Oh, sorry. All right.
To continue, then, my next question was “Why?” The reason, I believe, is that Canada suffers from IP fatigue.
There are protracted battles within the pharmaceutical industry, and the international pressure for stronger copyright enforcement has distracted policy-makers. Canada is stuck in a decades-old debate that has distorted the prism through which IP policy is viewed. As a result, it hasn't developed a comprehensive IP policy that addresses the needs of the future technology firms. Pharma research is important, but it will not be the biggest driver of jobs in this country. We need broad IP policy to support new technologies, particularly now that the boundaries are blurred between agriculture and pharma, nanotechnology and forestry, software and medicine.
I'm here to speak for some of the start-ups and small entrepreneurs with the biggest growth and job potential. The research conducted on behalf of the CIC showed that foreign companies that snap up Canadian start-ups favour those with IP assets; in fact, 66% of the IP that was sold as part of Canadian mergers and acquisitions deals between 2005 and 2009 went to firms outside this country. We have an IP leakage problem, people.
While I'm not suggesting halting foreign sales, we need to understand that if we want to build innovative companies, we need to anchor a significant portion of our IP in this country.
How do we do that? We need to look at the commercialization of technology. We know that our universities collectively have one of the worst track records in the developed world for commercializing technology. Our researchers write papers, but we can't seem to get the research off the page. Technology sits on the shelf. We have to encourage universities to work with industry to speed up the collaboration process and get ideas to market.
There are some solutions. Canadian universities should centralize technology transfer offices and create simplified legal agreements that take into account the risks that the private sector makes in commercializing invention.
The federal government can encourage this by structuring its incentive programs to reward universities that are industry-friendly and by supporting consortiums that bring industry and universities together to solve technology gaps.
We need to build capacity programs that teach entrepreneurs IP management skills. For example, we can look to Denmark's “growth houses”, which offer funding so that start-ups can perform patentability searches and subsidize the cost of filing a patent or trademark. I've heard repeated complaints from industry that university doctoral candidates are chasing technologies that have already been patented or pursuing technology that is obsolete in that it's not where the market is moving. We need to be more engaged.
Governments need to incentivize businesses to generate more patents. The CIC advocates that the federal government create a direct subsidy or make changes to the tax credit system to give entrepreneurs the option of hiring lawyers to file patents.
Canada should also establish its own public-private patent investment pool to fund patents in critical sectors. Currently institutions spend enormous amounts of time and money looking for renters who will license their technology. A patent investment fund would pool related patents and make them available for licensing on an industry-wide basis. The fund would also be in a position to purchase IP from high-tech firms that fall into bankruptcy, such as Nortel, or provide equity to entrepreneurs seeking to trade licensing rights for cash. In short, a patent investment fund would be like the amazon.com for Canadian patents.
We also advocate the creation of specialized IP courts. They already exist in some developed countries and in emerging markets such as China. Patents are being used as weapons of mass litigation, and we need to give our companies better support through the legal system.
Finally, we need a gold standard for patents. To that end, the government should improve the examination of patent applications and upgrade the Canadian Intellectual Property Office's antiquated database so that it can be searched online as easily as the U.S. archive. It should also let third parties contest an application before a patent is granted. Israel publishes applications and then weeds out the bad-apple patents by re-examining any applications that have been challenged. We should do the same.
In closing, I would argue that IP is complex and ever-changing. Wise governments undertake regular IP reviews that are conducted by independent experts. Most developed nations have carved out IP strategies, recognizing that a dynamic and carefully conceived IP policy is vital to their prosperity. Canada needs to join the race.
On behalf of the CIC, I'd like to thank you for inviting me here today, and I'm happy to take some questions later.