Thank you very much, Mr. Chair and honourable members.
On behalf of Canada's Research-Based Pharmaceutical Companies—Rx&D—thank you for the opportunity to appear before you today. As you have heard, Declan and I are here representing Rx&D.
To start, Hoffmann-La Roche Limited is a member of Rx&D. We have Canadian operations in Mississauga and Laval. I am here before you today as the acting chair of Rx&D's intellectual property protection committee.
New medicines and vaccines represent some of the most advanced, safe and effective treatments available to help Canadians live longer, better and more productive lives. Our medicines also ease the burden on the health care system by avoiding more costly hospitalizations and invasive procedures.
The innovative pharmaceutical sector is a key player in Canada's knowledge-based economy. We account for some 46,000 well-paying direct and indirect jobs in Canada. Last year alone, we invested $1.3 billion in research and development and we contributed $3 billion to the economy. One of the drivers of business investment, commercialization, and prosperity is a country's intellectual property, or IP, regime. This holds true for sectors from aerospace to resource development, from information technology to the innovative pharmaceutical sector.
A globally competitive IP regime supports other policy efforts as well, such as tax policy, regulatory efficiency, and investing in research capacity such as universities, hospitals, and clinicians. A key aspect for success in Canada is a predictable and reliable business climate. IP protection is key to creating this stability.
Right now, Canada has a unique opportunity to conclude the Canada-EU comprehensive economic and trade agreement, CETA, and make necessary improvements to harmonize our life sciences IP regime with European levels.
Specifically, we believe the federal government should do the following: one, create an effective right of appeal for innovators in patent invalidity proceedings—it's a simple matter of fairness; two, improve our data protection regulations from eight to 10 years, an incremental but important change; and three, implement patent term restoration, which already exists in every other OECD nation except New Zealand, Mexico, and Canada.
These improvements would make Canada's IP regime more stable and predictable.
A few weeks ago, this committee heard that there was no link between strong intellectual property and pharmaceutical research and development. We fundamentally disagree. The facts state otherwise.
In 1987, pharmaceutical investment in Canada was just $93 million. A year later, Bill C-22 improved the Patent Act, and along with amendments in Bill a few years later, here is what happened: over the ensuing 25 years, innovative pharmaceutical company investment in Canada grew from $93 million to $1.3 billion, an increase of 1,500%.
Despite an increasingly challenging and uncompetitive environment, we honoured our commitment to Canada. In fact, Rx&D members are the largest private sector investors in health research in Canada, proudly investing more than $20 billion over the last two decades.
To be fair, we acknowledge that our member investments, while averaging $1 billion every year, have declined over the past few years.
This is due in part to other countries surpassing Canada's IP regime. As a consequence, the global pool of life science investments is migrating elsewhere. Other nations, both developed and developing, can also boast of their business climates and top-flight scientific talent. In a fiercely competitive environment, Canada must keep pace. Harmonizing our IP regime to European levels will be the catalyst that helps to halt and reverse this trend.
Mr. Chair, allow me to acknowledge the IP changes that the federal government made to Canada's data protection regime in 2006. These changes played an important role to enable Hoffmann-La Roche to attract and win a $190 million investment last year. This investment will yield a new global pharmaceutical development site in Mississauga, one of six such global clinical trial sites for the Roche group, and 200 high-skilled jobs.
These changes also resulted in Rx&D members submitting 25 new medicines in Canada over the last five years, which would not have occurred without effective data protection.
As for concerns that these IP changes could impact provincial drug budgets, I would note that the provinces have every tool at their disposal today to manage them. Furthermore, Europe has stronger IP protection than Canada, yet EU countries, on average, spend less on health care as a percent of GDP compared to Canada, while benefiting from better access to innovative medicines.
Mr. Chair, you've heard a lot about intellectual property in the context of policy tools and investment levels, but I'd like to conclude by telling you what we think IP means for Canadians.
Over 75% of our investments go to clinical trials that benefit patients. Today there are more than 3,000 clinical trials under way across Canada. These trials are helping Canadians drawn from every background, region, and riding. These are your constituents.
In our Living Proof campaign, copies of which have been circulated to you this morning, Canadians are telling stories about the positive impact of innovative medicines on their lives.
Tannis Charles, 46, from Winnipeg, was the first participant in a global clinical trial for a new rheumatoid arthritis medicine, and her symptoms are now In remission.
Bill MacPhee, 50, from Fort Erie, uses our medicines daily to manage his schizophrenia, a condition he has been living with for 26 years.
