Science and Research Committee on March 9th, 2023

[Charles Sousa, Liberal, Mississauga—Lakeshore, ON]

Thank you, Mr. Chair.

Thank you to both witnesses for their presentations.

Ms. D'Agostino, congratulations on your accomplishments and expertise. I appreciate what you've had to say. My first round of questions is to you, and then I'll go to Mr. Gravelle.

We've talked about scaling and bringing the venture to market. We've talked a lot about IP and the commercialization of it. I understand how critical it is.

You recently mentioned the notion of that one-year deadline, which is concerning. Put yourself in the context of the government. Members of Parliament are going to ask where your money is being invested and why it's failing. That's the criticism. That so-called gatekeeper is there to protect the taxpayer. The taxpayers are saying they don't want their money invested in ventures where they don't have security or any confidence in success. That's your point. We're trying to ensure we do as much as possible to get one or two big hits. It's a problem.

When I hear about theft versus sale.... I'm trying to suggest we let go of our IP early in the stage, because we are looking for that capital and for that tolerance or appetite to invest long term. They go to private investors elsewhere, because, in Canada, we don't seem to have the socio-economic desire. Look at Nortel, for example. During their windup, all the assets and value—even Canadian-made ones—were held in IPs in the U.S. We lost a lot of potential to provide for some of those jobs and pensioners. They were lost to IP held elsewhere because that market took on that risk.

You've given us a few recommendations. University hubs should be more entrepreneurial. That's awesome. I'd love to say that's the case. How do you encourage that? How do you encourage tech personnel to look at the sectors more specifically—to look more long term, as opposed to short term? The bottom line is, when you look at the culture, that whole appetite...?

We've been at this a long time. We've been talking about the same issue for a while. Some Canadian pension companies that have those offshoots are looking at nurturing this more than the government. The government is involved, but someone has to assume that risk.

How do you encourage that?

[Giuseppina D’Agostino]

That's a great question. I think it encapsulates a lot of the points I've been making.

From a government perspective, your role is to set the tone for the country. You set the vision and policies. We say, “tone at the top”. I'm heartened, at least within Canada.... This study is a case in point. The tone in commercialization, right now, is a vibrant, dynamic and very uplifting one.

I can't remember the number of times I waited to even hear the word “IP” in the budget. In the last five or six years, there has been a flurry of activity in the government. We've seen this not only within the government of Canada but on multiple levels—within Ontario, as a case in point, and municipally. This, to me, is heartening. All of this has that visionary effect.

We also need to match that at the grassroots level.

[Charles Sousa, Liberal, Mississauga—Lakeshore, ON]

Yes, that's a good point.

I'm going to go to Mr. Gravelle. Should government be venture capitalists?

[Louis-Pierre Gravelle]

That's a billion-dollar question; isn't it?

[Charles Sousa, Liberal, Mississauga—Lakeshore, ON]

That's what's being presented before us, and some of the suggestions that are being made by our witnesses are, “Yeah, we should expand some of our taxpayer dollars to somewhat adjudicate some of these deals.” You've mentioned it too. You said that one size doesn't fit all, and that our SMEs and some of our businesses don't understand it fully. I agree with you.

Following up with Ms. D'Agostino, how do we encourage all parties in government to allow government to be a bit more of a risk-taker?

[Louis-Pierre Gravelle]

I don't know that government needs to be more of a risk-taker than it already is. The government does have programs funded through the BDC where it does assume some of the risk related to deep tech and other IP heavy companies.

What I do think, however, and you've alluded to it in your comments, is that we have a behaviour problem. If the Canadian government wants to change the behaviour of the actors, then the Canadian government should be looking at incentives that will effectively change that behaviour.

With respect to the lack of personnel or the lack of qualified personnel within the TTOs, the tech transfer offices, the government did have a program about 20 years ago where it would fund part of the salaries of those people who were experts in tech transfer, experts in intellectual property, and allowed the TTOs to have more staff.

