Does your Scale-up Reality Check Show an IP Strategy?

Investments in technology and global marketing are still happening, but in Canada, 90% of companies are not protecting the innovation as they move to grow. 

In the past several months I have talked with numerous startups and high-potential scale-up ventures, few of which are ready or able to adequately invest in protecting their R&D investments as they grow. The key challenge they all face? IP obstacles – both in funds to invest and the experience or expertise to do so efficiently, which will in turn become a limiter to their growth. The end result, at least for the ventures I met with, was they are at serious risk in expanding their global market footprint while keeping global competition at bay.

I considered if my experience was limited to the groups I spoke to, so I analyzed some additional Canadian market data, which confirmed my view.

First, we have to consider that there is support for company growth, and both Government and Canadian ventures are continuing to show success in innovations for global scale up. As an example, almost 75 Canadian companies were exhibitors at January’s Consumer Electronics Show (CES 2017) in Las Vegas, with more than half of them coming from Ontario. Navdeep Bains, Canada’s minister of innovation, science and economic development, was in attendance and met with a number of Canadians companies such as Blackberry, Mighty Cast, Interaxion, and Paradigm Electronics, to discuss innovation and access to global markets.  Considering the Government of Canada is investing $218 million over the next five years to increase global investments, and CES 2017 is billed as the worlds largest consumer technology tradeshow, the attendance by both Minister Baines and the exhibitors to help promote our innovations on a global scale makes sense.

However, when I look at the data, the long term impact of the Government’s global investments drive coupled with the ventures R&D investment, I struggled to find a way these investments would be protected. My analysis of the all the Canadian SME companies exhibiting at CES 2017 indicated only 18% had publicly listed patent protection for their technology. In fact, less than 10% of the SME’s reviewed had the beginnings of an Intellectual Property (IP) strategy. This implies that upwards of 90% of the ventures promoting their innovations on a global scale were not set-up to protect the benefits of their efforts in the long term.

What this means is while high-potential scale-up firms are producing ideas, ownership eventually will lie elsewhere as larger global competitors move to copy the product, or protect new iterations with their own IP protection.

Looking globally, there are several countries that realize this, and are moving to act on it. In April, Singapore launched a $1Billion innovation fund, which was partially funded by the IP Office of Singapore. Their goal is to fund companies that have “globally competitive technology”, and also begin to move Singapore as a “Global IP Hub in Asia”. With this it is clear that the innovation investments via Singapore will have a strong IP aspect to them. Canada, with creation of a National Patent Strategy in this years Federal Budget, will hopefully not be far behind.

In 2014 I posted a writeup about “Innovation and Sovereign Patent Pools”. The global IP licensing market has changed dramatically and while SPF’s and Patent Assertion Entities are still relevant, their approaches are expanding from pure licensing to stronger linkages to local innovation projects and funding.

So where do we move from here?

As a company, one must invest in not only research and global growth plans, but ensure they have the freedom to own their success – which can be accomplished by an IP Strategy. As an investor, either a private or government fund, policy and action via funding must consider the ownership of the technology: are we satisfied with merely creating technology, or will we strive to be the beneficiaries of our intellectual property?

To be successful, all key parties – ventures, investors, and government groups – need to make strategic investments in intellectual property to give freedom for growth.