Canada EU Science, Technology and Innovation Observatory Report

Transcription

1 Canada EU Science, Technology and Innovation Observatory Report Deliverable 2.1 Project Work Package: Deliverable: Version European Research Area Canada for Science, Technology and Innovation Partnership () WP2 Science, Technology and Innovation Policy Dialogue D2.1 STI Observatory Report Final Version Date 18/11/2015 Report authors: This report is a joint publication by the partners DLR Project Management Agency (DLR PT), Agenzia per la Promozione della Ricerca Europea (APRE), Universities Canada (UC) and the Public Policy Forum (PPF). Task leader is the DLR Project Management Agency (DLR PT).

2 DOCUMENT CONTROL SHEET Document title Work package: Deliverable Version Canada EU Science, Technology and Innovation Policy and Programmes WP2 Science, Technology and Innovation Policy Dialogue D2.1 STI Observatory Report Final Version Last version date 18/11/2014 Status File Name Finalised and published D2.1 STI observatory report_final Number of pages 148 Dissemination level Responsible author Editors Public Johanna Füllmann, DLR PT Isabelle Couture, PPF; Melissa Moor and Danielle Lenarcic Biss, UC; Debbie Kemp, DFATD; Miriam de Angelis and Elena Maffia, APRE; VERSIONING AND CONTRIBUTION HISTORY Version Date Author/Editor Contributions Description / Comments _v01 20/02/2014 Füllmann Initial Draft _v02 14/07/2014 Füllmann _v03 02/02/2015 Füllmann _v04 12/03/2015 Füllmann _v05 20/09/2015 Füllmann Isabelle Couture, Melissa Moor, Debbie Kemp Miriam de Angelis, Elena Maffia, Isabelle Couture, Danyu Bai, Nathalie Zakhem, Debbie Kemp Danielle Lenarcic Biss, Miriam de Angelis, Elena Maffia, Isabelle Couture Isabelle Couture, Martina de Sole Draft version to circulate amongst partners Final Version Recommendations from the Review Committee incorporated Executive Summary and Partners contributions revised final 18/11/2015 Füllmann Johanna Füllman Finalisation 2

3 Table of Contents Executive Summary... 4 Introduction... 7 Canada EU Science, Technology and Innovation (STI) S&T Policies and agreements Federal level Provincial level EU Member States level Bilateral agreements between Canadian and EU universities Conclusions on EU Canada Policies and Agreements EU Canada STI Programmes Canadian Programmes EU Participation in Federal Programmes EU Participation in Provincial Programmes Conclusions of EU Participation in Canadian Programmes EU Programmes Canadian Participation in FP Conclusions on the Canadian Participation in FP Innovation The European Union Canada Conclusions on Innovation in EU and Canada Assessment of the Canada EU STI collaborations Strengths and weaknesses of European, Member States and Canadian agreements and policies in fostering Canada EU STI cooperation Areas of collaboration Results and Recommendations ANNEXE

4 Executive Summary Canada is the EU s oldest formal partner amongst industrialised countries. The Agreement for Cooperation in the Peaceful Uses of Atomic Energy was signed in Since then, the cooperation continued to grow overtime and is even deepening today: Canada and the EU are currently finalising negotiations for two agreements, the Strategic Partnership Agreement (SPA) and the Comprehensive Economic and Trade Agreement (CETA). These two agreements will strengthen Canada EU relations even further. Although joint agreements between Canada and the EU primarily target economic and trade relations, cooperation in science and technology is included in most agreements. Throughout their long standing culture of scientific collaboration, Canada and the European Union have connected through many initiatives at the political, programmatic and researcher level. The cooperation structure is thus very diverse and complex. Furthermore, scientific and technological cooperation with Canada takes place at many levels: at the level of the EU, but also at the level of the EU Member States and even the Member States provinces, regions and communities. Similarly, cooperation with Canada takes place at the federal level but also with the provinces and territories. However, scientific priorities at the different levels do not always coincide, complicating comparison and analysis even further. In 2012, the Access2Canada initiative published an opportunity report that identified EU Canada scientific agreements and Canadian programmes that Europeans could link to. The same year, the ERA Can 2 project investigated the participation of Canadians in the European Framework Programme FP7 in its report Canadian Participation in FP7: Promotion and Impact. The current Science, Technology and Innovation Observatory Report builds upon these earlier reports, but looks at the European and Canadian science and technology programmes and participation together and adds the component of Innovation, the respective framework conditions and programmes, in a comparative manner. This report aims to provide a thorough overview of the EU Canada collaboration in science and technology and to compare innovation measures in the EU and Canada. It contains information and data for researchers, research or innovation organisations, funding organisations and political stakeholders in the field of science, technology and innovation that are considering transatlantic linkages. This report captures the momentum for the time period of 2007 until 2013 (the time span of the European Framework Programme FP7). More specifically, the report: provides information on policies and joint agreements between the EU and Canada (at the federal and provincial levels), as well as information on bilateral agreements between EU and Canadian universities; examines the participation of Canadian researchers in the EU and of European researchers in Canadian programmes. compares the innovation framework conditions as well as innovation programmes both in the EU and Canada analyses the joint research priorities between the EU and Canada and how these are reflected in agreements, as well as the research themes of Europeans and Canadian performing research abroad; recommends future steps and areas of investigation that the Joint Science and Technology Cooperation Committee (JSTCC) may wish to pursue beyond the JSTCC s current joint 4

5 research priorities, which cover aeronautics and space, health, information and communication technology, agriculture and food, and arctic and marine science. Some of the main findings are highlighted below. Themes of cooperation agreements in science and technology Aeronautics, aerospace and health are pivotal areas for agreements of scientific cooperation between the EU and Canada. Arctic and marine science is also represented through the Galway Statement signed in 2013 between the EU, Canada and the US. This report reveals agreements are lacking between Canada and the EU in the priority areas of agriculture and food and information and communication technology, despite the active participations of Europeans in Canadian programmes and Canadians in the European Framework Programme in these fields. However, there are a number of agreements, between EU Member States and Canada, especially in the field of agriculture and food. At the level of Canadian provinces and EU Member States, cooperation agreements in science and technology are mostly general. This may be due to the fact that, unlike the federal government, provinces have ministries for science (usually paired with technology and innovation or education), so provinces can bundle their research priorities also with general scientific agreements towards the international community. Participation of Canadians and Europeans in Science and Technology Programmes To date, Europeans have participated mostly in federal programmes related to social sciences and humanities, which does not coincide with the EU Canada joint research priorities. The Social Sciences and Humanities Research Council of Canada (SSHRC) offers the highest number of programmes in which Europeans can participate. Europeans also participated in programmes offered by the Canadian Institutes of Health Research (CIHR) and the Natural Sciences and Engineering Research Council (NSERC), but not in such a high number. However, the data received by NSERC did not allow further breakdown by theme in the natural sciences and engineering field. At the provincial level, Europeans can be found in a broad range of scientific fields, in alignment with the joint priorities identified by the European Commission and the Government of Canada. On the other side, Canadian researchers participated in the European Framework Programme for Science and Technology (FP7) predominantly in the fields of health and food, agriculture and fisheries, and biotechnology as well as transport (including aeronautics), followed by ICT. This means that Canadian participation largely aligned with the EU Canada research priority areas. Country representation in Agreements and Programme Participations Bilateral collaborations with Canada both at the federal and provincial level is most significant with the EU Member States France, Germany and the United Kingdom. Among Canadian provinces, Ontario and Quebec have the highest number of scientific agreements with EU Member States and also attract the most European researchers. Researchers from these two provinces were also the ones who participated the most in FP7. Innovation The report has identified a set of framework conditions for innovation both in the EU and Canada to make their state of innovation comparable. These indicators are research and development 5

6 (R&D) spending (both public and private), access to finance for start up firms and small and medium sized enterprises (SMEs), intellectual property rights (patents, copyrights and trademarks), and venture capital investment. These conditions determine the likelihood of developing, manufacturing and commercialising a research result. Since innovation is one component of this report, only a bigger picture is given here and no details of the innovation landscape in the EU and Canada are provided. In total, the EU has a higher R&D investment than Canada. Both focus their expenditures in the high tech sector on aerospace products and pharmaceuticals. The venture capital investments are rather low in both the EU and Canada. While Canada released a Venture Capital Action Plan in January 2013 to increase investments, the EU focuses on other instruments for financing start up companies, such as publicprivate partnerships. In the EU, it is easier to receive a patent and Canada holds a rather low number of patents in comparison. As Canada has undergone recent changes in government legislation to get in line with international standards, Canada is now eligible to sign the Madrid Protocol, which facilitates registration and management of international copyrights and trademarks as a component of the World Intellectual Property Organization (WIPO). This would level the playing field for Canadian enterprises and help them register trademarks globally. The EU is also part of WIPO and a signatory to the Madrid Protocol, and has undergone harmonisation of copyright law and trade mark systems throughout the EU Member States. Further research would need to be done to analyse the interactions between Canada and the EU in innovation. 6

7 Introduction The Science, Technology and Innovation Observatory Report 2015 contains information and data for policy makers, researchers, programme owners and innovation organisations as well as small and medium enterprises interested in EU Canadian linkages through a variety of means. It offers insights on the EU Canadian Partnership in Science, Technology and Innovation. The report is a deliverable of the project "European Research Area Canada for Science, Technology and Innovation Partnership" (). The project is presented in the next section. For the first chapter Canada EU agreements have been identified that are relevant to cooperation in Science and Technology. First of all, the major agreements between the European Union and Canada at the federal level are presented. The history of cooperation in science and research dates back to 1959 when the European Atomic Energy Community and the Government of Canada signed the agreement for cooperation in the peaceful uses of atomic energy, and the cooperation also concerned research in that field. Currently the European Union and Canada are working on the Canada European Union Strategic Partnership Agreement, where negotiations have been closed, but review of the text, signature and ratification are still outstanding. In the following section the agreements between the EU and Canada at the provincial level are examined. Especially the five Canadian provinces Quebec, Alberta, Manitoba, Nova Scotia and Ontario demonstrate strong Canada EU ties. After this the EU Member States agreements with Canada at the federal level are presented, here the countries that Canada has most of its agreements with will be discussed in more detail. The countries are France, Germany, the United Kingdom, Sweden and Finland. Following will be the section about the bilateral agreements between Canadian and EU universities. In the last section of this chapter, we will draw some first conclusions on the Canadian EU agreements. In the second chapter, the Programmes in Canada and the European Union will be assessed. First the Canadian programmes will be presented and the participation of Europeans in these programmes and also the financial contributions. In the following section is the EU Framework Programme being introduced and its various components with the participation of Canadians. At the end, conclusions will be drawn on the participations in the European and Canadian programmes. The last chapter gives some insights into Innovation Programmes from the European Union and Canada. The Project promotes cooperation between the European Union and Canada across the science, technology and innovation chain to support and encourage their mutual prosperity, address common societal issues and meet global challenges in the most effective and efficient way possible: together. The project is largely funded by the 7th EU Framework Programme for RTD under the theme of International Cooperation (7FP) in the Topic INCO : Canada, India, Japan, Republic of Korea. The project is a coordinated support action. It started at the 1 st of October 2013 and runs 36 months until the 31 st of September The overall budget encompasses 1,349, It includes seven partners (four in Europe and three in Canada). Objectives of the project The objectives of the can be illustrated in three pillars: 7

8 1. Enriching the EU Canada policy dialogue by identifying areas of mutual interest and targeted opportunities and by developing implementation plans based on the analysis of Canadian and European policies, programmes and project participation, consultations of researchers and innovators and programme level cooperation meetings. 2. Stimulating transatlantic cooperation between researchers and innovators by raising awareness of the opportunities available through communication activities as well as international workshops and networking events. For concrete questions an online helpdesk will be established and webinars organised. 3. Enhancing coordination among Canadian federal and provincial programme owners, sector leaders and networks and their counterparts at the European level and in European Member States through the organisation of priority setting workshops, symposia on international innovation and research infrastructure and preparation of an action plan for bringing research results to market. The project will also support the Canadian NCP network and prepare a feasibility study for a joint EU Member State Liaison Office in Ottawa. The pillars are linked, all focused on to a number of global and societal challenges identified through the policy dialogue as areas of mutual interest for Europe and Canada. In this way, offers a strong and sustainable structure for advancing cooperation with tangible benefit for Canadians and Europeans. Activities performs a variety of activities, here only a short overview can be given. Besides the Reports on Science, Technology and Innovation collaboration between Canada and the EU ( STI Observatory reports ), the project produces two guides: The Guide on Horizon 2020 for Canadians and the Guide on Canadian Funding Programmes for Europeans. Please see chapter 2 in this report for more information. organises further series of Information Sessions in Canada and Europe. The Information Sessions in Canada promote Horizon 2020, the EU Framework Programme, to Canadian researchers, programme owners and innovation organisations and small and medium enterprises. The Information Sessions in Europe promote Canadian Funding Programmes to European researchers, programme owners and innovation organisations and small and medium enterprises respectively. hosts a several webinars per year targeting Canadian and European researchers. The webinars for Canadians include experts presentations on Horizon 2020 in general and legal and financial issues of Horizon 2020, but also webinars on specific Horizon 2020 calls that are open for Canadian participation, e.g. for Aerospace, Information and Communications Technologies or Social Sciences and Humanities. The webinars for Europeans cover the Opportunities for Europeans in Canadian Funding Programmes, e.g. through the federal granting councils. In order to bridge the gap between public and private research and innovation actors on both sides of the Atlantic, specific joint activities are organised within. Roundtables are organized, whereas each will focus on a different research/innovation area of selected societal challenges. Working visits will actively encourage networking and partnership development and will specifically include innovation actors to foster knowledge transfer between university/public sector researchers, science and technology parks, research driven clusters and SME/business sectors. European Brokerage Events for Canadian participants interested in finding new potential partners through face to face meetings on selected societal challenges are organized in conjunction with the launch of a call. Further organizes two Symposia, one on arctic research infrastructure and one on innovation. If you are looking for more information on the project and/or Canada EU 8

9 science, technology and innovation cooperation, please visit our website can.net or write an to our online helpdesk can.net. The Project Consortium The project is led by the Agenzia per la Promozione della Ricerca Europea (APRE) in Italy as the project coordinator together with the Government of Canada in concert with sector leaders in the Canadian academic and business communities and leading European organisations for research and innovation development in Austria, France and Germany. The consortium brings together seven leading associations and organisations for research, innovation and public policy discussions. The Canadian partners are the Department of Foreign Affairs, Trade and Development (DFATD), the Universities Canada (UC), formerly Association of Universities and Colleges of Canada (AUCC) and the Public Policy Forum (PPF). The European partners are the Agenzia per la Promozione della Ricerca Europea (APRE) in Italy, the Centre National de Recherche Scientifique (CNRS) in France, the DLR Projektträger (DLR PT) in Germany, and the Zentrum für Soziale Innovation (ZSI) in Austria. 9

10 Canada EU Science, Technology and Innovation (STI) 1 S&T Policies and agreements This section seeks to identify major Canada EU agreements, policies and funding programmes at the federal and provincial levels relevant to cooperation in Science and Technology. The agreements between Canada and EU Member States have also been identified. 1.1 Federal level Canada and the European Union are linked through a number of agreements in the field of science technology and innovation. For a full list of agreements, please see the Annex I. Most of the agreements between Canada and the EU are in the field of Aerospace and the cooperation dates back even before the European Space Agency (ESA) and the Canadian Space Agency (CSA). Furthermore Nuclear Energy represents a field with vast cooperation agreements, and so do the fields of Environment and Material Sciences, followed by Health. There are also agreements in the fields of Innovation, Energy and Marine History of Agreements related to science and technology cooperation between EU and Canada Please see the table 1a for the major milestone agreements for the Canada EU cooperation. The most important ones are explained in further detail below. Table 1a: Timeline of the major EU Canada milestone agreements Cooperation Agreement Concerning the Peaceful Uses of Atomic Energy (1959) The history of cooperation in science and research started already in 1959 when the European Atomic Energy Community (EAEC, now EURATOM) and the Government of Canada signed the agreement for cooperation in the peaceful uses of atomic energy, and the cooperation also concerned research in that field. The co operation intended by this Agreement relates to the peaceful uses of atomic energy and includes the supply of information, including that relating to research and development, problems of health and safety, equipment, facilities and devices 10

11 (including the supply of designs, drawings, and specifications), and uses of equipment, facilities, devices and material; the supply of material; the procurement of equipment and devices; the use of patent rights; access to and use of equipment and facilities. Framework Agreement for Commercial and Economic Cooperation (1976) In 1976, the European Union (EU) and Canada signed the EC Canada Framework Agreement for Commercial and Economic Cooperation. Though the agreement did not concern research cooperation in the first place, it has nevertheless given birth to numerous committees, subcommittees and working groups; all of which involve frequent meetings of officials, in sectors ranging from metals and minerals, forest products, food processing and energy conservation, to policy areas such as R&D, telecommunications, environment and small business. The purpose of these meetings is to identify opportunities for mutually beneficial cooperation, and to exchange information on changing policies and programmes, that may be affected by such cooperation. They also seek ways to stimulate cooperation between both sides in all promising sectors [ ]. 1 The European Framework Programmes (since 1984) However, it was only after the EC adopted its multi annual Framework Programmes in 1984 that the two sides could more concretely begin to identify science and technology cooperation opportunities. The Framework Programme (FP) is the EU s primary funding mechanism for supporting collaborative, transnational research and development. The First Framework Programme ran from 1984 to 1987 with an EU budget of some 3.3 billion Euros. The current programme Horizon 2020 is the Eight Framework Programme; it will run from 2014 to 2020 with an EU budget of some 70.2 billion Euro. Science and technology cooperation between the EU and Canada has evolved ever since and in 1995 a formal Agreement for Scientific and Technological Cooperation was signed 2, which allows Canadians to take part in the EU Framework Programmes and Europeans in the Canadian programmes. Declaration on Transatlantic Relations (1990) The European Community and its Member States on one side and Canada on the other signed the Declaration on Transatlantic Relations in The aim of this declaration was to strengthen their partnership, to support democracy and the rule of law and to promote market principles. Furthermore common projects should be developed in science and technology, including space, research in medicine, environmental protection, energy conservation, and in communication, culture and education, including academic and youth exchanges. Science and Technology Agreement (1996) Canadian and European interest in advancing cooperation in science and technology is expressed in the 1996 Canada EU Science and Technology Agreement. The Agreement facilitates cooperation between the EU and Canada "in fields of common interest where the Parties are supporting research and development activities to advance science and/or technology relevant to those fields of interest." As a result of the Agreement, Canadian researchers have the permission, on a project by 1 Canada on the Threshold of the 21st Century: European reflections upon the future of Canada. Selected papers of the First All European Studies Conference, The Hague, The Netherlands, October 24 27, 1990, C. H. W. Remie and J. M. Lacroix, John Benjamins Pub Co 1991, p December

12 project basis, to join European led consortia participating in the European Union's Framework Programme, currently Horizon 2020 and Europeans from EU Member States can participate in Canadian federal programmes. The mutual advantages of strong Canada EU science, technology and innovation partnerships are evident. Many EU priority areas for research overlap with those of Canada, such as energy, food and biotechnology, health and information and communication technologies (ICT). New areas of cooperation have been added over the years such as: artic, marine, aeronautics and researcher mobility. Working collaboratively enables researchers to interact with the world's best minds and organisations thus avoiding duplication of effort and enabling the benefits and risks to be shared. 3 This Agreement between Canada and the EU is administered by the Joint Science and Technology Cooperation Committee (JSTCC), which is co chaired by the Department of Foreign Affairs, Trade & Development Canada and the European Commission. The JSTCC meets on an 18 months basis, with meetings being held alternately in the EU and Canada. Galway Statement on Atlantic Ocean Cooperation (2013) On 24 May 2013, Commissioner Máire Geoghegan Quinn and Commissioner Maria Damanaki, on behalf of the European Union, together with high level representatives from United Stated of America and Canada signed the Galway Statement on Atlantic Ocean Cooperation to launch a Transatlantic Ocean Research Alliance. The goal is to work together in order to better understand and "increase our knowledge of the Atlantic Ocean and its dynamic systems including interlinks with the portion of the Arctic region that borders the Atlantic" and to promote the sustainable management of its resources. 4 Upcoming: Canada European Union Strategic Partnership Agreement The Government of Canada is committed to strengthening its bilateral relationship with the European Union in a broad range of areas. [ ] Foreign Affairs Minister John Baird and his counterpart, High Representative and Vice President of the European Commission, Catherine Ashton, announced the conclusion of negotiations on the Canada European Union Strategic Partnership Agreement (SPA) [at the end of 2014], setting the stage for even stronger relations between Canada and the EU s 28 member states. The agreement will lay out a strategic direction for stronger future relations and collaboration between Canada and EU member states at the bilateral and multilateral levels. The SPA touches on a number of mutual priority areas, including energy, security, innovation, sustainable development and the promotion of human rights. It further seeks to foster scientific research cooperation. The next step for Canada and the European Union is to conduct their respective legal reviews of the text, paving the way for early approval, signature, and ratification of the Agreement consistent with the respective internal processes of Canada and the European Union ue/policies politiques/science_tech.aspx?lang=eng, 04.December alliance, 04. December communiques/2014/09/08a_bg.aspx?lang=eng, date 24. October

13 Themes of collaboration Here are the priority areas outlined, that have a long cooperation history and many agreements between the EU and Canada. Cooperation in the field of Aerospace Canada's cooperation with the European Space Agency (ESA) provides an outstanding model for international cooperation, the sharing of knowledge and expertise and the promotion of Canadian space industries, specializing in niche areas such as satellite communications, Earth observation, and space technologies. [ ] As a cooperating member, Canada participates directly in ESA programmes, activities and decision making. No other country outside Europe has such a relationship with ESA. 6 Canada s cooperation with Europe in regard of space activities dates back even before the European Space Agency and the Canadian Space Agency. From 1968, Canada was an observer in the European Space Conference (ESC), a ministerial level organisation set up to determine future European space activities. Even after the creation of ESA in 1975, Canada continued to hold its observer status. Other areas of collaboration included i.e. the work with the European Space Research Organisation (ESRO), which later merged with the European Launcher Development Organisation to form ESA, in the early 1970s on the Communications Technology Satellite (CTS). By 1979, the Canadian government was becoming a cooperating member in ESA and thus the first five year cooperation agreement came into effect ( ), followed by another five year agreement and three 10 year agreements, the current one running from 2010 to The status [of a cooperating member] was unique at the time and remains so today. Already in 1980, Canada started participation on its first projects, the Olympus programme and the development of ESA s first Earth observation satellite, the European, Remote Sensing Satellite (ERS 1). Since Canada s involvement in ESA activities was growing and to bring the collaboration forward, Canada appointed its first counsellor for European space affairs in ESA and Canada are also both involved on a multilateral or global scale. They are two of the five partners in the International Space Station and key players in the International Charter on Space and Major Disasters, the Committee on Earth Observation Satellites (CEOS) and Global Earth Observation System of Systems (GEOSS). 7 Cooperation in the field of Nuclear Energy The Agreement between the Government of Canada and the European Atomic Energy Community (Euratom) for cooperation in the peaceful uses of atomic energy which was signed in The agreement is Euratom s oldest international agreement. Bilateral cooperation in nuclear energy continues to be active. Over its lifetime, the agreement has been amended four times via exchanges of letters, and supplemented in 1998 by a further agreement in the field of nuclear research. The EU and Canada also participate in the Generation IV International Forum, which is a multinational research initiative to develop the next generation of nuclear energy systems to provide competitively priced and reliable energy in a safe and sustainable way csa.gc.ca/eng/programs/esa/ date: 20. October 2014; 7 d_technology, date 23. October agreements accords commerciaux/agr acc/eu ue/studyetude.aspx?lang=eng, date 24. October

14 Cooperation in the field of Environment EU Canada environmental relations were launched in 1975 with the signing of an exchange of letters on environmental cooperation. The purpose was and is to facilitate exchanges of environmental information and expertise in areas of common interest, such as the evaluation of risks to human health and the environment from pollution, the establishment of quality objectives in dealing with environmental pollution particularly in the areas of water pollution, and protection of the natural environment. The established mechanism for policy consultations is the High Level Dialogue on Environment. High level consultations on environmental policy take place on a regular basis every 18 months. The consultations are intended to cover a broad range of domestic and international environmental issues of common interest, to exchange views on respective approaches, and to identify possible areas for future cooperation. The last High Level Dialogue Meeting took place in Ottawa on 8 April In addition to areas of longstanding cooperation, the meeting provided an opportunity for discussion of respective international and domestic actions to address climate change, approaches to biodiversity, chemicals and waste, as well as Arctic marine ecosystems. 9 Cooperation in the field of Health The EU Canadian cooperation in the field of Health has a culture of vast cooperation between various organisations in Europe and Canada. Already in 1984 the agreement to promote Cooperation in Research in the areas of Medicine and Public Health (MOU) between the Canadian Department of National Health, the Medical Research Council of Canada and the European Commission was signed. Further CIHR together with the German Center for neurodegenerative diseases (DZNE) and the UK Medical Research Council (MRC) initiated the Networks of Centers of Excellence in Neurodegeneration (COEN) in By now, six other organisations joined the initiative. Since 2012 the Canadian Institutes of Health Research, the Ministry of Quebec and the Fonds de recherche du Québec are full members in the ERA NET NEURON, Network of European Funding for Neuroscience Research. Here, calls of different topics are being launched. Canada is the only third country that participates in this ERA Net with 16 EU Member States and Israel as an associated country to the EU. Canada also became a full member of the EU Joint Programming Initiative on Neurodegenerative Diseases Research (JPND) on May 4th, October 2014 date 14

