Transcript: The New Economy Series: Intellectual Property
Mark Schaan: Bonjour à toutes, à tous. Welcome, everyone. It's my pleasure to introduce you to this third event in the New Economy Series on Intellectual Property. This is a partnership between the Canada School of Public Service and the Centre for International Governance Innovation (CIGI). My name is Mark Schaan. I'm the Associate Assistant Deputy Minister of the Strategy and Innovation Policy Sector of the Department of Innovation, Science and Economic Development Canada. In that leadership role, I have the great pleasure of being able to work with some of the finest intellectual property professionals in the country, four of whom you will hear from today, which is an extraordinary pleasure for all of you.
It's my great pleasure to have this role today to be able to moderate our discussion, which is about the changing nature of intellectual property and its impact on the Canadian economy and our innovation ecosystem. From the very moment that I began interacting with intellectual property over a decade ago in working on life sciences issues, I have continued to see the radical rise of the importance of intellectual property and intangibles in our overall economic outlook and in the global race for global competitiveness. I have seen the rise of intangibles as a core function of our overall economic policies and those of our competitors raising incredibly important issues around information sharing, complexity, cost and whether or not companies and economies are going to be, as some people like to say, cheque writers or cheque cashers in a world of intangibles that continue to provide privilege and access to those who are able to secure their ideas in a meaningful way in the global economy. You're going to hear lots more about that over the course of the session today.
It's my great pleasure to have guests with me today from the Centre for International Governance Innovation, Aaron Shull as well as Myra Tawfik, Natalie Raffoul, and Karima Bawa, who are the exceptional professionals in this space and leading the charge in ensuring Canada has a leadership role in the intangibles economy.
Some housekeeping items for this session: simultaneous translation is available in your language of choice through the portal. Instructions were sent to you with your webcast link. Viewers are invited to submit questions for the moderated question and answer period, which will take place near the end of the event. Participants can submit a question on their desktop computer by clicking on the icon of the person with their hand up on the top right of the screen. We welcome questions in both official languages.
Note that you are joined by three experts in IP who will each draw on their expertise to discuss the importance of intellectual property as it relates to the work of the public service. Et c'est vraiment un grand plaisir d'avoir les panélistes aujourd'hui qui concluent les trois professionnelles dans le monde concernant le domaine de propriété intellectuelle. To kick us off, I'd like to introduce Aaron Shull, the Managing Director and General Counsel at CIGI, who will offer a few words of welcome, introduce CIGI, and introduce the three panellists. Over to you, Aaron.
Aaron Shull: Great. Thank you very much, Mark. I really appreciate it. It's a pleasure and indeed an honour for me to be with you here today. As Mark indicated, this is a partnership between CIGI, or the Centre for International Governance Innovation, and the Canada School. It's a true partnership.
I'd be remiss if I didn't begin with a word of thanks to the President of the Canada School, Taki Sarantakis, for his vision and putting this all together. Rapid technological developments, combined with the increasing importance of intellectual property and data, are upending established structures in every part of the Canadian economy and society. Today's module will explore the opportunities and challenges in intellectual property and the ones that it presents for Canada. It will address how the public service can best support Canadian entrepreneurs and innovators in navigating this brave new world in this technologically driven environment to ensure the greatest possible economic benefit and competitive advantage for Canada so that we can build a future of national prosperity.
One quick word about CIGI. CIGI is a public policy research institute often referred to as a think tank. Our hope in taking this partnership on with the Canada School was to bring some of the top thought leaders in the world together in order to support the growth and development of public servants in strategic skills, knowledge-based competencies in order to better serve Canadians in this rapidly changing, tumultuous, and uncertain new economy.
I do hope that you enjoy the session because when I thought about it, if the new economy was a house, intellectual property would be its foundation. I cannot think of a more important topic, nor can I think of three better experts to address it.
Before we begin, let me take this opportunity to introduce our speakers. First, we have Karima Bawa.
She is a Senior Fellow at CIGI with expertise on the commercialization of university research and development and capacity building in intellectual property strategy for Canadian innovators. For the past several years, Karima has been involved in various initiatives designed to help organizations better protect and leverage their IP rights. Most recently, she joined the Standards Council of Canada's Technical Committee as an expert, where she represents Canada's interests in the forthcoming IP Management Standard. Karima also serves on a number of boards and advises start-ups and technology scale-ups. She's a scholar-in-residence at University of Windsor's Law and Technology Lab, where she's been involved in interdisciplinary studies related to IP literacy. And she was previously the Chief Legal Officer and General Counsel of Research in Motion (then BlackBerry).
Myra Tawfik is a Senior Fellow at CIGI, where she contributes expertise on strategies for capacity building in intellectual property literacy and cost-effective IP legal services for start-ups and entrepreneurs.
Myra is a Professor of Law and was recently promoted to the Distinguished University Professor at the University of Windsor. She has founded and led a number of clinical and experiential programs to support innovation, including the multidisciplinary Centre for Enterprise and Law, where she provided student-led businesses consulting and legal support to local start-ups and entrepreneurs from 2010 to 2013. In 2016, she was appointed EPICentre Professor of IP Commercialization and Strategy at the University of Windsor to continue her research and educational outreach initiatives for building capacity in literacy. In 2018, she was recognized with a University of Windsor Award for Outstanding Community Outreach, Knowledge Transfer and Knowledge Mobilization and as Tech Researcher of the Year by the regional innovation centre WEtech Alliance in 2019. She was appointed by the Province of Ontario to serve as an expert on the expert panel on public sector commercialization of IP and is currently a member of the Provincial Special Implementation Team on IP. She and Karima Bawa are the co-authors of a book titled The Intellectual Property Guide: IP Literacy and Strategy Basics for Supporting Innovation and an online course that CIGI helped to create on IP and IP strategy.
Last but not least is Natalie Raffoul.
