by Kyle Briggs, David Durand, TJ Misra
Originally revealed on Policy Options
September 16, 2025
by Kyle Briggs, David Durand, TJ Misra
Originally revealed on Policy Options
September 16, 2025
Technology is altering our world at breakneck speed and revolutionary research is essential to remaining globally aggressive and safe. But Canada’s lack of a common coverage for governance of federally funded mental property (IP) makes tech transfer troublesome and blocks good concepts from attending to market.
Legislation handed in the United States greater than 4 a long time in the past below the Bayh-Dole Act dramatically modified how IP at universities and federal labs was dealt with, and helped kickstart an economic system that was in a downward spiral. It allowed post-secondary faculties and personal research establishments, quite than the authorities, to personal the patents arising from their research.
IRPP conference | Canada’s Next Economic Transformation: Industrial Policy in Tumultuous Times
It additionally required that they work with the home personal sector. This framework has led to numerous innovations arising from research and growth (R&D), together with medicine and vaccines, Google’s search algorithm and Honeycrisp apples.
But would the same strategy achieve success in Canada in at present’s context? Would it assist us higher capitalize on research funded with taxpayer {dollars}?
The Bayh-Dole Act
IP ensuing from federally funded research in the U.S. was petrifying on the shelf in the years earlier than the Nineteen Eighties. The authorities held 28,000 patents, however solely about five per cent have been getting used commercially.
The Bayh-Dole Act, handed in 1980, allowed universities to personal title to their innovations and supplied a monetary incentive to work with business. Combined with a non-public sector desperate to undertake revolutionary applied sciences, it grew to become a central aspect in a debate round the alleged failure of U.S. companies to “exploit academic research more effectively for commercial advantage.”
Two a long time after the laws handed, the Economist wrote that “[m]ore than anything, this single policy measure helped to reverse America’s precipitous slide into industrial irrelevance.”
Stopping the slide
The Bayh-Dole Act granted particular person research establishments the choice to personal patents on their research and to cost corporations to get entry to it. But it additionally imposed circumstances.
Universities have been required to point out good religion by making an attempt to make their research accessible commercially. They additionally had to make sure that any unique licence granted to a 3rd celebration would lead to merchandise that have been “manufactured substantially” in the U.S, guaranteeing that advantages accrued domestically.
Failure by research establishments to fulfill these duties gave the authorities “march-in rights,” but it surely has by no means intervened in the 45 years of the laws. So profitable was Bayh-Dole at stimulating tech switch that it has by no means been essential, though U.S. president Donald Trump has lately indicated intentions to revisit this.
The years after the laws was handed have been marked by universities centered on bringing their innovations to market. Subsequent a long time noticed an explosion of know-how switch to established and new corporations. The push was additional sped up in 2010 with the introduction of express licences that made tech switch between universities and corporations fast and painless.
Canada’s false innovation paradox
The circumstances that led to the passage of the Bayh-Dole Act ought to sound acquainted to Canadians. While Canada excels at research, it stays unable to capitalize on the full potential of its financial worth. The time period “innovation paradox” is used to explain the drawback. This isn’t solely a false descriptor however a harmful one. There isn’t any paradox. We know precisely why we’re failing and we will not let ourselves off the hook.
Canada has no federal framework for governing mental property arising from publicly funded research. Federal granting businesses go away administration to particular person establishments however, in contrast to Bayh-Dole, present no steerage on what ought to occur subsequent. A predictable result’s that IP insurance policies are fragmented and title to research ranges from absolutely owned by inventors to completely owned by establishments.
Most universities have tech switch workplaces which are quick on money. There aren’t any incentives for the dad or mum college to put money into them and their spinouts. There’s additionally an absence of established private-sector licensees for his or her IP.
Another drawback is that Ottawa’s policy of Crown possession of IP generated by authorities (or federal) labs presents licensing challenges for business enterprises (notably startups). This strategy is in direct battle with rising proof that startups are more practical at commercializing disruptive innovation than large firms.
In quick, whereas the parallel isn’t good, the challenges associated to tech switch in Canada are just like these confronted by the U.S. previous to 1980.
Not a silver bullet
Does this imply that adopting laws like that in the U.S. might remedy Canada’s innovation challenges? Evidence from earlier makes an attempt to duplicate its success elsewhere suggests it’s not fairly that easy.
An examination of spinout activity (creating a brand new firm from an establishment’s research) by a handful of Canadian universities reveals an fascinating distinction. U.S. tech switch is nearly uniformly primarily based on institutional possession of IP, whereas some Canadian universities have insurance policies that assign possession to inventors and researchers. Rankings by market knowledge platform Pitchbook recommend that these universities are likely to outperform others that take possession themselves. Institutional coverage on IP possession is clearly not the solely figuring out think about what research hits the market.
Bulldozer or bystander? Canada’s stakes in the new global economy
Only targeted industrial policy will fulfil Canada’s value-adding potential
Attempts at adopting frameworks just like Bayh-Dole in other international locations have had mixed results. Switching from inventor-owned to institution-owned IP insurance policies in Finland had the reverse impact. Rather than performing to stimulate college research patenting, there was a big drop. New Zealand’s IP coverage was lately reoriented towards inventor possession. That resolution ought to be rigorously noticed over the subsequent few years to see how the outcomes examine.
Context issues
Canada can be taught from Bayh-Dole as we think about industrial coverage initiatives geared toward addressing innovation challenges, however a “cut-and-paste” strategy is unlikely to work.
We want to regulate for the variations between Canada and our southern neighbour. Unlike the U.S., we shouldn’t have many companies desperate to commercialize IP belonging to universities. Without the home personal sector as a supply of monetary returns for universities, the federal authorities should present universities with cash to help patenting and tech switch — no less than lengthy sufficient to create circumstances through which the personal sector can take over.
Another distinction is that there’s risk-tolerant capital in the U.S. able to put money into technological innovation. This means universities can demand aggressive phrases of their licences. But there’s comparatively little such capital in Canada, so universities can’t count on demanding phrases to be accepted by the market.
The price of complacency and a possibility
Canada shouldn’t solely undertake harmonized federal IP coverage for publicly funded research, however go a step additional. We should present assets for tech switch as a part of research grants and reward velocity with specific licences.
Recognition of the vital position rising applied sciences will play for sovereignty and security makes it clear that Canada can’t afford to proceed down its present path. The Bayh-Dole Act was a generational guess on American know-how that continues to pay dividends at present. We should give you our personal insurance policies that can do the identical.
There is gigantic worth to be unlocked from Canada’s world-class research, if solely we decide to bridging the gap between labs and markets. Our nation’s future financial safety requires daring motion now greater than ever.
This <a goal=”_blank” href=”https://policyoptions.irpp.org/2025/09/ip-industrial-policy/”>article</a> first appeared on <a goal=”_blank” href=”https://policyoptions.irpp.org”>Policy Options</a> and is republished right here below a Creative Commons license.<img src=”https://policyoptions.irpp.org/wp-content/uploads/2025/08/po_favicon-150×150.png” fashion=”width:1em;height:1em;margin-left:10px;”><img id=”republication-tracker-tool-source” src=”https://policyoptions.irpp.org/?republication-pixel=true&post=295848″ fashion=”width:1px;height:1px;”>