CSIS Director Daniel Rogers appears as a witness at the Foreign Interference Commission in Ottawa, in 2024. Canada's spy agency has warned Canadian startups about the risks of engaging in international pitch competitions.Spencer Colby/The Canadian Press
Jim Hinton is an IP lawyer and strategist and founder of Own Innovation. Alexis Conrad is the principal IP adviser at Communitech.
Canada’s spy agency is joining those of us who are sounding the alarm about our country’s intellectual property. Last week, the Canadian Security Intelligence Service, along with U.S. partners, warned that international pitch competitions organized by China pose serious risks for Canadian startups, from losing their IP to having their data misused and their talent recruited abroad.
It’s a reminder that our support systems are often misaligned and self-defeating. Canadians are already paying twice for our own ideas: once to generate the research and talent, and again when the value walks out the door to foreign competitors.
Imagine Canada’s physical public infrastructure – our roads, sewers, electrical grids, hospitals, airports – being owned by American, European and Chinese companies after Canadians spent billions building it all. Every time we commute, get sick, plug in a phone or flush the toilet, we pay someone else to utilize infrastructure our tax dollars built. Canadians wouldn’t stand for it.
But that is how we have been treating our digital public infrastructure and institutions. We fund the research. We educate the talent. Then we let the ownership and economic value walk out the door. And then we buy the innovations back at marked-up prices. Canadian taxpayers pay once to build it, then pay again to use it, never getting paid back for our spend, never reaping the upside, just ceding our sovereignty at the same time.
Prime Minister Mark Carney needs to be applauded for finally declaring that the Canadian government needs to “Buy Canadian.” This recognizes calls that Canadian innovators have been making for more than a decade. This fall’s budget will reveal whether Canada is ready to stop the cycle or keep paying twice.
Carney says to expect both an austerity and investment-focused budget
While it’s great that Canadian steel, oil and lumber will be part of this Canada-first approach, the high-value parts of the world’s economy no longer rely on pipelines and factories. They run on IP and data. More than half the value of an iPhone is IP. Apple, Microsoft, Nvidia and Alphabet don’t dominate because of the gadgets they sell. They dominate because they own the rights to IP, algorithms, brands and trade secrets.
IP is not simply a matter of economic prosperity; it’s also a matter of national security. An ill-intentioned hacker (or government) could bring electric vehicles on the road to a dead stop. Ninety per cent of the data collected by BYD cars goes back to China.
Meanwhile, Canada is still playing a 20th-century game. Billions go to subsidize branch plants and foreign automakers. But the Canadian innovators building the underlying technologies are left scrambling to cover the cost of a single patent. That’s not economic development. That’s surrender.
Other countries treat IP as economic infrastructure. The United States holds millions of patents. China had fewer than a dozen high-value clean-tech patents in 2000. Today, it has more than 5,000. Both nations have treated IP as the lever of competitiveness in the 21st century for decades.
Canada? We continue to give it away. Our universities pump out world-class research, but the resulting IP is often transferred abroad. Our startups generate breakthroughs, but without protection and strategy, the value is snapped up by foreign firms.
Nowhere is this clearer than in artificial intelligence. About 75 per cent of AI patents from Canadian researchers at Toronto’s Vector Institute and Montreal’s Mila end up outside the country, most of them in the hands of U.S. tech giants. Only about 7 per cent remain with Canadian firms. This is an AI ownership crisis, and the CSIS warning shows it’s also a security risk.
But IP and data governance can’t simply be left to a department or siloed funding. It needs to be a way of life for Canadian governments.
South Korea turned its IP office into a ministry. The Canadian Intellectual Property Office needs to be supported in a similar way. Other programs such ElevateIP, the Innovation Asset Collective and IP clinics are underfunded by orders of magnitude when compared with international counterparts.
Yet these programs help startups protect their ideas, attract investment and scale globally. Skygauge Robotics is just one example. A single patent, filed with the help of York University’s IP Innovation Clinic, turned a student-led startup into a global company rooted here in Canada. Filing a patent application is precisely one of CSIS’s recommendations to mitigate the risk of IP theft.
This type of impact is growing. In just one year, ElevateIP supported more than 1,300 startups, delivered nearly 2,800 strategy and implementation services and backed more than 700 patent applications.
If Ottawa lets these types of collaborations and support expire, the message will be that Canada still doesn’t take IP seriously.
Budgets are choices. The next one will demonstrate whether Canada is ready to own its future or whether we’ll keep giving it away. No one expects a single budget to close Canada’s IP deficit, but this one can prove intent. It can extend existing programs, expand their reach and ultimately lay the foundation for a functioning national IP strategy.