Science and Research Committee on April 25th, 2023

[The Clerk of the Committee, Mr. Keelan Buck]

I call the meeting to order.

Honourable members of the committee, good morning. It's nice to see everyone. I see a quorum.

I must inform members that the clerk of the committee can only receive motions for the election of the chair. The clerk cannot receive other types of motions or entertain points of order, nor can they participate in debate.

We can now proceed to the election of the chair. Pursuant to Standing Order 106(2), the chair must be a member of the government party.

I am ready to receive motions.

Go ahead, Mr. Lauzon.

[Stéphane Lauzon, Liberal, Argenteuil—La Petite-Nation, QC]

Thank you, Mr. Buck.

I would like to introduce our new committee member, Lloyd Longfield. I would also like to nominate him as chair of the committee.

[The Clerk]

It has been moved by Monsieur Lauzon that Mr. Longfield be elected as chair of the committee.

Are there any further motions?

Go ahead, Mr. Lobb.

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

Thank you very much.

This is just as a long-standing principle that I have.

I have the utmost respect for Mr. Longfield. Don't get me wrong. His riding in Guelph is very close to my riding, so there's no issue with Mr. Longfield as a chair. When or if he's elected chair, I'm sure he'll do a fantastic job.

I've always believed that the person should be nominated from the committee that they already sit on, which is this committee. I would just ask if Ms. Diab would like to have her name stand forward as the chair of the committee. I have nothing against Mr. Longfield, but Ms. Diab has been a long-standing member of this committee and has shown herself to be very good and qualified. If she would let her name stand, then I would move her as our candidate.

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

Thank you, Mr. Lobb.

I appreciate very much the confidence you have in me, but perhaps next time. I think, for today, I'm very happy and excited to have MP Longfield as chair of the committee.

[The Clerk]

The motion has been moved by Monsieur Lauzon that Mr. Longfield be elected chair of the committee.

One more time, are there any further motions?

The question is on the motion. Is it the pleasure of the committee to adopt the motion?

(Motion agreed to)

Mr. Longfield is elected chair.

[Some hon. members]

Hear, hear!

[The Chair, Liberal, Lloyd Longfield]

Thank you to the members for your vote of confidence.

Thanks to Mr. Lobb for testing the waters. It's always good to have a democratic process in these types of things.

I'm looking forward to serving as your chair. Of course, I'm filling some pretty big shoes, with Kirsty Duncan having stepped down for health reasons.

Thank you to Mr. Tochor for all of the good work that you've done in keeping the meetings going on time.

I've been reading the testimonies and the questions. It looks like an excellent committee with great questions going around the table. I look forward to hearing more of those today.

For now, I'm just going to suspend for a couple of seconds. We have a second witness who has just showed up and we'll be doing some sound checks. Give us a second or two.

Now we'll get started with the meeting. Thank you for your patience. We're starting a few minutes late.

I want to welcome you all to meeting number 39 of the House of Commons Standing Committee on Science and Research.

Today we're continuing our study on the support for commercialization of intellectual property.

I'd like to make a few comments for the benefit of the witnesses and for the members here.

Please wait until I recognize you by name before speaking. For those participating by video conference, click on your microphone icon to activate your mike, and please mute yourself when you're not speaking.

There is interpretation for those on Zoom. You do have a choice at the bottom of your screen for either floor, English or French. For those in the room, you can use the earpiece and select the desired channel.

I'll give a reminder that all comments should be addressed through the chair. For members in the room, if you wish to speak, please raise your hand. On Zoom, please use the “raise hand” function. We'll be watching for that.

The clerk and I will manage the speaking order as best we can. We appreciate your patience and understanding in this regard.

In accordance with our routine motion, I'm informing the committee that all witnesses have completed the required connection tests in advance of the meeting.

Now I'd like to welcome our witnesses. We'll be hearing from two witnesses this morning: Alain Francq, who is the director of innovation and technology for the Conference Board of Canada, and Andrew Greer, who is the managing director of Purppl.

We'll start off with Alain Francq for five minutes. Alain, the floor is yours.

[Alain Francq, Director, Innovation and Technology, The Conference Board of Canada]

Mr. Chair and honourable members of the committee, thank you for the opportunity to contribute to your study.

I am Alain Francq, director of innovation and technology at the Conference Board of Canada.

Happy World Intellectual Property Day, by the way, which is celebrated around the world tomorrow. It's very serendipitous.

