Innovation without protection is philanthropy

Author: Paul Krzyzanowski, 01/08/13

This year, your household will pay $360 for the use of Intellectual Property (IP) held by people and corporations outside of Canada. For a little less than a dollar a day, you’re supporting industries like biotechnology, high-tech electronics, and engineering in other countries. Two policy think-tanks believe it’s time for Canadians to flip that balance in our favour.

…dramatic improvements to the national system of invention are long overdue.”

The Canadian International Council, an organization striving to improve Canada’s role in international affairs, released an intellectual property report, Rights and Rents, in 2011 that cites $4.5 billion as the net cost Canadians pay annually to use foreign-held IP (for non-Canadians, the report includes data on 15 other nations as a comparison). The report explores the many reasons why dramatic improvements to the national system of invention are long overdue.

In a similar vein, the Council of Canadian Academies released a State of Science in Canada report in late 2012. It found that Canadian science was held in very high regard by highly-cited authors across the globe, with 37 per cent identifying Canada as one of the five leading countries in their own fields, behind only the United States, United Kingdom, and Germany.

As in Rights and Rents, the deficiency highlighted by State of Science is in actually capturing IP, so that despite producing 4.1 per cent of the world’s scientific papers, Canadians held only 1.7 per cent of the world’s patents.

The reports are a long read, but both remind us that a great deal of work is needed to improve Canada’s ability to exploit intellectual property. Simply put, innovation without protection is philanthropy.

Will the 2020’s be a decade of IP-savvy graduates?

…the next generation of innovators aren’t being taught to consider the wider implications of what they are studying, outside of academic applications.”

Training of Highly Qualified Personnel (HQP), i.e. degree holders and postdoctoral fellows, is often used as a proxy for how we’re training an innovative workforce. More is often seen as better. Today, fully half of Canadians have some post-secondary education, and about 44,000 Masters and PhD’s graduate annually as of 2009.

But many examples indicate that such HQP, arguably the next generation of innovators, aren’t being taught to consider the wider implications of what they are studying, outside of academic applications. Take this, for example:

“While teaching a course on IP strategy at the University of Sherbrooke, Jean-Nicolas Delage of the Montreal law firm Fasken Martineau was shocked that no one in his class, all doctoral students conducting scientific research, routinely searched patent databases or understood the difference between “patentability” and “freedom to operate” (FTO) — the test required to determine whether a product may infringe on the rights of others.” (Rights and Rents, 2011)

To an extent, I can relate to this. During my grad work I was aware of some IP issues, but the knowledge came from my own self-study of institute policy documents and guidelines in grant applications regarding ownership of IP.

In the end, no formal course on commercialization was offered in my program. There was plenty of emphasis on the design of research studies with academic endpoints in mind, but considering IP potential of our research projects was hardly raised, if at all. If I had really insisted on a course, I’m sure an accommodation would have been made, but nonetheless the option wasn’t a priority.

I understand that promoting commercial endpoints within an academic setting might be anathema for many researchers. But given that most HQPs don’t end up in academia anyways, it might be more fair and ethical to trainees to expose them to this kind of thinking early in their training.

Today, one of the recommendations given in Rights and Rents is that “every student in an applicable master’s or doctoral program should require credits in innovation and entrepreneurial training.” In retrospect, I couldn’t agree more.

There’s strength in numbers (of patents, that is)

Fast forward to 2020 and imagine that you’re an IP-savvy postdoc or researcher and have patented a new invention: companies generally won’t bang on your door to use it. There are huge costs in making your patent work, such as identifying potential buyers or users of the IP and establishing the value and terms for licensing agreements.

This can whittle away at the economics of your invention until no options are good enough to pursue.

You could contribute it into an IP portfolio, which contains many patents like yours. This has a number of advantages. Technology can be licensed as a set of complementary inventions. Another major benefit of a patent pool is to have control over many critical pieces of IP, reducing the risk of encountering litigation from patent trolls. A set of complementary patents might end up in products sooner than each patent could alone.

One of the world’s largest patent aggregator funds is Intellectual Ventures, a private fund currently owning about 70 thousand different IP assets. The fund makes a profit by organizing these assets into focused areas and approaching potential users of those pools that pay for use of the property.

In Europe, another route towards leveraging research patents is being considered, with the creation of an online marketplace like an for IP being contemplated. The European Commission is currently exploring mechanisms of aggregating or actively trading intellectual property.

Either of these approaches can help mobilize dormant research IP, which in Europe estimates at 8 to 24 per cent of all patents.

Like it or not, industry and academia are intertwined

Despite universities being a hotbed of invention, licensing and royalty revenues do not constitute a significant source of funds for academia.”

Despite universities being a hotbed of invention, licensing and royalty revenues do not constitute a significant source of funds for academia. According to Rights and Rents, Stanford is the most successful campus from a return on research investment angle, recouping 7.2 cents for every dollar spent on research on its campus in 2008. Its Office of Technology Licensing offers a comprehensive overview of why commercialization of research matters.

On average, the IP revenues of the United States academic system equal only 5 per cent of research spending.

In contrast, the Canadian system returns just above 1 per cent, and the reasons for the discrepancy aren’t entirely clear. One explanation given is that researchers are reluctant to become entrepreneurs, which may speak more to a lack of emphasis on business training.

Another might be our conservative nature when it comes to financial matters, leading Canadians to opt for payments for IP and cost-recovery rather than higher risk options, such as engaging industry in partnerships to see what bears fruit.

This leads to a classic Catch 22: Part of the difficulty in finding partners to develop academic IP is that there aren’t more companies to engage. The Canadian International Council cites Canada’s gross spending on biotech research and development as less than 1 per cent of what the U.S. invests. Given the relative sizes of the two economies, the intensity of Canadian biotech should be 10 times higher.

This is bright news for the future, as it suggests there’s a lot of room for the Canadian biotech industry to grow. Ironically, I feel that this industrial growth will bring academic research to a whole new level.

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Paul Krzyzanowski

Paul is a computational biologist and writer living in Toronto. He's been a contributor to Signals for three years, writing articles for the general public about how biotechnology and biomedical research can be used to solve pressing medical problems. Alongside Paul's experience in computational biology,
 bioinformatics, and molecular genetics, he's interested in how academic research develops into real world, commercial technology, and what's needed for the Canadian biotech industry needs to grow. Paul is currently a Post-doctoral Fellow at the Ontario Institute of Cancer Research. Prior to joining the OICR, he worked at the Ottawa Hospital Research 
Institute and earned a Ph.D. from the University of Ottawa, specializing in computational biology. And finally, Paul earned an H.B.Sc. from the University of Toronto a long time ago. Paul's blog can be read at
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