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Black Swan events and IP: Managing today’s IP policies and IP strategies for tomorrow’s dawn

Given the recent developments due to the pandemic, including the unprecedented challenges companies will surely face in the coming months and years, the are are considerable IP based implications for innovation and stimulus policy makers, companies, and IP owners to start to act on.

In the short term, we can see the IP shifting in the market in the following ways – with the needs diverging between companies impacted negatively by Covid-19 related slowdowns and those “doubling down” as the work to carve out solutions for global need.

There are at least 4 key topics that will emerge for all firms to start to consider – both offering challenges and opportunists depending on the path taken:

1) Cash flow challenges:

Organizations facing liquidity issues often sell IP well below market value, or fully abandon their IP, with historical and well-publicized bankruptcy IP sales seeing over 80% discounts on expected portfolio values. With cash flow becoming a challenge for some firms, the IP on the open market may only increase with the possibility of lower pricing to come for some portfolios. For companies facing bankruptcy and potential liquidation of assets there is the real threat that the assets will be sold at a high discount, leaving Freedom to Operate control in the hands of competitive ventures or larger market players with the capital to acquire assets for future market control.

Who will come out on top?

2) Resource allocation:

Companies planning to survive and grow need to be vigilant of their short term finances and any return on investment and may move to reduce IP budgets or abandon patents or even reduce IP jobs to control costs. Unfortunately, patents are often a costly item that may only be seen to pay dividends 3-5 years in the future and thus may be deferred in favor of today’s finance needs.

Who will come out on top?

  • Companies that have a robust IP strategy that takes into account how to spend less but still create or retain intangible value over the long period. While access to continued capital for maintenance of patent portfolios will be important, those that understand which areas of the portfolio to “double down on” and which to divest or abandon that may only have secondary value will be much better position on balancing short term finance needs against long term value retention.
  • Likewise, those that have “IP thinking” embedded into key management roles (R&D, Finance, Marketing) will ensure continuity of an IP plan should talent need adjusted. Past investments in IP education for management will payoff today.
  • Finally, while some firms cut back on IP it will be those that continue IP investments where possible who will widen the “IP gap” between themselves and market competitors – and do so with the same level of planned investment. Going forward this is an unprecedented opportunity to take advantage of.

3) Market vertical adaptation

Many firms are now seeing a shift to support the short term global needs such as medical or health-technology. In addition, there will be many complementary technologies evolving outside the immediate health-tech area will evolve in the longer term, such as water purification or air filtering technology, due to the potential increase in the compromised health of all global citizens.

Who will come out on top?

  • Firms who have spent time building IP portfolios that are broad enough to shift to cover adjacent verticals will be in a strong position. The can begin to leverage their internal skills to not only shift to the market need, but do so knowing their medium and longer term IP position has some level of coverage to protect the investment.
  • Second it will be firms who begin to adapt now to todays market needs but also move in parallel to ensure the have Freedom to Operate, with particular attention spent on acquiring lower cost competitive portfolios to build their IP position at a low cost (see point #1 above).
  • Firms that work in a collaborative manner (i.e., via a Patent Collective) to develop pooling agreements to reduce the FTO restrictions on their respective teams and enable faster co-development for market ready products. This may already be underway in some areas as the WHO has already been asked to create a voluntary IP pool to develop Covid-19 products, and we are certain some individual Governments are moving to support the same approach within their own borders.

4) Licensing and technology investment approaches

Many firms who in-license technology may already have licensing terms that dictate the requirements of the IP owner to maintain or work to enforce patents – both that require active cash flow from the licensor – meaning if the licensor is unable to meet the terms due to financial difficulty then portions (or all) of the agreement may become void. Similarly, those who rely on out-licensing may also have minimum requirements to be held up by the licensor for them to maintain their geographic or other exclusive rights. Co-development of R&D projects may be contingent on background IP, as well as shared allocations of foreground IP based on continued investment.

Who will come out on top?

  • Firms who are reviewing IP clauses of existing contracts to ensure they will not be in breach based on failure to maintain minimum payments, levels of agreed on asset maintenance, or other IP based triggers that will put them at a competitive advantage or disadvantage or the coming months and years.
  • In addition investment firms who have considered IP assets as collateral may be in the strongest position to retain and control key assets of the firm if it goes under financial challenges, and likewise those that begin to request IP as collateral going forward will be in a stronger position.

In summary:

The seismic shift of world economy has been best summed up in 1 tweet, as quoted by Paul Graham earlier yesterday: “A week is the new year”

For many firms successful short term management of challenges today is key but IP may be the cornerstone that also enables them to succeed or fail tomorrow. And as a “week is the new year”, things will only move faster than before.