Ron Hansen, 69, in Toronto, uses innovative medicines for his COPD, which is a severe respiratory condition.
Today millions of Canadians are managing diseases such as diabetes, cancer, HIV/AIDS, or hypertension, just to name a few, and they are managing them with the appropriate use of innovative medicines and vaccines.
Strong pharmaceutical IP can increase our national wealth, but it is also critical to sustain and improve our national health. In our industry, intellectual property is the cornerstone of encouraging health research. The stronger it is, the stronger will be Canada's ability to innovate and bring new therapies to improve the lives of Canadian patients.
Thank you very much. We would now be pleased to answer your questions.
Thank you very much. I appreciate having the opportunity to come and speak with you.
My name is Chris Lumb, and I'm the CEO of TEC Edmonton, which is a joint venture between the University of Alberta and the City of Edmonton. I'm speaking to you predominantly as a representative of the University of Alberta, but also as a representative of institutes and institutions that universities create.
I have a simple message, and it's based on experience. I'm going to give you the message and give you a couple of examples of why I believe it's supported.
The message is that intellectual property policy is not as important as the leadership of the institutions that manage intellectual property. Therefore, when creating legislation and policies, I would strongly suggest that you bias towards actions that support strong leadership as opposed to getting into the details of which particular IP regime is better or worse, because, if you look at the numbers and the facts, there really isn't a single better or worse IP regime.
I'm going to give you a little bit of background on TEC Edmonton and why it exists, because it's got context for this. The organization I run was created about six years ago, and it came out of three fundamental ideas.
One is that universities generate negligible revenue for intellectual property royalties, at a little over $50 million per year for all Canadian universities, versus tens of billions of research dollars of expenditure in universities overall, so it's just not material to universities. The University of Alberta recognized that some number of years ago.
Also, in many cases university intellectual property by itself is too immature and comes too early to fully commercialize.
Universities also recognize the growing importance of their role as drivers of commerce in the economy.
The University of Alberta's response to that was to partner with the City of Calgary to create a joint venture organization called TEC Edmonton, which I run. It is, at this time, pretty much unique in Canada. In one independent organization, it does four things. One, it manages the intellectual property assets of the university. Second, it's got a business advisory and accelerator service to provide advice to early-stage companies, whether they come from the university or not. Third, it runs an incubator, which serves university and non-university companies. Fourth, it carries on a variety of training and entrepreneur development activities.
What makes that unique is that most universities don't give their IP assets to an independent organization that they don't fully control. The goals in setting it up TEC Edmonton were to focus on creating more spinoffs and on licensing locally and regionally in preference to licensing internationally, on the basis that if the university could license locally, it would create more spinoffs. It wouldn't really be forgoing any licence revenue because universities don't generate very much anyway, but in the long run it would create more new economic activity in the region, and that would link the university to the region better. That was the goal.
There were a couple of good outcomes, and I'd like to highlight two of them. One is from the institutional point of view and one is from the community economic development point of view.
I'll start with the institutional. I was just invited to speak here three or four days ago, so I don't have material translated to hand out, but I'll give you the numbers, and we can get them to the committee later.
One of the measures of commercial success of universities is the creation of spinoffs that are still operational. If you look back over time, if a university created a spinoff and it died a year later, that's not really as effective as if it's still in existence over a number of years. That's a measure that is gathered by most institutions around North America.
The University of Alberta ranks in the top 10, somewhere between eight and nine, depending on the year you measure it, of all institutions in North America. There are several hundred research intensive-based institutions in North America, and the University of Alberta ranks in the top 10. In addition, the University of Toronto ranks in the top 10, and UBC ranks in the top 10 as well. Those happen to be, perhaps with the exception of McGill, the three largest research-based universities in the country: Toronto, Alberta, UBC. All three rank in the top 10 of North America for creation of sustainable spinoffs. Interestingly enough, they all have different intellectual property policies. Actually, the University of Alberta and UBC are inventor-owned. The University of Toronto is institution-owned. Waterloo, which is completely inventor-owned, with no involvement from the institution whatsoever, doesn't rank on this scale.
What it says to me is that there isn't a right answer. You can't say that institution-owned is better or inventor-owned is better. What really matters is what the leadership of the institution has done to foster a culture of commercialization within the institution. Within that, pretty much any IP regime can work. That's one of the pieces of evidence I put before you.
