Episode 21: How do incubators/accelerators support innovators and their IP?

Lisa Desjardins, host (Lisa): You're listening to Canadian IP Voices, a podcast where we talk intellectual property with a range of professionals and stakeholders across Canada and abroad. Whether you are an entrepreneur, artist, inventor, or just curious, you will learn about some of the real problems and get real solutions for how trademarks, patents, copyrights, industrial designs, and trade secrets work in real life. I'm Lisa Desjardins, and I'm your host.

The views and opinions expressed in this podcast are those of the individual podcasters, and do not necessarily reflect the official policy or position of the Canadian Intellectual Property Office.

Many new inventors and creators in Canada find it challenging to know how and where to get help with the next steps to test, protect and scale up their creations. Strapped for cash to build the next prototype or test the improved version of their invention, innovators can feel stranded in the valley of death of inventions. Needless to say, this is a really tough place for intellectual property conversations. But, a company's IP is often the most valuable asset and IP rights are simply business tools to protect and build on that value.

As you'll learn in today's podcast, IP isn't all about patenting that one invention. It's understanding the complete portfolio of potential IP and finding cost-effective ways to protect it. The Canadian innovation system is full of incubators and accelerators, often publicly funded. Many of them offer valuable help to give inventors a better understanding of their intellectual property and how to use it strategically. They can help you identify additional IP and find cost-effective alternative ways to protect your IP over time.

One such organization is ventureLAB and we're fortunate to welcome today's guest, Josée Pharand, who is the Director of IP Programs and Policies at ventureLAB.

Lisa: Josée Pharand, I'm so pleased to have you on Canadian IP Voices, welcome!

Josée: Thank you, thanks for having me.

Lisa: Before we go into today's discussion, I wonder if you could tell me a little bit about yourself and the kind of work that you do at ventureLAB?

Josée: Sure! So, I'm a mechanical engineer. I started actually working in intellectual property when I joined CIPO in… oh, a long time ago, it's been quite a while… but I spent about 10 years as a patent examiner. I examined hundreds of patents and then I became a program manager of examination practice with CIPO. So, that allowed me to have a broad overview of Canada's patent system and Canada's intellectual property system and I started to really understand the regulatory aspects of it as well.

I was very interested in intellectual property. I wanted to learn as much as I could and I was also really interested in the U.S. system, so I've done a lot of deep dives into the U.S. patent system as well. I moved to ISED after leaving CIPO and I became a director with Canada's Supercluster program. So my responsibilities there included the programs IP framework, which it was designed to incent SMEs, not-for-profits, academic institutions, to all work together on collaborative projects.

Now at ventureLAB, as their director of intellectual property, I help our start-up companies identify their IP, which is critical, make sure that they own it, that's also really important, and I help them figure out the best way to protect it, and that's in line with their business objectives and their budget. I also help them figure out how to talk about IP when talking to investors, or potential investors, and how they can prepare their IP documentation for the due diligence process.

Lisa: Hmm, that's a very interesting background that you've been on the receiving end for inventors who have filed for patent protection, and now you're working with innovators in an organization that is helping innovators. And I think a lot of our listeners don't actually know the differences between the various roles in the IP ecosystem. If you're a first-time inventor trying to getting hold of, say, an incubator or an accelerator and you don't understand what the differences are, can you explain how this system works?

Josée: Sure, so in Canada we really do use the terms interchangeably, so we'll call an organization an incubator or an accelerator, regional innovation centre, for example, or a tech hub. So these are organizations that exist that are focused on helping start-ups grow their business. Typically an incubator will be for an earlier stage start-up, so perhaps they have a problem that they want to solve, but they haven't quite figured out the right solution yet, so they might want to go and talk to an incubator. An accelerator typically, but again, the terms are used interchangeably, so this isn't always the case, but an accelerator will typically work with a later stage start-up, so they have a solution for a specific problem, they know what they want to do, but they haven't created the prototypes yet perhaps, or they haven't found their right customer, they want to make sure they've got product-market fit or especially for ventureLAB in the hardware space, they need financing to help them undertake all those activities, and so they're seeking financing. So incubators could be better positioned to help them with that.

Lisa: And how would you describe ventureLAB?

Josée: So we call ourselves a tech hub. You could consider us an accelerator. Our mission is to grow globally competitive tech titans that build to scale in Canada and ventureLAB focuses on hardware technology and enterprise software start-ups. So we have a whole series of programs that's focused on helping these types of start-ups raise capital, find talent, commercialize their tech and protect their IP and acquire customers. ventureLAB is also a little bit different than many other incubators, accelerators and tech hubs in that we have a 50,000 square foot innovation hub. It's located in the York region and it houses a $7-million lab that provides our clients with access to testing and prototyping equipment. Because we work with a lot of hardware founders, they need this equipment to be able to run their business and to be able to make prototypes and tests of prototypes for example and a lot of this equipment is really, really expensive, so they wouldn't be able to have that available to them without our help in many cases. We also and this is true of most of the incubators and accelerators in Canada. They have advisors that work with companies to help them in various facets. And at ventureLAB we have a really amazing cadre of advisors and entrepreneurs who have "been there, done that" themselves, so they've built their own successful companies and they help our clients do the same. So they share their knowledge, their expertise, they tap into their networks and help our clients make important connections to other folks who can also help them.

