How to Improve Innovation by Protecting IP

We were supposed to return to normal but the post-COVID world still feels crisis-driven with inflation, interest rate hikes, uncertain markets, and even a surprise order from the bank regulator (OSFI) that our banks hold more funds in the vault because the record levels of indebtedness. 

And it is not just Canadians but their government, too, that is spending on borrowed money. We have seen a string of announcements of multi-billion dollar “investments” that promise new jobs and yet, it still does not feel reassuring. And it should not. 

The State of Spending in Canada

This kind of spending by government highlights the fact that we simply do not have an innovation and commercialization plan to grow our economy. What we do have is a jobs plan that relies on the massive subsidization of foreign-owned corporations that create some work but waltz off with the real value: the intellectual property that Canadians generate but do not own. We invent but they get to monetize it.  

“We simply do not have an innovation and commercialization plan to grow our economy. What we do have is a jobs plan.”

The borrowing to fund these subsidies has helped fuel inflation. And there is no doubt that has been devastating. Food inflation alone has forced many to choose between a meal on the table or medicine for the body.

To contain inflation, interest rates were hiked and most agreed that the tightening of monetary policy was necessary despite knowing it would curb growth and precipitate the inevitable economic slowdown.

Many experts believe a recession stateside is likely and that, at best, Canada will remain in a slow to no growth mode, if not in a recession ourselves. And the recent rate hike by the Bank of Canada – after weeks of holding the line – was a flashing red light!

Rising interest rates make mortgage holders vulnerable and nervous and they also impact the lowest-income earners who must stretch a dollar even further than they already do.

The carbon tax and the new clean fuel tax not only punish those consumers with no option to use public transit or who cannot afford an EV that does not travel long distances or withstand the cold, but the tax is also already impacting growth. It is also hurting our farmers who disproportionately shoulder green taxes as they strive to feed us and the world.

The messages from the Bank of Canada are mixed, offering both assurances and serious caveats. Perhaps it is just a reality check that this ride to recovery will take time and there will be serious bumps in the road. For example, we have seen higher-than-expected consumer spending. But is it a sign of recovery or just the increased costs of the same or even smaller grocery basket? Also, low unemployment is good – except that it risks new wage pressures.

Still, employment has remained steady as many are still not back in the market or are working part-time from home. More concerning is that a lot of the job creation in Canada has been within a growing federal bureaucracy.

At some point, the government must realize that it cannot spend its way out of inflation and when it does, it should be constrained, more targeted, and have measurable outcomes because the more you inject into the economy, the more you poke the inflationary bear. 

What is Ottawa’s plan to grow and ensure economic stability? 

The Importance of Innovation and Intellectual Property

Well, that brings me to the real issue at hand. We need to generate wealth if we want to spend more and pay the bills, and the best way to do that is through investment in innovation. 

“We need to generate wealth if we want to spend more and pay the bills, and the best way to do that is through investment in innovation.”

Ottawa does fund innovation but in the wrong way. It is short term and there is no expectation or mechanism to ensure outcomes and returns.


Canada produces world-class research but fails to capture the benefits through the commercialization of our intellectual property. In clean technology, Canada owns less than 1% of global intellectual property. There is no excuse for a country that produces some of the cleanest energy in the world and is widely recognized as a global leader in research and development in that field. Ditto in agriculture where tech and IP are changing the production of food. And when it comes to AI, with millions in public dollars invested, only 7% ends up in Canadian hands.

“In clean technology, Canada owns less than 1% of global intellectual property. There is no excuse for a country that produces some of the cleanest energy in the world.”

Today, more than 90% of corporate value is in intangible assets – things like apps, code, ideas, or AI. Subsidizing foreign companies like Stellantis and Volkswagen may bring some jobs to the country, but all the real value of innovation and IP will be captured by those foreign jurisdictions, not us. So those kinds of subsidies are not part of a real investment and growth plan.

Canada’s approach to investment remains stuck in an old-school, tangible production economic model – building things and stuff rather than creating and owning the ideas needed to build a better mousetrap.

Jim Balsillie, one of the brains behind BlackBerry and a lifelong innovator, says global investors are moving away from the traditional, production-based economy. They look instead for companies that own valuable IP and have control over data assets which allows the investor to become a market leader with high valuations.

This is echoed by others who know the laws around intellectual property. James Hinton, of Own Innovation, is blunt:

“IP and data aren’t everything, but they are almost everything. More than 90% of corporate value today is in intangible assets. So, if you’re talking about physical assets, such as jobs and factories, you’re missing out on the lion’s share of economic value.” 

The future economy relies on commercializing research and ownership of the resulting intellectual property. Government must develop a robust IP policy and build an environment to spur competition if Canada is to become a place where entrepreneurs can survive and thrive.

Canada Needs A Growth Strategy for Our Intellectual Property

A growth strategy is not a series of random incentives that get companies ready for sale rather than expansion and growth. Ottawa should clean up the regulatory maze of often conflicting rewards and punishments – they are a powerful disincentive, especially for foreign investment. And the most obvious of all – government should use its massive procurement budgets on Canadian suppliers and technology.

No matter how many multi-billion dollar government programs you create, if we do not have a strategy to keep the value here at home, then we are just enabling a massive transfer of wealth to foreign companies and countries. 

With data at the forefront of the global economy, our data has growing and significant value. But we need to know how to use it and protect it with incentives for patent protection and smart privacy laws. There is already little trust in how consumer data is handled and that will not change without a serious regulatory regime that keeps citizens’ data secure.

And education all along the chain is needed so digital literacy is key.

“Government could demand that the research it funds not only has value but that it remains primarily Canadian-owned.”

Government needs to streamline its relationships with entrepreneurs and offer a one-stop entry point to access government support. Guiding innovators through myriad government programs is as important as the money itself. That said, too many programs are siloed and offer only piecemeal help and short-term funding. There is too little support and follow-up for start-ups.

In return, government could demand that the research it funds not only has value but that it remains primarily Canadian-owned.

Let us look at outcomes and ensure that we are not just building companies to ready them for sale but for scale.

With our resource-rich economy and access to education and healthcare, we could most definitely be doing better. And we must because President Biden’s Inflation Reduction Act has changed the game by putting nearly $400 billion on the table for clean growth – and they can continue to outspend us ten to one. 

Spending smarter is the key. We do not need more “new and improved” government programs that make for great political announcements but have no long-term or strategic benefit.

And we need a more competitive environment. Competition not only helps constrain inflation long-term and attract investment, but it also encourages Canadians to innovate and expand – and to stay in the game. 

We should unleash our entrepreneurial inner self and change attitudes toward risk. The time is now. We are already late to the game.