A recent editorial by IAM Media’s Joff Wild does provide an optimistic view of “This, too, shall pass…” but at least in the short term the successful firms and IP strategist will be those who advocate, explain, and demonstrate the central role IP can play in developing IP strategies for this new world.

Policy makers need to consider the IP implications of medium and long term innovation investments, realizing that now is the time to ensure innovation is coupled with IP support and specific IP investments. This will ensure firms will be supported well beyond the economic situation we see today. Likewise companies and IP owners need to work to ensure strategic IP positions are managed appropriately (cost control, divested when necessary, re-positioned and refunded when required, or contractually supported), and assessed from the view of both a short term and long term position.

While innovation is needed for today, now is the time for firms and policy makers (corporate and governmental alike) to use this disruption to their advantage and ensure economic prosperity that grows well beyond these troubled times.

Up next post we’ll outline the challenges specific to SME’s, and how they can start to assess and make tangible moves to address IP risks and opportunities today.

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A Canadian Patent Collective

Almost 24 months ago, in response to Canada’s announcement of a national IP strategy, both Jim Hinton and I called for Canada’s need to move towards a more innovative intellectual property strategy. In our discussion we focused on the dismal amount of IP our research institutions and companies generate in relation to the rest of the world, and suggested approaches to consider. At that time, CIPO’s / Statistics Canada’s estimation was only 9% of innovative SME companies in Canada had an IP strategy. One of our suggestions was to consider a Patent Collective, formed to help companies address the IP gap we have when compared to the global IP environment we need to operate in.

The importance of this topic is a critical discussion to have:  In the past years there has been additional  moves to help shift Canada’s IP position, but the ability and pace to enact change is similar to a David vs Goliath story compared to the larger ecosystem . In reality countries like China and the US have increased patent filings in areas such as Artificial Intelligence, and IoT, where other countries investments of combined IP + research have not kept pace.  To support this example view, not a month seems to go by without yet another report from entities such as WIPO, who release data or press releases on how the “AI IP boom” is expanding.  For example, WIPO’s recent AI trend report indicated the CAGR of machine learning patents ranged from 46% to upwards of 174%, with leaders such as IBM and Microsoft as having AI portfolios in the range of 8200 and 6000+ inventions respectively.

(Source: WIPO)

While AI is only one example, there are other technology sectors where similar trends are playing out. Yet regardless of the trend the fundamental issue seems to remain for Canadian companies – IP attention by our SME’s appears lacking in comparison to the world growth rate.

In other words: We seem to do relatively very little in IP, and even less “IP strategy”.

Two years ago I wrote that few Canadian SME’s exporting at key conferences such as CES appear to have very little in the way of a developed IP strategy, in the range of 10%. The data I compiled is slightly higher for 2019 CES, but not substantially.  This estimate matches with Statistics Canada’s figures, which is a concerning trend because the same Statistics Canada report suggests IP is a component of successful SME exporting, finding SME’s in Canada who have formal IP are 2 to 4x more likely to export, and 60% more likely to be high growth. To support this, a study on SME’s in Europe out of Paristech Mines suggested startups were 3x more likely to be successful if they had 1 patents, and 5x if they had a number of patents.

In other words: We seem to do relatively very little in IP, and even less “IP strategy”, despite IP holdings and IP strategy being linked to SME success.

As a component of the national IP strategy, Canada’s recent announcement towards operationalizing a Pilot Patent Collective program may be just the pilot tool to help SME’s address or jump the “IP gap” they currently face. With IP linked to SME success, we now have the opportunity to support our innovation and SME research investments with similar IP based initiatives.

Inclusion into the IAM Strategy 300 list for 2016

IAM Strategy 300 2016 Truly a “Standing on the shoulders of giants” moment – for the 3rd year in a row I have been listed in the 2016 edition of the IAM Strategy 300, which was published  last month.

I am particularly thankful to my peers for nominating me for inclusion in this years list.   When I started investing in my IP education 17 years ago, seemingly “before it was cool”, I did it because I was passionate about the topic, getting insight from every piece of literature I could.  As a result of my efforts, I’m now humbled to be listed along side world class IP lawyers and consultants, as well as IP heads from companies like Google, Amazon, Ford Motors, Nike, and Apple.  I’ve come far, but still have a long way to go!

My congratulations to all those that are on the list in 2016.

About the IAM Strategists 300: Over the course of several months, IAM researchers spoke to a wide range of leading IP professionals in order to identify people considered to be world-class IP strategists: men and women whose business is the creation, development and deployment of strategies that enable IP rights owners to gain maximum value from their portfolios. Only those individuals considered and nominated by their peers to be outstanding IP strategists are listed in the IAM Strategy 300. The IAM Strategy 300 is available in printed format and online at

A brief pause on IP Insights …

My apologies – all my writing drafts are with publishers!  Two articles and a book chapter somehow were written in the past few months, so will be back to  posted IP insights shortly.

