Many Canadian-invented patents not staying with Canadians, study finds

Despite having the right conditions for innovation — from educated workers to strong research centres — many Canadian-invented patents are being snapped up by foreign firms rather than being developed by Canadian ones, a new study says.  

The report published by the Institute for Research on Public Policy says Canadians are increasingly likely to transfer or sell their intellectual property to foreign entities, especially with deep-pocketed American companies keen to invest in innovation.

"Canadians are actually pretty good innovators — they're investing quite a bit in innovation and we have lots of people who are smart," said Aidan Hollis, an economist at the University of Calgary, who co-authored the report with Nancy Gallini of the Vancouver School of Economics at the University of British Columbia.

"They do the innovations. They are listed on the patent. And then the patent is immediately assigned to the foreign company for which they work, or else, if it's a Canadian company, often the Canadian company will end up selling the innovation with the patent. That's sort of the core of the issue."

Patent ownership is important for Canadian innovators who want to commercialize their inventions and scale them up, the authors say. It helps them obtain financing, fend off rivals and offers protection from patent trolls.

Yet, in tracking U.S. patents with at least one Canadian inventor over a 20-year period, the study found the proportion of Canadian-invented patents transferred to foreign firms on the date of issue jumped to 45 percent from 18 percent. 

"And of the patents that are assigned to Canadian residents, a significant proportion are subsequently sold to foreign entities," says the report.

 U.S. companies are investing lots of money in innovation, Hollis said.

"They're putting … branch plants here in Canada and hiring Canadian workers, who then basically do lots of innovative work," he said. "And then the intellectual property rights and the ability to commercialize and monetize that innovation, it's handed over to the foreign corporation."

Though this "may be a cause for concern," the study says investments in Canada by foreign subsidiaries can produce long-term benefits for Canadians, including development of scientific infra­structure.

Strengthening intellectual property laws isn't likely to have much impact on scaling up activity in Canada, the study says. 

"More important to inventors is the ability to obtain and retain ownership of inter­national patents in order to operate in global markets," it says.

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Policies that improve awareness of the value of patent ownership, and make it easier and less expensive to access global markets, could make a difference.

Though the study calls a federal strategy aimed at promoting better management of intellectual property "promising," it says further policies and incentives supporting patent retention are needed.