The second is results of an organization like TEC Edmonton, which are broader than simply university-based. We did a survey last year of 74 companies we worked with. We expected to see decent numbers in terms of growth of economic activity. Those 74 companies generated $75 million of revenue, raised $27 million in new capital, spent $17 million on R and D, and grew collectively by 25%. That compares with Industry Canada data that says that the typical growth rate of organizations as early-stage technology companies is 10%.
If our survey showed 25% and the typical growth rate is 10%, the conclusion I draw from that is that whether it's TEC Edmonton or any kind of accelerator, young companies that access support networks, such as those provided by institutions and organizations like ours, do better. They grow faster. That makes sense because they're accessing networks, financing, expertise, and all sorts of different things. It says that the role of universities to support these kinds of organizations—accelerator organizations, business support organizations, IP commercialization organizations—is very important, because it does actually make a difference.
Another interesting fact that came out of the survey is that of the job growth that we saw, which was a growth of about 25%. It went from 600 jobs to 750 jobs across these 75 companies. It was spread across a number of companies and a number of sectors. There's no one winning sector; there's no single, big company that generates all that. That, too, is consistent with data that comes from U.S. entrepreneurship studies.
There are two outcomes: one, Canadian universities in general do well; two, these support organizations do well. My conclusion, then, is that leadership matters, and the action that you can take is to support things like Tri-Council funding that fosters commercialization-type behaviours in universities.
As well—and this is perhaps a little self-serving—I believe you should consider having regional organizations such as Western Economic Diversification support tech transfer offices that behave in the way that you want to see them behave.
Good morning, Mr. Chair and committee members.
I am going to give my presentation in English, but I would be pleased to answer any questions in French, if you like.
Mr. Chairman, on behalf of Genome Canada, I'm pleased to tell you about our priorities and activities and offer some thoughts on Canada's intellectual property regime, especially in regard to the field of genomics-based research, development, and commercialization.
Genome Canada is a not-for-profit corporation dedicated to developing and applying genomics that create economic wealth and social benefit for Canadians. We work in partnership with our six regional genome centres and with government, academia, and industry. This network is the Canadian Genomics Enterprise. We invest in and manage large-scale research and translate discoveries into commercial opportunities, new technologies, applications, and solutions in key life science sectors of the economy. Those sectors include health, agriculture, environment, energy, mining, fisheries, and forestry.
We continue to consider the economic, ethical, environmental, legal, social, and other challenges and opportunities related to genomics research and development. We do this to provide understanding that speeds the acceptance and uptake of innovations into society. Since the year 2000, fulfilling our mandate has resulted in $1 billion committed by the Government of Canada. In turn, this has leveraged a further $1 billion in co-funding over the same period.
Our achievements include a strong focus on commercialization. Since our inception, more than 20 SMEs have been created or enhanced; more than 200 patent applications filed, with 52 patents issued; and more than 20 commercial licence agreements negotiated with the private sector. In all our endeavours, our funded researchers and partners are encouraged to use their best efforts to ensure intellectual property is exploited to maximize the benefits for Canada and Canadians. This means both economic and social benefits.
Considering the role of intellectual property protection in the field of genomics begins with the clear understanding of how our innovation system works.
Innovation is a process. It's a complex one and has increasingly become a collaborative venture. Its key element is translation, which is moving from idea to invention, invention to product, and from product to business. Innovation frequently involves public sector funders, university-based researchers, and private sector entrepreneurs working together in teams and consortia.
These teams often cross national boundaries and operate often in a so-called “precompetitive” modus operandi. For innovation to flourish in such a complex environment, a number of policies and practices must be in place, and intellectual property protection is one of them. Intellectual property protection always involves creating a balance between protecting the economic rights of creators and providing public access to their inventions.
In today's world, IP protection is one of the keys to innovation, which drives productivity, and as a result has become an important competitive tool between national economies. Countries with strong IP protection attract the most entrepreneurial researchers and the kinds of investments that lead to jobs, products, and markets. Countries with weaker IP regimes often see those benefits go elsewhere.
We need Canada to have a level playing field to encourage investment from elsewhere. The more level the playing field is for intellectual property protection, the more freely capital, ideas, and skilled knowledge workers will flow.
In addition, we must work harder to encourage more homegrown intellectual property development and exploitation. That's a complex undertaking involving much more than IP issues. It also touches venture capital, innovation models, risk management, and a whole lot more.
Intellectual property rights entice entrepreneurial researchers and inventors to take risks in the expectation of economic rewards in their quest to develop new drugs, better diagnostic tests, more resilient crops, and so on. In the field of genomics, where large data sets are produced and stored, the balance between sharing this data openly and protecting potential value is critical in harnessing the value of publicly funded research.
