Agricultural Manufacturers of Canada

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The need for clarity on interoperability in Canada’s Copyright Act

Submission to the Government of Canada’s Consultation on a Modern Copyright Framework for Artificial Intelligence and the Internet of Things

SEPTEMBER 17, 2021

Submitted by Donna Boyd
President, Agricultural Manufacturers of Canada

Introduction: Global reputation for innovative farm machinery

Agricultural Manufacturers of Canada is proud to be the only Canadian association exclusively dedicated to ensuring agricultural equipment manufacturers and their suppliers succeed in domestic and global markets. Our member companies have earned a reputation for producing the highest-quality, most sought-after agricultural equipment in the world.

AMC’s members employ more than 25,000 people in facilities across Canada and contribute more than $2.4 billion annually in exports to our national economy. Canadian agricultural implements can be found in 149 countries, including the United States, Australia, Russia, China, Chile, Germany, Brazil and New Zealand. The U.S. is our single largest market, accounting for 80 per cent of our members’ exports.

As an essential industry, AMC members were proud to play their part in helping Canada through the global pandemic. Facing up to tough challenges is bred into our member companies. Over the decades, they excelled by using their experience and ingenuity to devise cutting-edge agricultural equipment that met the unique needs of local farmers given the harsh climate and growing conditions of the region. Today, as Canadians look toward a post-pandemic economy, AMC’s members are focused on moving ahead to promote productivity, competitive development and global sales opportunities.

This resilient and innovative sector is one we should all be proud of as Canadians. As Richelle Andreas, CEO of S3 Enterprises and past chair of AMC’s Board of Directors, says, Canadian farmers lead the world in the adoption of new technologies and sustainable farming practices. “Canadian farm equipment manufacturers have risen to the challenge, matching the pace of innovation and leading the world. ‘Made in Canada’ doesn’t just refer to the communities all across the country where you will find ag manufacturers. When it comes to farm equipment, ‘Made in Canada’ is a reputation — hundreds of companies strong — of solving problems, standing behind our products, and adding value to the men and women who produce our food.”

In order for the agricultural manufacturing sector in Canada to thrive in the face of global competition, the federal government must address the need to clarify interoperability rules under the Copyright Act.

The challenge: Interoperability in the 21st century

In today’s digital environment physical product design is becoming increasingly reliant on software, networking and computerisation.

We’re pleased to see the government recognize our sector in its consultation paper. Indeed, “Canada's agricultural manufacturing sector argues that the [technological protection measures] TPM exception for interoperability does not provide sufficient protection from liability for the kinds of activities they need to undertake to innovate and manufacture products required for the Canadian market that are interoperable with products from original equipment manufacturers.” For example, as the consultation paper notes, “the uncertainty as to whether this exception applies when access to data, as opposed to access to a computer program, is needed to ensure interoperability.”

The policy briefing titled Impediments to Interoperability under Canadian Copyright Law, notes: "As an increasing number of products and services rely upon integrated software and digitization for their functioning, we are experiencing an increase in the need to ensure that myriad products are interoperable in a number of different industries and settings. The range of products affected by these changes are effectively limitless: Toasters running on JavaScript, home appliances with central computers, ‘smart’ hot tub controls and sensor-monitored automotive components are just a few examples. The general trend is that physical product design is becoming increasingly reliant on software, networking and computerisation."

From an agricultural manufacturing perspective, this means that many pieces of industrial equipment are required to interoperate, often as a network of digital and analog components. This includes the mechanical interface, hydraulic components, onboard computer and sensors.

The original equipment manufacturers (OEM) [combines and tractors] and the products and services that are tied into them [digital and physical], form the platform that hosts the “applications” of implements that perform specific work, e.g. tillage, planting, spraying and harvesting. These OEM platforms are much like Apple or Google, in that they are generally considered the host of other products in an ecosystem of technology and tools.

Historically, agriculture has worked within an open ecosystem, where products from all brands had the possibility to interoperate and function as designed. This benefited the industry and spawned agricultural related industry in most small towns globally. In Canada, there are roughly 1,500 companies that participate in innovating and manufacturing agricultural solutions that interoperate with OEM platform equipment. The majority of these companies are located in small rural Canadian towns.

Unfortunately, with the introduction of embedded software in equipment, and secondary data products, there has been a move away from open and towards closed ecosystems between brands. This is primarily at the hands of the larger equipment OEM. So at a time that technology should be making its biggest impacts in our industry, we are instead facing walled garden business models that are creating an anti-competitive environment, at the expense of innovation.

