Securing Sovereignty and Scaling Scale-Ups: A Deep Dive into Canada’s Modernized ITB Policy

May 27th, 2026 marked a watershed moment for Canadian innovation, national security, and industrial strategy. Against the bustling backdrop of CANSEC 2026, the Government of Canada has officially unveiled its sweeping modernization of the Industrial and Technological Benefits (ITB) Policy (updated on May 27, 2026). 

For decades, the ITB framework has contractually mandated that global defence primes reinvest 100% of their contract values back into the Canadian economy. However, as geopolitics shift and intangible assets (and corresponding intellectual property) take center stage, the old rules of economic offsets required an urgent upgrade. Today's update turns the spotlight squarely toward domestic supply chain resilience, scaling small and medium businesses (SMBs), and—critically—Intellectual Property (IP) ownership. 

To break down what these changes mean for innovators, tech leaders, and the broader ecosystem, we sat down for an exclusive conversation with two leading voices at the intersection of Canadian technology and IP strategy: David Durand (lawyer and trademark agent as well as President of the Forum International de la Propriété Intellectuelle – Québec (FORPIQ), and Marc Caroll Dupuis, a strategic corporate advisor specializing in Canadian industrial offsets within the Defence echo-system.

The Ground Shift at CANSEC 2026

FORPIQ: David, Marc, thank you both for sitting down with us, and speaking about what was arguably the biggest day for Canadian industrial policy this year at CANSEC. Marc, let’s start with you. Can you give our readers a high-level overview of what was actually announced earlier last week at the CANSEC Conference in Ottawa regarding the ITB Policy modernization?

Marc Caroll Dupuis: It is a pleasure to be here. From my perspective, this is not simply an administrative update to the ITB Policy. It is a broader realignment of how Canada intends to use major defence procurement to strengthen its domestic industrial base.

The core principle remains the same: companies that win major defence or Canadian Coast Guard contracts must generate business activity in Canada equal to the value of the contract. What has changed is the quality of activity Canada is trying to incentivize. The emphasis is shifting toward industrial capacity, Canadian-controlled supply chains, R&D, commercialization, intellectual property, exports, and workforce development.

There are several practical changes that matter for Canadian innovators. The discretionary review threshold from $20 million to $25 million, meaning procurements between $25 million and $100 million are now reviewed for possible ITB application, while procurements above $100 million continue to be covered by default. Canada has also introduced the Strategic Investment Transaction, which gives enhanced credit for investments that build or expand industrial capacity in Canada, including facility expansion, R&D, commercialization, equipment, and certain IP-related investments.

The Canadian Company Boost is also significant. Where a Canadian company performs at least 70% Canadian Content Value, the policy can treat that work as 100% Canadian Content Value for crediting purposes. For Canadian small- medium sized businesses (SMBs), and in some cases qualifying Small Mid-Caps, there can also be an additional credit multiplier. That changes how primes think about Canadian partners: a company with strong domestic capacity is no longer just a subcontractor; it can become a strategic ITB asset.

Finally, the skills side matters. The policy now gives stronger incentives for workforce development, including a 5x multiplier for certain skills development and training investments and a 10x multiplier for Indigenous workforce development. For the defence sector, that is important because capability is not only about platforms and technology; it is also about the skilled people who can build, sustain, adapt, and export those capabilities over time.

David Durand: If I can jump in here, Marc—what is truly revolutionary about today's announcement from an IP standpoint is the government's pivot towards sovereign capability. Groups, like FORPIQ (see our videos) and others have posited that you cannot build a resilient, sovereign industrial base if the underlying intellectual property is owned by others, including foreign primes, and licensed (or leased) back to Canadians. The updated framework highlights prioritizing Canadian IP ownership, protection, and access. This is also mirrored in Bill C-31 (45-1) where proposed section 12e) indicates that the Minister (in charge of the Defence Investment Agency) must consider the “protection and acquisition of intellectual property rights” when undertaking procurement and investment in the defence sector. It signals that Canada is moving away from just counting local “metal-bending” assembly hours and moving toward valuing the high-margin, intangible assets created by Canadian minds. 