Increasingly, members of the collective research community opt to place results of their work in the public domain. This provides all interested parties with fundamental knowledge and enables others to continue research that truly can benefit the world community and improve commercial prospects.
That is the approach taken by the Structural Genomics Consortium, for example, of which Genome Canada is a foundational funder. The SGC is one of the largest-ever public-private research partnerships, representing more than 200 scientists working in labs ranging from university labs to some of the largest pharmaceutical labs in the world, all of whom openly share their early-stage results. The goal is to speed novel and effective drug discovery by identifying suitable molecular targets in a high throughput mode. The result is a new approach to intellectual property rights that allows drug makers and university scientists to share risks and reduce costs at a stage of research deemed precompetitive by the stakeholders.
In this manner, the speed of knowledge creation is maximized, and the companies involved compete further down the value chain.
Genome Canada recently published a brief entitled “Moving Beyond Commercialization: Strategies to Maximize the Economic and Social Impact of Genomics Research”. I have a few copies here if people are interested.
The authors are leading experts in intellectual property, technology transfer, and public policy. They argue that commercial success alone is inadequate to measure intangible assets such as the scientific knowledge, entrepreneurial experience, and industry collaboration that are necessary ingredients for economic growth. The point is that as important as intellectual property protection is in creating a supportive framework for genomics research and innovation, it is just one element of that framework.
To this end, we have been in ongoing discussions with the Government of Canada seeking financial support for multi-year programming. Specifically, we are seeking up front a federal commitment of $440 million to support four years of genomics-based research and development. Because of our ability to leverage federal funding through partners and transform discovery into real benefits, this would lead to a net investment for Canada of $1.2 billion in genomics research and development over the next four years. That's a 1:2 leverage of federal dollars.
This long-term, stable, effective, multi-year funding is essential to underscore Canada's commitment to an emerging bioeconomy and to show how genomics innovation can preserve and create jobs, boost productivity, and develop value-added products and markets.
Thank you, Mr. Chairman, for your attention.
Mr. Chair and honourable members, good morning, and thank you for the invitation to appear before the committee.
RIM is a proud Canadian company, founded in 1984, and our first BlackBerry was introduced in 1999, creating a whole new way to communicate. Our products spawned a global smart phone industry that is now estimated to be worth more than $200 billion annually. In addition to our Canadian headquarters in Waterloo, we have other operations and R and D facilities in various Canadian locations and across the globe.
RIM has been transitioning our company and we've been laser-focused on delivering our new BlackBerry 10 platform and associated products. We're on track to launch in the first quarter of next year and we've seen great support for our existing BlackBerry products across the globe. The momentum is strong and building for BlackBerry 10.
This past quarter, when many speculated we wouldn't, we grew our customers to 80 million users worldwide. We have a strong foundation operating in 178 countries, working closely with more than 600 telecommunication carriers. We have no debt on our books and we have a cash balance in excess of $2 billion.
With this backdrop, we are preparing to introduce the world to BlackBerry 10, an innovation that will usher in a new era of mobile communications and mobile computing. This innovation has been supported by a huge effort of more than $1.5 billion annually in R and D, spent primarily here in Canada, but also in places like the U.S., the U.K., and elsewhere.
Innovation, intellectual property, and the IP regime in Canada, but also globally, are of critical importance for our business. In these brief opening remarks, we'd like to underscore one very fundamental point: while innovation may lead to intellectual property rights such as patents and copyrights that need to be protected in a well-functioning IP regime, a solid IP regime does not necessarily lead to innovation or innovative companies or high-quality jobs. Above all, we have to keep our eye on ensuring that we foster and sustain innovative, globally competitive Canadian-based companies.
Early in our corporate history, RIM was assisted greatly by the policies of both the federal and provincial governments, whether it was IRAP, TPC funding, tax credits derived from the SR and ED program, or the provincial co-op tax incentive programs. Public sector support played a key role in our success. Our competitors also benefit from a variety of similar supports where they do their R and D, because world economies want this work and all the benefits that come with it.
We believe that Canada's key programs in support of innovation and commercialization, particularly for the ICT sector, have to be nimble to ensure that they can address changing business models and changing global economic environments.
If we were limited to recommending just one action you take forward to strengthen the foundation for innovative companies in Canada and jobs in Canada, it would be to ensure that we maintain the right competitive incentives for investing in R and D here in Canada.