Lisa: Is there a criteria or entry fees for people wanting to work with ventureLAB?

Josée: Yeah, so I think a lot of people are probably when they think of incubators and accelerators they probably think of organizations like Y Combinator or Techstars. Those are really, really well-known organizations and they do take an equity stake in the companies that they help in exchange for providing funding and putting their companies through a robust kind of boot camp model. So ventureLAB is a little bit different, and in Canada most accelerators and incubators do not take equity stakes in the companies. So ventureLAB does not charge any fees to our companies and we don't take any stake in the company, all of the services that we offer are available for free.

Lisa: So if there isn't an entry fee, some inventors may have a false idea that as soon as they go in and talk to an incubator and accelerator, they're going to have to share, like you were, you were saying that there might be an equity stake. Will ventureLAB then take part of the invention or income from the invention?

Josée: No, no, so the inventor or the founder of the company, they own all of their IP. We don't take any stakes in any of the IP. We don't take any royalties anything like that. Everything we offer is free.

Lisa: An inventor would often try to make sure that you talk to someone after you've signed a non-disclosure agreement or confidentiality agreement. How does that work with ventureLAB?

Josée: So all of the venture lab employees sign non-disclosure agreements, agreeing to protect all of our clients intellectual property. We do have a competitive application process, so companies who want to enter the ventureLAB ecosystem and be part of our programs apply on our website and part of that application and subsequent vetting. They also sign a contract that explains to them that you know they can maintain ownership of their intellectual property and that we have confidentiality agreements in place. So we are all bound to protect the confidential information that our clients share with us.

Lisa: You have experience as a patent examiner. I was wondering if you could share some of your experiences based on discussions that you have with inventors and innovators? Are there any particular things that you say should consider when you for example apply for a patent?

Josée: Yeah, so I work with a lot of early stage start-ups who don't have very large budgets. And so even the ones who have patentable inventions so if they were able to apply for a patent application, their invention would be eligible. They might not have the budget to do that yet, and so one of the things I talk a lot about with our start-ups is trade secrets. And there are pros and cons to trade secrets and to patents that I think every company should think about before they decide what to do, even if they have the budget for a patent.

So, just because you have the money to apply for a patent doesn't necessarily mean that that's what you should do. So some of the advantages of a trade secret. Obviously, it's less expensive. Trade secrets never expire, so if you're able to keep your secret, you can protect your invention as long as you can keep that secret. Having a trade secret will keep others from knowing about your invention, and if they don't know about it, then they can't work around it or work to improve it. So when you apply for a regular patent application, it will be published 18 months after filing. And one of the things I talk a lot with our start-ups is the impact of that publication. So if your patent application is published in 18 months, and let's say you do get your patent granted after that, are you going to be able to tell if anyone is infringing on your patent or not? So, if it's really challenging for you to tell, for example, if you have a process and you just don't know if somebody is making their product using your process, then you really have to think about the implications of that patent disclosure on your process. And maybe in that case, having a trade secret would make more sense for you.

On the other hand, you know, if your trade secret gets out, it's out. So the patent application is published eventually, but you have the patent system helping you protect that invention. A trade secret also doesn't protect you if someone else comes up with that same technology. So if you're in a space where you and all of your competitors are racing towards the same end goal, then a trade secret might not make sense, because even if you achieve that goal first, your competitors might be right on your heels, and then the trade secret won't protect you. So that's something to think about.

For companies who are seeking investment, investors, you know they do seem to find that patents have more cachet let's say than a trade secret. And so they like to know that the company has a patent. Investors, just like company CEOs and founders, there's a wide range of kind of IP savviness out there, so some investors will completely understand why a trade secret is really important and others are, you know, really more interested in just seeing that you have a patent. So that's another thing, that's really important to think about.

Another consideration is the lifespan of your technology. So if your technology is only going to be useful to your business for the next year or two, maybe even five years, and then you and everyone else will have moved on to something else, for example, well, do you want to take the time to get the patent application, pay for that, it does take some time for a patent to grant so then you get your patent grant, and perhaps you're already moved on to the next thing. So, in that scenario does it make more sense to protect it as a trade secret? The same idea if you have a very long lifespan. So patent protection is good for 20 years from the date of filing, but perhaps you have a technology that will be a foundational technology for the next 50 years, and so in that case you might want to think about trade secrets. Of course, you can't have a trade secret for something that can be easily reverse engineered, so that's another consideration. And sometimes you can't get a patent because your technology just isn't patent eligible. Or, it might be eligible, but you believe that you'll have a really challenging time getting a patent on it. For example, some you know software patents in the U.S., it's absolutely possible to get them, but it's a lot more challenging.

