10 things to remember from IPFest about your startup's DNA: intellectual property

Intellectual property (IP) is often perceived as a complex field, reserved for lawyers or large companies. However, it can make the difference between a startup that survives and one that collapses in the face of competition.

At IPFest, held at the heart of Startupfest and hosted by Susan Tees (New Ventures BC) and Alexis Conrad (Communitech), entrepreneurs, investors, and experts lifted the veil on the real issues surrounding IP. No jargon, no theory: just real stories, sometimes brutal, but always rich in lessons.

Ready to avoid the most costly mistakes? Here are the key takeaways from this half-day of content on intellectual property, as well as our conversation with Frank Baylis.

Discover how IP can help you build a strong, high-value business!

A good IP strategy is not a single patent framed on a wall: it is a family of patents and protections that form a bulwark against competitors.

A striking example: the sale of Baylis Medical for US$1.75 billion to Boston Scientific. It all hinged on a single strategic patent that enabled the company to acquire a competitor that was infringing on it, then take control of all its IP.

Without strong IP, an innovative startup remains vulnerable: an idea can be copied, commercialized faster, or on a larger scale by a wealthier player. IP transforms a fragile innovation into a monetizable asset.

Errors in IP are common and can sometimes be very costly for the founding team and the company's finances.

Some pitfalls we identified during our various discussions:

1. Believing that registering your company protects your brand.
2. Getting too attached to a name that turns out to be impossible to defend (hello six-figure rebranding).
3. Talking publicly about an invention before patenting it, which can invalidate any protection, especially in academic collaborations.
4. Revealing too quickly what we are working on, especially for very early-stage startups.

" [It felt like] fixing something that should have been done right from the beginning. "

After six years of building her business around "Hôtel UNIQ," she discovered that neither "Hôtel" (generic and descriptive) nor "Unique" (a common variation already used in the hotel industry) were easily protectable as trademarks. This lack of protection had a significant impact on her growth and long-term value.

Protecting your intellectual property worldwide? Unnecessary and a significant expense when you're just starting out. Targeting strategic markets (the United States, Japan, China, major European countries) may prove more effective.

It is also essential to separate inventor and owner: only those who have contributed to the patent claims should be named as inventors; the company owns the rights if this is clearly stipulated in the contracts.

IP does not replace a solid business model based on sales and alignment with customer needs, but it does enhance credibility and valuation when raising funds or making acquisitions.

Key tip: Consult an IP professional early on to develop a tailored strategy. Services such as momentumPI, funded by the ÉleverlaPI program, make this step accessible, even for start-ups.

Innovating in dominant sectors, such as real estate, can attract attention... and lawsuits. The key in this situation is to delegate the role of defending the cause in court to experts, allowing entrepreneurs to focus on the product and customers.

Resilience, and a realistic budget for litigation, thanks to informed and involved investors, is a critical factor for survival.

And often, in order to play in the big leagues, demonstrating that you are serious involves investing in intangible assets, such as trademarks or patents.

"If you have to spend all your time defending yourself in court, how much time can you devote to building your technology?"

The story of Ubee, which received two temporary restraining orders three days before the launch of its platform and found itself in court seven times in three months, demonstrates the importance of having the right people around you when building a business that disrupts a given industry.

For an investor, IP is an asset that creates value, amoat that blocks competition, and a risk management tool that must be clear and well documented.

It is important to check your rights (licenses, contracts) for technology that you have developed as an employee or through a university. Investors want clear terms and an adaptable strategy, not a dusty file.

During due diligence, investors ensure that the startup has secure access to the necessary IP, that the documents are in order, and that there is no risk of infringement.

That said, IP contributes to overall value, but the real value lies in the strength of the company itself, its ability to generate revenue and find its fit in the market.

In emerging technologies (AR/VR, AI, deep tech), obtaining a patent can take years and involve several rejections.

Patents require perseverance and strategic choices (it is impossible to patent everything), but they become a major asset for negotiating, raising funds, and getting acquired. Even if giants like Apple downplay their value in negotiations, their thousands of annual filings prove their strategic importance.

"A year means everything in the life of a startup. If you're thinking about getting a patent, know that it can take a long time."

It took Bertrand Nepveu seven years to obtain his first patent with Vrvana. He learned that initial rejections are common, requiring perseverance and a strategic assessment of the novelty of the invention.

It is impossible to talk about innovation and innovative companies without mentioning artificial intelligence (AI), the other favorite acronym these days (after IP, of course). In an in-depth discussion on the subject, Claire Mazzini and Paul Gagnon debunked three myths about AI creations:

1. IP systems are based on human contribution. Creations generated entirely by AI are not protectable unless significant human contribution to the creative process can be demonstrated. In any case, it is important to be aware of the terms and conditions of AI tools.
2. Confidential data provided to AI providers is not necessarily used. This depends on whether a free or paid plan is used. Proper training of employees on the use of AI tools will help minimize the risk of confidential information being disclosed.
3. Total AI automation does not (yet) exist: the best systems still include human supervision. To better build customer trust, companies must design workflows with human feedback loops.

The discussion about AI and IP must be a company-wide conversation, involving all functions, not just technical teams.

Well described by Jean-Nicolas Delage during the panel discussion on the importance of IP for investors, the "IP matrix" is a key element to understand in order to align your patents and trade secrets with your technology and market objectives.

Each patent, in its specificity and interconnection, fits into time and space to respond in detail to a key element or specific component of your business strategy.

You can hold the standout feature that will attract potential buyers (such as the button that switches the glasses developed by Vrvana between virtual reality and augmented reality) or a "wall" of patents, as Frank Baylis put it.

It all depends on what you want to do and how it benefits your business.

"If you don't have enough IP protection, [someone with more money] will steal your idea and crush you."

This strategic lesson was delivered by Frank Baylis, who discussed the sale of his company to Boston Scientific and the stages of IP-focused growth during an intimate session with around 30 people at OFF-IPFest in Walter.

Canada is home to many major inventions (insulin, AI, alkaline batteries), but companies often have to seek validation and initial sales abroad before selling at home, due to a lack of government support and risk-taking in public procurement.

The ArriveCAN scandal can be seen as a factor that makes the Canadian government afraid to take risks. In medicine in particular, it is rare for initial sales to take place in Canada due to the slowness of the governments that manage hospitals. Quebec is often more open to new medical product sales, and Halifax is showing signs of openness. In the United States, California and Texas are often more inclined to take risks.

Initiatives such as momentumPI exist to help startups protect their innovations, but several panelists are calling for bolder support to keep innovation in the country.

• Protect early: don't wait until it's too late to build your IP strategy
• Think globally: even if international expansion is not immediate, international protection may be necessary.
• Don't fall in love with your name too quickly: make sure it can be protected before investing in it.
• Don't rely on just one opinion: consult several IP professionals.
• Surround yourself with a strong team of experts, including specialized lawyers.
• Focus on revenue generation and market fit: this is the most important factor for success, and IP will be an essential support for this.

In short, intellectual property is a strategic pillar for any start-up company.

Investing time and resources in an IP strategy from the outset, seeking expert guidance, and remaining resilient in the face of challenges are essential steps in building a strong, valuable, and sustainable business. Services such as momentumPI in Quebec, and under the ÉleverlaPI program across Canada, are there to support Canadian businesses.