Thank you, Mr. Chair.
Thank you to the committee for the opportunity to speak today.
My name is Mike McLean. I'm the CEO of the Innovation Asset Collective, which is a not-for-profit funded by the federal government to improve the ability of Canadian companies to implement IP strategy and increase their freedom to operate. IAC is led by IP experts who help Canada's entrepreneurs and innovators develop the IP positions they need to compete on the world stage.
Canada faces an ongoing IP challenge. Despite being a nation of innovators, we remain poor owners of IP, which is the currency of today's global economy. Intangible assets, as a percentage of Canada's economy, have been shrinking since 2000. Patent applications from Canadian enterprises have declined on a per capita basis since 2005. Canada is struggling to create strategies driven by IP and data. This raises concerns about our ability to compete in the global ideas economy. The OECD shows that Canada is lagging other advanced countries, with a predicted per capita GDP growth of only 0.7% per year through 2030.
Traditional incentives to increase investment, such as lower interest rates or tax breaks, are ineffective in the knowledge-based economy as they do not account for the ownership of IP and the control of data, which is required to ensure that a firm's investments in R and D turn into new revenue.
IP and data are exclusionary assets used to limit competitors or to capture the financial benefits of innovation that come in the form of IP or data rents. You cannot commercialize what you don't own. Only companies with sufficient freedom to operate can be assured of capturing the high returns that deliver prosperity to Canada's economy. In comparison, many countries are implementing strategies to successfully commercialize innovation and build dominant IP positions that secure an unequal share of financial returns.
China recently released a 115-point plan, called the “Outline for Building a Powerful Intellectual Property Country”, which highlights the country's dedication to becoming an IP superpower. South Korea, France and Japan have each established sovereign patent funds to advance those countries' IP positions. Centralized IP resources such as those in Germany's Fraunhofer institutes and Singapore's IP Office help propel those nations to the top spots in global innovation rankings.
The Government of Canada has recognized a need for change and announced its IP strategy in 2019. This included a $30-million investment in a pilot project, which became IAC. During our time as a pilot program, IAC has gleaned valuable insights from the businesses that form our membership.
Canadian SMEs face challenges in developing self-sufficient IP positions. The first challenge is the time required to build such a position. A single patent can take four to five years to issue. Building a portfolio of rights requires a long-term investment.
A second challenge is the limited capacity of talent in Canada with the necessary expertise. The majority of IP professionals in Canada are focused on securing IP rights or litigating disputes related to those rights. Only a small minority understand the IP strategies and commercialization models that are required to create sustainable differentiation in international markets.
The final challenge is the expense. Companies with limited capital will often focus their spending on building and selling products, rather than on securing the IP needed to sustain profitable growth.
Fortunately, there are solutions to these challenges.
It is possible to build a resilient ecosystem that can improve the freedom to operate for Canadian companies until they have self-sufficient IP positions, increase the capacity for business leaders to build IP strategies and ownership positions necessary for commercial success, and help fund the consistent activity needed across the board. Investment in collective approaches rather than individual firms is part of creating this resiliency.
IAC is proud to play a role in testing and implementing some of these concepts. We are building a patent collective that will protect Canadian clean-tech companies and increase their freedom to operate as they grow and access new markets. We have also sourced IP insurance to cover costs to defend or enforce IP rights. IAC's collective model allows Canadian innovators to access much-needed IP resources and cost savings.
To continue building the capacity of Canadian innovators and entrepreneurs also requires IP education that is focused on IP strategy and building capabilities within businesses to commercialize IP. We need to build IP-savvy business leaders. Programs like those funded by ElevateIP and IRAP's IP assist, or those built by IAC or IP Ontario will move this process forward.
Complementary to IP education is access to IP funding to encourage capital-constrained innovators to consistently act to secure the IP needed to scale their businesses.
Efforts are under way at the federal, provincial and regional level to help improve Canada's IP capacity. However, the investment in these programs is extremely limited compared with the billions of dollars spent annually on innovation. These programs require funding at an increased scale and the will to sustain them over the long term in order to deliver a systemic impact on Canadian prosperity.
Coordination and collaboration across these efforts is also needed to maximize impact for Canadian companies.
Canada has some of the best talent and expertise in innovation and an enormous opportunity to advance this country's economic growth, but the window of opportunity will not be open forever. We must act quickly to establish the strategies and infrastructure that are needed to prosper in a global ideas economy.
Thank you.