So these are some of the factors that you want to think about as you're looking at how to protect your innovations and your business objectives are also going to play into that as well, as well as your budget. So that's the other factor that's really important for companies to think about. You might have the exact same technology as another company, but your intellectual property strategies could be completely different depending on what your overall business objectives are and what your budgets are. So definitely something to, to keep in mind as well.

Lisa: You've touched on many important points. Some people may have the idea that the objective is to protect their IP, but they don't understand how to go about their IP protection as they progress through their journey as an enterprise. What are the tricks that you could share with someone at a really early stage of an innovation?

Josée: So yeah, IP strategy is incredibly important. I talked to a lot of founders who will tell me things like "I don't have anything patentable" or "I don't have the money for an IP, so I don't need an IP strategy." On the flip side, I'll talk to founders who will tell me, "Well, I have a patent, so I'm good for my IP strategy," and I think that there's so much more to developing the intellectual property strategy for a company than just "I don't have patents" and "I don't, you know, I can't have patents or I do have patents, so I'm covered." So all of these pieces, the business objectives, the budget, identifying that intellectual property and making sure that you are taking all of the considerations into account when you decide how you're going to protect it. Like what I talked about between, you know the decision to make to keep something a trade secret, or to patent something, those are so important.

When talking with founders, I always talk about the first step is identification. So that's the number one critical piece is identifying your IP. And it's not that easy, people think ,"well, you have an invention or you don't," but there's so much more to it than that. So for example, one of the companies that I worked with had a device and they were thinking that they had maybe, you know, two or three patents on the device. And one of the workshops that I did with the team from that company was a brainstorming workshop where we spent a couple of hours just talking with the team about what they were working on and making notes about all of the potential patentable innovations that they were working on. And at the end of that two hours we had a list that must have had at least 20, if not more, potentially patentable innovations. So the device as a whole would be patentable, but there were all of these subcomponents and other things that they were doing that, you know, could potentially be patentable. And so, coming off of a, of an initial thinking of, "well, we have two or three" to "wow, we might actually have up to 20" was really, really important. So that identification piece cannot be understated.

And then once you've identified it, you want to make sure that you own it. That's critical as well. A lot of our companies have worked with academic institutions, universities, research institutions and those institutions have different IP policies and it's really important to understand as early as possible what those ownership policies are, and what their impact is on what you're doing. Even hiring students to work for you for example, a co-op student, you know, may have implications on the intellectual property that student develops. So it's really, really important to figure that out early on. So you identify it, you figure out how, you know who owns it, make sure that you own it, if at all possible, and then you figure out how to protect it. And so, you think about your business objectives, your budget, and what you're trying to achieve with the business and you figure out the best way to protect it.

And that can absolutely change over time as well. So, another suggestion that I give to our companies is to have regular IP review meetings. If they have a large enough team, they should set up an IP committee, even if it's just one or two founders working at the moment, they should, you know, set out a specific time every now and then to look at their IP and to think about their strategy, go over everything that's involved in that, the identification, the ownership, which jurisdictions they're interested in, all of that is going to flow into their strategy. And it's going to flow over time as well. It's going to change, company changes, the IP strategy will change, the budget will change, the business objectives will change, so it really is sort of a living document, a living thing that they have to keep working on as they grow.

But one other thing I just would like to mention, I think a lot of folks come and say, "well, I don't have any money, so I'm going to do my IP strategy later." But there are so many things that can be done really early on for little to no cost that will set you up very well for the future for when you do have more funding, and then you can take other steps in terms of your IP strategy, that there's really no such thing as too early for the IP strategy. It's really important, and I think that, that's sort of the most critical advice for folks starting a company is don't delay the IP strategy discussions. You don't need a huge budget to have a big impact really early on.

Lisa: Very, very good advice: think about strategy early, sit down and identify your IP, make sure you own it and then figure out how to protect it. Josée, fantastic insights. Thank you so much for coming to the podcast and sharing your expertise!

Josée: My pleasure, thanks for having me.

Lisa: You've listened to Canadian IP Voices where we talk intellectual property. In this episode we met with Josée Pharand, director of IP Programs and Policies at ventureLAB. Josée explained that ventureLAB just like many other incubators and accelerators across Canada can offer expertise, equipment and networking without expectation of owning a piece of your company. Josée also pointed out how important it is that start-ups identify their IP early, and that they set time aside to have a plan for how to protect and use their IP.

If you are curious to learn more about how ventureLAB helps their clients create an IP strategy, open the description to this episode to find the link to a series of articles written at ventureLAB explaining what you need to know before you file for IP protection.