NSERC moves to keep research IP in Canada

The day after the Council of Canadian Academies released its damning report on the state of science, technology, and innovation in Canada, NSERC President Alejandro Adem signed a memorandum of understanding aimed at aligning research funding with commercialization and, ultimately, Canadian economic prosperity.

His co-signatory was Jesse Vincent-Herscovici, CEO of Axelys, an agency dedicated to transforming the way research in Quebec is managed — and to ensuring it benefits society by keeping the resulting intellectual property in the province.

Through the MOU, signed last November, Dr. Adem sees NSERC poised to bring a similar approach to the rest of Canada.

“They say Canada’s great at IP philanthropy, and we want to stop that!” says Dr. Adem. “We want to be hard-nosed about it. That’s a great value Axelys is bringing. I think we can learn from that kind of methodology.”

Shifting from ‘innovation’ to ‘valorisation.’  

The shift in thinking starts with the very language of innovation, which in Quebec employs the term “valorisation.” Implying much more than novelty, discovery or invention, the concept has been shaping the province’s academic landscape and policy debates since the launch of the amibitious policy initiative Savoir changer le monde (Knowledge to change the world) almost 25 years ago.  

Axelys emerged in 2021 as the brainchild of this evolving strategy, linking the province’s dozens of college and university technology transfer offices through a single administrative office. While the Fonds de recherche du Quebec (FRQ) supports research upstream to the point of scientific discovery, the specialized teams at Axelys work downstream to assess the prospects of any intellectual property (IP) and ensure it remains in Canadian hands.

“It’s a bold model,” explains Mr. Vincent-Herscovici, who was vice-president of business development for the innovation agency Mitacs before joining Axelys. “We are well on the way to what is more than technology transfer.”

But, Mr. Vincent-Herscovici told members of the House of Commons Standing Committee on Science and Research just a couple of weeks before signing the MOU, the valorisation model doesn’t yet exist on a Canada-wide level.

“What we lack are the mechanisms to systematically transform our discoveries on a large scale into something of value for society,” he said. 

Intellectual property is the new gold 

The fate of IP distinguishes “valorisation” from “innovation,” which was at the heart of the discussion Mr. Vincent-Herscovici attended with the Standing Committee. As he and other speakers argued, the past several decades have seen a dramatic shift in the global definition of wealth, no longer rooted in tangible assets such as gold or manufacturing facilities, but instead taking intangible, digital forms — the patents and proprietary ideas generated by innovative research.

Canada rightly celebrates its global standing in research, the ability to generate those ideas with commercial potential. However, the country’s ability to hold on to those ideas is another story, something Jim Balsillie, the founder of BlackBerry maker Research In Motion, put in stark terms for the standing committee.

“Canada’s research and innovation strategy is global philanthropy,” he said. “It’s how we give to foreign countries. The problem is that we don’t have a policy where the individual researcher or university has to make decisions that benefit Canada economically where the economy is at hand.”

In other words, public money provided to Canada’s research community comes with no IP strings attached. Of course, individuals and institutions must account for spending the money on the work they indicated they would carry out when applying for it, but their obligation to Canada ends there. That work might generate ideas worth patenting, but if the researchers do not care to legally protect those ideas — or even know how to do so — they might sell or simply give away such rights to an interested party, then proceed to publish their findings, a step of much greater practical importance to their careers than producing wealth for society.

Tying IP strings to research funding 

For Mr. Vincent-Herscovici, this form of R&D philanthropy might not even be a conscious decision. The commercial potential of research insights can take years, even decades, to become apparent, as technology or markets change to create opportunities for new products. For just that reason, he insists research funds should come with IP strings, so that even the most unpromising IP candidates can be retained and regularly assessed, a safeguard against the possibility that they could become more valuable at some point in the future.

None of this comes cheap, which is why most institutions have shied away from such a process. Cultivating the necessary legal and technical expertise to determine the value of IP, along with maintaining a substantial database for tracking it, is an expensive, long game. Nevertheless, it is precisely the game countries such as China, South Korea, Israel, and Sweden have played for decades, yielding dramatic economic results based on their ability to wield IP — some of it provided by publicly funded Canadian research — for valorisation.

Within Canada, Axelys has already demonstrated the virtues of valorisation. Mr. Vincent-Herscovici told the Standing Committee that, in most provinces, the transfer rate of IP to Canadian small- and medium-enterprises (SMEs) is somewhere between 33% and 50%. In Quebec, that rate is 89.5%, and Axelys monitors how this IP is handled, in case foreign companies might be trying to acquire the enterprises receiving it.

“That’s a fundamental paradigm shift,” he says, adding that in one sense, it is bad business. “It means that you may take a lower dollar licence because it’s going to a Canadian SME. You may leave money on the table.”

Public funding, public value 

The difficulty of embracing this counter-intuitive notion is what has prevented Canada from enjoying the same innovative success seen elsewhere. Those Quebec SMEs get a bargain, since the IP might have earned a higher price if it went to a foreign buyer. Axelys covers that immediate loss, in exchange for the longer-term assurance IP will remain where it could benefit the same public that paid for it in the first place.

The good news, according to Mr. Vincent-Herscovici, is this difficulty is not written into our national genes. It is a structural problem, based on how research funding is provided — a bureaucratic problem to be solved, not an inherent cultural trait to be tackled.

“There’s a reason we have this problem in Canada,” he says. “It’s not a paradox, it’s very logical. The mechanics of post-secondary education are not in line with valorisation. They are in line with publishing, they are in line with teaching, they are in line with with getting dollars from some council. That’s your holy trinity. Putting time into a declaration, structuring a patent, supporting and mentoring — no one’s against it, but that’s not your holy trinity. It’s a different business and it needs its own expertise.”

Now, it’s time for NSERC to help expand Quebec’s valorisation model to the rest of Canada, says Dr. Adem.

“We can be instrumental in culture change among the research community.”