Joining the IP Race

The following is based on a statement given by Karen Mazurkewich at a meeting of the House of Commons Standing Committee on Industry, Science and Technology on the intellectual property regime in Canada. Ms. Mazurkewich is the author of Rights and Rents: Why Canada must harness its intellectual property resources.

Almost two years ago, the CIC approached me to write a report on how Canada ranks internationally with respect to its intellectual property regime. As a former journalist with the Wall Street Journal and Financial Post, the first question I asked was an obvious one: Who speaks for intellectual property in Canada?

I was struck by the response: Everyone and no one. To be precise, the job of the Canadian Intellectual Property Office is to administer IP regulations, but it doesn’t have the mandate to create policy. In fact, four ministries have input on IP policy. However, the most senior person in charge is only a mid-level bureaucrat at Industry, Science, and Technology. So while the U.S. has an IP czar that reports to the president himself and the U.K. has a chief economist on IP with three other economists reporting to him, Canada has no one at a senior executive level who speaks for IP.

My next question was why? One reason is this: I believe Canada suffers from IP fatigue. Protracted battles within the pharmaceutical industry, along with international pressure for stronger Canadian copyright enforcement has distracted policymakers. Canada is stuck in a decades-old debate that has distorted the prism through which IP policy is viewed. As a result, it hasn’t developed a comprehensive IP policy that addresses the future needs of technology companies. Pharma research is important, but it’s not going to be the biggest driver of jobs in this country going forward. We need a broad IP policy to support new technologies particularly now that boundaries are blurred between the agriculture and pharma sectors, nanotechnology and forestry, and software and medicine.

I want to speak for the start-ups and small entrepreneurs with the biggest growth and job potential. My research conducted on behalf of the CIC showed that foreign companies that snap up Canadian start-ups favour those with IP assets. In fact, 66 per cent of the IP that was sold as part of Canadian mergers and acquisition deals between 2005-2009 went to firms outside this country. We have an IP leakage problem.

While I’m not suggesting halting foreign sales, we need to understand that if we want to build innovative companies, we need to anchor a significant portion of IP in our country. So how do we do that?

1. We need to look at the commercialization of technology. We know our universities – collectively – have one of the worst track records in the developed world for commercializing their technology. Our researchers write papers but we can’t seem to get the research off the page. Technology sits on a shelf. We have to encourage universities to work with industry to speed up the collaboration process and get ideas to market.


2. Canadian universities should centralize technology transfer offices and create simplified legal agreements that take into account the risks that the private sector makes in commercializing invention. The federal government can encourage this kind of behaviour by structuring its incentive programs to reward universities that are industry-friendly and by supporting consortiums that bring industry and universities together to solve technology gaps.


3. We need capacity building programs that teach entrepreneurs IP management skills. The Canadian government should provide IP services and expertise at regional innovation centres. For example, we can look to Denmark’s “growth houses,” which offer funding so start-ups can perform patentability searches and subsidize the cost of filing a patent or trademark. I’ve heard repeated complaints from industry that university doctoral candidates are chasing technologies that have already been patented or pursuing a technology that will be obsolete because it’s not where the market is moving. We need to be more engaged.


4. Government must incentivize businesses to generate more patents. The CIC advocates that the federal government create a direct subsidy or make changes to the tax credit system to give entrepreneurs the option of hiring lawyers to file patents.


5. Canada should establish its own public-private patent investment fund to pool patents in critical sectors. Currently, institutions spend enormous amounts of time and money looking for “renters” who will license their technology. A patent investment fund would pool related patents and make them available for licensing on an industry-wide basis. The fund would also be in a position to purchase IP from high-tech firms that fall into bankruptcy (like Nortel Networks). Or the fund could provide equity to entrepreneurs seeking to trade licensing rights for cash. In short, a patent investment fund would operate like an amazon.com of Canadian patents – bartering cash for IP rights from companies or universities, and providing a one-stop shopping experience for other firms seeking to license.


6. The CIC advocates the creation of specialized IP courts. They already exist in some developed countries and emerging markets like China. Patents are being used as weapons of mass litigation: we need to give our companies better support through the legal system.


7. And finally we need a gold standard for patents. To that end, the government should improve the examination of patent applications and upgrade the Canadian Intellectual Property Office’s antiquated database, so that it can be searched online as easily as the U.S. archive. It should also let third parties contest an application before a patent is granted. Israel publishes applications and then weeds out the bad apple patents by re-examining any applications that have been challenged. We should do the same.

In closing: IP is complex and ever-changing. Wise governments undertake regular IP reviews, conducted by independent experts. Most developed nations have carved out IP strategies, recognizing that a dynamic and carefully conceived IP policy is vital to their prosperity. Canada needs to join the race.

Photo courtesy of Reuters