IP Osgoode

The Race for the Next Innovative Visionary

Entrepreneurs create ideas that turn into worldwide sell-out products.  Whichever country has the talent to conceive of these products will have a thriving economy.  For these reasons, various governments are developing programs to attract entrepreneurial talent to their country.  It is, therefore, not surprising that both the Canadian and American governments have announced their intentions to explore changes to their visa programs to attract foreign entrepreneurs.

In 2011, two American senators introduced the Start Up Visa Act of 2011 to congress, designed to attract immigrant entrepreneurs and make special visas available to them.  Similarly, Canadian Minister of Immigration Jason Kenney recently announced that a new start up visa program for Canada will be unveiled later this year.

But one country is already out in front.  Through its Ministry of Economy, Development and Tourism, Chile has developed an innovative program of its own called “Start-Up Chile” (a.k.a SUP).  The purpose of SUP is to attract foreign entrepreneurs to Chile by providing them with grants of up to 90% of total project costs, up to a ceiling of $40,000 USD.  In return, foreign entrepreneurs are expected to incorporate themselves into the national enterprise environment, stay in Chile for at least six months, create a business headquartered in Chile, employ local talent, attend programs and workshops, attend meetings with potential investors and develop and disseminate at least three English-language articles in international media that describes their experience.  In short, the expectation is that foreign entrepreneurs will have a social impact on the local environment.

As of June 2012, 323 projects have been implemented in Chile over the course of the pilot and three successive application rounds.  The projects span all industry areas, with the greatest percentage falling into the Social Media/Social Networking, E-Commerce and Education categories.  Although Chile’s legal system is governed by a civil code, its laws, including contract, corporate, securities and competition laws are similar to Canadian laws in many ways, and Chile wants foreign investment.  The result is a predictable and consistent business environment that is growing in the context of a hospitable economic climate.

SUP’s participants are governed by legally binding contractual obligations to the government and supported through a governance framework that includes monitoring, evaluation, and corrective measures.  In addition, a social support system is in place to manage participants.  For example, industry “tribes” have been created, where participants can share experiences and problem-solving techniques.  So far, participants have raised $7,860,000 USD in investments.  While it is too early to assess long-term impact on the local economy, success stories of social impact are plentiful.  Participants give back to the local community by mentoring local entrepreneurs and teaching classes and seminars. They are learning from all those they interact with in Chile – other participants and locals equally.  The projects are also truly innovative and many Canadian entrepreneurs are participating.

The Canadian program is markedly different from Chile’s program.  Under the Canadian model, entrepreneurs would be granted a special limited-term visa, if they have been identified by venture capital funds as suitable candidates.  Those funds would then be required to invest.  While Chile’s program requires participants to meet with investors, it does not require that investment capital be in place prior to participation in the program.  The difference in approach is largely driven by Chile’s current place in the global economy, its political history and what it wishes to achieve.  Canada occupies a higher position in the global economic pecking order and therefore the focus, requirements and desired outcomes of its program are very different.

From a legal perspective, setting aside the immigration law and other regulatory issues, the most important legal issues will likely centre around commercialization of the intellectual property immigrant entrepreneurs create.  Presumably, venture capitalists will want partial or complete ownership of the intellectual property rights.  It will take a very savvy entrepreneur to bargain a fair deal with capital investment and a visa hanging in the balance.  Even then, once ownership is determined, as Professor Yu rightly noted in his article, enforcement of ownership rights across borders is not reliable.  There are two issues.  First, the definitions of intellectual property are not harmonized around the world.  For example, something may be patented in one country but not even patentable in another.  The result is that there are no ownership rights to enforce in the latter jurisdiction, diluting the value of the bargain initially struck.  Second, even where there is consensus on property rights and obvious enforcement obligations, those obligations may not actually be honoured.  With these two issues in mind, the questions become: How reliable and stable is an investment in entrepreneurial talent that has been given no incentive to stay beyond the limited term visa they have been granted?  Will that talent be able to capitalize on the gaping holes in the swiss cheese that is the international intellectual property law framework?  And, from a public policy perspective, is there something to be said for the Chilean model of mutual support and investment that will keep talent and property in that country?

 

Sheerin Kalia is a Visiting Scholar at Osgoode Hall Law School.  Sheerin has taught International Business Law at both the college and university levels and is the author of International Business Law for Canadians:  A Practical Guide, as well as numerous articles on corporate/commercial law topics.  Sheerin was a Visiting Scholar at the University of Chile, School of Law in Spring 2012.

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