Science and Research Committee on March 7th, 2023

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you.

I want to follow up on another aspect of this, and maybe it's a totally different part of the problem with IP in Canada. If you have a start-up that has IP, manages it properly, gets it registered, owns it and then goes through valley of death, maybe sometime in that journey, when it comes out, it needs to expand, so it's looking for investments. Often, especially here in Canada, and I hear about it all the time, it gets bought by a bigger company from the United States, Germany, China or wherever. I assume that IP is then lost to Canada.

Is that a part of the problem you deal with, or is that something that's going to happen anyway? What can we do about that part?

[Mike McLean]

It's going to happen until we scale Canadian tech businesses that can provide a centre of gravity for our own intellectual property. We need to have Canadian businesses large enough to be buying our own start-ups and buying intellectual property that's been developed within our universities. Until we can get our companies to scale, it's going to leak. We need to get our companies to scale. We need to put in place the infrastructure and tools so that we can help our companies protect their intellectual property, so that they can grow and so that some of them do get to scale and become that centre of gravity.

[Louis-Félix Binette]

There are many examples in Canada. Look at the Waterloo ecosystem. That was born from one company taking a lot of risk. In the public conscience, that company is not seen as a success, but look at all the repercussions of that company. First, it is still alive. It's still producing very cutting-edge technology, and look at the ecosystem and the number of entrepreneurs who have grown around it.

We will probably sell 20 companies to have one of those companies create a new meteoric impact somewhere in Canada that we can't predict. We will sell some companies. The first thing we can do is to try to delay that sale or make that sale more valuable. How can we sell it for more money so we can reinvest it here?

Then we also need to be looking at opportunities and support. Someone talked about the BDC earlier. Maybe the BDC should come in, look at a tech company and say, “How can I help you acquire IP that was developed elsewhere and bring it into your IP portfolio in Canada?” That's also a strategy.

It's a mix of things. We can try to delay, but inevitably we will sell some IP companies.

[Mike McLean]

I have one further thought based on that. BlackBerry, which you were talking about, built IP capacity in this country. If you look at the IP experts who know how to utilize IP, you see a lot of them came from that route. For those large companies that do build success, they build capacity that then spreads elsewhere.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

I would say perhaps to Mr. Williams that the reason we're doing this study is because Jim Balsillie was before us and talked about this very thing. I'll leave it there.

[The Vice-Chair, Conservative, Corey Tochor]

Thank you so much to our witnesses for appearing here today.

We will suspend briefly as we set up for our next panel.

[The Vice-Chair, Conservative, Corey Tochor]

I'd like to make a few comments for the benefit of our new witnesses.

Please wait until I recognize you by name before speaking. For those taking part by video conference, click on your microphone icon to activate your mike, and please mute yourself when you're not speaking. I'll remind everyone that comments should be addressed through the chair.

I would now like to welcome our witnesses to our committee.

We'll open with five-minute opening statements and then rounds of questioning from our different members of Parliament. For your opening statements, I will try to get your attention when you have one minute left. Please try to keep it within the five-minute block for scheduling.

Dr. Taylor, you have the floor for five minutes.

[Jeffrey Taylor, Chair, National Research Advisory Committee, Colleges and Institutes Canada]

Thank you so much.

Good morning. Before I begin, I would like to acknowledge that I am speaking with you from the traditional and unceded territory of the Algonquin Anishinabe nation.

My name is Jeff Taylor, and I am the chair of Colleges and Institutes Canada’s national research advisory committee. I'm also the associate vice-president of applied research innovation at the Nova Scotia Community College. I'm very happy to be here today. We would like to thank the Government of Canada for this opportunity to speak about how we can better support the commercialization of intellectual property.

Colleges occupy a unique position in Canada’s innovation landscape. Our members, over 140 colleges across Canada, facilitate demand-driven innovation through college-applied research. In contrast to other research conducted at post-secondary institutions such as universities, college-applied research is different in three key ways. One, the research question is generated externally, usually by a small or medium-sized business partner. Two, the research is conducted quickly, with 85% of research projects done in less than one year, and, three, of key relevance to this hearing, any intellectual property generated during the project is turned over completely to the business partner. It stays with industry. This is because colleges have a mandate to support local and regional economic development, and we think the people best placed to commercialize or exploit IP are our business partners.

