Financially Pinched? Maybe It’s Because Canadians Are Vulnerable

Over time, Canada’s can-do attitude has faded.

April 1, 2024
This file photo taken in 2009 shows the rebuilt Italian abbey of Monte Cassino, the site of heroic action by Canadian paratroopers in 1944. (REUTERS)

Canadians have typically had an optimistic confidence in our ability to compete and generate revenue from new products and services that we introduce to global markets, and our government’s sound fiscal and monetary policy (such as during the Mark Carney years before he headed to the United Kingdom). On the global scene and following Canada’s Second World War contributions and peacekeeping initiatives through the famous casques bleus, the country was well respected.

Over time, however, Canada’s can-do attitude has faded. Even our UN peacekeeping staff has dwindled to fewer than 100 people. Coupled with inflationary concerns, interest rate hikes, the rising cost of living and various external pressures and threats (i.e., foreign interference), we can no longer take our traditional economic drivers and models of business for granted.

Although foreign interference and economic security are being examined by different parliamentary committees, including the Standing Committee on Science and Research, Canada’s Department of Justice has recognized the theft of “intellectual property, know-how or imposing market conditions to gain an economic advantage against Canada” in its online public consultation on foreign interference. This has also been discussed in a report from CIGI, among others.

But there’s a twist: the threats (the T in SWOT — strengths, weaknesses, opportunities and threats) aren’t as covert, deceitful or spy-like as one is led to believe, or as referred to in some legislation, such as the Security of Information Act. On the contrary, the threats are in plain sight, overt, and made in the name (or guise) of collaboration, innovation and investment (or foreign direct investment) by both friends and foes.

While Canada’s ranking falls in competition and productivity indexes, competing nations are taking advantage of the opportunity. These nations have deployed billions of euros or dollars on strategy and innovation: for instance, the €95.5 billion Horizon Europe 2030 fund and China’s US$1 trillion Belt and Road Initiative (BRI), which seeks “to connect Asia with Africa and Europe via land and maritime networks with the aim of improving regional integration, increasing trade and stimulating economic growth.” While the BRI is attractive, critics argue that one cannot lose sight of China’s underlying effort to “make participating nations interdependent with the Chinese economy, and thereby build economic and political influence for China,” hence “weaponizing innovation.”

But this presents a moral quandary. On the one hand, innovation is perceived as good — a known economic driver that enables us to create value and revenue as well as ease our bottom lines, especially when Canada has deployed billions of dollars to becoming more innovative and securing its intellectual property (IP). But on the other hand, innovation exposes us to serious risk, especially when we count on other people (i.e., investors) to fund and commercialize our creations. They may lay a hand on our intellectual capital, which could affect our national interests when the resulting technology touches upon emerging and disruptive technologies in a multitude of spaces. These include critical infrastructure and minerals, high technology as well as the automotive sector, where Canada has deployed significant capital (i.e., the electric vehicle space).

If we’re to address these issues, it’s not just modernization of legislation that is required, but also public engagement and dialogue about our innovation and security culture, as well as the creation of supporting documentation (including strategy, guidelines and legislation) that will assist us in detecting, managing and responding to threats. This approach is especially important when our personal, hard-won income, including taxpayer dollars, is used to fund public research and development and invest in businesses that seek to improve our economy and developing technology, which more often than not captures sensitive data.

Although the last review of Canada’s national security strategy occurred in 2004 — 12 years before the creation of TikTok in 2016 — there is an opportunity for redress and better leverage of business knowledge assets to maximize value, especially when IP is severely underused. Le Devoir, a French-language newspaper, published some very sobering statistics (translated by the author):

Intellectual property held by Hydro-Québec represents 0.2 percent of its revenues. That’s two-tenths of one percent. That’s half the Canadian average, where intellectual property revenues — $6.5 billion — accounted for around 0.4 per cent of total corporate revenues in 2020.

In the United States, intellectual property revenues amounted in 2019 to 7.8 trillion US dollars. That represented a third of the value of US GDP that year.

One third!

Call it what you like — economic interest, economic security or even national security — there needs to be serious questioning, a remise en question, about our innovation and security culture, and our motivation to substantively reconsider our priorities and strategies. At stake is nothing less than our national relevance, from the standpoint of both business and government. Just imagine what position Canada could be in if we could move the IP-generated revenue needle just a few points.

The opinions expressed in this article/multimedia are those of the author(s) and do not necessarily reflect the views of CIGI or its Board of Directors.

About the Author

David Durand is a lawyer, co-founder of MVIP Solutions and president of the International Intellectual Property Forum – Quebec.