The intellectual property (IP) provisions in the new United States–Mexico–Canada Agreement (USMCA) push Canada to adopt stronger standards. While some decry the concessions made to the United States, they are a big win for innovators and the economy. They should also provide insulation should Canada enter into a free-trade agreement with China.
Stronger IP rights protections provide greater legal assurance that innovators can reap the rewards of taking risks in creating content, cutting-edge technologies, and medicines.
China’s acquisition of foreign IP has been called the greatest transfer of wealth in the history of humankind. Increasingly, IP is at the core of international trade as it is the lifeblood or currency of today’s knowledge economy.
“The stronger one’s IP rights, the more likely one is to receive foreign direct investment [FDI] and technology transfer from another trading partner,” said Owens. “As we enter into new agreements, we will benefit proportionately to the strength of our IP rights.”
Owens, one of Canada’s leading authorities on IP, has long advocated for stronger IP rights protections so that the country can realize its potential as an innovation economy.
The two biggest changes from the USMCA that strengthen Canada’s IP framework are extending the term of patents for biologic drugs from 8 years to 10 and extending the term of copyright by 20 years to the author’s life plus 70 years.
“If Innovation, Science and Economic Development Minister Navdeep Bains is to retain a made-in-Canada approach to copyright, it is time to take back the pen and restore the balance lost in the fine print of the USMCA,” Geist wrote in a blog post.
As for patent-term extension for biologics, BMO chief economist Doug Porter called it “a clear negative for Canada, since it will add to drug costs with little upside in return.”
However, Owens contends that the money to pay for higher drug costs comes out of the greater wealth creation gained from innovation and not by reducing prices.
He adds that the extension of the copyright term is of benefit to Canadian creators who would now be able to get the same level of protection in Europe, calling it a “clear win.”
As for IP protection for biologic drugs, this is primarily of benefit to the small companies that tend to create them, as opposed to “big pharma.”
Change Rolls Through
Perhaps the biggest impact of the government’s new IP strategy, launched in April, has been to increase IP literacy for Canada’s businesses. However, Owens says it has done little to strengthen IP, which would help small business compete. He adds that the USMCA takes IP rights protection in Canada closer to what the government’s strategy should aim for.As the Canadian government subsidizes health care, it faces a conflict of interest in that it would like to keep drug prices low while at the same time encourage innovation.
Canada will have to depart slightly from its national strategy to accommodate the USMCA. But that is a good thing, said Owens, as Canada needs to realize its potential as a global innovator. Stronger IP rights help Canada get there because better protections promote greater economic activity.
Attracting Investors
One of the objectives of the federal government is to attract FDI through hubs like Invest in Canada. Finance minister Bill Morneau just met with Japanese business leaders in Tokyo on Oct. 9 to promote Canada.In 2015, Laura Dawson, director of the Canada Institute at the Wilson Center in Washington, D.C., argued that one of the reasons Canada fails to attract FDI is because it is perceived as being weak on IP rights protection. Canada adopting U.S. standards is one way to remedy the situation.
And should Canada enter into a closer trading relationship with China, Canada would begin from a more robust position in the quest for the most sought-after commodity in today’s world.