Natalie is the Managing Partner at Brion Raffoul LLP and is an expert in the patenting of software, business methods, artificial intelligence, and machine learning, and the legal issues surrounding this subject matter. She is consistently ranked as one of the world's leading patent practitioners by The World Leading Patent Professional's IAM Patent 100 publication annually since 2014, and in 2017 was shortlisted as one of the seven most Highly Recommended patent prosecutors in Canada and once again shortlisted in 2019. In 2018, she was recognized in the Who's Who Legal as a world-leading expert for Patents in Canada and by Acquisition International, The Voice of Corporate Finance, as the Most Influential Woman in Patent & Trademark Law in Ottawa. In 2015, Natalie was recognized by Lawyer Monthly in the Women in Law Awards as the Top Female Patent Lawyer in Canada, and by Corporate LiveWire as the Patent Lawyer of the Year in Canada.
In fact, Mark, when I went through these bios, I had to cut down greatly. I hope people got a sense of the true level of expertise that we're dealing with, and this was just a snippet of what these folks have accomplished. Mark, back over to you.
Mark Schaan: Thanks so much, Aaron. I couldn't agree more. We're in for a treat. This afternoon, we're going to have a chance to be able to understand and learn more about intellectual property and the basics of why it's critical in driving economic growth. Now, more than ever, it is part of the fundamental toolkit of every advanced nation. Canada entered this club with its own national intellectual property strategy two years ago and has been aggressively pursuing the inclusion of intellectual property as a core economic tool as part of its economic growth. I'll be interested and very excited to hear more from our panellists about how we can do better and do more as we continue to integrate it into our strategy. To kick us off this morning, our panelists are going to walk us through some of the core elements of consideration in intellectual property. With that, I will turn it over to Myra Tawfik, who will begin that presentation.
Myra Tawfik: Hi. Thank you very much, everyone, for having me. Here we are with all of Aaron's introductions and I'm really technologically quite incapable. I'm supposed to be pulling up a slide right now and I have to look for it because somehow it disappeared from my screen.
It's an auspicious way to start. I have no idea what just happened. Okay. Bear with me, please.
There. Okay. Thank you. Thank you for your patience. Sorry about that. Bonjour tout le monde. C'est vraiment un plaisir pour moi d'être parmi vous aujourd'hui to speak about a subject that I'm very passionate about, and that's the area of intellectual property. Karima, Natalie, and I have a little bit of a slide deck that we're going to go through to help contextualize where we're coming from in relation to what intellectual property is and why it matters. Then we're very happy to take your questions and comments. Mark will lead a moderated discussion.
To kick us off, we wanted to talk to you a little bit about what intellectual property is.
What do we mean when we use the term intellectual property? In a sense, what we're referring to are a set of discrete legal concepts, which at a very high level of abstraction are really designed to produce or provide exclusive rights over certain types of human, intellectual, and creative endeavours.
The term intellectual property is an umbrella term to actually refer to a number of different kinds of legal constructs. We've tried to encapsulate the most significant, or at least the most common, forms of IP in this slide and offer a comparative way of understanding them. Each form of IP protects something different. It covers a different, legally protectable form of human endeavour. Copyright would protect things like books, music, songs, software or paintings. Patents protect more scientific and technical inventions. New and non-obvious inventions are improvements to existing inventions. Industrial design fits somewhere between copyright and patents and protects the aesthetic, the eye appeal, of useful objects. The reason you buy an iPhone for its design features, for example, as opposed to a Samsung, or the reason you might buy a Swell bottle for its shape and design over any other kind of water container.
Trademarks, of course, many of you would be familiar with as well. That's the body of law that protects names, designs, and logos that are used in association with products and services. Trade secrets, this idea of confidential information, is a form of intellectual property that places a value on the secrecy of commercially important information, that gives a business a competitive advantage in the workplace or in the market because of the secrecy.
Each form of IP is protected in a different way and for a different period of time. For example, in Canada, copyright is protected for the life of the author, the creator of the work, plus 50 years after the author's death. But patents are protected for 20 years. All of these bodies of law operate differently and therefore add to the complexity of the material when we talk about intellectual property. To make things more complicated, intellectual property rights, these various forms of IP, can also be used in combination.
If you take Instagram, for example, there would be copyright in the source code, the software, so that performs the function of Instagram as a social media tool for images. Trade secrets would protect the underlying know-how that goes into the development of the code, the functionality or the ideal way of making Instagram operational to consumers. Patents would protect the functional process or methods and the architecture of the software and hardware that could be patented by Instagram, in relation to that one particular product.
Industrial design: what we see, how we interact with Instagram, the design features that provide unique eye appeal that gives us a sense that we want to participate in Instagram, because there is a visual or aesthetic element that is appealing. And trademark, of course, Instagram as a trademark—the word, the design, the logo that consumers know that when they see Instagram, the word or the logo, that they know that they're getting a particular product from a particular source. In the one Instagram app, you can have multiple forms of IP that interact with each other and protect different elements of that particular product.
Why do we have IP in the first place? This is one thing I really want to bring home as we start to kick off the session and it'll lead into what Natalie will be telling you about in the remaining slides. Why do we care? Why do we have intellectual property rights? Why did the law develop these forms of exclusivity over certain very specific aspects of human expression? These bodies of law, by the way—copyright patents, industrial designs—they all originated in the 18th and 19th centuries.
These are old bodies of law and at their origin, their policy goal was to encourage people to disseminate their new ideas, to disclose them, to put them to market, and to work them. Patents and copyright, for example, are a form of social contract whereby in exchange for an inventor to disclose the invention so that others can learn from it and build on it and new improvements could occur. We give that person, for a fixed duration, exclusive monopoly over that invention so that they could prevent, during the time of the patent, anyone from freeriding, reproducing, making, and manufacturing. They have a monopoly in the marketplace over their patented invention for that 20-year period.
The same with copyright. The idea was to encourage people to disclose, to disseminate, and to share knowledge so that others could learn from that knowledge and society could grow. All these wonderful benefits that accrue from sharing new ideas and knowledge. Again, in exchange for a certain period of monopoly, you encourage the disclosure of new ideas and new information.
