Thank you very much for inviting me.
Good morning, ladies and gentlemen.
Because I only had two days to prepare, I didn't get to translate my brief into French. I apologize.
I'm here in my personal capacity, not as associate dean, but as a James McGill professor in both law and medicine at McGill. Not to be too immodest, I am Canada's leading independent expert on patent law, and I have a particular focus on technology transfer partnerships between the university and industry. I have advised the alphabet soup of international organizations, such as WIPO, WHO, OECD, UNITAID, as well as Canadian and provincial governments. I have given advice internationally. I've talked to basically every single political party, although I don't think I've had conversations with the Greens yet.
Most pertinent to this discussion is that I was the lead expert on the OECD counsel's recommendation on the “Guidelines for the Licensing of Genetic Inventions”. Also, I was the author of the OECD's report, “Collaborative Mechanisms for Intellectual Property Management in the Life Sciences”. I have done extensive work with the tech transfer community in Canada, the United States, and internationally.
I sent in some slides. I'm not going to talk about them because we can't see them, but I'll leave that for the staff. We all know the background. We're very good in Canada in generating ideas; what we're not so good at is transforming them into innovation. If we look at the pharmaceutical, aerospace, and electronic sectors, all sectors that we think are strong, we're actually pretty poor in terms of our exports.
If you look at the top technology firms—this is from a Pricewaterhouse study in 2015—they gain about 60% of their revenues within Canada. Given how small Canada is in the world, that is a worrisome trend. We should be exporting much more than that.
The problem is essentially one of lack of investment and infrastructure—more intellectual than physical—which comes down to a failure of innovation policy. In terms of the universities, we've been pursuing the same policies of tech transfer for 30 years. They have failed. Every time they fail, we say, let's just try harder. We try harder and it fails again. It's time for something new.
The end result is that by ignoring innovation policy and just following things that don't work, we've lacked in an ecosystem in which firms invest, develop, and export technology. The end result is that our universities create knowledge, transfer it mostly to the U.S., but also other foreign firms, and they sell it back to us. We're paying twice for the same thing and not mobilizing that knowledge.
In terms of intellectual property, Canada is in compliance with all international laws. However, we do not exercise all the flexibility that international law offers us to ensure that we're helping our local innovators. There is no credible evidence that increasing intellectual property rights will lead to domestic innovation. I have to cite the MacArthur genius award winner Heidi Williams, who concluded, “we still have essentially no credible empirical evidence on the seemingly simple question of whether stronger patent rights...encourage research investments into developing new technologies”.
My own research with Jean-Frédéric Morin at Laval suggests that IP does not cause growth; growth causes higher IP. What we need to do is think outside the box and have a made-in-Canada solution within the international scheme. In particular, our universities have to break away from what they've been doing for the last 30 years and focus less on patenting. We're bad patentors at university.
The people who get their stuff patented are inventors who complain—the squeaky wheel. There's no business planning around it. When the patents are issued or sought, they're not necessarily sought for the right things, and so most of them go nowhere except to trolls. The only people who pick them up are patent trolls who will use them against our firms. There's just no capacity within the university to think about how to do this. Instead, it's the industry that needs to patent.
Instead of having this idea that we come up with ideas, patent them, and transfer them, we need to create new forms of partnerships and leave it to the private sector to get the patents.
One of the impediments is that we have little knowledge about how to use intellectual property. As I said, we tend to look to the U.S. for mechanisms, but even there the universities do not make money, except for the top 15, and most of them don't actually lead to much innovation.
What I want to suggest in my remaining time are some models to think about.
In Montreal, we have the Montreal Neurological Institute and Hospital, recently funded in part by the federal government, the provincial government, and a $20-million gift from Larry Tanenbaum of Toronto. The idea is that all the data will be made public, and there will be no intellectual property. The advantage of that is that it brings down the cost for companies to interact with universities. The thing that I hear constantly is that it takes too much time to negotiate one-off agreements with universities.
