Invisible Assets: Canada's IP Blind Spot

In Chapter 3 of Foundations of Digital Sovereignty, we look at intellectual property as a key realm of governance and strategic control over the innovation economy.

Intellectual property strategy can be a hard thing to wrap your head around.

The simplest version is that you have an idea for a better mousetrap, you patent your idea, and then you sue the hell out of anybody who copies your mousetrap.

Or maybe the mousetrap manufacturing business is a lot of hassle, so you just licence your IP to existing manufacturers, and you sit back and collect the royalties.

Simple enough.

But the reality is much more nuanced. Intellectual property is also about power, leverage and control. And it’s not about one patent for a better mousetrap; it’s about complex families of interdependent patents that make it difficult for any competitor to develop competing technologies in broad areas like artificial intelligence, e-commerce and digital media.

Ideally, this means that researchers and innovators get paid for their ingenuity, but IP can also be weaponized to shape markets, and dictate the terms of the digital economy.

You may have noticed that tech giants like Apple, Google, Amazon and Microsoft don’t seem to spend a whole lot of time suing each other for patent infringement, even though these companies own hundreds of thousands of patents between them, and they tend to make overlapping products and services.

The cynical reality is that all of these big companies are operating in a sort of ceasefire. Nobody litigates, because they all have a vast trove of IP. Legal battles would be ruinous for everyone (except the lawyers).

But at the same time, big tech companies have “kill zones” around them, where they take out startup competitors to maintain their market dominance. Those are typically referred to as ‘killer acquisitions.’ Check out the Google graveyard.

Again, they probably don’t kill the competition with patent litigation directly.

If you invent a better software tool, the big companies can simply copy it. If your best idea is suddenly embedded in Google Docs, offered for free as a loss-leader for Google’s larger subscription bundle, that would threaten to destroy your business.

If you’re a startup and one of these giants copies your patented ideas, what are you going to do? Are you going to sue Google, battle it out in court for years, and defend yourself against counter-suits when their IP lawyers dust off some patent from the archive that they say you’re infringing?

The larger point here is that intellectual property is about legally protecting ownership of an idea, but in an important way, intellectual property is also about power and control.

How companies use that power for competitive advantage and strategic leverage will depend on specific market conditions and sectoral considerations. But the common reality of intellectual property strategy is that ownership is power, and when companies or countries fail to protect their IP, they are foregoing that power.

We’ve been studying how other jurisdictions treat IP as strategic national economic architecture. For instance, South Korea, France and Japan have used state-backed sovereign patent funds to acquire strategically valuable patents, build portfolios, licence them to domestic firms, and support companies facing overseas litigation. The U.S. takes a different but equally institutional approach: Bayh-Dole pushes federally funded research toward commercialization, attaches domestic manufacturing expectations, preserves government-use rights, and is complemented by IP attachés and export controls that help American firms secure rights and enforce them abroad.

Peer economies have built public IP infrastructure that gives firms a better chance of scaling without selling early or licensing back their own ideas.

In Chapter 3 of Foundations of Digital Sovereignty this week, we dive into ideas about IP strategy and how the federal government can co-ordinate and support our national leverage in a competitive landscape.