At their origin, intellectual property rights were ancillary, in a sense, to the primary economic drivers of Canadian society during the 18th and 19th century and into the 20th century. We're talking about agriculture, goods, manufacturing, and natural resources. We're talking about education and cultural policy, tying into some of these drivers. IP became the driver for those types of policy initiatives. The intellectual property rights back then provided the security for brick-and-mortar businesses to be able to produce and manufacture products and services for the benefit of the Canadian economy and obviously to generate the wealth of knowledge for humankind.
What started to happen, and that's kind of where this slide is going, is that in the late 1980s and early 1990s, the US and Europeans started to see that they were losing competitive advantage globally in goods manufacturing. The knowledge-based economy was born and they deliberately shifted their economic priorities away from tangibles into intangibles.
The nature of intellectual property changed with it, as IP intensive companies such as the entertainment industry in the US and the software industry started to see IP rights as important business assets. European and American policymakers shifted into aggressive international trade and IP stances. The first NAFTA was the first international trade agreement to incorporate an intellectual property section as part of the trade regime. We moved from intellectual property as incentives to tradable commodities separate and apart from the core brick-and-mortar business. This is a seismic shift. When the industrialized world moved from a goods-based economy to a knowledge or innovation economy, Canada didn't quite move with it. We followed the direction in principle, but not in practice.
To add to this, we were caught flat-footed. We're now entering a new realm in the innovation economy in relation to data and artificial intelligence without our having a very solid intellectual property foundation to rely on in this country. The stakes are high.
You could see from this slide that from 1975 to about 2019, the shift in the wealthiest companies under the Standard & Poor's Index went from 83 percent holdings intangible, so the brick-and-mortar stuff, to 91 percent holdings value in intangible assets. The value in the marketplace has taken over from goods-based in a very, very dramatic way.
With Canada, and this is where I'll turn to Natalie, we talk the talk, but for a long time we didn't actually walk the walk. What we are seeing in the data are the results of our not having paid attention to this important shift away from an incentive-based IP system to an asset-based one. Natalie?
Natalie Raffoul: Merci à Myra et Mark et Aaron. C'est vraiment un plaisir pour moi de participer dans cette présentation sur l'importance de la propriété intellectuelle comme avocate et agente de brevet avec une formation en génie électrique.
To turn to this slide on trends and AI patenting and to situate us a little, I'm going to talk a little bit about artificial intelligence and machine learning, which is an area where I think Canada is well positioned to do well in terms of a lot of the research in this area. When we're thinking about patenting in this area, AI and ML situates itself within a classification of software or computer-implemented inventions. I worked in this area for over 20 years now and have worked a lot with a number of ministries on patenting.
Just this week, I was having another conversation with a Legal Advisor within a Ministry and they were surprised to learn that you can patent software and computer-implemented inventions.
We have a long way to go to educate the public service on the various forms of intellectual property and how they're being used very strategically today and how we really do need to play catch up. This is data taken from the World Intellectual Property Technology Trends report just last year. We're looking at trends and the numbers are actually moving upwards. Interestingly and important for you to note, for example, who is the largest patent portfolio in the world? It's IBM. That translates also into the area of AI. In terms of AI patents, the second largest holder is Microsoft. When we look at the largest portfolios internationally, 26 of the 30 are owned by corporations. Next slide.
I like looking at these slides because it's helpful to situate yourself within the global context. Who are the companies that are really pushing hard in this area that are not just inventing and not just doing research in this area, but are taking great efforts to protect innovation in this area? Look at those. This is just from last year. This is the number of patent applications being filed. Obviously, IBM is a runaway there with 8000 applications, but a lot of very big international companies within this list.
Canada is not there. If you look at Canada within the report, our numbers are quite low. Interestingly enough, what WIPO highlighted was of the non-corporate institutions, you've got a number of government institutions that are rapidly filing in this area and that happens to be 4 Chinese entities: the Chinese Academy of Science, ETRI, as well as Xidian University and Zhejiang. I think it's helpful to just see what those numbers look like and I can assure you that those numbers are increasing exponentially. The 2020 data is already exponentially higher than last year. Interesting to note also in terms of the Japanese, 12 of the top 20 companies are Japanese.
This actually is something to appreciate within the Canadian context: there are a lot of AI focussed companies being acquired. What we're seeing is a lot of these larger entities are on a bit of a buying spree and that includes some of our own companies. We have a lot of great research and innovation happening in Canada. What's happening is you're seeing this amassing of intellectual property rights in this area, particularly patent rights, and you see that bearing out here on the sides. Myra, next slide.
I'm not going to pour too much over this, but just to show you how it's trending. If you look at, for example, the State Grid Corporation of China, it is trending at a growth rate in terms of patent families at 70 percent annually. When we talk about patents, we're not talking about just patents being filed in China. These companies are filing globally. They're filing patent applications in Canada. They're filing in the US. They're filing in China. They're filing in Europe. And they're locking up those algorithms. They're locking up the application of those AI algorithms for particular purposes. They are patenting essentially all of it to make sure that they lock up all those different concepts that they're creating. The numbers are increasing exponentially. It's interesting to see who may be dropping down as well. Myra, just the next slide.
How does Canada hold? This is a more general slide in terms of patenting trends, moving away from just looking at A.I. How is Canada doing? For a while there in the 90s, we were starting to trend upwards in terms of patent filings and that probably had a lot to do with Nortel being a big patent filer and then I think BlackBerry was a big patent filer. We had a lot. We were trending upwards at some point in the 90s into the 2000s, but we really dropped down to the point where we've become laggards when you look at us in terms of the G20 context, and statistics just don't lie.
We look at the PCT marker. The PCT marker gives you a sense of if our innovators are here. Are our inventors filing internationally? Are they filing what you call a PCT International Patent Application? That gives you a sense then if we are exporting our innovation and we're protecting it outside of the Canadian context. We've been trending downwards and we continue to trend downwards at the present time. That's important to note, as well. Next slide, Myra.
I love talking about statistics. Unfortunately, only 2 percent of Canadian SMEs hold at least one patent. Some of the thinking around that is that really Canada should be looking at 6 percent. About 6 percent of our companies should be holding patents in order to really see the economic output from that. Another thing is that only 59 percent of our SMEs are even slightly aware of patents, which is problematic, especially when we looked at that earlier slide. Where does the value reside in companies? It resides in the IP and in the data over 90 percent now. We want to make sure that our companies are aware of what their rights are. They want to go after patents. What does that mean for their business? The statistics are bearing out.