Everybody is thinking that their little piece of IP is a lottery ticket, and they don't want to give it up. What that does is impede all but the largest companies from entering into agreements. By getting rid of intellectual property within the mandate of our research, we can allow in a whole bunch of companies. In the biotech—as is the Montreal Neurological Institute and Hospital—and life sciences, we can bring in IT companies that normally wouldn't come in because of these costs. Then we allow the firms to patent around it. If they get good ideas, products, and services, that's great. They patent it, but the university stays out.
That model, we think—and I have done some work on this that the committee will get later—should generate an ecosystem because we will get more firms involved with university research and allow the people who have the strategy to develop it.
That is one approach. There have been others. The BC Cancer Agency also has a form of openness. The Structural Genomics Consortium, based out of Toronto, has its own form. All of these have been exceedingly successful in attracting industry financing and in engaging industry. I would suggest we think more about that.
In Quebec, we have a different model with the aerospace industry through CRIAQ, whereby, within the partnership, everybody gets to use everybody else's intellectual property outside. They can license it.
All of these show that there are different ways of thinking about technology transfer that don't involve the universities necessarily getting any, instead leaving it to the private sector.
To make it effective, however, we need to build up strategic knowledge about intellectual property. We don't do a very good job. We don't educate our researchers about intellectual property. It's not Canadian intellectual property that's driving innovation; it's American and European. It's thinking about non-traditional IP, like standard-setting internationally. All of these drive innovation. We need our researchers and our firms to have a better understanding. We need more courses in this and more points of training, to the extent that we can use large collaborations like the superclusters to provide that training. That would be great.
We also need to recognize the fact that we're small in a big pool. We have to somehow bring together the intellectual property that's stretched across our country, whether through a patent pool or through a rule that when the federal government funds research that results in a patent, that patent cannot be used against Canadian firms. We have to unleash the power of charities. Our tax laws are pretty restrictive. We have to allow our charities to better invest in the sector.
Those are the types of things we need. It's not about intellectual property. We know that making universities all abide by the same rule of university-owned or inventor-owned doesn't make a difference. It's the soft stuff we need, not hard rules.
I would like to thank all members of the industry, science, and technology committee for allowing me to speak to you about facilitating technology transfer in Canada. My name is Stephen Beney, and I'm the council president of the Intellectual Property Institute of Canada, also known as IPIC.
IPIC is the professional association of patent agents, trademark agents, and lawyers practising in all areas of IP law. Our membership totals more than 1,800 individuals consisting of practitioners in law firms and patent agency firms of all sizes, in-house corporate and university IP professionals, government personnel, and academics. Our members' clients include virtually all Canadian businesses, universities, and also foreign companies that hold IP rights in Canada.
Today, I'm going to give you some of the highlights of our submission for the study, where we brought together IPIC members who work in private practice, university technology transfer offices, or TTOs, government research agencies, and large manufacturing corporations. Our purpose is to bring the perspective of these professionals involved in various aspects of technology transfer in Canada.
To begin, we define technology transfer as the process by which money invested in applied research in a university or college is transformed to produce societal benefits that may generate commercial revenue. We found four main routes by which technology transfer takes place. There's the industry-sponsored, university–college partnerships; there's the licensing of the technology to the private sector by the university or college; there's a spinoff company, where academic researchers create new companies to exploit their invention; and there's open innovation, where companies consider an external path to market, such as transferring IP rights or collaborating with partners who are better positioned to actually bring something to the market.
In support of your committee's studies on technology transfer, IPIC has six recommendations for you to consider.
First, a university's internal IP policy plays a role in the ease of commercialization of transferrable technology. Currently, universities are free to institute their own internal IP policies, a situation that has resulted in several different models. Some universities have a creator-owned IP model, others have a university-owned IP model, and some allow both or either. The lack of a systematic policy creates unnecessary barriers for commercialization. The different policies present different challenges to entities interested in technology transfer for purposes of commercialization, as they must customize their approach on an institution-by-institution basis. A clear national university internal IP policy could set out the road map for technology transfer within such institutions, facilitating negotiations of commercial IP arrangements between a university and a commercializing entity, including licensing and royalty-sharing agreements and private equity participation in academic start-ups.