I think we can all now agree that intellectual property is a critical asset and a driver of the innovation economy. It's important at the firm level. IP-backed companies are 1.6 times more likely to experience high growth, three times more likely to expand domestically, and 4.3 times more likely to expand internationally.

Innovation and IP are also important for countries, regions and communities. Those with strong innovation activity and an ability to commercialize their IP see improvements in productivity, economic growth and job creation.

Canada currently ranks 15th in the global innovation index, among 132 countries. We are considered global leaders in innovation on several measures, but we struggle to turn these advantages into commercial success and economic growth. Indeed, Canada faces considerable growth and productivity challenges. As we've heard from the OECD, Canada's real per capita GDP growth between 2007 and 2020 was less than 1%, and the country stands dead last among OECD countries in per capita growth all the way to 2060.

This week, economic growth will cost Canada more than $500 billion in lost economic potential, dollars that could be invested in innovation, health care, human capital or even growing the green economy.

To address this challenge, we need real-time measurement and analysis of our shortcomings and evidence-based recommendations to improve our performance.

We at the Conference Board actually capture our performance annually through our “How Canada Performs” series and our national “Innovation Report Card”, for which I have the most recent data in front of me here. Unfortunately, I must report that for 2022 Canada scores a “C” overall once again. We continue to score relatively well in public R and D, with a grade of “B”, and relatively strongly in entrepreneurial ambition, with a grade of “A”. We continue to lag significantly behind other OECD comparator nations, scoring a “D” in business expenditures in R and D, a “D” in labour productivity and a “D” in intellectual property. This confirms the innovation paradox is still alive and well here in Canada.

To get to the root of this problem, we recently partnered with MaRS Discovery District and 12 founding members to launch the Canadian centre for the innovation economy. In the same way that we've heard and seen an asset collective approach for IP education and support, we have built a research collective approach to provide analysis and insight to tackle the problem of our poor innovation performance.

The research agenda of the Conference Board's centre for innovation includes the role and impact of post-secondary research; commercialization and entrepreneurship on regional economies; corporate R and D innovation capability and technology adoption; Talent 4.0, which is developing the future skills workforce; and ultimately government innovation policy and funding program performance.

The first project out of the centre is on intellectual property and where Canada can punch above its weight and win globally through comparative advantage. I do have some preliminary results here, which I can share during the question-and-answer period.

We have five recommendations based on several research and experience papers we've done here. They are the following.

Number one, continue to strengthen investments in existing programs that provide IP education; access to IP intelligence experts; and enable freedom to operate and incentivize patent, trademark and industrial design filings in a very systematic way. This would be through the national IP strategy, ExploreIP, ElevateIP, IP Assist and the Innovation Asset Collective. These are good starts, but we could do more.

Number two, innovation funding programs for business, such as the innovation clusters, SIF, IRAP, the new Canada Innovation Corporation, and SR and ED, should increase the requirements and measurement of IP asset collection as an outcome. Any financial support should trace IP origin, assignment and ownership.

Number three, we should review IP rights ownership policies and technology transfer models for universities, colleges and research labs. The federal coordination and consistent provincial implementation will clarify the best models for researchers and industrial partners.

Number four, we need to prioritize different fields where technology has an absolute comparative advantage.

Number five, we need to collect and share systematic data on whether and how these research projects and business incentives generate IP. Without data or measurement, we won't have the information to make evidence-based policy decisions around IP. In the end, you get what you measure.

I'm excited for Canada, and I think we can win on the global stage by improving our ability to commercialize Canadian-made intellectual property.

Thank you, and I look forward to your questions.

[The Chair, Liberal, Lloyd Longfield]

Thank you, Mr. Francq. You're right on time.

Now we'll move to our second witness, Andrew Greer, for five minutes, please.

[Andrew Greer, Managing Director, Purppl]

Thank you, Mr. Chair and honourable members.

My name is Andrew, and for about 10 years, I've been focusing on supporting social entrepreneurs and impact leaders to address the root causes of systemic inequity. These people and organizations are working on some of the most complex and persistent problems in Canada: climate change, poverty and housing, mental health and addictions, colonization, racism, gender violence, food security and more.

I'm here today in hopes of bringing these organizations and people and their value to Canadian society into your thinking as you consider Canada's approach to focus on commercialization of IP. I think this perspective will be a bit different from what you've heard so far. Thank you for this opportunity to discuss.

