We live in an era marked by digital transformation and constant innovation. In this new economic reality, the success of individual organizations and the prosperity of entire nations increasingly depend on the ownership of intellectual property (IP).
In Canada, government and business leaders are rethinking our country’s IP strategies. First, we need a new definition of intellectual property, which reflects our current economic reality and addresses the rapid changes and new types of disruption that characterize the innovation economy.
In the industrial economy, it was acceptable to think of intellectual property as the technical details of a product or a manufacturing process. Back then, markets were smaller and slower, competition was less intense, and consumers didn’t have much choice – they bought what was available.
Times have changed and technical capacities are no longer sufficient. We are now faced with highly segmented markets and highly differentiated products targeted at individual niches. We also face accelerating rates of innovation, experimentation with venture capital-fueled products and markets, and frequent product and market disruptions.
Therefore, we need a new and expanded definition of intellectual property.
This new definition – let’s call it IP 2.0 – recognizes that “technical” intellectual property is just a table issue and that we must now add two equally important elements to our understanding of what constitutes intellectual property: the “market” and the “process” for bringing new technologies to market.
To go further, companies in the innovation economy must marry technical intellectual property with commercial intellectual property and deal with intellectual property if they are to be successful.
Recent research shows that Canadian tech companies are filing enough patents, but failing to generate the economic benefits that companies in the United States do. This is because Canadian companies have technical IP, but not enough market or process IP to meet the growing needs to be competitive in the innovation economy.
Market intellectual property is the knowledge resulting from identifying a large market ready for disruption, determining the needs of that market, and understanding the competition. For the most part, Canadian entrepreneurs do not create the kind of research-based technology companies that serve very large markets, preferring verticals to horizontal markets and enterprise markets to consumers.
Even if they find a large market to disrupt, Canadian companies still need to export to be successful. And to export successfully, a company must develop a solid understanding of the market needs in different export regions. It can be difficult. It is likely that Canadian companies will still need to buy market intellectual property by hiring key employees in the markets they seek to serve.
The third component of IP 2.0, the IP process, involves the people on your team. Do they have the knowledge and experience to lead a business to success? Do they understand the marketing process? Can they advance technology, drive rapid market adoption, and acquire sufficient capital?
There is a lot of experience in Canada in scaling technology, but we do not have equivalent experience on how to drive adoption and growth in export markets. Additionally, as there have been relatively few Canadian companies that have gone unicorn – a private company worth over $ 1 billion – or gone public on the US stock exchanges, there is little Canadian CFOs who truly understand the financial process required to build a world-class business.
This intellectual property “experience gap” hinders Canada’s competitiveness in a world where prosperity increasingly depends on intellectual property. To see this play out, consider that Canada ranks second in the OECD for the amount of venture capital invested annually, yet we are in last position to turn this investment into unicorns. The reason? Canada’s commercial talent pool has too little experience to drive rapid growth in export markets and acquire the vast sums of money needed to scale effectively.
Given the powerful role of innovation in shaping global economies, it is essential that we recognize the direct links between intellectual property ownership, job creation and prosperity.
And as Canada’s government and business leaders seek to strengthen our economic prospects through improved intellectual property strategies, the conversation must move beyond technical intellectual property and recognize that commercial and commercial intellectual property Intellectual processing are equally important parts of intellectual property.