The Cost of Innovation: Strategizing and Funding your Innovation, Part I

PART I: The Value of a Comprehensive Intellectual Property Review and Strategy

Authors: Massimo Orsini, Ridhey Gill

Innovation comes at a cost, and developing novel technologies, embedded systems, or software can be cost-prohibitive. While procuring the funds necessary to develop such innovative endeavors is important, the protection of such assets should be met with similar attention.

In this two-part article, we will first explore the importance of developing an intellectual property (“IP”) strategy to anticipate and account for the development and creation of novel IP. Separately, we will explore funding opportunities that are available to support technological innovation, inclusive of the National Research Council of Canada’s Industrial Research Assistance Program, or “IRAP”.

Considerations for the Development and Commercialization of a Business’ Intellectual Property

Intellectual property presents in a myriad of ways. It appears in the form of trademarks (e.g. branding elements, logos), copyright (e.g. software code, marketing materials), trade secrets (e.g. confidential information that is created, or accessed, by employees and contractors alike), and even patents.

In the context of business, IP-centric assets are subject to two crucial phases: development and commercialization. At the development phase, resources are expended to build something of commercial value – whether it be a novel software, a revolutionary widget, or a sophisticated branding refresh. Beyond budgetary and timing concerns, the way this IP is developed bears significance for a business’ ability to later license, sell, or even claim ownership of such assets. Whether developed by co-founders, employees, or third-party contractors, it is necessary, among other considerations, to ensure that the business is the ultimate owner or licensee of the IP in question. Without the right precautionary steps, it is possible that the ownership of the IP-in-question is retained by a third-party contractor who has yet to assign their rights to the business, or that it is jointly owned by two co-founders who parted ways before assigning their respective rights to their fledgling corporation.

At the commercialization phase, new questions arise:

• Can the corporation legitimately license its IP?
• Are the ultimate licensees of the IP (e.g., clients) able to customize or modify the licensed assets? If not, what prevents them from doing so? If answered in the affirmative, who retains ownership of the derivative works?
• Are some elements of its software subject to third party rights or to open-source licenses?
• If so, do those open-source licenses permit building a larger commercial product?
• Have the creators or co-creators of the assets fully assigned or transferred their rights in the IP to the business?
• Have the necessary steps been taken to register certain IP assets to ensure an exclusive monopoly on the asset in question?

If not addressed proactively, the actual licensing or the actual ownership of the assets can be compromised.

The Benefits of Creating an IP-Centered Strategy

Having an IP strategy in place early on can prevent issues pertaining to ownership and can help manage overall risk to your business.

At Oziel Law, we regularly work with new and established businesses alike in developing an IP strategy that would provide, among other considerations, the following:

• Contract and License Audit. We would assess the licenses and agreements entered into with third parties/clients to determine what rights are extended for use of the licensed assets.
• Copyright Assessment. We would determine whether the business can rightfully claim its copyrightable assets, such as software code.
• Review of Agreements Concerning Personnel. What agreements, if any, have been entered into with employees and/or contractors? We would determine if the requisite assignments have been recorded to ensure that the business has title to its IP assets.
• Branding Strategy. A rebrand can be an unnecessary, and extensive, expense, which is why it is crucial for a business to secure its branding elements. Has the business taken the right steps to protect its tradename(s) and trademarks? If registrations have yet to be formalized, we would conduct a series of searches to determine the registrability of its branding elements or identify whether identical or confusingly similar third party marks exist on the market.

Upon the conduct and preparation of the above, we would be able to identify what gaps exist in your business’ workflow concerning the ownership and protection of its intellectual property rights, as well as potential exposures to liability and risk. If such risks are identified, we can suggest actions, revisions, or new agreements to assist in their remedy.

For Consideration: Avenues for Funding Your IP-Centered Strategy

The Government of Canada is prioritizing its support of innovative Canadian businesses. A number of funding opportunities are available to Canadian businesses developing or commercializing its tech. We identify one source of such funding, namely, the IRAP IP Assist program, in part two of this series, titled “NRC’s IRAP, an Opportunity for Funding your Innovation”.

If you are interested in more information on developing an IP strategy for your business, please contact us.

If you have any questions about this article or wish to learn more, please contact Massimo Orsini or Allan Oziel. Oziel Law communications and legal articles are intended for informational purposes only and do not constitute legal advice or an opinion on any issue. To obtain additional details or advice about a specific matter, please contact our lawyers.

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