That program was cut about 20 years ago. Maybe it would be a good idea to revisit that, because that way, you're subsidizing or helping the TTOs spread the knowledge more effectively. You're building expertise within the TTOs, so that you can have more effective tech transfer out of the universities into the hands of entrepreneurs, who can then take that IP and bring it to market.

[Charles Sousa, Liberal, Mississauga—Lakeshore, ON]

I appreciate that. My time has run out, but thank you both.

[The Vice-Chair, Conservative, Corey Tochor]

Moving on to our third round of questions, we have MP Blanchette-Joncas for six minutes.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you, Mr. Chair.

Greetings to the witnesses here with us today.

Mr. Gravelle, it's a pleasure to see you again and, of course, to welcome to you to the committee, an important one that is currently studying intellectual property.

In your address, you provided an overview of the situation and also suggested a few solutions. I have familiarized yourself with your 2022 pre-budget recommendations. Needless to say, the 2023 ones will be forthcoming.

You recommended that the government introduce the first patent program. This program was already in place in Quebec, but was discontinued. It covered the costs of initial research, establishing an intellectual property strategy, and drafting a first patent application for an invention.

Can you tell us why it would be important to reintroduce a program like that?

[Louis-Pierre Gravelle]

Once again, I think that the important thing is to change behaviour. As studies conducted by the intellectual property office of Canada and statistics Canada have shown, Canadian companies underutilize intellectual property assets in general, and patents in particular. Being able to provide a grant to an established company that would give it an incentive to show concern for intellectual property is beginning to change behaviour. We're not talking about new companies here, or emerging companies from the universities, but rather established companies.

What we've have found is that the first patent is a remarkable step forward. It's very good. However, it takes more than one patent to build an intellectual property portfolio,. It's often the second, third or fourth patent that will add an enormous amount of value to the initial intellectual property.

With that in mind, establishing a program like this would change people's behaviour, and once behaviour begins to change, it becomes easier to further encourage the use of intellectual property tools.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you.

Do you feel that the current intellectual property ecosystem in Canada is sufficiently robust and equipped to provide a structure within which companies and researchers can develop their products?

[Louis-Pierre Gravelle]

I believe some useful steps have already been taken, but many more are required. In terms of tools, programs like the recently launched ElevateIP and IP Assist are a good starting point.

I mentioned research and development tax credits earlier. My view is that failing to encourage companies to change their behaviour is a missed opportunity. At the very least, they should be required, in one way or another, to give consideration to the intellectual property issue in the work they are doing and to commercialize the intellectual property as soon as it has been defined.

The other requirement, which I mentioned earlier in my address, would be to do something about the recent patent agent privilege issue, about communication confidentiality between the client and its agents. That needs to be dealt with; the current situation can't continue for long.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you, Mr. Gravelle.

You mentioned tax credits and incentives for the commercialization of innovations. Quebec introduced a tax deduction incentive for the commercialization of innovations in 2021. It meant that all profits from an intellectual property asset covered by the program were taxed at a rate of 2% rather than 11%. This of course encourages companies to innovate in order to lower their taxes.

Do you think it would be useful for the federal government to introduce a similar measure?

[Louis-Pierre Gravelle]

That should definitely be done.

The Intellectual Property Institute of Canada has been promoting a measure like that for several years. The advantage of that kind of incentive comes downstream from an intellectual property strategy deployed at the outset. When we talk about an intellectual property taxation regime, also known as a patent box or an IP box, which is what this tax deduction incentive for the commercialization of innovations happens to be, the intellectual property assets have to exist. They have to be made available to areas where commercialization needs to be encouraged. This generally occurs a fairly long time after initial patent applications have been filed, when the innovation has become a reality.

Once again, the measure needs to fit into a continuum of measures that would truly enable companies to concentrate on innovating and protecting their innovations and the various forms of intellectual property. That's when proper commercialization on behalf of Canadian companies occurs.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you, Mr. Gravelle.

