Accounting for Law
Intellectual Property

Federal budget falls short on innovation

By Aaron Edgar

The federal government's 2017 Budget puts a focus on bolstering innovation in Canada by proposing investments in “superclusters”, a new Strategic Innovation Fund, and a new Venture Capital Catalyst Initiative, among other initiatives. 

But these expenditures will likely fail to increase innovation according to the best metric we have for measuring Canadian innovation: patent applications filed by and granted to Canadian applicants.

The metrics by which the government intends to measure the success of these investments aren't clear at this early stage. It is often difficult to measure innovation, but without a way of quantifying the results, it will be difficult to assess if they've hit the mark in promoting innovation. 

Patents are awarded by the patent office if the invention is innovative. The legal test is whether it's new and non-obvious over prior publications. Measuring the number of patents filed by and granted to Canadians can then be a useful way to track innovation trends within the country, and to evaluate Canada’s innovative strength compared to other countries.

I have previously advocated that the federal budget should include policies designed to stimulate patent filings, such as a First Patent Program or a “patent box” tax break.

In the past, Canada has not measured up particularly well to other countries. According to the WIPO Intellectual Property Indicators 2016 Report, Canada is ninth in patent applications in the world. Although there was some growth in from 2015 to 2016, this was mostly due to an increase in non-resident applications, which does not represent Canadian innovation.

When patent filings are measured according to gross domestic product (GDP) and population, Canada falls further down the list. It is not in the top 20 countries for patent applications per GDP and is 20th when looking at patent applications per million people. An improvement in Canada’s patent output may be one way of measuring the success of the 2017 budget proposals on innovation.

The 2017 budget also states that the government recognizes “the importance of a well-functioning intellectual property regime” and that 2017 will see the development of a new IP strategy for the country. However, what changes this new IP strategy will bring remains to be seen.

Toronto patent lawyer Aaron Edgar is a partner at Edgar Chana Law.

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