Commercialising your IP
A fundamental question to ask yourself when embarking on the commercialisation of a project is "What do I really want to achieve?"
Typically, a business might identify a need within a certain market and after conducting market research may make a decision to meet the need themselves or to pay someone else to do it for them.
In either case, your financial position, what your strengths are, and how much risk you are able to bear are relevant considerations. If you have limited funds and a narrow skill base you may need to access funding and skills elsewhere.
Inventing something new can involve significant research and development costs as well as legal costs for protecting the innovation and preparing the relevant commercial documents. As such, it is important is to consider how you will fund the project.
You might decide to fund the development work with your own money. This option allows you a bigger stake in the reward if the invention becomes valuable and provides a lot more control over the invention. The downside is that if the invention does not work or is not well received in the market then you risk losing your own money.
Many people elect to obtain funding from investors. The most desirable investors are those who will be able to offer more than just money. For example you might seek an investor who has a wealth of marketing or distribution experience or one that has good manufacturing skills. The advantage of such an arrangement is that you have a greater pool of experience and you share the risk of failure. The disadvantage is that you will lose some control over the project and receive a smaller share if the invention succeeds.
How you structure the arrangement with the investor is important and should be agreed on and well documented before input of either party begins.
Another option is to obtain a government grant to help fund your project. The relevant website for information on government grants can be found here.
In terms of your own business structure you operate with, there are three main options available. These are Sole Trader, Partnership or Company. A fourth option utlising trusts may also be considered. There are advantages and disadvantages for each structure and you will need to consider what structure is best for you. There are various options available on how these different structures can be utilized depending on the specific requirements of each client. Some entities will hold their assets in separate holding companies to protect those assets from creditors. The holding company then licences the use of the invention to a trading entity.
From the outset, it is important that the invention and any other trade secrets be kept confidential. We recommend confidentiality provisions in any employment or contractors agreements you have with those having access to the invention or confidential information. In cases where you need to disclose the invention to outside sources, we recommend that you sign a Confidentiality Agreement. This is relevant when, for example, you seek expert advice on something or wish to trial your invention or if you want someone to evaluate the merits of your invention. We can supply you with these agreements at your request.
It is important to note that you cannot offer your invention for sale until a patent application is filed, irrespective of whether or not you have a signed Confidentiality Agreement.
The Process of Commercialisation
The general strategy for commercialisation for most people involves following the steps outlined below:
It is wise to conduct some market research on the intended market for your innovation. Questions to ask yourself to determine whether you should embark on the process are:
- is there a market for your invention?
- what size is this market?
- what value would they place on your invention?
- who would your competitors be? What other technology is already available in your field of interest? Are there patents already in place that will affect your invention? This research might influence your invention.
- what external factors might influence this market?
- can I access these markets effectively myself?
- can I afford to develop a new invention?
The invention itself must then be devised and developed into a marketable product. You might be a sole inventor capable of finalizing the invention by yourself or you might need to recruit the skills of other people to assist you in this process.
3. Protection of your Invention
The majority of our clients approach us once they have almost finalized the development of their invention. However, we can be of assistance earlier on in the process, particularly with respect to preparing confidentiality agreements, advising on timing of patent applications and patent filing strategies, prior art searching and preparing licencing documentation.
We generally recommend that we conduct a patent search on your behalf before we file a patent application. We have access to various patent databases around the world. The results of the search can provide you with a good indication on how novel your invention is or whether there is a patent registration in place that will preclude you from using your invention.
4. Remuneration from your Invention
If you make and market your product or service yourself or using a company, partnership or trust, then your remuneration will depend on the success or failure of your product or service.
If you make and market by way of a licence then the additional factor of what the licensee is to pay is added. The licence arrangement is important and again should be agreed on and well documented prior to manufacture or marketing commencing.