We view this role played by colleges as particularly critical, given Canada’s long-standing concentration of R and D activity within the post-secondary education sector. I'll just throw some numbers at you quickly. Canada ranks 20th in the OECD for the proportion of GDP spend on R and D and it ranks fourth for the proportion of R and D conducted in the higher-education sector versus other countries. In Canada, 39% of total R and D is performed by the higher-ed sector. This contrasts to 18.7% in Germany, 23.5% in the U.K., and an OECD average of 16%.

What this means is that in Canada the post-secondary education sector is the key driver of innovation broadly and the generation of intellectual property more specifically. This means that post-secondary institutions have built strong reputations as hubs for research support, along with our associated facilities, equipment and expertise, but despite our proven model of generating IP for businesses, colleges’ impact is limited by funding. According to internal analysis, Canada’s colleges received only 2.39% of tri-council funding in 2020.

While our reach is countrywide and colleges are often the only post-secondary institutions in more rural, remote or northern communities, our funding limits our opportunities to help businesses generate new IP, iterate on existing products and explore ways to improve labour productivity. With reach to almost every Canadian community, colleges can be better leveraged to provide these supports and draw connections between businesses and other supports they may need.

I would like to offer three recommendations to you on how the Government of Canada can better support the commercialization of IP. The first is to improve support for the generation of intellectual property by enhancing funding for college-applied research. The entire college sector is united in its call for improved funding. Instead of fighting historical trends, let’s leverage the capacity we’ve built in the system to help it drive innovation for small and medium-sized enterprises.

The second is to explore funding for colleges to offer education and other wraparound supports on the importance of IP rights to businesses with whom they collaborate. The expansion of IP education and IP supports to businesses through colleges is a natural extension of their role as research support entities, although, absent funding, it is unlikely that colleges will be able to fully embrace this role.

The third is to consider more broadly the contributions colleges can make to programs oriented at improving commercialization outcomes in the post-secondary sector, like the government’s proposed Lab2Market program that's just coming online.

I'd like to thank the committee once again for this invitation to speak to you today, and I look forward to expanding on our views through questions from committee members.

Thank you.

[The Vice-Chair, Conservative, Corey Tochor]

Thank you so much for that presentation.

Now we'll go to our six-minute panel. Starting with the Conservatives, we have MP Lobb for six minutes.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Thanks very much for your presentation.

Ten years ago, Gary Goodyear was the minister of state for science and technology and our previous witness, Mr. McLean, talked about the Fraunhofer institutes and everything about this, and applied research versus basic research. At that time 10 years ago, Gary came out and said, basically, that we need to really focus on applied research, not to dismiss basic research but that we need to really double down our efforts on applied research. The colleges were very supportive of this at the time, 10 years ago. Of course, at that time, though, there was a huge critique because they said we were getting rid of basic research.

How do you balance the competing interests, let's just say? It is kind of competing interests between college research and university research or basic research. Can we do both? That's the first question. Can we do both and everybody's happy in the same sandbox?

[Jeffrey Taylor]

Thank you for your question.

Ten years ago, I worked in universities in Canada and in the U.S. University research is so essential. We have world-class universities here in Canada, and we absolutely need to rely on them to produce that basic, fundamental knowledge that we all need.

On the other end of the spectrum, though, we have businesses that are trying to answer day-to-day questions about how they can increase sales, reduce costs, derisk an equipment investment and improve a process. There's a big gap between that business pull and that fundamental, basic knowledge produced at universities. I would argue that applied research is the bridge between them. That's really where colleges live and want to thrive. I think that we can not only have both, but I think we need both. It's essential for us to have a strong, thriving economy in Canada.

I mentioned in my opening statement that colleges have 2% dedicated to them, of the overall tri-council budget. It's 140 colleges fighting over 2% of the budget. I think there are 110 universities in Canada and they have 98% of the budget. Therefore, I would kind of be alarmed to hear universities complain that they're getting boxed out of any funding.

[Ben Lobb, Conservative, Huron—Bruce, ON]

We never know who can complain about what, I guess. That's always fair to say.

Maybe you can offer a frank assessment on the next question that I want to ask you.