The ITB Policy update, including ITB Model Terms and Conditions and Bill C-31 (45-1), has clearly made IP “top of mind” as it seeks to incentivize investments that strategically build (or rebuild according to Black et als, 2025, State of Defence (Spring 2026), CADSI and ISED) Canada’s defence industrial base by “introducing a new Strategic Investment Transaction providing enhanced, multiplied credits for cash and in-kind investments that meaningfully expand industrial output. This includes activities such as establishing or expanding manufacturing facilities, advancing R&D and commercialization, developing or transferring Canadian-owned IP, and acquiring or transferring equipment. Enhanced multipliers will apply, including:

1. Facility establishment/expansion (cash): 5x;

2. R&D and commercialization (cash): 5x;

3. Canadian-owned IP development (cash): 5x;

4. IP transfer ownership to a Canadian company (in-kind): 5x;

5. Exclusive licence to a Canadian company for IP (in-kind): 5x; 

6. Equipment purchase or in-kind transfer: 4x; and

7. In-kind knowledge transfer or marketing/sales support of lending an employee: 1x.”

At this point, you may ask yourself: what does the multiplier mean? At the simplest level, a multiplier changes the amount of ITB credit a prime contractor can receive for a qualifying investment. For example, if a contractor makes a qualifying $1 million investment and the applicable multiplier is 5x, that investment can potentially generate $5 million in ITB credit, subject of course to the ITB Authority’s eligibility review, valuation, verification, and specific contractual limits.

That matters because it changes the internal business case for the prime. Under the Strategic Investment Transaction, Canada is giving stronger credit to investments that create or expand Canadian industrial capacity. The model terms identify 5x credit for several high-value activities, including cash for R&D or commercialization, cash for the development of IP that will be owned by a Canadian company, transfer of IP ownership to a Canadian company, and an exclusive licence to a Canadian company for IP. Equipment is credited differently, and knowledge transfer or marketing support is lower.

The practical message is that Canada wants to reward deeper industrial outcomes, not just activity that happens to occur in Canada. A prime that helps a Canadian firm develop, own, license, or commercialize strategically important IP can receive more meaningful ITB credit than it would from a low-value transaction. That pushes the negotiation away from simple “workshare” and toward durable capability development.

There is one nuance that companies should not miss. The model terms define IP broadly to include patents, inventions, trademarks, copyrights, industrial designs, trade secrets, technical information, and other IP belonging to or licenses to a company, but the Strategic Investment Transaction multiplier language treats trademarks differently in some places. So the right takeaway is not “all IP automatically gets the same treatment.” The right takeaway is: structure the transaction carefully, document the valuation, and make sure the IP arrangement clearly supports Canadian-owned or Canadian-accessible industrial capacity. In other words, ITB credit is not automatic simply because an asset is IP. The IP must be part of an eligible, properly documented transaction accepted by the ITB Authority. In the Strategic Investment Transaction context, the enhanced 5x treatment applies to Canadian-owned IP development, IP ownership transfer, or exclusive IP licensing, but the model terms carve out trademarks from that enhanced IP credit treatment. 

Moving Past "Metal-Bending" to Intangible Value

FORPIQ: David, you’ve been a vocal advocate for IP commercialization. In 2023, you appeared before the Standing Committee on Science and Research in 2023 on the support for the commercialization of IP, and later co-authored the Simple Agreement for Innovation Licensing (SAIL) framework. Why has the historical approach to ITB offsets fallen short when it comes to intellectual property?

David Durand: Historically, the ITB framework primarily recognized R&D and other non-manufacturing activity, but its practical application often leaned towards visible industrial workshare rather than long-term Canadian control of intangible assets such as IP. If a global defence prime won a multi-billion-dollar contract to supply jets or ships to Canada, they could satisfy their offset obligations by setting up a local assembly plant or buying parts from Canadian suppliers. While this creates short-term employment (job creation), it often leaves Canadian companies stuck at the bottom of the value chain. The foreign primes retain the patents, the data rights, and the core algorithmic logic. When the contract ends, the local jobs can vanish, and Canada is left without the sovereign capacity to upgrade or maintain its own equipment without paying exorbitant licensing fees. More insights can be found here (right to repair and issues regarding technical data packages), here (ownership in IP and data rights), and here (for purposes of illustration only as it was published in 2021).

In the 2026 economic landscape, the true value of an enterprise lies in its intangibles—its data, software, patents, and proprietary trade secrets (WIPO, 2026). By modernizing the ITB policy to incentivize early-stage investments and direct work with SMBs with an eye toward IP protection, the government is acknowledging that IP is economic and national security, as suggested in a paper co-authored by myself and Kyle Briggs in 2025. This was reinforced in an interview I had with former ADM(Mat) Troy Crosby who opined that IP is the crown jewel of a defence industrial strategy. This was captured in Canada’s Defence Industrial Strategy, which emphasized the importance of protecting “Canada’s interests in knowledge transfer, IP rights, and access, ensuring that Canadian industries gain the technical know-how needed to operate, maintain, and repair technologies over the long term.”

