How Intellectual Property Ontario is helping innovative startups get off the ground
IPON provides critical funding, education, and mentorship to companies from the start
The Challenge
In 2020, an expert panel report was released examining the production and commercialization of intellectual property (IP) in Ontario, both from publicly funded research and in SMEs. As one consulted expert noted: “Canada is the world’s open source factory for ideas. We create it, but let others commercialize it.” This state of affairs is due in no small part to the fact that historically, support for Canadian IP has ended with patenting in universities, with little consideration to what comes next.
While many operational costs of early stage company operations are subsidized to some degree, it is only very recently that any consideration was given to the cost of managing an IP portfolio. As the global economy shifts its focus toward intangibles as the main source of value in the private sector (up from 17% of the value of S&P 500 companies in 1975 to 90% in 2022), support for IP strategy and patent filing is a key element in company success.
For Canadian firms, patent filing in particular is an onerous cost of doing business. Since Canadian firms must often export from the start to be competitive, they need to patent in several jurisdictions. This is an expensive process. While it is sometimes possible to defer costs using provisional patents, at some point these costs need to be dealt with, usually very early in the life cycle of a company, since these protections must be in place or at least in process prior to selling.
A handful of Canadian innovation support programs have IP support built in. CanExport SME and NRC IRAP IP Assist both cover some elements of IP consideration, but there are significant barriers to entry in the form of revenue minima, employee count minima, or fronting of cash that excludes most early stage startups from accessing this funding precisely when they need it most.
This leaves many Canadian companies in a catch-22: they need to protect their valuable intellectual property (probably widely) to operate safely, but without generating sales revenue, they are not eligible for most support programs and can’t afford protection. Resolving this can force companies to try to raise money before they are selling a product (in Canada, good luck), or to take a risk on forging ahead without adequate IP protection.
This deeply entrenched challenge is what Intellectual Property Ontario (IPON) seeks to address.
Intellectual Property Ontario
In winter 2022, IPON was established in response to the expert panel noted above, with a mandate “to support the development and protection of IP and improve the commercialization outcomes of research and new inventions in Ontario which will help advance our province’s economic growth and competitiveness”. Laura Bunn, Communications Lead, was kind enough to sit down with me and to discuss in detail how IPON is tackling this challenge.
Over the past two years, IPON has filled a critical niche in Ontario-based innovation by providing direct funding and support for patent costs and IP strategy development that has no barriers to entry beyond incorporation. While its budget and operation are relatively small compared to some of the incumbent innovation supports in Canada, the organization is rapidly expanding its services and is positioned in such a way as to deliver enormous impact relative to its budget, working closely with Ontario’s regional innovation centers, incubators, and accelerators to support scale-up and commercialization efforts.
For now, IPON operations are sector-specific, being limited to supporting ventures in areas of AI and data-driven technologies, self-driving and electric vehicles, medical and life sciences technology, and mining and advanced manufacturing. According to Laura, the organization aims to be completely technology-agnostic in the future.
Applying to IPON requires that your company be fit one of their target sectors above have fewer than 500 employees, and satisfy a number of requirements related to commitment to Canada and Ontario that can be found on their homepage. Applications are taken on a rolling basis, and Laura encourages application as early as possible. IPON takes a bespoke approach to supporting each company, via a combination of services including:
IP audits
IP strategy guidance
Competitive analysis and IP landscape reporting
IP registration, including:
patent filing both in Canada and abroad
industrial design protection
copyright protection
trademark registration
Support with contract review, including:
NDA
IP/data ownership assessments
IP/data licensing
and any contracts that involve the potential for being implicated in IP ownership/access
IP related costs, including:
initial patent filing fees
legal fees associated to patent drafting
examination fees
foreign agent/associate fees
translation costs
These services are delivered or supported through one of their three streams (IP Bootcamp, Partner Program, or Self-Guided), depending on the acuteness of the need and whether the applicant is affiliated with one of their key partners. In all cases, substantial funding is available for support of IP-related service delivery.