15 1.2 Provincial level Agreements in science, technology and innovation between Canada and the EU exist at the federal level, but also at the provincial level. Science, technology and innovation agreements between EU member states and five Canadian provinces Quebec, Alberta, Manitoba, Nova Scotia and Ontario demonstrate strong Canada EU ties and highlight the potential for further collaboration at this level. 32 agreements 6 agreements 2 agreements 2 agreements 3 agreements Figure 1a: Cooperation agreements between Canadian Provinces and EU Member States As we can see in figure 1a, the Province of Quebec has 32 agreements on science, technology or innovation with ten EU member states or their sub national governments. Nine of these agreements are with France, the first of which dates to The Quebec France agreements create a strategic partnership on innovation and establish collaboration in multiple areas including industrial technologies, biotechnologies and aeronautics. Quebec also has agreements on science, technology and innovation with several other EU member states, such as an agreement on environmental cooperation with the Netherlands, an agreement with Luxembourg that includes support for international research networks, two Memoranda of Understanding on science and technology with Hungary and another two with Poland. Additional science, technology and innovation agreements between Quebec and sub national governments in EU member states include a joint declaration on scientific cooperation with the German state of Bavaria and both an agreement as well as a joint declaration with the autonomous Spanish region of Catalonia. Quebec has entered into six agreements on science, technology and innovation with regional governments in Belgium and three with regional governments in Italy. Quebec is also a signatory to two multilateral agreements on science, technology and innovation, both of which include several sub national governments from EU member states. 15

16 The Province of Alberta has six science, technology and innovation agreements with EU member states or sub national governments, including Memoranda of Understanding with Croatia and with Finland. Alberta has signed two agreements on science, technology and innovation with Germany, one with the Federal Ministry of Economics and Technology and another with the state of Bavaria. The province also has science, technology and innovation agreements with the Brussels Capital Region and the Government of Flanders in Belgium. The Province of Nova Scotia is currently party to three agreements on science, technology and innovation with EU member states or sub national governments within EU member states. In March 2014, the Province of Nova Scotia, along with the Offshore Energy Research Association of Nova Scotia, signed a Memorandum of Understanding with the UK`s Technology Strategy Board, establishing a framework for collaboration on tidal research. Nova Scotia also has Memoranda of Understanding with the Belfast City Council in Northern Ireland, UK and the Province of Västernorrland in Sweden covering, among other things, collaboration in science and innovation. The Province of Ontario has signed Memoranda of Understanding on science, technology and innovation with two sub national governments in EU member states. The first, between Ontario and the Government of Catalonia in Spain, aims to identify opportunities for research collaboration and promote scientific and technological cooperation. The second, between Ontario and the German state of Baden Wurttemberg, covers collaboration in a number of areas, including science, innovation and research. Another Canadian province, Manitoba, has signed two Memoranda of Understanding that include cooperation in science, technology and innovation with sub national governments in the EU. Both of these are with regional governments in France, the Conseil Général du Bas Rhin and the Region Basse Normandie. Agreements such as the ones described above, between the Provinces of Quebec, Alberta, Manitoba Nova Scotia and Ontario and EU member states or sub national governments within the EU, point to opportunities for other Canadian provinces to establish similar agreements. These agreements provide models that could be used by the remaining Canadian provinces to develop agreements with their European counterparts which may foster research collaboration and support shared priorities in science, technology and innovation. 16

17 1.3 EU Member States level Considerable policy dialogue and research collaboration also occurs bilaterally between EU Member States and Canada. There are general bilateral science and technology agreements between Canada and France (1965), Germany (1971) and Belgium (1971), and there is also a Declaration of Intent with Spain (2007). 10 Furthermore, there are numerous agreements in specific thematic areas that also concern research cooperation between the EU Member States and Canada. In total, there can be 92 agreements and arrangements between the Government of Canada (and its science based departments and agencies) and the EU Member States be identified. The agreements cover a wide range of fields allowing cooperation in different themes between Canadian federal departments and agencies and counterparts in the EU. However, most of them do not provide funding, at least for the EU side, leaving a gap in the opportunities to establish concrete partnerships. Country Number Country Number Austria 2 Italy 4 Belgium 4 Latvia 2 Bulgaria 0 Lithuania 0 Croatia 0 Luxembourg 0 Cyprus 0 Malta 0 Czech Republic 2 Netherlands 3 Denmark 1 Poland 1 Estonia 0 Portugal 1 Finland 6 Romania 3 France 22 Slovakia 3 Germany 17 Slovenia 3 Greece 1 Spain 6 Hungary 2 Sweden 7 Ireland 2 United Kingdom 14* * Note: The UK & Netherlands have a joint agreement with Canada on astronomy, and the UK and Germany have a joint agreement with Canada in medical research. Table 1b: Number of Agreements between Canada and EU Member States Overall, most of the cooperation agreements between EU Member States and Canada are in the field of Nuclear Energy. Many of them concern the peaceful uses of Nuclear Energy. In Aerospace have been also numerous agreements between Canada and the EU Member States, as well as in Health. To discuss the countries that Canada has most of its agreements with, we are going yet deeper into the cooperation fields between Canada and France, Germany, the United Kingdom and Sweden. Canada and France have cooperation agreements in a wide spectrum of themes. Most of them concern scientific cooperation in Health, such as the Cooperation Agreement on Alzheimer's disease research (2008) between the Canadian Institutes of Health Research (CIHR), the Fonds de la recherche en santé (FRSQ) in Quebec and the Institut national de la santé et de la recherche médicale (Inserm) in France. Another being the Cooperation Agreement in the field of Energy, Health and Information Technologies (2008) between the National Research Council (NRC) in Canada and the Commissariat a énergie atomique de France (CEA) to promote research collaboration in the fields 10 agreements accords commerciaux/agr acc/eu ue/studyetude.aspx?lang=eng, date 24. October

18 of research and technology of mutual interest to further their respective research objectives including Energy, Health and Information Technologies (i.e. brain imaging technology to combat Alzheimer's disease). There are numerous agreements between Canada and France in Aerospace, mainly between the Canadian Space Agency and the Centre National d'etudes Spatiales (CNES) in France. Other agreements can be found in the fields of Energy (in general), Nuclear Energy, Marine and ICT. There exists even a Cooperation Agreement between the Industrial Research Assistance Programme (IRAP) at the National Research Council (NRC) in Canada and OSEO at BPIFrance (2008) to promote the creation of technological partnerships between Canadian and French small and medium enterprises. The Germany Canada cooperation in regard to agreements focuses on Environment and Energy, while some of the agreements go hand in hand in terms of research cooperation for sustainable environment and energy. To mention here the Agreement for the collaboration on the grounds of energy and environmental research (2011) between the University of Alberta and the Helmholtz Alliance of German Research Centers. The aim of this collaboration is to glean talented young researchers. Furthermore the focus of the agreement lays in energy efficient upgrading of bitumen, carbon capture and sequestration (CCS), the use of deep geothermal energy, soil and water remediation and the sustainable renaturation of post mining landscapes. Notably there is only one agreement on nuclear energy. In the field of Aerospace does the German Aerospace Center (DLR) have several agreements either with the Canada Centre for Remote Sensing (CCRS) at Natural Resources Canada or with the Canadian Space Agency (CSA), such as the Cooperation Agreement for receiving satellite data in Canada (2010) between DLR and CCRS. Since the 1971 signing of the bilateral Canada Germany S&T Agreement there have been more than 1000 joint research projects in priority areas such as space technologies and earth observation, fuel cells, clean/alternative energy technology, nanotechnology, photonics, metrology, ocean science, health and genomics, and arctic science. The agreements between Canada and the United Kingdom are very diverse and do not show a focus on a specific field of cooperation. There are two agreements in Aerospace and Health, and one agreement in Defense, Agriculture, Marine, Nuclear Energy and Polar and Innovation respectively. There are two general agreements on science and technology, mainly focusing on information exchange. The latest agreement is the Canada UK Joint Innovation Statement (2012) concerning joint initiatives in the fields of science, technology and entrepreneurship and innovation. While Canada and the United Kingdom enjoy a strong S&T relationship, the Joint Innovation Statement is a catalyst for focusing partnerships on applied research and the commercialization of research and technology in health sciences, renewable energy (tidal power), cyber security, and mobility. Canadian Agreements with Sweden focus on Aerospace and Nuclear Energy, as well as Innovation. In 2013 the Canadian Space Agency and the Swedish National Space Board signed the Cooperation Agreement on a Phase 0 Feasibility Study for a scientific atmospheric Limb Sounding Mission. In May 2010, a Memorandum of Understanding (MoU) between Canada and Sweden on Science and Technology Cooperation was established. Objectives for developing the Canada Sweden S&T MOU were based on the desire for increasingly significant private sector participation in bilateral research, greater leveraging of R&D funding from a wider range of sources, more effective industry to university partnerships, and a potential platform for multilateral projects. 18

19 1.4 Bilateral agreements between Canadian and EU universities Please note that the information included in this section of the report was compiled using AUCC s Canadian University International Exchange Agreement (CUE) database. 11 This section of the report covers bilateral agreements between one Canadian university and one university in the EU. Many additional multilateral agreements exist between Canadian universities and EU partners. While these agreements are challenging to quantify, they exemplify the high level of engagement between Canadian and EU universities in a range of areas, including research. While the information presented below is not an exhaustive representation of all agreements between Canadian and EU universities, it is indicative of trends in such agreements. As of 2012, 818 bilateral agreements were in place between universities in Canada and universities in 27 EU member states (i.e. all EU member states except Cyprus), illustrating the strong links that exists between universities on both sides of the Atlantic. Bilateral agreements were most common with universities in France, with 283 such agreements active in Following France, universities in the UK and Germany had the second and third highest number of bilateral agreements with Canadian universities. 818 agreements Graphic 1b: Most common agreements between Canadian universities and EU Member State universities Sixty two universities representing all ten Canadian provinces had bilateral agreements with universities in EU member states. These agreements were most prevalent among Ontario universities, which together had 330 bilateral agreements with their EU counterparts. Quebec universities had the second highest number of bilateral agreements with universities in the EU, reporting 295 agreements in total. This was followed by 71 agreements with universities in Alberta and 56 bilateral agreements between universities in British Columbia and EU universities. In each of the six remaining Canadian provinces, the province s universities had fewer than 25 bilateral agreements with universities in the EU. Nine of the ten Canadian universities with the most bilateral agreements with EU universities were located in either Quebec or Ontario. With 75 agreements, Université de Montrèal, in Montreal, Quebec, had the highest number of bilateral agreements with universities in the EU member states of the universities included in the CUE database. With 61 agreements, the University of Ottawa in 11 The CUE database, which represented agreements at 73 Canadian universities, has been inactive since As such, the information presented in this report may not reflect all current bilateral agreements between Canadian universities and universities in EU member states. 19

20 Ottawa, Ontario ranked second. The Université de Sherbrooke of Sherbrooke, Quebec followed with 51 agreements. Agreements Between Canadian Universities and European Universities by Province Universities in British Columbia: 56 agreements Universities in remaining 6 provinces: 66 agreements Universities in Ontario: 330 agreements Universities in Alberta: 71 agreements Universities in Quebec: 295 agreements Graphic 1c: Agreements between Canadian Universities and European Universities by Province Several types of bilateral agreements existed between universities in Canada and those in the EU, with undergraduate student exchange agreements being the most common, followed by graduate student exchange agreements and faculty exchange agreements. Of the 818 agreements, 159 were classified as joint research agreements and 36 were classified as scientific cooperation agreements. Many bilateral agreements between universities in Canada and those in the EU can be classified as more than one type of agreement. For example, a single agreement may be classified as both a faculty exchange agreement and a joint research agreement. Bilateral agreements between universities in Canada and the EU covered a range of disciplines, with a number of agreements encompassing two or more disciplines. While most agreements were restricted to specific disciplines, 217 of the 818 agreements covered all disciplines. After these general agreements, the disciplines most frequently specified were business administration and management, engineering and technology, arts and humanities, commerce and natural sciences. The quantity and diversity of bilateral agreements between Canadian and EU universities highlight the strength of Canada EU cooperation in the university sector. Through bilateral agreements, universities in Canada and the EU share their expertise, infrastructure and resources, and thereby strengthen Canada EU collaboration and exchange in science, technology and innovation. 20

21 1.5 Conclusions on EU Canada Policies and Agreements Areas of Research The history of cooperation in science and research dates back until 1959 when the European Atomic Energy Community and the Government of Canada signed the agreement for cooperation in the peaceful uses of atomic energy, and the cooperation also concerned research in that field. When in 1976, the European Union (EU) and Canada signed the EC Canada Framework Agreement for Commercial and Economic Cooperation, the agreement did not concern research cooperation in the first place, but has nevertheless given birth to numerous committees, sub committees and working groups, that contributed to a closer cooperation, also in science and research. However the most important step for EU Canada collaborations in science, technology and innovation marks the Science and Technology Agreement in 1996, which allows Canadian researchers to join European led consortia participating in the European Union's Framework Programme, currently Horizon 2020 and Europeans from EU Member States can participate in Canadian federal programmes. Many EU priority areas for research overlap with those of Canada, such as energy, food and biotechnology, health and information and communication technologies (ICT), arctic, marine, aeronautics and researcher mobility. These priority areas have also been reapproved by the latest EU Canada Joint Science and Technology Cooperation Committee meeting in Ottawa on the 19 th November More current agreements such as the Galway Statement on Atlantic Ocean Cooperation and the upcoming Canada European Union Strategic Partnership Agreement tap into fostering the cooperation in priority areas that do not have major agreements yet, i.e. arctic and marine, and energy respectively (Working Agreement of the High Level Dialogue on Energy). The provincial agreements are mostly more general Memoranda of Understanding on science, technology and innovation or agreements on a number of areas, including science, innovation and research. Quebec has agreements with France in the areas of biotechnologies and aeronautics and with the Netherlands one agreement on environmental cooperation. Nova Scotia established in 2014 together with the UK a framework for collaboration on tidal research. Overall, most of the cooperation agreements between EU Member States and Canada are in the field of Nuclear Energy. Apart from Nuclear Energy, are the cooperation agreements between EU Member States and Canada prevalent in the priority areas aerospace (including earth observation) and health. These two areas also dominate the scientific cooperation agreements of Canada with its closest cooperation partners France, Germany and the UK, followed by agreements on energy, marine and polar research. Bilateral agreements between universities in Canada and the EU cover a range of disciplines. Here most agreements are restricted to specific disciplines. Business administration and management, engineering and technology, arts and humanities, commerce and natural sciences are the most frequent disciplines in the specified agreements. Still over ¼ of the agreements cover all disciplines. Country Distribution 21 of the EU Member States have at least one agreement with Canada at the federal level. Bulgaria, Croatia, Cyprus, Estonia, Lithuania, Luxembourg and Malta don t have any. France, Germany and the UK have the highest number of agreements with Canada, followed by Sweden, Spain and Finland, Italy and 21

22 Belgium. France and Germany (and their states) do also have many agreements with Canada at the provincial level, while the UK has established only one in 2014 with Nova Scotia. Also Sweden, Spain, Finland, Belgium and Italy have agreements at the provincial level. Luxembourg and Croatia do not have any agreements with Canada at the federal level, but Poland has one agreement with the province of Quebec that includes international research networks and Croatia with the province of Alberta. The Province of Quebec also has two agreements with Poland, while at the federal level there is only one. Quebec, Alberta, Manitoba, Nova Scotia and Ontario are the only ones that have science, technology and innovation agreements with EU member states and/or their sub national governments, Quebec having by far the most agreements. All ten Canadian provinces have at least one university with a bilateral agreement with universities in EU member states, whereas nine of the ten Canadian universities with the most bilateral agreements with EU universities were located in either Quebec or Ontario. On the other side, all EU member states have also at least one university that has an agreement with a Canadian university (except Cyprus). Canadian universities have most of its agreements with universities in France, the UK and Germany. In sum, the EU Canada agreements are high in number and show a variety of themes, whereas most of the agreements, also with EU Member States, reflect the priority areas under the S&T agreement between EU and Canada (1996) (except agreements on nuclear energy). Overall, it can be seen that from the European side France, the UK and Germany have the highest number of agreements with Canada, while Quebec has the most agreements from the Canadian side, followed by Alberta. 22

23 2 EU Canada STI Programmes 2.1 Canadian Programmes In Canada, federal and provincial governments are jointly responsible for the framework conditions that support science, technology and innovation such as fiscal and tax systems, intellectual property rights, labour mobility, policies shaping competition, and foreign investment and trade. At the federal level, the Minister of Industry and the Minister of State for Science and Technology are regarded as having the lead responsibility for innovation in Canada, while the Minister of International Trade has the responsibility to support international innovation, science and technology. Provinces are responsible for universities, colleges and hospitals within their jurisdiction and provide most of the basic operating costs, including staff salaries, that support Research and Development (R&D) carried out within these institutions. Please refer to the Guide to Canadian science, technology & innovation programmes for Europeans for thorough information on all funding opportunities for Europeans at the federal and provincial level of Canada. This guide is intended to help European researchers and innovators identify and access opportunities for collaboration with their Canadian colleagues. The guide offers an overview of Canada s science, technology and innovation system and profiles Canadian science, technology and innovation programmes that may be of interest to Europeans. Each programme profile provides a brief description of the programme and of the eligibility criteria for Europeans, as well as contact information for the programme owner. You can find the Guide to Canadian science, technology & innovation programmes for Europeans here: can.net/canada/guide canadian programmes EU Participation in Federal Programmes In this chapter, Programmes by the three federal granting councils that are open to European participation are being presented. The federal granting councils are the Canadian Institutes of Health Research (CIHR), the Social Sciences and Humanities Research Council (SSHRC) and the Natural Sciences and Engineering Research Council (NSERC): The Natural Sciences and Engineering Research Council of Canada (NSERC) is the federal funding agency for academic research in the fields of natural sciences and engineering. The agency supports university students in their advanced studies, promotes and supports discovery research and fosters innovation by encouraging Canadian companies to participate and invest in postsecondary research projects. The Social Sciences and Humanities Research Council of Canada (SSHRC) is the federal research funding agency that promotes and supports postsecondary based research and training in the humanities and social sciences. By focusing on developing talent, generating insights and forging connections across campuses and communities, SSHRC strategically supports world leading initiatives that reflect a commitment to ensuring a better future for Canada and the world. The Canadian Institutes of Health Research (CIHR) is Canada s federal funding agency for health research. Its mission is to create new scientific knowledge and to enable its translation into improved health, more effective health services and products and a strengthened Canadian health care system. Composed of 13 institutes, CIHR provides leadership and support to more than 13,000 health researchers and trainees in universities, teaching hospitals, and research institutions across Canada. 23

24 Collectively, the three research granting councils, namely NSERC, SSHRC and CIHR, are referred to as the Tri Council. Some programming is offered by the Tri Council Agencies in consortium (see below and Section on Innovation). A whole list of federal funding programmes that are open to participation of EU organisations or researchers and the actual participation of organisations or researchers divided by countries can be found in the Annex II. Participation can either mean actual organisations that were partners on projects but also individuals/researchers which are being affiliated with an EU organisation and collaborating with a Canadian researcher. The time span is determined by the duration of the 7 th Framework Programme that dates from beginning of 2007 until end of We are looking at all 28 EU Member States, plus Associated States. Organisation can mean either EU institutions, universities or other post secondary institutions, companies, granting agencies, national European institutions, not for profit organisations, governmental organisations or industry. Below you find a table of all the Programmes by CIHR, NSERC and SSHRC that are open to Europeans. CIHR offers nine programmes and NSERC four, while SSHRC has even 19 different programmes where Europeans can participate. In total 84 Europeans participated in the nine CIHR Programmes. NSERC had 49 Europeans taking part in its four Programmes. SSHRC offered 505 European researchers participation in its 19 programmes. Table 2a: European Participation and Origin in Canadian Funding Programmes provided by CIHR, NSERC and SSHRC Granting Council PROGRAMME CIHR Banting Postdoctoral Fellowships ( ) Canada Finland Joint Research Programme in Public Health Challenges Canada UK Partnership on Antibiotic Resistance Catalyst Grant Meetings, Planning and Dissemination Grant Operating Grant Structural Genomics Consortium Team Grant Vanier Canada Graduate Scholarships ( ) NSERC Banting Postdoctoral Fellowships ( ) Collaborative Research and Training Experience Programme ( ) Strategic Project Grants ( ) 24

25 Vanier Canada Graduate Scholarships ( ) SSHRC Aboriginal Research (2007) Banting Postdoctoral Fellowships ( ) Community University Research Alliances ( ) Connection Grants ( ) Image, Text, Sound & Technology (ITST) (2009) Insight Development Grants ( ) Insight Grants ( ) International Community University Research Alliances (CURA) International Opportunities Fund ( ) Knowledge Impact in Society (2007) Major Collaborative Research Initiatives Programme ( ) Partnership Development Grants ( ) Partnership Grants ( ) Public Outreach Grants ( ) Research Development Initiatives ( ) Research/Creation Grants Standard Research Grants Programme ( ) Strategic Knowledge Clusters (2007) Vanier Canada Graduate Scholarships ( ) When looking at the table it becomes obvious that the Banting Postdoctoral Fellowships programme and the Vanier Canada Graduate Scholarships are being offered by all three granting councils. The Banting Postdoctoral Fellowships programme provides funding to the very best postdoctoral applicants, both nationally and internationally, who will positively contribute to the country's economic, social and research based growth. The objective of the Banting Postdoctoral Fellowships programme is to attract and retain top tier postdoctoral talent, both nationally and internationally, develop their leadership potential and position them for success as research leaders of tomorrow. Applicable for this programme are Canadian citizens, Permanent residents of Canada and Foreign citizens. 70 fellowships are awarded annually and a total of up to 140 awards are active at any time. 25

26 The Fellows are granted $70,000 per year (taxable) for 2 years. The areas of research are health, natural sciences and/or engineering and social sciences and/or humanities. The Fellowships are distributed equally among CIHR, NSERC and SSHRC. Amongst all Banting Fellows between 2010 and 2013 are 35 Europeans, whereas 11 are being associated with CIHR, 12 with NSERC, and 12 with SSHRC. The Vanier Canada Graduate Scholarships Programme (Vanier CGS) was announced in the 2008 federal budget as part of a broader strategy to increase the supply of highly qualified research personnel in Canada. It is open to both Canadian citizens, permanent residents of Canada and foreign students pursuing a doctoral degree at eligible Canadian universities. Up to 167 Vanier Scholars are awarded each year. The Scholars receive $50,000 per year for three years. The areas of research are health, natural sciences and/or engineering and social sciences and/or humanities. The scholarships are equally divided among the three federal granting agencies. Amongst all Vanier Scholars between 2009 and 2013 are 39 Europeans, whereas seven are being associated with CIHR, 17 with NSERC and 15 with SSHRC. Country Representation: Table 2b shows that out of 477 EU partner organisations that participated in Granting Councils programmes over , more than 55% originated from the UK, France and Germany. Following are participants from Spain, Belgium, Italy, Netherlands, Switzerland, Sweden, Austria, Israel, Denmark, Norway, Finland, Greece, Ireland, Poland, Turkey and Luxembourg, Croatia, Romania, Czech Republic, Estonia, Kosovo, Malta, Serbia, Norway and Latvia (listed as others in the table) Number of 80 Organizations Country Representation of EU Partner Organizations in Granting Councils Projects, Countries Table 2b: Country Representation of EU Partner Organisations in Granting Councils Projects, Contributions: In some cases, EU Partners bring their own funding to the Canadian programmes. As can be seen in table 2c, out of 571 partner collaborations, 115 involved EU partners contributing more than $50, in a project, and 99 involved of EU partners contributing more than $100,

27 Distribution of EU Partner Contributions in Granting Councils Projects, Frequency Contribution Range, in dollars Table 2c: Distribution of EU Partner Contributions in Granting Councils Projects, Table 2d shows that out of 478 EU partnered projects, about three quarters involved more than $50,000 of granting council funding over the period (subject to revision awaiting CIHR confirmation). Number of Projects Distribution of Granting Council Funding Amounts of EU Partnered Projects Contribution Range, in dollars Table 2d: Distribution of Granting Council Funding Amounts of EU Partnered Projects. 27

28 2.1.2 EU Participation in Provincial Programmes Between 2007 and 2013, individuals and organisations from the EU participated in several science, technology and innovation programmes offered by Canadian provinces Ontario, Saskatchewan, British Columbia, Alberta and Quebec, in addition to the federal programmes discussed above. Europeans participated in these programmes as funders, as peer reviewers, as research collaborators and as industry experts. These diverse forms of participation highlight the many ways in which the EU collaborates with Canada through provincial science, technology and innovation programmes. The following table identifies some of the programmes in which Europeans participated. Table 2e: EU Participation and Origin in Canadian Provincial Programmes Province Program EU Member States Saskatchewan Agriculture Development Fund Unknown Ontario Ontario Research Fund Research Excellence Germany UK Spain France Italy Belgium The Netherlands Sweden Alberta Alberta Finland Innovation and Commercialization Program ABBY net Core Program Targeted Areas Program Finland Germany Germany France UK The Netherlands Portugal Slovenia Romania Czech Republic Denmark Poland Finland Austria British Columbia Research Team Program I Exploration Program III Natural Resources and Applied Science (NRAS) Endowment Fund Germany Spain Germany Multiple countries Quebec Tax Holiday for Foreign Experts France UK Germany Italy Spain The Netherlands Belgium Ireland Sweden Austria 28

