James Hinton is an intellectual property lawyer with Bereskin & Parr LLP in Waterloo, Ont., and an assistant professor at the University of Western Ontario. Warren Clarke is a senior research associate at the DEEP Centre in Waterloo.
The text of the recently concluded Trans-Pacific Partnership agreement continues to generate considerable debate. Critics allege that the most controversial provisions of the agreement – largely contained in the intellectual property (IP) chapter – would do significant harm to the long-run competitiveness of Canadian firms. Former BlackBerry co-CEO Jim Balsillie has argued that the TPP "clearly demarks the shift in global value creation from tangible to intangible goods by providing unprecedented advantages to current large holders and producers of IP."
Ultimately, there is little doubt that the IP provisions of the TPP largely reflect the interests and preferences of the United States and its large technology champions, although it is worth noting that the U.S. negotiators did not secure all of their initial demands. Moreover, the fact that the negotiating outcomes are tilted in U.S. favour should come as no surprise. American negotiators have long used the carrot and stick of preferential access to the world's largest and most lucrative consumer market to bend negotiating outcomes in their favour. Trade negotiations have always been and will always be a power game, and we should expect those countries with the biggest bargaining advantages to get most of what they want, most of the time.
Instead of unquestioningly embracing foreign-bred rules or withdrawing from international trade negotiations, there is another option that Canada can and should embrace. Canada must recognize that while we cannot always shape international rules to our liking, we can play within the margins of these rules – using their flexibilities, loopholes and omissions – to enhance our innovation and commercialization capacity. This "wiggle room" approach has already been used successfully to support firms through precommercial procurement as a reaction to international rules which increasingly restrict the ability of governments to give preferential treatment to goods and services produced by domestic firms. Going forward, Canada can and must embrace a similar approach with respect to intellectual-property rights.
Other countries are already embracing this strategy. As international standards in IP have increasingly converged, national governments have implemented systems to protect national firms through state-backed or "sovereign" patent funds. Japan, South Korea and France have all created such funds as mechanisms to intervene in the patent landscape by acquiring, licensing and even occasionally enforcing patents. In our recent report, we examined the holdings and strategies of these funds and found that they are actively protecting domestically generated IP abroad, particularly in the world's largest IP market – the United States.
Each of these funds provides protection in different ways. Japan's IP Bridge has focused on acquiring U.S. patents previously held by large Japanese multinationals in an effort to realize value from "dormant" patents and prevent them from falling into the hands of so-called patent trolls. South Korea's Intellectual Discovery operates both a defensive pool, designed to protect firms against litigation, as well as helping both public and private groups commercialize their IP. Finally, France Brevets focuses on bundling together IP in particular technology areas and providing commercialization support to individuals and small and medium-size French companies, such as the firm Inside Secure.
The sovereign patent fund model can help secure and commercialize Canada's IP within the boundaries set by existing international trade rules. The model is also flexible and can adapt to focus on strategic sectors and firms. For instance, a Canadian fund could be oriented toward protecting Canada's existing intellectual property resources and helping secure freedom to operate for Canadian innovators both at home and in crucial marketssuch as the United States.
In addition, a state-backed fund could provide targeted support to help high-potential firms develop IP strategies that support rapid growth and scaling. Coupled with a greater emphasis on IP support delivered through startup support organizations like business incubators and accelerators, such a fund could represent a significant step forward in helping the next generation of Canadian technology companies develop strong positions in IP.
Canada has the knowledge and IP expertise to make this model work successfully at home. We can also draw on the experiences of these other countries to give Canadian innovators the edge they need when venturing into international commercialization.
We wouldn't expect our national athletes to succeed internationally without the proper coaching and training, and we shouldn't expect our innovators to succeed without national IP support. It is time to own the innovation podium. It's time for Canada to develop and implement a national IP strategy.