RESEARCH
A. Government Research
The federal government has been significantly involved in research since the National Research Council of Canada (NRC) was established in 1916. Generally, the government's research activities have been geared to supporting specific departmental responsibilities or fundamental research.In the past, the commercialization of government scientific research had tended to be limited. The private sector could access to the results of existing government research in return for royalties or licensing agreements. The idea used to be that an organization like NRC would develop a technology and then would try to push it out to find a receptor in the private sector for further development. On the other hand, companies would try to reach in and find things that were useful to them. The Committee heard how this has changed over the past decade, and that now government labs are more focused on commercializing their work. Often NRC's partners are involved in a project from the design phase of research. The federal lab technology transfer takes many forms including the interchange of personnel.
I think it is well recognized these days that the old traditional push pull mechanism for technology transfer. . . is not very effective. . . Having partners involved in the design and the performance of research from the very early stages, participating directly in it, ensures that the research is relevant and raises the knowledge level and the technical capabilities of the private sector partners.
The witnessess explained that the federal research is increasing focused on commercializing its results and consulting with its partners in industry and academia. Although collaboration and partnering with industry were improving, some participants indicated that more could and should be done.
Research from federal labs has generated many new spin-off companies and assisted many existing companies. It was noted that that additional flexibility to use equity as payment for intellectual property could increase the rate of commercialization of government research.
We greatly emphasized this need for departments and federal labs to put their results out in the market place. There have been some interesting initiatives in certain organizations, such as the National Research Council of Canada, for example, where a structure was set up to do this kind of thing. The Communications Research Centre was also doing very interesting things. CANMET is doing a lot of work with industry.
The Committee was told that in addition to the innovation gap, Canada has a strategic research gap. This is a lack of private sector investment in medium- to long-term strategic R&D in major industrial labs. NRC sees its role in part as filling this gap.
These partnerships then do what I would describe as filling the strategic innovation gap, the lack in Canada of many major industrial research and development laboratories that have a focus on medium- to long-term strategic research. We don't have many companies that invest in strategic medium- and long-term research. Industry, government, and university partnerships help to leverage more of this activity and to fill that gap. It's very important, particularly in Canada.
Comments from industry participants concerning federal S&T were generally positive. Several participants noted the leadership role that the NRC was offering to the Canadian research community. Some reservations were heard concerning overall coordination within federal S&T activities. Another concern mentioned was the treatment of intellectual property rights from classified research done for the government.
The Committee heard that the role of the government in R&D is to invest in R&D which is of significant benefit for the nation, but which could not be done at a profit by the private sector. This includes sustaining specific core competency that would not be maintained by private industry.
B. University Research
University research adds to our stock of knowledge in important fields and gives Canadians access to knowledge generated around the world. Research done in the universities also produces highly qualified people who can make use in Canada of all the advances in science and engineering from around the world. The Committee was told that Canadian scholarship and research are currently recognized as being internationally competitive.Most basic research in Canada continues to be done at its universities. The overall level of Canadian university research as a percentage of the total national research effort is higher than our competitors. Much of the funding for university research continues to be provided by the three federal research granting councils but funding from industry and commercial revenues are increasing. Several participants noted that Canada needs to continue to invest in its intellectual wealth in its universities. University research is a key source of innovation in Canada.
The Committee was informed that university researchers in Canada have a significantly higher teaching load than their European or American counterparts. In addition, with budgetary restrictions, many of researchers are spending a much greater amount of their time searching for funding, and consequently have much less time to actually conduct their research.
Over the past decade, universities have been trying new approaches to improve the successful commercialization of their scientific research efforts. These efforts have been increasing rapidly to help offset the various budgetary reductions. With the decline in government funding for university research, universities now view revenues from intellectual property and industry contracts as more important to their future. The main thrust of the evolution in the commercialization of university research has been to increase partnerships with industry. Government has been promoting this industry-university relationship by funding collaborative research, as well as by defraying some of the costs of managing the commercialization process with programs such as the Technology Partnerships Program and the Intellectual Property Management Program.
When the cutbacks happened to university research in particular, we found ourselves inundated with university researchers pounding on our door saying they had this neat technology, and asking, gee whiz, wouldn't we like to help fund this and possibly use it.
I have a lot of contact with the universities of Guelph, Saskatchewan, Calgary, and limited contact with Queen's. These universities, I believe, are on top of the situation. They're flexible, they want to help, and they want to be part of the future.
