The Innovation Ecosystem is Complicated—Intellectual Property is not a Fix-All Solution

Jun 14, 2022 | Blog, Guidelines

It is a given that governments should pay close attention to our innovation ecosystem‭; ‬it is the most obvious driver of our social and economic wellbeing now and into the future

The global economy is shifting towards knowledge-based industries and systems, underscoring the importance of policies that encourage ambitious scientific research and the commercial translation of resulting inventions and innovation. While Canada has a highly educated, growing population and excellent research capacity, the country has had a consistently weak performance when it comes to innovation. According to the Conference Board of Canada, in 2021, Canada ranked 11th of 16 peer countries for innovation with a C grade. While this under-performance has been reason for concern for many years (perhaps first brought to the forefront through Canada’s Fundamental Science Review, the so-called ‘Naylor report’ in 2017), the 2022 Federal budget seems to have at least some focus on ameliorating the country’s lagging innovation-driven economic productivity. The 2022 budget includes a $15-billion Canada Growth Fund and a new innovation agency, a long-awaited 50 per cent tax credit on heavy industrial carbon-capture projects, a $4 billion “accelerator” to increase housing supply, $6.1 billion over 5 years to the Department of National Defence as well as a $47.8 million program to improve the country’s intellectual property (IP) performance through a new “lab to market” program, at least half of which will be distributed by Innovation, Science and Economic Development Canada (ISED). 

IP is ONE output of a healthy innovation ecosystem‭, ‬but if policies ignore or de-emphasize everything else‭, ‬we are unlikely to see results

IP should be a core component of Canada’s modern economic development strategy and at the heart of the ambition to make Canada a global commercialization and innovation hub. Why? Because a strong IP system is fundamental to giving businesses and academic institutions the confidence and expertise to bring the ground-breaking results of collaborative research to market.

But innovation ecosystems are complicated, with many interconnected actors and circular value chains. Below is a simplified conceptual model of what we mean. You can see that within this model system, IP is one measure of innovation output and one path through which research-based findings can be mobilized towards commercial outcomes. Also, while protected intellectual property is more often considered a prerequisite of innovation uptake and commercial performance in some sectors (for example in pharma), it can play a less significant role in other sectors (like software or biological materials). So thinking about IP as an end-all and be-all indicator of innovation-driven economic growth is not accurate.  Other innovation outputs, like useful knowledge and innovative ideas that can lead to new business practices, can also contribute significantly (sometimes indirectly) to monetization.

Moreover, commercial value generation (jobs and wealth) are not the only outcomes that should be expected of a productive innovation-based economic engine. Social value generation, talent development and attraction, are other core outcomes that innovation policies and programs must aim for.

Our simplified model of a vibrant innovation-driven regional economy and community necessitates the connection of at least five interconnected outputs: the region’s ability to recruit high-calibre and diverse researchers (students and faculty), the region’s ability to secure research funding (from public grants, philanthropic dollars and industry collaborations), the region’s research excellence and impact, the region’s innovation outputs (which includes patents and other forms of IP, but also useful knowledge, innovative ideas, competitive business strategies, and highly qualified personnel), the degree of local industry growth, diversity and health (VC funding, foreign direct investments, start-ups, spin-outs and scale-ups and their revenue growth, presence of large multinationals) and finally the robustness of the public enterprise. 

Innovation policies should aim to integrate and align different actors and parts of the system‭, ‬not siloize or compartmentalize‭ ‬mandates and accountabilities

There are three primary actors in the innovation-driven ecosystem that are supported by government funding and policy in one way or another: post-secondary institutions, commercialization enablers and business support organizations. While the success of all these actors is tied to the creation of jobs, wealth, social value and talent, their individual mandates are more strongly linked to certain (not all) components of the system. For example, tech transfer offices (TTOs) are generally charged with helping to recognize and protect IP, commercialization enablers help to shop for receptors or create commercial vehicles to mature and increase marketability of innovations, and business support organizations help to bolster and cultivate fledgling or established companies. These actors need to align their objectives and better fuse at the intersections for the virtuous cycle of innovation-driven economic productivity to revolve. 

Research excellence and discovery science are not the enemies of innovation‭; ‬without them the innovation system will perish

We need to think about the innovation system as an organism, not as a few disparate parts, which will not function or accomplish anything on their own. We need to put forward a sound and balanced strategy that allows this whole organism to thrive. That means, first and foremost, ensuring that the parts of the system that are working, for example our research excellence, continue to get the fuel and energy they need to perform. We will also need pockets of funding specifically for the development of purpose-driven solutions and job-ready talent pools, but also policies and programs to ensure scientists generating high-impact research findings have the understanding, desire and all the necessary implements to translate that knowledge into practical commercial solutions if and when appropriate. We may also need to roll out carefully-designed institutional policies that encourage both knowledge generation and entrepreneurship as recognized outputs of research endeavours, as well as capacity building, capability building and investments across the system, including at Tech Transfer Offices, to bring the right expertise and know-how for advancing research-based ideas to the fore in the marketplace. A central entity (such as the nascent Intellectual Property Ontario) focused on IP should not only serve as a credible resource to educate researchers on the merits and best practices surrounding innovation, it can also help to build strong competencies at TTOs for IP recognition and protection, and even serve as (or boost the work of) commercialization enablers to find and create appropriate market paths for new IP through seamless connectivity with the business community.