Patents & SR&ED: Building a strategy for your R&D efforts

  • By Rebecca Galicha
    • Feb 15, 2024
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Patents

We often hear how important filing patents is for protecting innovation. However, in addition to patents, there is another program that encourages Canadian companies to further their innovative projects through tax incentives via the Scientific Research and Experimental Development (SR&ED) program. Here’s what you need to know about patents and SR&ED:

What are patents?

Innovation is a driving force for economic growth, competitiveness, and problem-solving and it is at the heart of continued success of a company. Innovative ideas could be protected through legal documents known as patents. Patents are filed with a government patent office to seek exclusive rights to an invention; and are used to protect intellectual property by preventing others from making, using, or selling the patented technology for a specified period (typically 20 years).

What is the SR&ED Program?

The Scientific Research and Experimental Development Program – Commonly known by its acronym (SR&ED), provides tax incentives for research and development (R&D) activities that yield technological advancements.

Difference between Patent Applications vs. SRED claim applications

Patent and SR&ED filings often require experts to assist companies as the process for both filings are typically complicated and time-consuming. Patent applications – In order to be granted a patent, the application must meet the eligibility requirements set forth by the patent office (e.g., USPTO, CIPO) such as novelty, non-obviousness, and
utility of an invention. Patent applications require detailed documentation describing the invention, including specifications, claims, and drawings which would involve both legal and technical aspects. Typically, the patent application could take over 2 years from filing to grant of the patent. Once the patent is granted, exclusive rights are awarded to the inventor for a fixed duration, usually 20 years from the date of filing.

SR&ED applicationsSR&ED submissions, on the other hand, is filed with the Canadian Revenue Agency (CRA) to claim back tax credits for R&D activities conducted within a company’s fiscal year. Eligibility requirements to get the tax incentives include: the work must be conducted for the advancement of scientific knowledge or for the purpose of achieving a technological advancement and that the work must be systematic investigation or search that is carried out in a field of science or technology by means of experiment or analysis.

Leveraging SR&ED and Patents

Although patents and SR&ED are two distinct concepts, by leveraging patents and SR&ED incentives together, businesses can maximize the value of their innovation efforts and maintain a strong position in the global market. The following strategies are recommended for pursuing patent and SR&ED applications together:

patents
  • Integrated R&D Planning: Align the R&D efforts with patentable inventions which would involve identifying potential patentable aspects of the projects. This can maximize the protection and financial benefits of the company’s innovations.
  • Identification of Eligibility for Patents + SR&ED: There are some similarities with the eligibility requirements for SR&ED and patents. During the course of the R&D project, the company can simultaneously look out for areas in the project which could be a source of technological advancement as well as parts of the project which would satisfy the novelty and non-obviousness requirements.
  • Use acquired SR&ED Funds for Patenting Fees: While the qualified expenditures for a SR&ED claim do not include the costs for patenting, the SR&ED tax incentives received from the CRA can be funneled back to invest in patent-related expenses.
  • Collaboration and Knowledge Sharing: Encourage collaboration between the R&D and legal teams. Through this collaboration, the shared insights can lead to more strategic patent filing decisions and stronger SR&ED claims.

When filing patents and SR&ED claims, it is important to note that effective documentation, expert guidance, and strategic planning are critical to maximize the benefits of the distinct programs. By taking into account both patents and SR&ED into the R&D efforts of a company, businesses can build a robust intellectual property portfolio that strengthens their competitive position and drives innovation-driven
growth for the organization.

If you are hoping to apply for patents or SR&ED, at Leyton, our experts can help you develop a compelling application without disrupting your day to day activities. Schedule a free consultation with one of our consultants now!

Sources:

https://www.canada.ca/en/revenue-agency/services/scientific-research-experimental-development-tax-incentive-program/sred-eligibility.html

https://www.wipo.int/patents/en/

https://canadianinnovators.medium.com/modernizing-sr-ed-to-cover-patent-costs-is-long-overdue-206b5add341b2 / 277%

Author

Headshot Rebecca Galicha
Rebecca Galicha

Senior Innovation Funding Consultant

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