Industry Committee on Oct. 2nd, 2012

[Karen Mazurkewich]

It's a combination. In some cases the companies just buy our companies, take the IP back, and use it in their own firms. In other cases they buy the companies, and then the people who created and developed that intellectual property leave as well, to further develop it elsewhere.

[Ted Hsu, Liberal, Kingston and the Islands, ON]

Okay. They move into a laboratory somewhere else.

[Karen Mazurkewich]

Yes.

[Ted Hsu, Liberal, Kingston and the Islands, ON]

What are some examples of countries that are doing the opposite, that are collecting IP as opposed to leaking IP? Are there—

[Karen Mazurkewich]

Or maybe keeping IP?

[Ted Hsu, Liberal, Kingston and the Islands, ON]

Well, no. Somebody's gaining if we're losing, right?

[Karen Mazurkewich]

Yes.

[Ted Hsu, Liberal, Kingston and the Islands, ON]

Which countries are picking up IP?

[Karen Mazurkewich]

Do you mean from Canada?

[Ted Hsu, Liberal, Kingston and the Islands, ON]

Around the world, which countries are doing the opposite?

[Karen Mazurkewich]

Well, the United States, for example, is doing the opposite. They're buying a lot of companies with heavy intellectual property.

China is doing it now, more and more. There are a lot of deals being cut. They totally understand that IP is critical in developing innovation, and they're a nation that has not been strong on innovation. In the past, they've been stronger in copying, as we know, but their innovation policies have changed dramatically in the last couple of years. They're heavily buying and investing in companies that are IP-rich.

There are a lot of companies doing it. If you look at the scale of where Canada is, we're giving up more IP than we're keeping, I think, in this country.

[Ted Hsu, Liberal, Kingston and the Islands, ON]

If you look at all of, say, the OECD countries, are half of them gaining and half of them losing IP generally, or are there a couple that are grabbing a lot and the other ones are...?

[Karen Mazurkewich]

Well, what's interesting—and it's hard to explain how this is all playing out— is that when the World Bank looked at IP deficit, Canada had -4.5%, a $4.5 billion deficit, in terms of intellectual property. That's what they call the rights and rents, meaning who pays licensing. On the other hand, most of the other countries in the OECD had a positive number. That's one indicator that there is something going wrong here, and what it is exactly.

[Ted Hsu, Liberal, Kingston and the Islands, ON]

If I understand you correctly, Canada is in a small minority of OECD countries that have a deficit in IP flow.

[Karen Mazurkewich]

That's according to the World Bank. Yes.

[Ted Hsu, Liberal, Kingston and the Islands, ON]

Okay.

My last question is about the licensing process for IP at universities. Are there universities that are doing it right and whose best practices maybe can be copied?

For example, in my riding, Queen's University has PARTEQ, which has a commercialization arm and an intellectual property arm. Are there universities that are doing it better than others and that we should be looking to as examples?

[Tony Stajcer]

I think they're all different. There are some things....

What I'm suggesting is that they take an overly long time because we have to educate on what the next process is and how much investment has to go on beyond just the initial IP. I think the mechanism just takes a long time, and it looks cumbersome because you have to negotiate.

Currently, as I've said, the Mitacs program, which is a federal program, allows that collaboration to happen very quickly. It's predefined. That program can be worked with any university. I think that's an example of a good model, a good process.

Some are easier than others, but they're all different. I took four or five months to negotiate a very small contribution that I had to a university, when it was very difficult to see any value that would come out of that right up front.

It just takes different amounts of time. Apart from Mitacs, I haven't come up with a very good model. Others can correct me.

[Karen Mazurkewich]

Yes, the consortium model is good. PARTEQ is trying to do a consortium as well. I think the model is to prenegotiate some of the stuff up front so that the industry can hold on to and develop the IP, the university keeps it for research purposes, and later on, as Tony was saying, you negotiate some of the royalties.

It think this is something that every university could do and every province could encourage. This is a model that is not one-size-fits-all, but one size could be made to fit various sectors, and I think we need to encourage it.

[Tony Stajcer]

I wanted to add that in terms of the IP leaving Canada, I believe a lot of it has to do with the fact that we're still in that valley of death. We need funding, and there's a lack of available funding for the companies, so the multinationals see that opportunity to take over a company. As well, the market in the U.S.—or China, for that matter, or Europe or Germany—is much bigger, so the company sees that if it goes with this company into the U.S., it can go into a larger market and make more money.

The impediment occurs because we do not keep those incubating companies long enough. There isn't enough funding to maintain that development to get to a point where you can really see the high commercial value. We have some funding and we struggle along, and then we need to continue funding to develop that IP internally, and there's a lack of it. I think that's also partly why some of that IP leaves.

[The Chair, Conservative, David Sweet]

Thank you.

That's all the time we have for now.

Mr. Stajcer and Mr. Hsu, thank you.

Now we're going to go to five-minute rounds, and first up is Mr. Braid. You have five minutes.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Thank you, Mr. Chair.

Thank you to all of our witnesses for being here today.

Ms. Mazurkewich, on the issue of IP leakage, could you just clarify either the World Bank or the OECD stats? What time period do they cover?

I have a second part to that question: are we starting to turn this around at all, or is the situation the same today?

[Karen Mazurkewich]

They do calculations, and the World Bank does it on an annual basis. When I did my report, I believe it was in 2009 or 2010 that the number was -$4.5 billion. They continue to look at that.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Do you have a gut sense, or a more precise sense, of whether we are starting to turn this around? It's now 2012. Do you know?

[Karen Mazurkewich]

I don't think so.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Okay.

On this notion of having a senior official in government as a champion of IP, you mentioned the U.S. example and that of the U.K. Do you have a specific recommendation on what this role might look like in the Canadian context and where the position might be housed?