There have been numerous studies on the need to see a better ROI on government support in this area, and we concur with this need. Some good initiatives have been announced to strengthen the program supports for innovative-based SMEs and to generate more venture capital funding, and we agree with those, but the job is not done, and many of our larger innovation-based companies remain concerned about the ongoing competitiveness of Canada's tax incentives and programs to attract and support R and D. The Canadian Manufacturers and Exporters and others have done a good job of highlighting these issues lately, and we recommend their recent reports to you.
First, we need to ensure that Canada fosters R and D, innovative global companies, and jobs, and then we need to support those with a strong intellectual property regime.
As an innovation-based company, RIM develops proprietary software, physical products, and services on a daily business. As a result, we have a substantial portfolio of intellectual property rights in Canada and elsewhere. We were granted approximately 6,000 mobile patents by the U.S. patent office and European patent office between 1995 and 2012. In 2010 alone, we filed for over 1,000 patents with the United States patent office and filed hundreds of patents in other international jurisdictions, including the Canadian patent office.
We view the IP system as a larger piece of the global puzzle. While the Canadian IPR system is generally well crafted, it must be balanced and supported in a manner that promotes innovation within the marketplace and guards against the kinds of abuses we've seen in other countries, where IPR often acts as an obstacle to innovation rather than a catalyst.
We also agree with others who have appeared before you that Canada can do more to adopt the best international practices for patent examination to increase patent examination quality and efficiency while reducing time to patent.
Finally, there are steps to take to leverage Canada's very substantial investments in public sector R and D.
RIM is passionate about nurturing new talent and technologies at the academic level, and we have first-hand experience in building and maintaining strategic partnerships with academic institutions globally, through support for university research and educational outreach activities.
There are several models that post-secondary institutions follow in commercialization, and of course we're particularly supportive of the University of Waterloo model, which I think you heard about previously. We can leverage our university students and turn them into the next generation of innovators. Co-op programs are a great asset in Canada. We'd love to answer questions about those and how RIM has benefited from co-op.
We believe that a federal tax credit that is offered to companies who employ co-op students could further accelerate commercialization models and an understanding of how business innovates. RIM also believes that companies should have access to, and be able to license, technology created in government laboratories and institutions. There is no value added and no opportunities if intellectual property sits on a shelf.
In conclusion, let me sum up by saying that the Canadian digital economy is reliant upon innovation and requires modern, competitive public policies, programs, and incentives. This is essential if we are to ensure further development of existing Canadian companies as well as lay the foundation for the future companies yet to be launched.
We do need a strong IP regime. While we believe that the Canadian IPR system is generally well crafted, as I noted earlier, we also see that there are opportunities to strengthen it. We are conscious of the delicacy of this task. New laws or polices that may be good for one company may harm another. A policy that is good for one industry might be harmful to another. This area is very complex, and we appreciate the committee's time in talking to us so that together we can help identify potential pitfalls.
Thank you for the opportunity to appear. We welcome your questions.
Thank you to all our witnesses for joining us today. We appreciate your taking time from your busy schedules.
For those of you who have had an opportunity to take a look at what we've been doing in this study, it's a study that we take very seriously, obviously, and it's one I believe is very important to the future of this country.
To set the stage for today's questions, Dr. Meulien and Madame Nolet, could you talk a bit about Canada specifically?
I read a lot early in the discussions, and the testimony from witnesses has been that Canada is the second place of registration for patents. I got the impression early on that from an IP development perspective, we aren't a leader, although I've heard a lot of testimony over the past month or so that maybe we're better than we've given ourselves credit for.
Could you talk to the baseline of where Canada sits globally today? We want to take patents and IP to commercialization, and obviously, Dr. Meulien, we're going beyond that now, but let's just start with taking it to commercialization.
How does Canada fare globally, and are there hurdles? As well, are we doing things right that we should be acknowledging as we complete our report?
This is a great question. I think that patents are not an end in themselves. Using patents as a measure of success of how we're doing in terms of commercializing research is not a good measure. As some people have already said, you can file a lot of patents, but if they just sit on the shelf, they're of no good to anyone.
I think the question is this: is the patent and intellectual property regime in Canada okay? It's probably okay, but we do need to make a level playing field, and I would encourage Canada to harmonize with the European system as much as it can, because I think it does in fact invite investment in terms of big companies coming in.