If a company holds an IP right, such as a trademark or a patent, what that's done for the business is forced them to do a certain amount of due diligence. I think the reason that we see that the likely expected growth of an SME that does hold IP is going to be greater than one that doesn't is because when you go to the efforts to protect your brand through a trademark registration or to figure out what you are going to patent by going through a competitive landscape. What are your competitors patenting? What are you doing that's really disruptive or unique?
By going through that exercise as a company and figuring out what is really worthwhile to patent and what is something that you should just keep as a trade secret or defensively publish. By going through that IP strategy exercise, we see empirical evidence that companies will fare better by going through that exercise of developing an IP strategy. Even if they decide not to patent, they should know why they're not patenting. We are seeing companies just bear out in the growth rates. The statistics don't lie. Obviously, the logical leap to that is if we can improve on this front, then we can really improve our outcomes in terms of growth of our SMEs, which is really the backbone of Canadian business. We're a country of SMEs. On that note, I'll turn it over to Karima to speak to close off our opening remarks here.
Karima, you're muted.
Karima Bawa: Thank you, Natalie.
In order to pick up where Natalie left off, I think what our companies need to grow in scale is a number of things related to IP. The first and foremost as a starting point might be having our innovators understand IP, understand its mechanics, and understand how to leverage it. That means that IP education has to be not just at the Law School level, but it has to exist in terms of how our innovators understand IP and can learn to leverage it. In the absence of this understanding, I think our companies will face some of the same issues that I faced when I was at BlackBerry.
BlackBerry, which at the time was known as RIM, struggled with a number of patent lawsuits, threats of shutdown, large damage awards, and damage awards on patents that were of questionable value. These were realities that BlackBerry came to experience. Some of that is what prompted, I think, the accelerated dialogue in this country around IP. It's been about a decade since people like Jim Balsillie and myself and others who had that lived experience, started talking about IP and making it part of a national dialogue. I think the result of that has been that there's been a number of initiatives that have taken place.
CIGI, of course, is at the forefront of trying to bring about some education on this front and really equip our companies to deal with these issues. Our companies need to understand, as BlackBerry did, how to go global, which means they need to understand how IP can be used to leverage customer relationships to create a competitive position and to use your brand to try and form those relationships, to build out an ecosystem. Those are all important factors for growing.
Another factor is understanding the competitive landscape that IP presents. Those are all issues that I think come from understanding what IP looks like when you go global. I think part of what we need to do is create an environment where companies learn how to collaborate, learn how to use publicly funded R&D, how to participate in standards, and how to take advantage of things that the government is doing as part of its IP strategy, which Mark alluded to. That's things like the patent collective, getting better equipped professionals through the Patent and Trademark Board or College that was set up, but really making sure that our entrepreneurs, our innovators, have access to the right kind of resources that are independent.
Independent resources that will teach them. Independent resources that will allow them to scale. independent resources that they may not have in the form of IP, that they may themselves be lacking things like patent pools, things like strategic advice that they aren't necessarily going to get from a law firm that may have more of a narrow view. Having that kind of a framework is going to be very important for our companies. I think those are some things that will be discussed as part of today's discourse as we go into the next part of our session.
Aaron Shull: It looks like we're waiting for Mark to come back on.
Mark, are you there?
Why don't I jump in for a minute then and keep things rolling here, because I appreciated the remarks he made and I think he made a number of really, really key points. Myra, one of the things that jumped out at me is it strikes me that Canada is vulnerable. We saw that the data doesn't lie. The numbers don't lie. A lot of countries are going like this in terms of the number of patents that they're filing. I agree with your assessment that this is the bedrock of the knowledge-based economy, but it seems like we're lagging. I guess my question is: where is Canada vulnerable and how could this impact our competitiveness?
Myra Tawfik: I think we're vulnerable on a number of fronts, but let's talk specifically about this IP deficit in the way we understand IP. Karima mentioned this. It's an area that she and I have worked on quite a bit over the last few years in building capacity and in this idea of IP literacy, especially on the strategic side of intellectual property. We're vulnerable because we just don't have the knowledge. We don't have the right skills at every level—at the policy level, on the ground, at the education level—to actually pivot, to use a much-used word right now, to be a player or competitor in this innovation economy. Part of it is a mindset. I've been teaching intellectual property for a long time, and writing about it. We always claim that Canada is a net importer of intellectual property and that's just the way we are.
I think we need to start to think about developing ourselves as net exporters. China went from a made-in-China philosophy to created-in-China. I think part of it has to be a shift in the culture in this country away from our traditional economic structures into really becoming players. That means attention at every level from the ground up, from the innovators up to the policy makers. We're vulnerable in many respects, but from my vantage point, that's one thing that needs to be fixed. Slowly, but surely, the initiatives are coming online that will help support SMEs in developing greater sophistication. We're here talking to the Canada School about IP. Obviously initiating greater discussion amongst the public sector around IP is part of that capacity building as well.
Mark Schaan: Aaron, I assume that you took over when my computer managed to crash at exactly the moment that it wasn't supposed to. I appreciate that.
Myra, fantastic response. Maybe we can build on that with the next question, which is: how can we close this IP gap with the rest of the world? This is a fierce race. We've been saying this for a while. This is an innovation race that we're playing globally. Not everyone can win and not everyone can certainly win in every race. I think there are ways in which we can try and ensure more winners than losers. We can talk about that as well. Karima, from your perspective, what would be some of the key ways that Canada can close this gap, given that we do have, as Natalie and others have highlighted, some pace to make up?
You're on mute.
Karima Bawa: I keep doing this. Sorry. Apart from the education front that I think Myra and I've already talked about a fair bit, I think another part is having sophisticated, independent expertise. Organizations, like the Patent Collective that is being set up, will provide that independence, that educational mandate, and the ability for people to have somewhere to turn to in order to get the resources that they need that aren't necessarily expensive, that aren't necessarily aimed at trying to achieve just a narrow agenda but a more broad-based focus. One of my experiences at BlackBerry, we had to go outside of the country to get that expertise quite often. It'll be great to have that expertise built-in within our own country. We also need to teach our companies how to leverage things like Standard-Essential Patents.
