Defending Innovation Against Lock-Out

Canada developed its Defence Industrial Strategy in light of an increasingly fragile international rules-based order. The Strategy outlines two responses to this reality: 1) engaging Canadian industry to produce defence-related (particularly dual-use) technologies domestically, to supply national and international markets; and 2) ensuring that Canada has the capacity, when a crisis arises, to meet critical domestic needs (including health) and to continue to innovate and deliver products and services at home and globally. While the bulk of the Strategy deals with the first, it is the second that ensures Canadian resilience in the face of a crisis.

Resilience has two components. First, it aims at reducing harm, both temporally and quantitatively. Second, it seeks to return to an equilibrium, although not necessarily the old equilibrium, as soon as possible.

According to a federal government assessment, the most likely high-impact crises are war, environmental loss due to human causes and climate change, and overwhelmed health and emergency systems due to a pandemic and climate change-induced tornadoes, fires, and floods. Responding to these crises involves a combination of deploying existing knowledge and technologies and developing new ones.

One component of the Defence Industrial Strategy, Pillar IV, explicitly addresses resilience and only with respect to health. It states that “the Government will support targeted investments in life sciences innovation, infrastructure, and workforce development” and that it will explore mechanisms, such as stockpiling and coordinating with allies “to ensure continuity of essential medical supplies.” 

This is not enough, however, to ensure resilience. Stockpiles run out. More significantly, existing technologies are often not enough. As the COVID-19 crisis demonstrated, we had to develop new health interventions. These did not arise spontaneously, but after decades of background research on mRNA vaccines and drugs developed in response to the 2002-2004 SARS crisis. These technologies were not developed here and so Canada was reliant on foreign manufacturing. The United States would not export mRNA vaccines to us, so we had to rely on European allies. Acknowledging this is key to developing policies aimed at resilience.

Considering this, Canada needs to secure its internal capacity to develop and produce technologies and drugs necessary during a crisis. Specifically, Canada needs to do three things: 1) ensure access to the knowledge and data necessary to produce existing and future drugs at home; 2) ensure that domestic firms have the capacity to deploy that knowledge; and 3) develop countermeasures, should foreign powers attempt to block production in Canada. One important way to achieve all three is by supporting Canadian firms, universities, and colleges that engage in open science partnerships to generate data and knowledge while guaranteeing Canadian access. By supporting these collaborations, Canadians gain the necessary “know-how” to turn scientific knowledge into new technologies and drugs. By collaborating within an open science framework , Canadians ensure that they cannot be locked out.

Canadians are already leaders in open science partnerships, with the federal government supporting consortia such as the University of Toronto’s Structural Genomics Consortium, the Montreal Neurological Institute-Hospital, and Conscience. What needs to be done is to explicitly incorporate these collaborations into Canada’s defence and innovation policies to build Canadian technology and data sovereignty.

While Canadians do well in basic research, we still represent only two to three percent of the global market and cannot be expert in all areas. To address this, Canada must encourage its firms and researchers to embed themselves not only in national but international open science partnerships. Through these collaborations, companies and researchers gain access to more data, knowledge, and expertise, along with the ability to identify false leads and promising opportunities that can make their research more efficient. Funding open science collaborations builds Canadian resilience by increasing our formal and informal access to the knowledge that will drive any crisis response.

A significant challenge is to position Canadian firms to take advantage of opportunities. Currently, Canadian companies invest significantly less in research and development than in comparable countries. One reason is that Canadian innovative firms are predominantly small, with larger firms missing from the equation. To counter this, Canada has attempted to attract branch-plants of multinational companies. The danger in this is that not only are these firms apt to leave the country, but they have no political attachment to our well-being. Instead, Canada needs to provide incentives to our larger domestic firms – banks, generic pharmaceutical companies, and more – to invest in innovation. Financially supporting their involvement in open science partnerships is one way to achieve this.

Canadian firms and researchers lack assured access to the bulk of the knowledge and data necessary to drive the development of new technologies and drugs. Much of this  knowledge is controlled by foreign firms, who can restrict access. In 2023-2024, the Canadian Intellectual Property Office granted 90% of Canadian patents to foreigners, almost half to US firms. In a crisis, particularly an economic one, a foreign government could instruct firms to close Canadian access to that knowledge through these patents. Sure, there are some exceptions for research but not for selling the critical technologies and drugs Canada needs. Canadian patent law allows governments to override patents in emergencies, but this provision has never been used, is vague, and subsequent legislation has cast doubt on its ambit. To address this risk, Canada needs to include a clear, quick and broad right that allows not only governments, but also Canadian firms to override patents in circumstances where access to critical technologies is restricted by foreign governments. 

Canada’s Defence Industrial Strategy takes important steps to increase Canadian innovation for new defence and dual use technologies, but this is half the equation. To ensure Canadian resilience in the face of the next crisis, be it war-, economic-, or health- or climate-related, Canada must encourage its firms and researchers to participate in international open science partnerships that not only build critical knowledge but ensure Canada’s ability to respond to the crisis.

E. Richard Gold is a Distinguished James McGill Professor at McGill University’s Faculty of Law, Faculty of Medicines and Health Sciences, and the Bieler School of the Environment, Chief Policy and Partnerships Officer at Conscience, a non-profit focused on enabling drug discovery and development in areas where open sharing and collaboration are key to advancement towards accessible treatments, and Senior Fellow at the Centre for International Governance Innovation