Building an IP Commercialization Strategy – Impediments Facing SMEs

Small and Medium Enterprises (SMEs) play a significant role in driving the economies of many countries. In Canada, SMEs contributed more than 50% to the GDP between 2003-2016, and Canadian small businesses constituted 98% of all business enterprises in 2018. In addition to being a critical part of the country’s economy, SMEs constantly generate new ideas and inventions across industries

Intellectual property (IP) can be used as a business tool by SMEs to grow. IP assets enable businesses to develop at a faster pace, expand to new marketsreceive funding from investors and financial institutions, and contribute to a country’s overall economic growth. Government initiatives and access to IP assistance through law firms, universities, and schools have certainly increased the awareness of these benefits among SMEs; however, there is still a gap in the understanding of exploiting IP in Canada. 

It is crucial to recognize that registering IP is only a step towards fully realizing the commercial benefits of IP. It is unlikely that a business will be able to generate substantial financial returns unless the IP is successfully commercialized. IP commercialization means turning ideas or IP into marketable assets with the view to profit and grow. Several obstacles impede the effectiveness through which IP is commercialized.

One significant issue is the lack of IP management strategies tailored to the business. This limited knowledge leads to the underutilization of IP held by SMEs – for example, patents owned by smaller entities have lower rates of survival than those owned by large entities. To optimally utilize IP, SMEs must assess how their IP fits within the overall business goal and plan; integrating IP into the broader business strategy helps bring value to the business through IP. There are several ways to commercialize IP (like licensing, franchising, sale), but choosing the most appropriate method depends on various factors specific to each business. Every approach has its advantages and drawbacks; irrespective of the method, a business will likely have to conduct an IP audit, IP valuation, and market analysis (to assess target markets, competitors, the receptiveness of IP, etc.).

SMEs may not have the appropriate level of awareness or the wherewithal to navigate the IP commercialization process. After experiencing challenges in raising capital for their business and IP protection, further investing in building an IP strategy may seem unattractive in the early stages. However, in an increasingly innovation-driven economy (with IP and data as the most valuable assets), IP commercialization becomes even more vital for success. Government initiatives, like the recently launched Innovation Asset Collective, are a step in the right direction. Nevertheless, more efforts need to be made at the grassroots levels to spread awareness about such initiatives and the importance of commercializing IP within Canada to avoid draining Canada’s innovation economy. There is a need to increase access to resources for SMEs – both in terms of finances and human capital skilled in managing IP – to tap into the immense potential that lies in SMEs.

Written by Tanya Tawakley, JD Candidate 2022, enrolled in Professor D’Agostino’s Directed Reading: IP Innovation Clinic course at Osgoode Hall Law School. As part of the course requirements, students were asked to write a blog on a topic of their choice. 

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