Good morning, Mr. Chair, honourable members.
My name is Karna Gupta. I'm the president and CEO of ITAC, and I'm very pleased to be here on this intellectual property regime discussion. I have a personal interest because in a prior life I led Certicom, as their CEO, a small public company that had the largest patent portfolio in Canada, with 550 global patents. So the subject is very interesting.
We at ITAC speak on behalf of the Information Technology Association of Canada. We have about 350 members, 65% of which are SMEs. The topic of fostering innovation through IP is of particular interest to our constituents, given that 35% of the R and D spent in Canada is in ICT.
Having said that, there are always diverging views when you have a large membership. I'm going to comment on three specific areas: one area is on commercialization; the second is on education; and the third is on consultation.
On the commercialization side, with regard to innovation, there has been much discussion taking place within the committee about how to take ideas from a research stage across the valley of death to the commercialization stage, and how to keep that successful.
To promote the growth of ICT and IP-based firms in Canada, ITAC advocates a comprehensive government digital economy strategy. That is the underlying the framework. There is a tremendous opportunity for Canada to be the destination nation for both talent and investment. If we have a strategy to create the right conditions, innovation and entrepreneurship will happen.
The ICT industry is clearly a fast-moving and globally competitive market, and IP is a key asset in these companies. If you look at some of the recent studies done by MIT or Berkeley, you would see that 82% of the companies that have a high-value IP are backed by venture capitalists.
We understand that as a smaller market Canada is an office of the second filing for patent applications. At the same time, we need to encourage the Canadian industry to use the system. To do that, it is important that the Canadian patent process be efficient and in line with the global standards. Let me give you a couple of examples.
In Canada, the examination of patent application can be deferred up to five years after filing. The examination takes another two years. The deferral period makes it difficult for Canadian industry to assess the risk potential of infringement during this process. It's an incentive to move the production outside of Canada. In the U.S., the patents are granted in two to three years. We need to look at a shorter deferral period and ways to speed up the process overall.
Secondly, when the patents are filed in the U.S. first, Canada has a bilateral agreement to process Canadian patents faster than normal, which is typically 6 to 12 months, rather than years. We think this approach could be faster as well, and perhaps a more unified system is an option to keep pace with the globally competitive market.
Investment capital is critical to the success of the ICT industry. We have made a submission in this regard regarding the $400 million investment from the economic action plan to support the ICT industry working on patents. Again, I will draw your attention to the previous study, where today there are over 12,000 Canadian patents filed in the U.S., fewer than 5,000 in Canada.
Specifically on IP, it might also be helpful to look at ways to incent the revenue generation on patents, as in the U.K. What incentives can be provided to encourage the IP development and revenue-generating ideas? It's very important to drive the revenue generation of the patents through the commercialization phase rather than just patents for patents' sake.
On education and outreach, a number of witnesses have commented that more education on the IP regime is needed for business, and we hear this from our members as well. Stronger skills in IP management will lead to higher-quality patents and help avoid litigation. The officials from CIPO offer outreach programs, but lack time and resources. Associations like ITAC and others could help. There is an excellent opportunity to leverage existing organizations to create a broader outreach through these associations. We can be used as a portal for CIPO to take the patent issues out to the community and to the entrepreneurs themselves. It is a great way to maximize the resources we have to help Canadians and the industry.
Finally, IP is a complex field in terms of consultation. There is a balance to ensure consistency in patent evaluation decisions while at the same time adopting a forward-looking practice, one that can evolve with an industry like ours.
Ongoing consultations with the business community are the best way to stay in tune with the market, to make sure the process is predictable but up to date. This is also a good way to ensure that the Canadian system does not become overly burdened with litigation, as it is in the U.S. As such, we propose that consultations with the industry become a regular part of Canada's IP regime.
In conclusion, we believe there is an opportunity to build on Canada's IP regime by ensuring a more consultative and consistent approach in line with the global markets. At the same time, it is vital to increase our focus on the big picture. Canada needs a comprehensive strategy to encourage IP development and commercialization to truly capitalize on the opportunities at hand.
To give you some statistics, on the innovation side Canada has been rated fifth in the world in terms of pure innovation. On the commercialization side we are a laggard and we are rated as twelfth. A significant amount of work needs to be done. How do you drive patent and the IP regime to move from innovation to commercialization and to sustaining it as a business?
I'll conclude my comments. Again, I appreciate the opportunity to present in front of the committee.
Thank you, Mr. Chair.