Photo by Olga DeLawrence ()

Tiffany Wang is an��IPilogue��Writer,��Intellectual Property Journal Editor, and a 2L JD Candidate at Osgoode Hall Law School.��

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Intellectual property and taxes—an unlikely convergence.����

Since the����has accelerated on a global scale. As����(marking��a 74% increase in 44 years).��.����

Intellectual property is a key category of intangible assets. Intellectual property falls into the category of����among others. Often, trademark and patent are protection tools to prevent competitors from exploiting value-driving assets.��

Intangible assets inevitably lead to a quagmire: how do governments tax intangibles?��. How does one impose taxes on something invisible (e.g.��data or goodwill)?��Or something��with a��value��more difficult to��decipher?����

Under paragraph 3(a) of the��Income Tax Act��(“ITA”),��. Property is defined in section 248 of the ITA as����whether real or personal or corporeal or incorporeal. Logically, intellectual property may be subject to taxation under paragraph 3(a). However,��. Not only does the difficulty of determining the fair market value of intangible assets render taxation different from the traditional economy, but the lack of concrete legislative guidance undermines��the predictability and efficiency of taxation.����

Another issue is the difficulty in treating intellectual property as either capital or income. Intangible assets can simultaneously fall into both categories. For instance,��. However, if a taxpayer sells a copyright-protected work and transfers copyright, then the revenue generated would be income.����

As other jurisdictions have reformed the taxation of intangible assets, Canada has remained largely stagnant on the matter. .��Additionally, the Organisation for Economic Co-operation and Development has turned to base erosion and profit shifting tools to strategize how to close the taxation loopholes triggered by intangible assets and payments (e.g.��royalties).����

The rapid replacement of brick-and-mortar industries by digitalization creates opportunities to reform taxation. To parallel business development, perhaps novel legislative reforms are required to ensure that Canada does not fall behind in the global restructuring of taxation.����

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, the Deputy Minister for Innovation, Science and Economic Development Canada (ISED), kicked off the event with opening remarks. He emphasized the importance of bringing together IP members from academia, the private sector, and the public sector to foster an inclusive IP community, inspire innovative thinking, and work together to improve Canada’s intangible economy. Kennedy noted that events like this would help develop a more durable IP structure for Canada’s national and international interests.

Kennedy concluded by emphasizing the importance of developing IP knowledge and structures within the growing digitized economy. By expanding Canada’s IP infrastructure, our institutions would be better equipped to utilize data strategies for evidence-based decision-making in a variety of spheres, including economic policies, business initiatives, and national security programs.

Following Kennedy’s introductory remarks, , Founder of CIGI, gave a keynote speech. Balsillie offered a very critical analysis of the current state of Canada’s intangible economy. He argued that Canada is currently playing “catch up” after failing to invest in IP assets and structures. By missing the international shift from traditional to intangible markets, Canada is now economically and politically vulnerable, especially as a dependent importer of IP assets.

Canada is the only country that saw a decrease in patent applications relating to Artificial Intelligence between 2016 – 2018. Canada also saw a decline in research partnerships between Canadian institutions and foreign entities over the same period. Balsillie argues that these trends are not only detrimental to the Canada’s security and sovereignty, but also indicate clear shortcomings in the Canadian IP framework.

In his presentation, Balsillie emphasized Canada’s need to establishing a better framework and policy guidelines to protect IP and data in Canada. He argued that there is a clear lack of IP knowledge among businesses and the Government, which has led to the spread of misinformation and the development of ineffective IP frameworks. Balsillie bluntly states that real IP experts are needed in positions of power to update Canada’s policy infrastructure and institutions to better match the flexible, dynamic needs of the intangible economy.

IP and data are now the most valuable business, national, and international assets. They not only shape the economy, and public and private sphere, but are also the primary drivers in economic grown and national security. Furthermore, intangible stock assets in IP tie together policy considerations such as foreign investment, domestic economic development, and national security. In other words, intangible assets such as IP and data act as the new foundation of international political-economic status and stability. The world now lives in an era of intangibles, and this conference is one of many IP initiatives telling us that Canada’s digital transformation is overdue.

Adele Zhang is an IPilogue Contributing Editor interested in the intersection between IP law and sports, and technology.

The post The 4th Annual IP Data & Research Conference: Opening Remarks and Keynote Speaker appeared first on IPOsgoode.