On Innovation and Sovereign Patent Pools

Note: 2017 update at the bottom. 

How can ventures in Canada, without licence expertise or experience, actually benefit from the IP they have acquired over time?

This week the DEEP Center in Canada (Center for Digital Entrepreneurship + Economic Performance), who has been doing research around the governance of IP, posted a blog about their ongoing research into sovereign patent funds (SPF’s). They looked to address a few specific questions around the rise of SPF’s, and how policy-makers can think about these types of funds. So far the governments of Japan, South Korea and Taiwan, all leading innovation nations, have all set up SPF’s.

There are many that won’t take the time to read through the paper, assuming it doesn’t impact their roles in IP or innovation activities, but I would suggest that many rethink the potential impact it will have on their venture. Looking through the DEEP work, it is obvious the question about the economic development of IP has been a topic of interest, and with recent talk in the news about SPF’s and moves by RIM we can say there is at least a discussion started that could impact how IP could be approached by firms in Canada.

Last June, Jim Balsillie (co-founder and former co-CEO of RIM / Blackberry), wrote an article in the Globe & Mail entitled “Time to invest in better protections for Canada’s intellectual property”. He lamented that if Canada wants to continue to invest to grow SME’s into globally competitive firms, they also need to invest in an ecosystem that protects their ideas.

“The Government of Canada annually invests billions of dollars in innovation strategies through various grants and programs designed to harness ideas and turn them into commercialized services or products. Yet the intrinsic value stored in the intellectual property that has been generated by these public investments will not yield maximum dividends if we do not consider equally shrewd approaches used by GE, other global corporations and governments.”

One such way to do this, Balsillie suggest, is to build and increase the IP rights capacity through tools such as sovereign patent funds.

Ironically, last month in August, Blackberry spun off and launched BlackBerry Technology Solutions – the IP arm of Balsillie’s old company – to essentially build a separate licence venture. In essence, Blackberry’s budget and pool of 44,000+ patents was enough to launch their own corporate patent fund.

Unfortunately for most ventures launching a private fund or group is not feasible, which is where the DEEP research comes into play. By starting the conversation for policy-makers, it puts another viable option on the table. Right now there are several semi-private funds in Canada, such as Wi-Lan, but there exists no easy way for smaller ventures to be helped with protection, or even larger ventures without the expertise or connections to build a licence program. As a result it implies there is a considerable amount of work many governments can do on the IP front – they routinely invest billions in innovation and R&D grants, but as a percentage dedicate little to no effort or funds to the future of protecting innovation outputs.  Granted, there is a large time gap between funding innovations and having patents that can be used for licensing, but that does not make it any less important in the cycle of taking an innovative idea from conception and building a global business around it.

If the innovation outputs are supported by IP they can be a vehicle for future venture growth both remain in and be profitable inside of Canada. There are those that will argue against a SPF, just on principle that a state sponsored NPE shouldn’t be created, but it ignores the key market force at play: Regardless of who is funding and managing the funds there is a multi-billion dollar opportunity in both jobs and revenue that has been created by the enforcement side of the patent system that exists. Many firms and individuals understand that and are reaping the benefits, using the patents supported by the innovation funds originally supported by early state investors and government funds.

If countries and firms want to be leading edge on the innovation front, it will also take effort to remain out front protecting their developments.

2017 UPDATE: An update has been posted in relation to this. I bring this up because the global IP licensing market has changed dramatically in the past few years – both in what is working and in what jurisdictions they are working best in.  While SPF’s and Patent Assertion Entities are still relevant, their approaches are expanding from pure licensing to stronger linkages to venture innovation projects and associated funding.