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Confronting Canada’s Innovation Gap

| October 20, 2011

Karen Mazurkewich
The Mark, October 20, 2011

The lack of a common approach to intellectual property ownership in our academic institutions is stifling our ability to bring products to market.

Canadians like to think of themselves as great collaborators. The label “Team Canada” is used both as a sports metaphor and within diplomatic circles to describe our national character: Canucks as collegial competitors.

But as innovators in business, Team Canada falls short of this moniker.

While Canadian scientists are great at collaborating on publications, or sharing basic research data, our entrepreneurs are terrible at teaming up for the critical commercialization phase of business – helping carry an invention to market.

Our limitation as entrepreneurs is evident when technology transfer mechanisms between universities and industry are compared to those in other parts of the world. While research and development (R&D) at Canadian universities tripled from $1.7 billion in 1999 to $5.5 billion in 2008, the revenues collectively generated by patents developed at these institutions were significantly less than the revenues generated by universities in the U.S. and Europe. In short, Canadian researchers employed at institutions aren’t leveraging their generous R&D dollars to introduce inventions into the commercial marketplace.

In fact, between 2002 and 2008, revenue from the intellectual property (IP) created at Canadian universities was 1.14 per cent of the total R&D expenditures, compared to five per cent at U.S. schools, according to a report released earlier this year by Quebec’s Conseil de la science et de la technologie. Canadian universities, quite simply, get less bang for their research buck.

This would not be so awful if our institutions were better at collaborating with industry players and sharing the IP that is generated from such relationships. But that doesn’t seem to be the case either.

In fact, Canadian business executives like Steven Fabijanski, president and CEO of Saskatchewan-based Agrisoma Biosciences Inc., argue that Canadian institutions are lousy at identifying potential partnerships with the private sector, and do not understand the money, time, and business skills that are required to bring an invention to the marketplace. As a result, he argues, many Canadian firms shy away from working with institutions.

“I’ve not had a single good experience with a university,” says Mr. Fabijanski. “They are outrageous in their licensing demands by looking at cost recovery of their intellectual property.” Universities often insist on payment up front, or unrealistic milestones that terminate an agreement if certain targets are not met, he argues.

As innovation cycles shorten and R&D strategies become more closely tied to the demands of the market, academics will want to forge much closer ties with industry. But herein lies the rub: Canada’s nearly 100 universities and colleges currently lack a common approach to technology transfer – in particular, how they address intellectual property ownership issues. As a result, potential strategic alliances are falling apart.

Canada’s lacksidasical approach towards IP ownership may be stifling commercial innovation. According to the OECD, Canada ranks sixth among developed nations when it comes to taking part in international projects that involve co-authoring academic papers. However, the country’s entrepreneurs are much less likely to collaborate if the project is commercial in nature.

Frustrated with the messy negotiations around IP ownership, Canadian businesses are not reaching out to academic researchers. This could be an anchor dragging us down in the global innovation race.

In business and commerce, secrecy and exclusivity are the traditional weapons of competition. But in most industries today, it is no longer possible for businesses to control all the strategic elements related to intellectual property. Especially in sectors like the software industry, where continuous innovation is important, collaboration is becoming essential.

Open innovation, in which companies leverage their expertise by sharing resources, is a growing trend that requires interdisciplinary teams of scientists with broad scientific skills. That means working with competitors or partnering with scientists from more than one university.

It also means reaching out to other countries, including China. The U.S. Customs and Border Protection Agency says China remains the top source of counterfeit goods it intercepts, accounting for 66 per cent of total seizures in 2010, valued at $124.6 million. But despite its notorious reputation for piracy, U.S. institutions and companies have reached out to establish collaborative partnerships, particularly in the clean-energy space. The U.S. has financed several large co-venture initiatives, including the China Clean Energy Research Centre (CERC), but Canadian initiatives of this sort are non-existent.

Canada ranked eighth in overall clean-energy investment among the G20 countries, according to the Pew Charitable Trusts in 2009, but we have yet to undertake any major collaborations with Chinese firms – obvious prospective partners for renewable resources. Why have Canadian firms failed to engage with China?

Before Canada can stand out in the global economic arena, we must learn to be better team players. To do that, we must carve a place in international collaborative ventures and hone our skills in open innovation. That doesn’t mean giving away our inventions – it simply means that Canadian businesses and institutions must develop sophisticated strategies to protect and develop our nation’s most valuable natural resource: intellectual property.