Science and Research Committee on March 30th, 2023

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Yes, I would agree.

Now I want to shift focus a little bit and talk about under-represented communities, women and indigenous peoples, the have-nots of the IP system.

They're the have-nots of the patents. When we think about having a dynamic commercialization process and systems and results for the benefit of all Canadians, they're not at the table, because they're not the owners of the IP. They're not filing the IP.

What specific challenges do women and indigenous peoples face in the commercialization of intellectual property?

[The Vice-Chair, Conservative, Corey Tochor]

I'm sorry, Ms. Bradford, but we're 30 seconds over already. I would ask for a written response from our witnesses.

[Dr. Chad Gaffield]

Yes, I would like to provide a written response. It's a fascinating question. Thank you.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

That would be great. Thank you so much.

[The Vice-Chair, Conservative, Corey Tochor]

That's great.

I will move on to MP Blanchette-Joncas for six minutes.

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

Thank you very much, Mr. Chair.

I'm going to address you in French, the language of the minority, one of the two official languages of this country, and the language of my nation. I'm proud to speak to you in French before this important committee.

The science community was paying careful attention to the government on Tuesday when it released the 2023 budget, which I have looked at. I have it in front of me where, on page 126 of chapter 3, , it talks about modernizing Canada's research ecosystem. I went looking for various numbers—I even had to put on my glasses which, as you know, I take pride in wearing—and noticed that the budget did not mention any investment in science, Mr. Chair. Actually, there is a number, and I'll tell you what it is: zero. What makes this number amazing is the fact that you can turn it upside down and it's still zero. It's a bit like this government; you can look at it from every angle but the end result is always zero.

There are zero dollars, Mr. Chair to support Canada's science ecosystem, despite the recommendations that were made to the government in the report it commissioned, called the "Report of the Advisory Panel on the Federal Research Support System". Oddly, it was released on March 20, just a few days before the budget, just late enough to make sure there wouldn't be enough time to include its recommendations.

I'm going to tell you about the first recommendation, which was discussed by Mr. Gaffield, who is with us today. It would involve an increase of at least ten percent annually for five years to the granting councils' total base budgets.

Mr. Chair, zero plus zero is still zero. This government did not deem it appropriate to set a priority on recommendations from its own report.

The past speaks to the future: these recommendations had previously been made in the 2017 Naylor report. That was six years ago. I have a great deal of respect for the people on this committee and for the experts who gave testimony, but when the government doesn't pay attention to what is already known, it's difficult to say something new. It's hard to think of anything else.

Mr. Chair, I'd like to address this subject concretely, but I felt that this preamble would be helpful to those watching us, because the future and the development of our scientific communities depend on it.

My first questions will be for Mr. Gaffield.

Mr. Gaffield, it's a pleasure to see you again today. I'm going to read the motion I introduced to the committee today. To reassure my colleagues, my purpose is not to debate it, but simply to hear your expert opinion as representatives of universities and the U15 network. Here it is:

That, pursuant to Standing Order 108(3)(i), the committee invite the Minister of Innovation, Science and Industry to testify about the 2023‑2024 federal budget, at the latest on Thursday, April 27, 2023, and for one hour.

Mr. Gaffield, what do you think of the idea of asking Mr. Champagne, the Minister of Innovation, Science and Industry, to come here before the committee to explain why the government has completely failed to invest in research?

[Dr. Chad Gaffield]

Thank you very much for your question.

As I mentioned at the beginning of my address, I consider this committee to be the only place in Canada where serious and intense discussions are held throughout the year on the importance of research and science for Canada. Indeed, it's here that the key discussions take place. That's why am very pleased to be here, and and I can't see why people in Canada would refuse an invitation from you.

I'd like to briefly address the budget. I think that it's worth remembering that in Canada, the research granting councils were established in the 1960s and 1970s, a period during which Canada really decided that it would cease to be a colony. After World War II, our military contingent was rather substantial. We were actually beginning to think of ourselves as a full-fledged country. But in intellectual and scientific circles, we seemed to still be considered a colony.

