Like a Moth to the Flame: Attract Corporations and IP Will Come

Like a Moth to the Flame: Attract Corporations and IP Will Come

Androu Waheeb is a 3L JD Candidate at Osgoode Hall Law School. This article was written as a requirement for Prof. Pina D’Agostino’s IP Intensive Program.

Gone are the days when businesses were valued by their ability to market tangible goods. Ontario’s Expert Panel on Intellectual Property (EPIP) and CIPO reported that intangible assets (IP and data) are crucial to wealth creation and represent the “world’s most valuable business and national security assets.” In 2019, they accounted for 91% of the S&P500’s value. Canada has struggled to meaningfully partake in this intangible economy.

Canada’s patent portfolio is incommensurate with its enviable workforce and publicly funded research. Domestically, Canadian patent filings decreased by 3% annually and 7% in the last ten years. Non-resident filings swelled by 1% and 4%, respectively. In 2019, Canadians contributed 12% of the patents filed in Canada, whereas Americans accounted for half. Contrarily, USPTO reports that Americans owned 60% of patents filed in the USA.

Internationally, Canadian patent filings decreased after 2012, stagnated after 2014, and are geographically clustered. In 2018, 2/3 of Canadian international applications were filed in the USA – a meagre 2% of applications filed there.

Canada’s struggle to protect ideas has dire economic consequences. As Canada’s IP footprint diminishes, Canadian corporate operations face increasingly onerous restrictions, with portfolios too anemic to leverage. Consequentially, our GDP per capita has declined by 3% since 2010 and job quality by 15% since the 1980s. New jobs generate 2/3 of the income they did in the 1980s.

EPIP and CIPO blamed this on deficiencies in IP awareness, access, resources, expertise, capacity, laws, and funding. Neither report performed competent modelling or statistical analysis, which led to inadequate recommendations. To implement those recommendations, Canada developed the Intellectual Property Strategy; Ontario established the Intellectual Property Action Plan and Intellectual Property Ontario.

Meanwhile, Peter Nicholson of the Institute for Research on Public Policy blamed Canada’s inability to foster and retain innovative corporations. The technology sector, a driver for innovation, contributes only 5% of the S&P/TSX60. Conversely, the 75 technology corporations in the S&P500 constitute 1/3 of the index. Without innovative corporations to develop IP, Canada will never amass the portfolio it deserves. Public funds and talent earmarked for innovation will benefit other economies to the detriment of our own, cementing Canada as an innovation farm for hire.

Innovation emigrates from Canada because of what Nicholson calls its “buy versus make” economic structure which results in passive posturing and ambivalence about market dominance in Canadian C-suites. Canada’s refusal to acclimate to new global economic realities disincentivizes local innovation independently of the patent system, and the “trend of investment in innovation is not encouraging.”

Canadian innovations’ short-lived victories exemplify this. Nortel and Research-In-Motion revolutionized telecommunications, yet their failure to continue innovating led to their demise. Canada’s abandonment of the CF-105 shuttered AVRO Canada.

Canada must foster a fertile corporate environment and broad innovation incentive structures to fend off the pending economic degradation. All policy instruments must be recruited, including taxation, trade, and regulation. Unfortunately, the current strategy of developing IP awareness, access, resources, and law alone will not suffice.