty.


Richard Burpee Hanson: Yes, that is important, as it involves a penalty for short weights.


James Layton Ralston: As I understand it the
minister is delegating to the governor in council the power to impose penalties for the breach of any regulation, without any limit as to the maximum or minimum of those penalties.


Richard Burpee Hanson: That is
a suggestion.


James Layton Ralston: What does the minister
think about the decision of the United States Supreme Court in connection with the matter of delegation? ?


Richard Burpee Hanson: I would
rather not discuss it. That is a very live question at the moment, and I should not like to give an opinion. I have not seen the decision.


James Layton Ralston: I submit seriously that
this parliament ought at least in some way to limit the penalties which may be imposed, or, to put it the other way, provide a maximum and minimum.


Richard Burpee Hanson: I have
an open mind on the matter. I would say to the hon. member that had it not been for the suggestion of the Department of Justice I would have done it in another way. I had in mind the passing of a special section
Patents of Invention

dealing with the contravention of any provision of the act for which no penalty is otherwise provided. If it is the view of the committee that that should be adopted, I would be agreeable.


James Layton Ralston: Act or regulation.


Richard Burpee Hanson: Yes, act
or regulation. If it is thought that the matter should not be left to the governor in council I should be glad to take that into consideration. Personally I am not desirous of having it done, but as I said a moment ago the suggestion -was made by the Department of Justice. I am quite agreeable to having a clause in the act providing that for the contravention of any provision of the act or regulation thereunder for which no special penalty is provided there should be a fine not exceeding $25 for the first offence and not less than $25 or more than $100 for any subsequent offence. I am in the hands of the committee.


James Layton Ralston: As a member of the committee and with all due respect to the Department of Justice I would certainly concur in the minister's suggestion. While in some cases it may be the practice to give carte blanche to the governor in council to impose penalties, I believe the much better way is for parliament itself to provide penalties for the infraction of any regulation or statute.


Richard Burpee Hanson: I shall
be glad to accept the suggestion. I will ask leave, with the unanimous consent of the committee, to withdraw the amendment now proposed) and' to submit the following as section 81 (a) which I shall move, when we come to the end of the bill.
Any person who acts in contravention of any provision of this act or regulation thereunder for which no special penalty is provided shall be liable to a fine not exceeding $25 for the first offence and a fine of not less than $25 and not more than $100 for any subsequent offence.


James Layton Ralston: May I suggest one word?


Richard Burpee Hanson: Yes.


James Layton Ralston: I would use the word
"express" instead of the word "special," or have it read, "for which no penalty is expressly provided."


Richard Burpee Hanson: The expression I have read is the one which the departmental officers suggested to the Depart-

roent of Justice. I give notice now that at the conclusion of the bill I will move that as an amendment. In the meantime I would ask that the other be withdrawn.


Mr. ILSLEY:: May I point out that section 82 contemplates the imposition of penalties by regulation, and with the new amendment proposed an amendment will be required to section 82.


Richard Burpee Hanson: Section
82 deals with procedure entirely. We are making an express provision with respect to contravention of the act or of any regulations not provided for.


James Lorimer Ilsley: But section 82 contemplates the imposition of penalties by regulation, which we are now abandoning.


Olof Hanson: I am not
so sure about that. I do not think it does. That is my immediate reaction, but I would have to study it.


James Lorimer Ilsley: It says: "All penalties
imposed by this act or by any regulation."


Richard Burpee Hanson: But we
have not provided in the act elsewhere for penalties by regulation, so far as I am aware.


James Layton Ralston: We have by this amendment.


Richard Burpee Hanson: I understand that it is because of the provisions of section 82 that the Department of Justice recommended the amendment which they did, which I have now withdrawn. I have an open mind on the subject, but my first thought was as I have suggested.


James Layton Ralston: The suggestion of my
hon. friend from Hants-iKings (Mr. Ilsley) is that the words "by regulation" in section 82 be struck out. Perhaps the minister will consider that.


Richard Burpee Hanson: Perhaps we had better let that matter stand until we reach it.


John Campbell Elliott: Are the regulations changed frequently, or are they not subject to change very often?


Richard Burpee Hanson: I understand that there have not been any changes for three years, so they do not come very often.

Questions


John Campbell Elliott: I think when we are dealing with penalties for breach of regulations, if the regulations have been very much the same for many years it is much better to embody the regulations as far as possible in the act itself than to leave them subject to change from time to time and have penalties imposed for a breach of regulations that we know not of.


Richard Burpee Hanson: If I catch the hon. gentleman's idea correctly he suggests that the regulations should be embodied as substantive provisions of the bill. I do not think the department ought to be hampered by having to come to parliament to get regulations to meet the situation when, for instance some new scientific invention comes into general use. If we did not have the power to make regulations the department would be handicapped. I am advised that there have been no changes in the regulations since 1929.


John Campbell Elliott: If there have not been many changes, my argument is all the stronger.


William Duff: Referring to the amendment that the minister proposes to move, it seems to me that $25 is a pretty stiff penalty for a first offence, and that not less than $25 or more than $100 is also very high for a second offence.


Richard Burpee Hanson: That is the maximum. The magistrate does not need to impose $25. The experience of the department is that magistrates are pretty lenient; ten dollars is about the average, and sometimes it is one dollar.


William Duff: It seems to me that it would be much better to have the penalty definitely set out in the act so that the magistrate would know exactly what to do instead of leaving it to his discretion.


Olof Hanson: There is a minimum and a maximum penalty.


William Duff: I think $25 is too high.


Richard Burpee Hanson: It all depends on the offence. It is very difficult to legislate here in advance. We do not know what the contravention of the regulation in question may be. With respect to sections 63 and 64, the short weights and unjust scales sections, the hon. gentleman will observe, if he reads the bill, that very severe penalties are suggested. However, it is very late now to go
into that and I therefore move that the committee rise and report progress and ask leave to sit again.
Progress reported.


[Stage Direction]
At eleven o'clock the house adjourned without question put, pursuant to standing order.
Wednesday, May 29, 1935