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The Difference Between Invention and Innovation

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About a year ago, I was chatting with my CEO about the consultations led by the Jenkins Panel on Canada's government support to business innovation. He threw a line at me: "In Canada, we're great inventors, but very poor innovators." As I usually do when my boss says something I don't really understand, I nodded my head and just said "yes, of course," as if everyone knew that.

Like most people, I use to assimilate invention with innovation.

Two weeks ago, I watched a documentary on Steve Jobs, and finally, I understood what my boss had been talking about. I understood the difference between invention and innovation.

Commercializing the computer mouse

Like many of us, the first time I saw a "computer mouse" was on an Apple personal computer in the mid-1980s. At merely a decade old, I remember having to enter codes manually to program our favourite games on the Computer 64 before that.

I always thought Apple invented the mouse. After all, I had never seen one before.

Turns out it didn't, but the story is fascinating and typical of millions of other inventions. It's a great story of innovation.

A researcher at the Stanford Research Institute (SRI), Douglas Englebart prototyped the computer mouse in 1964, and it was patented in November 1970.

Nine years later, Steve Jobs was in the planning stages of a business computer and arranged a visit with the Xerox Park research centre to view some of their experimental technology. Jobs saw, for the first time, Engelbart's mouse, which had been incorporated into the graphical user interface (GUI) used on the Xerox Alto. Xerox had no intent to commercialize it -- it cost them $400 to build, which was out of budget for most people looking for a personal computer.

Steve Jobs was really inspired by the computer mouse. Back in his office, he asked his chief designer to stop what he was working on and design a mouse that would cost no more than $25. It was done, and they made fortune off these new "computers with a mouse."

During an interview later on, Engelbart said, "SRI patented the mouse, but they really had no idea of its value."

Engelbart never received any royalties for his mouse invention, whereas Apple licensed it for $40,000. This, my friends, is the difference between invention and innovation.

Canada's commercialization gap

The OECD recently released a study showing Canada is among the leaders in public research and patents filed by academics -- great news. It probably convinced the government its $25-billion-a-year investment in universities is worthwhile.

And yet, I think again of the computer mouse, and ask myself: so what? A mouse was really just a ball within two pieces of plastic until Jobs came and re-defined it as one of the most important components of the personal computer. What does it mean to be a world leader in filing patents if no one brings these great inventions to market?

Between January 1 and October 9, 2012, Canadian universities were granted 45 new patents, with everything from "a method and nucleotide sequence for transforming microorganisms" to "immunization of dairy cattle with GAPC protein against streptococcus infection." Canadian brains were hard at work and make us proud. But, out of these 45 patents how many do you think allowed a license to third parties so companies could prototype and commercialize them? Only one.

A new technological curling broom head for improved ice surface heating and curling performance. Don't laugh -- the Olympic team used the prototypes during the Vancouver Olympics. The researchers licensed it to Balance Plus, a company specialized in curling equipment. The product is a great commercial success.

I wish the other 44 patents were allowing companies to license the patents, too. Licensing patents is as much important as developing them.

Encouraging open innovation in universities

In his blog, law professor Michael Geist said that a Statistics Canada report based on survey data from 2008 found the total IP income, primarily from licensing, at participating Canadian universities was $53.2 million. "The cost of generating this income?" he writes,

"the reporting institutions employed 321 full-time employees in IP management for a cost of $51.1 million. In other words, after these direct costs, the total surplus for all Canadian universities was $2.1 million. The average income per university from IP was only $425,000."

Patent applications and patents issued were actually down in the reporting institutions, he wrote, and there were less than 24 spin-off companies reported by the universities.

He concludes by stating,

"while few would suggest that there is no value in the IP commercialization strategy for universities -- there is surely a role for it -- the emphasis on this approach as the optimal method of benefiting from billions in public funding for research has consistently failed. Rather, an effective commercialization strategy might recognize that the commercialization is better suited outside the university with funded research the engine for new innovation that is openly available to entrepreneurs without licensing barriers. The public pays for the basic research and might ultimately enjoy far more benefits than the current break-even approach by having more open access to research results."

I could not agree more. Think about it: $10 billion is spent by universities across Canada in research and development, and taxpayers should expect better ROI than $2.1 million.

We need more Steve Jobs' in Canada. But, even Steve Jobs couldn't have built an innovative computer mouse without a license.