In his column from November 20, entitled “Hydro-Québec’s missed opportunity”, Alain McKenna attempts to demonstrate that in Quebec, and in Canada in general, the importance given to intellectual property is lower than that of in the USA. And not just a little: in percentage terms, about a hundred times less!
Let’s look at the facts. Mr. McKenna said: “ [Au Canada], intellectual property revenues — $6.5 billion — accounted for about 0.4% of total corporate revenues in 2020.” The revenues in question are defined earlier in the column as those coming from “patents and property intellectual”. Very good so far. But things get worse when the columnist says, after warning us to fasten our seat belts, that “in the United States, intellectual property revenues in 2019 amounted to 7.8 trillion US dollars. This represented a third of the value of the GDP of the United States that year. Third ! »
The problem is that the journalist is comparing apples and oranges here. The 6.5 billion Canadian dollars of intellectual property revenue in Canada corresponds to royalties that patent holders or copyrights receive from third parties to whom they have given the right to use them. If I invented a better mousetrap, and I give you the right to make and sell it in exchange for a royalty on those sales, I am earning intellectual property income.
If we look carefully, we find that the 7,800 billion US dollars cited in comparison by Mr. McKenna represent the contributions to GDP (roughly sales) of American companies which hold more patents than the average. In the example, this would be total mouse trap sales, not royalties paid to the inventor of the trap. These royalties usually represent a small percentage of sales.
Here is a fairer version of the situation. Economic research firm IbisWorld gives US$65.8 billion as the size of the US intellectual property market in 2019. According to the World Bank, US GDP in 2019 was US$21.38 trillion. dollars. The quotient of these numbers indicates that real intellectual property revenues in the United States therefore amounted to 0.31% of GDP that year. This is a hundred times less than the value given by Mr. McKenna. According to this measure, at 0.4%, Canada would also do better than the United States in terms of intellectual property.
Reply from the columnist
You are right, and the column makes it clear. The comparison made between Quebec, Canada and the United States is not perfect, but the example of the American aeronautical sector cited next reinforces its more central point, which concerns the lack of consideration by Quebec decision-makers regarding the importance to stimulate the creation of intellectual property to improve productivity and thus create this famous wealth so dear to the government.