[M]y partners. . . are universities, institutes, government laboratories, research consortia, Networks of Centres of Excellence, which is a big one we're very heavily involved in, and industry forums. . . the heavy investments being primarily in universities.
Most universities have created technology development offices (TDOs) within the past 12 years. These offices file patents, transfer technology, and are increasingly involved in start-up companies. All of this normally entails extensive liaison with industry and helping to find capital for spin-off companies. TDOs are even raising special funds to commercialize university research. These funds are required in part since raising capital for spin-off companies can be both time-consuming and difficult. We heard that another challenge facing TDOs is the lack of a broad business receptor capacity that is competent to receive the output of university research.
I think it needs to be stated that the universities are at the heart of many of the start-up high-technology success stories in recent light. Within Canada I would point to Biochem Pharma, Biomira, Quadra Logic, Neurochem and Polyphalt. All of these are spin-offs of university-based technology. In the United States, perhaps more widely known are Digital Equipment Corporation, Genentec, Raytheon, Lotus Development Corporation and Biogen. So there is a track record and there is value in university-based research.
Dealing with intellectual property and intellectual capital is an issue where the Committee heard many different views concerning university research, as well as for the innovation system in general. This is also a critical issue in the commercialization of government and university research as well as finding capital and partners for industry.
[U]niversity-based research inevitably gives rise to intellectual property, and the university technology transfer office is the vehicle through which that intellectual property is captured and exploited. Our role involves providing a service to the academic community and an outlet for their intellectual property to be managed professionally. We provide a liaison with industry so that when industry is interested in university technology, they have a proper forum and vehicle through which to conduct that business.
However, our mandate increasingly is to offset declining revenues from public sources of funding for the university. That is a difficult task and that is what is forcing us within the universities to be creative and proactive and go beyond the more traditional technology transfer paradigm of licensing.
As I say, the intellectual property we are presented with is almost invariably at a very early undeveloped and therefore highly conceptual state, and this makes it inherently unappealing to Canadian industry and industry in general. There's a tremendous degree of risk associated with it.
Much of this is caused by the lack of funds for primary research and the need of academics to publish above all else, so we are forced to patent and then try to license technology at a very early stage.
The third thing that was identified was the need for a greater and more vibrant process of intellectual property protection and technology transfer. It was hoped at that time that a fund could be provided across the country to help the universities in that regard. You've heard from technology transfer people: the limitations are fundamentally resources.
If that's the case, then my recommendation is that the intellectual property should be vested in whatever business has been chosen, stuck its hand up, or whatever mechanism it is, and that the government not be squeamish about that.
The reason I say that is - again, I'll offer you what experience I have - the minute you cross an international border and discuss technology that you have partly and you wish to sell, you are going to wind up, one way or another, in some kind of a collaborative venture with a foreign company. It seems to be almost inevitable. That's the entry point to, let's say, the American market or to the far eastern market.
The minute you put on the table the fact that you jointly own this with the Canadian public or that by any other mechanism it is possible to obtain this by other sources, you get into trouble. I've never been able to figure out why Canadians were so jealous about the issue of intellectual property, provided it is possible for the Canadian government to retrieve it if need be, if in fact they have funded all of it.
Thomas Jefferson and James Madison attempted to answer that question in the United States Constitution. In the Constitution of 1789, they took the utilitarian approach to intellectual property and said the Congress of the United States shall pass laws to give a limited right of ownership to inventors in the creative arts and sciences for the progress of mankind. By that they meant they felt it was important to allow the individual who created the new patent or the new copyright to have a period of time when he or she would enjoy the fruits of that, but there would be an obligation to pass it on. It's quite an unusual notion of intellectual property because we've always thought of it as a natural law theory: my ideas belong to myself and I shall keep them and exploit them as fully as I want. It's not so in the U.S. Constitution.
Essentially, the theory of our copyright and patent legislation is that inventors shall have a limited right to exploit because that will encourage them to invent. The fruits of those inventions and ideas will benefit all.
I think that same spirit should motivate us today. In our universities we have worried a great deal about the question of division of profits from intellectual property. Having worried about this a great deal, my own view is that we should concentrate much more on growing the ideas and investing in the people. If we do that well enough, as Bernie MacIsaac has said, we will enjoy the profits from those and we will enjoy the profits from the export trade that comes from it. In sharing knowledge, we'll find that it grows.
