Thursday, January 12, 2012

Commercialization -- The Selection of IP -- Part 13 in our Series on IP and Patents

This is the thirteenth in a planned 20-part series of articles on intellectual property.  In future posts, we will explore product commercialization.

In this posting, we will provide a discussion on the selection of IP.  What should you look for in determining whether certain intellectual property makes sense to pursue for commercialization?

Earlier this year, the US Department of Energy (DOE) held a patent clearance sale

Yes, you read that right – the DOE had a sale on its intellectual property (IP) portfolio, offering licenses to patents they had for the low, low price of $1,000.

The DOE runs 21 labs and technology centers (that are listed on the website) whose primary job is to advance science and the defense and economic leadership position of the country.  These research centers have produced over 15,000 patents for the DOE, but apparently only about 10% of those had been licensed to industry.  So, the DOE launched a campaign that portrayed those technologies, in a tongue-in-cheek way, as though they were having a massive clearance sale, and these technologies were just sitting there, waiting to be adopted like pets at an animal shelter, only quite a bit more expensive and requiring a lot more work! 

Where Does One Find Technologies?

National laboratories seem to pump out technologies at a high rate, and so do universities.  Most of the larger universities have commercialization arms which are established to license technologies developed and owned by the institution.

One of the oldest and most active of these is WARF – the Wisconsin Alumni Research Foundation, which is established to partner with industry to license technologies developed at the University of Wisconsin.  There are many others, however, and they go by varying names.  They are usually called their Technology Transfer office, but may also be found online under “Research”, “Commercialization”, “Industry Partnerships” or some other moniker. 

A couple years ago, Enable IPC quietly researched over 300 universities in the US that had active engineering programs and found that about 80% of them had established such offices, and most of the other 20% seemed to think that establishing an office was important to do, but they simply hadn’t gotten around to it yet.

All this research, plus the corporate research and individual inventor activity, has combined to deluge the US Patent and Trademark Officer (USPTO) – they received nearly a quarter of a million utility patent applications from US filers in 2010 alone (over half a million when foreign filers, and design and plant applications are included in the total).  And, past blog postings on this site have discussed the USPTO’s backlog. 

There are a lot of ideas being protected.  The key is to find the ones that are worth investing in.

Determining the Right Idea

Finding the right concept to pursue is easier said than done.  It takes a lot of work and a lot of objectivity.  But, put simply, one needs to analyze a couple of very important things right off the bat:

Review the technology against the current state-of-the-art and what’s likely to come

No one has a working crystal ball.  It’s tough to see into the future and determine what the competition might be working on, or what it may have up its sleeve.  But, that’s part of the risk.  And it needs to be taken seriously and objectively.

Objectively analyze the assets and risks of the technology

What is the real advantage of the tehcnology?  Is it protected under the patent being licensed?  If not, can it be protected and what will it cost to obtain that protection?

What can be gained by this technology?  Are there work-arounds (i.e., can someone circumvent the protected idea)?  If so, what hkind of head-start in the market can you expect to get while the competition is catching up?  Once the competition catches up, what happens to your market share?  Does it go down by 10%?  20%?  50%?  Or worse, completely evaporate?  Will the head start gained by the technology be enough to make this effort worth while?

The assets and potential success of the technology must be weighed against the risks.  The likelihood of success needs to include an objective evaluation of the succeeding technologies – when will the technology be replaced by a new technology and what kind of profits can be realized in the meantime? 

In future installments, we will look at some additional activities and analyses that may need to be done, followed by some discussions on trademarks and copyrights.

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