Keep Canada’s IP in Canada
A lot of people think of Thomas Edison as a great inventor. But he was also a savvy businessman—someone who understood the true value of owning ideas. That’s what made the difference in his famous rivalry with Nikola Tesla. Tesla’s ideas were brilliant. But Edison controlled the patents, the licensing and, ultimately, the profits. Today, that same dynamic is playing out between Canada and the United States. We have no shortage of innovation, just like Tesla. But without capturing the value of that innovation through intellectual property, we risk remaining an also-ran in America’s shadow.
The core problem is that our policymakers and institutions are still playing by outdated rules. In the 1970s, about 85 per cent of the S&P 500’s value came from tangible assets like factories, equipment and inventory. Today, more than 90 per cent of that value comes from intangible assets; patents, proprietary software, trade secrets—all forms of IP. And yet we continue to operate as if we’re still in a brick-and-mortar economy.
Our backwards mentality is reflected in how we allocate our innovation funding nationwide. Take Ferrero Canada’s plant in Brantford, Ontario, which just received millions in provincial government subsidies for its planned expansion. Or the hundreds of millions that Ottawa recently pledged to upgrade IBM’s semiconductor packaging facility in Bromont, Quebec. Policymakers might see these projects as political wins that create jobs and benefit the economy. But we’re essentially investing public dollars into foreign-owned companies. The profits and long-term economic benefits ultimately flow back to their home countries—not Canada. It’s like pouring water into a leaky bucket. In doing so, we’re missing the chance to invest those funds into building globally competitive Canadian firms.
What’s missing in Canada is the infrastructure to commercialize tech and IP at scale, something that other countries have invested in heavily. Consider Germany, where a publicly owned research organization called the Fraunhofer Society has a $5-billion budget and employs tens of thousands of scientists and engineers in 76 institutes across the country. Those institutes specialize in different areas of applied science, with Fraunhofer serving as a centralized hub for managing the IP they generate—directly linking R&D to economic prosperity. Canada, by contrast, has a fragmented system of small, under-resourced offices that lack coordination and often end up working primarily for foreign firms.
It’s no surprise, then, that Canadian researchers seeking to commercialize their ideas often end up selling them overseas—especially to the U.S., which offers far deeper funding for IP commercialization. To stop the talent and IP drain to the U.S., we have to beat them at their own game. And that starts with changing how we think about the value of IP, then realigning public policy to match our new mindset.
The first step is improving Canadian IP literacy, particularly among policymakers. The average person knows what IP is. But few understand how it actually drives power in the modern economy. It’s not just patents and copyrights; it’s algorithms, proprietary datasets and the business know-how to monetize them. Whoever controls those intangibles controls the value chain. In the U.S., many tech founders and investors are fluent in this language. In Canada, that institutional knowledge is thinner. We need to bring in more experts—domestic and international—to advise startups, public agencies and even cabinet ministers. And then we need to turbocharge our existing education and training programs to translate those insights into practical tools.
Ideally, this educational acceleration will guide policymakers in realizing that if more than 90 per cent of the value in today’s economy is intangible, then our funding should reflect that reality. As things stand, we’re falling drastically behind. Canadians file just 123 patent applications per million people, putting us dead last among G7 countries. To put that in perspective, Japan files around 1,770 applications per million. We’re not even in the same stratosphere as far smaller Scandinavian economies like Denmark and Sweden, which file between 600 and 700 applications.
To catch up, we need to significantly increase our investment in intangible IP. This doesn’t mean cutting off all investment in physical production, even if it’s for foreign players in Canada. It means being strategic. Use the majority of public dollars to back Canadian firms that generate and retain their own IP, with an emphasis on high-value areas like AI and clean tech. Yes, some of those bets will fail. But others will become the next Shopify. And even the failures will leave more behind than a subsidized foreign-owned packaging plant.
One way to help Canadian firms compete is by supporting the creation of patent and data collectives: industry-specific groups that pool together their IP resources. In IP, there’s strength in numbers. A single company with 100 patents is far more protected than 100 companies with one patent each. Canada’s a relatively small market, and our firms often lack the scale to defend themselves in IP battles with corporate giants based in the U.S. or elsewhere. Collectives allow them to access shared legal tools and negotiate from a position of strength.
Another step is expanding support programs that already work. The Innovation Asset Collective, which I co-founded in 2020, is a $30-million federally funded non-profit designed to help small and medium-sized Canadian companies build and protect their IP. Right now, it’s focused on data-driven clean-tech firms. It’s the first program in Canada to take a truly holistic approach to IP, offering training, strategic guidance, peer-to-peer networks, grant support, even liability insurance to cover legal costs if firms are accused of IP infringement. To make a broader impact, we need to extend this model well beyond clean tech.
Lastly, we need to rethink the role of universities in Canada’s innovation ecosystem. Currently, more than half of the industry-assigned IP that comes out of Canadian universities ends up in the hands of foreign companies. In 2018 alone, Canadian universities spent $4.5 billion on research and development. You know how much they made in IP commercialization? Just $54.4 million. That’s not a minor oversight—that’s a structural failure.
Canadian universities excel at basic research and education. But in countries like Finland, economic development is also part of their universities’ institutional mandate. We need to give Canadian universities that same mandate. By aligning academic priorities with national economic goals, we can ensure that publicly funded research helps Canadian-headquartered companies commercialize and scale IP here at home and around the world.
In short, Canada doesn’t just need more innovation. We need to own it. That means thinking less like factory landlords and more like IP lawyers. The economy of the future isn’t built with bricks—it’s built with intellectual property. If we get this right, we’ll have a booming innovation economy that captures a far more substantial chunk of global market value. If we don’t, we’ll keep creating the ideas while someone else gets rich off them.
Jim Hinton is the founder of Own Innovation
