On May 9, The Globe and Mail published Canadians Can Innovate, But We're Not Equipped To Win, by Research in Motion co-founder Jim Balsillie. This is part of a series responding to and expanding on that essay.
Barry Sookman is a senior partner in McCarthy Tetrault's technology law group and former head of its intellectual property group. He teaches intellectual property at Osgoode Hall law school and blogs on IP issues at barrysookman.com.
Judith McKay is a patent lawyer specializing in intellectual property strategies at McCarthy Tetrault. She is also the firm's chief client officer.
Jim Balsillie is right: We need to implement a concrete plan to support and capitalize on Canadian innovation. Our current approach is not the path to prosperity.
We need only look to the global companies that have successfully commercialized innovation to see that our approach hasn't measured up. One of the salient differences between Canadian companies and them is their perspective and approach to intellectual property, especially patents. Companies around the world, and especially in the United States, recognize its strategic importance throughout the entire innovation ecosystem.
In Canada, many businesses still view intellectual property as arcane. These businesses may obtain a significant number of patents, but haven't positioned themselves to strategically harness their value. Canadians play nice and tend to think of patents only as defensive tools, rather than as weapons. This is not the way to unleash the wealth our innovators and entrepreneurs are capable of generating.
Leaders at most successful global technology companies understand the strategic worth of a patent portfolio and use it as powerful ammunition for increasing business value and beating the competition. Executives, researchers and lawyers collaborate to develop comprehensive business strategies for exploiting intellectual property. Litigation and commercial lawyers work hand-in-glove with patent counsel to develop offensive and defensive strategies. Universities partner closely with industry to develop, protect and monetize their intellectual property. Governments are highly supportive of business and help them capitalize on their innovations. This sophisticated global approach is built on robust, long-term leadership and solid business planning.
When there is a market shift, the most successful global companies invest substantially in research to address unmet market needs. Patents multiply at a dramatic pace as each company strives to achieve a dominant position – analogous to an arms race. If the players' patent portfolios are on relatively equal footing and customers want a variety of solutions, there may be some skirmishes, but ultimately there is a form of détente through cross-licensing arrangements. Those businesses that don't make the investments to protect their IP, or that cut corners on patents protection, lose their ability to cross-license, or have to pay substantial fees to do so.
If the stakes are high enough and companies feel they have a competitive technological edge protected by a stronger patent portfolio than the competition, they go to war, and lawsuits proliferate. A prime example is the smartphone industry, where the web of lawsuits among manufacturers is byzantine. As the digital economy continues to cause massive disruption to traditional business models, the disputes will only get more frequent and increase in intensity. Canadian businesses that rely solely on their technology and marketing prowess lack a key leg in the competition stool.
As Mr. Balsillie noted, Canada's innovation performance will only improve if business, university and political leaders come together to consider radical solutions.
Canadian businesses need to understand intellectual property's importance to their competitive potential. Training lawyers with the right skills would be a first step, but as the survey Mr. Balsillie referred to pointed out, over all, Canadian law schools are falling short. In some parts of Canada, law students can get only the most basic level of IP education; the most diverse programs are generally concentrated in Ontario and Quebec. There are few schools that offer even core courses in patent law, let alone courses in competitive patent strategies. Furthermore, the publications of full-time academics in Canadian law schools reveal an emphasis on theoretical aspects of IP law, much of it advocating for weaker laws. Far less has been written on strategic use of existing laws to obtain, exploit and commercialize IP.
A considerable portion of this research is funded through government grants, research chairs and salaries for full-time faculty. If Canada really wants to support innovation, questions need to be asked about whether this helps support innovation, and whether our resources can be better invested.
It is true that the patent system has been the subject of considerable criticism, most recently related to patent trolls and poor patent quality. But Canadian businesses and those who support our innovation ecosystem can't sit idly by, criticizing and waiting for patent systems to be recalibrated abroad.
The largest market for Canadian innovation is the United States. Commercializing in the more litigious U.S. environment is not for the unsophisticated or faint-hearted. Meanwhile, global companies are entering Canada with technologies that have the potential to disrupt many of our established financial services, telecom and resource-based industries.
Accordingly, it's critical that we strategize at the national level about the multidimensional innovation chess game being played out in the world's boardrooms and courtrooms. We must unite to implement a concrete plan to support Canadian innovation – and capitalize on it.