Evidence of meeting #37 for Industry, Science and Technology in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was companies.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

  • Avvey Peters  Vice-President, External Relations, Communitech
  • Clément Fortin  President and Chief Executive Officer, Consortium for Research and Innovation in Aerospace in Québec
  • David Harris Kolada  Vice-President, Corporate and Market Development, Sustainable Development Technology Canada
  • Rob Annan  Director, Policy, Research and Evaluation, MITACS

9:20 a.m.

Conservative

Peter Braid Kitchener—Waterloo, ON

In Waterloo region we see an average of more than one start-up a day created. It's the highest rate in the country. These companies make it through the valley of death, and then 60% are sold to the U.S. How do we, as policy-makers, address that? How can we see that ratio come down? What role will better protection of IP in Canada play in that?

9:20 a.m.

Vice-President, External Relations, Communitech

Avvey Peters

I think IP certainly does have an important role in that. In some ways that issue is more one of access to capital, and I know there are other conversations happening about how to increase access to capital for early-stage companies.

As you're building your start-up you're trying to figure out if you can grow it to a billion-dollar company in Canada, or if you can grow it to a certain point, at which time you need to figure out what your exit strategy is. So if I am acquired by another company, my intellectual property will go to that buyer. Often that acquiring entity is not inside Canada. And that's the real risk, in our view. If we're not growing a strong enough crop of mid-sized companies, our start-ups are acquired and their assets, including the IP that they've generated, end up leaving Canada, and any commercial exploitation of that IP results in job creation somewhere else.

I don't know that it's just an IP challenge; there's certainly a large capital aspect to it. But with those two pieces together, if we can grow our companies to a larger footprint and have them anchor here, that means the job creation and the consequent productivity will happen in Canada.

9:20 a.m.

Conservative

Peter Braid Kitchener—Waterloo, ON

Excellent.

I'll turn to you, Mr. Kolada. SDTC helps with the creation of clean technology start-up companies and the growth of those companies. Are you seeing the same phenomena happen with clean tech companies in Canada, that a certain percentage reach a point and then get sold to the U.S.? What can we do about that?

9:20 a.m.

Vice-President, Corporate and Market Development, Sustainable Development Technology Canada

David Harris Kolada

Yes, it's a dynamic that we see across Canada in a variety of technology sectors, although—and I don't have statistics on this that I can quote—certainly anecdotally what we see is that in clean technology the phenomenon is a little less pronounced, for a couple of reasons. One is that typically, to get over that valley of death is an even greater effort within the clean tech sector because of the capital intensity that is required to get these technologies piloted and demonstrated so that customers start buying them, which requires a partner with industry earlier, getting that buy-in from the customers, and getting the various parts of the ecosystem involved, which is one of the things our program does at that stage.

Once they are able to get over that hump, what we do find is that there are more physical assets and there are more linkages to the different parts of the supply chain, for example. So the exit opportunities are less likely to result in removal of the IP or the employment or the assets from Canada. Regarding the percentage that is going to buyers outside of Canada, again, I don't have statistics on that. But if the technology persists and continues to be sold and developed and marketed around the world, and the jobs and the assets that have been built in Canada remain in Canada, we view that as a very positive sign. Rather than looking at the percentage of foreign ownership, we like to look at the prevalence of the Canadian-funded and Canadian-built technology that continues to be sold and deployed globally.

9:25 a.m.

Conservative

The Chair David Sweet

Thank you, Mr. Kolada and Mr. Braid.

We're now on to Madame LeBlanc, for seven minutes, please.

9:25 a.m.

NDP

Hélène LeBlanc LaSalle—Émard, QC

Good morning. Thank you for your very interesting testimonies. It fuels our discussion.

Mr. Fortin, what type of intellectual property are you developing in the aerospace industry? What challenges are you facing to develop that intellectual property? Could you give us some examples?

9:25 a.m.

President and Chief Executive Officer, Consortium for Research and Innovation in Aerospace in Québec

Clément Fortin

It is important to remember that CRIAQ is a network. For each project, there are at least two industrial partners and two research partners, in this case two universities or research centres. The project is developed within a team. On average, the projects include three or four small or large businesses, as well as three or four universities or research centres, if not more. The intellectual property that is developed is shared, but since the needs are expressed mainly by the large businesses, whereas the SMEs have access to this intellectual property at the end of the project, the results are gathered and used by the medium and large businesses, with the goal being to become more competitive on the market.

As for challenges related to intellectual property, it is always good to define things properly at the outset. That is why our intellectual property agreement enables us to lay the proper groundwork. There was no significant debate. There always is when the project is in development, but once the project is done, there aren't any problems.