However, the issue I'm most interested in is how it affects the innovation piece, and that goes well beyond patents. We can have a patent, but if investment comes from the U.S. to take that intellectual property and create a company out of it, the first thing that's going to happen—and it has, and in some of our own companies that we have created—is that the company will be asked to go south of the border. We have to create an environment in which that does not happen, or happens less. There can be value in that, but it's not maximizing the value.
We need to create an innovation continuum that allows the intellectual property created in our academic institutions to remain in Canada and for Canadian companies to be created around that piece of intellectual property or, better still, to pool with others and create innovation and commercialization around that.
So how are we doing? We know that Canada has a problem with innovation. We're not creating the value, the new companies that we should be creating, and far too much of our intellectual property is going south of the border, with companies being created down there.
Now, that's a complex area for discussion, because it involves the VC mentality in Canada. We're risk-averse in Canada relative to others. Our VC community is not a specialized community; it's a generalist community. We need to change that. Also, we need to support the entrepreneur type of mentality in Canada, which is much more mature south of the border and in many other countries.
I think that patents are not an end in themselves. I think we need to look at the broader picture and nurture that innovation continuum, which currently is problematic in Canada.
Thank you very much, Mr. Chairman.
Thank you all for coming today.
Ms. Nolet, in 1987, after the Patent Act was amended to increase protection for pharmaceutical drugs, Rx&D committed to increasing its members' annual expenditures on R and D to 10% of sales revenue by 1996. According to the 2011 report of the Patented Medicine Prices Review Board, that ratio was at or above 10% between the mid-1990s and 2002. It was for maybe seven or eight years. Since then, it's fallen below 10%. It was at 6.7% in 2011.
The commitment made in 1987 was kept for a little while, but not on an ongoing basis. That's of concern, particularly when we talk about this proposal Ambassador Matthias Brinkmann talked about yesterday in Halifax. He made it very clear that for the EU, increasing patent protection from eight to 10 years is a big deal in the trade agreement being negotiated. We've heard about the costs. It would potentially cost provinces an added $2 billion per year. I don't know how much it would cost consumers across the country.
You talked about the $1.3 billion investment in R and D that it has grown to. That's important and valuable, and we want to encourage that. Of course, when you talk about $20 billion in R and D over that period, I assume that there was somewhere in excess of $200 billion in sales.
We were talking about the cost and how provinces can manage this increase in costs. You said that provinces have every tool at their disposal to manage them. Recently, in Nova Scotia, the NDP government cut spending on primary and secondary education by $200 million and made a similar cut to post-secondary education. Is that the kind of tool you're talking about that provinces have?
I heard two questions. I'll address the R and D commitment piece, and then I can go to the health piece.
For us, as we were discussing, the nature of research and development has changed in Canada. We've had this definition, as you pointed out, since 1987, but research has changed, and the type of research we do now and the type of investments we attract in Canada have changed. They're actually not captured in that definition.
We have companies like ours that bring global investments directly into the country. We have partnerships with biotechnology companies. We have venture capital, which you've heard about. We have acquisitions. We have private-public partnerships. All of these are different types of research and development that exist now and that are not captured in that definition. In fact, a vast majority of the $190 million in Mississauga I spoke to you about doesn't qualify for the SR and ED tax credit, which is what is used to measure that 10% commitment. I would also add that none of our investments in the Montreal Heart Institute qualify for the SR and ED tax credit, even though they are investments directly into this world-class academic research organization.
What I think might be interesting as you deliberate and consider intellectual property and its impact on investment is to actually look at these definitions. Look at how things are measured to ensure that we are capturing the true definition of research. Look at the true way investment is now coming into Canada, because, as you point out, it's very different from what it was in 1987.
In terms of health care and what we mean by tools, we have very good conversations when we bring our drugs to market. We go to the provinces. We submit our medicines for consideration for reimbursement. There are a number of things we consider and that we negotiate with provincial governments. Those are the tools I'm referring to.
Some provinces may have product listing agreements. Some provinces negotiate very well on criteria. For example, you have your drug, and it can do these things, but we would prefer that it come to market after you've tried this drug or only in this subset of patients. There are a number of different ways we have discussions within the health framework on these products coming through.
I would also add, and Declan may want to chime in as well, that when we're looking at what else happens around the world, I don't believe that there's any other industrialized country that uses the argument that it should weaken the IP regime to control health costs. The two usually aren't married.
There's only the possibility of giving you a subjective answer to that question, but if I had to come down on one side or the other, I would say no, we're not.
