MC in the News: Canada’s Budget Supports IP Ownership, but Omits Patent Box "Carrot"

Marks & Clerk was recently featured in iPolitics, a Canadian news outlet focused on political news, analysis, and intelligence, in an article exploring the Government of Canada's decision not to introduce a patent box regime in Budget 2026.

The article highlights elements of the Budget that support the federal government's efforts to strengthen Canada's innovation ecosystem, including enhancements to the Scientific Research and Experimental Development (SR&ED) program, promises to review the intellectual property (IP) system, and proposed requirements for mandatory IP ownership registration.

While the article noted how these measures can support Canadian innovators and improve visibility into where Canadian-developed intellectual property ultimately resides, it flagged that the budget did not include a patent box regime, a tax incentive that many countries use to encourage companies to retain and commercialize intellectual property domestically.

Providing expert commentary, Paul Horbal, Head of Marks & Clerk’s Computer and Electrical patent practice in Canada, observed that the government’s mandatory patent ownership registration may help keep track of where Canadian IP ends up. However, he said it's more of a “stick”, whereas a patent box would provide the corresponding “carrot” to encourage companies to keep it here.

"A patent box would go a long way towards incentivizing companies to keep IP ownership in Canada."

Paul also noted that many countries in the Organisation for Economic Co-operation and Development (OECD) already offer patent box incentives, leaving Canada among the outliers.

Despite the exclusion of a patent box from Budget 2026, the expansion of the SR&ED program to include certain commercialization and IP-related expenses does provide Canadian companies with additional relief for IP expenditures.

The coverage reflects Marks & Clerk’s depth of expertise in intellectual property and our insights on how government programs and incentives can be used to support Canadian innovation and economic growth, which are informed by our experience working with Canadian companies to support them on their commercialization journey.

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The government’s mandatory patent ownership registration may help keep track of where Canadian IP ends up, [but] its more of a “stick”, whereas a patent box would provide the corresponding “carrot” to encourage companies to keep it here.

www.ipolitics.ca/...