IPIC recommends that, in the absence of a common internal policy of IP ownership between universities and creators, the federal and provincial governments should work together to study and propose policy options with the objective of encouraging uniformity within these common models, such that we can do that.
Second, universities have traditionally created technology transfer offices to promote and facilitate commercialization. These offices are funded by the universities themselves, and over the years they have benefited from government funding. While incentives provide the motivation to commercialize, the practices of TTOs and the commercialization models that they adopt determine the path of commercialization. In a nutshell, these practices and models determine whether a deal gets done and whether and how it will create value for the Canadian economy.
Therefore, we recommend that, to transform the range of expertise found in TTOs across Canada into a national advantage, the government should establish programs to facilitate knowledge-sharing across TTOs, including best practices in working with IP professionals.
Third, a key hurdle in university relationships with the private sector is the funding gap, the lack of funding from either government or industry to take innovations from early stage to a marketable stage. To bridge this gap, proof-of-concept centres have gained popularity with universities. These centres offer various services, including seed funding and incubator space, thus allowing inventors to test the commercial potential of their research. This is a trend worth investigating, with the caveat that providing researchers with insufficient funding is probably worse than providing no funding at all.
We recommend that the government should develop programs that help to bridge the funding gaps between academic research and market entry.
Fourth, researchers, students, institutional leaders, funding agencies, and other key players in applied research should have basic knowledge of IP concepts for the commercialization process. For example, researchers need to know that publication of their research might eliminate a possibility of patenting an invention that resulted from the research. Some may believe that freely sharing their discoveries is the best approach to solving a problem in society, and that can be fine; however, sometimes that may not be so, and the development of a commercial product would require a company to do it, and a patent for that.
So that researchers know the right information to be successful, we recommend that universities engage IP professionals in discussions and education about technology transfer best practices and IP basics. IPIC would be pleased to be involved in discussions about IP education.
Fifth, much has been written to say that the current metrics may not be sufficient to measure the performance and impact of technology transfer. For example, the Auditor General of Ontario recommended that universities develop socio-economic performance measures. To this end, we would recommend that the government work or support work on the development of relevant metrics. IP professionals would likely be involved in these discussions as well.
Finally, patent and trademark agents are at the forefront of supporting innovation in Canada. This is why we must ensure that the Patent Act and Trade-marks Act remain updated and competitive.
A current legislative gap that is relevant to technology transfer concerns is the regulatory framework for patent and trademark agents. The Canadian Intellectual Property Office, with assistance from the profession, administers a rigorous exam qualification process, but most of the hallmarks of a professional regulatory system are missing. There is no mandatory code of conduct for agents, no continuing education requirements, and no discipline process. A self-regulated body would provide all stakeholders in technology transfer with the confidence that the patent and trademark agents meet continuing education and insurance requirements, abide by a code of conduct, and are subject to a clear complaints and discipline process. We recommend that Parliament adopt legislation that would allow for the creation of a college of patent and trademark agents.
In conclusion, we have found that there are several aspects of the current technology transfer system in Canada that need to be addressed by the federal government to ensure that it's more effective and efficient. Canadian IP professionals continue to be at the front line of helping with this process, which allows for innovation and supports economic growth. We are confident that by implementing some of these recommendations from IPIC, Canada will be positioned to become one of the more innovative countries in the world.
I would like to thank you on behalf of IPIC for your continued support of our profession, and for considering the six recommendations I have presented to you today.
Hi, this is my first time here, so I brought my five copies.
I'm coming at this from a different angle. I'm coming from industry. Our consortium exists probably because companies like Nortel don't exist any more, which is quite unfortunate. I'm here on behalf of large industry members. Unfortunately, most of them are multinationals based outside of Canada, although we do have a lot of service providers, the large Canadian service providers as well.
