The two patents received by the Neurological Simulation Center in Montreal, run by McGill University Professor and retired neurosurgeon Dr. Rolando Del Maestro, on July 5, 2023.Andrej Ivanov/The Globe and Mail
Dan Herman is the chief executive of Intellectual Property Ontario. Jesse Vincent-Herscovici is the chief executive of Axelys, a non-profit organization founded by the government of Quebec.
Last week, yet again, we saw a new warning about Canada’s declining productivity: Toronto-Dominion Bank economists said further declines in living standards loom if the situation does not improve.
Everyone seems to be talking about Canada’s troubles with productivity, a metric often defined along the lines of output per hour worked. In March, Bank of Canada senior deputy governor Carolyn Rogers called it an “emergency.”
What’s at the source of this? Here’s an interesting, and perhaps disturbing, data point related to Canada’s productivity and therefore prosperity: we import nearly double the intellectual-property-backed products and services than we export. Considering the immense size of global demand for such products and services, don’t we produce things the world wants?
The answer to that is evidently yes. From coast to coast to coast, Canada is rich in world-class research expertise, dynamic entrepreneurs and supportive intermediaries, yet we’re clearly not capturing those assets to be more productive.
So, when our governments say that they want to address our country’s productivity crisis, the two of us can’t help but raise our hands with a solution: we need to dramatically increase the rate at which we protect and commercialize new ideas and the intellectual property (IP) that often starts in publicly funded research.
As it stands, too often this publicly financed research ends up orphaned on the shelves of institutions that are unable to fund its commercialization because of underinvestment in the capacity to transfer our best ideas and technologies. Where there is valuable IP to commercialize, those same cash-strapped organizations are often raided by foreign multinationals eager to gain access to the knowledge developed by our best and brightest.
Research conducted by the Centre for International Governance Innovation (CIGI) finds that just half of the patents developed as a result of publicly funded research at Canada’s largest research-intensive universities find their way into the hands of industrial partners. Just 45 per cent of those that do are licensed or transferred to a Canadian partner. This represents a weak return on investment, especially given the 55 per cent of patents that land with foreign firms, substantially limiting the ability of Canadian companies to succeed in global markets.
To be sure, there continues to be skeptics who question the importance of IP in the commercialization path of successful companies. “Software companies don’t patent” they say, or “you can’t patent AI.”
The data, however, tells a different story. In artificial intelligence (AI) , for example, a global surge in patent filing activity has seen the number of patent families in this field more than double in just four years. In medical technology, filings globally have more than doubled since 2018, likewise in the life sciences. Even in automotive, where governments across Canada are investing billions to attract foreign direct investment, IP filings have increased by over 100 per cent since 2016.
Does patenting cost money that could be invested elsewhere? Yes. But research published by the Canadian Intellectual Property Office (CIPO) finds that companies with IP ultimately raise more money, export more and grow faster. And given the increasingly competitive global landscape, IP ownership is the means to ensuring that our startups and small and midsize enterprises (SMEs) can access markets over the long-term, lengthening their runway to do so.
To answer the IP-critics; does this mean companies should spend scarce resources on IP protection before sales and marketing? Preferably not, and increasingly this binary perspective is less relevant as publicly funded organizations like the ones we lead, work to lower the barrier toward IP protection and commercialization.
Ultimately, we can’t hope to solve our productivity crisis without addressing the core element of modern competitiveness – we must own our ideas and the innovations that result from them. If not, we’ll be relegated to paying others for their creations. Or worse yet: paying others to reacquire what was once created here.