29 Tax Holiday for Foreign Researchers France UK Germany Italy Spain The Netherlands Poland Belgium Ireland Czech Republic Finland Romania Sweden Austria Greece Portugal Switzerland During this period, researchers and institutions from the EU participated in 24 projects that were partially funded by the Province of Ontario`s Ontario Research Fund Research Excellence programme, which supports the operational costs of large scale research initiatives in the province. Sixty seven EU institutions, including universities, research institutes and companies, from 17 EU member states collaborated with Ontario institutions on ORF RE projects during this time. Half of the twenty four OFR RE projects that included EU collaborators were in the health sciences, while EU participants also collaborated on projects in energy, ICT, agriculture, forestry, biology and physics. In addition to participating in Canadian provincial programmes as research collaborators, Europeans occasionally participate in such programmes as funders, as in one instance of EU participation in the Saskatchewan Ministry of Agriculture s Agriculture Development Fund. This fund supports projects that increase the competitiveness of Saskatchewan s agriculture industry. A private sector partner from the European food industry participated in this programme as a funder, contributing to a project that investigated wheat yields and protein content under different fertilizer regimes. Experts from the EU participated as peer reviewers under the British Columbia Innovation Council s Natural Resources and Applied Science Endowment Fund Research Team Programme, which supports BC researchers working on projects that have significant potential benefit for the province. Approximately 60 experts from the EU academic research community participated in the peer evaluation of 55 applications during the evaluation cycle. European researchers and experts working in Canada also participated in two Province of Quebec programmes designed to increase international research collaboration in the province. The first programme, the Tax Holiday for Foreign Researchers programme, provides a provincial tax break to non Canadian researchers conducting research at a Canadian company in Quebec. Between 2007 and 2013, 347 EU researchers from 17 member states participated in this programme. Participants worked mainly in ICT, biotechnology, manufacturing, aeronautics and the pharmaceutical industry. Through a similar programme, the Tax Holiday for Foreign Experts, Quebec provided a provincial tax break to 109 EU experts from ten member states working on tasks related to the application of the results of research and development at a Canadian company in the province. Individuals and organisations from the EU have participated in several Alberta programmes, including four programmes run by the Alberta Prion Research Institute, which is part of Alberta s innovation system, Alberta Innovates. Under these programmes, researchers from five EU countries have collaborated on nine projects. Through Alberta Innovates Energy and Environment Soluons, a Dutch research institute has collaborated with Alberta Environment and Sustainable Resource Development and the Alberta Geological Survey on a project on groundwater management. SME s 29

30 from Finland have participated in two projects under the Alberta Finland Innovation and Commercialization Programme, which is jointly funded by the Province of Alberta s Alberta Innovates Technology Futures and the Finnish funding agenda Tekes with contributions from SMEs in Alberta and Finland. Researchers from the German state of Bavaria also collaborate with their Albertan counterparts through the jointly funded Alberta Bavaria network on the science and technology of coevolution of energy systems and ecosystems, ABBY net. As these examples indicate, individuals and organisations from the EU participate in Canadian provincial science, technology and innovation programmes in a number of capacities. Current EU participation in Canadian provincial programmes provides a strong foundation to increase collaboration with the EU in a growing number of programmes across all provinces Conclusions of EU Participation in Canadian Programmes Areas of Research At the federal level Canada offers funding programmes through three thematic granting Councils: One for health, the Canadian Institutes for Health Research (CIHR), one for natural sciences and engineering, the Natural Sciences and Engineering Research Council (NSERC), and one for the social sciences and humanities, the Social Sciences and Humanities Research Council (SSHRC). All councils offer funding programmes that are also open for Europeans. SSHRC offers with 19 programmes by far the most opportunities for Europeans in Canada. Overall 505 Europeans participated in these programmes during the analysed time span, thus making social sciences and humanities an important field of collaboration. A total of 84 Europeans took part in nine programmes offered by CIHR and 49 Europeans participated in the four NSERC programmes that are open for Europeans. At the provincial level EU participants collaborated on projects in health, energy, ICT, agriculture, forestry, biology, biotechnology, physics, manufacturing, aeronautics and the pharmaceutical industry as well as innovation and commercialization. It becomes obvious that collaborations in health are only with the Province of Ontario. At the provincial level there are no SSH collaborations shown. Country Distribution At the federal level, we can see that out of 477 European partner organisations that participated in Granting Councils Programme over , more than 55% originated from the UK, France and Germany. Following are participants from Spain, Belgium, Italy, Netherlands, Switzerland, Sweden and Austria. At the provincial level it becomes obvious that Germany, UK and France collaborated in all Provinces where Europeans participated in research projects, Ontario and Quebec attracted the most European researchers for collaboration, followed by Alberta, British Columbia and Saskatchewan. 30

31 2.2 EU Programmes This chapter gives an overview of the Canadian Participation in the European Union s Seventh Framework Programme (FP7) and Horizon 2020 (H2020). Figure 1 illustrates an important increase in Canadian participation in the European Union s Framework Programme projects over the past eighteen years and, in particular, in the last six years during FP7. There are now more Canadian researchers in FP7 projects than in FP4 ( ), FP5 ( ) and FP6 ( ) combined. Moreover, the success rate of FP7 proposals with Canadian partners is per cent well above the norm in Europe (19% per cent) and the Canadian success rate in FP6 (19.8 per cent). Figure 1: Number of Canadians in EU Framework Programme Projects Canadian Participation in FP7 This section provides an overview and analysis of Canadians participation in the different Specific Programmes of FP7, based on data provided by the European Commission (EC). The Seventh Framework Programmes for Research and Technological Development (FP7) was the European Community s main instrument for funding R&D activities in Europe, reflecting all aspects of EU research policy. Running from 2007 to 2013, the programme had a budget of 53.2 billion euros. The broad objectives of FP7 were grouped into four Specific Programmes: Cooperation, People, Capacities and Ideas. These activities ranged from supporting collaborative research projects to the mobility of researchers and sustaining basic science. FP7 was a highly competitive programme based on scientific excellence and cross border cooperation, offering wide partnership and funding opportunities for researchers and entities established both within and outside the EU. International cooperation has played a pivotal role under FP7 and was integrated throughout the whole programme. This new emphasis on international cooperation was the result of new policy guidelines towards S&T international cooperation, recognizing the high importance of supporting European scientific and economic development through strategic partnerships with key EU partners in selected fields. For this reason, all these programmes are open to international participants. 31

32 In the first five years a total of proposals with at least one Canadian participant in the consortium have been submitted, and a good number of proposals have been presented in almost each Specific Programmes. Significantly, the most popular programmes for Canadians are the People specific programme (Marie Curie Actions) and the Cooperation specific programme: Specific Thematic Area Applicants Participants Programme Cooperation Energy 23 8 Environment (incl. Climate Change) Food, Agriculture and Fisheries, and Biotechnology Health Information and Communication Technologies Joint Technology Initiatives (Annex IV SP1) 4 3 Nanosciences, Nanotechnologies, Materials and new Production Technologies NMP Security 8 3 Socio economic sciences and Humanities 38 8 Space 39 5 Transport (including Aeronautics) Total Ideas ERC 60 2 Total 60 2 People Marie Curie Actions Total Capacities Activities of International Cooperation 14 8 Research for the benefit of SMEs 4 Research Infrastructures 14 8 Science in Society 13 4 Support for the coherent development of 1 research policies Total Euratom Nuclear Fission and Radiation Protection 4 3 Total 4 3 Total Table 2f: Applicants and Participants in FP Specific Programmes divided by Thematic Area As shown in the table 2f and figure 2a, the number of proposals submitted by Canadian participants under the Cooperation Programme is very high and satisfactory, with 165 contracts signed. The Ideas and Euratom Programmes have less encouraging results, with respectively 2 and 3 contracts signed. 32

33 Figure 2a Percentage of contracts signed by Canadian applicants for FP7 Specific Programmes The success rate of the Canadian participation, calculated as the contract signed on the proposal presented, is really encouraging. The Cooperation programme shows a success rate around 30.96%, the Capacity programme is close to 43.48%, the Ideas programme slightly more than 3.33% and the People programme around 21%, while the Euratom programme shows a success rate of 75% Cooperation The Specific Programme Cooperation supports all types of research activities carried out by different research bodies in trans national cooperation and aims to gain or consolidate leadership in key scientific and technology areas. The Cooperation Programme is sub divided into ten themes (please see figure xxx above), reflecting the most important fields of knowledge and technology where research excellence is particularly important to improve Europe s ability to address its social, economic, public health, environmental and industrial challenges of the future. From January 2007 to December 2013 a total number of 328 organisations have been included in the submission of 463 proposals under the Cooperation Programme. Focusing the analysis to all the 133 funded proposals, the result is a success rate of 28.73%, with a total of 165 Canadian applicants. However, it is important to note that the above mentioned are aggregate data, and that there are differences among the ten thematic priorities of the Cooperation Programme. The ICT theme is by now the most attractive for the Canadian organisations (142 applicants in 121 proposals submitted). Other themes that are very attractive for the Canadians are Food (90 applicants in 78 proposals submitted) and Health (66 applicants in 56 proposals submitted). Distribution: From 2007 to 2013 a total number of 533 Canadian applicants have submitted a proposal under the Cooperation Programme of FP7, and 165 contracts have been signed. The highest number of proposals, involving at least one Canadian partner, in absolute values has been submitted under the ICT and Food themes (respectively 121 and 78 proposals). It is followed by the Health theme that includes a total number of 56 proposals submitted. The Security theme and the Joint Technology Initiatives (JTIs) appear as the less attractive priorities for Canadians under the Cooperation programme, and this is also confirmed by the very low number of proposals submitted (respectively 8 and 4). 33

34 Figure 2b: Number of proposals (involving at least of one Canadian applicant) submitted under the Cooperation Programme Success Rate: Canadian participation in the FP7 shows a success rate of % for the whole Cooperation Programme (analysis based on projects). The success rate is higher for some thematic areas, for example for JTIs, (75% 3 projects with Canadian partners on 4 proposals submitted); Transport (45.24% 19 projects with Canadian partners on 42 proposals submitted); Health (41.07 % 23 projects with Canadian partners on 56 proposals submitted) and Nanosciences, Nanotechnologies, Materials and new Production Technologies (NMP) (39.29% 11 projects on 29 proposals submitted). While the success rates are lower than 20% for the two thematic areas Space (13.51% 5 projects on 37 proposals submitted) and ICT (18,18% 22 projects on 121 proposals submitted). Figure 2c: Number of participants in projects under the Cooperation Programme 34

35 Figure 2d: Success rate of the applicants and proposals referring to the Cooperation Programme (based projects and submitted proposals) Type of Participants: The Canadian participation in the Cooperation Programme is dominated by Universities with 99 participations, followed by 37 Canadian companies and NGOs and 34 Canadian Agencies. Figure 2e: Percentage and number of all type of applicants who have submitted proposals under Cooperation programme EC Contribution: The total of EC contribution to Canadian participants funded under the Cooperation Programme amounts to , under a total cost of The EC contribution to Canadian participants under the Cooperation Programme was higher in the Health theme with a participant EC contribution of ,81 and in the ICT theme with a contribution of The less attractive themes regarding EU contribution are the JTIs, Energy and Security. 35

36 Theme Project Total Cost Project EC Contribution Participant Total Participant EC Contribution Health , , , ,81 ICT KBBE , Environment Transport JTIs Space NMP Energy SSH Security Sum Table 2g: EC contribution for Canadian participants in Cooperation Programme for each theme IDEAS The "Ideas" programme, implemented through the European Research Council (ERC), will boost Europe's competitiveness by helping to attract and retain the most talented scientists, supporting risk taking and high impact research, and promoting world class scientific research in new, fast emerging fields. The objective of the Specific Programme is to reinforce excellence, dynamism and creativity in European research and improve the attractiveness of Europe for the best researchers from both European and Third Countries, as well as for industrial research investment, by providing a Europe wide competitive funding structure, in addition to and not replacing national funding, for frontier research executed by individual teams. So far, the Ideas programme is the least successful Specific Programme of FP7 in terms of Canadian participation. Even if 53 proposals with Canadians have been presented under this theme, only 2 contracts have been signed with Canadian participants in the social and health fields People The 'Marie Curie Actions' have long been one of the most popular and appreciated features of the Community Framework Programmes for Research and Technological Development. They have developed significantly in orientation over time, from a pure mobility fellowships programme to a programme dedicated to stimulating researchers' career development. The 'Marie Curie Actions' have been particularly successful in responding to the needs of Europe's scientific community in terms of training, mobility and career development. In the Seventh Framework Programme, the 'Marie Curie Actions' have been regrouped and reinforced in the 'People' Specific Programme. Canadian Applicants People Proposals with Canadians Canadian Participants Projects with Canadians

37 As seen in the graph below, the projects involving Canadian organisations under FP7 spanned a wide variety of research areas, with the majority of projects in the areas of life sciences (30%), environment and geosciences (18%) and social sciences and humanities (15%). CHE 6% MAT 5% ECO 2% CHE - Chemistry SOC - Social Sciences and Humanities PHY 10% LIF 30% ECO - Economic Sciences ENG - Information Science and Engineering ENV - Environment and Geosciences LIF - Life Sciences ENG 14% SOC 15% ENV 18% MAT - Mathematics PHY - Physics Figure 2f: Research areas of projects involving Canadians Distribution: From 2007 to 2013 a total of 656 Canadian organisations have submitted 645 proposals under the People Programme. The funded proposals, involving at least one Canadian partner, are 133, which is 20,62% of the total proposals submitted. EC Contribution: The total of EC contributions to projects involving Canadian participants funded under the People Programme amounts to Capacities The Capacities programme aims to enhance research and innovation capacities throughout Europe and ensure their optimal use. Its specific goals are to: support the coherent development of policies; complement the Cooperation Programme; contribute to EU policies and initiatives in order to improve the coherence and impact of Member States policies; find synergies with regional and cohesion policies, the Structural Funds, education and training programmes and the Competitiveness and Innovation Programme (CIP). From January 2007 to December 2013 a total number of 46 Canadian organisations have been included in the submission of 37 proposals. Analysing all the 13 funded proposals, the result is a success rate of 43,48%, with a total of 20 Canadian applicants main listed. However, it is important to note that the above mentioned are aggregate data, and that there are differences among the thematic priorities of the Capacities Programme. The Research Infrastructures (RI) theme is at the same time the most attractive for the Canadian organisations (14 applicants in 12 proposals submitted) together with the International Cooperation (INCO) (14 applicants in 7 37

38 proposals submitted) (success rates are 50% and 42,86% respectively). Also the Science in Society theme is of interest for the Canadian organisations (13 applicants), with a success rate of 30,77%. The Research for the benefit of SMEs and the Support for the coherent development of research policies are indeed not of interest for the Canadians (4 and 1 applicants in 4 and 1 proposals submitted) and also the success rate equal to 0% reflects it. Distribution: Based on a total amount of 59 proposals with at least one Canadian participant submitted under the Capacities Programme of FP7, 16 contracts have been signed so far. The highest number of proposals, involving at least one Canadian partner, has been contracted under the Science in Society (7) and the Research Infrastructure theme (6). Figure 2g Number of contracts signed (involving at least of on Canadian applicant) submitted under the Capacities Programme Success Rate: Canadian participation in the FP7 shows a success rate of 35,14% for the whole Capacities Programme (analysis based on mainlisted projects/presented proposals). Top is the Research Infrastructure, 50%, INCO programme is the second in the score with 42,86. O% for Research for the SMEs and Support for the coherent development of research policies. EC Contribution: The total of EC contributions to Canadian participants funded under the Capacities Programme amounts to The EC contribution to projects with Canadian participation under the Capacities Programme amounts to Provinces The Canada administration is organized in Provinces and the following 9 took part in the FP7 Programme: Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Québec, Saskatchewan. The Ontario and Quebec Provinces are the most involved with 120 and 109 participations respectively. The Provinces with less involvement are Newfoundland and Labrador (4 participations), New Brunswick and Nova Scotia (both with 5 participations). 38

39 Figure 2h: Overview on participation for Canadian Provinces Significantly, Canadian participants are found across the country roughly in proportion to the population of each province. University based researchers are prominent, accounting for per cent of all Canadian participants. Only in Ontario, where private sector participants account for 22.5 per cent and public research institutions represent per cent of participants, is university participation relatively lower. See Table 2h below. Province University Public Private Total Alberta British Columbia Manitoba New Brunswick New Foundland and Labrador Nova Scotia Ontario Quebec Sasketchawan Total Table 2h: Canadian participation by Province and type 39

40 Horizon 2020 for Canadians Horizon 2020 is the European Union s Common Strategic Programme for Research and Innovation. From 2014 to 2020, it will provide 80 billion for peer reviewed research in all sectors and at all points in the value chain, from the most fundamental research, training and infrastructure, to the most experimental emerging technologies, advanced scientific developments, demonstration projects and valorisation of results. It is considered the eighth in a series of Framework Programmes first launched by the European Commission in For Canadians, Framework Programmes are significant for their size and scope and for their structuring effect on European and international research. Please refer to the H2020 Guide for Canadians for thorough information on all opportunities for Canadians. This guide is intended to help Canadian researchers and innovators find and take advantage of opportunities to collaborate with European colleagues in Horizon 2020, the latest Framework Programme for Research and Innovation of the European Union. It describes the programme architecture, identifies specific opportunities for Canadians, explains the rules and the norms in Europe for participation and funding, how to prepare an application, negotiate grant and consortium agreements, manage a project and protect intellectual property rights. You can find the H2020 Guide for Canadians here: can.net/eu/guide to h Conclusions on the Canadian Participation in FP7 As the result of the analysis of the Canadian participation in FP7, we can make the following conclusions: Firstly, the Cooperation Programme is characterized by the highest number of contracts signed together with the People theme (both with 133 projects) compared to the results of other Programmes (see table below). Figure 2i FP7 overview on proposals submitted and funded projects under each Specific Programme 40

41 Secondly, the Canadian participation in the FP7 is dominated by Universities with a percentage of 72%. They are followed, with a significant gap, by the number of Privates and by Public Body. Figure 2j: Percentage oftype of Canadian organisations involved in FP7 Areas of Research: In the Cooperation Programme the ICT theme is by far the most attractive for the Canadian organisations (142 applicants in 121 proposals submitted), following Food (90 applicants in 78 proposals submitted) and Health (66 applicants in 56 proposals submitted). The numbers look however different when we look at the actual Canadian participants in FP7 research projects. Most Canadian participants can be found in the fields of Health, Food, Agriculture and Fisheries, and Biotechnology and Transport (including Aeronautics), following ICT then. The two projects of Canadian participants in the Ideas Programme were in the social sciences and health fields. The Marie Curie Actions were dominated by the areas of life sciences, environment and geosciences and social sciences and humanities. Country Distribution: Canadian participants show a strong link with some European Countries: UK (492 proposals), France (472), Germany (427), Spain (377), Italy (371) and Netherlands (252). Outside Europe a notable link is with U.S.A (170), Switzerland (157), Norway (117), Russia (63), China (50) and South Africa (40). In Canada the Provinces of Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Québec and Saskatchewan took part in FP7. The Provinces of Ontario and Quebec are the most involved with 120 and 109 participations respectively, following British Columbia and Alberta. EC Contribution: The last remark is on the EC contribution for contracts signed. Canadian participants in the Cooperation Programme have received the highest EC contribution. 5% of the total EC contribution is under the Capacities Programme and 2% under the People Programme. Total Cooperation Ideas Capacities Total Table 2 EC Canadian participants contributions in Euros for each Specific Programme of FP7 41

42 Figure 2k: Percentage of EC contributions for each Specific Programme of FP7 (for Canadian participants) 42

43 2.3 Innovation The European Union By now, the European Union (EU) and Member States have fully recognized that innovation, together with science and technology, is essential to create a leading knowledge based society, and they have dedicated uncountable efforts to turn the EU into the most competitive and dynamic knowledgebased economy in the world, capable of sustainable economic growth. 12 The European Commission (EC) drew attention to Europe s innovation deficit in the 1995 Green Paper on Innovation 13. The subsequent First Action Plan for Innovation in Europe (1996) 14 indicated lines of action for implementation by the Member States and the Commission. Nevertheless, the importance of innovation was firstly systematically highlighted in March 2000 by the European Council in Lisbon. As a response to the challenges of globalization and the new knowledge driven economy, the European Council called for a challenging programme for building knowledge infrastructures, enhancing innovation and economic reform, and modernizing social welfare and education systems. This is encapsulated in the strategic goal set at Lisbon for the next decade: the Union to become the most competitive and dynamic knowledge based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion. The Lisbon European Council endorsed the objectives in the European Commission s Communication Towards a European Research Area 15 to enhance the efficiency and innovative impact of Europe s research effort, and called for concrete steps towards their implementation, stemming from the consideration that enterprise and research policies are mutually enriching, notably where technology based innovation is concerned. 16 Following the Lisbon Council, the 2002 Barcelona Council and the 2005 Initiative on Working together for growth and jobs 17 gave new momentum to the Lisbon strategy, while initiatives, such as EURAXESS, the European Research Council and the European Institute of Innovation and Technology, have been launched in order to boost European research, to improve access to the labour market for scientists and to increase financing for researchers, as well as to boost industrial competitiveness by strengthening the innovation capacity of Member States and the Community. More recently, the Europe 2020 strategy, the Innovation Union, Horizon 2020and the European Research Area have 12 More information is available at: htm 13 Communication from the Commission Challenges for enterprise policy in the knowledge driven economy (COM(2000) 256), 1995, available at: on%20from%20eu%20commission/ _com_2000_256enpdf.pdf 14 First Action Plan for Innovation in Europe Innovation for growth and employment, 1996, available at: 15 Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions (COM(2000) 6), available at: 16 The European Commission s 1995 Green Paper on Innovation stated that innovation is the renewaland enlargement of the range of products and services and the associated markets; the establishment ofnew methods of production, supply and distribution; the introduction of changes in management, workorganization, and the working conditions and skills of the workforce (Bulletin of the European Union,Supplement 5/95). 17 Communication to the European Council Working together for growth and jobs. A new start for the Lisbon strategy, 2 February 2005,available at: n.htm 43

44 been designed as main means (strategies and instruments) for the development and the integration of innovation, research and education of the highest standards in the EU. 18 In fact, the Europe 2020 strategy, launched in 2010 as the EU s growth strategy, specifically arise from the belief that Europe s future is connected to its power to innovate, stipulating an investment of 3 % of gross domestic product (GDP) in research and innovation (R&I), across the public and private sectors combined, by At the core of Europe 2020, the Innovation Union initiative is intended to provide an environment in which new ideas can be fostered. Complementarily, Horizon 2020 (H2020), the EU s new research framework programme, strengthens innovation by fostering excellence in research and the development of innovative technologies. Through H2020, whose lifespan goes from 2014 to 2020, almost 80 billion have been invested in R&I projects with the aim to help the EU produce new products and services that are competitive for the international market. Upon the realization of the deep demographic changes that will take place in the next decades, with the world population potentially reaching nine billion people by 2050, a substantial part of Horizon 2020 is also dedicated towards finding responses to societal challenges such as stable energy supplies, global warming, public health, security of water and food resources. However, finding solutions to such societal challenges, while boosting growth and competitiveness, necessarily means building an efficient network of research excellence. H2020 is also intended to avoid that the same research is funded several times by the EU single national authorities, but done only once by the most appropriate organisations and the results are shared. Additionally, given the increasing demand for excellent researchers, Horizon 2020 contributes to the creation of a European research area, building a single market for ideas to help researchers, their 18 European Commission, Science, technology and innovation in Europe, Luxembourg: Publications Office of the European Union, 2010, p. 1., available at: GN /EN/KS GN EN.PDF 44

45 knowledge and results to circulate and be used freely across Europe. This is intended to ensure that every euro spent on research will have a global trans border impact, while working for open and transparent recruitment and gender equality in research. 19 All in all, significant progress has been made in the last decades. A rich variety of innovation fostering policies and measures has been introduced at the European, national and regional levels. The Commission has acted by adjusting its programmes in line with the new strategies, and by taking innovation into account in the Community level rules for doing business, in particular the rules for competition, intellectual property rights, and the internal market. Today, in the EU the exchange of knowledge and technology; the cooperation between universities, industries, research organisations, Small and Medium enterprises (SME), exc.; as well as free flowing of ideas is considered crucial for the implementation and sustainability of a single system of innovation supplementing the national systems and providing a link between localized spillovers and diffusion of technological knowledge. The present report in the next sections will be aimed at describing European system of R&D and innovation, identifying the main innovation policies at the EU level. As successful innovation depends not only on the quality of public policies but also on innovation friendly framework conditions, the latter are analysed and EU innovation programmes and financial incentives are outlined. In this context, relevant and meaningful data and facts on science, technology and innovation from the EC literature are provided in order to offer a comprehensive, both qualitative and quantitative look at where Europe stands on the path to greater knowledge and growth General Innovation Policies at the EU level The Europe 2020 Strategy Drawing the lessons from the 2000 Lisbon strategy (renewed in 2005), in 2010 the European Commission (EC) launched Europe as the new European strategy for growth and jobs with the aim to improve the EU's competitiveness while maintaining its social market economy model and strengthening its resource efficiency. Advocating a smart, sustainable and inclusive growth as a crucial element of economic development, the Europe 2020 strategy was initiated against a background of low growth and productivity levels and a rapidly deteriorating economic and social environment, in the wake of the worst global financial crisis the EU has ever faced. As the crisis spread and took on new forms, a particular challenge for the EU was to break the vicious circle between rising levels of sovereign debt, contagious financial instability and low or even negative growth. To do so, Europe 2020 called for both short term and systemic action. In fact, it made it clear that the "short term priority (was) a successful exit from the crisis", but that "to achieve a sustainable future", the EU needed "to tackle its structural weaknesses" and "already look beyond the short term". The ambition was to "come out stronger from the crisis and turn the EU into a smart, sustainable and inclusive economy, delivering high levels of employment, productivity and social cohesion." 21 The strategy has been conceived as a partnership between the EU and its Member States with a set of goals focused around the priorities of smart, sustainable and inclusive growth, and a dedicated delivery system. Specifically, it sets out five interrelated headline targets for the EU to achieve by 19 European Commission, The European Union explained:research and Innovation, Luxembourg: Publications Office of the European Union, 2014, pp More information on Europe 2020 is available at: 21 EUROPE 2020 A strategy for smart, sustainable and inclusive growth (COM(2010)2020), 3 March 2010, available at: lex.europa.eu/legal content/hr/txt/?uri=celex:52010dc