That being said, in the country we're doing a lot better than we have been doing in the past. We can all point with pride to Waterloo as an example of experiential-based learning that clearly has an effect on the approach graduates take coming out of there. There's more willingness by Waterloo graduates to start companies than there is by people who haven't worked in small entrepreneurial companies throughout their undergraduate education.
Lots of other things are being done in other parts of the country, but predominantly, I think no, we're not where we need to be. Waterloo could be an example for more of that to take place across the country.
There are lots of other experiential-based learning programs now, and that's good. There are what universities call capstone projects, projects in which fourth-year students work with industry. There are things like that. There are many programs that graduate studies schools are doing to encourage people doing graduate work to consider entrepreneurship as a career, as opposed to thinking they will be academics, because most won't be, so that's all improving.
You see it in the aggregate numbers. I spoke about some of them in terms of start-ups created by universities. They're pretty good in Canada. The numbers are very good, in fact. We don't give ourselves enough credit for that.
But can we do better? Absolutely, we can do better there.
There are two fundamental approaches in the way universities manage intellectual property, and then there is variance within the two. The two approaches are inventor-owned and institution-owned; that basically says who owns the intellectual property. Then, within them there are various gain-sharing rights that have been negotiated at each university.
Typically, in the U.S., by comparison, intellectual property is institutional. That's as a result of a federal act called the Bayh–Dole Act in the U.S. Canada is somewhat unique in having a larger percentage of inventor-owned IP policies. Within the inventor-owned category, there are different degrees of control that the institution can exert.
In some cases—for example, at Waterloo—they say, “Inventor, you do whatever you want. You don't even have to tell us; you just do whatever you want with the intellectual property. We'll help you, if you tell us and you ask for our help, but you don't have to.”
At the University of Alberta, there's a little more control. The IP is owned by the inventors. They can do what they want, but they have to tell the institution that they have it. The institution makes sure that the ownership rights are clear and so on—that they don't, for example, have a graduate student also licensing technology at the same time as his professor is, or that sort of thing.
However, I'll come back to the point I made earlier. If you look at the numbers of the created spinoffs that are sustainable, it doesn't really matter what the intellectual property policy of the university is. I know from my experience at the University of Alberta that the leadership of the university is very supportive of commercialization and speaks about it, highlights it, celebrates it, supports it when it's happening. That makes more of a difference than what the actual words in the IP policy say.
The best way to explain is through an example, as you suggested.
The first one is the Structural Genomics Consortium, which started with one pharmaceutical company joining a high-throughput technology-driven arrangement led by a Canadian researcher and linking up with the Wellcome Trust Fund, a group in Oxford University. That produces 25% of all of the protein structures available in the world, and that goes directly into a shared database.
Since then, eight pharmaceutical companies have joined this consortium, and we're now just entering phase three of its life. The interest from the pharmaceutical companies is that they get access to hundreds and thousands of things, whereas if they were just one-on-one with a research group, they would be doing 10 or 20 things. It's the scaling of what the technology can do. At scale this is incredibly productive and, as I say, is one of the most productive precompetitive research consortia in the world.
The other one, believe it or not, is in the energy sector. Four or five of the big Canadian-based oil companies have joined together in a genomics-based project, the goal of which is the remediation of tailing ponds and looking at microbial communities that live in the bitumen in the oil sands, trying to liquefy that oil and make it more easily extracted.
You can see why oil companies would think of that. It's a high-risk field. Who knows whether it's going to work or not? They believe in putting a few million bucks in there to see what the feasibility is, and they do that precompetitively, so the data is shared among everyone. Everyone has access to it, and then down the line they can be competitive. They can file their own patents based on work they would do in-house afterwards, and it's the same for the pharmaceutical companies in the Structural Genomics Consortium.
This is a model, and we can see companies doing more and more of this kind of work. It's not anti-IP, right? It's a precompetitive stage before the competition really starts, and it just speeds up the process. We know that pharmaceutical companies are struggling to get new products out the door, and sharing of data upstream will speed up that discovery process and allow them to compete down the value chain.
That's a great question. Thank you.
In general, in genomics research there's a huge amount of data being created. There's a big case at the moment in the U.S. Supreme Court around the Myriad breast cancer gene that you might have heard about, and whatever way that's going to come down, the value of actually patenting a gene these days is very low. Most of it is in the public domain anyway, and more and more is going into the public domain. That's on one end of the spectrum, if you like.
The value, though, is going to be in the particular profile or genetic test or biomarker panel that you would like to put into a test that you or somebody will make and commercialize and sell. It's that value that needs to be protected with strong intellectual property, and that's being done in the genomics arena.
