Exemplar Zero: Integral Economic Model and Deployment of Global Innovation Commons

Exemplar Zero

Integral Economic Model and Deployment of Global Innovation Commons

Dr. David E. Martin

Executive Chairman, M·CAM Inc.

Batten Fellow, Darden Graduate School of Business Administration

University of Virginia 

Imagine a world in which ecosystem, human interaction, and value exchange brought dignity to the Earth, facilitated collaborative engagement between people, and yielded prosperity to every engaged person.  Imagine a world where we did not have to choose the “ends” while justifying the “means”.  Exemplar Zero is one of the world’s first opportunities to transition from imagination to action.  And ironically, this opportunity has been created by decades of resource imbalance, unconsidered consequence, and asymmetric wealth and power distribution.

Not only will EZ provide a globally relevant platform to demonstrate the accessibility of innovations to meet some of our greatest challenges, but the financial model supporting it will be equally transformative.  Whether you approach challenges from the lens of development grants and philanthropy, private or public debt and equity, or sovereign procurement, the EZ Integral Economic Model (EZ-IEM) will both engage current paradigms and work to transform them in creative ways. 

At the core of the EZ IEM is a very special asset.  Since the modernization of the intellectual property system and sponsored research programs of the past four decades, economic development and exclusionary innovation property rights have gone hand-in-hand.  However, as far back as 1980, these property systems were contaminated with a growing practice of using patents and other intellectual property regimes to block commercial access and market use.  It is no accident that some of the largest patent estates were filed (and restrained from market adoption) by companies who had the most market share to lose.  Oil companies filed and held thousands of environmentally desirable patents in fields ranging from solar and wind power to hydrogen and hybrid propulsion.  Paint companies filed and held thousands of patents on alternative surface coating techniques only to continue using toxic metals in industrial production.  Pharmaceutical companies and their agro-chemical allies filed and held thousands of patents on treatments and cures for disease and on land renewal technologies and insured that these options were not available for deployment.  And the list goes on.  However, in this “cold war” of innovation abuse, the most economically marginalized countries (a term we use in place of the conventional, pejorative term “Least Developed Countries” or “LDCs”) were overlooked.  Patents were not filed in markets that didn’t seem to matter.  And this has created an unprecedented opportunity for bringing hope to us all. 

Profiling over 75,000 innovations in the maritime industry, we have identified over 25,000 innovations on environmentally prosperous technologies which have expired through the normal passage of time, been abandoned and no longer maintained by the industrial giants, or were unprotected in countries which have most marginalized economies.  It is this asset – the open source Global Innovation Commons or GIC – that serves as the collateral basis for the EZ IEM value differentiation.  These innovations represent over US$1 billion of research and development which is now available to any user authorized to access the GIC without any requirement for proprietary pricing or royalty.  And the financing options possible with this Global Innovation Commons are compelling:

     Research and Development funding efficiency is very poor with less than 2.5% of all publicly funded research resulting in a commercially viable product.  By starting with established technology success, focus moves from R&D to deployment and commercialization where the funding efficiency increases ten-fold or more;

     Innovation and technology transfer is the most valuable asset to exchange in management of Trade Credit Offset obligation fulfillment.  Every industrialized country’s companies have offset obligation challenges.  Every economically marginalized country has unmet obligations owed.  By facilitating technology transfer (credited at up to 10 times fair market value for its future earning potential), industrialized countries can incentivize their companies to partner in funding development activities out of existing capital arising from commerce – not investment;

     Seeding entrepreneurial ventures with innovation estates from the open source directly increases the commercial productivity of existing ventures and those in formation creating revenue support for existing or future conventional debt or equity engagement; and,

     Effectively linking open-source innovation commercialization entities with government procurement for domestic or international development consumption decreases unit cost and increases funding efficiency.

In this time of global economic realignment, the EZ IEM serves as a perfect platform to demonstrate the power of the Global Innovation Commons to bridge between old-paradigm economics into a more ethical capital future.  It’s really quite straight-forward.  The process is simplified below:

The financing is then possible in a number of forms but would ideally operate in the following manner.

     A Trust, including the Global Innovation Commons innovation options, combined with the capital from the Norway Sovereign Wealth Fund would be created.

     The Trust would provide rights to use GIC innovations to various enterprises:

• If provided to an existing business, the company would use the Trust license as collateral and project financing for deployment capital.  The return would come in the form of a royalty on credits enabled to the company by the innovation (see above); an option to provide procurement receivables financing from funds in the Trust; and an option to participate in equity in future commercial activities arising from the initative.
• If provided to an entrepreneurial company, the company would use the Trust license and a procurement agreement for goods and services for a receivables funding agreement.  The return would come in the form of return on project financing at a commercial rate and all financing would be credit enhanced using all applicable innovations in the GIC pool attributable to the enterprise.
• If provided to research institutions, the institution would share a royalty interest return back to the Trust for all innovations from the GIC that seed funded research or licensed technologies.

     The Trust appoint an Asset Management team responsible for insuring that all use of GIC assets are linked to a productivity return agreement which replenishes allocated capital and provides a return that can come in the form of:

• Trade credit offset royalty participation;
• Tax, Environmental, or Enterprise Credit royalty participation;
• Forward “Innovation Commodities” which allow for a return based on a pre-determined discount on future sales as a profit-sharing/risk-sharing financial instrument (somewhat similar to forward contracts on commodities); and,
• Retained interest in future commercial productivity from newly created enterprises.

This model has been successfully deployed in a number of settings around the world and creates an series of enterprise engagements which can be profitably operated and transparently managed such that any subsequent financing activities are available in any market – both conventional finance markets as well as religious-sensitive markets – should funds from Middle East/North Africa or Southeast Asia be desired.