We're a centre of excellence. We're funded by the NCE and we focus on ICT/telecom, which I would argue is the foundation of the next digital economy. You can't name any industry that is not going to have a technology component to it.
Our model is very simple from an intellectual property view. We deal a lot with small and medium enterprise. That is where the innovation comes from. I used to work for very large companies like Cisco Systems. I ran their R and D here in Ottawa for many years. I also worked for Bell Canada, and so on. When you're at these large companies, you think that you're innovating, and you are, but the bright ideas are coming from the smaller companies. In my opinion those are the ones that need their intellectual properties protected.
When they come to the table, in our model we have large multinationals that put out problem statements: we would like investment in these areas. Small companies submit a proposal that may or may not match what these companies are looking for. We bring in students and professors from universities to do a proof of concept and a commercialization exercise, and in that way we believe that this is the proper engine or, in the ICT space, this is the proper vehicle for commercialization. At least we've had some very good success.
We are going to be launching our program across Ontario, linking all of the innovation centres together. You'll see that in my slides whenever you can see them. Then we also plan to link the innovation centres across the country, as well as the superclusters and the centre of excellence. That's our long-term view and, effectively, any of the major vertical spaces—be they oil and gas, mining, energy, health care, you name it—will have an ICT component and will ride over this infrastructure.
Now, it does need to be open and to be standard spaced. That's the only solution that would make sense. From an intellectual property perspective, our model is very simple. The IP actually stays with the SME. This is agreed to. The large multinationals have very big law firms and we need to make sure that the small companies who can't afford it are protected. That is right in our mandate. It's in our proposals, so unless the SME agrees to partner, licence, or share, it stays with them. If we create something together while we're doing this proof of concept or commercialization, then we would have a discussion about where that intellectual property would lie. Right now, it's assumed that it would be joint, with equal representation from the various members.
In terms of technology transfer, we have a very interesting competition in the sense that we have industry members who compete with each another, but when they come to CENGN for the benefit of Canada, they co-operate. There are times when material cannot flow company to company, so we need to make sure that is absolutely secure. Technology transfer will happen once all the appropriate agreements had been signed, and so on.
That is our model. I know it's a very simplistic view. I'm certainly not a lawyer, but from my industry perspective, I believe innovation comes from industry. It comes from the small companies and that is where the IP needs to stay.
Thank you, Mr. Chair, and members of the committee, for your kind invitation. As a matter of fact I received an invitation from several of you, which is very encouraging.
I'm pleased to be here today to represent the Canadian Chamber of Commerce. Most of you know who we are. As the largest business organization in Canada, we have a network of over 450 local chambers of commerce in our membership. That includes boards of trade, representing over 200,000 businesses across the country. So it's businesses of all sizes and in all sectors.
A lot of those businesses aren't necessarily involved in tech transfer from the perspective that you've been listening to this morning, but there are a number of things that we might want to look at, such as what innovation actually is.
My comments to you this morning are informed by regular dialogue with these members. You've heard this before, I think, but Canada is currently ranked 15th on the World Economic Forum's global innovation index, and we've been falling behind for roughly the past decade. That was last year's number. This year's rankings come out next week, so it's too bad I couldn't have talked to you next week. I might have had a better answer for you, because the focus will be on agriculture and natural resources, which I think we're pretty good at in this country. Perhaps we'll see an improvement in the ranking.
The OECD defines innovation as the implementation of a new or significantly improved product, good, or service, or process; a new marketing method; or a new organizational method in business practices, workplace organization, or external relations. That's pretty broad. In Canada we tend to be a little narrower in our definition. We count the number of patents and we ask, what do we commercialize? Perhaps we should think a little more broadly in terms of what we mean by ”innovation” as our metrics. It might help to improve our scores if we looked a little bit beyond the traditional notion of intellectual property and find incentives for businesses to improve on their processes, as an example, to meet the needs of the 200,000 businesses out there.