I'm joining you from the unceded and unsurrendered territory of the Okanagan Syilx people in Kelowna, B.C.

I'm the managing director and co-founder at Purppl. It stands for purposeful people. We're a social enterprise. We help social entrepreneurs and impact leaders build sustainable enterprises that address these inequities. We do this by coaching the leaders of these organizations. We have about 25 active projects at any given time—50 to date so far this year—and we operate in B.C., Alberta, Ontario and Quebec.

Our clients and alumni are about 70% led by women and 80% incorporated as a non-profit. Their average size is about $1.7 million in annual revenue. Many of these are led by and serving folks who are Black, indigenous, people of colour and other racialized communities. We're also a co-owner of Thrive Impact Fund. We do direct investment into social enterprise and social purpose organizations on Vancouver Island and in the B.C. interior.

What's a social purpose organization? It's an organization with a mission to advance social and environmental objectives. They are mostly non-profits, of course. There are some private for-profit organizations, as long as they're focused on social environmental causes, and some hybrid community contribution companies like Purppl. They often have grants and donations, but they also have significant customer revenue.

They usually operate in three areas of the economy: community-based non-profits like food banks, non-profit housing providers, and sports and recreation associations. There are also business associations like chambers of commerce and critical government services like hospitals and universities.

The economic contribution of this sector is about 8.3% of Canada's GDP, or about $192 billion a year in annual economic impact, and it's growing. There are 2.4 million people employed in this sector, which is about one in 10 workers, and about 77% of those people in the sector are women. This is as large as oil and gas, forestry, agriculture and retail. Meanwhile, there's no minister in government.

Our recommendations are the following.

Include social purpose organizations and social enterprise. There's a large economic impact and a priceless social benefit.

Give social purpose organizations—SPOs—and SEs—social enterprises—a home in government so that they can be included in Canadian policy programming, budget frameworks and committees like this.

For IP, focus not just on patents. SPOs need support around contracts, licensing and legal costs, just like SMEs.

Support the leaders. They're underpaid, under-resourced and working on really hard problems. If you're going to support entrepreneurs with things like coaching and mentorship, you also need to support SPOs and social enterprises so they can expand their contribution.

In terms of community benefit, much of the value of Canada's IP accrues to private interests and a small number of shareholders. Let's consider Canada and the Canadian people as shareholders. When the government invests money in private companies and IP is developed, consider a mechanism and conditions by which the government retains royalty, shares or licensing, with the value accruing back to Canadians. If there's a sale, exit or ongoing revenue, this could be used to fund ongoing investment into social innovation and SPOs.

Accelerate impact investing. Developing IP requires significant investment, so when SPOs and SEs become investment-ready, help them. Help investors understand the unique needs of SPOs. Both support commercialization.

Measure social impact. Consider income tax revenue, employment benefit and the value of social services to Canadians for this sector. If we do that well and communicate it well, it will be very clear why SPOs need to be considered in commercialization and IP strategy.

If you want to talk, let's connect. SPOs are uniquely positioned to build a just, regenerative economy that upholds collective well-being, equity and the health of air, land and water. SPOs and social enterprises need to be included in Canadian policy, program and budget frameworks.

This is a really large movement. Let's build social impact together.

[The Chair, Liberal, Lloyd Longfield]

Thank you, Mr. Greer, for your testimony.

Now we'll move to the first round, with six minutes each, starting with Ryan Williams.

Go ahead, Mr. Williams.

[Ryan Williams, Conservative, Bay of Quinte, ON]

Thank you, Mr. Chair. Welcome to our witnesses.

I'm going to start with Mr. Greer.

Mr. Greer, we've known each other for a long time. When I was involved with an organization called QuinteVation, you were involved with the group called Accelerate Okanagan and a program called RevUP.

You knew your stuff, especially for rural innovation. You knew your stuff about scaling companies. I think what you're doing is almost IP commercialization 2.0, because social purpose organizations or, as we used to call them, social enterprises, are really focused on great things that are changing the landscape of Canada on housing, inclusivity and all the different things you mentioned. I think the biggest number that was amazing was the $192 billion of impact for Canada. That's pretty amazing.

I'm going to start with some questions for you.

Why is scaling IP not just about patents?

[Andrew Greer]

IP is not just about patents, because much innovation can't be protected by patents or it's the wrong play or wrong choice to just focus on patents. Patents are registered IP. Contracts and licences are more like protecting unregistered IP.

