Government Release of Proprietary Sesimic Information

Firm sues governments over intellectual property

LETHBRIDGE — Governments have the power to regulate the use of private property nearly to the extent of actually expropriating it. And surprisingly, even though regulatory policies are acceptable under our legal system, there is no requirement that compensation be paid for the use of that property.

It is clear that, for the sake of justice, governments must protect and compensate property owners. And the same goes for intellectual property.

Geophysical Service Incorporated (GSI), a Calgary-based company specializing in marine seismic data, needs such protection. The company performs expensive offshore seismic surveys for petroleum companies.

The data collected during these surveys is valuable and is used for petroleum exploration and development.

GSI’s problem started when it began collecting offshore seismic data in Atlantic Canada. The governments of Nova Scotia and Newfoundland and Labrador required that it submit its valuable seismic data to them if it were to receive a licence to work in the area.

However, after a 10-year confidentiality period, both governments released the data into the public domain, thereby depriving the company from selling the data to customers. The provinces’ actions threaten GSI’s the financial viability.

Of course, GSI is contesting the public release of their intellectual property. Not surprisingly, they are hopping mad at both governments.

“The company may have been forced to submit its data . . . , but it did so in confidence and without waiving its ownership, copyright and confidentiality rights,” said Catherine Butlin, a lawyer for GSI.

GSI has taken federal and provincial offshore regulators – such as the Canada-Nova Scotia Offshore Petroleum Board, the Canada-Newfoundland Labrador Offshore Petroleum Board, the National Energy Board and Natural Resources Canada – to court. All of these legal cases are ongoing, and the boards will not comment on the proceedings because the claims are currently before the courts.

Paul Einarsson, chief operating officer and chairman of GSI, said this sort of seismic data is protected in other provinces and territories, including his home province of Alberta. In Alberta, specifically, seismic data confidentiality is enshrined in Section 50 of the Alberta Mines and Minerals Act. Businesses do not submit data to governmental agencies because the free market is allowed to work.

But Newfoundland and Nova Scotia give the data out for free, using it to promote the provinces’ economic development. In other words, Einarsson said, these governments are using GSI information, gathered at very high expense, for offshore energy development but are not paying for its use.

GSI first protested when the Newfoundland Government passed new expanded legislation aiming to attract more oil companies who should be paying for the license fees. The government’s response was particularly chilling:

“I understand that he’s trying to protect his company and the interest of his company, but there comes a point when the greater good needs to be served and that’s what this policy is all about,” said Natural Resources Minister and now Premier Kathy Dunderdale while attending the Newfoundland and Labrador Oil and Gas Industries Association convention in St. John’s.

Governments in the western tradition were established to promote and protect the common good. They often invoke the “greater good” when they want to expropriate physical or intellectual property. Governments see the “public good” as trumping private, commercial, interests. But governments should not compel a company or individual to shoulder exclusively the cost of the common good in a given sector.

A system in which private interests are trampled without offering the appropriate protections or compensations, as the historical record shows, is never sustainable in the long run. If governments deem it in the public interest – in this case regional economic development – to effectively confiscate hundreds of millions of dollars worth of intellectual property from private companies, such as GSI, then governments should fairly compensate them.

At best, governments should let the free market work to make their jurisdictions more attractive to investment, and not adopt policies and legislation that make them less so.


Joseph Quesnel is a policy analyst with the Frontier Centre for Public Policy.

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