That said, intellectual property is the cornerstone of the value proposition for any new venture. It's both a wealth creator and a wealth protector. As competition from other jurisdictions rises, a robust IP regime is crucial to our economy. The U.S. Chamber of Commerce—I think some of you went down to Washington recently and heard a little bit more about this—produces an intellectual property index. In that index, Canada was ranked 17th this year, just ahead of Taiwan, Malaysia, and Mexico, and just behind Israel and Poland.
The report analyzes a number of factors, including things like patent terms, and court systems and judgments, to derive a score. Then they take that score and measure it against the innovation indexes, and they found a direct correlation. Canada is an anomaly on that score—namely in terms of the relationship between innovation and IP—according to our GDP. Why is that? It's because we do pretty well in agriculture and natural resources, which are not necessarily innovation-related. There are innovation aspects to them but most of our exports are raw materials.
Weak patent protection can lead to suboptimal innovation, since the potential payoff for a private actor may be deemed insufficient for the amount of time and resources put into developing an invention. Because weak rights make it more expensive to protect inventions, firms tend to look inward to solve problems that may otherwise have been more efficiently solved by an inter-firm partnership. Patents allow employers to see the exact results of the creativity and skill of prospective employees. As well, when rights are weak, workers have trouble qualifying their value.
We're not experiencing a dearth of ideas in this country and research is well-funded by the crown, so why are we seeing other jurisdictions rise in global innovation indexes relative to Canada's position?
One of the reasons is access to capital. Start-ups tend to do quite well in seeing a first round of financing for a great new idea, but, as I think you've heard from a number of sources this morning, one of the key challenges is the sales and marketing, and the strategy for intellectual property going forward within those start-ups. Start-ups aren't always looking for an exit. Often they are looking to scale up. They just can't find the financing for that, and it's because the strategy is wrong. What ends up happening is that the start-up gets bought by a U.S. company and the U.S. company takes it on and, as you heard this morning, sells it back to us in other ways.
So we need to find a way around that.
With respect to knowledge transfer, one of the key challenges for publicly funded research is the IP ownership framework of Canadian universities. Unlike the United States, Canadian universities don't have a uniform patent policy, with both university ownership and inventor ownership models existing at different universities. For inventions, 22% of Canadian universities have university ownership policies, while inventor ownership policies are more common, making up 42%. Rarer are the joint ownership models, where technology transfer and innovation policy are for both the inventor and the university. The mandatory implementation of uniform patent ownership policies interferes with contractual freedom. IP ownership or preferred licensing terms are a prerequisite for business to participate in research projects.
Second would be the incentive structure for academics. Innovation is more likely driven by the obligation to publish in reputable journals as a means of advancement than is commercialization of products derived from research. As you heard this morning, academics aren't necessarily geared towards entrepreneurship. There are some who are very good at it, but they are the exception rather than the rule.
The questions being asked by university researchers are more often than not framed by academic curiosity rather than commercial demand. In speaking to our members, who are regularly asked to participate in these research projects, our researchers are not asking the questions business needs answered, those immediate problem-solving questions that help bring new products to market.
Third, I'll talk a bit about spin-offs and licensing. These are another method of transfer we rely on. Waterloo University is probably the only example of researcher-owned IP framework. It is the most successful research institution, but maybe we should look more to that example not just for the IP framework but as a source of human capital. Knowledge transfer comes not just from the ideas and relationships that they build, but from the interaction between business and academia. It's critical to mutual understanding. Also, I think the co-op programs, which you're seeing more universities do now, help build those relationships and trust.
Incentives for research should take into consideration the objectives for reducing the research in the first place. If the end goal is to satisfy academic curiosity, then we should forego the expectation of a commercial return. There is merit in doing research for research's sake, and funding universities is an important thing to do, but don't expect something to come out of that. If the incentives are geared towards business enterprise and commercialization of ideas, then sales and marketing should be an integral component of the research proposal, which I think is a fundamental component of the supercluster idea that's come out. That should be an integral component of the proposal, with a clear strategy to commercialization as part of a grant application.
