4.2 The early commercialisation process

Technology Transfer Offices offer many avenues for transitioning the findings from research into real-world services and technologies. Patent protection for an invention is one legal protection method that could be applied. In the example flow diagram below you could substitute other intellectual property outputs such as research tools, software, copyright, plant breeders rights and designs.

For universities, the typical steps in early commercialisation, in an ideal sequence, are:

1. IP identification

Researchers and students should seek the advice of the university’s technology transfer office (TTO) as soon as they believe they have developed any potential IP. TTOs often expect researchers and students to use an official ‘IP Notification Form’ for this purpose.

2. Technology or invention definition

A commercialisation manager from the TTO works with the IP creators to define exactly what constitutes the potential IP. The perceived uses of the potential IP are described, and the identities of the IP creators are confirmed. Prior art searches are conducted to determine whether novelty, and preferably inventiveness, probably exist.

3. Preliminary evaluation

If the results of the prior art searches are favourable, the probable commercial value and social impact of the IP is assessed to determine if commercialisation is likely to be worthwhile. Key factors are: any potentially fatal obstacles such as regulatory hurdles, the probable strength of IP protection, and likely sales. Being skilled in the relevant work area, the IP creators assist the TTO with this evaluation.

4. Application for IP protection

The TTO usually arranges for IP creators employed by the university to confirm assignment of the IP to the university, even if their employment contracts or university policy suggest this is unnecessary. This clearly identifies the university as the legal applicant for IP protection. The application process for each type of IP protection has been described previously in this training.

5. Basic commercialisation plan

With assistance from IP creators, the TTO develops a plan describing the perceived best commercialisation pathway/vehicle (more on this later) and validating the preliminary evaluation with additional evidence. The commercialisation plan for each IP is tailored to its unique characteristics. This plan supports discussions – usually involving NDAs – with potential collaborators, partners and funders.

6. Industry engagement

If no further R&D is necessary and the commercialisation plan is mature, the IP is ‘commercialisation ready’. Working with the IP creators, the TTO identifies potential industry partners with relevant market access and expertise and develops a pitch to engage their interest in commercialising the university’s IP. Potential commercialisation partners include existing R&D funders/collaborators/businesses who have had no prior connection to the university.

7. Contract negotiation, execution and exit

Universities may access seed funding for commercialisation ventures, but cannot provide the subsequent, significant investment required for long-term business growth.  Therefore, the TTO will attempt to arrange licensing or sale of the university’s IP to one or more suitable businesses via a negotiated contract. However, the university will contractually preserve the rights to continue using the IP for teaching and R&D.

The IP licensee or purchaser may be an established business, or a new, affiliated company (a ‘spin-off’ from the established business), or a new, independent company (a ‘start-up’). Each party to the contract conducts ‘due diligence’ (independently investigates the risks).

This step of the process can take a long time and often fails because substantial financial commitments are required from external parties, who may deem the risks too great. To assist in risk reduction, the university may cooperate with a business to apply for government grants for partial, short-term funding of further steps towards commercialisation. Universities usually cease active participation in commercialisation when this step concludes successfully or otherwise, but they may continue administrative activities, including managing IP protection and income and distributing a percentage of net returns to IP creators. IP creators may be involved in ongoing patent prosecutions.

Quick quiz – Q1: You are a staff member or researcher, employed by the university, who develops potential IP while completing your work. You must notify the university TTO that you have created the IP. True or false?

CORRECT: IP ownership is often complex. Under terms of your employment university ownership of any such IP is defined in your contract. The IP may be partly owned by R&D funders/collaborators. Additionally, your IP may affect other R&D in the university. The TTO will help you to resolve these issues.
INCORRECT: Try again.

Quick quiz – Q2: ‘Due diligence’ means that the industry partner is solely responsible for investigating the risks associated with commercialising university-owned IP. True or false?

INCORRECT: Try again
CORRECT: All parties involved should independently investigate the risks, e.g. the university should investigate risks inherent to the specific industry partner tentatively selected.