We have companies that have spun out of our projects. There is one looking at cancer gene panels for colorectal cancer. That's a commercialized product. It's available around the world, and the patenting was not on individual genes, but a panel of genes that was put together in a very innovative way.
I think we have the whole spectrum of activity, but toward the commercialization end, I think it's the specific use you're going to make of a specific panel that's based on your own innovation and your own discovery that's going to be of great value.
I think they're having a huge impact.
Communitech is a good example. MaRS is a good example. TEC Edmonton is a good example. Innovate Calgary in Calgary is a good example.
They're making a difference, but keep in mind, too, that universities have many researchers doing research that is not and probably never will be commercializable, so the percentage of researchers at any given university who commercialize technology will always be low.
However, of the technologies being worked on that have the potential for being commercialized, I think there is much more awareness today than there has been, and I would say it's partially due to the organizations like the one I run.
That's only one reason. I think there are a number of other things. As I said, the awareness of senior administration at universities makes a big difference. The existence of infrastructure organizations like Genome Canada, CMC Microsystems, and Canarie make a difference because they provide shared infrastructure. As well, some of the funding that goes to them now is coming with some pressure from the federal government to focus on commercial outcomes, so that helps to make a difference.
There are a number of things coming together that are creating a stronger focus on commercialization than there was, say, 10 years ago.
That's a nice easy question.
Voices: Oh, oh!
Mr. Morgan Elliott:I'll take my cue from the chair and first of all thank you personally, in this public forum, for your ongoing support of Research In Motion. I know you're a great advocate for us, and we really appreciate it.
To that extent, too, Mr. Regan, I know you speak up for us, on our behalf, and we really do appreciate it.
You know, the members, and even the men and women of the public service, have been truly outstanding for us, in international affairs and Industry Canada, as we take on the world in our industry, so thank you very much for that. You've always been behind us.
Hopefully we'll give you reasons to be excited and to be behind us even more on November 7, when there's an event at the Château Laurier at which you can get a sneak peek at the BlackBerry 10. Certainly we hope you'll be able to attend.
I apologize for that commercial, but....
Is it a natural evolution? I don't know. It's too hard to say right now. Obviously the pendulum has swung quite far. You see all sorts of crazy class action lawsuits in the U.S., and it really is a barrier or a tool that people are using in the competitive nature of our business world. It does have an impact on the cost to consumers. It's all a matter of finding that balance, of being able to protect all of the R and D spending you do, and at the same time not making it anti-competitive—if that makes sense.
The short answer is that it's too soon to tell.
Perhaps I can speak to your questions.
In terms of the ability to patent software and the ability to patent business methods, I think every country has its own set of rules when it comes to patent eligibility. Canada is no different. There have been some rules that have been put in place.
As far as RIM is concerned, a lot of what we do is built into the software. We also build tangible things that take the form of hardware, perhaps, but half of what we do is in the software. This expression that people use of patenting software and whether that is a good thing or a bad thing, in my view, is a dangerous generalization of what software can and could be. You really have to go to the particulars of each jurisdiction to see whether the system goes too far in allowing applicants to patent software-related inventions.
In the case of RIM, we're always on the lookout to protect the innovations we come up with. As far as we're concerned, the Canadian system is good in that regard, and we don't have much to say about it.
In terms of creating a database, which I thought was your other question, I believe CIPO already has a database of patents that can be consulted. Certainly it could use some improvements to make it easier to see what's in that database, to consult it and to do perhaps more detailed searches. That would certainly help. It would also help if CIPO brought their database infrastructure up to par with what is readily available from other patent offices around the world.
I have one question, and I'll try to condense it.
Morgan, I'd be remiss if I too didn't endorse your product. I would feel that I had missed an opportunity. We'll leave that where it is.
Chris, you talked earlier about leadership as a driver. We've had the opportunity to hear from a number of different educational institutions, and I've had the opportunity personally to visit a couple of incubators. I've seen a variety of different and very exciting environments, with different compensation plans or ownership plans for IP, etc.
One of the questions that came out of that is whether, from a commercialization perspective, researchers—those working in that environment—really know whether they're going to take their product to commercialization or whether they have that opportunity. I'm just wondering about it. From a leadership perspective, you talk about leadership as the driver being as important.... I'd like to go from Chris to Pierre to Brigitte.
How do we ensure that we're maximizing our reach into these incubators and pulling the very best and the brightest out, particularly when you talk about entrepreneurialism and a lot of these other factors that I think affect whether or not we're going to have success?