Ag manufacturers say uneven intellectual property rules could freeze them out of U.S.-made machinery market

Many of Canada’s smaller farm equipment manufacturers are at risk of being left in the cold by the main U.S.-based manufacturers if the Canadian government doesn’t change its intellectual property rules, say representatives from a Saskatchewan-based company that builds attachments for harvesting equipment.

Honey Bee Manufacturing’s general manager, Jamie Pegg, and Scott Smith, manager of components, systems and integration, sounded the alarm in front of the House of Commons’ standing committees on international trade, and innovation, science and technology in late February.

The company builds headers for combines and swathers, employing around 160 people at its plant near Frontier, Sask. — about 400 kilometres southwest of Regina near the Montana border.

They say the combination of uneven intellectual property rules in Canada and the U.S., along with the increasing use of proprietary tools by combine and tractor manufacturers to exclude third-party attachments, are threatening to put Canadian agricultural equipment manufacturers out of business.

“New intellectual property clauses in the CUSMA (Canada-U.S.-Mexico) agreement do not place U.S. and Canadian implement manufacturers on the same footing,” Pegg told the House of Commons trade committee. “U.S. copyright law makes exceptions for legally modifying motorized agricultural equipment for the purpose of interoperability. Canadian copyright law does not provide these exemptions, making it illegal for Honey Bee or any Canadian company to reverse engineer platforms to achieve interoperability.”

While farmers are voicing concerns about maintaining their right to repair machinery — a related intellectual property issue, Honey Bee’s concerns revolve around maintaining the ability to have implements that are built in Canada “interoperate” with machines made by large original equipment manufacturers (OEMs) in the U.S.

Honey Bee Manufacturing’s Scott Smith (left) and Jamie Pegg speaking to the House of Commons trade committee (ParlVU screenshot)

For example, for a combine header built by Honey Bee to work properly, it must be compatible with not only the mechanical connections, but the digital controls and signals coming from the combine that it’s attached to — whether it’s a John Deere, Lexion, Case, New Holland, or AGCO machine. It’s similar in concept to plugging a third-party computer mouse or keyboard into a different brand of computer, or using a third-party app on an Apple or Android phone.

Where older combines used standard wiring, hydraulics, and gears to operate a header, OEMs are increasingly deploying a combination of proprietary mechanical connections and software technology, including encrypted digital interfaces, on new machines. This forces companies like Honey Bee to invest in building their own parallel systems that do the same thing.

“At a minimum, the requested exemption that gives us parity with our U.S. counterparts on reverse engineering for interoperability needs to be added prior to signing the CUSMA agreement. It is imperative for the Canadian agricultural manufacturing industry,” said Pegg.

Ideally, Smith said, they would like the Canadian government to not only implement an exemption for reverse engineering, but they’d like to see legislation changed to include a mandate for interoperability on all equipment coming into the country. This would allow short line manufacturers to invest in building new products rather than spending hundreds of thousands of dollars on building systems that accomplish the same task as existing technology that’s already on a machine from an OEM, he explained.

“It’s a very expensive process to reverse-engineer and to develop parallel systems, but it’s a starting point. It’s the minimum that we would like to see, which is already established in the U.S. copyright legislation, and could be transported into the Canadian legislation without argument from the U.S., without bickering about this thing being added in advance of signing the trade agreement,” noted Smith. “The trade agreement is very important to us, but without this, we’re dead.”

The whole interoperability issue for Canadian manufacturers has quickly come to a head with the federal government looking to sign the Canada-U.S.-Mexico trade agreement in the coming weeks.

“Our concern is if we made a change after the signing of CUSMA, there would be the threat of sanctions or tariffs if we then changed our Copyright Act,” said Smith.

Carlo Dade of the Canada West Foundation

Carlo Dade, director of the Canada West Foundation’s Trade and Investment Centre, tells RealAgriculture he’s afraid the Canadian government is “asleep at the switch” when it comes to addressing these IP inconsistencies with the U.S. market.

“Our statement to MPs is ‘get ahead of this. It’ll cost you next to nothing to do this before CUSMA comes into effect,'” he says. “Even if we have this in process at the time, I think it would address the argument that American manufacturers were caught blind by Canada granting the same exemptions the U.S. already has.”

In addition to their committee appearances, Pegg and Smith have met with multiple federal departments, including Global Affairs Canada, Agriculture and Agri-Food Canada, Innovation, Science and Economic Development, and Heritage Canada, which is responsible for copyright legislation.

Ultimately, Pegg and Smith believe there’s an opportunity for government to show its support for Canadian manufacturers, who export farm equipment around the world, by updating intellectual property rules to reflect how technology has changed. It’s also a major economic issue for rural communities, noted Pegg.

“The impact of technical lockout by OEMs will be the death of the Canadian implement industry and it will decimate our communities,” he told the trade committee.

“We talk about ag technology and Canada being a leader, and this being growth area for exports. This is where the rubber meets the road,” adds Dade.

So far, Honey Bee has been leading the effort to have the federal government address the interoperability issue. Several other Canadian manufacturers we contacted said they were unfamiliar with the topic, or unable to comment on it.

“No one wants to put their head up,” says Dade.

Donna Boyd, executive director of the Agricultural Manufacturers of Canada (AMC), which represents short line ag manufacturers across the country, told RealAgriculture in an email that Honey Bee’s presentation to the trade committee was representative of AMC’s position on the issue, and that they hope to discuss these concerns at the group’s annual conference in Guelph, Ont. on April 29th.

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