4.2 The early commercialisation process

4.2 The early commercialisation process

Technology Transfer OfficesTTO: The Technology Transfer Office or Commercialisation Unit is a specialised unit within the university responsible for managing the university’s IP. It exists to guide and assist researchers, other staff and students in IP management and commercialisation. 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, copyrightCopyright: An automatic legal IP protection applicable to the novel expression of ideas and information; best suited to artistic creations, using that term broadly., plant breeders rightsPlant breeder’s rights: A type of legally registered IP protection applicable to novel varieties of plants that are distinct, uniform and stable. Registration provides exclusive rights to use, license or sell the plant variety. and designs.

For universities, the typical steps in early commercialisationCommercialisation: The process of taking an innovation to market for financial profit., 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 IPIntellectual property (IP): An innovation or invention – a novel creation from a single mind or a collaboration – that may be protected via a trade secret, copyright, or a legal registration.. 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 artPrior art: Any information that may show that the perceived novelty in potential IP does not actually exist, where that information was publicly available prior to an application for legal protection of the potential IP. 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 patentPatent: A type of legally registered IP protection applicable only to inventions, which provides exclusive rights to exploit the IP commercially in the jurisdiction of the registration. prosecutions.