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Intellectual Property

Federal government urged to embrace IP innovation programs

The federal government should heed the advice of the intellectual property community to close the innovation gap in Canada’s economy, Toronto patent lawyer Aaron Edgar tells AdvocateDaily.com.

In its 2018 pre-budget submission, the Intellectual Property Institute of Canada (IPIC) urged the government to adopt a three-step program it claims will help the country’s business community “innovate, commercialize, and leverage their intellectual property to compete and grow.”

“These are great ideas that will promote patent filings and help ensure the future growth of our economy,” says Edgar, a partner with Edgar Chana Law. "In order to remain competitive with its global peers, Canada needs to incentivize innovation and provide tax breaks that have been tried elsewhere.”

The three complementary initiatives proposed by IPIC are known as the “first patent program,” the “commercialization coupon” and the “innovation box.”

“They are intended to support the commercial implementation and global competitiveness of Canadian innovations and intellectual property, while targeting both ends of the ‘innovation gap’ in the Canadian economy. Together, these programs will support Canadian R&D, commercialization, and job growth," the IPIC submission reads.

Modelled on a similar idea enacted in Quebec, the federal first patent program would make subsidies available for small- and medium-sized businesses obtaining their first patents.

Edgar says these costs are often a large hurdle for founders with enough other worries on their plates trying to get businesses off the ground.

“The law requires you to file as soon as possible, but startups may not have funding in place at the time they should be filing for patent protection,” he says.

The Quebec program launched in the summer of 2015, provided enterprises with fewer than 250 employees the opportunity to claim half of the expenses paid towards their patent application project, up to a maximum of $25,000.

Commercialization coupons are meant to promote patent and other IP protection to researchers funded by government grants. Academics whose work results in patentable matter may only pursue an application if they already have a commercial partner due to the cost of the process, the IPIC submission says, suggesting a one-time funding injection of between $10,000 and $20,000 to go exclusively towards the commercialization of the research.

“Canadian businesses and researchers need to improve on the crucial step of commercializing our innovations and intellectual property if we want our economy to grow,” the IPIC proposal continues.

Innovation boxes, sometimes known as “patent boxes” or “IP boxes,” provide special lower tax rates on income related to businesses’ intellectual property, aimed at incentivizing commercialization of research inside the country.

They get their name from the extra checkbox added to tax returns in countries where the reduced tax rate has been adopted, in order to delineate eligible revenue from companies’ regular income.

The Irish government pioneered the idea in the 1970s, but a number of nations have jumped on the innovation box bandwagon in recent years, including China, the United Kingdom, Belgium, Luxembourg, France, Spain and Switzerland.

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