Are our community colleges across the country really at a teetering point right now? They're coming out of COVID. There are issues with hybrid, issues with international students, enrolment declines and students not making it through the first semester because they're not prepared.

This may be a bit beyond what we're talking about today, but in a way it isn't. We want to make sure that these students who do the research.... Are we at a critical point right now with our community colleges in Canada? Are they at risk?

[Jeffrey Taylor]

Related to the question broadly about community colleges at risk, I'd say no. Enrolment is still strong, and we still have a lot of opportunity to even grow, I would say. As the broader skills and microcredentials terminology become more commonplace for education, colleges are really able to occupy that space quite effectively and nimbly address that call to action, so I wouldn't be concerned at all about the future of colleges.

However, to answer your question related to this committee today around IP, I would be more concerned about how we're having to turn partners away due to our limited funding. Between 2020 and 2022, we had to say no to 12,000-plus partnership requests to support innovation with businesses because we just don't have the money. The receptive capacity is there. We want to do this. Every college across Canada is very connected locally to its community and wants to help start-ups and small businesses succeed, but the funding is really limiting us right now.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Okay, that's fair enough.

The federal government is going to be involved in any funding, and the provincial government likely is in there for some as well.

One of my issues has always been—and you did mention it in your statement—that whatever the outcome is, if it's positive, the business itself has the ownership of it, which is good for the business. However, the federal government is an investor, kind of like a venture cap investor in the research. The previous witness says you get it back in taxes and you get it back in this and that, but....

Is there an issue with that? I'm not saying there is, but are there any philosophical issues with governments continually pumping money in but not having any ownership of any of the benefit that comes out of it? I'm not saying it one way or another. I'm just asking the philosophical question.

[Jeffrey Taylor]

Philosophically, I'm not sure I have the best answer for this.

I think every business partner we work with is quite happy to be able to leverage some government funding support. Every project we do is with a partner, and we always require them to provide some skin in the game, so it's not just kind of a “free ride” for them.

The knowledge translation of having the IP stay with the partner is where we think it should be to get the most commercialized value out of it.

[Ben Lobb, Conservative, Huron—Bruce, ON]

I know it's probably difficult to say, but what is the average value of a research project that a college would look at?

Is it $50,000? Is it $150,000? What would it be?

[Jeffrey Taylor]

Yes, there's a spectrum, of course. A small, stage one project with a partner is typically around $25,000. As we progress and grow that relationship, we would expect to grow more and more.

Of course, we don't just work with small businesses. We also can work with large corporate entities. We would expect them to have more skin in the game and higher dollar-value projects.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Okay.

I guess I'd just say this: In southwestern Ontario where I'm from, if an agricultural manufacturer or an automotive manufacturer wanted to come in to a college and do a project, why wouldn't it just fund it itself? Why would it come begging to the federal government or the provincial government when, if it's $250,000 or $150,000, a mid-sized automotive manufacturer should be able to come up with that money? Why do they ask or why do these colleges ask the federal government for this when it maybe even slows the project down? Why is it good for the feds to come in when a business could afford to do it?

[Jeffrey Taylor]

My quick response to that question is to please visit your local college and have a tour around. You'll see tremendous facilities, equipment and expertise that your example business probably just doesn't have in-house. Is it going to go out and spend $10 million on a state-of-the-art 3D metal printer just to do a project, or is it going to go first to the college down the street that has one and do the project there? It will derisk its investment down the road. It will make it feel more reassured that the project will be successful.

We have tremendous facilities—

[The Vice-Chair, Conservative, Corey Tochor]

Thank you so much. We're out of time on this round. There will be a chance to explore this a bit more in additional rounds of questioning.

Up next is Madam Diab online.

[Lena Metlege Diab, Liberal, Halifax West, NS]

Thank you very much, Mr. Chair.

Mr. Taylor, welcome to our committee. It's wonderful to have you there. You're in person. I'm not—I'm actually celebrating the wonderful events happening on International Women's Day—but I want to welcome you there. I know that you're the associate vice-president of applied research and innovation at NSCC, and of course, you're there in your capacity as chair of the national research advisory committee at Colleges and Institutes Canada.