Canada has actually played quite a critical role in terms of developing the IP management standard, and now we have to make sure that our companies can actually leverage that information. Apart from that, being able to participate in IP standards, being able to be at the table, to actually have a Standard-Essential Patent that they can licence on an easy basis and basically allows them to build an ecosystem around them, and finding ways to create opportunities to collaborate with other organizations. I think some of what the Supercluster is doing in that respect is great. I think we need more of those kinds of opportunities. Our companies need to understand that IP is actually an asset and it needs to be valued by government funding tied to it being an asset. It can't be just about if you are pre-revenue. No, that shouldn't be the discussion. We do need to start thinking about IP as an asset, promoting our companies to actually get those assets so that they actually see some tangible benefits coming from it, even if it's just for capitalization at the outset.
Mark Schaan: All three of you know me and you know that I'm a wild card and that I will potentially go off script.
Just a quick follow-up on that, which is: how important is the valuation question on this? We've seen some recent efforts from the BDC to play a stronger role in making intangibles-based investments. It brings me sadness when I think about how amazing Canada has been becoming a financial centre for the mining industry, the world over, regardless of whether or not that mine is being built in Canada or elsewhere in the world, because we got really good at pricing risk related to a mining development. We seem to not have that valuation capacity growing in our financial ecosystem. To your point about valuing it and understanding it as an asset, do you see a growing role for the valuation side and ensuring that we can actually have investments that understand intangibles as an asset and understand them as capital that a firm should be able to tap into?
Karima Bawa: I most certainly do. I think that IP can generate revenue for people. It can give them that competitive advantage. It can allow them to build an ecosystem. All of those things are business concepts that come out of having IP be treated as an asset. I do think we need to have that expertise, but we need to have it in an independent fashion. We need to have it in a way that's not going to be predatory towards the people that don't really understand all of this. I think the government has a really important role in making sure that the right people are involved in assessing that.
Mark Schaan: Great. Natalie, maybe building off of that, Canada's approach to IP—how do you see that as potentially determining Canada's success in the new economy?
Natalie Raffoul: I think going back to Myra's slide where we looked at the tangibles to intangibles. In the old economy where we were counting tangibles, it was tangibles are positive rights. You sell a good, you make money. In the intangibles, intellectual property rights are notionally negative rights. They prevent others from doing something. One of the things people don't necessarily realize is that there's no requirement to actually work your patent. You could invent something, you can have a clear idea of how you are going to reduce it to practise, and then you can charge rents on those patents for folks that want to use your patented technology.
If you look at IBM, IBM has a massive portfolio. They're not using their portfolio. They're charging significant rents on that portfolio. The paradigm has shifted. Now we look at it when you talk about valuations. Where are the valuations coming from? It's in that ability to be able to charge those rents, which is really critical. I think it's important to understand that positive versus negative right.
I also think that going through the exercises we get more familiar with intellectual property rights in this country. We're going to be better at building competitive businesses because we're going to better understand the competitive landscape. I always encourage companies to go out and do a patent search, go out there and see what your competitors are protecting. Often, no one is taking the time to see what their competitors are up to. By going through these exercises, it's really going to help you build a better product, build a product that's not already out there. Unfortunately, we see a lot of times, like in the research institutions, researchers working on research that is already being done by someone else or has already been completed. That's tragic. By forcing yourself to do a little bit more review of the competitive landscape, I think that's going to help us build better products. If we take the time to protect those products, it will obviously help us to navigate the marketplace better.
Mark Schaan: No, that's really useful. Are there people we should be looking to as examples? Obviously, your slides point to a number of leaders in this space.
Natalie Raffoul: Of course. China and the US are certainly leading the pack, but we don't need to compare ourselves to them. They're probably always going to be leading. In the areas where we think we can be winners, that's where we really need to make sure that we're carving out our own intellectual property rights. Such as in advanced manufacturing, where Canada is a strong leader: natural resources, agriculture. These are areas where we can be really focusing on an IP strategy. Let's look to countries like Sweden, Germany, and Singapore that are having a lot more success than us when it comes to that innovation piece. Canada is great on the invention piece, but where we fall down is on the innovation side, which is really when you're taking those ideas and moving them into products and services.
We see those countries leading on the commercialization front and certainly leading when you look at them on the IP metrics. If you're looking at their patent counts, their designs or their trademarks, they are certainly leading. One of the things I wanted to point out was that 25 percent of SMEs in Europe have at least 1 in-house IP expert. How many SMEs in Canada do you think have an in-house IP expert? That's staggering. Let's compare ourselves to Germany. 41 percent of German SMEs have at least 1 in-house IP expert. We've got some catching up to do. Myra and Karima were talking about how we need expertise. We need education. I fully agree with centralized resources as well in terms of making sure that people can go to an unbiased place and be able to get that advice and not necessarily get it directly from law firms, but somehow it's vetted.
Mark Schaan: Yes. I'd like to build on that point for just a second. In the old economy, as it were, part of the rationale for this was that we're a very small market and in a durables world, we'll be an input to a broader place and the proximity to market actually matters. Whereas in an intangibles world, do you see limits to growth? Obviously in the sense that because we're now in an intangible space where proximity to market is not necessarily nearly as important. I can build technological goods from anywhere. I can build an algorithm from anywhere. Do you see the same sense of why we should stay small or what our limitations are as a function of market size? They seem to be playing against the opportunity in this regard, which is that this really could be a pathway to prosperity.
Natalie Raffoul: There's a lot packed in there. Of course, technology is borderless in a lot of senses. It doesn't matter where you're located. That could be an advantage for Canada because we've got such a great talent pool here. By the same token, there are a lot of great talent pools everywhere. I think for Canada, what's going to be really important is to carve out our niche areas and really win at that and make sure that just like some of these other economies, we're carving out our own rents in areas where we think we can be winners.
