New IP-Related Statistics for the Canadian Innovation Ecosystem
In late July 2024, Statistics Canada released a series of reports on Canada’s innovation ecosystem. Here are some key takeaways:
“While business expenditures on research and development (R&D) have risen, as have the receipts that R&D-performing firms earn from intellectual property, concerns over the intensity with which businesses are investing and capitalizing on their investments in knowledge capital persist, especially in relation to many competitor economies” (Understanding Canada’s innovation paradox: Exploring linkages between innovation, technology adoption and productivity);
“Recent data from innovation and technology surveys highlight the positive linkages between competition, innovation and business efficiency. While business expenditures on research and development (R&D) and receipts from intellectual property are rising, concerns over the intensity with which businesses are investing in knowledge capital persist, especially in relation to many competitor economies. R&D intensity remains low, while patent applications scaled back measurably prior to the pandemic” (Research to Insights: Challenges and Opportunities in Innovation, Technology Adoption and Productivity); and
“Canadian IP activities grew from 9.0% in 2019 to 11.9% in 2022” (Survey of Innovation and Business Strategy, 2022, July 31, 2024).
In the first report, titled Understanding Canada’s innovation paradox: Exploring linkages between innovation, technology adoption and productivity, the authors noted significant challenges and opportunities around R&D and patent activity. More particularly:
“While business expenditures on research and development (R&D) have risen, as have the receipts that R&D-performing firms earn from intellectual property, concerns over the intensity with which businesses are investing and capitalizing on their investments in knowledge capital persist, especially in relation to many competitor economies. Canada’s overall R&D intensity remains well below many other countries, and in 2021, fell two spots to 19th in the Organisation for Economic Co-operation and Development (OECD). At the same time, business sector R&D spending as a share of GDP was the second lowest in the G7.
R&D-performing businesses in Canada generated $8.9 billion from their intellectual property in 2021, up over one third from 2020, with much of the growth coming from higher receipts from software. Software sales accounted for almost three quarters of the total receipts from intellectual property. While over one in five businesses owned an intellectual property asset in 2022, only 5.8% owned patents (Survey of Innovation and Business Strategy).
Trends in Canadian patent applications were recently examined by Abbes, Lafrance-Cooke and Leung (2023). The authors showed that the growth in patent applications in Canada and applications abroad by Canadians stagnated in the years leading up to the pandemic, falling to levels observed in the early 2000s. New research by Gagnon and Ma (2024) examined the advanced technologies associated with patent applications, focusing on trends among Canadian and foreign-owned multinationals. Applications for high-tech patents, largely for communications, computer, and automated business equipment, accounted for about one third of all applications by Canadian-resident businesses between 2001 and 2019. Their study also showed that Canadian multinationals exhibited superior intellectual property generation than foreign-owned multinationals, with Canadian-controlled businesses generating more intellectual property relative to their investments in R&D.”
In the second report tilted Research to Insights: Challenges and Opportunities in Innovation, Technology Adoption and Productivity, the authors concluded that:
Businesses invest in innovation and technology adoption—especially in response to competition, and that “nearly two in five businesses that developed and introduced product innovations registered to protect their intellectual property”;
Business research and development spending is ramping up, but overall R&D intensity remains well below that of other major industrial economies. In this regard, it was noted that “foreign multinationals accounted for over 40% of all intramural research and development (R&D) spending by corporations in 2021, and one-third of all corporate expenditures on intellectual property (IP) in 2022”; and
Patent activity scaled back prior to the COVID-19 pandemic. In this regard, it was noted that “while over one in five businesses owned an intellectual property (IP) asset in 2022, only about 6% owned patents (Survey of Innovation and Business Strategy, 2022).”
Further noted:
“Recent data from innovation and technology surveys highlight the positive linkages between competition, innovation and business efficiency. While business expenditures on research and development (R&D) and receipts from intellectual property are rising, concerns over the intensity with which businesses are investing in knowledge capital persist, especially in relation to many competitor economies. R&D intensity remains low, while patent applications scaled back measurably prior to the pandemic.”
In its third report titled Survey of Innovation and Business Strategy, 2022 and released on July 31, 2024, the authors noted that:
Innovation activities are an important precursor to the introduction of new products and business processes, the filing of intellectual property protection and accessing government support
"Innovation activities are strongly associated with innovation. In fact, 9 in 10 businesses (89.9%) that conducted innovation activities in 2022 introduced an innovation in the 2020-to-2022 period, while this proportion falls to approximately 1 in 2 businesses (55.7%) for those that did not conduct innovation activities.
Filing for IP protection is a key innovation activity. Businesses that conducted innovation activities in 2022 were more apt to file to protect at least one type of IP during the 2020-to-2022 period compared with businesses that did not conduct innovation activities. Over one in five businesses (20.7%) that conducted innovation activities in 2022 filed for IP protection over the 2020-to-2022 period, compared with 3.5% of businesses that did not conduct innovation activities.
Businesses engaged in innovation activities in 2022 were also more likely to have received government support for innovation-related activities during the 2020-to-2022 period. The rate at which businesses used government programs to support innovation-related activities was over twice as high among businesses that conducted innovation activities in 2022 (50.0%) compared with those that did not (19.9%)."
Table 3 of the Survey, titled Rate of filing for new intellectual property (IP) assets among businesses that conduct innovation activities and businesses that do not displays:
The Importance of Maximizing Value and Intellectual Property
In today's fiercely competitive business environment, maximizing value is paramount. To achieve this goal, businesses must effectively leverage grants and incentives - flywheels (see here and here) as well as intellectual property (IP) investments. Grants and incentives provide vital financial support, reducing costs and freeing up capital for further innovation. This allows businesses to develop cutting-edge products and services, strengthening their market position and driving growth. Additionally, securing IP protection, such as patents and trademarks, grants businesses exclusive rights over their innovations. This exclusivity acts as a barrier to entry for competitors, protecting market share and revenue streams. Furthermore, strong IP portfolios enhance a business's appeal to investors and partners, opening doors to new collaborations and funding opportunities. Ultimately, by integrating grants, incentives, and strategic IP investments into their business strategy, companies can unlock significant value, fostering innovation, and maintaining a competitive edge in the dynamic global marketplace. Together this creates a multiplier effect.
MVIP™ and its dedicated project management office (PMO) can assist you in achieving these goals. Contact us.
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