Protecting Canadian Innovation: Trade, Tariffs, and Intellectual Property

In response to rising global tensions and economic uncertainties, Canadian tech leaders are increasingly worried about the implications of evolving trade policies and tariffs on their operations. To address these concerns, Communitech organized a virtual Tariff Townhall on March 24, 2025, featuring an expert panel, including Jim Hinton, Christopher Bown, and Tim Rollins, who provided insights on navigating the current landscape.

Hinton opened the discussion by noting the period of instability in which trade rules can shift unexpectedly, while developing a robust intellectual property (IP) strategy can be a lengthy process. He urged Canadian tech companies to diversify their markets beyond the U.S., encouraging them to explore alternative regions where they could more effectively safeguard and capitalize on their IP assets.

Bown added that while tariffs do not directly impact patents, they become relevant if a company intends to relocate manufacturing to the U.S., as this would subsequently affect how IP is valued and utilized. He emphasized the necessity of conducting regular IP audits to identify vulnerabilities in a company's IP portfolio—highlighting that protection is only as strong as its weakest link, which can include contractual agreements.

He also introduced Patsnap, an IP research and valuation platform that helps companies assess their competitive positioning and the worth of their innovations. The discussion by Rollins transitioned into the complexities surrounding the taxation of IP ownership. He pointed out that while relocating IP might seem strategically advantageous for accessing the U.S. market or circumventing tariffs, it could engender intricate tax implications. Rollins advised companies to critically evaluate IP ownership, registration locations, and how these factors could influence their tax liabilities.

The conversation underscored the increasing significance of IP in due diligence processes linked to fundraising, partnerships, and global expansion. Hinton noted that investors are becoming more scrutinizing regarding patents, trademarks, and the agreements that define ownership and usage rights, emphasizing that even a simple non-disclosure agreement can have significant implications if inadequately constructed.

To support startups in building more effective IP strategies, programs like ElevateIP, delivered through Communitech in partnership with organizations like Invest Ottawa and North Forge, were highlighted as valuable resources. However, Hinton called attention to the need for broader policy reforms, asserting that Canada's procurement and innovation initiatives have long favored U.S. technology firms over homegrown companies.

During the discussion, the panel agreed that Canada needs to enhance access to procurement opportunities and increase R&D incentives for domestic firms. A troubling trend was noted as well: data from the Canadian Intellectual Property Office indicated a 6% decline in applications in 2023, with notable decreases in both resident and non-resident filings.

Rollins concluded with optimism regarding the potential implementation of a patent box regime, which would grant tax advantages to firms that develop and commercialize IP within Canada. The realization of such a policy will largely depend on the outcome of the next federal election and the government's commitment to innovation policies. The panel emphasized that a supportive environment for Canadian technology companies is vital for fostering innovation and growth in a competitive global market.