part III: perception


The discussion of Canadian innovation and Intellectual Property (IP) is ongoing.  The goals are lofty and admirable: spurring-on innovation; inspiring inventors; improving patent value; improving Canadian competitiveness; and retaining the spoils of our innovation.  There is considerable ground to cover.

A central part of this will be changing the perception of patents, and patent ownership within corporations and the wider community.  This should be an objective of any education, which was discussed in Part II.  However, perception is important enough that it should be discussed separately.  OK, so where and how do we start?  We start from our current location.

location 1: thought from the innovation economy

In January 2020 I conducted an assignee search in both issued patent and published application databases of the USPTO.  I picked five high-profile, well funded Canadian companies from the “innovation economy”.  They were all at least several years old, and all received between tens of millions to over $100 million in funding.  There were several fintech companies, all were software and at least one of the CEO’s has been quite vocal about supporting the innovation economy.

The result; one company (not the vocal CEO) had one issued patent.  This was a pretty poor showing and it was actually a bit of a shock.  They all have plenty of money, so the financial resources are there.  Is there no patentable innovation or is there no interest in IP at either the C-suite or board level?  These are real questions and I suspect the answer is a bit of both.  This has to change if we want to protect Canadian innovation.

location 2: broader society & oversimplifying

In some respects patents are too popular.  Too many people try to report on and discuss them.  Oversimplification is the end result.  Why is this the case?  A patent discusses and provides legal protection around an aspect of technology.  In many cases this aspect represents an advance in a small bit of a particular field of technology.  The average author or pundit may not appreciate the subtleties of the technology, or they do not anticipate their audience will appreciate the subtleties.  So, the technology is simplified.  They may even look for a 5-word summary, or sound bite, or catchy phrase.

Another factor are today’s abbreviated, think twitter for example, forms of communication.  A simple, catchy 280 characters are needed to generate interest.  There is no room for differentiating detail.  So, the public, including C-suite executives, see patents as being too broad and maybe a bit silly.  A diminished view of patents and the patent system is not far behind.   

I have written about this difference between perception and patent reality many times.  In one example, I considered an article entitled “Fake news: A Report Claims that Huawei Received a Foldable Smartphone Patent ahead of Samsung and Apple”.  I should note this article appeared in a widely read, widely cited blog.  A first reading of the headline suggested the companies had patents related to an entire foldable phone, maybe even in the broadest sense.  In reality, the three patents cited in the article disclosed very different technologies associated with the hinge, bending region of the display, and interconnect.  Unfortunately, I doubt many people went this far in their understanding; went far enough to differentiate the technology.

location 3: makers and takers

“Makers and Takers” is the title of a 2016 economics book by Rana Foroohar.  It is a simple, binary, catchy phrase that also nicely summarizes a view of patents that is present in both corporate, including those of the innovation economy, and public psyches.  Let’s spend a few cycles here.

This analogy, and the concept in general, considers two types of patent holders.  Accordingly, a maker makes things and is a legitimate patent holder.  A taker does not make things and is illegitimate.

The latter might, more generally, be called a Non-Practicing Entity or NPE.  NPE’s include small inventors that do not make, Universities, research institutions, government labs and entities that buy patents for licensing purposes.  The first four are directly associated with the inventor(s), while the last is probably not.  So, if you do not make you take from those that make.  It should be noted that this simple binary reading is not held by everyone.  Not everyone goes to these endpoints, but the notion is out there.  The danger is that it takes us down the road of believing there may be illegitimate patent owners.

Of course it is not this simple.  There are many undefined or ambiguous spaces.  It is time for a thought experiment.  Let’s say a large consumer electronics company has a portfolio of 5000+ patents.  They are vocal proponents of the “makers and takers” ideology.  Within their portfolio is a family of patents, say thirty, around materials processing technology.  In fact, they detail very innovative and lucrative processes and structures for metal A, let’s say.  But, the company does not use metal A in their products.  They thought they might, but chose not to.  Do they have the right to collect license fees from a company in a different space that is using the Claimed technology to fabricate metal A? They are not a maker, because they are not using metal A.  Are they a taker?

net result

A discussion of makers and takers is complicated and stirs strong emotions.  Many find themselves somewhere in the middle, others want to use technology freely and others want to extract money from pretty much everyone.  Now, add in the oversimplification of technology, maybe even to the point where the patent sounds absurd.  The overall impression; the patent system issues rights that slow innovation and extract money for overly broad or trivial concepts.  It is difficult to maintain a positive view of patents and their role in innovation.  One quite regularly hears, including from innovation economy CEOs, that takers, and patents hinder innovation.

moving forward

Moving away from this paradigm will not necessarily be easy.  People are invested in their positions.  These positions do however need to be confronted.

First, with respect to oversimplification, patents need to be considered and presented in terms closer to the detailed technology.  No not everyone needs to know the intricacies of each technology but, the existence of those intricacies should be acknowledged.  Repeated use of blanket statements such as “X has many more AI patents” does not necessarily help perception.  Maybe, any education could step through a real Specification and a Claim.  The latter would have a plain language reading.  This reading could then be compared to the title and abstract to illustrate the actual level of the “patented” technology.   I presented a poignant example of this around the media’s coverage of an IBM “AI” patent.   

Second,  we have to embrace the role of patents in innovation.  We have to move away from “makers and takers”.  Patents are an important and valuable tool  in the innovation economy.  We have to think of a patent as an asset, like a land claim in the “old” economy.  Again, this needs to be part of any education program.  It needs to be part of talks, seminars and fireside chats.  C-suite executives have to buy into the patent system.

It is worth recalling that a patent is a limited monopoly granted to an inventor.  In exchange, the inventor agrees to make their invention public, allowing others to invent on top of it.  It seems so basic.  The patent system, at its heart, is designed to spur innovation, while compensating an inventor for their contribution.

An inventor’s accomplishments should be celebrated and if their invention is valuable they should receive compensation.  Those that speak against this concept are compensated for their efforts, in their fields, so why do some argue against compensating inventors and patents.  I know an inventor that developed a novel, valuable method of purifying silicon for the solar industry with basement-based extractive metallurgy and a credit card.  He made the investment, he took the risk, he obtained the patents, so he deserves to be compensated.

advancing Canadian Innovation

Are we not proud of inventors?  Are we not happy for their accomplishment and how they are rewarded for their investment?  A government can strike committees and draft recommendations, but society has to buy into and support the patent system to retain innovation.  We are trying to move away from what is in the ground to what is from our mind.  Patents are central to quantifying these efforts.

As a country Canada does not have the domestic corporations needed to sponsor the research, to be the makers.  We dealt a large blow to the aircraft industry in the late 50’s, with many engineers leaving the country for NASA and Boeing.  Then, 50 years later we let a world leading telecom company die.  Our national broadcaster even joked when Nortel patents were being licensed after its demise.  Canada can no longer turn to its backyard for wealth.  There are some large SMEs out there that have had considerable money invested in them.  Yet, they are exposed and have no ammunition to battle a savvy IP owner that might put a roadblock in front of them.  Maybe, their core algorithm is already patented, but they developed other, supporting algorithms that would be of interest to the other owner.  They can now start a conversation.

Without a pool of makers, particularly in knowledge based industries, Canada can benefit from “non-makers” to own and protect Canadian innovation.  If we want private capital to step up to the plate, as I discussed in Part I, we can not ridicule them because they do not make.  Our perception has to change.  We have to have faith in and support ourselves.  We have to look to the end ultimate goal of wealth creation within Canada, for Canadians.