46 2020 in the areas of employment, research and development (R&D), climate change and energy, education, and the fight against poverty and social exclusion: 1. 75% of the year olds to be employed; 2. 3% of the EU's GDP to be invested in R&D; 3. greenhouse gas emissions 20% (or even 30%, if the conditions are right) lower than 1990; 20% of energy from renewables; 20% increase in energy efficiency; 4. Reducing the rates of early school leaving below 10%; at least 40% of year olds completing third level education; 5. at least 20 million fewer people in or at risk of poverty and social exclusion. Such targets are not exhaustive but considered exemplary of the kind of dynamic change advocated in the strategy. To catalyse progress at EU level, the EC has also set out seven flagship initiatives which provide a framework through which the EU and national authorities can mutually reinforce their efforts in areas supporting the Europe 2020 priorities. Such seven flagship initiatives are: SMART GROWTH SUSTAINABLE GROWTH INCLUSIVE GROWTH Innovation «Innovation Union» Climate, energy and mobility «Resource efficient Europe» Employment «An agenda for new skills and jobs» Education «Youth on the move» Digital single market «A digital agenda for Europe» Competitiveness «An industrial policy for the globalisation era» Social and territorial cohesion «European platform against poverty» Apart from the flagship initiatives, other EU levers such as the European single market, the EU budget and the EU external agenda also contribute to the achievement of the goals of the Europe 2020 strategy. In addition, in order to monitor and advance national implementation of the Europe 2020 strategy, Member States were invited to set their own targets and to spell out detailed actions as part of their national reform programmes. These programmes are reviewed annually at EU level as part of the European Semester of economic policy coordination. Conceived as a way to reinforce EU's economic governance, the first European Semester started early in 2011 and the mechanism has rapidly established itself as the new annual policy cycle of economic guidance and monitoring at EU level. Reflecting the partnership approach, there is regular dialogue with the European Parliament and the various formations of the Council Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions (COM(2014) 130), 5 March 2014, available at: 46

47 In May 2014, a public consultation feeding into the mid term review of the Europe 2020 strategy was launched and will be open until 31 October The Innovation Union The Innovation Union is one of the seven flagship initiatives of the Europe 2020 Strategy. As a comprehensive initiative, it addresses a wide range of elements that impact Europe s innovation ecosystem, and aims to improve conditions and access to finance for R&I. It is the answer for the basis of Europe s future competitiveness and growing challenges, among which climate change, the scarcity of resources and demographic changes. The aim of the Innovation Union is to build a solid R&I system in Europe, where great ideas and excellent research can more easily become products or services. To build this innovation friendly environment, broader partnerships between private and public sectors are to be developed, bringing together researchers, industry, users and public entities. Under the Innovation Union, public authorities are also encouraged to use innovative public procurements spurring companies to find creative solutions to problems, rather than just offering the cheapest bid. Additionally, according to the Innovation Union, bottlenecks, such as rules and laws differing significantly between the Member States or outdated standards, have to be removed in order to make Europe a top class actor in science and innovation. This should lead to the creation of a true internal market for skills, regulations and capital, allowing ideas and new solutions to come to market more quickly. As stated by the EC Communication on Innovation Union 24, the European Union should commit to creating a true "Innovation Union" by 2020 by: Taking collective responsibility for a strategic, inclusive and business oriented R&I policy, to tackle major societal challenges, raise competitiveness and generate new jobs. The EC will reflect this strategic approach to innovation in all its policies and invites the other EU institutions to do likewise. Prioritizing and protecting investments in our knowledge base, reducing costly fragmentation and making Europe a more rewarding place for innovation and for bringing ideas to market. Agreeing to launch European Innovation Partnerships to pool resources and expertise to find solutions to societal challenges and to build competitive advantage in key markets. In order to achieve such objectives, the following 10 item strategy is proposed: 1. Member States need to continue to invest in education, R&D, innovation and ICT; 2. Reforms should ensure more value for money and tackle fragmentation; 3. Education systems at all levels need to be modernized; 4. The European Research Area must be completed in four years; 5. Access to EU programmes must be simplified; 6. Research must lead to innovation more often; 7. Barriers for innovation, such as expensive property rights and access to finance, must be removed; 8. European Innovation Partnerships should be launched to accelerate research, starting with the area of health ageing; 9. Social innovation must be stimulated; 10. Cooperation with international partners must be improved. 23 The public consultation is accessible at: consultation/index_en.htm 24 Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions Europe 2020 Flagship Initiative. Innovation Union (SEC(2010) 1161), 6 October 2010, available at: union/pdf/innovation unioncommunication_en.pdf 47

48 Those 10 items, on their turn, are inflected in 34 commitments to be pursued by the EU Member States. Please see Annex IV for a more detailed description of the 34 commitments. To help ensure that such commitments are delivered, the EU cyclically produces an Innovation Union Scoreboard, which ranks each country according to their innovation performance. 25 The EC has set out the online platform I3S, the Innovation Union Information and Intelligence System 26, whose principal aim is to ensure that all stakeholders are well informed on the implementation of the Innovation Union. I3S provides easy access to up to date and comprehensive and comparable information on the nature and implementation of all 34 of the Innovation Union Commitments, also providing more detailed background intelligence information relating to each commitment. This facilitates further exploration of the key issues addressed, and provides additional supporting data and analytical perspectives. At the core of the I3S is a searchable repository of detailed information on each of the 34 Commitments. For each of these, a dedicated section of the online platform ( sets out: the key dimensions of challenges faced the objectives in tackling these challenges the approach planned to meet these challenges key milestones along the way are presented, highlighting the achievements made and specific events, publications and other activities planned State of the Innovation Union Taking stock In 2014, four years after the Innovation Union s launch, the EC has taken stock of how it has been implemented and what first results it has delivered in the State of the Innovation Union Taking stock According to the document, the Innovation Union is succeeding in building momentum around innovation, mobilizing stakeholders and mainstreaming innovation in key European, national and regional policies. Notably, the European budget allocated to R&I was increased, despite a decrease in the overall EU budget for Also, despite the economic crisis, the EU has made progress towards its R&D investment target of 3 %, giving a clear sign that the EU is prioritizing growth and jobs. Considerable measures have also been taken to ensure that the R&I budget is well spent: through simplification of programme architecture and participation rules in Horizon 2020, the new R&I framework programme; through the deployment of European Research Area (ERA) measures and through the development of an indicator to monitor innovation output. Relevant progress has been made in delivering on each of the Innovation Union blocks. The knowledge base in Europe is being strengthened, notably through the launch of Horizon 2020, the focusing of European Regional Development Funds on smart specialization strategies, progress towards the ERA, and support for skills development. Within Horizon 2020red tape was sensibly reduced so as to allow wider, more competitive participation. All phases of the innovation cycle are now funded under a single programme, making sure that the knowledge produced can be better exploited for the realization of new products and services. More private investment has been secured to address major societal challenges while boosting Europe s industrial competitiveness. Public private and public public partnerships are one of the key elements of Horizon The 25 The Innovation Union Socreboard 2014 is available at: scoreboard/index_en.htm 26 The I3S platform is accessible at: 27 European Commission, State of theinnovation Union Taking stock , available at: union/pdf/state of theunion/2013/state_of_the_innovation_union_report_2013.pdf 48

49 private sector has committed to invest nearly 10 billion in Joint Technology Initiatives stimulating innovation in area such as aeronautics, medicines, electronic components and systems, transport and bio based industries. In addition, eight contractual Public Private Partnerships have been launched in areas such as green cars, energy efficient buildings and cleaner manufacturing processes, photonics and next generation internet. These partnerships are expected to leverage more than 6 billion of investments with substantial impact on the competitiveness of the EU industry. Moreover, due to measures favouring researchers mobility it is easier for European and third country researchers to develop their work anywhere in the continent. Regarding, the Getting ideas to market lock, great efforts have been made in delivering the tools for a more innovation friendly business environment, such as the unitary patent and the revised public procurement directives which offer better opportunities for innovating. Instruments to ease access to finance are in place and are about to start delivering, including reinforced debt and equity facilities and the venture capital passport. Such mechanisms and initiatives provide substantial support for innovation by leveraging the engagement of industry and business. Measures to overcome the insufficient availability of finance in Europe, a major obstacle to getting innovations to the market, have been put in place: the Risk Sharing Finance Facility, jointly set up by the European Commission with the European Investment Bank Group, has ensured that for every billion euro of EU budget money the European Investment Bank (EIB) has mobilized 12 billion in loans and over 30 billion in final R&I investment. This has led to additional resources of up to 40 billion since 2007 for R&I activities which would otherwise be left unfunded. Moreover, a specific SME instrument scheme was created within H2020 in order to support SMEs in realizing their best ideas. Additionally, public intervention has increasingly been used to stimulate the demand for innovation with instruments such as pre commercial public procurement, innovation friendly regulation and standards setting. The Innovation Union has also tackled the challenge of Maximizing social and territorial cohesion. For instance, smart specialization strategies have been established as ex ante conditionality for investment priorities under research, technological development and innovation, in order to promote a better innovation performance across European regions and Member States, without compromising on excellence. The increased emphasis on social and public sector innovation is ensuring a broader uptake and societal impact of innovation, as well as a change of mind set with regards to who should be concerned by innovation and who can be an actor of change in the EU. The European Innovation Partnerships (EIPs) have presented a new approach to EU research and innovation. Five EIPs have been launched in key areas of active and healthy ageing, water, agriculture, raw materials and smart cities. They are now all in the implementation stage, having identified priorities, engaging a wide range of partners across the demand and supply sides of innovation, and starting to deliver first results. Within the Leveraging our policies externally block, the global dimension of innovation has been taken into account. Several initiatives have been developed to increase Europe s attractiveness as a R&I destination and partnerships between the EU and its Member States have been strengthened in the definition of priorities for cooperation with third countries, including with regards to the development of global research infrastructures. Progress in Europe and Member State s innovation performance has been monitored in the framework of the integrated economic coordination ( European Semester ), through the Innovation Union Scoreboard and the Innovation Union Competitiveness Report. This will be continued and improved through the Policy Support Facility under Horizon Exchange of best practices and mutual learning have equally been facilitated by the EU. In order to better monitor how well the expenditure in R&I is delivering results, an innovation output indicator has been developed. It allows a measure of the ability of the economy to transform knowledge into successful marketable 49

50 innovations, so as to inform policy makers about the effectiveness of their expenditure in R&I and innovation eco system. Over the past years, a fundamental shift in the right direction has happened, reducing the innovation performance gap with our main competitors. The latest Innovation Union Scoreboard shows that, since 2008, the EU has managed to close almost half of its innovation performance gap with the US and Japan. Nevertheless, the State of the Innovation Union Taking stock also identifies Europe s innovation related issues and the room for their improvement: The eco system for innovation has been greatly improved by putting in place key single market measures. However, inconsistencies of rules and practices remain and are hampering the development of high growth innovative firms, which often find it too burdensome and risky to operate on other European markets. The prospects of a full roll out of the single market would indeed be a major driver of investment and innovation, including through the exploitation of digital technologies. Closer involvement of society has proven to be key in fostering a wider innovation culture in Europe. It should be promoted in all phases of the innovation cycle so as to make innovation more relevant and acceptable and to improve its uptake. The public sector is increasingly recognized as a key driver of innovation. While its role in promoting innovation through regulation, fiscal policies, standard setting, procurement and supply side policies has been tested in the past and although there is room for an increased uptake of such tools in the future and for a better mix of supply and demand policies its capacity to innovate itself so as to become more user friendly, efficient and effective should be further explored. The inclusiveness of innovation needs to be improved. At the regional level, the benefits derived from the roll out of smart specialization strategies for R&I could be multiplied through better linkages across regions, allowing for the development of complementarities and European value chains. Despite great progress made through the EIT, the Knowledge Alliances and other skills development schemes, skills shortage and mismatch is still important. It does not only concern sector specific skills, but also numeracy and literacy skills, as well as the 21st century skills for creativity and entrepreneurial spirit. Communication For a European Industrial Renaissance On the 22nd January 2014, the EC adopted a new Communication on Industrial policy For a European Industrial Renaissance 28 as a contribution to the 2014 March European Council debate on industrial policy. Drawing on the Annual Growth Survey, 29 the Communication lists the EC s key priorities for industrial policy, provides an overview of actions already undertaken and puts forward selected new actions to speed up the attainment of these priorities. It shows that industrial policy and other EU policies are getting gradually more and more integrated and why this mainstreaming process must continue. 28 Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions For a European Industrial Renaissance (SEC(2010) 1161), available at: lex.europa.eu/legal content/en/all/?uri=celex:52014dc Communication from the Commission Annual Growth Survey 2014 (SWD(800)), 13 November 2013, available at: 50

51 Communication on Research and innovation: the sources of future growth 30 The Communication on Research and innovation: the sources of future growth, which is accompanied by the State of the Innovation Union Taking stock , explores how the potential of R&I as drivers of growth can be maximized through a better qualitative investments within Member States' fiscal consolidation strategies. In it the EC emphasizes the need to enhance expenditures within overall fiscal consolidation efforts. The document takes steps from the consideration that public investment generates the knowledge base and talent that innovative companies need and leverages business investment in R&I, crucial elements to fulfil the ambitions of the Europe 2020 strategy. Curbing public investment in R&I, even if due to difficult budgetary conditions, may also have a considerable impact on a country's long term growth potential by reducing the capacity to absorb research and innovation performed elsewhere and through the loss of attractive career opportunities for a country's most talented young people. The Union budget for marks a decisive shift towards R&I and other growth enhancing items, with a 30 % real terms increase in the budget for H2020. A further EUR 83 billion is expected to be invested in R&I as well as SMEs through the new European Structural and Investment Funds. However, this additional investment from the Union budget must complement, and not substitute for investments by Member states both from public and private sources. In other words, governments across Europe need to continue investing in R&I, ensuring its efficiency and leverage over private investment. In fact, experience shows that implementing reforms in a way that increases the quality of spending is a continuous process and a long term challenge to all the EU countries. Focusing exclusively on the ability of the private and public sectors to translate investment in R&D into patent applications, the available metrics show that some countries are capable of extracting more impact from their public and private R&D expenditures than others. 31 The countries with higher efficiency of spending tend to be those with higher levels of public spending in R&D and GDP per capita, and a stronger knowledge base. In addition, business investments in R&D tend to be higher in those countries with higher public R&D spending, given that efficient public R&I systems are capable of better leveraging private investment in R&D. Improving value for money requires maximizing the impact of R&I policies, including by establishing closer links between quality and the resources allocated to these areas. Consistent incentives to drive up the quality of public spending and preserve growth enhancing expenditures, notably R&I, are thus essential. Drawing on this experience, three axes of reform emerge, which are relevant to all EU Member States: 1. Improving the quality of strategy development and the policy making process; 2. Improving the quality of programmes, focusing of resources and funding mechanisms; 3. Optimizing the quality of public institutions performing research and innovation. Regarding the first axe, research and innovation affect many policy areas and involve a large number of actors and should therefore be driven by an overarching strategy and be steered at a sufficiently high political level. Such a strategy should encompass both R&I activities, including infrastructure investments. Policy design should take account of the long term impact of R&I and operate on the basis of a stable multi annual strategic framework and forward planning of public investment. 30 Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions Research and innovation as sources of renewed growth (COM(2014) 339), 10 june 2014, available at: union/pdf/state of theunion/2013/research and innovation as sources of renewed growth com final.pdf 31 Conte, Efficiency of R&D Spending at national and regional level, Technical Report, Joint Research Centre, European Commission, 2014, in ibidem. 51

52 Embedding growth enhancing spending such as R&I within the multiannual planning perspective of a medium term budgetary framework 32 can combine the benefits of sounder public finances with increased visibility of the medium term priorities of governments. This can build credibility and improve the attractiveness of the R&I system. Member States should at the same time take care to not spread scarce resources too thinly, focusing on a limited number of key strengths and opportunities, through the process of smart specialization as supported under the European Structural and Investment Funds. Given the dynamic changes in R&I, policy making should also take account of emerging thinking and paradigms. Objective information and evidence is an integral part of policy making, including foresight and systematic exante and ex post evaluations, in particular to assess the long term socio economic impact of R&I funding. Member States need to continuously monitor the impact and review their policies in a European and international context. As for the second ax of reform, significant amounts of public R&I funding are managed through programmes, the objectives of which have traditionally been set in terms of scientific disciplines, technology areas, or industrial sectors. As in Horizon 2020, Member States should consider increasing the focus of their programmes on key societal challenges, as there is considerable growth potential in turning these into the business opportunities of tomorrow, while at the same time providing solutions for citizens' concerns. A better coordination of priorities between Member States through joint programming of national research and innovation agendas increases the impact of public investment in a given R&I area. As set out under the ERA, quality of public spending through programmes can be increased by allocating funding on a competitive basis, through open calls for proposals (e.g. on the basis of international peer review) and by allocating institutional funding on the basis of proven performance. Open competition should equally apply to programmes targeting specific economic and/or societal objectives, with clear expected impacts defined and a robust evaluation system to assess proposals against those impacts using independent expertise. In line with more focused and aligned strategies ("smart specialization"), the monitoring of real outputs and impacts of projects supported should provide accurate and comparable information about the quality and efficiency of funding through R&I programmes. R&I programmes need to be relevant and accessible to businesses, including through reducing administrative burdens to participation, accelerating time to grant, monitoring business involvement, and taking seriously the feedback received from participants. The essential role of frontier science in advancing the state of the art and in triggering breakthrough technological innovations should be addressed, building on successful initiatives at the EU level such as the European Research Council. Concerning the third ax of reform, in all Member States a large share of public R&I funding is provided as institutional funding to universities, technology institutes and other public research and technology organisations. Nevertheless, these institutions need to be encouraged to be entrepreneurial and seek out new opportunities and partnerships, including outside Europe, to allow for an improved transfer of knowledge to the private sector and to reallocate resources to activities that have the greatest impact. These institutions therefore need sufficient autonomy and flexibility, while ensuring accountability, as part of which they should be subject to regular independent evaluation and quality assessment. Institutions also need to be able to attract the best possible researchers to work for them. However, as identified by the European Research Area, a lack of open, transparent and merit based 32 See the Council Directive 2011/85/EU of 8 th November 2011, Official Journal of the European Union, 23 November 2011, available at: 52

53 recruitment in some countries which undermines the performance of institutions and holds back career attractiveness and development for the most able researchers Framework Condition for Innovation in Europe R&D Spending Public R&D spending. State aid in the context of overall public financing of business research In May 2014 the EC has adopted a revised General Block Exemption Regulation (GBER) for state aid. 33 The Regulation is part of the State Aid Modernization (SAM) initiative 34 setting an ambitious reform programme of state aid control fostering sustainable, smart and inclusive growth. One of the components of SAM is the increased flexibility given to Member States to grant state aid without prior notification and approval by the EC, provided that certain conditions are met. The GBER sets out the categories of aid and the conditions under which aid measures can benefit from such an exemption, identifying eligible beneficiaries, maximum aid intensities (i.e. the maximum proportion of the eligible costs of a project that can benefit from state aid) and eligible expenses. Its objectives are: significantly extends the possibilities for Member States to grant "good aid" to companies without prior EC scrutiny; simplifies the award of state aid and reduces the duration of processes for aid beneficiaries; introduces ex post requirements for Member States such as the requirement to evaluate large aid schemes and introduce more transparency on aid measures. The GBER specifically addresses the kinds of aid that brings societal benefits outweighing the possible distortions of competition in the Single Market triggered by the public funding. As a result, EU Member States may implement measures which fulfil the conditions of the Regulation without prior notification to the EC. The GBER is already used (to a varying extent) by aid granting authorities (i.e. national governments, as well as regional and local authorities). However, thanks to the recent revision, the 3/4 of today's aid measures and about 2/3 of total aid amounts granted by Member States could be covered by the Regulation. This could even extend to up to 90% of all aid measures, if Member States use the GBER to the full extent by designing their measures in order to fit its requirements. Namely, the GBER has been extended to the following new categories of aid: aid to innovation clusters and aid to process and organisational innovation, aid schemes to make good the damage caused by natural disasters, social aid for transport residents of remote regions, aid for broadband infrastructure, aid for culture and heritage conservation, including aid schemes for audio visual works, aid for sport and multifunctional recreational infrastructures, 33 More info is available at: agenda/en/news/state aid commission adopts newgeneral block exemption regulation gber 34 On 8 May 2012, the EC set out an ambitious State aid reform Program in the Communication on State aid modernization. More info on the SAM is available at: The Communication on State aid modernization (COM (2012) 209), 8 May 2012, is available at: lex.europa.eu/legalcontent/en/all/?uri=celex:52012dc

54 investment aid for local infrastructure. As from 1 July 2014, aid measures designed in line with the provisions of the GBER in all these categories do not need to be notified to the Commission any longer before being implemented. Moreover, categories which were already covered by the previous GBER are broadened. This is the case of the following types of aid: a wider scope for risk finance aid, investment aid for research infrastructure, a new simplified provision on start up aid, environmental aid categories: aid for the remediation of contaminated sites, district heating and cooling, waste management, operating aid for electricity from renewable sources, energy infrastructures, a wider definition of the notion of disadvantaged workers for employment aid to the youngest, aid for compensating the costs of assistance provided to disadvantaged workers, regional operating aid for outermost regions and sparsely populated areas and for urban development schemes. The new GBER also sets higher notification thresholds and aid intensities, for instance: R&D projects notification thresholds are doubled risk finance: the previous annual tranches of 1.5 million are replaced by a total limit that an eligible undertaking can receive of 15 million (see also IP/14/21), for investment aid for sports and multifunctional infrastructures: EUR 15 million or the total costs exceeding EUR 50 million per project and for investment aid for culture and heritage conservation: EUR 100 million per project; This means that only the cases with the biggest potential to distort competition will remain for exante assessment by the Commission before they can be granted to beneficiaries. This increased use of the GBER will have a strong impact on aid beneficiaries and on granting authorities, as it will allow for immediate access to aid (no notification, no prior compatibility assessment) and a lower administrative burden. This can also contribute to easier absorption of structural funds, when projects are funded in such a way. Nevertheless, an evaluation system has been set up in order to verify whether the assumptions and conditions underlying the compatibility of an aid scheme have been complied with, whether its objectives have been realized and what impact it had on competition and trade. Such evaluation concerns only the following aid categories: regional aid (except operating aid), aid for SMEs, aid for access to finance for SMEs, aid for R&D&I, aid for environmental protection (except reductions of environmental taxes under Directive 2003/96/EC) and aid for broadband infrastructures. Within these categories, evaluation will be required only for large aid schemes, with an average annual budget exceeding 150 million. Schemes covered by the GBER but related to other categories of aid will not be subject to evaluation requirements, regardless of their budget. Successors to evaluated schemes should be notified in order for evaluation results to be taken into account both by the Member State and by the Commission. According to simulations based on previous experience, only a limited number of aid schemes per year should qualify for evaluation under these requirements. This will ensure that the evaluation exercise remains proportionate. For each of the above mentioned aid categories, the measures included in the GBER are: Regional aid: the GBER can make an important contribution to the EU's cohesion objectives. In addition to exempting investment aid, a new provision exempts for the first time regional operating aid to address the specific handicaps of outermost regions and sparsely populated 54

55 areas. Such aid may be granted to compensate for additional transport costs of goods (in outermost regions and sparsely populated areas) and for additional operating costs other than transport costs (for outermost regions). Moreover, in view of the importance of urban development in terms of economic, social and territorial cohesion, aid to urban development projects up to 20 million, implemented through urban development funds in assisted regions and co financed by the European Structural and Investment Funds (ESIF) is also exempted. Aid for SMEs: SMEs can benefit from any category of aid covered by the GBER. In addition, the section on aid to SMEs, designed specifically for SMEs, covers investment aid, aid for consultancy services, aid for participation in fairs and a new category: aid for cooperation costs incurred by SMEs participating in European territorial Cooperation projects. On the basis of these provisions, SMEs can benefit from public support of up to 7,5 million. Aid for access to finance for SMEs: to allow Member State to boost SME's access to finance, the revised GBER now covers a much wider range of companies, irrespective of their geographical location, including not only SMEs from seed/start up and expansion stages but also SMEs in later growth stages. To better align with market practices and adapt the funding to the needs of eligible SMEs, the limit of annual funding tranches of 1.5 million has been replaced by an overall limit of funding of 15 million per company. The range of possible instruments and funding architectures has also been widened including equity, quasiequity, loans and guarantees, to better reflect market practices. The provisions on aid for start ups have also been simplified. Aid for research, development and innovation: the GBER acknowledges that targeted aid for research, development and innovation can play a significant role in economic growth. The notification thresholds have been doubled for research and development projects. The conditions for support for prototypes and pilot projects has been simplified and streamlined. New categories of exempted aid cover innovation clusters, research infrastructures and aid for process and innovation. Finally, the provisions on innovation for SMEs have been simplified. Training aid: from 2007 to 2012, Member States granted around 90% of training aid under the GBER. This indicated that there was no need of major modifications in that category. One important novelty is that the distinction between general and specific training is abolished, which should further simplify the use of these provisions. Aid for disadvantaged workers and for workers with disabilities: the new GBER extends the scope of the exemption for aid for the recruitment and employment of disadvantaged and disabled workers. In particular, the definition of disadvantaged workers now also applies to young people of years old in order to reflect their difficulties to access the labour market in the current economic crisis. The Commission is committed to defending the rights of workers with disabilities. The GBER's provisions on aid to these workers worked well in the past and are largely retained. The scope of eligible costs in aid for compensating the additional costs of employing workers with disabilities has been enlarged (now extending e.g. to the costs of training staff to assist workers with disabilities, costs directly linked to the transport of workers with disabilities to the working place). Aid for environmental protection: reflecting the principles of the guidelines on State aid for environmental protection and energy, the GBER contains provisions to help Member States meet their Europe 2020 climate targets, to gradually move to market based support for renewable energy and to incentivize companies to take early steps to meet European standards (see also IP/14/400). New categories include a provision allowing aid for up to 100% of the costs of remediating contaminated land, operating aid for the production of renewable electricity and operating aid for small scale renewable energy installations. Also, in order to facilitate the rehabilitation of buildings, a new possibility to grant support without notification is now available to Member States to allow then to leverage scarce public funds that may be available in this area. A new possibility to grant aid for waste recycling is also included in the Regulation. 55

