Research and development in Canadian industry: Intellectual property, 2017
Businesses in Canada having research and development (R&D) activities sold a record $4.2 billion of intellectual property and technological services (IP) in 2017, up 7.7% from 2016.
This was due largely to higher payments for packaged or off-the-shelf software. Packaged or off-the-shelf software are considered IP products as they are developed using in-house knowledge. At the same time, businesses in Canada spent $2.2 billion on buying IP, mostly as a result of lower spending on patents and packaged or off-the-shelf software.
Payments and receipts for IP are considered measures of innovation and creativity often related to R&D. IP can include different forms of registered instruments that generate revenues through sales and licensing, such as patents, trademarks and copyrights. It can also include transactions related to original and packaged software, databases with useful lives exceeding one year, and other payments for IP. Other payments entail technological services, such as technical assistance and know-how, offered by the R&D-active businesses' highly skilled personnel to support the adoption of R&D results by purchasing organizations.
Canadian businesses export almost three times more intellectual property and technological services than they import
In 2017, the majority of sales of IP by Canadian companies were made to foreign markets. These exports of IP increased 2.8% from 2016, demonstrating an increase in outside demand for Canadian IP goods and services.
Domestic purchases of IP exceeded foreign purchases for the first time in 2016 and this trend continued in 2017, with 57.5% of payments for IP by Canadian firms going to domestic organizations. This trend indicates an increase in the commercialization of knowledge-based goods and services by Canadian companies. IP imports by Canadian businesses decreased by 44.0% compared with the previous year, reaching $944 million in 2017.
The increase in IP exports, combined with lower imports of IP, resulted in an 86.0% year-over-year increase in the net flow of IP commerce (payments received less payments made) to just under $1.8 billion in 2017.
Original software accounts for almost half of all intellectual property sold
For the fourth consecutive year, original software accounted for the largest share of IP sales made by businesses in Canada, despite a decrease of 10.7% from 2016 to $2.0 billion in 2017. This decline was offset mainly by an increase in sales of technical assistance, industrial process and know-how, which were up 35.2% to $883 million.
Services-producing sector remains the largest contributor to IP spending and receipts for the fourth consecutive year
The services-producing sector accounted for two-thirds ($1.5 billion) of the total money spent on IP in 2017, while the manufacturing sector accounted for over one-quarter.
Similarly, sales by businesses in the services-producing sector represented 89.7% ($3.8 billion) of total payments received for IP in 2017. This sector has been responsible for the majority of purchases and sales of IP since 2014. The dominance of the services-producing sector in both sales and purchases of IP is consistent with Canada's transition towards a services-based economy.
Note to readers
The estimates do not represent all trade in intellectual property rights or informal technology assistance services in Canada.
These estimates of payments made and received for intellectual property and technology assistance were derived from data collected from companies within the sample of the Annual Survey of Research and Development in Canadian Industry. Although the data come from a sample survey, the responses are self-representing and are not weighted for these particular variables given the volatile nature of intellectual property-related activities. Therefore, the estimates represent intellectual property commercial transactions only for the companies in Canada with research and development activities that responded to the survey.
R&D-active businesses are companies within the Annual Survey of Research and Development in Canadian Industry sample that funded or performed research and development during the reference period or in previous year the previous year.
Newly created knowledge can be formally protected through registered intellectual property (IP) instruments. Technology payments include payments made or received for patents, copyrights, trademarks, industrial designs, integrated circuit topography designs, original software, packaged off-the-shelf software, databases with a useful life exceeding one year, and other technical assistance, industrial processes and know-how. Technology payments can be made to, or received from, affiliated or unaffiliated organizations within or outside Canada. These technology payments can be for licensing of IP, consultation fees and one-time sales.
An organization that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with, another organization.
An organization that is not controlled by another organization; nor under common control with another organization; nor related directly or indirectly through one or more intermediaries controls affiliated with another organization.
The new interactive dashboard "Characteristics of research and development in Canadian industry" (71-607-X) is now available.
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