I'll make one final note on data flows. Raw data is not treated as intellectual property in any formal sense. However, the data derived from research could produce unintended and spectacular results when analyzed outside the parameters of the original research project, and we should probably give some thought as to how data is treated as intellectual property.
With that, I will conclude, and thank you so much for your attention.
I did not submit any slides or opening comments in advance, but I am captivated by the conversation around the room, and thank you very much for the opportunity to speak to you folks.
By way of introduction we build start-up companies. We take great ideas that are often patent-protected, and we turn those into companies. Our KPIs measure investments that we secure with client companies, the revenues we generate, and how many jobs we put into this space. As everybody probably knows, Manitoba is not the biggest province in the nation, but we did manage to raise over $125 million in capital from the clients of our little operation last year. We created about 250 new technology jobs, and we generated over $35 million in revenue from concepts that were ideas three years ago. So we are starting to see the acceleration of these ideas. What I find interesting is that less than 10% of our client base is rooted in the intellectual property that comes from universities or academics. Most of the ideas we work to commercialize come from the private sector, or from individuals working on their own.
If the purpose of the committee is to understand how we can use innovation to grow Canada's commercialization and economic standing, one of the questions I would ask is for a review of the sources from which our intellectual property come from. In a regional and a national setting, if we look at the patents filed, I'd be curious to know the owners of those patents. I would argue that you could divide it into three categories: universities and academics, business, and individuals. If you were to look at the data that shows where our greatest flow of patent ideas come from, it would be very useful then to use that data to build policies to enhance their acceleration and commercialization.
I would also encourage the idea that there is more room for the private sector to work in the early stages of filing ideas and getting patents. There has been some conversation that universities should take a longer position as the ideas get formed and patented with the view of building businesses, but again I would come back to some of the comments that were objectives-based. Understand why patents or research is undertaken and the objectives of the patent, and one of the phrases that we often use is to put people to their “highest and best use”. I think that from ideation to company formation a multitude of skill sets are required to come into that process, and I would encourage the use of people and their highest and best use. It's not going to be one person or even one team that would likely be involved to make that transformation from ideation into technology that can build a company.
If I had opening suggestions to make, it would be to focus on data to make sure that we make informed decisions that are objectives-based.
I thank you for your time.
Thank you, Mr. Chair, and my thanks to our witnesses for being here virtually and at the table.
I'm going to ask a general question. The testimony was excellent today, and I'm looking forward to further submissions and further follow-up. In talking about the issue of superclusters and the whole strategy behind it, I recall that it was originally $800 million. The minister says it will be divided between three to five centres. They added an additional $150 million, so apparently now there are super-duper clusters.
Now we have people and companies that are going to be in and out of these clusters. I wonder about those situations. It's a little bit of a concern to me, in the sense that if you look at that money, it's not a whole lot when you look at the issues we have and start dividing it among five centres. You're looking at $200 million. That can get swallowed up by universities, research, and so forth.
I'm wondering whether or not the strategy with the best bang for our buck should look at medium-sized cities or smaller centres where we'd actually get a higher degree of value, almost like a greenfield project. I represent an area of the auto sector where greenfield sites are their own clusters. We don't need another acronym to describe them. You build a manufacturing plant and you have a competitive advantage to build around it and grow your business, because later on you can add components.
I'll turn it over to Mr. Gold and Mr. Ring. I'd like some general thoughts about how we protect those who don't get enclosed in the superclusters from getting washed out.
Clusters have two dimensions. One is very geographic, because we know that where we have a certain number of players, we build out from there, and it's really important for that ecosystem, but they are also nationally focused.