56 Aid to make good damages caused by certain natural disasters: a new category has been introduced to allow for the compensation of damages caused by certain natural disasters, provided the competent public authorities of a Member State have formally recognized the character of the event as a natural disaster and there is a direct causal link between the natural disaster and the damages suffered by the company. Social aid for transport for residents of remote regions: a new category has been introduced to allow for aid supporting end consumers of air or maritime transport linking an airport or a port in a remote region with another airport or port within the EEA. Aid for broadband infrastructure: the GBER exempts aid to white and white NGA areas (i.e. areas where no relevant broadband operator exists or is likely to invest in the next three years), but excludes block exemption for aid to grey or "grey NGA areas", where potential competition concerns need to be analysed very carefully. The requirements of an open tender for selecting the beneficiaries of aid, of fair and non discriminatory wholesale access to the supported network and of full and effective unbundling ensure maximum competitive benefits. This category of aid should be seen in connection with the Commission's broadband guidelines (see IP/12/1424). Aid for culture and heritage conservation: this is a new category of aid in the GBER which covers a wide scope of cultural purposes and activities. The support can take the form of investment or operating aid. The block exemption will cover the vast majority of aid granted by Member States in support of this objective. Aid to schemes for audio visual works: the GBER will cover the vast majority of audio visual aid schemes and a large number of beneficiaries. The compatibility conditions set out in the GBER are based on the Cinema Communication (see IP/13/1074). Aid for sport and multinational recreational infrastructures: the new GBER introduces this new category of support which may take form of investment or operating aid. Key compatibility condition is that access to infrastructures must be open to several users and be granted on a transparent and non discriminatory basis. Aid for local infrastructure: this new category of aid supports the construction or upgrade of infrastructure which has a local effect and which made available to users on an open, transparent and non discriminatory basis. Such infrastructure plays an important role in fostering economic and social development and job creation at the local level Access to finance Access to financial services by firms is crucial when it comes to the supply of research and technology innovation by private firms and especially by SMEs 36. In the EU, access to finance is considered as the second most pressing problem facing EU SMEs after finding customers 37. The chart below provides a summary of main findings in analyzing four critical dimensions in relation to innovation Framework Conditions in EU. 35 The full text of the GBER is available at: 36 European Commission, Innovation Union Competitiveness Report 2011, p.330, available at: union/index_en.cfm?pg=home&section=competitivenessreport&year= European Commission, SME s access to finance Survey 2011, p.6 56

57 EU Access to finance EU + European Venture Capital Funds + Support to access to finance under CIP (and Horizon 2020/COSME) + Initiatives from EC to support microfinance (regional policy and Progress Microfinance Facility g1 Demand conditions EU Much lower levels of entrepreneurial activities in EU compared to China and the United States Innovation conditions Role of Government Schemes for collaboration EU + Public private cooperation: coinvestment VC funds launched by the EC under CIP (SME Facility) EU Difficulties for new and innovative SMEs in raising funds from banks Low VC investments Financing gap at early stage Supporting industries, Institutions for collaboration EU + Structured EU Business Angels networks The public sector in Europe seems to be increasingly dedicated to stimulating initiatives in support of access to finance. Nevertheless, private R&D funding is an important component of total R&D expenditure in the more advanced knowledge economies. Its level reflects the attractiveness of the national research and innovation system for business investments as well as the structure of the economy. Key Strengths Creation in 2012 of the Small Enterprise Finance Agency Sophisticated financial market/strong private equity industry European Venture Capital Funds Support to access to finance under CIP (and Horizon 2020/COSME) Initiatives from EC to support microfinance (regional policy and Progress Microfinance Facility Public private cooperation: co investment VC funds launched by the EC under CIP (SME Facility) Structured EU Business Angels networks Key opportunities Opportunity for EU to learn from third countries expertise on private equity Exchange of best practices in the field of microfinance Development of EU third countries Business Angels Networks Capacity building activities for venture capitalists, BA investors Shared reflection on potential tools to foster transnational investments? Few public initiatives in support of VC and angel investors High unemployment rate Low early stage entrepreneurial rates Few formalized angel networks Difficulties for new and innovative SMEs in raising funds from banks Financing gap at early stage Microfinance is still to be fully developed Much lower levels of entrepreneurial activities in EU compared to China and the United States Few cross border investments Difficulties for SMEs in raising funds from banks Low VC investments Financing gap at early stage Key weaknesses Different regulatory and taxes rules Difficulties in monitoring the activities of business angels Different structure of financial markets Key threats 57

58 Access to finance in the seed, start up and early growth phase Regarding the debt finance, according to data published by the OECD in 2011, whereas bank loans remain the main source of external financing for SMEs, these are being significantly affected by tighter credit conditions as a result of the economic crisis. SMEs face increased interest rate spreads, shortening maturities and increased requests for collateral and guarantees 38. Nevertheless, according to the survey led in 2014 by the European Central Bank in cooperation with the EC, while access to finance remains an important concern, it is less important than in previous years. The percentage of SMEs reporting access to finance as their main problem declined to 14% (from 16%). SMEs reported in net terms an increase in their need for bank loans during the survey period. The difference between the percentage of firms reporting an increase and those reporting a decrease in their need for bank loans was 4%, similar to the previous survey round. SMEs reported a deterioration in the availability of bank loans, albeit to a lesser extent than in the previous survey round ( 4% of respondents, in net terms, after 11% in the previous round). The survey results indicate a marginal decline in the rejection rate for euro area SMEs applying for a loan (11%, down from 12%). Additionally, the survey results suggest that financing conditions for SMEs continue to differ significantly across euro area countries and are in general more difficult than those of larger companies. 39 Concerning equity finance, the latter plays a crucial role in the seed and early stage of innovative SMEs development. 40 Venture Capitals (VC) and Angel investors have a great role to play in supporting young and high growth firms to access to finance. Nonetheless, in most EU countries, the performance of VC in financing start up firms remains quite low. Overall, the EU has considerably lower rates of venture capital investments than the USA. In 2011, the total VC investment for EU member countries was just under 3.4 billion in This represents a tiny proportion of the total investment in SMEs compared to other types of finance 41. Venture Capitals are also very sensitive to market cycles both in terms of amounts invested and in terms of the stage of investment 42. Depending on market conditions, and in particular when profit expectations are less clear and the risk higher, venture capitals might invest more in the later stages of development. Therefore, and as a consequence of the current economic crisis, in EU, as well as in developing countries, fewer and fewer venture capitalists are investing to finance the early developments of innovative firms. 43 Easing access to finance in EU Public/Private VC funds Public private partnerships (e.g. co investment VC funds) 44 would allow VC to consider smaller and riskier deals while protecting, thanks to the public guarantee, against the firm failure 45. As an 38 OECD, Financing High Growth Firms: the role of Angel Investors, 2012, p European Central Bank, Report on the results of the survey on the access to finance of SMEs in the euro area October 2013 to March 2014, 30 April More info is available at: 40 Ibidem. 41 More info is available at: financeindex/access to finance indicators/venture capital/index_en.htm 42 European Commission, Innovation Union Competitiveness Report 2011, p Roberto Zavatta, Financing technology entrepreneurs and SMEs in developing countries: challenges and opportunities, InfoDev Publication, 2008, p.49, available at: 44 European Commission, Report of the Chairman of the expert group on the cross border matching of innovative firms with suitable investors, 2012, available at: 58

59 example of such public private cooperation schemes, the European Commission, between 2007 and 2013, has allocated resources to the European Investment Fund (EIF) under the Competitiveness and Innovation Framework Programme (CIP) to the High Growth and Innovative SMEs facility (GIF). Under this facility, the EIF invests in venture capital funds which cover early and growth stage investments with a view to improve access to finance for SMEs. This SMEs facility scheme is continued in under both Horizon 2020 and COSME (see chapters 3.1 and 3.2). Business Angel networks There is no single settled definition of a Business Angel. The EC Directorate General Enterprise defines a Business Angel as A knowledgeable private individual, usually with business experience, who directly invests part of his or her personal assets in new and growing unquoted businesses. Besides capital, Business Angels provide business management experience for the entrepreneur. As such, Business Angels networks have a growing role to play to fill the financing gap of innovative SMEs at their early stage. As business angels are usually interested in firms with potential for rapid growth operating in fields where they have experience and located close to their home or office, 46 the tools to activate business angel investment in the EU are the responsibility of the Member States, who should create incentives for private investors that are willing to invest in enterprises, including by using public funds to target co investment with business angels. Since the creation of the first business angel networks in 1997 by the UK government, in Europe and other parts of the world, more and more structured business angel networks are forming as a way to facilitate match making between potential angel investors and entrepreneurs 47. Most networks operate at regional or national level. Nevertheless, at the European level the European Business Angel Network (EBAN) represents the European business angel market and networks. The EC's policy is to identify and spread good practices that can help improve the conditions for business angel investment. The Competitiveness and Innovation Framework Programme (CIP) 48 allows business angels to develop co investment funds in partnership with venture capital funds. The funds should focus on seed and start up financing, and the venture capital fund should act as lead partner. 49 Microfinance initiatives Microfinance could play a substantial role, complementary to VC and business angels, in enabling smaller firms to undertake innovative activities, in particular relatively small scale and/or less capitalintensive innovations 50.In this context, the EC and the European Investment Fund (EIF) launched a series of initiatives with the aim to develop microfinance in support of innovative activities. Firstly, the role of microfinance in regional cohesion policy has been reinforced, through two dedicated programmes: Joint European Resources for Micro to Medium Enterprises (JEREMIE) and Joint Action to support microfinance institutions in Europe (JASMINE). JEREMIE allows EU countries to use EU structural funds to support small and very small businesses whereas JASMINE aims at improving the capacity of microcredit providers and helps them become sustainable and viable operators in the credit market. In 2010 the EC also launched the European Progress Microfinance Facility to increase 45 Roberto Zavatta, Financing technology entrepreneurs and SMEs in developing countries: challenges and opportunities, InfoDev Publication, Centre for Strategy and Evaluation Services, Evaluation of EU Member State Business Angel Markets and Policies, October 2012, p. 5, available at: rep_en.pdf 47 OECD, Financing High Growth Firms: the role of Angel Investors, 2012, p More info is available at: 49 More info is available at: capital/businessangels/index_en.htm 50 ProINNO Europe, Microfinance and innovation, Mini Study 06, 2009, p.6, available at: and innovation mini study 06/ 59

60 the availability of microcredit for setting up or developing a small business. These activities will be continued and scaled up under the programming period as part of the new EU programme for Employment and Social Innovation (EaSI) Intellectual Property Rights Within a strategy of internationalization and business cooperation, the defence of IP during the process of innovation is crucial, because it may: generate an income through the licensing, sale, or commercialisation of the IP protected products or services; contribute to making a company s products and services more attractive to consumers; enhance the value or worth in the eyes of investors and financing institutions; significantly raise the value of a company in the event of sale, merger, or acquisition; help in the creation and maintenance of competitive jobs. This section follows a market oriented approach by illustrating the relevance of intellectual property (IP) protection throughout the whole cycle of innovation of a company as a potential and practical issue for an European company willing to approach with the extra European market Patents Intellectual Property Rights (IPR) trade and international legislation in EU Ideas and knowledge are an increasingly important part of trade. Most of the value of new high technology products lies in the amount of invention, innovation, research, design and testing involved. On the other hand, evidence suggests that the tradability of IP has increased over the last few decades, leading to a considerable growth in IP rights licensing and the emergence of new technology market intermediaries (such as technology transfer offices or IP clearinghouses, exchanges, auctions and brokerages). Particularly, some statistics recently elaborated by the World Intellectual Property Organisation (WIPO) shows how receipts coming from international royalty and licensing fees increased from USD 2.8 billion in 1970 to USD 180 billion in International royalty and licensing payments and receipts ( ) 51 More info is available at: p

61 Source: WIPO World Intellectual Property Report 2011, p. 9. IPR are granted through several legal instruments, such as copyrights, patents, trademarks, and industrial design rights amongst others. Governments and parliaments have established various forms of IPR protection as an incentive for creators to produce ideas that will benefit society as a whole. On the other hand, States have frequently established legislation in order to ensure that IP emanating from publicly financed research is commercialised for the benefit of their citizens. The extent of protection and enforcement of IPR varied widely around the world; and as intellectual property became more important in trade, these differences became a source of tension in international economic relations. New internationally agreed trade rules for intellectual property rights were seen as a way to introduce more order and predictability, and for disputes to be settled more systematically. An example about this trend could be found in the European Patents granted by the European Patent Office (EPO) for (technical) inventions that are new, involve an inventive step and are industrially applicable. The great advantage of European patents lies in the fact that it allows inventors to file a single application for obtaining patent protection in all the 40 European contracting states 53 to the European Patent Convention (EPC). European patents are released by EPO with a centralized and thus cost effective and time saving procedure, providing the same legal effects as national patents in all the countries for which they are granted. Plus, European patents offer strong protection, inasmuch they undergo significant examination and can be obtained for states which otherwise have registration only systems 54. Besides that, European patents can be requested also by natural or legal persons having neither their residence nor their principal place of business in one of the 40 contracting States to the EPC. In this case, applicants will be requested by EPO to appoint a professional representative who will be in charge of conducting patent proceedings 55. However, 25 EU Member States and the European Parliament agreed in 2012 on a legislative initiative which laid ground for the creation of unitary patent protection in the EU. After having adopted two Regulations in December 2012, the contracting States have started the process which will lead to the ratification of the Agreement on a Unified Patent Court. Once the Regulations and the Agreement enter into force, inventors will be able to obtain a European patent with unitary effect a legal title ensuring uniform protection for an invention across 25 Member States, providing huge cost advantages and reducing administrative burdens 56. IPR in EU trade relations with extra European countries and the role of international standards About EU Canada situation, in some cases the national IPR legislation can serve as a basis for claiming so called convention priority in most other countries, provided a corresponding application is filed in that other countries within the time period conceded by the convention of reference us/organisation/member states.html 54 Some countries have only a patent registration system where there are only requirements of form to be fulfilled and no substantive examination of the patent takes place

62 Agreements between EU and single extra European countries should be supported in order to boost business cooperation along the principles commonly followed and the national specific needs 57. In particular, agreements should cover issues such as: 1. how basic principles of the trading system and other international intellectual property agreements should be applied; 2. how to give adequate protection to intellectual property rights; 3. special transitional arrangements during the period when the new system is being introduced. In this context, standardisation plays a key role as a bridge between research, innovation and markets. A standard is a document, established by consensus and approved by a recognised body, which provides for common rules, guidelines or characteristics for activities or their results and having the purpose of achieving an optimum degree of order in a given context. Standardization implies several benefits, and it could play an important role in boosting commercial relations between countries inasmuch: it helps in ensuring compatibility and interoperability of products and services so it facilitates the creation of new markets; it supports exports by removing technical barriers to trade so it provides entrepreneurs with easier access to existing foreign markets; it is the best tool to ensure the commercialization of innovative products and technologies at the earliest stage possible so it contributes to shortening time tomarket at global level. Standards can be categorised into four major types: 1. Fundamental standards which concern terminology, conventions, signs and symbols, etc.; 2. test methods and analysis standards which measure characteristics such as temperature or chemical composition; 3. specification standards which define the characteristics of a product (product standard) or a service (service activities standard) and their performance thresholds such as fitness for use, interface and interchangeability, health and safety, environmental protection, etc.; 4. organisation standards which describe the functions and relationships of a company, as well as elements such as quality management and assurance, maintenance, value analysis, logistics, project or systems management, production management, etc. In Europe the recognised Standards Organisations are: CEN 58 (the European Committee for Standardization); CENELEC 59 (the European Committee for Electro technical Standardization); ETSI 60 (the European Telecommunications Standards Institute); International agreements have equally been established in order to coordinate the standardization work at global level and to optimize the use of available resources and expertise. CEN and CENELEC, for example, closely cooperate with their international counterparts, respectively the International Organisation for Standardization (ISO) and the International Electrotechnical Commission (IEC). This close collaboration has been materialized by the signature of the Vienna Agreement (ISO CEN) and

63 the Dresden Agreement (IEC CENELEC). CEN and CENELEC are always open for cooperation with third country National Standardization Bodies (NSBs) or with regional standardization bodies. CEN and CENELEC also recognize that this kind of cooperation may take several shapes, depending on their counterparts links with Europe, wish to participate in technical activities and interest in the results of the European Standardization process. Therefore, they propose four big models of cooperation: Affiliation, Standardization Partnership (PSB), Cooperation Agreement and Memorandum of Understanding 61. Finally, any company or organisation with an interest in the creation of telecommunications and related standards can become an ETSI affiliate. 62 Role of IPR in enhancing business competitiveness abroad Before embarking on an export operation, enterprises go through a series of crucial steps which range from identifying an appropriate export market and estimating demand, to finding channels of distribution, estimating costs and obtaining funds. However, IPR are territorial, meaning that they are usually only protected in the home country or region where protection has been applied for and obtained. Protecting IP in export markets is therefore crucial so as to enjoy the same benefits of protection abroad as are enjoyed in the domestic market. It should be carefully considered applying for IP protection well in time in all countries to which an organisation is going to export or license its products or services. It is fundamental to gather as much information as possible in order to being informed of the features of the export market, the technologies already available in it, the potential partners and their particular business positions and objectives. A company willing to explore foreign market needs to: Analyse its products or services so as to discover what kind of IP it is using; Identify its business goals and the IP strategy to be implemented, as well as the pressure it has to meet them (e.g. the need to license in); Ascertain what are its accounting options (e.g. whether it prefers to amortise the IP related costs over the expected life of the asset, or pay them immediately as costs of sales); Segment its patent portfolio, to grasp the core area of business and determine its technology needs. In this perspective, the valuation of IP detained by your organisation assumes particular relevance. Indeed, knowing the economic value of your IP will help you in taking strategic decisions on your intangible assets, but will also facilitate the commercialization and transactions concerning IPR 63. To assist in particular SMEs performing basic valuation in house, several national IP offices in the EU and other public organisations have created free tools, such as the following: IP score (tool provided by European Patent Office for evaluating patents and development projects): IP Tradeportal (tool provided by the Danish Patent and Trademark Office for assigning a score to patents, trademarks and design): tradeportal.com/valuation/ipevaluation.aspx members 63 p

64 IP Panorama (set of e learning modules dedicated to IP issues, jointly developed by the Korean Intellectual Property Office, the Korea Invention Promotion Association and the World Intellectual Property Organisation): IP Healthcheck Agreeing a price for intellectual property rights (booklet published by the UK Intellectual Property Office to help companies on the valuation of their IP assets in the context of business transactions): Further information about IP matters could be acquired by contacting European and Canadian IP offices such as: European Patent Office (for European patents): Office for Harmonization in the Internal Market (for European Community trademarks and, in the future, industrial designs): EPO and ARIPO also offer the opportunity to file patent applications under the Patent Cooperation Treaty, which grants patent protection in 148 countries simultaneously. This possibility is provided to all nationals or residents of a Contracting State which is party to the European Patent Convention (in the case of EPO) or the Harare Protocol on Patents and Industrial Designs (in the case of ARIPO) Copyrights Copyright and related rights provide an incentive for the creation of and investment in new works and other protected matter (music, films, print media, software, performances, broadcasts, etc.) and their exploitation, thereby contributing to improved competitiveness, employment and innovation. In fact, the field of copyright is associated with important cultural, social and technological aspects, all of which are taken into account in formulating related policies. In EU there has been significant harmonization of the substantive copyright law to reduce barriers to trade and to adjust the framework to new forms of exploitation. Several efforts have been made in order to build common ground with respect to the rules on the enforcement of rights, i.e. on access to justice, sanctions and remedies regarding infringements. In order to grasp the full potential of marketing intellectual property rights in the Single Market, complementary measures on the management and licensing of these rights may also prove necessary. The task of the EC is to enforce the acquis on copyright and related rights; to advance it further and to modernize and adapt it to new developments in technology or the markets concerned as this is an evolving scenario. In fact, the copyright industries are critically important to the EU because they involve media, cultural, and knowledge industries. Development in these industries is indicative of performance in post industrial society especially where related to the information society. The EC is also responsible for conducting negotiations on industrial and intellectual property within World Intellectual Property Organisation (WIPO) (e.g. audiovisual, broadcasting, resale right, databases, etc.), for participating in the relevant WIPO General Assemblies, and for contributing to the work of other international fora on IPR related matters with a view to ensuring adequate protection of intellectual property rights (IPR) internationally. In July 2012, as announced in its Communication A Single Market for Intellectual Property Rights, the European Commission adopted its proposal on collective management of copyright and related rights and multi territorial licensing of rights in musical works for online uses (IP/12/772)

65 Collective management organisations act as intermediaries between right holders in a variety of industries such as music, books and films, and the service providers intending to use their works. They license rights and collect and distribute royalties in circumstances where negotiating licenses with individual creators would be impractical and entail high transaction costs. Cases of mismanagement of rights revenue and long delayed payments have shown that there is a need to improve the functioning of collective management organisations. Furthermore, the collective management of rights also plays a key role in the licensing of online music service providers (music download services or streaming services). Online service providers often want to cover a multitude of territories and a large catalogue of music. Many collective management organisations have not been able to meet these challenges, and service providers have faced difficulties when trying to obtain the licenses necessary to launch online music services across the EU, resulting in fewer online music services available to consumers. 65 Additionally, on the 4th February 2014, the European Parliament adopted the new Directive on collective rights management and multi territorial licensing of musical works for online use. This Directive is a cornerstone of the digital single market as it aims at facilitating the entry of smaller innovative suppliers on the European market. It will also contribute to wider availability and better choice of offers of online music in Europe. The Directive modernizes the functioning of collective management organisations (also referred to as collecting societies ) which manage copyright and related rights on behalf of right holders, such as authors or performers, across Europe. It strengthens and improves the governance and transparency of these organisations. For example, it gives right holders the possibility to be more involved in the decision making processes of their collective management organisations, set out minimum requirements relating to the governance structure of collective management organisations and ensure timely and accurate payments of royalties to right holders. In addition, the new rules foster and improve multi territorial licensing by collective management organisations for online music services (such as music download services or streaming services). Going forward, it will be easier for those services to cover a multitude of territories and a large catalogue of music, which in turn will increase the offer available in the EU Trademarks Trade marks are indicators of business origin, distinguishing products and services of one company from those of another. They enable consumers to recognize a product as one which they have liked, or disliked, in the past and thereby allow them to make an informed choice when making the purchase or asking for a service. Trade marks are also essential marketing tools for modern business as principal instrument used by businesses for advertising their products, and offer a guarantee that all the goods originating from the same producer have a certain quality. In a world of increasing consumer sophistication, branding, supported by trade marks, can assist businesses of all sizes in their quest for innovation and entry into new markets. Trade marks are territorial rights. They guarantee a protection to their owners only in the territory of the country or countries concerned. In Europe, several systems for trade mark protection exist: National trademarks are registered by the intellectual property (IP) offices of Member States on the basis of a harmonized system. Currently, there are 24 national offices, and one 65 For more information on collective rights management: 65

66 regional office the Benelux Office for IP (BOIP) 66. National trade marks generally serve users seeking registration in one, or a limited number of, countries, as well as users that want to obtain much broader protection in geographical terms but are not able 67 or willing to opt for a Community trade mark. Community Trade Marks (CTM), available since 1996, grants their proprietors a unitary IP right with an equal effect throughout the entire EU. They are registered by a specialised EU agency, the Office for Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM) which was established in 1994 in Alicante, Spain. The CTM does not replace national trade mark systems, but provides an additional legal framework ("a 26 th regime") for obtaining trade mark protection in the territory of all 27 Member States. Finally, international trade mark registrations are administered by the WIPO, and secure protection in several countries, through the system of the Madrid Agreement and the Protocol to that Agreement. These trademarks can be obtained in a single procedure; however, once registered they do not become a single IP right, as the CTM, but split into a bundle of national and/or Community trademarks, depending on the choice of the applicant. International applications have limited added value within the EU and are more advantageous for users seeking trade mark protection in countries outside Europe and/or worldwide. The national, Community, and international trade mark systems not only coexist passively but are closely interrelated with each other 68. Such European trade mark system has undergone a significant development over the last 20 years. This process started with the harmonisation of national trade mark laws in 1989 and was followed by the creation of the CTM in Since then, it has not been subject to any major modifications 69. The business environment, however, has changed significantly over the past two decades, notably with the expansion of the internet and other electronic business tools. The numbers of trade mark applications have been growing, both at national and Community levels 70, as are the numbers of trade mark users. Stakeholders increasingly demand faster, higher quality, more streamlined trade 66 Hereinafter, the 24 national IP offices and the Benelux Office for IP are referred to jointly as "national IP offices" and the national and regional trade marks as "national trade marks". 67 Given the unitary character of a Community trade mark (Article 1(2) CTMR), protection cannot be obtained if absolute grounds for refusal exist in any part of the EU (for example, trademarks that would be purely descriptive in one of the EU languages and/or would be contrary to public policy in one Member State). Similarly, the existence of an earlier national trade mark in a single Member State can prevent the registration of a CTM for the whole territory of the EU. 68 In principle, companies should be able to freely choose between registration at national, Community or international level, depending on their business needs and the type of protection that they want to secure for their trade mark rights. Ideally, their choice ought to be guided by considerations regarding plans for future expansion, existence of prior rights in some territories, investment in IP protection etc. In practice, however, their free choice is often biased by uneven conditions at individual IP offices. For more details about these issues see chapter 3.2, problem definition. 69 The 1989 Trade Mark Directive was amended only once in 1992 as regards its transposition deadline. The 1994 CTM Regulation was amended in 2003 in relation to the EU accession to the system of international trade mark registrations under the Protocol to the Madrid Agreement. In 2004, the CTM Regulation was subject to some further amendments on substantive law and procedures. Both the TM Directive and the CTM Regulation were codified in 2008 and 2009, respectively, but without any changes on substance. 70 For more details refer to section

