A non-profit that aims to help data-driven cleantech companies generate more patents and protect themselves from intellectual-property litigation will begin operations Wednesday, just over a year after the federal government picked it for a $30-million, four-year pilot program.
The Innovation Asset Collective (IAC) will offer members educational programming to help them develop IP strategies, financing and expertise to turn ideas into assets, and access to information and resources to defend themselves in legal battles. It will also seek to purchase cleantech patents for member companies to license.
“Many tech business leaders ignore IP, simply because it takes a long time and it seems expensive and [it’s] boring and arcane,” said Chris Wormald, an IAC co-founder and former BlackBerry executive, in an interview with The Logic. The new program comes as governments try to reconcile the mismatch between Canada’s spending on research and development and the relatively little revenue it generates from those investments.
The Innovation Asset Collective (IAC) is set to begin operations on Wednesday, more than a year after Innovation Minister Navdeep Bains announced $30 million for the non-profit to lead Ottawa’s patent collective pilot program. The organization, chaired by former BlackBerry executive Jim Balsillie, will acquire patents for data-driven cleantech firms to license, help them generate more IP through education and funding, and try to safeguard members against patent trolls and lawsuits.
The patent collective pilot is the largest component of Ottawa’s national IP strategy, an $85.3-million plan in the 2018 federal budget to support Canadian firms through advice, as well as resources like a new marketplace for licensable government and academic patents and legislative changes designed to deter trolls. Innovation Minister Navdeep Bains announced in August 2019 that the IAC had been picked to run the test; he will officially launch it at a virtual event on Wednesday.
The organization is focusing on companies whose sustainable technology products and services use data. “There’s lots in common between analyzing a farm crop from an aerial image, monitoring a pipeline, a smart thermostat and controlling a traffic intersection with live cameras,” said Wormald. All those situations involve taking in data, analyzing it in real time, collecting it in a database for further study, and then triggering an action—adding fertilizer, shutting off a valve, turning on a furnace or changing the light.
Jim Balsillie, former Research in Motion (now BlackBerry) co-CEO, will chair the IAC. He declined The Logic’s request for comment in advance of the official announcement, but has for years called for national and provincial patent strategies to address the gap. In July, the Ontario government appointed a panel led by Balsillie to find ways to increase the commercialization of publicly funded research in the province. It’s tasked with working with post-secondary and research institutions to create commercialization mandates and improve overall IP literacy in the province through an IP curriculum. The government has so far budgeted $1.5 million for the initiative.
Canada is lagging behind other countries in terms of generating income from its research. It ranked 17th on the World Intellectual Property Organization’s most recent Global Innovation Index. While the 2019 report pegged Canada ninth on inputs such as R&D funding and policies to support innovation, it ranked just 22nd on outputs, which include commercialization and “intangible assets” like patents.
The gap between research spending and commercial outputs is prominent at universities. The Logic reported last year that Canada’s top universities and research institutes spent $5.7 billion on R&D in 2017, but generated less than $75 million from licensing their innovations. Patent filings also decreased that year, with academic institutions making 687, down from 790 the year before and the fewest since 2008.
In January, the IAC will launch a course to teach member companies how to build their own IP strategies. Participating firms will get individual instruction, initially from IAC co-founders Jim Hinton, founder of Kitchener, Ont.-based law firm Own Innovation, and Peter Cowan, principal at Victoria-based consultancy Northworks IP. Long term, the organization plans to create educational resources that executives and boards can use to regularly review and plan for IP the way they do sales, marketing or financing.
Members will also have immediate access to an annual credit to spend on IP generation, such as filing a patent or trademark. Companies will be able to get funding to protect additional ideas through quarterly contests. While the Canadian Intellectual Property Office (CIPO) charges a few hundred dollars for most patent services, filing in multiple jurisdictions can raise costs into the thousands. The pilot is meant for small- and mid-sized firms who may not have the resources for more than a couple such applications a year; the credit and contest streams are designed to increase that number.
Though the organization is called a collective, “we don’t force anybody to give up their IP,” Wormald said. The IAC may offer to buy a patent, or to file to protect an idea that doesn’t win the quarterly contest but shows promise. In such situations, the non-profit would own the IP, but grant licences to the inventing firm as well as other members.
The IAC will also work to help firms avoid costly litigation. It plans to use some of Ottawa’s $30 million to buy patents that are relevant to its members’ businesses, give the companies perpetual licenses to them, then sell them back into the market. The system will afford firms protection without tying up the IAC’s capital. “Wherever [the patents] finally end up—if it’s in the hands of Microsoft or Google or a patent troll—our members can’t ever get sued because they’re licensed,” Wormald said.
The organization will acquire and hold some IP, made available to participating companies “for defensive purposes only.” For example, if a larger foreign firm threatens to sue a member for infringement to try and extract a licence, the member will be able to use the IAC’s patent to counter-assert, in the hopes of forcing the other company to back off. Wormald said the organization has begun scouting for IP for both these programs, but has yet to acquire any. The IAC also plans to build a database of prior art, evidence showing that an invention is already known that can be used to invalidate patents. The library will be fully operational in the second quarter of 2021.
The non-profit has hired two staff focused on IP education as well as operational team members. It’s recruiting a member-relationship manager, one of three open positions it aims to add to a team that currently includes four full-time employees, four contractors and the three co-founders. Membership will initially cost $15,000 a year, although Wormald said the IAC is likely to eventually shift to a percentage-of-revenue model.
Wednesday’s launch comes 16 months after Bains’s original announcement. The October 2019 federal election and pandemic “created inevitable delays,” Wormald said, although he also cited the co-founders’ “naïveté with respect to how [the] government-procurement [and] approval-justification process works. The IAC signed its contribution agreement with the federal government in late June, and has started receiving payment from the $30-million program allocation.
Citing commercial confidentiality, Wormald declined to specify whether the pilot’s four-year term will begin on Wednesday, or will be dated as of the original announcement, effectively reducing its running time to just over two and a half years. Innovation, Science and Economic Development Canada did not directly answer The Logic’s questions about the contribution agreement or terms of the pilot.
“A lot of what is lagging in Canada is just IP awareness and IP understanding to make good decisions,” said Nathaniel Lipkus, a partner at Osler’s IP practice, noting that the patent-collective pilot could add “institutional capacity to the ecosystem” as an alternative to university tech-transfer offices or hiring lawyers.
The IAC will have to bet that the patents it chooses to acquire and license are the ones a member will need in the future, said Lipkus. The organization has also promised not to sue first, but IP is more powerful in a legal battle when it’s previously been asserted and produced damages. “It’s a very risky endeavour, and not one [where] you’re going to know whether you made the right decisions within four years,” Lipkus said, although he praised the quality of the IAC team.
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Wormald said the pilot has enough funding to address its target user base of small- and medium-sized data-driven cleantech firms. The IAC is hoping to show the federal government that the model can work. “Expansion is really what’s on our minds,” Wormald said, noting that there are “a whole lot of other ecosystems in our country” with significant talent and promising companies, where the collective can ensure Canada doesn’t get “steamrolled by international conglomerates.”