We are exceedingly small in Canada. I think Jim Hinton provided evidence a couple of days ago about AI. Our patents are spread out across Canada. There is no one place. If we just focused on the Vector Institute in Toronto, we would lose. It has to be pan-Canadian.
Somehow, we have to bring the patents that exist across Canada and make them available to Canadian firms. From that perspective, we can't have firms outside. I think that's the idea behind superclusters. It's not to do original research; it's to build the infrastructure that allows that sharing and common base.
We want competition within Canada, kind of like intramural sports, but when we go on the outside we want Canada's A-team, so we have to bring it together. In my mind, that's what the supercluster is about.
That doesn't negate the importance of local clusters, such as the ones you're talking about or the MNI, where we build communities that involve universities and civil society. The cheapest way to deliver benefit in mental health may not be through pharmaceutical products; it may be through social services. We have to bring together all of these actors locally to develop new solutions. To me, that's not the supercluster; that's more traditional clusters.
Thank you for the question.
If I were to repeat what I think you're asking, it's how to ensure that there are smaller centres or smaller municipalities included in this—the same as Mr. Nuttall's question.
Frankly, I share a bit of the concern that the money for superclusters will go to super-cities and it will be a drop in the bucket against current activities that are already ongoing. I view the supercluster initiative more as what a bank would do to a company, which is that it would have the money available when you don't really need it. You're looking for a 6% to 8% return, but I don't think it's going to have as powerful an impact without the stated purpose of going into smaller communities.
It's been said before that it's not the big firms that are doing a lot of research, innovation, and commercialization. The big firms, with shareholders, are looking for growth of 8% a year, and they do that through acquisition of new IP and new ideas. It's the innovation that comes from the smaller and medium-sized companies that feeds the machine. When you start looking at putting money into the superclusters around the largest centres, I think the regional places where great innovation exists will be excluded from that, for the simple function that people do business with those they know. For example, I recognize that a couple of you folks know each other by name, and I'm brand new to this because of my geographic distance.
I think there needs to be a concerted effort to look at where you can empower some of the smaller communities.
Thank you to all of you. We've had great testimony today.
Certain themes are developing, such as pooling, IP generation sources, various working models, and integration or collaboration among different superclusters. One of the things I am noticing but that, at least for me, is not coming across in a very clear manner that I can use to form my model for making recommendations, is really around what Mr. Gold talked about.
You mentioned it briefly at the tail end of your conversation, and you called it “soft stuff”. You talked about some tax credits or incentives, which goes back to funding, and some policies.
With about five and a half minutes left, can each of you give me one funding model or policy that we could use? At the end of the day, the government develops policies; the policies are focused on the direction the government wants to take, and then it uses funding to be able to advance that agenda.
If you could start with one policy that you think would make a difference in tech transfer to commercialization and the creation of jobs, as well as one funding model that would support that, what would that be?
Let's start with Mr. Gold.
Thank you very much, Mr. Chair.
Welcome to all of our guests here this morning.
We have had so much information here today, and it will be very interesting trying to work our way through it.
Mr. Gold, you mentioned that you're looking at the university model as somewhat broken. We've had 30 years of doing the same thing and wondering why we're not getting better results and, of course, that's what our major study is about. It's about how do we manage and take a look at where all the funding is? How are we getting the bang for our buck and so on? In a lot of ways it's as though we are trying to find ways to enhance what we have done already, but without looking at what the results are. That is really part of it. And then there is the discussion on having a national university policy. We understand the structure that we have in this country and how it's difficult even if you have different universities in the same province, let alone having something that's going to work at a national level.
Those are my observations. Of course, there are other things we've heard. Making sure there is better broadband for rural areas is critical, and a gigabyte for business is what is needed. But there are so many businesses out there. In our visit to the U.S, and of course in all the discussions we've had with Canadian businesses, we can't forget the smaller areas. That's where the resources are. That's where the wealth is. The people, for their wealth, are in the big cities, but if you look at what makes Canada go, it's the rest of the country. When you think about that—and the discussion is working its way to that right now—we have to think about perhaps having different tax structures or things that can help to bring in angel investors and ensure they are there to help people over the original hump that we have.