67 mark registration systems, which are more consistent, user friendly, publicly accessible and technologically up to date. In 2007, the Council 71 recognised that it was over a decade since the introduction of the CTM Regulation and the establishment of Office for Harmonization in the Internal Market (OHIM) 72, and under the principles of better regulation, emphasised the need for an overall assessment of the functioning of the CTM system. It invited the Commission to start work on a comprehensive study on the overall functioning of the CTM system. The Commission committed itself, in its 2008 Small Business Act 73, to make the CTM system more accessible to SMEs. Furthermore, the 2008 Communication on an Industrial Property Rights Strategy for Europe 74 stressed the Commission's commitment to effective and efficient trade mark protection and to a high quality trade mark system. It concluded that it was time for an overall evaluation which could form the basis for future review of the trade mark system in Europe, and the further improvement of cooperation between OHIM and national IP offices. As regards the international dimension, the Communication announced that the Commission would prepare the ground for the accession of the EU to the Singapore Treaty on the Law of Trademarks and encouraged Member States to ratify that treaty. In 2010, in the Communication on Europe 2020 strategy under the Flagship Initiative Innovation Union, the EC committed to modernise the trade marks framework in order to improve the framework conditions enabling business to innovate. Finally, in its new IPR strategy for Europe 75, the Commission announced a review of the trade mark system in Europe, with a view to modernising the system both at EU and national levels, by making it more effective, efficient and consistent as a whole. The Competiveness Council adopted on 25 May 2010 conclusions on the future revision of the Trade Mark system in the EU 76. The Council called on the Commission to present proposals for the revision of, respectively, the CTM Regulation, and the Directive approximating the laws of Member States relating to trademarks, and flagged up those issues which it would like to see addressed therein. Therefore, on the 27 th March 2014 the EC presented a package of initiatives to make trade mark registration systems all over the European Union cheaper, quicker, more reliable and predictable. The proposed reform would improve conditions for businesses to innovate and to benefit from more effective trade mark protection against counterfeits, including fake goods in transit through the EU's territory. As regards fees, the EC proposes a principle of "one class per fee" that will apply both for Community trade mark applications and for national trade mark applications. This will enable any business particularly SMEs to apply for trade mark protection according to their actual business needs, at a cost that covers those individual needs only. Under the current system, the fee for registering a trade mark allows for the registration of up to three product classes. Under the revised system, a trade mark can be registered for only one product class. So at EU level, businesses will pay substantially less when they seek to obtain protection for one class of product only. In order to foster innovation and growth by making trade mark systems in Europe more accessible and efficient for businesses, the proposed revision would: 71 Council Conclusions of 21 and 22 May 2007, Council document 9427/ The OHIM website is at: 73 COM(2008) 394 final. 74 COM(2008) 465 final. 75 COM(2011) 287 final. 76 Council document 2010/C 140/07. 67

68 Streamline and harmonize registration procedures, including at Member State level, taking the Community trade mark system as a benchmark; Modernize the existing provisions and increase legal certainty by amending outdated provisions, removing ambiguities, clarifying trade mark rights in terms of their scope and limitations and incorporating extensive case law of the Court of Justice; Improve the means to fight against counterfeit goods in transit through the EU s territory; and Facilitate cooperation between the Member States offices and the EU trade mark agency the Office for Harmonization in the Internal Market (OHIM) in order to promote convergence of their practices and the development of common tools. The proposed package contains three initiatives: 1. Recast of the 1989 Directive (now codified as 2008/95/EC) approximating the laws of the Member States relating to trademarks; 2. Revision of the 1994 Regulation (now codified as 207/2009/EC) on the Community trade mark; and 3. Revision of the 1995 Commission Regulation (2869/95) on the fees payable to OHIM Venture Capital Investment As part of the EU action plan to improve access to finance for SMEs, in December 2011 the EC submitted a proposal of Regulation on Managers of European Venture Capital Funds (EuVECA), which was then accepted on the 17th April The EuVECA came into effect on 22 July 2013 to complement and coincide with the implementation of the EU Directive on Alternative Investment Fund Managers (AIFMD), which establishes certain basic registration and information requirements for the Alternative Investment Funds managers (AIFM). 78 A secure and stable financial system requires that all significant financial market actors are subject to appropriate regulation and supervision. The adoption of the EuVECA regulation and the AIFMD directive means that hedge funds and private equity will no longer operate in a regulatory void outside the scope of supervisors. The new regime brings transparency and security to the way these funds are managed and operate, which adds to the overall stability of European financial system The EU Directive on Alternative Investment Fund Managers (AIFMD) An AIFM is a manager of an alternative investment fund. The term alternative investment fund encompasses a wide range of investment funds that are not already regulated at European level by the UCITS Directive 79, including hedge funds, private equity funds, real estate funds and a wide range of other types of institutional fund. 80 AIFM have grown to become very significant actors in the 77 Regulation (EU) No 345/2013 of the European Parliament and of the Council of 17 April 2013on European venture capital funds, 25 April 2013, Official Journal of the European Union, available at: content/en/txt/?qid= &uri=celex:32013r The Directive of the European Parliament and of the Council of 13 july 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for the collective investment in transferable security (2009/65/EC), 17 November 2009, regulates the investment funds at the European Union level. More info are available at: directive/index_en.htm 80 According to the Consultation Paper: Guidelines on key concepts of the AIFMD published by the European Securities and Markets Authority (ESMA) on 19 th December 2012 (available at: pdf) AIFs are defined as collective investment undertakings, other than UCITS, which raise capital from a number of investors, with a view to investing it in accordance with a defined investment policy for the benefit of those investors. 68

69 European financial system, managing a large quantity of assets on behalf of pension funds and other investors; accounting for a significant proportion of trading activity in financial markets; and constituting an important source of counterparty risk for other market participants. AIFM have also contributed to the build up of leverage in the financial system, the consequences of which for the stability of financial markets became apparent when leverage in the hedge fund sector was rapidly unwound during the crisis. In this context, it is essential that the risks that AIFM pose to their investors, the financial markets and the companies in which they invest, are rigorously monitored and controlled. The AIFMD is a key part of the European Commission's drive to lay the regulatory foundations for a secure financial system that supports and stimulates the real economy. The objective of the AIFMD is to create a comprehensive and secure framework for the supervision and prudential oversight of AIFM in the EU. As a result of the entry into force of the AIFMD, all AIFM will be required to obtain authorization and will be subject to ongoing regulation and supervision. The AIFMD will not apply to entities such as governments managing funds supporting social security and pension systems; supranational institutions, such as the World Bank and member organisations of the World Bank Group; and other entities expressly excluded from its scope. The AIFMD also introduces for the first time a genuine single market framework for this sector, which will allow AIFM to passport their services throughout the EU on the basis of a single authorization. Specifically, once an AIFM is authorized under the AIFMD in one Member State and complies with the rules of the directive, this manager will be entitled upon notification to manage or market funds to professional investors throughout the EU. By creating a single regulatory and supervisory regime for all AIFM active in the EU, the AIFMD will help market participants to overcome the barriers and inefficiencies created by the current patchwork of national regulation. This will help to increase choice and competition, to the benefit of European investors. The AIFM foresees a 'third country passport' as well, which will in due course become a single harmonized regime for third country access to investors in the EU. Alternative investments are a global industry and it is important that European investors have access to the best that the global market has to offer. At the same time, it is imperative that all AIFM active in the EU are subject to the same high standards of transparency and conduct, irrespective of where they, or the funds they manage, are located. Following a limited transition period of two years, and subject to the conditions set out in the AIFMD, the passport will be extended to the marketing of non EU funds, managed both by EU AIFM and AIFM based outside the EU. The phased introduction of the third country passports will allow European supervisors to ensure that the appropriate controls and cooperation arrangements necessary for the effective supervision of non EU AIFM are operating effectively. A limited number of exemptions from the AIFMD: Firms meeting these exemptions will not be required to be authorized under the AIFMD but will nevertheless be required to register with their local regulator. More importantly, smaller AIFMs will not be required to be authorized, although they may choose to opt in. AIFMs managing AIFs with combined assets under management of 100m (including use of leverage) or AIFs with assets under management of 500m (where the AIFs are unleveraged) will not be required to be In the supervisory framework for AIFM set by the AIFMD, both ESMA and the ESRB will play an active role, strengthening the monitoring of risks on a cross 69

70 border basis; promoting the consistent application of the AIFMD across the EU; and facilitating the secure functioning of the passporting mechanisms for both European and non European AIFM The Regulation on European VEntureCApital funds (EuVECA) The EuVECA is a voluntary marketing passport aiming to facilitate cross border fundraising while sparing smaller funds the disproportionate costs of authorization under the Alternative Investment Fund Managers Directive (AIFMD). The EuVECA is part of the European Commission s action plan to improve access to finance for SMEs and represents recognition by EU policymakers of the importance of venture capital (VC) investment to Europe and in particular Europe s innovative highgrowth companies and SMEs.That recognition was brought about by a campaign of constructive dialogue with policymakers by the European Private Equity & Venture Capital Association (EVCA) and its members, who made the case that VC needed a tailored regulation of its own if it was to continue commercializing innovation. The EuVECA Regulation No 345/2013 sets out the criteria which managers of venture capital funds must meet in order to market their funds to investors across the EU under a new European Venture Capital Fund label and without needing to comply with the demands of the AIFMD. The Regulation, which unlike the AIFMD is purely a marketing regulation, aims to provide a voluntary EU wide passport for qualifying venture capital funds and their managers. It is intended as an alternative regime to that set out in the AIFM Directive, which provides a compulsory regime and a marketing and management passport for private equity managers whose assets under management are above a threshold of 500 million (or 100 million if certain conditions are not met). In brief, EuVECA allows smaller funds access to a marketing passport without the full compliance cost and regulatory burden of the AIFMD. In order to qualify for the EuVECA designation the Regulation introduces requirements relating to the investment portfolio, investment techniques and eligible undertakings that a qualifying fund needs to meet. It also sets out uniform rules on which categories of investor a qualifying fund may approach and on the internal organisation of the managers that market such qualifying funds. The Regulation applies to fund managers who meet the following criteria: being established in the EU; managing portfolios of EuVECAs (i.e. qualifying venture capital funds); being registered with the competent authorities of their home member state in accordance with point (a) of Article 3(3) of the AIFMD; having assets under management that in total do not exceed the threshold referred to in point (b) of Article 3(2) of the AIFMD (i.e. 500 million for closed ended and unleveraged funds). Nevertheless, the EuVECA regime is entirely voluntary, meaning that, the use of the EuVECA label is not compulsory: no manager is obliged to comply with the EuVECA. Any, who is below the 500 million threshold for the AIFMD; and who does not wish to comply with the EUVECA, can continue to operate (manage and market) under the existing respective national rules (and under any other EU rules that might be applicable to their business). 81 More information on the Directive on Alternative Investment Fund Managers is available at: 70

71 Concerning the main criteria for a fund to qualify, those are: The EuVECA Regulation applies on a fund by fund, vehicle by vehicle basis. It is on that basis that the qualifying criteria need to be applied. The manager should be below the de minimize size threshold under the AIFMD. The 500 million threshold only applies if all funds managed by the manager are not considered to be leveraged for the purposes of the AIFMD. The Regulation is intended to be available for venture and growth capital. Recital 11 of the Regulation expressly says that the Regulation is not intended to facilitate the cross border marketing of buy out funds. The starting point for applying the criteria is the definition of a Qualifying Investment Funding Article 3 of the Regulation. A Qualifying Investment Fund is an Alternative Investment Fund (AIF), as defined under the AIFMD, with an additional key condition that it must respect a 70/30 ratio of qualifying to non qualifying investments. Moreover, every fund using the label will have to prove that it intends to invest a high percentage of investments (at least 70% of the capital commitments) in supporting young and innovative companies. Regarding the qualifying investments, they are: equity or quasi equity instruments issued by "qualifying portfolio undertakings", principally SMEs, defined as unlisted organisations with fewer than 250 employees and an annual turnover not exceeding 50 million or a balance sheet of less than 43 million. the SME may either be established in the EU or in another jurisdiction, provided that third country meets certain conditions: it must have signed an agreement with the home member state of the manager of the qualifying venture capital fund and with each other member state in which the units or shares of the qualifying venture capital fund are intended to be marketed that ensures that it complies with the standards laid down in Article 26 of the OECD Model Tax Convention on Income and on Capital 82 and ensures an effective exchange of information in tax matters, including any multilateral tax agreements. it must not be listed as a non cooperative country or territory by the Financial Action Task Force (FATF) on Anti Money Laundering and Terrorist Financing 83. The qualifying portfolio undertaking must not itself be a fund nor a financial business entity (bank, collective investment undertaking, insurance company, etc.). The nature of the fund s interest in the SME must be either equity or quasi equity as those terms are defined in Article 3(e) of the Regulation: Equity: shares in the SME which are issued by the SME to the fund or shares acquired by the fund from existing shareholders (shares acquired in the secondary market are allowed). Quasi equity: secured or unsecured loans by the fund to the company provided the fund already holds qualifying investments in that company. Secured and unsecured loans must not exceed 30% of the aggregate capital contributions and uncalled committed capital in the fund. 82 More info at the following link: 83 More info on FATF at the following link: gafi.org/ 71

72 Interests in other EuVECAs are also qualifying investments provided that those underlying EuVECAs have not themselves invested more than 10% of their capital contributions and uncalled capital in other EuVECAs. The EuVECA Regulation applies in all EU member states and in the three EEA countries (Norway, Iceland and Liechtenstein) but not in Switzerland. As the EuVECA is a Regulation (and not a Directive) it does not need to be transposed into national law and so it has immediate effect in all Member States. There is, however, in some member states, a need to change some domestic laws and regulations in order for the national competent authority to be able to oversee the EuVECA regime and to organize local registration and so venture capital managers interested in using this designation should also investigate any local requirements. In conclusion, the EuVECA is a great example of a regulation that will encourage investment in Europe s businesses and of what can be achieved when policymakers and industry work together. The myriad of different rules in EU member states have increased costs for raising venture capital funds across the EU. This has in turn contributed to reduced levels of investment in such funds. The new EuVECA regime addresses these issues and complements the AIFMD so that smaller funds can improve their access to capital. Fund managers who comply with the Regulation and achieve EuVECA status will reduce the costs they incur in raising capital across the EU. Managers will not have to comply with the full requirements of the AIFMD and will have simplified compliance procedures. Marketing venture capital funds across the EU will also be easier, as there will be no obligation to comply with the national laws of each individual member state. Achieving EuVECA designation may also bring other benefits, if as seems likely this status becomes a cross reference in other pieces of legislation with an impact on venture capital. For example, in its recent proposal on reforms to the structure of EU banks the European Commission has proposed an important exemption for venture capital funds, but only if they have the EuVECA designation. If this is accepted by the European Parliament and the Council of Ministers this could become a powerful precedent EU Innovation Programmes Horizon 2020 The financial instrument implementing the Innovation Union Horizon 2020 (H2020) is the biggest EU Research and Innovation programme ever with nearly 80 billion of funding available over 7 years (2014 to 2020), fostering breakthroughs, discoveries and world firsts by taking great ideas from the lab to the market. Horizon 2020 has the political backing of Europe s leaders and the Members of the European Parliament. They agreed that research is an investment in our future and so put it at the heart of the EU s blueprint for smart, sustainable and inclusive growth and jobs. By coupling research and innovation, Horizon 2020 contributes to this objective by emphasizing on excellent science, industrial leadership and tackling societal challenges. The goal is to ensure Europe produces world class 84 European Private Equity and Venture Capital Association, EuVECA Essential. An introduction to the European Venture Capital Fund Regulation, February 2014, available at: 72

73 science, removes barriers to innovation and makes it easier for the public and private sectors to work together in delivering innovation. H2020 is founded on three main pillars: Excellence Science Industrial Leadership Societal Challenges In addition, the EU Framework Programme for Research and Innovation is complemented by horizontal measures aimed to complete and further develop the European Research Area: Spreading excellence and widening participation Science with and for society European Institute of Innovation and Technology (EIT) Euratom These measures will aim at breaking down barriers to create a genuine single market for knowledge, research and innovation Excellent Science The Excellent Science Pillar aims to reinforce and extend the excellence of the EU s science base and to consolidate the European Research Area in order to make the European R&I system more competitive on a global scale. The pillar has four main components: 1. The European Research Council (ERC). It provides attractive and flexible funding to enable talented and creative individual researchers and their teams to pursue the most promising avenues at the frontier of science, on the basis of EU wide competition. 73

74 2. Future and emerging technologies. They support collaborative research in order to extend Europe s capacity for advanced and paradigm changing innovation. They foster scientific collaboration across disciplines on radically new, high risk ideas and accelerate development of the most promising emerging areas of science and technology as well as the Union wide structuring of the corresponding scientific communities. 3. Marie Skłodowska Curie Actions. They provide excellent and innovative research training as well as attractive career and knowledge exchange opportunities through cross border and cross sector mobility of researchers to best prepare them to face current and future societal challenges. 4. Research infrastructure (including e infrastructures). It develops European research infrastructure for 2020 and beyond, foster their innovation potential and human capital, and complement this with the related Union policy and international cooperation. Together, these objectives form a powerful and balanced set of activities which, in concert with activities at national and regional levels, span the breadth of Europe s needs regarding advanced science and technology. Bringing them together in a single programme will enable them to operate with greater coherence, in a rationalized, simplified and more focused way, while maintaining the continuity which is vital to sustain their effectiveness. The activities are inherently forward looking, building skills in the long term, focusing on the next generation of science, technology, researchers and innovations and providing support for emerging talent from across the whole of the Union and associated countries, as well as worldwide. In view of their science driven nature and largely bottom up, investigator driven funding arrangements, the European scientific community will play a strong role in determining the avenues of research followed under the programme Industrial Leadership The pillar Industrial Leadership aims to speed up development of the technologies and innovations that will underpin tomorrow's businesses and help innovative European SMEs to grow into worldleading companies. It consists of three specific objectives: "Leadership in enabling and industrial technologies" provides dedicated support for research, development and demonstration and, where appropriate, for standardization and certification, on: o information and communications technology (ICT); o nanotechnology, advanced materials, biotechnology, advanced manufacturing and processing; and o space. Focusing on new and breakthrough technologies, this part of the programme contributes to boosting competitiveness, creating jobs and supporting growth. The emphasis is on areas of research and innovation with a strong industrial dimension and where mastering new technological opportunities enables and drives innovation. The goal is to achieve the EU Industrial policy goals, which represents an important component of the EU Strategy for Key Enabling Technologies (KET). "Access to risk finance" aims to overcome deficits in the availability of debt and equity finance for R&D and innovation driven companies and projects at all stages of development. Together with the equity instrument of the Programme for the Competitiveness of Enterprises and small and medium sized enterprises (COSME) ( ) it supports the development of Union level venture capital. 74

75 "Innovation in SMEs" provides SME tailored support to stimulate all forms of innovation in SMEs, targeting those with the potential to grow and internationalize across the single market and beyond. The general goal is to make Europe a more attractive location to invest in R&I (including ecoinnovation), by promoting activities where businesses set the agenda. It provides major investment in key industrial technologies, maximize the growth potential of European companies by providing them with adequate levels of finance and help innovative SMEs to grow into world leading companies Societal Challenges Horizon 2020 reflects the policy priorities of the Europe 2020 strategy and addresses major concerns shared by citizens in Europe and elsewhere. In the third pillar, a challenge based approach brings together resources and knowledge across different fields, technologies and disciplines, including social sciences and the humanities. This covers activities from research to market with a new focus on innovation related activities, such as piloting, demonstration, test beds, and support for public procurement and market uptake. It includes establishing links with the activities of the European Innovation Partnerships (EIP). Funding focuses on the following challenges: 1. Health, demographic change and wellbeing; 2. Food security, sustainable agriculture and forestry, marine and maritime and inland water research, and the Bioeconomy; 3. Secure, clean and efficient energy; 4. Smart, green and integrated transport; 5. Climate action, environment, resource efficiency and raw materials; 6. Europe in a changing world inclusive, innovative and reflective societies; 7. Secure societies protecting freedom and security of Europe and its citizens Spreading Excellence and Widening Participation Maximizing investment in R&I will enable the European Research Area to function in a more streamlined and homogeneous way, allowing the individual strengths of each Member State to be optimized. Despite serious efforts deployed at national and European level, the EU sees significant internal disparities in terms of research and innovation performance as also identified in the Innovation Union Scoreboard. These trends are further exacerbated by the continuing severe financial crisis, and the subsequent adverse effects on public research and innovation budgets. Also, there is significant evidence pointing to the fact that the pathway to economic growth and competitiveness is strongly connected to the scaling up of investment in research and innovation. In order to address these challenges, Horizon 2020 has introduced specific measures for spreading excellence and widening participation: The Teaming action (associating advanced research institutions to other institutions, agencies or regions for the creation or upgrade of existing centers of excellence) is a new feature under Horizon It provides new opportunities to the parties involved, with real prospects for growth through tapping into new collaboration and development patterns, including the establishment of new scientific networks, links with local clusters and opening up access to new markets. This offers national and local research new possibilities for 75

76 exploitation and value creation and boosts the innovation potential of the countries involved. Twinning helps strengthen a defined field of research in a knowledge institution through linking with at least two internationally leading counterparts in Europe. The ERA Chairs scheme provides support for universities and other research institutions to attract and maintain high quality human resources and implement the structural changes necessary to achieve excellence on a sustainable basis. The Policy Support Facility aims to improve the design, implementation and evaluation of national/regional research and innovation policies. It offers expert advice to public authorities at national or regional level on a voluntary basis, covering the needs to access the relevant body of knowledge, benefit from the insight of international experts, use state of the art methodologies and tools, and receive tailor made advice. Supporting access to international networks for excellent researchers and innovators who lack sufficient involvement in European and international networks. This includes support provided through COST. Strengthening the administrative and operational capacity of transnational networks of National Contact Points allows financial and technical support and ensures the flow of information between them and the Horizon 2020 implementation bodies. These measures are targeted at low performing Member States in terms of research and innovation, and they are implemented by the Member States most in need of the new Cohesion policy for the programming period Science with and for Society The aim of the Science with and for Society programme is to build effective cooperation between science and society, to recruit new talent for science and to pair scientific excellence with social awareness and responsibility. It is instrumental in addressing the European societal challenges tackled by Horizon 2020, building capacities and developing innovative ways of connecting science to society. It will make science more attractive (notably to young people), increase society's appetite for innovation, and open up further research and innovation activities. It allows all societal actors (researchers, citizens, policy makers, business, third sector organisations etc.) to work together during the whole research and innovation process in order to better align both the process and its outcomes with the values, needs and expectations of European society. This approach to R&I is called Responsible Research and Innovation (RRI) and aims to ensure that societal actors work together during the whole research and innovation process. The ultimate goal is to better align both the process and outcomes of R&I, with the values, needs and expectations of European society European Institute of Innovation and Technology (EIT) The European Institute of Innovation and Technology (EIT) is intended to bring real and lasting change to the European Union s innovation landscape, by creating new environments where higher education, research, public administrations and business work together to produce disruptive innovation, so to integrate for the first time at EU level, education and entrepreneurship with research and innovation. From 2014 to 2020, the EIT will receive million to continue promoting innovation in Europe. 76

77 The main operational arm of the EIT is its Knowledge and Innovation Communities (KICs), through which the EIT develops and tests how innovation is approached, managed, financed and delivered in Europe. The KICs offer a genuine opportunity for top innovation players to be part of a highly collaborative community, based on the principles of excellence and commitment, to achieve pan European impact. The KICs have already brought about promising results by training more than 1000 students, creating more than 100 start ups which have launched more than 400 products and services. The EIT's three initial KICs were established in 2010 to address: Climate change (Climate KIC) Sustainable energy (KIC InnoEnergy) ICT innovation (EIT ICT Labs) From 2014 onwards, the EIT will launch 5 new KICs: 2014: Innovation for healthy living and active ageing Raw materials sustainable exploration, extraction, processing and recycling 2016: Added value manufacturing Food4Future sustainable supply chain from resources to consumers 2018: Urban mobility Euratom Euratom is a complementary research programme for nuclear research and training, focusing on continually improving nuclear safety, security and radiation protection, notably to contribute to the long term decarbonisation of the energy system in a safe, efficient and secure way. By contributing to these objectives, the Euratom Programme will reinforce outcomes under the three priorities of Horizon 2020: Excellent science, Industrial leadership and Societal challenges. The indirect actions of the Euratom Programme focus on two areas: nuclear fission and radiation protection fusion research aiming at developing magnetic confinement fusion as an energy source. A strong emphasis is put on developing nuclear skills and competence, which will allow Europe to maintain world leadership in nuclear safety and waste management and to attain the highest level of protection from radiation. In particular, the Programme will be carrying out research in the medical uses of radiation, for the benefit for all European citizens. Regarding fusion research, Euratom calls for a substantial reorganisation that will support a shift from pure, academic research to scientific questions of designing, building and operating future facilities. This will allow fusion to progress towards electricity production by fusion around the middle of the century. 77