I just want to take it from your last comments. Of course, I have visited my local college. I know very well the Nova Scotia Community College, all the campuses and all the great work that's happening. I know that you oversee a thriving entrepreneurship, research and innovation, with international programming, engagement from industry and technology, and all kinds of strategic partnership activities.

You also ended by giving us three recommendations, but towards the end, you spoke about the government's Lab2Market initiative. That's a new one for me. I'm just going to ask you to please expand on how this program could leverage colleges. Also, after that, how do you see colleges as involved in the Canada innovation corporation? What is the role that you would envision?

[Jeffrey Taylor]

Thank you, Ms. Diab. It's so good to see you again. I remember when you were an MLA in our Nova Scotia legislature. You were briefly the minister of labour and advanced education. You always made time to come to our campuses, attend events and speak with our students. It's great to be able to work with you on this particular file today.

Those are two new programs you brought up: Lab2Market and the new Canada innovation corporation. I think not everything is figured out for those programs. They're still in the development and design phase, so I don't think we can talk about them fully yet.

If we start with Lab2Market, from what I understand, it is really meant to enable graduate students, post-doctoral fellows, people in a university lab, to get their IP out into the marketplace, to commercialize. I think there's a bit of a gap there because colleges don't have graduate students. They barely have post-doctoral fellows. It really becomes a very university-centred program very quickly.

I think it's certainly possible for colleges to grow into this space. We could certainly develop more fellowships. I can tell you—this is from your backyard, Ms. Diab—that we have a great relationship with Dalhousie University. There's one program—I believe it's a master's in computer science program—that has a co-op term. The students actually come over to our labs at NSCC and will spend their co-op working there, getting hands-on experience in trying to solve real-world problems. Then they go back and finish their work at the university. It's a chance for inspiration and collaboration to occur between institutes, all with the hope that IP will come out of it and be commercialized.

I think there's an opportunity with Lab2Market for us to think more about how colleges can play in that space. Certainly, I'll be working on it locally, and I hope that nationally we can become a little more coordinated.

With regard to your second question about the Canada innovation corporation, we have done great background work, meeting with officials as they develop their planning documents. They just launched a blueprint recently. We were so pleased to see that colleges were called out specifically in the blueprint. From what we understand, this corporation is not going to be providing direct funding to colleges and universities but will rather be business-focused. However, with the IRAP—that's the industrial research assistance program—moving over to the Canada innovation corporation, I'm confident that we'll be working together with them.

We've worked with the IRAP for years. The money flows to a business partner, but then the college research is funded by that partner. There are models there that I know will work well, and we look forward to exploring that more with the innovation corporation.

I mentioned before that, in the last two years, we turned away about 1,400 potential partnerships. I'm hoping that these new investments, both Lab2Market and the Canada innovation corporation, can help prevent that from happening more in the future.

[Lena Metlege Diab, Liberal, Halifax West, NS]

Mr. Taylor, I know the government provided an injection in budget 2021 to support and sustain college applied research as well as SME innovation. Can you expand on the value of that investment and how it supported innovation throughout the pandemic?

[Jeffrey Taylor]

Yes. Thank you for that question.

In 2021, the government generously boosted the budget for college applied research to $45 million. We very much appreciate that injection of capital. When the first call for proposals went out, there were 153 applications for $188 million, so clearly there's capacity in the sector to consume the $45 million and much more.

Part of the funding was to try to establish more collaborative research across colleges, and there was $118 million proposed to do that, but only $13 million could actually be funded.

We're so fortunate in Nova Scotia. We were able to receive one of those. We partnered with College of the North Atlantic in Newfoundland and Holland College in Prince Edward Island to look at mapping kelp beds all around the east coast of Canada, around Nova Scotia and Newfoundland. Then we harvested samples of the kelp to send over to Holland College to their culinary institute, Canada's smartest kitchen, where they actually developed neat food products out of the kelp: kelp chocolate, kelp sushi, kelp salad and all kinds of different things. Eventually, they will become products that go to markets and exports. They could develop a whole new aquaculture sector around kelp. That was a $2-million project.

These sorts of investments clearly grow the economy in so many unique ways. The sky's the limit when we get together like this.

[Lena Metlege Diab, Liberal, Halifax West, NS]

In the time remaining, can you expand a bit more on how our colleges are currently addressing the IP aspects of applied research?