Perhaps I'll go to Mr. Gold first, then to Mr. Smith, because I know that you've talked about tax structures. Could you talk a bit about what you might see us doing from a government perspective as far as some of the different tax incentives taxes are concerned?
The most realistic patent pool is not one owned by the government. That has been done in South Korea and France. It should be industry-led, with government funding and co-funding.
I work with Power Corporation here. They're interested in doing some things in this area, whereby firms would get together, define a space, perhaps in association with a cluster, and buy patents. They would then license those patents out to any Canadian firm—it would have to be completely open—and you could do so in one of two ways. One is just to provide freedom to operate, so that eventually, if some U.S. firm were to sue them, they'd be able to countersue and tell them not to go ahead, rather than use it as an armament—that is, we transfer it to a Canadian firm and allow them to attack other firms.
The first line of defence is simply to provide Canadian firms with some defence, especially in the IT industry, where it's most important, so they can negotiate agreements.
You can also achieve a similar route through funding. When you fund large projects, you can attach a rule to the funding agencies that says they can patent, but if they patent, whenever they license the patent there must be a agreement by the licensee or the transferee that they not sue Canadian entities. You would have to define them.
What you're basically trying to say is that knowledge that the government is funding or that industry as a group is funding cannot be asserted against Canadians. That gives us room to breathe. It doesn't bring new products, but at least it gives us the opportunity to enter into the U.S. market.
The alternative of having the Canadian or provincial governments set up a pool.... I just don't think that governments are willing to put that much money into it by themselves. The safer way is to have it industry-led.
There are a number of things I have in listening to the discussions.
The first one is that when we talk about different charitable groups—I believe Mr. Longfield mentioned it as well with his observations about charities—you can have dollars that go into research that are against the national interests. We've seen that with charities and different groups that have gone after our oil and gas industries. We've seen that same type of thing happening in agriculture.
There are great ideas for setting this up. However, you have to make sure that the focus is in Canada's national interest. I think that's something we may want to keep in mind, as politicians who have to come up with policies.
Mr. Beney, you spoke about getting education out there so people understand how they can look at intellectual property and innovation—getting that literacy there. The suggestion was that we should have university people talking about this. I submit that it should be done a lot earlier than that.
I was a high school math and physics teacher. When I was teaching my calculus classes, I had professors come from universities. They'd say, “Well, your kids are going to know all they need as far as first-year calculus is concerned. What they aren't going to know is how to work together. Your classes should be set up in a collaborative way so that they're working on projects.” I think it has to start a lot earlier.
As you are talking to universities or trying to push this as far as universities are concerned, I'm wondering if you have some strategies that might enhance that.
I think if we were perfect we wouldn't be working anywhere.
Actually, there's a lot of misinformation about the Bayh-Dole Act. It only applies to a percentage of U.S. rules. It's only federally funded research that is subject to it. As to anything that comes from the state or from industry.... In fact, universities in the United States vary considerably. It's a myth that there's a uniform system in the United States. That is actually not true because most projects are funded from multiple sources.
This has been studied to death in Canada and the unanimous conclusion is that there's no point in coming up with uniform rules. It's actually not the barrier. Just as different firms have different approaches to how they think about their IP, we manage that. What you want is clarity and strategic knowledge so that when you approach a university, you know what they want to do.
As I argued before, I would get universities, to the extent possible—and you don't want to do it 100%—out of the business of patenting, leaving it to the private sector firms to do it. We want to open up the universities, but I don't think we want a Bayh-Dole Act. Frankly, I'm not sure it would pass constitutional muster. This is about the make-up of universities and would likely have to be done through the provinces, in my view, but I'm not an expert. You could attach it to federal grants. On federal grants you can specify who the owner is, but then when you have mixed funds, it's going to lead to more chaos, not less, in my view.