You spoke earlier about the underutilization of commercialization and it's tools because people are unfamiliar with it. Mr. Mike McLean, of the Innovation Asset Collective, attended the last committee meeting. He said that the intellectual property strategy launched by the federal government was poorly understood and not widely known.

Could you tell us more about how the government might provide information to the right people in order to establish links to intellectual property?

How should one go about improving the way innovation is commercialized? How to reach these people?

[The Vice-Chair, Conservative, Corey Tochor]

Unfortunately, I'm going to have to interrupt.

We only allowed him six seconds to answer. I know that's not enough time to give a fulsome answer.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

I'll request a written answer to my question.

Thank you.

[The Vice-Chair, Conservative, Corey Tochor]

You're welcome. We'll have a written answer to that question.

Moving on to the final six-minute spot is MP Cannings.

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

Thank you.

I'm going to turn to Professor D’Agostino with a number of questions. You said a lot, and I missed some of the details.

At the end, you said something about how we need to change the law. I'm wondering if you could expand on that—what and why?

[Giuseppina D’Agostino]

I said as tempting as it is for me to say we need to change the law. I don't think—

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

You don't think—

[Giuseppina D’Agostino]

My sense of urgency wouldn't be there. My sense of urgency is more looking at the entire socio-economic system, because with the law, it doesn't matter. Ultimately, the law has to be clear. If it is clear to the different stakeholders, the venture capitalists and the inventors, that's all we want.

If you look at Canada, within universities, we have a patchwork system. York has an inventor-centric policy, but other universities have a university-centric policy. As long as there's an awareness of what those policies are and that gives life to that context-specific approach, I think we're okay.

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

In that context, you were talking about women and indigenous participants in this process. You said that you were helping disenfranchised entrepreneurs.

I wanted to give you a chance to expand on what you've been doing, what the results have been and what we need to do to encourage it.

[Giuseppina D’Agostino]

Sure. Thank you so much for raising that.

To me, the under-represented communities, women and indigenous peoples, are the have-nots of the IP system. They're the have-nots of the patents, so when we think about having a dynamic commercialization process and system, and results for the benefit of all Canadians, they're actually not at the table, because they're not the owners of the IP. They're not filing the IP.

These figures are well documented. The Canadian intellectual property office here, the USPTO and the World Intellectual Property Organization all have studies on this. I gave a presentation to Indigenous Services Canada just last year, tabulating some of these numbers. It's pretty sad. On the heels of International Women's Day, to see that women own only 16% of patents, that's a sad day in 2023. We need to do better.

I'm doing my part, in a sense, and this is in many ways a response from the federal government. The federal government identified women and indigenous communities as two communities that need assistance, and they've done this through their programming. I was the beneficiary of that through one of the proposals I put through and my IP innovation chatbot, which is a way to automate the commercialization process to be more responsive of women and indigenous peoples who often don't have the resources—even more than just mainstream ecosystems—to ask the questions and to get the answers.

That's just one of the tools that I've done through the clinic.

As an example, one of the exciting start-ups that I helped put through the clinic is Indigenous Friends. They were essentially grad students from York University who felt very alienated. They came up with this technology and a smart app, which was then funded by the provincial government and is now being rolled out across Canada. That's just one instance.

ELLA is another group within York University that is looking specifically at women and trying to help them in their commercialization success.

There are many different examples here, but one thing that I would encourage this committee to look at is avoiding the siloing. There's a lot of money and a lot of programming being deployed to help lift these communities, but we really need a heat map to find out what is being done, to have accountability and transparency, to line up the success stories and to connect the dots.

What we want to avoid at all costs is siloing. I see it within the institution, and it can happen within Canada. It happens within the provinces and the municipalities. We all need to work together.

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

I would ask if there's a way to get the report you mentioned and held up—