The Quebec government pays hundreds of millions of dollars annually to help companies innovate, but does nothing to ensure the benefits of those investments are maintained.
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“We are not able to fully retain the intellectual property of emerging companies that have benefited from measures to promote innovation and to capture the full value of these innovations.” This is a big problem,” complains researcher Éric N. Duhaime, author of a study on the subject conducted for the Institute for Research in Contemporary Economics (IREC).
Half a billion dollars
Quebec is spending nearly half a billion dollars on a tax credit designed to encourage thousands of companies to conduct research and development (R&D). Including several other relief measures, the state plans to invest more than $7.5 billion in its R&D strategy from 2022 to 2027.
The Minister for Business, Innovation and Energy, Pierre Fitzgibbon. Archive photo
However, the government in no way forces companies to share with it – and the residents of Quebec – the benefits of the innovations that have arisen thanks to its financial support.
In 2009, Quebec adopted a policy recommending that ministries “at least ensure that they receive fair compensation.” [pour] any intellectual property belonging to a third party where its creation required public resources.” However, their application has never been made compulsory.
Innovations that take off
The issue is particularly critical when a company that received research and development tax credits is sold to interests outside Quebec.
“Intellectual property is an asset that is part of a company’s portfolio. So when the company is sold, its assets go with it,” recalls Mr. Duhaime.
In recent years, promising young Quebec companies such as Mobeewave, Mnubo, Element AI, Poka, Heyday, Bluecity, CloudOps and Classcraft have been acquired by foreign, mainly American, companies.
According to a count carried out by IREC using data from specialized website Crunchbase, Quebec lost 58 start-ups to foreign interests from 2013 to 2022 inclusive. During the same period, Quebecers attracted a total of 47 young companies from other countries.
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