334. Canada is pleased to present some of its analysis and findings on the role of IP-intensive industries in the Canadian economy, as part of the broader three-part discussion on "The Societal Value of IP in the New Economy". Canada looks forward engaging on these issues during the current and upcoming TRIPS Council meetings in 2018. We would like to thank the co sponsors for their communication on this topic, as well as the delegations that have provided insights so far.
335. In examining the relationship between IP-intensive industries and economic activity, one of the key questions facing policy makers is in identifying the influence that IP protection may have on economic output. While it is broadly understood that the outputs of innovation and creation – such as new products, technologies and processes – can drive commercial success (a point made in last year's discussion on the topic of IP and micro, small and medium-sized enterprises), the exact role played by IP protection is not always linear. In other words, a patent does not always necessarily lead to a given ratio of economic activity. Nor for that matter, is innovative economic output necessarily accompanied by a given level of IP protection.
336. Nonetheless, we can identify the impact that specific IP-intensive industries have on economic activity, which in turn, can help inform policy decisions on how IP can support and facilitate the growth and contribution of these industries to overall economic activity. Along these lines, Canada has recently conducted a number of studies on the contribution of specific IP intensive industries in the Canadian marketplace, with a view to further clarifying the relationship between IP and economic output.
337. For instance, in 2014, a study commissioned by the Canadian Department of Innovation, Science and Economic Development (ISED), entitled "Intellectual Property and the Canadian Economy: IP-Intensive Industries and their Economic Contribution", measured the level of employment, wages, and economic contribution of 75 IP-intensive industries to Canadian GDP and trade. The study drew upon a range of data sets, including patent and trademark filing data available through WIPO, as well as data from the Canadian Intellectual Property Office (CIPO) and Statistics Canada, to identify a set of patent and trademark-intensive industries across the Canadian economy. In terms of methodology, this involved linking the listing of industries in the North American Industry Classification System (NAICS) to the classes of trademarks used in the Madrid System as well as the Nice Classification System under WIPO, as well as to patent classes under WIPO's International Patent Classification. Using patent grant and trademark registration data, the study then calculated patent and trademark intensity ratios (e.g. total number of patents granted and trademarks filed divided by the average payroll employment by industry) for a set of industries, to identify a subset of IP-intensive industries for each type of IP. Using the WIPO definition of "core" copyright industries (e.g. those industries that are "wholly engaged in creation, production and manufacturing, performance, broadcast, communication and exhibition, or distribution and sales of works and other protected subject matter"), the study also identified a subset of IP-intensive industries in this area.
338. Using this data, researchers were able to estimate that the 75 IP-intensive industries in the study accounted for 25 percent of Canadian GDP in 2010 ($332 million in Canadian dollars, or roughly $262 million in US dollars). These industries also contributed to 40% of Canada's total exports for 2010. In cross-referencing the set of IP-intensive industries with Statistics Canada data, the researchers were also able to identify the total Canadian employment in IP-intensive industries, which stood at 13.6% in 2010, with the majority of employment found in trademark-intensive industries, followed by copyright and patent-intensive industries. Researchers also found that weekly earnings in IP-intensive industries were 16% higher than the national average, with the highest weekly earnings found in patent-intensive industries.
339. Going a step further, CIPO has also more recently turned its investigation to the relationship between IP-intensity and economic performance at the firm level. For instance, CIPO's most recent "IP Canada Report" for 2017 examines the economic impact of industries designs on firm performance. Using financial data from the years 1990-2014 from 723 publicly-traded Canadian firms, of which 70 held at least one industrial design, CIPO's study found a 16% increase in revenue per employee associated with holding industrial designs. More interestingly, the study found a 0.46% increase in revenue per employee from each additional industrial design registered to a firm.
340. Of course, one of the questions raised in examining IP-intensity and economic output is the role played by IP-protected assets. To get at a better understanding of this relationship, CIPO's study on industrial designs also investigated the impact of the "design orientation" of a firm, which aims to capture whether the industrial designs are directly responsible for higher performance, or whether this correlation is due to other activities associated with the industrial design. Using a new model to get at this question, CIPO found that a firm having ever held an industrial design resulted in a 13% increase in revenue per employee and a 17% increase in net income per employee, in additional to the marginal effect of each industrial design currently held by that firm. At the same time, the relationship between industrial design ownership and economic performance is not definitive. While the presence of industrial designs is associated with higher levels of firm performance, future research on data on associated variables, such as R&D spending, marketing expenses, and firm age, will be instructive in getting a clearer sense of this relationship.
341. Building on this research, CIPO has also begun investigations on emerging Canadian industries, with a view to using patent data to highlight areas of innovation. Two ongoing studies, in the areas of climate change mitigation technologies and space technologies, draw upon patent data to identify areas where Canada may have relative advantages in respect of certain technologies within each industry. Using keywords from patent documentation to cluster patents together, CIPO has developed "patent landscapes", which serve as visual representations of climate change mitigation technologies, as well as space technologies, in respect of patents applied for by Canadians. In clustering patents together in this way, patents are organized in common themes and grouped together as "contours" on each patent landscape map to show areas of high and low patenting activity by Canadians. In doing so, the patent landscapes provide insights into the areas of each industry where Canadian innovators are relatively specialized. For instance, when compared to other top patenting countries in the area of climate change mitigation technologies, patent landscape maps in this area indicate that Canada is relatively specialized in areas such as carbon capture, buildings, smart grids and traditional energy. Similarly, with respect to space technologies, the patent landscape in this area indicates that Canadian innovators are active in areas such as antenna technology, communications, and navigation satellite systems. This research, which is continuing in 2018 (and is detailed further in CIPO's most recent "IP Canada Reports" for 2016 and 2017) will provide further insights into the technology areas where Canadians are patenting, with a view to identifying some of the key innovations in these fields.
342. These are just some of the approaches that can help identify and measure the impact of IP-intensive industries on economic output. Canada would be pleased to provide additional information on any of these studies with other Members upon request, as well as updates on ongoing studies as this research continues. We would like to once again thank other Members for sharing their national experiences and information on the role of IP-intensive industries on the economy, and look forward to continued discussion under the theme of "The Societal Value of IP in the New Economy" today and in the coming months.