The lack of clear rules in Canada permitting Canadian ag manufacturers to make interoperable equipment is preventing Canadian industry from reaching its full innovative potential.

Furthermore, IP inconsistencies between Canada and the U.S. have created a significant competitive disadvantage for Canada’s ag manufacturing industry. Similar to their U.S. competitors, Canadian ag manufacturers need to be able to "reverse engineer" the products of OEM in order to produce equipment that is interoperable for Canadian farmers. This would allow them to innovate a variety of products that help Canada’s agricultural sector do more with less while addressing important public policy issues such as climate change.

Just over 50 per cent of AMC’s manufacturing members are located in rural communities of fewer than 10,000 people. Without changing intellectual property rules to put Canadian and

American manufacturers on an equal footing, Canada’s rural communities will lose an essential employer, severely decimating local economies.

The Copyright Act must be updated to reflect how technology has changed.

Lack of harmonization with U.S. a barrier for Canadian ag manufacturers to remain competitive

Agricultural manufacturers need clarity on interoperability not only to thrive in a competitive global economy, but also to survive as small businesses employing thousands of Canadians.

The lack of clarity is a severe barrier to innovation, competitiveness and economic growth.

AMC’s member companies’ revenues are generated through exports to the United States. Exports to the U.S. have grown more than 50 per cent over the last decade. Without clarity, Canada’s agricultural manufacturers risk losing a competitive edge as producers of the highest quality and most sought-out agricultural equipment in the world.

There are exceptions for interoperability under the Copyright Act, but they are too unclear to enable innovation.

As technology increases in everyday applications, the problem continues to grow. In essence, any piece of technology can potentially become an infringement on copyright. This is even more prevalent from a competitiveness angle because of the lack of harmonization with U.S. copyright laws.

Innovation and market access for Canadian manufacturers abroad, especially the U.S. — our single largest market — becomes even more difficult.

According to a study by Western Economic Development Canada, Interoperability: An overview with a western perspective, “impacts of interoperability will be affecting the industry in 2020 as one OEM’s starts restricting access to short line manufactures equipment. A survey of implement dealers has indicated a significant drop in orders of short line manufacture combine headers for the coming year and into the future.”

Additionally, WED notes that “dealers of agriculture equipment have indicated a reduction in intentions to purchase headers from short line manufactures based on the past five-year average. The current sales, specifically in OEM 1 mainline dealers, could see sales numbers decreasing by as much as 60 per cent this year over the five-year average. A further reduction in future sales is predicted moving forward. Dealers have indicated that sales on new combines of short line headers have reduced significantly or have been zero due in part to new headers introduced by OEM’s over the last few years. One dealer in Alberta has indicated an increase in short line header sales due to the better offerings for the harvested terrain.”

It is imperative for the federal government to carefully address this interoperability issue in order to support a truly innovative, export-oriented and job-creating Canadian agricultural manufacturing sector that is well-positioned to contribute to our country’s post-pandemic economy.

Fostering innovation, producing world-leading products: Recommended solutions for clarity

Canada’s statutory framework for interoperability under the Copyright Act is emblematic of an era prior to widespread computerisation and software integration in a myriad of products and machinery. In the context of modern machinery, innovation and networked components, a more inclusive approach is needed that enables innovation.

Providing the agricultural manufacturing industry with clarity will ensure Canada is well- positioned to foster an innovation environment with as few impediments as possible to producing world-leading products, services and technologies. Many of the ideas in this submission would equally apply to forestry, mining, construction, energy and heavy industry generally.

We recommend a realistic, expedient, and direct approach to reduce the chilling effect produced by the ambiguities in the Copyright Act through:

  1. Interpretive guidelines issued by the Canadian Intellectual Property Office (“CIPO”) (e.g., “Guide to Interoperability under Canadian Intellectual Property Law”);
  2. An amendment to the Copyright Regulations enacted pursuant to the Copyright Act, clarifying the nature and scope of the interoperability exception to the prohibition on TPM circumvention, including a comprehensive definition of “interoperable”;
  3. An amendment to CIPO’s Guide to Copyright which clarifies the nature, scope and applicability of the interoperability exception to the prohibition on TPM circumvention;
  4. Empowering an independent administrative authority to oversee the implementation of TPMs in the Canadian marketplace to ensure that Canadian innovators are able to take advantage of the interoperability exception to TPM circumvention under the Copyright Act.

By providing Canadian industry with the requisite clarity to move ahead, the government will be ensuring that Canada is well positioned to foster an innovation environment that incorporates as few impediments as possible to producing world-leading products, services and technologies.