A crucial component of a functioning tax system is that it should establish a level playing field, and should not arbitrarily pick “winners and losers”. I happen to believe that the tax system should rarely be used to drive policy, but that is obviously a minority view. But a tax system that perversely favours some over others for no policy reason at all is clearly flawed.

Our HST system is trapped in 19th century mercantile thinking and is such a flawed system. We levy HST on services provided by Canadians for Canadians, but we do not levy HST on the same services if they are provided by “non-Canadians” for Canadians. It defies belief that Google can direct Canadian search queries to google.ca instead of google.com, while at the same time evading any responsibility to levy HST on its advertising (the real service it sells and thus its core business, not the free service it provides to support its advertising business), while domestic advertisers must charge and remit HST is ridiculous. It is also an instance of massive tax leakage.

Google, Netflix, Amazon … the list goes on. They must be forced to levy HST on the services that they provide to Canadians – otherwise, they gain an enormous (i.e. roughly 13%) advantage over Canadian competitors for no reason, all to the detriment of Canadian companies and Canadian taxpayers.

Neil

The post HST fairness: tax those foreigners! appeared first on Miltons IP.

If you want to move the needle with economic development, it is services that matter the most. Manufacturing and resource extraction may be easy, but they are not the core of a first world economy. The challenge – and it is a very serious one – is that to improve standards of living, we must figure out how to improve productivity in services. Services make up >75% of the economy, and yet, most are still conducted much as they were a century ago. Think of education or health care or accounting – are they really ‘more efficient’ or delivered differently than 100 years ago? In the main, they are still the same services delivered the same way. This must change if we are to create wealth and grow GDP per capita in the years ahead.

Neil

The post Services matter more than manufacturing if you want to improve productivity and growth appeared first on Miltons IP.

In the spirit of the season, a Rant and best wishes.

Happy Festivus, and All the Best for 2015.

Neil

The post Seasonal Rant appeared first on Miltons IP.

Here are some fundamental truths:

• Patents are not self-enforcing, nor does the state enforce your patent rights;
• A patent is nothing more than a call option to sue, and unless the patent owner enforces its rights, a patent is worthless;
• Enforcing patents is hard and requires expertise, resources, tenacity, and capital;
• No business can be good at everything; every business needs to focus on a few core competencies; and,
• Very few businesses have expertise in patent enforcement.

Accordingly, as long as we have patents, it is inevitable that we are going to have businesses whose core competency is in patent enforcement.

Moreover, for additional reasons – such as ‘reputation management’ – entities that produce a lot of patents (like universities and research labs), have a lot to gain by outsourcing the dirty work of enforcing their patents to third parties.

So it is well past time that we got past calling patent licensing and patent assertion entities nasty names, and learned to love our favorite trolls.

Neil

The post Patent trolls are here to stay appeared first on Miltons IP.

Moneyball by Michael Lewis is an excellent piece of financial journalism, vastly better and more insightful than you would glean from the movie starring Brad Pitt.

The premise of Moneyball is that the Oakland As revolutionized baseball by abandoning heuristics and instead analyzing the data very carefully: and what the data told them was the teams that won baseball games could be assembled more effectively and with much lower payrolls than teams built by buying expensive free-agents.

The Moneyball thesis is the dominant trend of professional sports team management of the past decade, and has had a dramatic impact on MLB (baseball) the NBA (basketball), and now the NHL (hockey is always a bit behind the curve).

However, the thesis – that you should look very carefully at the data is more relevant than ever in virtually every business. We have more data at our disposal than ever before, and much of it will provide insights that overturn old heuristics and make it possible to win more games with smaller budgets. Or at least, that’s what I keep telling myself when I look at my meager budget.

Neil

The post Moneyball – don’t judge a book by its movie. appeared first on Miltons IP.

Staples has done a brilliant job of holding Office Depot out of the Canadian market, and one factor must be its skillful use of the BUSINESS DEPOT trademark which it acquired when it bought a beachhead in the Canadian market.

This is a great little story of two American titans battling it out in Canada, with one besting the other, and using Canadian trademark law very effectively as a weapon on its behalf.

Neil

The post An IP Story: Business Depot appeared first on Miltons IP.

