Former BlackBerry co-CEO Jim Balsillie is among those who have argued for major changes in Canada’s approach to IP.Cole Burston/The Canadian Press
There are great inventors throughout Canadian history, from insulin creator Frederick Banting a century ago to artificial intelligence pioneer Geoffrey Hinton today.
Companies such as Nortel and BlackBerry forged the future of telecommunications and brought Canadian innovations to a global stage. Yet that was fleeting, before corporate stumbles and downward spirals.
The problem is that Canada isn’t capitalizing on innovations across the economy, and is losing the race to be a leading global player in intellectual property, the economic currency of this century. Stories like Nortel and BlackBerry are the exceptions – magnifying the impact of their collapse.
What remains is a country where upwards of half the market value of the top publicly traded companies are either banks or oil producers. Compare that with the United States, where the biggest companies are household names around the world, from Google to Amazon. There’s a reason Canadians are known as hewers of wood and drawers of water.
It’s been observed that British Columbia is an ocean of forests. But where is Canada’s version of Sweden’s Ikea, which turns wood into furnishings for the world?
There is no lack of ideas; Canadians are creative thinkers. What’s missing is the leap from coming up with an idea to finding a way to make scads of money from it. Innovation is about profiting from invention: the computer mouse dates back to the late 1960s; Steve Jobs a decade later realized the mouse was a perfect tool for his personal computer.
As Canada’s productivity has flagged, major indicators of intellectual property success have sagged. Thirty years ago, Canada’s share of global exports was more than 4 per cent. It’s fallen to 2.4 per cent. Patent filing is also lacklustre. In the late 2010s, barely 1 per cent of businesses filed for a patent. The OECD average was more than quintuple that rate.
The Prosperity Problem
This is part of a series on Canada’s economic challenges. Follow our editorials page to see more instalments as they are published.
The challenge: How Canada can build a better future
Labour: Don’t fight the crunch
Regulation: Measure the cost of red tape first, then cut to fit
Former BlackBerry co-CEO Jim Balsillie and others have argued for major changes in Canada’s approach to IP. Productivity in the economy of the past was about investing in more efficient machinery. The 21st century is about ideas, legally protecting that IP, and companies making money from it – thereby creating jobs and paying taxes.
One necessary change is an overhaul of the scientific research and experiment development tax program. Ottawa finally started a review in January. As this space argued on Wednesday, the overhaul needs to shift the emphasis from invention to profitable innovation. The tax break should be better focused on companies that capitalize on their IP, including by adopting the patent box model.
The broader focus also needs recalibration. Ottawa should focus its resources on Canadian companies and encourage them to export their innovations globally. Further, Ottawa’s systems need to be easier for companies to navigate.
Too often public money flows to foreign multinationals in Canada. Artificial intelligence is an example: experts funded by Ottawa produced several hundred patents but the majority belong to foreign companies such as Google. This is too common in Canada. A Senate report last year called for federal research grants to require IP “being retained in Canada for the benefit of the Canadian economy.”
Such a move would improve what’s called “freedom to operate”: the ability to innovate without being hemmed in by a welter of patents or other IP rights.
It’s often said that Canada is a small economy, but that’s a false narrative. Canada has the world’s ninth-largest economy. Companies can grow here and expand internationally. But an IP policy that focuses on supporting those firms is key.
Changing some rules is essential. But a culture change is also necessary. IP has to be at the fore of every company’s thinking, in every industry, across the economy. Today, all companies are tech companies: Mr. Balsillie recently called out Canada’s top miner, Teck, for having filed a tiny number of patents compared with its global competitors.
Canada is a country blessed with an abundance of natural resources, but making the most of those assets will increasingly depend upon IP. Hewers of wood need to become filers of wood-technology patents. Our prosperity depends on it.