There’s a new national consensus forming in Canadian policy circles, and it goes something like this: Canada is world-class at producing research, terrible at commercializing it, and the solution is to “own our

IP

.” File more

patents

. Keep the rights at home. Build a moat.

I’m a patent professional. I make my living analyzing, brokering and monetizing patents. And I am telling you: a patent is not a moat. A patent is a legal claim — a piece of paper that gives you the right to sue someone, somewhere, if you can afford it, if the claims are drafted well enough to survive scrutiny, and if the technology you patented actually covers what your competitors are doing.

Strip away those caveats and the filing cabinet full of patents Canada is learning to accumulate will not save us if we don’t understand the brutal mathematics of patent reality. The “own our IP” rallying cry is right in spirit. But as a strategy, it is dangerously incomplete — and Canada cannot afford incomplete strategies right now.

Start with the basics. The top 10 to 20 per cent of patents generate 80 to 90 per cent of all economic value in the patent system. Studies of German and U.S. patent portfolios consistently show this extreme log-normal distribution. The vast majority of issued patents are, commercially speaking, nearly worthless — they decorate walls, inflate R&D reporting metrics and reassure investors who don’t know any better.

Then consider what happens when an issued patent actually matters enough to get challenged. At the U.S. Patent Trial and Appeal Board (PTAB), the all-claims invalidation rate exceeded 75 per cent until recently. The PTAB has been called a “death squad” for patents by its critics, and the numbers justify the hyperbole. For Canada, which files at a fraction of U.S. scale and with shallower prosecution resources, the expected quality distribution of our patent portfolios is likely even more skewed toward the worthless end.

Research on European and U.S. firms consistently shows that secrecy and lead-time advantages are far more important than patents as a means of protecting competitive advantage — particularly for SMEs. Only in science-based industries with long commercialization cycles, like pharmaceuticals, clean tech and specialty chemicals, do patents reliably create the blocking power we imagine they provide.

Only about two per cent of issued patents ever end up in litigation. Of those that do, roughly 95–97 per cent settle before trial. The expensive, dramatic patent wars you read about are statistical outliers. For most Canadian companies, the patent on the shelf will never be tested in court — which means it will never function as a barrier to entry. It may create some deterrence at best, but you will never know for sure.

Patents are expensive — a well-prosecuted portfolio in multiple jurisdictions easily runs $200,000 to $500,000 for a

startup

. Money diverted from product development, talent acquisition, or market entry can be fatal at early stages. And it may buy very little protection.

Worse, patents are disclosure documents. When you patent something, you teach your competitors exactly what you built and how it works. In fast-moving technology sectors —

AI

,

semiconductors

, software platforms — by the time a patent issues (typically 2–3 years after filing), the technology has often moved on. Your competitors didn’t copy your patent; they read it and built the next version.

The 2024 Global Innovation Index ranked Canada 8th on innovation inputs but 20th on innovation outputs. The Council of Canadian Academies’ 2025 State of Science, Technology and Innovation report put it bluntly: Canada “excels in research but falls short when it comes to retaining the value of its innovations.” The structural failures identified — lack of large innovative firms, persistent barriers to scaling, low private sector R&D spending — are not fixed by filing more patents. A patent filed by a company that can’t scale, can’t enforce it and can’t iterate past it is a tax, not an asset.

A real IP strategy is a multi-layered system of barriers to entry. Patents are one layer — and for specific sectors and specific technologies, a critically important one. But Canadian entrepreneurs and policymakers need to internalize the full toolkit.

Trade secrets

Coca-Cola’s formula has never been patented. It has been a trade secret for over 125 years, providing indefinite protection that a 20-year patent could never have matched. In AI and software, the training datasets, model weights and optimization processes that create real competitive differentiation often can’t be patented — but they can be locked down as trade secrets, indefinitely, with no public disclosure. Canadian companies systematically underinvest in trade secret governance: robust NDAs, exit agreements, need-to-know access controls and employee training. A company with excellent trade secret hygiene and a mediocre patent portfolio will often outperform a company with a larger patent portfolio and poor operational secrecy.

Standards-setting

Companies that write the standards write the rules. When your technology becomes a standard — whether an IEEE wireless protocol, a 3GPP telecom standard, or an industrial safety specification — you create lock-in that no patent can replicate. Participation in standards bodies confers market credibility, interoperability requirements and network effects that build moats no competitor can easily breach. Canada’s Standards Council explicitly supports this pathway. Almost no Canadian startup uses it.

Data assets: In the age of AI, proprietary datasets may be more valuable than patents. A Canadian company that has accumulated ten years of agricultural sensor data, patient genomics, or autonomous vehicle telemetry has built a barrier that cannot be reverse engineered and cannot be replicated on a reasonable timescale by even a well-capitalized competitor. Data moats compound over time.

Network effects and switching costs

A platform business integrated deeply into customer workflows — through proprietary APIs, certified integrations, or branded training ecosystems — creates lock-in that patents would never achieve. The IP strategy here is defensive: ensuring that trademarks, copyrights, and contractual terms protect the ecosystem you’ve built. Many Canadian B2B SaaS companies have strong network effects and weak IP protection for them.

Regulatory data exclusivity

In life sciences and agtech, regulatory approval packages confer data exclusivity periods that function as IP protection independent of patents. Canadian companies that focus exclusively on patent strategy while ignoring the regulatory IP layer are leaving significant value on the table.

The companies that have built durable competitive advantages through IP — the Qualcomms, the Intels, the pharmaceutical majors — do not simply file patents. They build interlocking systems of protection. They identify what is worth patenting (the blocking claims, not the decorative ones), what is worth keeping secret, what should become a standard, and what should be licensed strategically to build ecosystem dependency. They audit their portfolios regularly and abandon weak patents rather than paying maintenance fees on dead weight.

For Canada to compete in this environment, we need to intervene at multiple levels simultaneously. Accelerators and incubators should require IP strategy as part of founding team education — the question “what is your IP strategy?” needs to encompass trade secrets, data governance, standards participation and regulatory exclusivity, not just “have you filed a patent?”

Government programs supporting IP should explicitly fund trade secret governance infrastructure: legal templates, cybersecurity frameworks and training for the HR, legal and engineering staff who implement secrecy protocols. And subsidizing Canadian company participation in ISO, IEEE, ITU, and 3GPP processes for technologies where Canada has research leadership — quantum, AI safety, clean energy protocols — would embed Canadian IP into the rules of global commerce in a way that no patent portfolio can replicate.

The national conversation Canada needs is not “file more patents.” It is “build real moats.” Sometimes a patent is the right tool. Often it is not. Always, it is only one tool in a strategic system. A patent filed without a commercialization plan is a disclosure document for your competitors. A trade secret without governance is a lawsuit waiting to happen. Data without licensing terms is a free resource for whoever aggregates it first. Standards participation skipped is market structure written by someone else.

We’ve learned to want the filing cabinet. Now let’s learn to build the moat.

Louis Carbonneau is the founder and CEO of Tangible IP, a patent advisory and brokerage firm. 

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