78 To achieve these objectives, the nuclear research activities will be supported by simpler legislation, thereby facilitating access to funding for companies, universities, research institutes in all EU Member States and beyond. In line with the Euratom Treaty, the Programme will run for five years, from 2014 to COSME COSME is the EU programme for the Competitiveness of Enterprises and Small and Medium sized Enterprises (SMEs) running from 2014 to 2020 with a planned budget of 2.3bn. With SMEs, current and potential entrepreneurs and business support organisations as its main targets, the programme will provide better access to finance, deliver business support services and promote entrepreneurship. 85 COSME aims at: Facilitating access to finance for SMEs. Creating an environment favorable to SME creation and growth. Encouraging an entrepreneurial culture in Europe. Strengthening the sustainable competitiveness of EU enterprises. Supporting the internationalization of SMEs and improving their access to markets. In order to achieve its objectives, the programme ensures continuity of initiatives and actions already undertaken by the Entrepreneurship and Innovation Programme (EIP), building on the results and lessons learnt. While many successful features of the EIP are continued, access to the programme is simplified to make it easier for entrepreneurs and SMEs to benefit from it. It must be noted that COSME is intended to support, complement and coordinate actions by the Member States. In doing so and building on the expertise of the European Investment Fund (EIF) and the Enterprise Europe Network (EEN), the programme specifically addresses problems of a transnational nature which, by means of economies of scale or by their demonstration effect, can be more effectively addressed at the European level, such as: Overcoming market fragmentation in the Single Market. Facilitating the adoption of best practices across all Member States. 85 More info on the Competitiveness of Enterprises and Small and Medium sized Enterprises Program is available at: 78

79 As a result the access to finance is made easier for entrepreneurs and SMEs, self employment and business development is facilitated and consequently Member States are in a better position to maintain the competitiveness of their industrial basis, increase the number of their entrepreneurs, and raise their employment rate. This having said, the main beneficiaries of the programme are: Entrepreneurs, in particular in SMEs, who can benefit from easier access to funding for development, consolidation and growth of their enterprises. Citizens who want to become self employed and face difficulties in setting up their own business (e.g. young and women entrepreneurs). Member States authorities (at national, regional and local level), who can be better assisted in their efforts to elaborate and implement effective policy reform. In particular, they will benefit from EU wide reliable data and statistics, best practice and financial support to test and scale up sustainable solutions for improving global competitiveness. Under the programme four key actions are foreseen: 1. Better access to finance for Small and Medium sized Enterprises 2. Access to markets 3. Supporting entrepreneurs 4. More favourable conditions for business creation and growth Better access to finance for Small and Medium sized Enterprises COSME will facilitate and improve access to finance for SMEs through two different financial instruments, the Loan Guarantee Facility 86 and the Equity Facility for Growth 87. With the former COSME funds guarantees and counter guarantees for financial intermediaries (e.g. guarantee organisations, banks, leasing companies) to help them provide more loan and lease finance to SMEs. This facility will also include securitization of SME debt finance portfolios. With the latter, COSME provides venture capital and mezzanine finance to expansion and growth stage SMEs in particular those operating across borders. The fund managers will operate on a commercial basis, to ensure that investments are focused on SMEs with the greatest growth potential. Both the facilities will be managed by the European Investment Fund in cooperation with financial institutions in the different Member States Access to markets This COSME action includes the activities of the Enterprise Europe Network (EEN) 89, which is a onestop shop for the business needs of SMEs in the EU and beyond. EEN brings together more than 600 business support organisations from across 60 countries, including chambers of commerce and industry, technology centers or development agencies. It provides enterprises with information and a range of quality and free of charge business support services to make them more competitive, such as: 86 The calls for expression of interest for the COSME financial instruments were launched. Please find more detailed information at: facility growth/index.htm 87 The calls for expression of interest for the COSME financial instruments were launched. Please find more detailed information at: 88 More info on the Better access to finance for Small and Medium sized Enterprises action is available at: to finance smes/index_en.htm 89 The EEN website is 79

80 Information on EU legislation and participation in EU programmes (Horizon 2020, regional funds); Assistance to find a business partner abroad: in the EU or worldwide; Advice on EU access to finance; Support for innovation and technology transfer; Obtaining SME's opinion on EU legislation. The COSME programme will also provide SMEs with support to facilitate business expansion in the EU Single Market and in markets outside the EU. International business cooperation will be fostered, in particular, to reduce the differences in regulatory and business environments, between the EU and its main trading partners. COSME will also fund IPR SME Helpdesks for China, ASEAN and Mercosur to help SMEs to deal with issues relating to intellectual property rights (IPRs) in these countries. This includes the registration of formal IPRs, such as patents, trademarks or utility models, but also how to deal with infringements of intellectual property rights or manage intellectual property as business assets. The China IPR SME Helpdesk 90 is fully operational. Its free services include confidential first line advice, awareness raising, training and the provision of materials on relevant topics. Since 2011, the helpdesk has answered more than 400 direct enquires from SMEs that would like to operate in that country and supported thousands of SMEs through events and online services. Additionally, the EU Japan Centre for Industrial Cooperation is a non profit organisation which manages different support activities for the benefit of EU companies with a view to fostering trade, investment and R&D cooperation between the EU and Japan Supporting entrepreneurs Within this action, support is given to encourage trans national networks, to exchange good practices and identify scope for expanding business activities, building on the Entrepreneurship 2020 Action Plan. 92 The latter is a call for joint action at European, national, regional, and local level, aiming at three main improvements: Entrepreneurship education COSME supports exchanges among European educators and trainers as well as the development of best practices in entrepreneurship education in the EU. Improving the business environment so entrepreneurs can grow and flourish together with improving the legal and fiscal environment, experts will also develop recommendations on the best support for businesses throughout their lifecycles. Specific support for Web entrepreneurs will be provided. Role models and outreach to specific groups under COSME groups such as young people, women or senior entrepreneurs will be able to benefit from mentoring or other tailored programmes. 90 The multilingual online portal of the China IPR SME Helpdesk can be accessed there: 91 Click on japan.eu/ to learn more about the types of support offered to EU companies. 92 More info on the Entrepreneurship 2020 Action Plan is available at: /index_en.htm 80

81 Moreover, established initiatives such as the SME week and the Network of Woman Entrepreneurs will be continued. Mobility exchanges for entrepreneurs will be maintained and expanded More favourable conditions for business creation and growth Within this action, analytical work is foreseen to facilitate evidence based policy making by national and regional policy makers. Such work includes the compilation and analysis of data on performances and policies of the Member States and regions, as well as other economies, and also studies on the latest trends and development in certain sectors in European and global markets. Examples include the annual EU Competitiveness Report and the analysis on reducing the administrative burden in EU legislation affecting SMEs. A number of conferences and other public events will be also organized to assemble and disseminate sectoral knowledge, inform policy makers, and make policy suggestions to increase the coherence and cooperation between EU Member States policies to foster entrepreneurship Risk Sharing Finance Facility (RS FF) The Risk Sharing Finance Facility (RSFF) 94 is a facility jointly developed by the European Commission and the EIB to finance higher risk Research, Technological Development, Demonstration and Innovation investments (RDI projects). One of the key factors constraining the implementation of RDI activities is the insufficient availability of financing, at acceptable terms, to promoters of investments involving complex products and technologies, unproven markets and intangible assets. In order to overcome these difficulties, the EC and the EIB have joined forces to offer through the RSFF an innovative scheme to improve access to debt financing for private companies or public institutions promoting RDI activities. RSFF financing is provided to promoters of eligible RSFF projects, i.e. private and public entities of all sizes and ownership, including Midcaps, SMEs, Special Purpose Companies, Joint Ventures, PPP s Research Institutes, Universities, Science and Technology Parks, Joint Technology Initiatives as well as Partners collaborating under European Technology Platforms and Eureka. Beneficiaries under RSFF financing will be required to present a coherent business plan confirming their capacity to repay RSFF financing. Under RSFF the EIB provides or guarantees loans with higher risk profiles compared to its normal financing activities. RSFF can finance promoters of projects in a wide range of RDI (Research, Technological Development & Demonstration and Innovation) activities, including Basic or Fundamental Research, Applied or Industrial Research, experimental or pre competitive development, definition stage or feasibility studies, pilots and demonstration activities and Innovation. Such projects can be part of European Research Initiatives, including Research Infrastructures, European Technology Platforms, PPPs Joint Technology Initiatives or projects undertaken under Eureka. RSFF can also finance research infrastructures, both national and European, at universities, in science parks or with other research organisations. The scope of eligible activities is wide and extends from traditional brick and mortar investments to equipment and intangible investments such as R&D operating cost, salaries of researchers, management and support staff, utilities, consumables, IPR acquisition or protection costs. 93 More info on the Supporting entrepreneurs action is available at: creation growth/index_en.htm 94 More info on the Risk Sharing Finance Facility is available on the EIB website at: 81

82 Projects eligible for RSFF financing can be located in the 27 EU Member States and in the following Associated Countries: Iceland, Liechtenstein, Norway, Switzerland, Israel, Turkey, Croatia, Serbia, the Former Yugoslav Republic of Macedonia, Albania, Montenegro, Bosnia & Herzegovina and the Faroe Islands. Research Infrastructure projects can be supported in any of these countries provided its ownership or operation involves legal entities established in at least three Member States or Associated Countries, or its services are used or requested for use by research communities from at least three Member States or Associated Countries. In order to apply for RSFF financing, companies or their advisers can contact EIB directly through the EIB website connections. 95 There are no formal requirements such as application forms or deadlines in order to apply for RSFF financing. For financing amounts of EUR 7.5m or more, the Bank can be contacted directly, either via its Head Offices in Luxemburg or via its European external offices located in Austria, Belgium, France, Germany, Greece, Italy, Poland, Portugal, Spain and the United Kingdom Public Private Partnerships & Public Public Partnerships (PPPs) in R&I The Public Private Partnerships (PPPs) are contractual arrangements between the EC and representative industrial associations for key sectors of Europe's economy, aimed at providing vital funding for R&I activities in sectors which are essential to Europe's industrial leadership. The PPP's implement industry defined strategic R&I agendas through co funded projects selected through Horizon 2020 calls for proposals. The PPPs will therefore bring together companies, universities, research laboratories, innovative SMEs and other groups and organisations around major research and innovation challenges. On 17 December 2013 the European Commission launched eight contractual PPPs, which will leverage more than 6 billion of public investments with each euro of public funding expected to trigger additional investments to develop new technologies, products and services. These PPPs are based on roadmaps for R&I activities which are the result of an open consultation process and which have been positively evaluated by the European Commission with the help of independent experts. The PPPs will be implemented through open calls under Horizon 2020, the new EU Programme for Research and Innovation for The first Horizon 2020 Work Programme for , published on 11 December 2013, foresees around 1.45 billion for these eight PPPs. The three PPPs in the "Nanotechnologies, Advanced Materials, Advanced Manufacturing and Processing, and Biotechnology" part of Horizon 2020 are: 95 See previous footnote. 82

83 Factories of the Future (FoF) Energy efficient Buildings (EeB) Sustainable Process Industry (SPIRE) Factories of the Future, Energy efficient Buildings and Green Cars PPPs were first established in 2009 as a response to the economic crisis. They have shown their success in strengthening European supply chains and innovating key industrial sectors. The five other contractual Public Private Partnerships are: European Green Vehicles Initiative (EGVI) Photonics Robotics High Performance Computing (HPC) Advanced 5G networks for the Future Internet (5G) 83

84 2.3.2 Canada General Innovation Policies Structure of the Canadian Innovation System Canada is a federation of ten provinces and three territories and the Canadian constitution specifies that provincial governments have exclusive responsibility for all levels of education, natural resources, and health. The federal government has responsibility for defence, foreign policy, communications, and citizenship. In Canada, federal and provincial governments are jointly responsible for the framework conditions that support science, technology and innovation such as fiscal and tax systems, intellectual property rights, labour mobility, policies shaping competition, and foreign investment and trade. At the federal level, the Minister of Industry and the Minister of State for Science and Technology are regarded as having the lead responsibility for innovation in Canada, while the Minister of International Trade has the responsibility to support international innovation, science and technology. Provinces are responsible for universities, colleges and hospitals within their jurisdiction and provide most of the basic operating costs, including staff salaries, that support Research and Development (R&D) carried out within these institutions Policy context in Canada The most recent federal science and technology policy document, Mobilizing Science and Technology to Canada s Advantage, was released in 2007 and provides a framework to guide Canada s S&T policy. It focuses on creating an entrepreneurial advantage, a people advantage and a knowledge advantage for Canada by promoting world class excellence, partnerships and accountability for R&D investments. The strategy centres both on increasing private sector R&D and on ensuring that Canada benefits from an internationally competitive university research environment. Four broad strategic R&D priorities were also outlined and these include: environmental science and technologies; natural resources and energy; health and related life sciences and technologies; and information and communication technologies. To provide further focus, in 2008, the Science, Technology and Innovation Council identified 13 subpriority areas for R&D, which were endorsed by the Government of Canada. These include: Environmental science: Water (health, energy, security) Cleaner methods of extracting, processing and utilizing hydrocarbon fuels, including reduced consumption of these fuels 84

85 Natural resources and energy Energy production in the oil sands Arctic (resource production, climate change adaptation, monitoring) Biofuels, fuel cells and nuclear energy Health and life sciences Regenerative medicine Neuroscience Health in an aging population Biomedical engineering and medical technologies Information and communications technologies New media, animation and games Wireless networks and services Broadband networks Telecom equipment More recently, in the October 2013 Speech from the Throne, the Government of Canada stated its intention to release an updated ST&I Strategy, which is anticipated to reflect the need to maintain and build on Canada's R&D strengths while identifying opportunities for enhanced commercialization activities. In November 2013, the Government of Canada launched a new international trade plan entitled Global Markets Action Plan, which can enhance the reach of the Federal ST&I Strategy by promoting Canadian business innovation and global competitiveness Framework Conditions for Innovation The following section identifies six primary framework conditions for innovation with the objective of facilitating the deployment of innovative products and services. Useful sources pertaining to the six indicators discussed are also available in the annex of this report. The indicators discussed in this section are: R&D Spending o Public R&D spending (state aid) o Private R&D spending (companies) Intellectual Property Rights o Patents o Copyrights o Trademarks Venture Capital Investment Level of difficulty to establish enterprise o Access to finance in the seed, start up and early growth phase o Bureaucracy and Regulations (Red Tape Reduction) Attractiveness for researchers/impact factor of publications Canada/EU specific framework conditions o Connectivity and ICT Investment 85

86 R&D Spending The National Science Foundation defines research and development as creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society, and the use of this stock of knowledge to devise new applications. 96 R&D spending is traditionally believed to be a good indicator of the level of innovation within a nation. However, this might be a false correlation. According to IT World Canada, top innovating firms like Apple spend relatively small amounts on R&D; in fact, only three of the ten most innovative companies in the world are in the top ten for R&D spending. 97 A 2013 report by the Council of Canadian Academies acknowledges that while R&D and innovation are not synonymous, it remains a critical driver of innovation. 98 The World Bank places Canada seventeenth respectively on a list of nations by R&D expenditures as a percentage of national GDP, behind several European countries, including world leaders: Finland, Sweden, Denmark, Germany, and Austria. 99 The report went on to confirm what previous studies had already revealed: Canadian R&D spending is lower than other nations, and our productivity, in turn, is lower as well. 100 However, despite low R&D spending, Canadian firms consistently report high levels of innovation. 101 The report also highlighted several areas where Canada outshone her neighbours in research and development expenditures, including: Aerospace products and parts manufacturing Information and communication technologies (ICT) Oil and gas extraction Pharmaceutical and medicine manufacturing 102 While Canada does have strengths in a few key sectors, its overall R&D spending level is relatively weak. However, companies such as Apple have shown us it is not always necessary to have enormous amounts of R&D funding to be successful and innovative Public R&D spending (state aid) Overall direct research expenditures in Canada were estimated to be worth $30.4 billion in 2013, which equals just under 2 percent of GDP. The three largest investors in Canadian R&D are the private sector, the federal government and universities. The domestic private sector currently accounts for 47 percent of all R&D expenditures in Canada. As the next largest funder, the federal government contributes almost 20 percent of national R&D funding. These direct federal investments are dispersed primarily between intramural research performed by federal government departments and agencies, including the National Research Council, and extramural R&D performed by the higher education sector. These extramural R&D activities originate from several agencies, including: The Natural Sciences and Engineering Research Council of Canada (NSERC), which is the federal funding agency for academic research in the fields of natural sciences and 96 xii develop/ird_execsummen.pdf.pdf, lue-last&sort=desc 100 Ibid., Ibid., Ibid.,

87 engineering. The agency supports university students in their advanced studies, promotes and supports discovery research and fosters innovation by encouraging Canadian companies to participate and invest in postsecondary research projects. The Social Sciences and Humanities Research Council of Canada (SSHRC), which is the federal research funding agency that promotes and supports postsecondary based research and training in the humanities and social sciences. By focusing on developing talent, generating insights and forging connections across campuses and communities, SSHRC strategically supports world leading initiatives that reflect a commitment to ensuring a better future for Canada and the world. The Canadian Institutes of Health Research (CIHR), which is Canada s federal funding agency for health research. Its mission is to create new scientific knowledge and to enable its translation into improved health, more effective health services and products and a strengthened Canadian health care system. Composed of 13 institutes, CIHR provides leadership and support to more than 13,000 health researchers and trainees in universities, teaching hospitals, and research institutions across Canada. The Canada Foundation for Innovation (CFI), which makes investments in state of the art facilities and equipment, universities, colleges, research hospitals and non profit research institutions that are attracting and retaining the world s top talent, training the next generation of researchers, supporting private sector innovation and creating high quality jobs that strengthen Canada s position in today s knowledge economy. Collectively, the three research granting councils, namely NSERC, SSHRC and CIHR, are referred to as the Tri Council. Some programming is offered by the Tri Council Agencies in consortium (see Chapter 2). A smaller portion of direct federal funding goes to other sectors including the business and nonprofit sectors. The federal government also provides indirect support for research activities performed by the private sector through the Scientific Research and Experimental Development (SR&ED) tax credit programme. The university sector, the third largest investor in Canadian R&D, accounts for about 17 percent of the country s R&D funding. Foreign investors, provincial governments and the not for profit sector collectively invest the remaining 15 percent of R&D expenditures in Canada Private R&D spending (companies) In 2013, private R&D spending totalled $12.5 billion, representing a 4.1 percent increase from According to the annual Canada s Top 100 Corporate R&D Spenders list, published by Research Infosource Inc., Aerospace was the leading spending sector of 2013, with 23 percent of the Top 100 total. However, when the spending of firms operating in ICT related sub sectors (such as Telecommunication Services and Telecom Equipment) is combined, the ICT industry came out on top with 40.3 percent of the Top 100 total

88 In terms of geographical distribution of Canadian business expenditure in R&D the majority of Top 100 dollars originated from Ontario (43.7 percent), compared to 39.9 percent from Quebec, 11.3 percent from the Prairies, and 5.1 percent from British Columbia. Between 2012 and 2013, private R&D spending increased in most regions (12.4 per cent in Quebec, 11.2 percent in British Columbia, and 2.7 percent in the Prairies), but declined in Ontario by 2.7 per cent. 104 Despite this growth Canadian private R&D spending remains lower compared to international counterparts. A 2013 report by the Conference Board of Canada ranked Canada 15th out of 16 peer countries based on its intensity of business enterprise spending on research and development as a percentage of GDP. 105 Similarly, the OECD s 2013 Science, Technology and Industry Scoreboard showed that Canada was among the few OECD countries that experienced a decline in private R&D spending between 2001 and This decline occurred in spite of strong government support in the form of tax incentives for business R&D, the most generous amongst OECD countries. 106 To improve its international ranking, Canada would need to develop a sense of urgency to overcome the risks of spending and innovating Intellectual Property Rights Intellectual property, or the creative works, new technology, or exclusive symbol or design used in commerce that has economic value in the marketplace, is a central pillar of innovation. The protection of intellectual property ensures an environment of competition, allowing incentives for entrepreneurs to sell their products and ideas without fear of theft or plagiarism. This security allows for the free flow of ideas and information, ultimately accelerating the evolution of technology for the benefit of society as a whole. From an economic standpoint, an increase in the level of technology in an economy raises productivity and potential output levels, translating to an increase in national GDP. This section will explore three components of intellectual property law in Canada: patenting, copyrights, and trademarks

89 Patents Patenting is a government granted right that gives inventors a monopoly to make, sell, and use their inventions for a certain period of time. In exchange, the [patent owner] is obliged to disclose the details of the invention so that others can make use of them when the patent expires. 108 The granting of patents encourages innovation, as entrepreneurs seek the profit incentives of a temporary market monopoly. Patents also benefit the research of others by expanding access to knowledge, improving the quality of research, and diminishing unnecessary research costs via the establishment of economies of scale. 109 Simply put, sharing research lowers R&D costs, increasing productivity and freeing up valuable financial human capital to be put to use in other areas. Despite the fact that Canada is a world leader in academic research, producing 4.1% of global research papers, Canada accounts for just 1.7% of patents worldwide. 110 At 1.28%, Canada holds the lowest number of triadic patents (patents filed with the European Patent Office (EPO), the U.S. Patent and Trademark Office (USPTO), and the Japan Patent Office (JPO)), in the G The Conference Board of Canada says private companies must do a better job at collaborating with universities and the public sector in order to commercialize their ideas and research before foreign competition takes control of the market. 112 A 2014 survey released by the United States Trade Representative expressed concern with the number of court cases that have resulted in the loss of patent licenses by US companies that failed to meet the promise of the patent. 113 The promise of the patent, otherwise known as the promise doctrine, is the condition that products must fulfil all promises companies make about its utility. This means a patent can be proven invalid if one or more of the patent s promises are not fulfilled. These Canadian rules are stronger than those of the United States, where no such promise doctrine exists. As a result, American pharmaceutical companies have experienced more difficulty in the Canadian market than in their home country. The European Patent Office (EPO) also has promise restrictions on patent applications. European promise laws are structured around the concept of industrial applicability, and the definition of invention. 114 Industrial applicability is the requirement that an invention contain a promise (often called a function ), but does not require that the promise be a high one. 115 In Europe, in order to be considered an invention, a new innovation must address a particular problem. 116 It can t be speculative in nature. For this reason, the EPC s definition of invention implicitly recognizes promises. 117 However, while both criteria aim to create similar protections to those of the Canadian promise of the patent, in reality, their effect is much smaller in scope than the Canadian equivalent ofst2012_fullreporten.pdf (xiii), 111 Ibid., E. Richard Gold and Michael Shortt, The Promise of the Patent in Canada and Around the World, (November 24, 2013). 30:1 Canadian Intellectual Property Review 35 (2014). Available at SSRN: Ibid. 116 Ibid., Ibid., Ibid. 89

90 In 2013 the Canadian Government signed an agreement in principle with the European Union for a Comprehensive Economic and Trade Agreement (CETA). The agreement will bring significant benefits for Canadian science, technology, and innovation (STI) fields by encouraging cooperation in these areas, promoting private sector investment and fostering partnerships between Canadian universities, research centres and civil society 119. CETA also aims to reinforce intellectual property laws, noting the agreement will complement access to EU markets for Canadians who develop and market innovative and creative products. The CETA agreement was signed in principle in the fall of 2013, and final details are set to be released on September 25, This announcement follows ten months of intense bargaining between representatives from Canada and the European Commission. There is speculation that the main source of disagreement between the two parties stems from differences of opinion on the state of intellectual property laws. The European Union wants Canada to increase patent protection term lengths, subsequently increasing the incentive for pharmaceutical companies to innovate and create new products while having a negative impact on the consumer, who will pay higher prices as companies maintain artificial monopolies for extended periods of time. Lexichin and Gagnon predict CETA will include clauses that significantly contribute to further increasing the cost of drugs in Canada, without any significant benefit for Canadians Copyrights As defined by the 1985 Copyright Act, a copyright consists of the sole right to produce or reproduce the work or any substantial part thereof in any material form whatever. 122 Copyrighting usually refers to artistic or academic works such as books, publications, magazines, movies, songs, and artwork. In Canada, copyright laws are subject to fair dealing provisions (as opposed to fair use provisions in the United States). This means that copyright laws can be infringed without permission of a work s creator under two conditions: first, whether the intended use qualifies for one of the permitted purposes, and second, whether the use itself meets the fairness criteria (reasonable use of a work within reasonable limits). 123 In Canada, the permitted purposes described under condition one include research, private study, education, parody, satire, criticism, review, or news reporting. 124 The European Union also allows for its member states to provide exceptions to its 2001 Copyright Directive for various reasons, including educational purposes, for the benefit of someone with a disability, for reproduction by the press, use in religious institutions, and for the purpose of parody. 125 In 2012, the Copyright Modernization Act modernized the Copyright Act and resulted in the following changes: implemented the rights and protections of the World Intellectual Property Organisation (WIPO) Internet treaties; gave copyright owners new tools to combat piracy; clarified the roles and responsibilities of ISPs and search engines; Ibid Article 5, 3a-o. 90