When I began my studies at McGill University in 1969, for example, most of the professors had been educated outside of Canada. However, we established granting agencies for research as a way of signalling that in Canada, we were going to build a serious science community in support of our wish to become a strong country.

And as you know, the province of Quebec took the initiative of creating a research fund to support and complement the federal initiatives to some degree. I therefore think that the link between a solid scientific foundation and a country's capacity to be strong and properly protected in today's world is very important.

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

Thank you for your comments Mr. Gaffield.

[The Vice-Chair, Conservative, Corey Tochor]

I'm sorry; we are out of time on this round.

Moving on to our next round, we have MP Cannings for six minutes.

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

Thank you to all the witnesses here today with us.

I'd like to start with Mr. Balsillie.

In your presentation, in a brief conversation before the committee and in the material you presented, it's clear you feel that the critical, essential piece here is that upstream appropriation of intellectual property.

I come from a science background where science is based on knowledge. Mr. Gaffield mentioned this, too, I think. Knowledge isn't even considered real knowledge until it's verified and publicly known. There's sort of a tension there, I think. I guess I'd like you to comment on that.

We heard that most of our IP activity seems to be coming from universities. You could comment on that in general, but in particular, maybe I'll give you a chance to go over again what you said about what the federal government can do to make sure that upstream appropriation—especially in the university context and the science context—is up to par with the rest of the world.

[Jim Balsillie]

Sure. Thank you, sir, for the question.

There is no tension between those two things. You simply file provisionals for the patents when you're publishing. That's what other nations do. It's quite inexpensive. They do it in an organized, systematic, expert fashion. There is no problem doing that, but we just don't do it.

I'd like to quickly talk about open science.

We misconstrue open science, because you cannot make something open that you don't own. If you invent the time machine but you don't patent it, the person who creates the door handle for the time machine owns the time machine. If you invent the time machine and say, “Now I give that as open”, you have to own it before you can say it's open. Open science has a very active appropriation structure before you avail it.

In terms of the recommendations I made, they're very simple. You create collectives that have broad, upstream.... When you file the provisional, who does it and who manages its 10 years of filing? We have no system for doing that. We have no funding, we have no training and we have no institutional apparatus, and the rest of the world does.

All of my comments are around creating an expert zone that has the stewardship function, including the filing, the staying with it, the licensing and the education. The only thing I would encourage your committee to study very quickly is the data-driven economy and data trusts, and the interrelationship between IP, data, algorithms and all of that. I've given you some of the IP filings on algorithms.

Basically, all I'm saying is to take an organized, institutional approach to manage the appropriation and the education of the appropriation, and then I say also do that with data. This is very small money. It's an orientation.

I chaired a panel on this for the Government of Ontario. Every leading innovation economy has been doing this for decades.

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

Are there provinces in Canada that are doing better? What kind of structure would this federal government action have? Would it be an agency? Would it be a Crown corporation?

How would that look, or is it just an idea?

[Jim Balsillie]

I think it's a mixture of agency and policies. The gentleman from Axelys talked about how in the U.S. and other places, when you take government money, the IP is immediately assigned to the federal government, as it is in places like Germany. That's a case in which you have a policy at a granting agency so that you've created some appropriation.

I think you naturally have to have an agency, as Ontario has and other provinces are working on, to steward the asset in an expert fashion, as well as provide complementary services. Places like South Korea, Taiwan, Singapore, Germany, the U.S., Israel and Scandinavia all provide these kinds of services with an expert zone, because small mistakes cause the whole thing to leak out.

It's an unfair system. I say in the tangible economy, if you get it 90% right, you get 90% of the benefits. In the intangible economy, if you get it 90% right, you get 10% of the benefits. It has non-linear leaking structures. That's why it needs to be very technically attended to.

[The Vice-Chair, Conservative, Corey Tochor]

You have 50 seconds left.

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

I'll turn to Mr. Gaffield and ask more or less the same question.

We talked about how important universities are. How are universities doing in this field?

[Dr. Chad Gaffield]

As was described, they are now being expected or asked to do all those things, so they've developed offices and so on. It's on an institutional basis in most cases. It's not organized at a larger level. It's not done in the way that is being proposed here.