We face a crisis of ignorance about intellectual property – seriously, more people know less about IP than any other core business discipline. IP is not the be-all or end-all of business. Lots of other disciplines like marketing, sales, finance and HR are more important for more businesses than IP. But the knowledge gap in C-suites between what folks do know and what they should know is greater, in my view, for IP than any other core discipline of business and that is why I have devoted so much energy to trying to explain the basics of IP to people.

That is why it drives me bonkers when people who should know much better say stupid, deliberately misleading things about patents in order to lobby for their pet position. In this rant, I talk about some recent foolishness from the new CEO of AbbVie Canada, who happens to be a Frenchman. I am sure that his PR firm was delighted to get his speech featured in the Globe & Mail, but shame on him and shame on the Globe for mindlessly repeating drivel. Put charitably, if this came out of a four-legged animal, it would be fertilizer. Here is the article in the Globe..

Here is the key point: patent law makes it possible to ‘invent anywhere, and patent everywhere’. Whatever pharma companies may think about the scope of Canadian patent protection, it has no logical nexus to whether or not they conduct pharma R&D in Canada: none.

Sadly, there are many more examples of this self-interested misinformation about IP. In Rants to follow, I will try to highlight some choice idiocy from Google and others.

The post Misinforming people about patents appeared first on Miltons IP.

One of the key challenges for entrepreneurship and innovation in Canada is that so much of the economy is dominated by de facto oligopolies, often regulated ones. For instance, banking and telecom, are dominated by a few titans protected from foreign competition. So, while they may compete fiercely with each other, they are significantly protected from the real gales of creative destruction.

It is tough to innovate in any industry dominated by a few monsters in which the access of entrepreneurs to foreign capital is severely constrained as it is, for instance, in telecom in Canada.

The trouble is, oligopolies rarely innovate, and as a result they sit at home and never venture abroad.

Neil

The post Oligopolies rarely innovate appeared first on Miltons IP.

One of the key challenges for innovation and entrepreneurship in Canada is that so much of the economy is ‘derivative’, and especially dependent on innovation and entrepreneurship that took place elsewhere and has now been imported into Canada. Many Canadians have no familiarity with a real entrepreneur or innovator.

Two examples that illustrate for me just how significant this challenge is, are Dragon’s Den and The Conference Board. Both are franchises, developed elsewhere and brought into Canada.

In the case of Dragon’s Den, it was first developed for Japanese television, then brought to the UK and subsequently to Canada. In a rare twist, it went to the US after Canada (rebranded there as Shark Tank), and they actually imported two of the key stars from Canada (Kevin O’Leary and Robert Herjavec) to ‘seed’ the panel. Maybe this is just a good illustration of how dependent Hollywood is on Canadian talent that passes for Americans.

The Conference Board is a particularly stunning example of this issue. It is unquestionably a leading think tank in Canada, and yet it does not own its own trademark, and uses its name under license from the US owner. “I think, but do not own my brand” must be their motto. Can you get more perfect illustration of the ‘derivative’ economy than that?

Neil

The post The derivative economy appeared first on Miltons IP.

Among the many challenges facing entrepreneurs and innovators in Canada is the lack of role models. People who have ‘been there and done that’ are a huge source of motivation and inspiration for others. In Ottawa in the mid 1990s, the presence and prior successes of Terry Matthews and Michael Cowpland (first at Mitel, and then later at Newbridge and Corel) had an enormous impact on the technology cluster.

It would be very helpful if we had more such role models.

One group of people who are not, however, very valuable role models in this regard are the management teams of the local branch plants of multinational giants, even if they are technology giants. This group attracts far more press coverage than they warrant. For instance, the CEOs of Twitter Canada, Google Canada, and Microsoft Canada are regularly featured in news stories. This is horrid journalism, likely driven by a mix of pure laziness and ‘advertiser bias’. These folks are local marketing and sales executives – they certainly are not particularly knowledgeable about entrepreneurship or innovation. Moreover, the excessive attention to their thoughts crowds out attention that should be devoted to real entrepreneurs and innovators – and sends the strong (and terrible) message that we as a a society place the middle managers of large multinationals in higher regard than real entrepreneurs.

The post Role Models and Branch Plants appeared first on Miltons IP.