Largest-ever federal investments in intellectual property a “significant step” toward improving Canada’s global competitiveness, IP experts and innovation groups say

The federal government’s largest-ever investments in intellectual property and IP services highlighted the importance of protecting and leveraging IP for Canada’s economic growth, say IP experts and heads of innovation groups.

“Budget 2021’s IP-related investments are an important recognition that, more than ever, developing, managing and fully exploiting IP is critical to Canada’s capacity to innovate and compete globally,” Iain Klugman, immediate past president and CEO of Waterloo-based Communitech, said in an email to Research Money.

Canada’s innovation hubs, accelerators and incubators are well positioned to partner with the government to ensure that entrepreneurs are set up to succeed in optimizing their IP, he said.

“The additional resources provided in Budget 2021 will allow these anchors of regional innovation ecosystems to provide more programming, training and tailored advisory services to high-growth firms to help them get the most from their IP,” Klugman said.

“We are very glad to see the federal government recognizing the importance of developing a solid understanding of IP and related opportunities within Canada’s tech sector,” said Martha Casey, CEO at Volta, Canada’s East Coast innovation hub.

“This significant investment builds on earlier initiatives, and will benefit startups directly by enabling access to expertise in IP, along with training and resources. We also see this as an incredibly important investment in supporting innovation within scaled organizations, which is another important piece of our country’s economic success,” Casey said.

Budget 2021’s IP-related initiatives included:

• $90 million over two years, starting in 2022-23, to create ElevateIP, a program to help accelerators and incubators provide startups with access to expert intellectual property services.
• $75 million over three years, starting in 2021-22, for the National Research Council’s Industrial Research Assistance Program to provide high-growth client firms with access to expert IP services.
• the launch of a Strategic Intellectual Property Program review to assess IP provisions in Canada’s innovation and science programming.

The ElevateIP program offers a new resource that will help startups working with incubators and accelerators, said Dr. Terry Rock, president and CEO of the Platform Calgary innovation entity in Alberta.

“Convenient and trusted access to expert intellectual property services lets startups pursue great ideas without the added worry of the legal requirements to protect those ideas,” Rock said. “The bottom line is that accessible IP services helps us all grow a local tech economy that competes on a global scale and becomes an international innovation hub.”

Largest IP-related investments to date

Budget 2021 included Canada’s largest investments to date in both IP and the services of Canadian IP professionals, said the Ottawa-based Intellectual Property Institute of Canada (IPIC).

In 2018, the federal government launched Canada’s Intellectual Property Strategy with $85 million over five years and $10 million ongoing. The strategy focuses on updating IP laws, creating IP tools for business owners, and establishing the country’s first patent collective that is now being operated by the Innovation Asset Collective.

Budget 2021 “represents a significant step forward towards the government’s recognition that IP can play a huge role in Canada’s economic growth and, in the case of the pandemic, our recovery,” Adam Kingsley, CEO of IPIC, said in a statement.

In addition to $165 million in direct financial investments to help provide IP services, Budget 2021 proposed making IP a reimbursable expense.

Canadian-controlled private corporations will be able to expense up to $1.5 million of eligible expenses made on or after Budget Day and before 2024. This includes investments into a broad range of assets and will include expenses towards building digital assets and intellectual property, IPIC said.

Budget 2021 also proposed to enable the use of IP in small business financing, by improving the Canada Small Business Financing Program through amendments to the Canada Small Business Financing Act and its regulations. These amendments include expanding loan class eligibility to include lending against IP and startup assets and expenses, increasing the maximum loan amount, and extending the loan coverage period, IPIC said.

Gaps still remain in protecting, leveraging IP

Dana O’Born, director of strategic initiatives for the Council of Canadian Innovators (CCI), said the CCI has been saying for years that Canada has excellent research institutions doing world-leading scientific research and technological development.

“But where we have fallen short as country is in the process of commercializing that research — in particular, ensuring that Canadians are the primary economic beneficiaries of our academic research,” O’Born said in an email to Research Money.

So it is encouraging to see federal funding to increase access to expert IP services for Canadian startup and scale-up companies, she said.

“But on the other hand, we’ve still seen no movement to include IP filing costs as part of the Scientific Research and Experimental Development tax credit [program],” she added. The notion that legally protecting your IP is not an integral part of the R&D process “is exactly the mentality that has left Canada playing catch-up in the global innovation game.”

“IP generation should be a consideration across all of government, from academic research funding through to economic development grants, and IP should be a part of sector-specific innovation strategies across a wide range of critical industries,” O’Born said.

Jill Tipping, president and CEO of the BC Tech Association, said life sciences and cleantech companies in particular are capital-intensive and have a long investment cycle, so protecting IP generated over that long cycle is essential to retain value and attract investors.

Canada scores poorly compared with most OECD countries in terms of patent registrations, commercialization of IP, and medium-term growth of emerging companies, she noted.

“Programs to educate companies on IP, prevent IP leakage, and provide advice on cost-effective ways to secure IP are essential to change this picture,” Tipping said.

New B.C. investment fund includes focus on IP

BC Tech joined forces with 10 other innovation organizations in 2020 to lobby the B.C. and federal governments for $41 million in combined funding to establish ScaleUp BC. The new platform would support 800 tech companies to scale up, including by optimizing their IP strategies.

The B.C. budget released in April included $500 million to support the launch of InBC, a new strategic investment fund. Premier John Horgan said the fund will invest in firms in the technology, life sciences and green tech sectors, and ensure that IP property developed in post-secondary institutions and industrial sectors remains in the province.

Prior to the B.C. and federal budgets, BC Tech made policy suggestions that included creating a BC Transformation Fund, with an investment of $100 million annually over 10 years, to increase the number of homegrown, locally-headquartered anchor companies and spur retention of IP created in B.C.

Dr. Cory Mulvihill, vice-president of ecosystem development for the Toronto-based MaRS Discovery District innovation hub, said one of the biggest shifts in IP among MaRS’s portfolio of companies has been the increase in scaling companies with annual revenue in the $50-million to $100-million range. These Canadian companies are now acquiring U.S. and European firms and their IP.

“Those transactions are some of the most significant in terms of amassing control and the benefit of IP within Canada, and often that’s overlooked,” Mulvihill said in an interview.

“We need to have companies of a certain size to be able to become the acquirers,” he said. “And then other companies will model that behaviour and learn from other entrepreneurs.”

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