An Australian company now owns one-third of Canada’s patent law market, drawing concern over conflicts of interest

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Australian intellectual property services company IPH Ltd. now controls about a third of the Canadian patent and trademark law market following its recent acquisition of Bereskin & Parr.

That deal, which was announced in late August, is IPH’s fourth Canadian acquisition in the past two years. The company’s aggressive push into Canada has raised concerns in some quarters about the impact on the country’s intellectual property market. Some in the sector have warned that this level of consolidation will drive up costs and create conflict of interest headaches, while others warn that the IPH business model is going to harm small domestic innovators.

But in an interview with The Globe and Mail, IPH chief executive officer and managing director Andrew Blattman said Canadians shouldn’t worry.

“What we’ve seen in Australia is probably what we’ll experience in Canada, in that competition is very strong – probably more so now than it’s ever been,” Mr. Blattman said.

The IPH business model is a relatively new one.

In 2013, a law changed in Australia allowing patent attorney firms to incorporate. This was the genesis of IPH, which grew out of Australian intellectual property firm Spruson & Ferguson. The partners sold the business into IPH and then listed the company on the Australian Stock Exchange.

In the ensuing years, IPH began buying up domestic competitors, eventually ending up with a market share of about a third in Australia. IPH began expanding elsewhere, including in New Zealand and then further afield.

In October, 2022, the company made its first Canadian acquisition in a deal with Smart & Biggar, one of Canada’s oldest and most important intellectual property firms. A year later, IPH acquired Ridout & Maybee and then Quebec’s ROBIC. Along with Bereskin & Parr, these firms were the four premier intellectual property boutiques in the country. (Bereskin & Parr and Ridout & Maybee both merged into Smart & Biggar and operate under that name, while ROBIC continues as its own brand.)

The way the ownership is structured in Canada is as follows: IPH purchases the firm’s intellectual property agency practice – the component that handles patent prosecution and trademark work – and then assumes an ownership stake in the legal practice through the agency.

Today, IPH has offices in 10 jurisdictions – Australia, Canada, China, Hong Kong SAR, Indonesia, Malaysia, New Zealand, the Philippines, Singapore and Thailand.

“The whole premise of what we do is the difference between primary and secondary,” Mr. Blattman said. “The world’s intellectual property only comes from about four or five regions – it comes out the United States, Western Europe, South Korea, Japan and increasingly out of China. The rest of the world receives intellectual property.”

Secondary legal work is different than drafting originating patent applications, because the bulk of the work is done, with potential roadblocks and questions already sorted out. IPH’s goal, he said, is to become the world’s go-to option in the secondary intellectual property market.

Mr. Blattman said the Bereskin & Parr acquisition is likely the end of their Canadian expansion.

IPH’s entrance into the Canadian market has some lawyers worried. Among them is Louis-Pierre Gravelle, who left Bereskin & Parr recently after the buyout was announced. He is now with Dipchand LLP.

“The incursion of IPH on the Canadian market will have long lasting ripple effect, some of which is predictable, some of which isn’t,” Mr. Gravelle said.

“There are no more boutiques,” he said, adding that what’s left is large full-service firms with intellectual property departments – such as Gowling WLG – and very small shops.

Consolidation means prices will inevitably rise, Mr. Gravelle said, and it could mean less choice for clients because of conflict-of-interest concerns. But Mr. Gravelle said one impact that will be tougher to measure is how IPH is leading to a “corporatization” of the intellectual property business.

Most of the the Canadian market is made up of secondary intellectual property work, he said, but there are still plenty of domestic creators. People and businesses in the sector often don’t know much about how the patent system works. They need a crash course and a lot of that hand-holding can’t be billed by a law firm. But Mr. Gravelle said this is some of the most rewarding work and if he can help a client grow, it will earn dividends in the long run.

These relationships are what he’s worried about losing.

Gunars Gaikis, a senior counsel at Norton Rose Fulbright Canada, who left Smart & Biggar after nearly four decades shortly after the sale to IPH, raised a similar concern.

“Their focus is profit,” he said. “Not everything is always about money … I know in my own career, somebody calls, they have an idea, you help them out, you quickly realize they really can’t afford very much, but you help them to the extent you can. I think a lot of that is likely to go by the wayside.”

But Matthew Zischka, the managing director of Smart & Biggar, said that IPH still values this type of work and has established differential billing arrangements for direct clients who are proposing original patents, arrangements that take into account that the clients are small and may need additional support.

“We’re very mindful of the fact that the direct client base needs to be treated differently,” he said. “I think the reality is, it’s been two years since we’ve been with IPH and we’re still providing the same services to the same clients as we did two years ago.”

Mr. Zischka added that clients will benefit from being part of a larger organization, particularly with respect to large technology investments, such as those in artificial intelligence.

“With IPH in the marketplace, I think these firms have bound together and are in a position to leverage their relevant strength,” he said, adding that consolidation in intellectual property law is nothing new and follows wider market trends.

“I think bigger is better in law firms generally.”