Gordon Harling is CEO of CMC Microsystems.
Concerns about Canadian intellectual property moving offshore raise a broader and more important issue about made-in-Canada IP. Across the country, universities have no common or baseline intellectual-property policy; each institution has developed its own approach based on its own worldview. These variations in IP policy have resulted in a wide range of outcomes in industrial collaboration and the financial terms relating to patent use. In the worst cases, IP policies have turned potential industrial partners away from collaborating with universities.
In my own experience working inside Canadian startups, one university insisted on 30 per cent of our company’s revenue as a royalty. This may seem reasonable if, for example, a patent has been developed through university-funded research, but in an industrial setting even the best companies only generate about 10-per-cent profit, so being forced to pay 30 per cent of revenue would ensure that a startup company never becomes viable.
Universities that generate income from selling patents are generally fortunate if they come close to break-even on those IP efforts. In all of North America, only a few have had significant success, including the University of California Berkeley (CRISPR gene-editing technique ), University of Florida (Gatorade), University of Sherbrooke (CELP processor) and more recently Carnegie Mellon (semiconductor company Marvell).
A lottery-ticket mentality around IP has spurred universities to focus on building patent portfolios with the hope of cashing in at a future date but the university Office of Technology Transfer, which is responsible for licensing patents, has not proven to be the best approach: In most cases, a small number of people are expected to understand the significance of IP coming from every department of the university and to develop contacts in the appropriate industries. Often, they are given the task of approaching companies with a message along the lines of, “We believe that you are infringing on our patent.” As you can imagine, this is not a positive way to start a collaborative relationship.
Essentially the universities are acting as non-practising entities, or patent trolls. Patent trolls are companies and organizations whose sole purpose in life is to acquire patents on various innovations and then search the global market to find companies whose products appear to infringe on those patents. They then take legal action against those companies that is typically resolved by large cash settlements.
Some universities in Canada have simply chosen to leave IP in the hands of the researchers who created it. The universities help them commercialize the IP through incubators, accelerators, and local investors. Although this approach may take decades, it has shown extraordinary success in spinoff tech companies such as BlackBerry, Maplesoft, OpenText, DALSA, and many others.
Canada is very well placed for innovation; our academic researchers and students are well equipped with industrial-grade tools for design, our graduates are highly prized for their training and attitude, and our government is investing in building the manufacturing ecosystem.
We could unleash a flurry of pent-up technology and launch hundreds of new technology startups if we had a national policy on intellectual property for our government-funded universities. This, in turn, would break the IP management bottleneck in the universities and motivate researchers to commercialize their innovations as quickly as they can, instead of waiting for the “good news” from the Technology Transfer department.
If Canada is serious about supporting innovation and technology to support the growth of a new and flourishing wave of start-up companies and entrepreneurs, then it must respond to the challenges around commercializing university-created IP. New funding initiatives such as the superclusters rely on industry-university collaboration to achieve lasting, technological advances to secure economic benefit. This requires a common-sense approach to intellectual property. It is time to create a national policy for universities.