If you have IAM Magazine access you can view my latest published IP strategy based article: How an innovation and IP value-chain view can transform portfolio value “While an IP portfolio built on business value chain can have strategic value, companies should take a closer look at how strong links between intellectual property and innovation can expand a portfolio’s breadth and depth”


October Event Calendar: IP & Business Innovation Forum

For those local to Victoria, I am helping organize an IP-Business forum in October – Mark your calendars for October 8th.  Details are below and you can register here.

Event Calendar: IP & Business Innovation Forum

Register today – limited availability

If you are a R&D leader, inventor, investor or CEO, CFO, or CTO of a growing technology-based venture join us of an afternoon seminar featuring thought-provoking discussion from six industry experts. The session will conclude with a networking reception. Local beer, wine and appetizers will be served.

WHEN:  Thursday, October 8, 2015 – 3:00 pm – 6:00 pm

A seminar examining significant factors that may dictate whether your venture is successful – These factors include the interaction between R&D, Innovation, IP, and Business.

A panel of industry experts will address questions including:

  • What are the best business structures for operating success?
  • What are the strategic approaches connecting R&D, innovation, and patents?
  • Why and how does a business focused patent strategy need created?
  • How do SR&ED, and other tax challenges impact your venture or investment?
  • Why should company stakeholders care about these topics, and what is the cost of getting them wrong?

WHERE: Laurel Point Inn, Merino Room.


  • John McLeod – Reed Pope Business Lawyers
  • Anne Flanagan – Alliance Patents
  • James Ramsbottom – Merizzi Ramsbottom & Forster
  • Peter Cowan – Northworks IP
  • Jason Cheng – PwC
  • Elisabeth  Finch – PwC

Each of our speakers will talk to you about their area of expertise for twenty minutes, followed by a panel discussion moderated by Peter Elkins of the Capital Investment Network

COST: $45, includes refreshments and appetizers.

REGISTER: To register click on the following link

Speaker & Session Details:

 Session #1: Structures for Success
(John McLeod, Associate Counsel at Reed Pope Law Corporation)

This session will highlight the importance of adopting business structures that suit your operating environment and capital raising, tax, IP and other goals.  John will review steps you can take to document ownership of IP as between your business and its founders, employees, consultants and partners.  If you build value, the strength of your IP portfolio will likely be tested through due diligence or litigation or both.

Session #2: Developing and Protecting Technology
(Anne Flanagan, Owner, Alliance Patents)

A strategic approach to developing and protecting technology is essential for any company, whether a start up based on new technology, or an existing company looking to maintain their competitive advantage.  This session will discuss strategies to mesh company R&D with the development of a patent portfolio.

Session #3: Canadian Organization Filing Strategies
(James Ramsbottom, Partner & Patent Agent, Merizzi Ramsbottom & Forster)

A strategically built intellectual property portfolio is the cornerstone any organization involved in the development, marketing and selling of technological advancements.  This session will review some high-level patent prosecution strategies that may be available to organizations for developing their patent portfolios in a timely manner, using programs available through Canadian Patent Office and other foreign patent offices, which can be leveraged internationally.

Session #4: IP and strategies to secure sustainable competitive advantage
(Peter Cowan, Northworks IP)

An IP strategy is vital for all businesses that rely on IP to support or generate revenue. This session will review the key points in building and developing a business focused IP strategy that can both lock out competitors as well as create a scalable and sustainable competitive advantage.  It will illustrate how to create and evolve your IP strategy, and bring the discussion into the boardroom.

Session #5: SR&ED Update: Are your claims aligned with new case law & CRA expectations?
(Jason Cheng, Partner, PwC)

The Scientific Research & Experimental Development (SR&ED) program remains a key source of funding for innovative businesses. Ensure that you continue to protect your investment in R&D by learning the latest on this key tax credit program, understand the current approach the CRA is taking on file reviews, and hear about the implications of significant recent court rulings that could be beneficial to your claim.

Session #6: Moving and using IP across international borders: tax opportunities and challenges
(Elisabeth Finch, Partner, Tax Services, PwC)

This session will explain the international tax challenges you will face when creating an effective international IP structure, in a way everyone can understand. Elisabeth will also highlight the reasons your company’s stakeholders will care about these structures being right, and the costs of getting it wrong.

Session #7: Bringing it all together: Business, R&D, IP, & Innovation

(Peter Elkins, Capital Investment Network).

Peter will host a moderated discussion with the panel members.