Good morning, distinguished members of the committee. My name is Jeremy Auger. I'm the chief strategy officer of D2L, a world-leading learning technology company based in Kitchener, Ontario. Founded in 1999, D2L has evolved from a small start-up of just five people to one that now employs over 750 staff around the world, with offices in Canada, the United States, Europe, Australia, Brazil, and Singapore. As a company we're committed to breaking down the barriers to education and transforming the way the world learns. Our learning management system, Brightspace, is a cloud-based platform that looks to improve learning through data-driven technology that helps to deliver a personalized experience to every learner, regardless of geography or abilities. Today millions of learners all around the world in K to 12, higher education, and the enterprise sector use our products as their digital learning environment. Our mission to transform the way the world learns has been the same since we founded the company, and it continues to drive everything we do.
Growing to our current size has taken perseverance and a fundamental belief in our mission, and it hasn't always been easy. As a young company seeking to export to new markets, we learned of the predatory and litigious U.S. IP environment the hard way. As we entered the U.S. market, we were sued by a much larger U.S. competitor and fought a fierce, three-year IP lawsuit all the way to the U.S. federal circuit appeals court. Our experience taught us the importance of IP and that IP is, or will be, central to every business in the future if it isn't already. I believe that as technology proliferates every industry, how one leverages IP will be critical to one's success in the marketplace. For us, as a scale-up, software as a service company, our strategy is likely somewhat different from what you might find in other industries such as pharmaceutical or biotech, but it is critical nonetheless.
For Canada, our challenge is not one of having enough innovation; our challenge is to ensure that Canada retains some of the economic and social benefits from our innovation activities—to ensure that inventions are commercialized and leveraged to support the scaling of Canadian firms. Getting technology transfer practices and policies right is a critical piece of this puzzle, and I'm happy to be here today to share some of our experiences.
In the fast-changing space of software, research is an integrated and applied process. We have a different value proposition for IP than do the other industries I've mentioned. And unlike the fundamental research that occurs in some other sectors, say pharmaceuticals, which can result in breakthrough discoveries, software research tends to be continuous and incremental. For D2L, patents are rarely used for direct monetization to accrue royalties or generate a direct revenue stream; they are mainly used for defensive purposes. The patents that D2L holds primarily act as an insurance policy against competitors attempting to restrict D2L's ability to commercialize its innovations. There are two areas of focus I want to raise in my opening statement, which I'd be pleased to further elaborate on during questions.
The first relates to our experience with university-generated IP and tech transfer offices. I'll start by making it clear that academic institutions are our partners, our customers, and in my opinion Canada should be very proud of them. However, D2L has struggled to find value in university-held IP that's generated in isolation of the private sector. In cases where this has happened, many times we've found the technologies already commonplace in the private sector or not in a state where they would provide commercialization value.
The second relates to partnerships between colleges, universities, governments, and the private sector. A strong partnership between academia and business has the potential to bolster the innovation occurring in Canada, but despite participating in several government-funded research partnerships with academic institutions, D2L has struggled to find value in these projects.
When we partner with universities on research, typically funded in part through grant programs, the grant funding is generally allowed to flow only to the non-profit organization. Usually there's also a requirement on the university to have a commercialization partner, such as D2L, for them to qualify for the funding. As that partner we're required to invest with our own cash towards the university and further spend time and effort to undertake research alongside the academics. Most of the time, any resultant IP from the research will be jointly owned between the parties, and then begins the process of D2L's needing to license or buy back the IP from the university. The result of this process is that we find ourselves doubly investing in research if we have commercial interest in the output.
It's a process that pays for universities to do research with both company and government funds, yet we are beholden to the university for the free and clear use of the IP at the end of the project. D2L and other scale-up companies need relevant IP developed for the marketplace that will facilitate growth and commercial success, but paying for IP twice is a disincentive for companies like ours.
As a scale-up company, D2L needs IP for two reasons: first for defence, namely in the form of a defensive patent portfolio; and second to further our business by driving innovation into our products.
More transparency into ongoing university research would increase the accessibility for companies like D2L to understand current research areas, availability of patents for sale, and financial expectations. Any support in this area, as we just heard, would reduce efforts and costs and would transfer success between universities and the commercial sector. Additionally, upfront transparent IP ownership favouring free and clear commercial exploitation for government-funded joint research would help catalyze more joint research.
Lastly, de-risking the collaboration between academia and business has the capacity to unleash new and innovative ideas onto the world. Research, by its nature, is not certain to produce viable commercial outcomes, so engaging in research can be risky and cost-prohibitive. Smaller-scale grants like those of the engage grants program can reduce the risk of research, which may result in IP that can't be commercialized, but this program is very small in scale, and as such is more appropriate for start-ups than for scale-ups.
The pool of grants available for scale-up companies like D2L is much smaller than that for SMEs, so we are stuck between a rock and a hard place. It can be cheaper for us to hire away researchers from universities rather than having to go through the costs and efforts of dealing with universities through larger grant programs. Grants that de-risk working with universities, such as the engage grants, but that are responsive to the needs of a growth company would benefit both parties. There is huge potential in solidifying the partnership among the three levels of government, academia, and business, but we need to do a better job of de-risking technology transfers for scale-up companies like D2L.
I'll leave it at that. Thanks for the opportunity to speak to you today.