What we've seen through the pandemic is that there is more pressure on the tangible asset economy in the sense that we can't necessarily get our products out that easily. Environmentally, we're seeing a reduction into the tangible consumption. Reduce, reuse, recycle. It's going to be more and more about the intangibles, about the knowledge that we are using to really solve problems, big problems, and we need to make sure that we're oriented towards that. We don't need to worry about winning in all sectors. Let's make sure that we have things that everybody else wants. They should be intangible things that everybody else wants that we can charge rents on in order to secure our future for our kids. We're obviously a wealthy country. We want to be able to stay a wealthy country and be able to help others as well. Canada is a great global citizen and we want to be able to continue to be in a position to help others.
Mark Schaan: That's super useful. And—
Karima Bawa: I—
Mark Schaan: Sorry, go ahead.
Karima Bawa: I think on the flipside to this whole globalisation issue is not just the issue of having your own IP. It's understanding how to deal with the third-party IP and the predatory practices that exist. I think that's part and parcel and finding ways to use the resources that we have to allow companies to do that. We have publicly funded R&D that can be used to help these companies to actually be able to compete, either because they can do so on an assertive basis or on a defensive basis. It's taking some of the resources that are already there and either leveraging them for defensive purposes or proactive purposes. I think that's going to be a big part of how we move forward in terms of an intangible economy.
Mark Schaan: Not a panacea, but definitely a more activist industrial policy that makes sure that we can assert ourselves in the right spots. I know Myra wanted to get in as well.
Myra Tawfik: Yes, sorry. I know I'm the naive academic, but what Natalie and Karima said I want to pull out—we can't compete in the same space, the predatory space, the individualist IP space that the US and China are carving out for themselves. I agree about finding strategic areas, which we're good at, but I also think we should try and change the discourse at the international level and think more about collaboration and sharing models.
The goal of the international trade system was to ensure that every country could prosper because we shared and exchanged things. IP distorted that. If we had a different narrative around more collaborative IP, I think that Canada would play well in that space. The pandemic has given us an example of that. Some countries immediately called for patent sharing or the sharing of vaccines or the idea of a more collaborative approach, a global approach, to vaccine development and the intellectual property around it. I think part of a strategy would have to include also, to the extent that we can, working on and understanding collaborative and ecosystem models that will allow us to play with others in a more equitable, international intellectual property environment.
Mark Schaan: I'm conscious that my portion, before I turn to our audience portion, is running very thin. I might just torque what we had thought we would talk about by asking you each to comment on a general question in the next section. If you had to give one set of instructions or an ambition or a piece of advice to policymakers to navigate through this new realm, what would be your piece of advice? Recognizing the huge diversity of public servants that are likely on this telecast. There are folks working at the Department of Fisheries and Oceans on aquaculture. There are folks potentially in a regulatory capacity at the border. There are folks from all walks of the policy sphere. They don't all get to live and breathe intellectual property like I do every day. What would be your parting piece of advice to them as policymakers and as public servants in this realm of intangibles?
You're on mute, Myra, but if you want to go first, go ahead.
Myra Tawfik: Pardon me. Sorry. The public sector evolves continuously and incorporates and includes different elements. For example, inclusion, diversity, equity. We're all running under principles that matter to our society and to our values and so to everyone within the public sector, I would say start to embed some IP literacy into what you do. Start to think about it in terms of procurement. Think about it in terms of providing, wherever you are and whatever you're working on, ways and opportunities for some of your user base or consumers or however you're dealing with things, ways of creating better incentives to develop IP, protect it, and put it back into the economy. There's a disconnect, I find, between the message that government, provincially and federally across the board, gives about how important IP is. When it comes to implementing programs, IP is largely absent. It's not embedded in the language of government. My message would be: start to understand a little bit more about why it's important, what we're talking about, and start to embed that language in what you do.
Mark Schaan: Karima, Natalie.
Karima Bawa: I think from my perspective, a lot of very positive energy initiatives have already been started. I think seeing those through, finding ways to accelerate them, finding ways to make sure that they stick, finding ways to make sure that they're adequately resourced, to actually make sure that we can do what they said they were going to do. I think having the right people at the table, making sure that government is engaged, the right people with the right skills are engaged. I think those will be very important for moving forward because we've identified the issues. We've put in programs into place. We just need to make sure that we deliver on them now. I think we're well equipped to do that.
Mark Schaan: And Natalie.
Natalie Raffoul: I would just end with: be very careful with the nomenclature around this. Do not confuse a science and technology strategy with an innovation strategy. People use research and innovation so interchangeably. They're not the same thing. Invention with innovation, again, not the same thing. A job strategy is not an innovation strategy. Getting more foreign branch plants into Canada, another Amazon warehouse, is not going to build successful companies here in Canada, not in the way it used to when you had foreign branch plants and you had companies that could learn from each other. With IP rights, it's a different game. I would just be very careful. We're talking about innovation strategy and IP strategy. Those terms cannot be used interchangeably. I would just think along those lines.
Mark Schaan: Merci. Il y a les questions incroyables par les participants de notre appel aujourd'hui. J'ai reçu les bonnes questions et je pense que ça fait bien de continuer la conversation. As I said, brilliant questions from our participants. I'll throw out the provocative one first. I think it's an interesting one. Why is it the government's role to help companies figure out how to be successful in this space? If AI IP is the new gold rush, why aren't companies developing this expertise in-house? What's the role or necessity of public investment or the role of government if this is such a clear-fire winner for folks to advance in the new economy?
Natalie Raffoul: I'll take that one.
I don't think our incentives are aligned with that. When we look at massive programs like SHRED, we're not funding for commercialization and intellectual property rights. There are programmes that provide for that. I also think don't get in the way, guys. There's a lot of misinformation coming from our institutions that are government funded or government institutions in and of themselves that put out misinformation around intellectual property. Just the fact that the concept around "well, I didn't think you could patent software" is still looming around government.
I agree, it is the role of companies to go forth and conquer and protect our intellectual property, but we want to make sure that we're not part of the problem. I think the issue is that there's been impediments in place and we have institutions and folks within institutions that are just misinformed. They don't have the expertise and that's not necessarily their fault. The training has not been there, but there are a lot of issues around that. When we went through our expert panel report exercise last year, Myra and I were working on that for the Ontario government, there were a lot of impediments by a government-run institution. I think that's a problem.
