Canada’s first patent collective launched with defensive “war chest” to protect Canadian IP

Canada’s first patent collective includes significant federal funding for acquiring patents to help data-driven clean tech companies defend their intellectual property in an often predatory global IP marketplace.

The not-for-profit Innovation Asset Collective (IAC), launched last Wednesday and backed by $30 million from Innovation, Science and Economic Development, will build a pool of strategic patents that collectively protects IP for Canadian clean tech SMEs, said Jim Hinton, an IP lawyer and a co-founder of IAC.

“Instead of each company having to build its own defensive position, we can build a defensive position across multiple companies,” said Hinton, founder of Kitchener, Ont.-based Own Innovation and an assistant professor at Western University.

Canadian companies don’t own much IP globally, leaving them subject to patent litigation from large international firms and so-called patent trolls, entities that acquire and monetize companies’ IP.

IAC’s freedom-to-operate pool of globally relevant patents will give Canadian clean tech companies “defensive power assertion” as they scale and expand into international markets, Hinton said.

The needs of IAC’s members will determine how the patent pool operates. Options include acquiring patents in the global marketplace and making them available to IAC members, and procuring licenses on existing patents for members.

“We have a significant budget set aside for patent acquisitions and patent growth, as well as [patent-] granting pieces,” said Peter Cowan, co-founder of IAC.

IAC also will build a “prior art library” of evidence that an invention is already known, to guard against low-quality and potentially invalid patents.

IAC membership will initially cost $15,000 annually, which may look expensive for some SMEs, “[but] it’s actually giving access to millions of dollars of patent acquisitions or patent licensing,” said Cowan, founder and principal consultant at Northworks IP, an IP strategy advisory firm in Victoria, B.C.

The patent collective will focus initially on Canada’s data-driven clean tech sector, which, as of 2018, employed more than 180,000 Canadians and generated about $28 billion annually in goods and services.

Global race underway to own IP

IAC is funded under Innovation, Science and Economic Development’s four-year Patent Collective pilot program, the largest component of the federal government’s $85.3-million National IP Strategy.

SMEs armed with strong and modern IP strategies are more profitable, about 60% more likely to be high growth, and four times more likely to be export-oriented, Innovation Minister Navdeep Bains told IAC’s virtual launch event on December 9.

Ottawa’s patent collective initiative also responds to long-standing criticism that Canada, unlike the U.S., U.K., France, Germany, Japan, South Korea and other leading IP nations, doesn’t adequately protect Canadian IP and data.

The share of Canadian-invented patents transferred to foreign firms on the date of issue has increased to 56% from 18% over the past 20 years, according to IAC.

Jim Balsillie, chair of the soon-to-be-announced IAC’s board, has been among the most vocal in criticizing the loss of Canadian IP.

“There is a global race underway by large firms and nation-states to own critical IP, especially for key emerging areas such as blockchain, AI and machine learning,” Balsillie, chair of the Council of Canadian Innovators, told a webinar presented in November by the Munk School of Global Affairs & Public Policy’s Innovation Lab.

SMEs will receive IP education and market intelligence

Along with the patent pool, IAC’s core activities will focus on IP education, IP generation and IP market intelligence.

“We will deliver IP education programming, from IP 101 basics to advanced and tailored IP strategy building, to empower our companies to make critical IP business decisions,” Hinton said.

Canadian companies own less than 0.7% of global patents in the clean tech space, he said. IAC will provide funding for SMEs to work with their existing IP advisors to cover IP-related costs, including patent or trademark filings, IP strategy costs and other IP expenses.

IAC also will provide IP intelligence and market data, so its members can strategically position their IP globally.

IAC’s core activities were adapted from global best practices by leading IP nations and, with advice from IAC strategic partner Sustainable Development Technology Canada, meet the needs of Canada’s clean tech sector, Cowan said.

Another IAC partner, the Business Development Bank of Canada (BDC), launched a new IP-focused debt and equity fund in July to accelerate scale-up of IP-rich companies across all sectors, said Lally Rementilla, managing partner, IP-backed financing at BDC.

“It’s really important as you grow to understand the implications of IP because people will do what they have to do to defend their market,” said Jon Lipinski co-founder and president of Toronto-based Ecopia.

“That may result sometimes in more aggressive tactics where you need to . . . defend the IP that you’ve built and you own,” Lipinski said. Ecopia’s technology, which uses AI to digitize geospatial imagery, was spun out of research at the University of Waterloo.

Protecting IP also has been vital for Waterloo, Ont.-based Borealis Wind, which developed a heating system that can be retrofitted onto wind turbines to prevent and remove ice build-up, so turbines can continue operating through harsh winters. The company has nine systems installed at five different wind farms in Canada.

Borealis Wind plans to expand to 20 to 30 systems next year in Canada and also has demand from Europe, said founder and CEO Daniela Roeper. The company’s IP strategy has included filing three patents on its product, in several different countries.

“It has helped us have confidence that we have protection in the markets that we are going to be entering in the future,” Roeper said.

As the world emerges from the COVID pandemic, the gap will increase between companies and countries that can double-down on IP needs and positions, versus those that don’t have the capital or talent to do so, Cowan said. “IAC will give [Canadian] companies the opportunity to understand what IP is, how it can impact their company, and how they can use it to support scaling up their business.”

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