Research and development in Canadian industry: Intellectual property, 2019 (final)
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Businesses in Canada that engaged in research and development (R&D) activities in 2019 received payments for (sold) $4.4 billion worth of intellectual property (IP), software and technological services. This was more than double the $1.8 billion they made in payments (purchased).
The value of IP, software and technological services sold declined slightly from the previous year (-3.7%), as did the value of purchases (-5.3%). The drop in purchases of patents and technological assistance more than offset increases in purchases of trademarks, packaged or off-the-shelf software, and original software. While the levels of IP, software and technological service sales changed only slightly, their composition shifted: a decrease in patent revenue was balanced by an increase in sales of packaged or off-the-shelf software and technological assistance.
Exports of intellectual property account for the largest proportion of intellectual property, software and technological service transactions
Transactions for IP, software and technological services comprise purchases and sales, domestically and outside Canada. Of these four types of transactions, exports from businesses in Canada accounted for almost half (48.4%) of all IP, software and technological service transactions in 2019.
Revenues made through exports ($3.0 billion) rose to make up 68.2% of all sales, up from 66.9% in 2018, while sales within Canada ($1.3 billion) continued to fall for the second year in a row.
In terms of purchases of IP, software and technological services, imports ($817 million) fell, while domestic purchases ($1.0 billion) rose. This represents a shift from 2018, when imports ($1.1 billion) were greater than domestic purchases ($867 million).
Overall, Canadian businesses that conducted R&D reported a positive net trade balance (exports minus imports) of $2.2 billion.
The majority of intellectual property, software and technological service transactions are with non-affiliated entities
In 2019, IP, software and technological services were sold most frequently to non-affiliated parties, totalling $3.0 billion and accounting for 68.2% of all sales.
Sales to non-affiliates declined in 2019—for the first year since 2014—as sales numbers both within and outside Canada dropped. Overall, sales to non-affiliates increased by 125.3% over the six-year period. In comparison, sales to affiliated entities went up by 37.6% over the same period.
Similarly, payments for IP, software and technological services were more likely to be made to non-affiliates. Up 12.8% in 2019, payments to non-affiliated entities accounted for 61.3% of all expenditures.
Software accounts for the largest proportion of intellectual property, software and technological service sales
Since 2015, both original software and packaged software have accounted for close to two-thirds of total IP, software and technological service sales, totalling 61.4% in 2019. Software sales accounted for $2.7 billion in 2019, while technological assistance sales followed, at $1.0 billion (22.7%). Patent sales were worth $275 million (6.3%), and sales of all other forms of IP accounted for $309 million (7.0%).
Overall, trademarks were the most commonly purchased form of IP, accounting for 24.2% of all payments made. This was followed by packaged software (21.7%) and original software (15.1%).
Note to readers
The estimates do not represent all trade in intellectual property (IP) rights or informal technological assistance services in Canada.
These estimates of payments made and received for IP, software and technological assistance were derived from data collected from companies in the sample for 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 IP-related activities. Therefore, the estimates represent IP commercial transactions only for the companies in Canada with research and development (R&D) activities that responded to the survey.
R&D-active businesses are companies in the sample for the Annual Survey of Research and Development in Canadian Industry that funded or performed R&D during the reference period or in the previous year.
Because of differences in the scope of surveyed enterprises, the data on international IP trade in this release are different and are not directly comparable with other Statistics Canada data on international transactions in services.
Newly created knowledge can be formally protected through registered 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 technological assistance, industrial processes and know-how. Technology payments can be made to, or received from, affiliated or non-affiliated organizations within or outside Canada. These technology payments can be for IP licensing, consultation fees and one-time sales.
IP protection involves the disclosure and registration of an organization's ideas (often the result of R&D, such as new or improved products and processes) to confer legal rights on these disclosed ideas. This can facilitate their subsequent commercial exploitation through sales, licensing agreements and the provision of technological assistance to clients, while impeding others from unauthorized use.
An organization that, directly or indirectly through one or more intermediaries' control, is controlled by, or is under common control with, another organization.
An organization that does not control, is not controlled by and is not under common control with another organization, either directly or indirectly through one or more intermediaries.
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