91 encouraged innovation in the private sector through exceptions for technical computer processes; 126 These changes to Canadian copyright law have ensured new protections for digital work while also increasing the ability of researchers to access material for educational purposes. These changes will also make it easier for researchers and educators to collaborate and share material Trademarks Trademarks, defined by the Canadian Intellectual Property Office as one or a combination of words, sounds or designs used to distinguish the goods or services of one person or organisation from those of others in the marketplace, represent the creation of new products, and thus, the advancement of innovation in Canadian society. 127 Simplified, trademarks indicate the origin of the goods or services for which they are used. 128 In 2014, the Canadian Government proposed several changes to the Trademark Act (Bill C 8 and Bill C 31) to put Canadian legislation in line with international standards. 129 The changes would make Canada eligible to join the Madrid Protocol. 130 The Protocol, a descendent of the Madrid Agreement of 1889, simplifies the process of obtaining an international trademark. 131 Individuals or companies wishing to obtain a trademark in one of the 91 nations that are party to the Protocol need only fill out a basic application form and pay one set of fees. If their trademark is approved, their product will automatically be trademarked in all 91 partner countries. Canada is currently disadvantaged by not being party to the Madrid Protocol. Canadian entrepreneurs are paying higher fees than their global counterparts for international trademark rights. By signing the Madrid Protocol, Canada can even the playing field, ensuring that Canadian entrepreneurs remain competitive on an international scale Venture Capital Investment Venture capital investment is a high risk, high reward type of investment involving the provision of funds and expertise to small, startup businesses. 132 A 2011 report commissioned by the Government of Canada entitled Innovation Canada: A Call to Action, noted the importance of government investment in venture capital. It was the opinion of the committee that gaps existed in both the start up stage and the later stages of project development. They recommended the Business Development Bank of Canada begin sidecar funds for start up projects that follow the lead of private investment groups, creating economies of scale and promot[ing] higher quality investments through access to a broader range of expertise. 133 The committee pointed to the success of programmes such as The New Zealand Venture Investment Fund, the Russian Venture Company and the Israeli Heznek Fund as examples. Projects in the later Marinkovic, Ana Racki. "On domain names and trademarks." Journal of Internet LawJune 2012: 29+. LegalTrac. Web. 8 May and M.A. Leaffer, New World of International Trademark Law, Marquette Intellectual Property Law Review 2 (1998) =false (Preface) 133 Ibid. 91

92 stages of development could also benefit from government financing, in the form of funds that encourage a larger scale of investment from the private sector. 134 In January of 2013, acknowledging that Canada s venture capital industry had been suffering in comparison to international partners, Prime Minister Stephen Harper announced $400 million in new funding measures the Government would take to install a Venture Capital Action Plan. After the government s announcement, venture capital investment was up sharply in the third quarter of 2013, posting $541 million in investments (a 48% increase from the same time a year before). 135 As a part of the Venture Capital Action Plan, the Government of Canada will provide new funding for incubators and accelerators over a five year period. 136 The selection process for funding allocations is currently underway Level of difficulty to establish enterprise Access to finance in the seed, start up and early growth phase Canadian entrepreneurs have access to a multitude of instruments to finance their new businesses. Government grants and financing, private sector and non governmental financing, crowdfunding and equity financing are only some of the available instruments that Canadian innovators can benefit from. 137 In spite of the large number of financing instruments, identifying and securing the right financial sources remain a real challenge for new entrepreneurs in Canada. In fact, the 2013 Ernst and Young s Entrepreneurship Barometer, which examines conditions for start ups in the G20, found that 73% of the polled Canadian entrepreneurs cited access to financing as a significant barrier. Yet, according to the same report, Canadian entrepreneurs have better access to funding than most of their G20 counterparts, ranking fourth and only behind the United States, United Kingdom and China. 138 Additional report findings appear to show that some funding instruments have improved over time. A large proportion of surveyed Canadian entrepreneurs cited improvement in access to crowdfunding (47 percent), venture capital (45 percent) and private equity in Canada (42 percent). In contrast, much weaker improvements were perceived in micro financing (26 per cent) and bank loans (18 per cent). This is consistent with another 2013 survey that alluded to the inability of Canadian banks to meet the financial needs of Canadian entrepreneurs. According to the Forum Research survey 35 per cent of respondents found that financial institutions responded too slowly to their needs, while 12 per cent completely avoided banks in their financing efforts Bureaucracy and Regulations (Red Tape Reduction) The reduction of government red tape is a critical initiative that ensures the future success of small businesses and startups. Canada Revenue Agency (CRA) defines red tape as the unnecessary and undue compliance burden: the time and resources spent by business to demonstrate compliance 134 Ibid Canadian-entrepreneurs.pdf 92

93 with the federal government regulations. 140 The Canadian Chamber of Commerce believes red tape reduction will help business, concluding Canada can significantly boost its international competitiveness by simplifying its tax system to facilitate administration and reduce compliance costs and by rethinking the structure of its system. 141 In the 2013 Speech from the Throne, the federal government promised to introduce a one for one red tape reduction as a part of their Red Tape Reduction Action Plan. 142 The implementation of such a policy is a positive step for small business owners and entrepreneurial startups hampered by government regulations. The Canadian Federation of Independent Business (CFIB) lobbies the government for red tape reductions on behalf of small businesses. In 2014 they released their Report Card on how well Canadian governments (federal and provincial) do at measuring and publicly reporting on the rules, processes and paperwork that they impose on small business, giving the federal government a B CFIB celebrated many of the initiatives brought forward in the 2014 federal budget that promised to lighten the burden on small and medium sized business and startup companies. Among the initiatives, the government promised to freeze Employment Insurance and Canada Pension Plan rates, created new options for workplace training, and put forward new reforms for sick leave provisions Attractiveness for researchers/impact factor of publications In order to produce relevant research that can lead to advancements in innovation, universities must provide an attractive environment for researchers. Canada is performing well in this regard. Research by the Association of Canadian Community Colleges in 2011 identified a rapid expansion of applied research at Canadian post secondary institutions over the last half decade. 145 The report also revealed an increase in investment in private sector research by over $40 million in the last ten Ibid. and (full report) iii. 93

94 years. 146 This is evidence of increased cooperation between the private sector and post secondary research institutions, which is a necessary step for growth in innovation. Another vital indicator of innovation is the impact factor of publications from particular states. Canada does well in this regard, ranking fourth in the world in scientific research, producing 4.1 per cent of the world s research papers and nearly 5 per cent of the world s most frequently cited papers despite its meagre population of 35 million (approximately 0.5% of the world s population). 147 In 2012, the Council of Canadian Academies produced a report on the current state of S&T in Canada. The report found Canada s ARC rankings placed it among the five leading countries in the world in 7 of 22 fields of research, and among the 10 leading countries in a further 14 fields. 148 These figures suggest that relative to its size and scope, Canada is performing well on the international stage when it comes to attracting researchers and creating a global impact with publications Canada specific framework conditions Connectivity and ICT Investment The Government of Canada defines broadband connectivity as access to Internet service that supports data transmission at a minimum download speed of 1.5 Mbps to the household. 149 Connectivity is critical for advancements in research and development (R&D) in science and technology, information technology communication (ICT) investment, and the commercialization of research results in an international market in an increasingly globalized world. Studies show that connectivity has significantly improved the ability of Canadian universities to carry out research projects, share results, and expand their networks. 150 The use of the internet in academics is now considered a necessity for sharing information within a university, as well as within and between states. The Connectivity Scoreboard, a global ICT index, measures the quality and quantity of a country s ICT usage by dividing an economy into three pillars: business, consumer, and public sector. In 2013, Canada was given a score of 5.27, placing it twelfth respectively among innovation driven economies. 151 The Connectivity Scoreboard noted that one of Canada s weaknesses is a substantially lower level of ICT investment per capita in Canada. 152 The Conference Board of Canada ranks Canada eighth out of fifteen for ICT investment, ahead of France, Finland, and Germany, but behind the United States, Sweden, Denmark, the United Kingdom, Belgium, the Netherlands, and Switzerland. 153 Another challenge Canada faces in the context of broadband connectivity is the disparity between average commercial connectivity and connectivity levels on Aboriginal reserves. Many reserves, especially in northern Canada, do not currently meet the Industry Canada minimum of 1.5Mb/s to an individual household. 154 This is a potential inhibitor aboriginal in ICT projects. 146 Ibid., iv xii ofst2012_fullreporten.pdf, xii Pachi, Clarice Gameiro da Fonseca,Jorge Futoshi Yamamoto, Anna Paula Amadeu da Costa, and Luis Fernandez Lopez, Relationship between connectivity and academic Productivity, Scientomatics, 93 (2012): Ibid

95 In 2014, the Government of Canada launched Digital Canada 150, an ambitious project that will see 98% of Canadians gain access to high speed internet at 5Mb/s by The programme specifically targets Canadians in rural and remote areas Canadian Innovation Programmes Excellence in innovation is a crucial component of national economic success. By promoting a competitive environment that facilitates the commercialization of research, innovation is a critical driver of GDP growth. Canada remains one of the most competitive economies in the world. According to a 2014 report published by KPMG, Canada ranked first in the G7 and second on a list of ten countries (G8 plus Australia, the Netherlands, and Mexico) for the competitive advantages of doing business. 156 Among many others, Canada has one of the lowest utility, digital services, research development, corporate services, and manufacturing costs in the G The following section aims to first provide a broad overview of the Canadian programmes that support business and commercially oriented R&D, both at the federal and provincial level, and, second, to identify key framework conditions for innovation in Canada Federal Programmes Canada First Research Fund In the 2014 federal budget, the Canadian government announced several new measures to invest in innovation and increase funding for research at post secondary institutions. For example, it established the Canada First Research Fund, a long term investment plan that will provide a total of $1.5 billion for innovation research paid in increasing increments annually (the fund will reach $200 million a year in and stay constant from that point on). 158 For more information, please visit: first research excellence fund Build in Canada Innovation Programme (BICIP) Another relatively new government programme is the Build in Canada Innovation Programme (BICIP), formerly known as the Canadian Innovation Commercialization Programme (CICP). 159 Originally launched as a pilot project in 2010, the programme helps companies to bridge the precommercialization gap by procuring and testing late stage innovative goods and services within federal departments and agencies. 160 The programme will receive $40 million in annual funding by For more information on Build in Canada Innovation Programme, please visit: and programmes/build in canada innovation programme bcip Sustainable Development Technology Canada (SDTC) SDTC is an arm s length crown corporation established by the federal government in 2001 with a mandate to provide financial support to clean technology projects. More specifically, SDTC sees it as their responsibility to bridge the gap between research and commercialization for innovative green projects by means of supporting development and demonstration. SDTC is open to incorporating international participation in project proposals and has worked with many businesses that have partnered with organisations from the European Union. For more information on SDTC, please visit their website, at: en.do?nid= Ibid Ibid. 161 Ibid. 95

96 Western Innovation (WINN) Initiative Launched in 2013, the Western Innovation (WINN) Initiative is a five year federal programme that will provide $100 million in repayable assistance to SMEs in order to support them in the commercialization of their products, processes, and services in Western Canada. For more information on the Western Innovation Initiative, please visit Industrial Research Assistance Programme (IRAP) of the National Research Council of Canada NRC IRAP exists primarily to help small and medium sized enterprises (SMEs) accelerate growth through innovation and technology. The programme provides information, advice, and services to over 10,000 SMEs annually. NRC IRAP services include technical and business advisory services, financial assistance, networking and linkage services, and a youth employment programme. For more information on the Industrial Research Assistance Programme and the National Research Council of Canada, please visit cnrc.gc.ca/ Business Innovation Access Programme (BIAP) of the National Research Council of Canada BIAP is a new government pilot project administered by the Industrial Research Assistance Programme of the National Research Council of Canada (NRC IRAP). BIAP provides $20 million in funding for Canadian SMEs to allow them access to a wide array of business services and technical assistance. These services include but are not limited to: Product optimization Process development, analysis or optimization Specialized testing Market research Market strategy development Competitive analysis Business strategy development For more information on BIAP, please visit: cnrc.gc.ca/eng/irap/biap/index.html Atlantic Innovation Fund (AIF) AIF is sponsored by the Atlantic Canada Opportunities Agency, a Government of Canada run programme that works with businesses in the Atlantic region in order to increase innovation and foster growth. The fund helps Atlantic Canadians compete in the global economy through the development and commercialization of new ideas, technologies, products and services. In July, 2014, the Government of Canada announced $43 million in new funding for AIF to create new R&D projects. For more information on the Atlantic Innovation Fund, please visit: Investing in Business Innovation (IBI) IBI is a programme sponsored by FedDev Ontario with a mandate to help strengthen and increase the competitiveness of the Southern Ontario economy. IBI aids small businesses by helping them transform their ideas into globally competitive products and services, and increasing their access to private sector investment and advice. Not for profits, early stage, innovative businesses, and angel investor networks based out of Southern Ontario are eligible to apply to receive support. For more information, please visit: Provincial programmes British Columbia Innovation Council (BCIC) BCIC is a BC Government Crown corporation that uses core values of collaboration, results, integrity, and entrepreneurial spirit to accelerate technology commercialization by supporting startups and developing entrepreneurs. The BCIC mandate to promote technology and innovation is one of the eight sectors promoted by the BC Ministry of Jobs, Tourism and Innovation s BC Jobs Plan (The plan 96

97 also includes Agrifoods, Forestry, International Education, Mining, Natural Gas, and Tourism). For more information on BCIC, please visit: For more information on the BC Jobs Plan, please visit: Alberta Innovates Solutions and Connector Service Alberta Innovates is an Alberta provincial government funded programme to help Albertan innovators. The programme assesses business needs and provides entrepreneurs with the right contacts, all while attempting to save time, energy and resources by helping [the entrepreneur] get the right information when [he or she] needs it. For more information on Alberta Innovates, please visit: Innovation Saskatchewan Innovation Saskatchewan (IS) is a government agency that is responsible for providing recommendations and advice to the Government of Saskatchewan on its strategic direction in the areas of research, development, science and technology. IS also works directly with government, industry and other stakeholders to encourage the commercialization of new technology. For more information on Innovation Saskatchewan, please visit: Ontario Innovation Demonstration Fund Programme (IDF) The Government of Ontario s Innovation Demonstration Fund (IDF) is a discretionary, nonentitlement funding programme that focuses on the commercialization and initial demonstration of globally competitive, innovative technologies, processes and/or products. The objective of the IDF is to support companies in the commercialization of innovative technologies in the province. For more information on the Innovation Demonstration Fund Programme (IDF), please visit: and economy/innovation demonstration fund programmeguidelines Association pour le développement de la recherche et de l innovation du Québec (ADRIQ) Established in 1978, the Association pour le développement de la recherche et de l innovation du Québec (ADRIQ) aims to increase the competitiveness of Quebec companies in Canada and abroad by supporting and promoting innovation within the province of Quebec. ADRIQ now encompasses the RCTi (Réseau Conseil en Technologie et en innovation), a support network that brings together some 200 experts to improve competitiveness for innovative SMEs through consulting services tailored to their needs, with the goal of propelling them to the international level. 162 For more information on ADRIQ please visit: Innovation PEI Innovation PEI is a crown agency of the Government of Prince Edward Island that focuses on accelerating regional economic development by investing in people, innovation, and infrastructure in sectors with high growth potential. Such sectors include: advanced manufacturing and processing (including value added food development and production), aerospace and defence, bioscience (including agriculture and fisheries), information and communications technology, financial services and renewable energy. For more information on the Innovation PEI, please visit: Research & Development Corporation (RDC) The Research & Development Corporation (RDC) is an arm s length crown corporation based in Newfoundland and Labrador. RDC was founded to help spur innovation in Newfoundland and Labrador, as well as increase provincial spending on research and development to average national levels. RDC provides services to the public and private sectors as well as researchers from academia. For more information on RDC, please visit:

98 Other resources to help businesses and innovators Canadian Innovation Centre (CIC) in Waterloo, Ontario CIC is a non profit organisation that has spent the last thirty five years working with innovators, entrepreneurs, and inventors to transform innovative ideas into entrepreneurial realities. Launched as a collaborative project with the University of Waterloo, CIC has worked with over 20,000 businesses of all sizes on a large variety of projects. For more information on CIC, please visit: MaRS programme and facility in Toronto MaRS works with private and public sector partners to help entrepreneurs launch innovative companies. MaRS is housed in a giant, 1.5 million square foot facility in the middle of downtown Toronto. They offer venture services, funding, office, lab and event space, and programmes to promote social impact and open market access. For more information on MaRS, please visit: New Brunswick Innovation Foundation (NBIF) NBIF is an independent, not for profit corporation that invests in new growth oriented companies and applied research activities. NBIF s two funds, the Research Innovation Fund and the Venture Capital Fund, ensure that New Brunswick based entrepreneurs receive help in transitioning from the research phase to the commercial phase. NFIB has supported over 300 organisations and invested over $41 million in innovation projects. For more information on NBIF, please visit: Innovation Place in Saskatoon Innovation Place is the business name for Saskatchewan Opportunities Corporation, a crown corporation with a mandate to support the growth and success of Saskatchewan s technology sector. Innovation Place brands itself as one of the most successful university related science and technology parks in North America, and is responsible for over 130 clients, contributing $1.16 billion to the Saskatchewan economy in For more information on Innovation Place, please visit: or Nova Scotia Research and Innovation Trust (NSRIT) The Nova Scotia Research and Innovation Trust (NSRIT) is a professional, non profit organisation that supports local research infrastructure projects by matching national funding from the Canada Foundation for Innovation (CFI). Since its creation in 2001, the trust has awarded over $66 million to more than 340 projects at Nova Scotia research beneficiary institutions. For more information on the Nova Scotia Research and Innovation Trust, please visit: Mitacs Mitacs is a non profit research organisation that uses unique research and training programmes to help foster scientific and business skills in young innovators. Mitacs has four programmes: Mitacs Accelerate, Elevate, Globalink, and Step. Mitacs Accelerate is a research programme that connects companies with graduate students who are able to use real life applications for the research skills they have learned. Elevate is a two year programme for collaboration between post doctoral fellows and Canadian innovation companies. Globalink increases student mobility by facilitating collaborative projects abroad. Step provides training for graduate students and postdoctoral fellows in essential interpersonal, project management and entrepreneurial skills. For more information on Mitacs, please visit: 98

99 Ontario Centres of Excellence (OCE) Funded by the Ontario Government, the Ontario Centres of Excellence (OCE) is a not for profit organisation that drives provincial economic growth by helping create new jobs, products, services, technologies and businesses. OCE works in partnership with industry to co invest in the commercialization of promising technologies developed in publicly funded research labs. For more information on the Ontario Centres of Excellence, please visit: ontario.org/ Summary The framework conditions to innovation discussed in the above sections are tools to help gauge the current state of innovation in the Canadian economy. In the face of American opposition and developing free trade negotiations with the European Union, the future for intellectual property law in Canada is uncertain. Canada has not yet signed the Madrid Protocol, but recent changes in government legislation will make Canada eligible to sign the agreement, levelling the playing field for Canadian entrepreneurs. While Canada generally does well with regards to connectivity and ICT investment, significant improvement can be made in Northern regions, as well as on Aboriginal reserves. A new government initiative, Digital Canada 150, will attempt to address connectivity concerns in rural areas. Canada is seen as an attractive place to do research, and consistently produces more academic papers than the world average per population size. Venture capital has struggled over the previous decade but seems to have improved marginally in the last year. Finally, new government measures to reduce red tape will ease regulatory burdens on small businesses, which will improve the conditions for innovation. Overall, Canada faces many unique challenges in innovation, but recent changes in government policy suggest a positive outlook for the future. 99

100 2.3.3 Conclusions on Innovation in EU and Canada Policies for Innovation in Canada and Europe The EU s policies and initiatives regarding innovation started already in Its most recent policies were released in In the European Union, the European Commission is the main driver for Innovation. But the Member States do also have their own policies on Innovation at the national level. Thus the EU and Member State policies coexist and interrelate from case to case. In the 1995 Green Paper on Innovation, the EU`s innovation deficit was emphasized. A First Action Plan for Innovation in Europe followed in 1996 and it gave action points to implement by the Member States and the European Commission. In March 2000 Innovation was highlighted in Lisbon by the European Council as a pivotal question for the European Union. As a response to the challenges of globalization and the new knowledge driven economy, the European Council called for a challenging programme for building knowledge infrastructures, enhancing innovation and economic reform, and modernizing social welfare and education systems. Following the Lisbon Council, the 2002 Barcelona Council and the 2005 Initiative on Working together for growth and jobs gave new momentum to Innovation strategies. Initiatives such as EURAXESS, the European Research Council and the European Institute of Innovation and Technology, were launched in order to boost European research, to improve access to the labour market for scientists and to increase financing for researchers, as well as to boost industrial competitiveness by strengthening the innovation capacity of Member States and the European Community. Initiated in 2010, the Europe 2020 strategy, the Innovation Union, Horizon 2020 and the European Research Area represent strategies and instruments for the development and the integration of innovation, research and education. To emphasize the importance of innovation also for research, the funding programme for Innovation, formerly the Competitiveness and Innovation Framework Programme (CIP), is now jointly implemented with the (former) Framework Programme for Research and Technology, thus creating Horizon 2020, the Framework Programme for Science, Technology and Innovation. In Canada, federal and provincial governments are jointly responsible for the framework conditions that support science, technology and innovation such as fiscal and tax systems, intellectual property rights, labour mobility, policies shaping competition, and foreign investment and trade. Provinces are responsible for universities, colleges and hospitals within their jurisdiction and provide most of the basic operating costs, including staff salaries, that support Research and Development (R&D) carried out within these institutions. Canada does not have a stand alone innovation strategy, but it is part of the Science and technology policy. Canada s framework for S&T policy Mobilizing Science and Technology to Canada s Advantage was released in It sets a focus on creating an entrepreneurial advantage, a people advantage and a knowledge advantage for Canada by promoting world class excellence, partnerships and accountability for R&D investments. The four broad strategic R&D priorities include: environmental science and technologies; natural resources and energy; health and related life sciences and technologies; and information and communication technologies. To provide further focus, in 2008, the Science, Technology and Innovation Council identified 13 sub priority areas for R&D, which were endorsed by the Government of Canada. The three largest investors in Canadian R&D are the private sector, the federal government and universities. The domestic private sector currently accounts for 47 percent of all R&D expenditures in Canada. As the next largest funder, the federal government contributes almost 20 percent of national R&D funding (mostly the three federal granting councils CIHR, NSERC and SSHRC). 100

101 As emphasized in the two chapters before, innovation cannot be measured with a single indicator. The report identified the framework conditions that foster innovation in economies and exemplified these both for Canada and the European Union (please see chapters and 2.3.2).In the following, key areas for an assessment of the innovation performance comparing the EU and Canada are depicted. R&D spending in Canada and the EU Canada s overall R&D spending level is relatively weak. The overall direct research expenditures in Canada were below 2 percent of GDP in 2013, estimating a worth of $30.4 billion (about 22.07billion Euros). The leading spending sector of 2013 is Aerospace with about 23% of expenditures. Combining all ICT related sub sectors, ICT then represents about 40% spending. Canada spends more than the other countries examined in the World Bank survey in the areas of aerospace products and parts manufacturing, information and communication technologies (ICT), oil and gas extraction, pharmaceutical and medicine manufacturing. 163 While Canada generally performs well with regards to connectivity and ICT investment, significant improvement can be made in Northern regions, as well as on Aboriginal reserves. A new government initiative, Digital Canada 150, will attempt to address connectivity concerns in rural areas. The Europe 2020 strategy, aims to stipulate an investment of 3 % of gross domestic product (GDP) in research and innovation (R&I), across the public and private sectors combined, by Horizon 2020 is the main funding and investment instrument for research, technology and innovation in the EU for the years and is the largest funding programme for research in the world. Through H2020 nearly 80 billion (about CAD $ billion) are invested research and innovation projects. The graphic below shows the budget allocation for the different programmes. The European Institute of Innovation and Technology manages even 2.7 billion, but Innovation is also part of the initiatives of the other Horizon 2020 programmes. The Digital Agenda for Europe addresses main ICT related issues within the EU such as an agreement for the EU wide roaming charges and open Internet wbapi_data_value last&sort=desc,p agenda/en 101

102 According to the 2014 EU Industrial R&D Investment Scoreboard 165 published by the European Commission, the overall R&D investment by the 633 EU companies among the top world 2500 R&D investors in 2013 was billion. The overall R&D investment in high tech sectors of the EU Scoreboard companies was 61.8billion 166. The biggest investments were made in the areas of automobiles and parts (over 40billion), pharmaceuticals and biotechnology (nearly 30billion), technology hardware and equipment (nearly 20billion) and aerospace & defence (around 10billion). The EU has a much higher R&D investment than Canada. In the high tech sector, they both focus expenditures on aerospace products and pharmaceuticals. Access to finance In spite of the large number of financing instruments, identifying and securing the right financial sources remain a real challenge for new entrepreneurs in Canada. In fact, the 2013 Ernst and Young s Entrepreneurship Barometer, which examines conditions for start ups in the G20, found that 73% of polled Canadian entrepreneurs cited access to financing as a significant barrier. In the EU, access to finance is considered as the second most pressing problem that EU SMEs face after finding customers 167. SMEs reported in net terms an increase in their need for bank loans during the survey period. Additionally, the survey results suggest that financing conditions for SMEs continue to differ significantly across the Euro area countries (Eurozone) and are in general more difficult than those of larger companies. 168 Both in Canada and most EU countries Venture Capital (VC) Investment for financing Start up firms remain quite low. While the Government of Canada seeks to rise Venture High R&D intensity sectors (R&D intensity above 5%) include e.g. Pharmaceuticals & biotechnology; Health care equipment & services; Technology hardware & equipment; Software & computer services; Aerospace & defence 167 European Commission, SME s access to finance Survey 2011, p European Central Bank, Report on the results of the survey on the access to finance of SMEs in the euro area October 2013 to March 2014, 30 April More info is available at: 102