Myra Tawfik: Can I chime in, too?
Mark Schall: You bet.
Myra Tawfik: The federal government and the provincial governments have always supported industry in the tangibles. The airline industry. The agriculture industry. That's always been where strategic interests are of national importance, economic interests are of national importance. We just need to shift away from what we already support, in terms of our government supporting companies in different, more tangible sectors, to think about supporting them in the intangible sectors. There are ways of doing that through government policy that will help bolster their capacity to compete. To think that government stays away from supporting business or companies, I think it is part of the role of government.
Mark Schaan: Yes. Obviously the more activist industrial policy, I think, is premised on the notion of spillover benefits for the broad society and economy. If you can help the companies be winners rather than leaving them to be mediocre, the whole country potentially prospers. Obviously, I recognize that there are folks who have a different philosophy about whether or not that is in fact the case.
Another great question, and I'll broaden it from the way it was posed. The question was whether or not COVID-19 has shifted the debate regarding the patent protections in the areas of pharmaceuticals and whether or not the owners, as it were, of the first vaccine would have too much power or market dominance in an area of fundamental public health. Maybe I'd broaden it slightly and say: how do you see the impacts of COVID-19 on IP more generally? Obviously, there's a life-science play here. But also I think there's been a huge—Natalie, your comments about supply chains and self-sufficiency and a whole bunch of interesting questions. I'll just ask broadly: did COVID-19 and the IP landscape shift the debate? Change things? Kept it all the same?
Myra Tawfik: I can chime in just because I happen to have this experience right now. Crisis breeds innovation and COVID-19 led to a lot of people rolling up their sleeves at universities and goods manufacturing to actually start to develop new PPE and new formulas for hand sanitizer. Every community around the country rallying to do that. And yet again, the inability to be able to access the right kinds of IP expertise first to be able to determine whether or not what these individuals are inventing or doing is not actually infringing on someone else's intellectual property.
But also that they are positioning themselves so that when the pandemic is over—and everyone is doing it out of the generosity of their hearts and they want to give it away, which is fine. When the pandemic is over and life returns to normal, hopefully, we have preserved the conditions for us to be able to leverage what's being created and invented now through intellectual property generation protection at a later stage. Those elements are still missing. We don't have the infrastructure to be able to support as invention is happening. So the pandemic creates a great opportunity for us to experiment with embedding more intellectual property sophistication throughout the system so that when we emerge from the pandemic, some of these new inventions would actually bring commercialized returns to the economy. It's frustrating, I guess.
Natalie Raffoul: I would agree with Myra. Innovation is up in this country. What I'm finding as a Patent Lawyer on the ground is that the phone's ringing off the hook. What do people do in a pandemic? They're coming up with new concepts. They're shifting their businesses, even within the restaurant industry. We're hearing from folks who are moving into wholesaling. They're coming up with new brands. They're creating. I think this is critically important.
On the flip side, what I'm seeing from our international clients is filings are up. If you look at statistics, people are retrenching now. Intellectual property rights are becoming more and more important. I think that it's making this whole shift to intangibles, actually. I think that it's just shifting upwards and it's a more acute issue.
Mark Schaan: I mean—sorry. Go ahead, Karima.
Karima Bawa: I think in some ways, though, the positive impact has been that there's been this encouragement for people to collaborate. For organizations to come together, put together pools, interesting models that I think we have wrestled with forever. I think one of the universities in the UK came up with a very interesting model to say, "I'm going to make it available for free for now, but I do have a mindset as to how I'm going to commercialize later on." It's forced people to come up with creative ways to share their IP and to work together. I think some of that is going to be very useful. I think hopefully we'll see more of that and participation on things like patent pools for the health care space because we're investing a lot of money. I'm hoping that a lot of the money that's being invested in these programs is actually going to result in Canadian IP that stays in Canada.
Mark Schaan: To your point, I think we've seen both ends. It's been fascinating in terms of reinforcing the importance because when you can't unlock something that you absolutely need because of IP, it reminds you of why it's important. On the other hand, also some very cool open source stuff, some very interesting collaborative stuff. Some folks dusting off old patents that have actually expired on ventilator models that you can potentially tweak and incrementally innovate around. I think a very interesting set of lessons.
Shifting gears a little bit, but maybe related to that point around wide scale benefits and democratizing the benefits of intellectual property and some of the risks. I'm wondering if anyone wants to comment on how Indigenous Nations in Canada are reconciling or potentially not reconciling and are dealing with the intellectual property rights around Indigenous knowledge and cultural expressions around traditional knowledge and about the intersections between Indigenous conceptions—not that it's monolithic, obviously, but Indigenous conceptions of intellectual property and knowledge vis-à-vis those that are enshrined in our current sets of laws.
Myra Tawfik: I could address some of this. I think that's an area where Canada, in terms of laws and policies, could actually do some deep thinking and structural changes to meet Indigenous communities. Not to assume that Indigenous communities should just merely adopt the intellectual property assumptions under which we've built this Western model of proprietary and individualistic that we allow for no collaborative models of intellectual property ownership in Canada.
There are a lot of ways in which we could actually improve and learn from other countries. For example, there are all kinds of outcries now about, for example, trademarks that are being used by sports teams and things that are offensive. They've appropriated Indigenous images, symbols, names, etc. The New Zealand Trademarks Act, for example, has an advisory group of Māori individuals who vet every potentially problematic trademark application and make a recommendation to the government about whether or not to allow it to be registered. We don't have any mechanisms that embed or integrate Indigenous conceptions of creativity and inventiveness in any of our intellectual property models, be it copyright, patents, or trademarks.
Our system is built on certain assumptions. They are gendered as well. We have a lot of assumptions built into our laws that originated in the 18th and 19th centuries that we could do a deep rethink about. Frankly, if we bring more underrepresented groups into our economic recovery—groups that are not participating in the ways that they could either as entrepreneurs or within the intellectual property system—I think it behooves us to actually do a deep dive and understand why and actually work towards amending our laws and our practices so that they are more inclusive.
