Next week, Prime Minister Paul Martin will ask the Governor General to deliver the Speech from the Throne to open the fall session of the House of the Commons. The much-anticipated speech will specify the government’s upcoming priorities, undoubtedly touching on issues such as health care, national security, and financial concerns, including details on whether government spending could send the country into a deficit.

While the government will likely propose a plan to avoid a fiscal deficit, there are two other Canadian deficits that merit its attention as well. This week’s column addresses one of these — Canada’s innovation deficit. The federal and provincial governments urgently need to adopt policies that foster innovation by increasing access to, and dissemination of, cutting-edge Canadian knowledge and research in order to correct the imbalance between dollars spent on research and educational materials and the corresponding outputs to the Canadian research and education communities. Next week’s column will discuss the other deficit — Canada’s cultural deficit, which Statistics Canada recently reported stands at nearly one billion dollars annually.

In recent years, the federal government has made an admirable commitment to innovation through research and education. It quickly identified the need to bring the Internet into Canadian schools, launching a program in the mid-1990s that made Canada the first country in the world to connect every school from coast to coast to coast to the Internet. It has also demonstrated a consistent willingness to invest in research, committing more than a billion dollars annually on university-based research granting programs.

Research and appropriate funding remain a top priority. This morning in Ottawa, Canada’s technology leaders, including Industry Minister David Emerson, the leaders of several international organizations and numerous prominent CEOs, are gathering to discuss the state of Canada’s digital economy with the federal government’s planned policies a prominent item on the agenda.

Notwithstanding these impressive accomplishments, there remains cause for concern. Canada’s investment in research has yet to pay the dividends in new innovation that its proponents anticipated. Canadian researchers, particularly those engaged in security research, have reason to fear that legislative reform may limit their ability to disseminate their research results. Canada’s education community, struggling with 20th century budgets to provide a 21st century education that will serve as the bedrock for future innovation, face the prospect of unnecessarily spending millions of dollars on copy licenses, rather than allocating that money to much-needed new books and equipment.

The upcoming throne speech presents the federal government with an exciting opportunity to chart a new course when addressing each of these issues.

First, Canada must begin to think about new ways to disseminate its publicly funded research. While the Martin government has stressed the importance of focusing on commercializing Canadian research, that approach provides only a partial solution.

Under our current model, Canadians spend billions of dollars on university research through granting programs in the sciences, social sciences, and health fields. Those results are typically made available to the public in one of two ways. If the results have commercial value, they are often brought to market, generating new revenues for the researchers and their institutions. Alternatively (or in addition), researchers publish the results in expensive scientific journals, which often fetch thousands of dollars in annual subscription fees.

In other words, Canada spends billions of tax dollars on research only to “buy back” that funded research through the marketplace or by subsidizing universities, which are effectively forced to repurchase their own research through journal subscriptions.

Late last month, a group of Nobel prize winners in the United States (which faces the same dilemma) issued a public letter calling on their government to link public research funding with public dissemination of the results. Canada should jump at the chance to adopt a similar model that would tie free, public dissemination to all publicly funded research. Such an approach would still leave room to commercialize the research results, while providing Canadians with an unprecedented innovation opportunity and a more immediate return on its research granting investment.

Second, Canada must ensure that it does not erect any barriers to innovation by impeding the dissemination of research results. An emerging risk in that regard has arisen from potential copyright reform that would chill the dissemination of security-based research.

In the United States, the enactment of the Digital Millennium Copyright Act has led directly to such a chill. For example, several years ago a Princeton researcher sought to release an important study on encryption. When he publicly disclosed his plans, he was served with a warning that he faced potential legal liability under the DMCA if he publicly disclosed his findings. Similarly, in 2001, a Russian software programmer was arrested and spent the summer in a California jail after highlighting encryption weaknesses in an Adobe software product at a public conference.

These cases sent a wave of fear through the security research community, leading foreign researchers to avoid traveling to the U.S. and Cyber-security Czar Richard Clarke to acknowledge that “a lot of people didn’t realize that [the DMCA] would have this potential chilling effect on vulnerability research.”

Canada can ill-afford to follow the United States down this path. In fact, by refusing to ratify the World Intellectual Property Organization’s Internet treaties that serve as the basis for the DMCA, the federal government will maintain an environment that encourages the dissemination of research results and creates a competitive advantage that will attract security researchers to Canada.

Third, Canadian universities, colleges, and schools, which serve as a critical source of new innovation, must stop throwing away millions of dollars each year by paying unnecessary copy licenses to copyright collectives such as Access Copyright.

While copyright collectives claim that education institutions need licenses to compensate for faculty and student copying, many copying activities are permitted under Canadian copyright law without the need for payment. The Copyright Act contains an explicit user right for copying for research or private study purposes (surely the most common uses of works on university campuses). The Canadian Supreme Court has ruled that this user right must be interpreted in a liberal fashion such that copying full articles may be lawful in certain circumstances.

The copyright collectives have recently turned their attention to copying for teaching purposes, even though the Act contains several relevant exceptions there as well. For example, the Act contains an exception for copying work for classroom instruction provided that no commercial alternative exists. Millions of web sites likely fall under this exception since many are freely provided without expectation of compensation.

It is important to note that the use of these user rights and exceptions would enhance both Canada’s education system as well as its authors and publishers. The saved money could be directed toward purchasing new books, generating handsome royalties and revenues for authors and publishers, while increasing the size of university library collections.

Since the cost savings would only come at the expense of the copyright collectives, it comes as little surprise to find that they support the establishment of an extended licensing system that would require schools to pay millions of dollars for works found on the Internet. Although these groups point to a government-commissioned study on the merits of extended licensing for support, that report was written before the recent Canadian Supreme Court rulings removed much of the need for such a system in the education context.

The potential damage from such a system led six national education groups, including the Canadian Council of Ministers of Education which counts Ontario Education Minister Gerard Kennedy as a member, to call on the federal government to reject the extended licensing approach and to adopt a balanced copyright approach that encourages the use of the Internet in Canadian schools instead.

While those groups could presumably argue that no payment is required, they have instead opted for greater certainty by proposing a balanced solution that would establish a limited educational user right to publicly available work on the Internet.

In keeping with longstanding and widely accepted practices on the Internet, publicly available work would include materials that are not technologically or password protected — i.e. information that the author would appear to want to make widely available.

Canada’s innovation deficit, which has led to missed research dissemination opportunities and the loss of millions of dollars from critical education programs, stands as one challenge that the federal government must confront head on. Next week, this column will address a similarly thorny problem — the billion dollar drain on Canadian culture.