Two things in the list of supported services and in the language used on the IPON website are worth an explicit note. First is the use of “IP/data” as opposed to just IP. I’ve written several times on the increasing importance of high quality, curated datasets in the IP portfolio, but most Canadian innovation supports do not obviously recognize the importance of data in that equation. IPON is ahead of the curve in elevating data to the same level as other IP assets in their messaging, a forward-thinking approach that should be adopted across all Canadian innovation support programs. Second is the comprehensive nature of their IP portfolio coverage. While other Canadian innovation supports that cover IP operate in siloes that cover only a small part of a full IP strategy, IPON does it all, and tailors their offering to the needs of the client.
In addition to their core program delivery, IPON has recently completed their first pilot study, which allocated $2M to 10 Ontario-based colleges and universities for a variety of IP-related initiatives. This year, their funding was increased, with an additional $4.6M available to support expansion of the program, of which $1.7M is allocated for expansion of this study, and another $2.9M to include an additional 10 institutions. Laura explained that the IPON approach with this funding is similar to their approach with individual companies: they let the client institutions decide how best to allocate funding after assessing their applications and working with them to identify their requirements, with the goal of broadly enabling effective commercialization of Ontario-based IP coming out of post-secondary institutions.
In addition to support for post-secondary institutions, IPON’s team of 32 is supporting almost 300 clients, and their capacity is growing as the province increases their funding.
IPON’s annual report goes into some detail into the rationale behind their program design. Focusing on post-secondary tech transfer, the report identifies several core issues with Canadian tech transfer generally, most importantly “a shortage of funding for advancing technologies from TRL3 to TRL6 which reduces the number of promising new products that can be further developed by Canadian companies and investors.” The recommendations arising from the report are sound, and their execution of program delivery in response to their findings indicates that they are on the right track in remedying the current lackluster approach in Canadian tech transfer.
I was happy to learn in our conversation and on a subsequent read of the IPON business plan and annual report that they actively collect valuable data to assess how to improve their programs further. By seeking to better map the scope and scale of the innovation ecosystem through measurement of activity at Ontario-based post-secondary institutions, IPON positions itself to be able to quickly identify best practices for IP support through measurement of downstream impact and commercialization results, and to develop new program interventions aimed at increasing efficiency and overall commercialization impact.
In this effort, IPON’s data-driven, flexible approach to innovation support is critical. It is a sad irony of the Canadian innovation support system that most of the programs involved are completely unable to innovate their own approach in response to the rapidly changing landscape, and fail to collect relevant data on which to base iteration decisions in the first place. IPON builds this feedback loop into their service delivery, taking a bespoke approach with every client and tracking the impact of their programming to allow evidence-based improvements to their program offering. As with my recommendations for SR&ED, I strongly encourage IPON to adopt a required outcome reporting framework that follows IP through its full lifecycle, including post-acquisition in cases where that occurs.
Looking Ahead
In the early days of building my own company, this kind of support would have made life much easier. In my experience, both first-hand and more recently through mentorship of several university-based startups across Canada, the difference between a successful startup spinning out of a Canadian post-secondary lab and a failed commercialization effort that sends a Canadian IP portfolio south is often just a few tens to hundreds of thousands of dollars, delivered at precisely the right time. While still young, IPON is positioned at a point in the innovation pipeline where every dollar spent has a disproportionate impact on downstream economic success, and is filling a niche that is otherwise woefully underserved in Canada.
I hope that the Ontario government continues to increase their support for this organization and that the data collection continues long enough to see the long-term impact of small amounts of funding applied at the very beginning of building a business. I will be watching with great interest to see the impact IPON has on the Ontario innovation ecosystem in the coming years.
If IPON is of interest, Laura encourages everyone to follow on LinkedIn, X, and YouTube to stay on top of new developments. They are also actively in search of mentors and service providers to assist in their service delivery, for which you can apply on their careers page.