For a Canadian innovator like a tech company, for example, if you register a patent, it means you have to release what you're patenting. That could be dangerous. It could also be very expensive for a global innovation. It's very, very expensive to register patents globally. It makes it basically a huge barrier for a tech company.

For social innovation companies or social purpose organizations, the innovation isn't necessarily patentable. It's through process innovation, digging into different ways to deepen social impact. These things need to be protected by licensing and contracts rather than patents. Bluntly, they can't be patented. SPOs and business of all types, to be honest, need help around other parts of intellectual property protection, not just patents.

[Ryan Williams, Conservative, Bay of Quinte, ON]

Tell me a little bit about leadership development.

In my region, I have a not-for-profit organization matched with a developer, and they are building homes. They have a five-in-five plan to build 500 homes in 500 years. They need leadership development.

Tell me a little bit about why that's important.

[Andrew Greer]

It comes back to the people leading organizations, regardless of whether they are SMEs, tech companies or SPOs. It really comes back to the people leading. The social sector in general doesn't have much leadership development capacity provided by the government and the provinces.

Leaders in these organizations need help building business models. They need help building sustainability. They need help improving their operations. They need help figuring out what strategy looks like, how to measure impact and, most importantly, they need help being good leaders. It really comes back to the leadership development of the people in charge of the organizations. We can't really do innovation without good people in charge.

[Ryan Williams, Conservative, Bay of Quinte, ON]

You have a great model with Accelerate Okanagan, which is entrepreneurs-in-residence. You had mentors matched with businesses. Would you see the same thing here?

I also want to get into community benefit, talking about government retaining shares, royalty or licences with certain companies that they are involved with. How does that work with not-for-profits and social purpose organizations?

[Andrew Greer]

There are a couple of questions there.

There are lots of ways to provide mentorship and leadership development in a model like entrepreneurs-in-residence, who are essentially experienced entrepreneurs providing some long-term coaching to leaders of SPOs and tech companies.

That kind of long-term mentorship is critical. You can't really learn IP in a boot camp. You can't learn how to run a company or an organization in a boot camp or a workshop. I really think we need to invest in long-term mentorship and coaching to support these leaders who help to solve really hard, complex problems. Again, this stuff doesn't happen in a workshop or boot camp.

With regard to community benefit, there are a few different ways to think about it. I want to first say that it's not going to make sense that the government or a determining body keeps the licence, royalty or shares for every piece of IP that comes out. I think it's worth exploring some conditions when perhaps the size of investment justifies that the government or some entity keeps some value that would be held by the Canadian government and controlled by the Canadian government, but not to the detriment of the entrepreneur.

Really, if there was an acquisition, an exit or ongoing significant revenue, some of that benefit should come back to fund more intellectual property development, including social purpose organizations and a long-term social innovation strategy.

[Ryan Williams, Conservative, Bay of Quinte, ON]

That's fantastic.

This is the last question, sir. Tell us about impact investing and why that's important.

[The Chair, Liberal, Lloyd Longfield]

You have about 30 seconds.

[Andrew Greer]

Thank you for the time check.

Globally, impact investing is growing tremendously. It's growing tremendously here in Canada. Impact investing is putting direct investment into organizations that are working to solve cultural, social or environmental issues. There are unique needs. Patient capital is needed.

In lots of cases, a lower expectation of financial return on investments is needed. Lots of SPOs are incorporated as non-profits. They just can't take equity investment, and market rate returns aren't a good expectation. We need patient capital. We need values-aligned capital. We really need to educate, to bring SPOs up to investment readiness and educate investors on what they need.

[The Chair, Liberal, Lloyd Longfield]

That's great. Thank you, Mr. Greer. Thank you, Ryan.

Next up is Chad Collins, for six minutes.

[Chad Collins, Liberal, Hamilton East—Stoney Creek, ON]

Thanks, Mr. Chair.

Mr. Francq, I'll start with you.

I was interested in your third recommendation. You talked about the review of IP rights, policies and transfers related to post-secondary institution policies.

Can I ask you what role you believe the government should play in terms of improving that process and what support we can provide as it relates to the third recommendation that you provided to us?

[Alain Francq]

Yes. Thank you.

I'd like to say, first of all, that we actually looked at the economic impact of universities on regional economies. That was one of our projects. We started specifically with Ontario—

[Stéphane Lauzon, Liberal, Argenteuil—La Petite-Nation, QC]

I have a point of order, Mr. Chair.