Imagine a contact lens that monitors a diabetic's glucose levels through a person's tears. Though not on the market yet, it is the patented wearable technology designed by Waterloo, Ont.-based Medella Health.
This company is in the homestretch of commercialization – a harrowing feat for many university-born concepts in Canada, as countless ideas never make it past the research stage thanks to high costs and years of red tape around ownership of intellectual property (IP).
While funding is usually pegged as a major problem hindering new ventures, the IP challenge is also one that has observers concerned.
In its final survey of IP in the higher education sector in 2009, Statistics Canada reported the country's universities made just more than $67-million in income from IP, but it cost almost $57-million to commercialize this research. With just $10-million in profits, critics call this rate of commercialization dismal at best and some of the blame may lie with unnecessary licensing, which can be costly and, in some cases, scare off further innovation.
In Medella's case, the company benefited from an unusual university setting.
Their idea started as the fourth-year design project of Medella founder and former University of Waterloo engineering student Huayi Gao. Within six months, a team of three, which included co-founder Harry Gandhi, chose to push Mr. Gao's research into commercialization.
"Given that we are in this very competitive industry, we realized that IP was going to be an important aspect for us," Mr. Gandhi says. Medella patented their idea just months after inception, in the summer of 2013. Mr. Gandhi says it was a "necessity" for his team because they wanted to protect their ideas, but adds that University of Waterloo's unique IP policy, which allows its researchers to own their own work, had everything to do with that decision.
"When you're a project coming out of a university…[you go] the typical path like a commercialization office set up by the university and, depending on what the project is, they'll take a certain cut of the project," he explains "Waterloo, given its IP policy, gives us a second option that you go build your own IP."
But Medella's experience and Waterloo's IP policies are uncommon. And experts argue that many Canada's universities act rashly when it comes to IP.
"I think we have tended to exaggerate the importance of patents," says McGill University law professor Richard Gold. "We are living in an era where universities are patenting everything. … I think we still tend to patent too much and there are other ways, better ways, to get information to go to industry."
He suggests that universities identify the necessity of a patent and see if there are faster ways to get a research idea to market. In the case of Medella's contact lenses, there may be a need to protect the intellectual property from the early stages to make sure no one copies the idea and brings the product to market early. But areas that are given government priority for development, such as clean technology, can take shortcuts to get to market.
"What you can do in certain key fields, like green energy, green technology, is they sometimes allow you to move ahead. They have a priority lane if you wish. It's like crossing into the United States with a Nexus card: You can go in faster," says Dr. Gold.
Patents can also cost in the tens, or even hundreds, of thousands, and according to Dr. Gold, "a lot of universities patent their really early-stage research, which really has no commercial value. … Most universities either break even or lose money in terms of their patenting and licensing, which is true around the world."
"And that's not including the cost to the researchers themselves in having to spend time drafting the patents and it doesn't include the effects of third parties who might be deterred from doing research," he adds.
An article published last month by U.S. researchers Mark Lemley of Stanford and Robin Feldman of University of California Hastings – Does Patent Licensing Mean Innovation? – found, through its surveys of those who negotiate patent licenses, that these could actually hinder new discoveries by discouraging others to pursue research in these fields.
"Based on our survey results, patent licensing seems to be an activity almost entirely divorced from innovation, a fact that has troubling implications for the patent system as a whole," notes the article.
One solution is more open access research, where researchers share their findings online and entrepreneurs and other researchers alike can access the information. For example, the BC Cancer Agency and the Structural Genomics Consortium Toronto, affiliated with the University of Toronto, both employ open access research. Their findings are available online without licensing restrictions.
But despite the criticism, some experts say that Canadian universities have improved their outlook on patents and their role in commercialization in recent years.
"I think we are getting better because it's finally changing to where it hasn't been before," says Tom Corr, president of the Ontario Centres of Excellence.
"To go back to my tech transfer days at the University of Toronto and the University of Waterloo, years ago – and this isn't a criticism; it was just the culture of universities and academic institutions – [it] was very much about, 'Let's come up with some neat stuff in the labs and maybe there's a home for it and maybe there isn't and we'll see how it evolves and whether or not it gets commercialized.'"
There is more concentration on getting those ideas to market, explains Dr. Corr, and there is more recognition that "a patent is simply one vehicle to protect intellectual property."