Thank you very much for the opportunity to speak to the committee.
Startup Canada is a new, not-for-profit organization that works to support the interests of Canada's entrepreneurs. We believe that entrepreneurs and small businesses are the backbone of the Canadian economy and the key economic engine that drives it forward to create growth and jobs, and we want to try to accelerate that growth. To achieve this, we met with 25,000 entrepreneurs across the country from May to September of this year, and with the help of more than 250 volunteers, we conducted 30 town hall meetings and more than 100 events in every province of Canada. We listened to entrepreneurs and discussed their ambitions and their concerns. I think we heard about a good cross-section of some of the issues they had about innovation. We heard the emerging voice of quite a strong and vibrant entrepreneurial culture. They're very engaged citizens and very dedicated to economic and social progress, while at the same time wanting to contribute to their communities.
One issue they raised was the importance of ensuring fair access to government business and innovation support programs. This is the issue we'd like to discuss with the committee today: how can Canada's IP system be modified to better support innovative Canadian entrepreneurs? In this regard, I'd like to start with a few facts from the latest comprehensive data set from Stats Canada.
In 2008, the Canadian economy spent $29.5 billion on research and development. While about 55% of this R and D was conducted by the private sector, over 45% of this R and D was conducted in the public sector. Here there are three types of publicly funded institutions that contributed to this R and D output. The provinces conducted about 1% of this R and D; the federal government conducted about 9% of this R and D; and the universities conducted a remarkable 35% of this research and development. In total, the university expenditures on R and D were about $10.3 billion. Of course, this produces trained researchers and new knowledge that gets captured in research papers and intellectual property.
Now what's interesting, we think, is to ask this question: what's the value of the IP that is extracted from this investment of $10.3 billion in university R and D? Fortunately, we have an answer in a report called “The State of Science and Technology in Canada, 2012”, which was just released in September. The report has a very interesting display within it, on page 112 and table 7.3, which indicates that the total value of intellectual property earned by Canada's universities in 2008 was $53.1 million. This amounts to about half of 1% of the value of the research conducted. However, the total cost for the universities to manage this intellectual property was $51.1 million. Therefore, the net commercial value that was extracted by the universities in protecting their IP was about $2 million, and this is in relation to a research investment of $10.3 billion. Note that this amounts, then, to only one-fiftieth of 1% of the value of the research conducted. As a result, we need to ask ourselves if this university IP management structure is the best way to transfer the IP from publicly supported research into the hands of Canadian entrepreneurs and small business.
One alternative to this current problem might be to consider establishing an intellectual property cooperative for all publicly funded R and D conducted by federal governments, provincial governments, and universities—and note that this would amount to about 45% of all research being done in the country. The ownership of IP rights from the R and D conducted by these public institutions would be transferred to this IP cooperative in exchange for royalty payments every time the IP is used. Collectively, the IP would be owned by the contributing institutions, which would be the members of the cooperative. So entrepreneurs and businesses in general across the country could access the IP cooperative for non-exclusive licences for the combinations of IP they need in order to develop the technologies and companies that are important to them.
In addition, such an IP cooperative should also provide outreach services to entrepreneurs and small businesses, and here we suggest three of them.
The first is programs to educate entrepreneurs, students, and innovative businesses on the content of the IP portfolio being managed by the cooperative, including the technology trends that they can see emerging and also the opportunities for even newer technologies.
Secondly, we think regional community programs should be required to educate entrepreneurs about the risks and rewards of effective IP protection and some of the links entrepreneurs can get then into programs like IRAP or the National Research Council regional institutions that can help them develop and protect their intellectual property.
Thirdly, since most entrepreneurs and small businesses understand the need to sell into global markets, from the inception of their businesses, the IP cooperative—and this could be done perhaps in conjunction with the Canadian Intellectual Property Office—should provide entrepreneurs with community access to education models about the practices and risks of getting their products and services into emerging markets, in particular, China, India, and Brazil, and then also into the 11 countries of the Trans-Pacific Partnership free trade negotiations, for which Canada has recently been accepted as a participant.
In summary, Canadian entrepreneurs are a central force in our communities in promoting economic and social growth. Providing entrepreneurs with easier access to the IP generated from publicly funded research, we think, will help them to succeed and will reinforce the important Canadian value of collaboration.
On behalf of Startup Canada, I'd like to thank the members of the committee for your consideration.
Thank you.