Along with Ms. TJ Misra and Dr. Kyle Briggs, we, in our INDU-DIS-submission, wrote about the importance of intellectual property, and I did so again within the context of the Standing Committee on Science and Research’s study on Dual-use and defence research needs (see here, dated May 12, 2026), in which I argued for the facilitation of “ITB Policy compliance and connecting SMEs (including university spin-outs) to defence primes”. 

Marc Caroll Dupuis: David is exactly right. The old way of thinking about offsets often focused too heavily on visible industrial activity: assembly work, parts manufacturing, or short-term local content. Those activities can be valuable, but by themselves they do not necessarily give Canada control over the technology, the data, the software, or the upgrade path.

The real shift here is that intangible assets are now being treated as part of sovereign industrial capacity. In defence, IP is not just a legal asset; it determines who can modify a system, who can sustain it, who can export it, and who can adapt it when the threat environment changes. That is especially important as defence platforms become more software-defined, data-driven, networked, and AI-enabled.

For Canadian companies, this creates a different negotiation posture. They should not approach primes only as suppliers of labour or components. They should approach them as capability partners with technology, know-how, data rights, and commercialization potential that can help the prime meet its Canadian obligations while also strengthening Canada’s defence industrial base.

The opportunity is to convert IP from something Canadian firms are pressured to give up into something they can structure intelligently: through co-development, licensing, exclusive rights, commercialization agreements, or other arrangements that preserve long-term Canadian value. That is where policy, procurement, and IP strategy now intersect.

The Practical Impact on Canadian SMBs and Mid-Caps

FORPIQ: Marc, you mentioned the new "Small Mid-Capitalization" category. How does that change the game for a Canadian tech firm trying to scale up without selling out?

Marc Caroll Dupuis: This is one of the most practical changes in the package. Historically, there was a cliff effect for companies that grew beyond the SMB definition. In the model terms, an SMB is a Canadian company with no more than 250 full-time employees, provided the company and its affiliated entities do not exceed 500 full-time employees. A Small Mid-Cap is a Canadian company that is not an SMB but still does not exceed 500 full-time employees, including affiliated entities.

That distinction matters because many Canadian technology firms are most vulnerable precisely when they start to scale. They are too large to be treated as early-stage companies, but not yet large enough to compete like established defence primes. At that point, they need revenue continuity, supply-chain access, and credible pathways into major programs.

The Small Mid-Cap category helps reduce the penalty for growth. In several transaction types, a Small Mid-Cap can remain eligible for enhanced treatment if it qualified within the relevant five-year period before the transaction was proposed to the ITB Authority. That gives scaled Canadian firms a longer runway and gives primes a reason to maintain relationships with Canadian companies as they grow.

The strategic importance is straightforward: we should not design policy that encourages Canadian firms to stay small. If a Canadian company grows from 200 employees to 350 or 450 employees, that should be seen as a success, not a reason to fall out of the ecosystem. This change helps make those companies more attractive partners for global primes while keeping headquarters, talent, supply chains, and IP anchored in Canada.

David Durand: And from an IP perspective, that runway is everything. When a small company is cash hungry, they are vulnerable to predatory IP terms. They might sign away their global patent rights just to secure a subcontract with a major global defense corporation. With these updated tools — including a new 90-day service standard for ITB transaction approvals intended to improve predictability, transparency, and timeliness for industry — Canadian SMBs and scale-ups should have greater procedural certainty when structuring transactions, including IP licensing or co-development arrangements rather than outright IP transfers. 

The Path Forward: Culture Shift and Implementation

FORPIQ: This sounds incredibly promising, but as we know, policy is only as good as its execution. What are the hurdles to making sure these updates achieve their lofty goals?

Marc Caroll Dupuis: Implementation is where the rubber meets the road. The newly established Defence Investment Agency has a massive job ahead. Primes are sophisticated in structuring offset transactions, so Canada needs clear rules, consistent review, and verification focused on real industrial outcomes. If the evaluation criteria for what constitutes “priority strategic capabilities” are too vague, there is a risk that transactions could generate credit without producing meaningful technology transfer, Canadian industrial capacity, or long-term IP value. We need rigorous, transparent monitoring and specialized compliance officers who understand both advanced technology and the intricacies of international defence supply chains.

First, and in line with former ADM(Mat) Crosby’s FORPIQ interview, Canada needs to be clear about what qualifies as strategic. A transaction should not receive enhanced credit just because it is administratively convenient. It should be tied to real industrial outcomes: new or expanded Canadian capacity, stronger supply chains, R&D, commercialization, export potential, or meaningful Canadian access to technology and IP.