Natalie Raffoul: Yeah. To touch on that, Myra, I think our Indigenous communities don't necessarily have access to the same resources. If we look at centralized resource, the patent collective, one of the things we could be looking at is, for example, prior databases. When we talk about conceptions of Indigenous communities, we see things being appropriated and then patented when they've been known to these communities for hundreds of years. Developing databases, helping them to build their intellectual property libraries, so that they can ensure that if their something is appropriated, they get advice and they're able to deal with that. There's a record to be able to assist them with that. I think a more centralized resource providing access would be terrific.
Mark Schaan: Yeah. And obviously we're extraordinarily proud of the Indigenous pillar of the National Intellectual Property Strategy that has some really great early work that's being done on the conversation and starting the conversation and recognizing that the first place there is really about building capacity and allowing for a conversation that's on the terms that Indigenous Nations want to pursue it.
Myra, on your point, the thing that fascinated me, at least it was the case the last time I had a conversation with my colleagues in New Zealand, not a single trademark has actually been turned down upon the advice of the Māori advisory board. In part because the Trademarks Administration is using it as a tool that no business wants the Māori advisory to turn them down. They don't want to be offensive in the first place. They're actually using it as a teaching lesson, which is fascinating.
We're coming close on time. The fascinating question from someone qui concerne les qualités des brevets. Ce n'est pas seulement une question de les quantités de brevets et je voudrais poser la question dans deux façons. We've talked a lot about quantities, all of these filings, these countries are rapidly pursuing these strategies. Is it speculative? Is it a thicket? Is it a lot of potential patents? The question was around whether or not we can help SMEs with fewer patents achieve greater value from them. I'd be interested in your thoughts on the quantity versus quality challenge. Also, whether or not you see strategies that we need to employ around this race to counting patents that we might be able to still potentially assert some Canadian leadership and win, as it were, without necessarily being in the realm of a massive amount of patent filing strategies. And Karima, you've dealt with this in spades.
Karima Bawa: I have, and I think it's both. I think it's quality and quantity, but let me tell you that it becomes quite daunting when somebody says to you, "by the way, I have 1900 patents" and you have to go through every single claim and make sure that you're not infringing on something. Quantity does matter in this context because you were resource-constrained and you have to have the ability determine if there's something there. However, I do agree that quality is really important. I think filing patents for the sake of filing patents is not necessarily always the best thing because patents are expensive. You have to be strategic about how you do it. You have to be strategic about the advice that you get. You have to be thoughtful about whether or not patenting is, in fact, the right strategy for you.
There may be other ways to look at IP. It's not just about patents. It's about other forms of IP. Patents are very important when you are growing internationally, if you can't rely on other things like trade secrets or trademarks to build your brand. It is not a yes or no answer. It's really context specific. To think that we might get to the levels that China has gotten to or where the US has gotten to in these companies and countries is not realistic. To at least get somewhere is going to be very, very important.
Being able to rely on resources like the patent pools and the collectives will actually help to defend these companies, give them a way to have an arsenal that they might not otherwise have. We do have to start thinking about how we leverage those assets if we're not going to be able to play and compete on the competitive front in terms of numbers.
Natalie Raffoul: I would agree with that as well. I think that it's not necessarily about patent counts. It is certainly about quality. When you look at the millions and millions of patent applications being filed annually by the Chinese, you could say that probably half of those are frivolous, but then there's another half or even another 10 percent that are actually quite good and quite strong. Our problem is that in certain areas where we think we're winning, I don't see any patents. How can we think we're winning in those areas? We're doing groundbreaking research and yet we hold no patents. I think we really need to start somewhere.
I think, as Karima said, it's about also understanding the competitive landscape as well as being able to deal with patent assertion. Getting to a point where we think we can win. We have very strategic assets because some patents are worth more than others. It's not like every patent is worth the same amount. It covers different things. Some patents are very broad in their coverage and are very powerful and some have very narrow coverage and are easy to circumvent. Every patent has a very different valuation.
Mark Schaan: That's hugely helpful. I think there's so much for us to continue to dig in on this particular issue about overcoming the giants in many ways and thinking about what our most strategic tack is. Sometimes, it is relying on other intellectual property rights. Sometimes, it is collectivizing and pooling and having each other's backs. I think we're still working through some of those very interesting models about if we're all sharing the guard dog, who pays the liability when the guard dog bites the assailant. I still think it's a fascinating area that all of you are helping us work through.
We are very close on time. Maybe I'll just ask each one of you for one sentence on a parting thought on this wild world of the new intangibles.
Karima Bawa: I think I'd say don't discount its importance. Don't discount its importance from a practical and a strategic level and think about it in every context of what you're dealing with when you're dealing with these innovators and entrepreneurs that come across your desk in the multitude of different ways.
Myra Tawfik: I will chime in just to follow up. Let's start to think of growing Canada into an IP powerhouse. Start to think of ourselves as having the capacity to become exporters of intellectual property.
Natalie Raffoul: I would just end, based on my own domain expertise, that software patents are real.
Computer implemented inventions are being protected. I would challenge all of your ministries to look deep inside. You're all developing software. You all have computer-implemented solutions. Think along the lines of what is the IP strategy around this and formulate, because some of you are further along than others. But, you know, it's real.
Mark Schaan: I have no man-all rule in that I won't appear on panels with just men, but I may make it a new rule that I only want to appear on panels with extraordinarily professional, smart, ambitious, provoking, and provocative thought leaders like yourselves.
A huge thank you to Natalie, Karima, and Myra and to Aaron as well for the intro. A big thank you to all of you who've been participating in our telecast today. A reminder that there are folks and your colleagues in the Department of Innovation, Science and Economic Development and at Global Affairs and at the Department of Canadian Heritage for whom these are their files and their day-to-day work. You should draw on them. Just an indication that the next event in the series will be held on September 11th. That event will focus in on governing cross-border data flow and how trade in data is different from trade in goods or services in the new economy. So a huge thanks to everyone. Un grand merci à tous. Merci pour votre participation et bonne journée.