Patent Collective to give Canadian cleantech firms “freedom to operate”

By reducing risks of patent infringement claims and other intellectual property issues, Canada’s new Patent Collective will give SMEs with innovative clean technologies the “freedom to operate," says an IP strategist leading the initiative.

“For startups and mid-sized companies that really need to expand their footprint and work in the global marketplace, this initiative will help them do that,” says Peter Cowan, principal consultant at Northworks IP in Victoria, B.C., and a co-founder of the new non-profit Innovation Asset Collective, in conversation RE$EARCH MONEY.

Earlier this month, Innovation, Science and Economic Development Canada (ISED) announced that Innovation Asset Collective will receive $30 million over four years, under the government’s Patent Collective Pilot Program, to assist SMEs in the cleantech sector with their IP needs.

Canadian scaleups with innovative technologies are often restricted in growing their market by larger and sometimes predatory companies — known as “patent trolls” — claiming patent infringement or demanding hefty licensing fees, Cowan says. “The freedom to operate gives companies a broader right to use, test, market or sell their products, without having to worry as much about IP risks and issues.”

Cowan says the Patent Collective will help SMEs understand and build effective patent and IP strategies and portfolios; assist them in filing patents in Canada; facilitate cost-efficient legal advice on IP; and acquire patents that can be provided free or licensed at an affordable rate.

Only about 10% of Canadian companies, including clean tech firms, hold formal IP, Cowan says. A study by Cycle Capital Management and Sustainable Development Technology Canada, in collaboration with Écotech Québec, showed Canadian academics published more than Canada’s per capita share of global research in cleantech, he adds. “But we almost never patent and commercialize ideas that arise from that research.”

At the same time, cleantech companies employ more than 180,000 Canadians, Canada exports about $20 billion in clean tech goods and services, and the global marketplace is projected to grow to $2.5 trillion by 2020.

“We see a huge opportunity to help companies protect [their IP] in that space,” Cowan says. “There’s a lot of export opportunity for Canada we can help support.”

Building on IP success elsewhere

Canada’s Patent Collective concept was borrowed from other countries, including Japan, South Korea and France, with similar initiatives called “sovereign patent funds.” These funds often were created for specific missions and to be aligned with the country’s strategic needs, Cowan says. “Our team has picked the pieces we know that have been successful in those funds and applied that in the Canadian context.”

Innovation Asset Collective (IAC) will be working with Sustainable Development Technology Canada, a federal foundation focused on clean tech technologies, in delivering the Patent Collective’s programs and services. Although the focus is on the cleantech sector, IAC will be working across all sectors of industry and reaching out to partners and key stakeholders.

Alongside Cowan, IAC was co-founded by venture capitalist Chris Wormald, former executive at BlackBerry, and Waterloo IP lawyer Jim Hinton, principal at OWN Innovation and IP advisor to the Council of Canadian Innovators. While IAC is still finalizing details on the Patent Collective with ISED, “we’re hoping to launch in the fall,” Cowan says.

Declining patent applications in Canada

In today’s knowledge-based and data-driven economy, the core of any tech company’s assets is its IP, including patents, talent and data, Hinton said in an interview with R$. “Controlling and having access to that is 95% of the value of the company.”

“We’ve seen a big decline even in the last five years of Canadian IP generation,” Hinton says. Patent applications in Canada are 17% below their level in 2008, according to the Canadian Intellectual Property Office.

In the area of artificial intelligence, for example, of the approximately 100 machine learning-related patents developed in Canada over the past 10 years, more than half have ended up in the hands of foreign companies such as Microsoft and IBM.

“We recognize that as a nation of small businesses, we lack scale individually, yet by banding together and working collectively, Canada has a chance to compete in a global ecosystem,” Cowan says. “Our goal is to create the type of IP collective that transforms the way Canadians approach the digital economy and positions Canada for global success.”

R$