I like to think that universities have really done gymnastics to make this work. Can we do better? In the 21st century, I think we're asking that about absolutely everything we do. My sense, at least, is that this is going to be an important debate as we move forward and try to update all our institutions for this new economy and society.

[The Vice-Chair, Conservative, Corey Tochor]

Thank you so much.

As a quick reminder, I'll do my best not to cut off witnesses, but I will cut off MPs if they go over their time.

Moving on to the five-minute round, we have MP Mazier. The floor is yours.

[Dan Mazier, Conservative, Dauphin—Swan River—Neepawa, MB]

Thank you, Mr. Chair.

Mr. Balsillie, I think most Canadians are proud of what BlackBerry accomplished, and I thank you very much for that. It was a true Canada success story.

I wonder what Canada can do differently to create and retain a company like BlackBerry. You've touched on it in many different ways, I think. What's the one thing we can go forward with here, as legislators? What is the one thing you want to stand out in this report?

[Jim Balsillie]

The one thing I want to say is that 92% of the value of the Standard and Poor's 500 is now intangible assets, up from 17% in the middle to late seventies. The game has changed from supply chains to value chains. You can appreciate how maniacally predatory and competitive the positions on value chains are, and how they can move non-linearly. The most elite expert SWAT teams, highly trained and aligned all through their system, are focused on the upstream appropriation game. If you don't appropriate up front, you have nothing to commercialize, and then your companies have nothing to sell or grow.

I think Canada has all the ingredients to create multiple $100-billion companies in the intangibles economy. That's why it's such a shame. Then, when you make that money, you can turn it right back to the universities and get that flywheel going like crazy.

My one message is that upstream appropriation structure in a maniacally predatory mercantilist game is what we are missing in our policy and institutional architecture.

[Dan Mazier, Conservative, Dauphin—Swan River—Neepawa, MB]

That advice neatly segues into my next question: When it comes to developing and retaining IP at Canadian universities, what are we doing right and what are we doing wrong?

[Jim Balsillie]

I chaired a panel on this.

Germany is always at the top of the rankings. I'll give you an example: the Fraunhofer Institute. They have 74 research institutions, 30,000 employees and one TTO, tech transfer office. Ontario is a small fraction of the size of Fraunhofer, but it has 35 TTOs. That's between about two and three orders of magnitude of fragmentation.

When Mr. Gaffield talks about these TTOs at the universities, they can't be at the scale you need in this. It's a structure problem. They are put in an impossible situation. How can you compete against an institutional apparatus that has orders of magnitude more scale than you do and national alignment from the funding agencies?

[Dan Mazier, Conservative, Dauphin—Swan River—Neepawa, MB]

As far as the scale goes, would it require regulation changes or [Inaudible—Editor] different changes?

[Jim Balsillie]

I think you basically say, at a national level, that we take some stewardship here, through some kind of agency, which was the earlier question. Is this a job universities really want, or one they were forced to take?

We did consultation with 170 or 180 different organizations and all the universities. Managing TTOs is not a satisfying exercise for anybody, because everybody knows it's not a structure that's going to work. It's Einstein's definition of insanity: doing the same thing over and over again and expecting a different outcome.

I think they inherited a structural problem. Our report basically said, “Let's evolve to something that's got some form of resource. Let the TTOs exist, but take them out of the aspects of the job they don't like. We provide services, education and patent pooling. If you want to knock yourself out in this job, go ahead.” However, we found most of them want out of the job.

It's not a penalizing system; it's a system to allow them to migrate out of something they don't want to do but still let them do the education and research and preserve the downstream possibility of commercialization for the benefit of Canada.

I think it's an elegant evolution of a system we have.

[Dan Mazier, Conservative, Dauphin—Swan River—Neepawa, MB]

Okay, thank you.

Dr. Gaffield, how many of the 15 universities that you represent continue to work with Huawei, in any form, after CSIS cautioned against it?

[Dr. Chad Gaffield]

As you know, we're living in a rapidly changing geopolitical context, which I mentioned earlier. Some years ago, that context was very different—and seen as very different—from the one we are in now. All our universities are in the process of transitioning in fundamental ways. As you know—