Decades of failed industrial policy have proven that government is a poor substitute for markets. One area of policy reform, however, that can help to foster greater innovation in Canada is our intellectual property regime, say Sean Speer and Michael Robichaud in the National Post.
By Sean Speer and Michael Robichaud
Federal Industry Minister Navdeep Bains recently launched his government’s “innovation agenda” to much fanfare. He has called on Canada to become “a global centre for innovation,” a home for an “entrepreneurial and creative society” with “world-leading clusters of innovation” where “science, insight and innovation are interconnected.” To achieve this vision, he said, the “government is playing a leadership role.”
Readers have reason to be skeptical. Government can play a role in creating the climate for entrepreneurs, investors and risk-takers to conceive the next big idea. But the solution isn’t another round of state-provided incentives. Decades of failed industrial policy have proven that government is a poor substitute for markets.
One area of policy reform, however, that can help to foster greater innovation in Canada is our intellectual property regime. Strengthening Canada’s intellectual property rights (IPR) regime can be a low-cost, high-impact part of a pro-innovation agenda.
Decades of failed industrial policy have proven that government is a poor substitute for markets.
Canada’s middling innovation record is well known. R&D spending as a share of the economy has taken a serious hit in recent years, and Canada continues to fall further behind the OECD pack on most measures of technology and innovation.
Yet there’s a tendency for commentators to call for doubling down on “strategic investments” and “sectoral strategies” and ignore a non-fiscal factor that could make a substantial difference. The IPR regime — a key contributor to the conditions of innovation — ought to be part of the solution.
Consider patents. Just as R&D spending is a good indicator of what Canadian firms invest in innovation, the number of patent grants gives us a good idea of what we get out of it. Predictably, Canada doesn’t fare well on this metric: Both patent applications and patent grants are lower than the OECD average. And recent research found that the number of Canadians filing for domestic patents has been in decline for nearly a decade.
The IPR regime — a key contributor to the conditions of innovation — ought to be part of the solution.
A major part of the explanation has to do with demography and geography. Canada’s relatively small market size and closeness to the world’s largest technology consumer make it appealing for Canadian firms to file an initial patent in the U.S. And the U.S.’s role in administering and enforcing the Patent Co-operation Treaty only serves to reinforce its advantage with respect to patenting.
While there isn’t much Canada can do about America’s larger market size, there are steps we can take to make Canadian patents more attractive.
Analysis by the Global Intellectual Property Center has consistently found that Canada’s IPR regime is the weakest among G7 peers with respect to protection and enforcement, and substantially less robust than that of the U.S. Onerous patentability requirements, poor pharmaceutical-related enforcement, and a lack of patent-term restoration are just some of the weaknesses with Canada’s IP policy. And even after a round of IPR reforms, Canada’s global ranking remains somewhere between Poland and Taiwan and well below most other nations with comparable levels of GDP per capita.
It is time to stop thinking of IPR reform as a defensive issue and to start thinking about how it can become a Canadian advantage and a real contributor to the national economy. The industry minister deserves credit for his determination to bolster innovation in Canada. But new government incentives in the name of “leadership” are unlikely to help. IPR reform can be part of an effective, pro-innovation agenda.
Sean Speer is a senior fellow and Michael Robichaud is a policy intern at the Macdonald-Laurier Institute.