While most universities are flexible in terms of intellectual property management, some are very rigid in this regard, leading to lost opportunities in working with the corporate sector.
New incubators are being set up at universities across Canada. Three new companies have facilities in the Bioscience Complex at Queen's University. It was mentioned that major changes in attitude have occurred at universities to make faculty and students more receptive to the needs of industry.
You talk about retooling professors. Yes, we have a large cadre of people in this age range whose attitudes we do have to change, but many professors have taken early retirement. The more entrepreneurial ones, in fact, are the ones who have taken it. I can point again specifically to Queen's.
With the idea of building this bioscience complex and the incubator in it, there have been three biology or biotech-type companies set up at Queen's, funded and grown out of the faculty within that university over the last three years. At least one of those is a faculty member who has taken early retirement and is setting up a plant biotech company, which recently received venture capital funding and is off the ground.
We heard about many success stories of the commercialization of university research. But the Committee also heard how it takes many ideas to produce only a few commercial successes and that the earlier the evaluation or weeding-out process is done, the fewer the limited resources that are wasted on ideas with little commercial potential.
On the other hand, an early filter reduces the amount of wasted effort that would go into chasing an idea that has little or no potential. In Canada the Canadian Industrial Innovation Centre is the best example of this type of filter. More than 11,000 ideas that have been filtered have led to an estimated 200 commercial successes, some of which are returning significantly to the economy years later.
However, the Canadian Industrial Innovation Centre has only scratched the surface. We're evaluating some 800 to 900 new ideas each year. That's less than 1 per 40,000 Canadian citizens. We believe the gap is not in the availability of innovative ideas but rather in the availability of enough effective mechanisms to find the best ideas from a large population of potentials.
It was also noted that a solid basic science foundation is essential to the future health of Canada's innovation system.
From hindsight we of course know that the research of late 19th Century physics spawned the discipline of electrical engineering, which in turn with physics spawned Canada's electrification in the wake of World War I and later spawned our nuclear generation plants in the wake of World War II. In the more recent timeframe, we know that what now makes possible the diagnosis and treatment of such inherited human defects as cystic fibrosis would not have been possible without the curiosity-driven research of geneticists a quarter century ago. . .
What we lack, as did our 19th Century ancestors, is the foresight that would tell us what curiosity-oriented research in what disciplines will provide the facile examples of how ideas provide the basis of the major innovations that the ten decades of the coming century will spawn. . .
This. . . is the core argument that R&D investment must feature a balanced portfolio that accommodates ample investment in the unpredictable and uncertain relevance of fundamental concepts and ideas to downstream innovation and long-term economic growth and well-being.
The seeds are planted in the fundamental platform, and basic science is absolutely critical to our model 2010 vision that we've referred to here if we are going to have this as a leading driver of economic activity in our community down the road. . . remember that in the year 2010, biotechnology and knowledge-based industry will be a major economic force in this country. We must not in any way injure that fundamental platform.
Many witnesses felt that the most serious problem facing university research is that the laboratories, facilities and equipment in our S&T infrastructure are increasingly obsolete, rundown, or over-extended. It was stressed that Canada needs to re-invest in its S&T infrastructure or risk losing both the edge in innovative technology and taking the risk that human capital, our key asset, will leave Canada for countries with the necessary research facilities.
[A]dvanced research is becoming difficult because of the underinvestment in the physical infrastructure that sustains innovative research. The costs of this is enormous. Without the resources to purchase up-to-date equipment and facilities, universities cannot attract and maintain the best and brightest researchers. Nor can they attract as much industry-sponsored research.
We would hope that this Committee would support the proposals in the ''Putting Knowledge to Work'' document, calling for the new infrastructure program and having a large component of that program devoted to the renewal of university infrastructure.
Research infrastructure in Canada has deteriorated at an alarming rate in the past three to five years. It is crucial that government provide funding for the modernization of research laboratories, equipment purchase, and operation and maintenance in order that universities can carry out state-of-the-art research at a level competitive with at least some of the industrial nations.
The Committee was informed of several interesting suggestions that could enhance research in Canada. One of these was that the federal government offer start-up grants which would include research support for young scholars as well as major facilities and equipment grants through a New Research Frontiers program.