NRC ‘should be embarrassed’ over stalled licensing deal
Ottawa 3D scanning firm frustrated in bid to secure software after council’s claims about becoming more accessible
An Ottawa company’s attempts to secure underused technology from the National Research Council is raising questions about the council’s claims that it aims to become more accessible to small- and medium-sized businesses.
Helmut Kungl, founder of Ottawa firm XYZ RGB Inc., has been trying to license a piece of software code from the NRC for more than two years. The code, which helps to automate the process of shading and colouring images that have been scanned by a 3D scanner, is close to five years old. It was created by researchers at the NRC and never used commercially, according to Kungl.
“We are one of only three, or maybe five, companies in the entire world that can use this,” Kungl said. “We can create revenues, jobs and taxable income with this.”
XYZ RGB, a world leader in 3D scanning, is based in Kanata and employs seven people. It has been called upon by Hollywood bigwigs.
Those in Hollywood, including Peter Jackson, have used the company to scan props and even actors themselves in order to make movies happen on the big screen.
Its technology is responsible for helping bring King Kong to life in the blockbuster 2005 film. It’s also been used to help animate many of the characters in the Lord of the Rings trilogy, G.I. Joe and most recently the horror flick Mama, among dozens of others. Kungl said the company is working on numerous new projects, too.
The NRC code would help XYZ RGB to further distance itself from competitors, which are steadily going out of business thanks to continued economic pressures.
Kungl said that XYZ RGB is profitable, but whatever money is left after all the bills have been paid goes into expanding its technology so it can remain in its world-leading position.
According to Kungl, after two years of negotiation, the NRC has demanded $100,000 for the licence to use the software. It also wants ongoing royalties from every contract the company wins as a result of having access to the technology.
With negotiations coming to a standstill, Kungl fired off numerous emails to NRC president John McDougall, former minister of state for science & technology Gary Goodyear and others. He also sent a request to the Consiglio Nazionale delle Ricerche (CNR), Italy’s version of the NRC. Within three weeks, the CNR offered XYZ RGB a licence to use a similar piece of software for $15,000. No royalties were requested.
“I have spent two years with the NRC, who is in our own backyard. We have been supportive of them for years. Now, I’m sending my money overseas,” he said. “They should be embarrassed. They really should be.”
Kungl is no stranger to the NRC. He worked with the national researcher in the 1990s, training companies to use its 3D scanning technology. When he started XYZ RGB, it was headquartered on the NRC’s main research campus on Montreal Road. When XYZ RGB was nominated for an Academy Award for Technical Achievement in 2004, Kungl made sure that the NRC was also named in the nomination, even though the company had never used or licensed any NRC technology.
François Cordeaux, general manager for information and communications technology at the NRC, said the organization has set a value on the technology that Kungl desires and that there are costs associated with licensing technology to companies that must be recuperated.
“We have not an unusual disagreement on the value of the technology,” Cordeaux said. “The discussions are ongoing.”
Cordeaux said the software that Kungl wants is also desired by other companies, which only increases its value. He said the NRC regularly licenses technology that it has created to businesses. The money raised by the NRC through its licences is returned to the federal government.
He encouraged Kungl to continue negotiating.
“The door is always open on discussion,” Cordeaux said.
Kungl fired back, asking if the five-year-old software was so coveted, why hasn’t it ever been licensed? He also said the Italian software he is preparing to license is offered in a freeware version that XYZ RGB has been using for the past two years. But the company needs to tweak the software in order to make it work better with its scanning technology. To do that, it needs access to the software’s source code, which requires a licence. That’s why he pursued the CNR when talks with the NRC seemed to grind to a standstill.
“No company will ever pay $100,000 for an obscure piece of code that only a handful of companies in the world would even be interested in licensing,” Kungl said. “It’s absurd. It’s so frustrating.”
Kungl’s complaints come on the heels of the federal government’s promises to make the NRC and its technologies more accessible to Canadian businesses.
In 2012, Goodyear said the NRC would be realigned to help Canadian businesses with daunting research projects, be more accessible to licensing technology that could help expand businesses and help push Canadian ideas and inventions through to commercial production. The government’s changes to the NRC came on the heels of a report from Tom Jenkins, executive chairman of OpenText Corp., which called for a massive overhaul at the federal researcher.