Second, the process has to be predictable. SMBs and scale-ups cannot afford long periods of uncertainty. They need to understand what documentation is required, how Canadian Content Value will be assessed, how IP will be valued, and what evidence will satisfy the ITB Authority. The model terms make clear that transactions are subject to eligibility review, reporting, and verification before credit is awarded, so companies need to build that discipline into the transaction from day one.

Third, defence primes need to be pushed toward genuine partnerships. The best outcomes will not come from one-off transactions designed only to close an obligation. They will come from relationships where a Canadian company becomes part of a long-term supply chain, has a role in sustainment or upgrades, and can export into allied markets.

For Canadian innovators, my advice is practical: know your Canadian Content Value, document your domestic capacity, protect your IP, and approach primes with a structured value proposition. Do not simply say, “We are Canadian.” Say, “Here is the capability we bring, here is how it aligns with your ITB obligation, here is the IP and commercialization structure, and here is how this helps Canada build sovereign capacity.”

David Durand: I completely agree with Marc, and one should not consider maple-washing. There are rules about what is a “Product of Canada” and “Made in Canada”. Furthermore, there needs to be a cultural shift within our own ecosystem. Canadian innovators must aggressively become IP-literate. It’s one of the reasons FORPIQ exists—to make companies aware of IP, and bridge the gap between brilliant technical innovation and sophisticated IP strategy, which our partner firms can assist with, amongst others. It's also one of the reasons I started working on Think IP – an IP resource center.

We need to ensure our entrepreneurs are utilizing frameworks like SAIL or other forms of express licenses to streamline technology transfer and that they understand how to value their intangible assets. Indeed, Canada’s DIS, including at Pillar III, recognized the critical role of Canada’s world-leading colleges and universities in creating investigator-driven science, supported by billions of dollars of government funding (see this note on Bill C-31) and the need to establish “mechanisms to better connect universities and colleges to defence priorities”, and “integrate incubators and test centres into national defence innovation pipelines.”

When the government rolls out programs like the $6 billion Defence Platform at the BDC or the Regional Defence Investment Initiative (RDII), those funds must be paired with robust IP advisory services.

Final Thoughts: A Sovereign Future

FORPIQ: To wrap things up, if you could leave Canadian tech founders and policymakers with one key takeaway from this ITB Policy update, what would it be?

Marc Caroll Dupuis: My takeaway is that the playing field has shifted. Canadian founders should not view defence as an impossible-to-enter market reserved only for traditional suppliers. If you are building dual-use technology, advanced manufacturing, AI, cyber, space, autonomous systems, sensors, materials, simulation, or other defence-relevant capabilities, the policy environment is becoming more receptive to Canadian-controlled innovation.

But opportunity does not replace preparation. Companies need to understand the ITB system, protect their IP early, build credible documentation around Canadian capacity, and engage primes with a clear commercial and industrial story. The firms that do that well will not just chase contracts; they will become part of Canada’s long-term defence industrial base.

For policymakers, the message is equally clear: the goal should not be to count activity for its own sake. The goal should be to build Canadian firms that can scale, export, and sustain critical capabilities over time. If the modernized ITB Policy is implemented with that discipline, it can become a serious tool for sovereignty, competitiveness, and industrial resilience.

David Durand: My parting thought is that we must stop viewing intellectual property as a legal afterthought or an administrative chore. IP is the ultimate currency of the modern global economy. Today’s ITB policy update proves that the Canadian government recognizes that reality. This is also mirrored in section 12e) of the proposed Defence Investment Agency Act (see: Bill C-31 (45-1)) where the Minister, under his proposed powers, duties and functions, must consider the “the protection and acquisition of intellectual property rights.” 

Protecting your IP isn't just about defending your company; it’s about building a prosperous, self-reliant, and economically secure Canada. Getting this right starts early in the lifecycle of a company, long before the growth stage. If IP is not managed well from the start, problems arise later that are much more difficult to fix. The ITB is mainly focused at companies in the growth stage, but for them to arrive at that point ready to take advantage, we need to encourage sound IP management upstream, which is what tools like SAIL are for. 

FORPIQ: David, Marc, thank you both for your incredible insights.

If you have questions, please feel free to reach out to Me David Durand or Marc Caroll Dupuis for more information.  

For more resources on navigating intellectual property strategy or to learn more about upcoming forums, visit www.forpiq.com.