Alpha geeks, Golf Shoes, and the Waterloo Miracle

On Tuesday February 3, the Canadian Intellectual Property Council (CIPC), under the umbrella of the Canadian Chamber of Commerce, held a conference on the global threat of illicit trade. The conference brought together stakeholders interested in the protection of intellectual property rights within Canada and around the world. IP Osgoode’s Rex Shoyama was invited as a guest speaker and sat on a panel discussing the intersection between innovation, IP protection and Universities. One of the key points raised by Shoyama, was how patents bring together individuals with different expertise and provide a point of focus for collaboration so that great inventions can be commercialized and introduced into society.

As an example, Shoyama cited Kickspike, a Canadian invention.  Because of the destruction to golf greens, golfers have been forced to use small plastic spikes for shoe traction as a replacement for traditional metal spikes. Even with the switch, greens are still being damaged and the plastic spikes have been found to be a poor substitute for the traction of metal spikes. To solve this, independent inventor Darrell Bachmann, a Class A golf course superintendent from British Columbia, created a special shoe where the spikes could be extended and retracted by clicking a button on the heel. He then appeared on CBC’s venture capital show, the “Dragon’s Den“. Dragon’s Den allows inventors to pitch their invention to a panel of venture capitalists on national television. In exchange for providing funding, the venture capitalists take a share in the company.  The Kickspike garnered immediate interest from the Dragons. However, what drove them to a bidding war was the promise of patent protection over the invention and that a major shoe manufacturer had expressed an interest in entering into a licensing agreement.

This story illustrates that patents are advantageous not only because they incentivize inventors to come up with new ideas, but also because they allow innovative concepts to develop into real products.  What the patent system allowed Bachmann to do was secure seed capital and coalesce the necessary business expertise from other collaborators, so that the technology can be quickly commercialized and disseminated to society.

What is interesting about the Kickspike story is that despite the many billion dollar multinational shoe companies out there and their large R&D departments, one lone inventor was still able to discover and bring to fruition a good idea. Tim O’Rielly, founder and CEO of O’Rielly Media, one of the leading computer book publishers in the world, recently published an article in Forbes magazine arguing that the real innovations start with interesting problems and people who want to solve them.  He coins the term “alpha geeks” as describing those smart enough to make technology do what they want rather than what its originator expected. They usually have no profit motive, but simply pursue an idea because it is “fun” and in doing so, “pave the way for entrepreneurs to figure out how to create mainstream versions of their novel ideas.” Having monitored the industry for over 30 years, O’Rielly has found that innovations behind best selling books weren’t coming from companies but from individuals. This further underlines the importance of having a patent bring together the necessary expertise for commercialization of an invention. Unlike individual inventors, large corporations often already have in-house resources, business knowledge, and networks to take good ideas from inception to commercialization.

A patent’s ability to assemble expertise is probably most important in Universities. Universities are a hot bed for young, innovative minds who have been given the time and resources to think about and solve hard problems. What they lack, however, is the capital and the business knowledge to commercialize their findings. As discussed, patents allow for resources and expertise to be focused on innovations so they can be taken into the marketplace.  What can detract from this and potentially discourage investment from others, is a University’s policy on ownership of IP.  A University that claims a percentage ownership in inventions developed by students, employees, and faculty has the potential to stifle commercialization. The “Waterloo Miracle” provides a good example of how an inventor-owned policy can drive commercialization and ultimately have greater benefits for the University.

Within a span of 50 years, the region of Waterloo has transformed from a rural town to a bastion for Canada’s knowledge-based sector. The region houses 514 high tech companies that generated $13 billion in revenue in 2008. Credited for Waterloo’s success is the distinctive inventor-owned intellectual property policy of the University. At the CIPC conference last Tuesday, Dr. Tom Corr, CEO of the Accelerator Centre (an organization that provides advice to startups in the Waterloo region) noted that while the University of Waterloo may lose a revenue stream by relinquishing IP ownership, it more than compensates for this in gifts and funding from graduates who have gone on to setup successful startups in the Waterloo area.  The Waterloo Miracle is important because it shows that even with a strong patent system, the benefits can be frustrated or furthered by systems and policies within institutions themselves.

As Canada strives towards a stronger economy and reforms of intellectual property rights, special consideration should be given to lone inventors and the larger institutions in which they operate. Without factoring this in, Canada risks stunting an important source of innovation.