Universities are first in line to request the patent. If they do not wish to, the business can. Even if the university does do it, the businesses have a licence that is free, universal and so on. So there is no debate over determining who owns the patent or intellectual property.

I'll give you a concrete example. A business recently requested a patent in relation to one of its projects. After one year, since the deadline was nearing, someone from the university called me to say that those participants would like to get the product back to eventually continue to develop it. I phoned the president of the SME, who told me that they did not intend to push the technology any further. So the university will continue to develop it.

I think it is important to specify that the relationship isn't bilateral, but multipartite. In fact, several partners share the intellectual property. An SME that is part of a project will be able to fully benefit from it, just like the large and medium businesses and all the other participants.

9:25 a.m.

NDP

Hélène LeBlanc LaSalle—Émard, QC

Thank you very much.

This approach is very much a collaborative one. Do you think that it encourages innovation more than a more closed and secret approach to intellectual property?

9:25 a.m.

President and Chief Executive Officer, Consortium for Research and Innovation in Aerospace in Québec

Clément Fortin

CRIAQ was created based on an open model of innovation. Every two years, we have a research forum, and businesses are asked to present project ideas before the whole group. We had one recently in May, and 600 people attended. The project ideas are relatively simple. At the start, there are three slides, then, afterwards, a discussion is held. People look for industrial partners and research partners. The project is developed jointly by the two parties. There are always surprises.

I'll give you a very concrete example. Two years ago, Bombardier proposed developing a new research theme on the inside of aircraft. We're talking here about interior design. At the time, we were told that no university researchers were interested in the interior design of aircraft, especially the interface between wood and polymer, in the case of corporate aircraft. There were 10 researchers. I was director of the mechanical engineering department at the École polytechnique at the time.

One day, a young researcher I knew very well came forward. He said that, while he was doing his doctorate in England, people had developed a technology for measuring the surface finish of Aston Martins, the type of car James Bond drives; they have a very fine surface finish. He suggested using that technology to measure the quantified finishes, the original finishes of Bombardier aircraft, when they leave the factory. That way, measures can be established when they come back. Bombardier would never have found that researcher and the researcher would never have found a business to promote his research.

The advantage of open innovation is that it gives rise to plenty of surprises, to partnerships that we didn't expect. At our last forum, the SMEs were strongly encouraged to put forward project ideas. Some of them did. The large businesses joined the SMEs, saying that they were going to develop this technology with them. Of course, the SMEs are well positioned to benefit greatly from these technologies.

9:30 a.m.

NDP

Hélène LeBlanc LaSalle—Émard, QC

In terms of intellectual property, do you think that this type of collaborative approach is a solution for the future? Will the businesses that use those models benefit from them in the short and long term?

9:30 a.m.

President and Chief Executive Officer, Consortium for Research and Innovation in Aerospace in Québec

Clément Fortin

We think open innovation is good only in the initial stages of technology development. More and more, we are seeing that businesses are interested in pushing this further. For example, there are projects with 3M Canada where resins will be developed. So we can get results, even in open innovation, that are very applicable and marketable.

At the same time, we are going to push that thinking more to take the research even further. There are ways to combine things and create a project architecture where the industrial fabric will benefit.

I find that surprising, but the businesses really want us to push the open innovation model further, to the point where we are almost at commercialization.

June 19th, 2012 / 9:30 a.m.

NDP

Hélène LeBlanc LaSalle—Émard, QC

Thank you very much, Mr. Fortin.

I would like to ask Harris Kolada, from Sustainable Development Technology Canada, a question about clean technologies.

One thing surprised me during your presentation. In fact, you said that Canada exports a lot of clean technology. In that case, why are we not using them here, in Canada?

9:30 a.m.

Conservative

The Chair David Sweet

As briefly as possible, please.

9:30 a.m.

Vice-President, Corporate and Market Development, Sustainable Development Technology Canada

David Harris Kolada

Yes, that's a very good question. It's hard to answer that quickly.

There's an inherent conservatism, we believe, in Canadian industry in regard to adopting technologies early—to avoid taking the risk. That's number one.

Number two—and this is being addressed by the new government program around this issue—some of the large potential adopters and deployers of technologies are governments, and there hasn't been, until recently, an organized program and funding to bring in these technologies and to be the first adopter of some of them.

But we are seeing some promising signs in that regard, and also in some of the leading companies globally that are headquartered right in Canada. We are seeing some progress there as well, but we are behind—it's true.

9:30 a.m.

NDP

Hélène LeBlanc LaSalle—Émard, QC

Thank you.