Turning intellectual capital, i.e., what’s in your brain, into intellectual property (“IP”), i.e., a legally protected, transferable asset is not cheap. Organizations invest time, focus and capital to protect innovation through patents, trade secrets and other means.
IP is of critical importance in the process of turning innovative ideas into commercially viable products and services. IP helps establish and protect competitive advantages created through innovation, the same competitive advantages that ultimately play a significant role in commercial success.
However, not all IP is created equal. It is estimated that only about 10% of recently granted patents will be commercialized, and the average patent earns less money than the cost to obtain it.1
However, by following certain IP best practices, organizations can increase the probability of commercializing innovation in a value added way. While not all inclusive, following these best practices will help ensure you are maximizing the benefit of your IP and IP processes.
Proper Disclosure: Don’t reveal how the sausage is made (before protections are in place).
- Know the relevant disclosure rules and the implications of disclosure: For example, in the U.S., inventors have up to one year to file a patent application after public disclosure. This is not the case in Europe, where if the invention is publicly disclosed in sufficient detail, inventors lose the right to obtain patent protection. Also, be wary of the change from a first to invent system, to the first to file system resulting from the 2011 America Invents Act.
- Implement disclosure policies and procedures: Have internal policies and controls in place to prevent unwanted or improper disclosure. Ensure personnel know those policies and agree to follow them. Utilize non-disclosure agreements internally and provisional patent applications as necessary to minimize chances of a pre-mature disclosure negatively impacting your chances of obtaining IP protections.
Enforce Your Rights: If you created valuable assets in the form of IP, don’t let those asset values waste away by failing to enforce your rights.
- Implement mechanisms to hinder misappropriation: This is achieved through a variety of ways. Implementing adequate controls and policies and procedures will lower the probability of misappropriation. In addition, certain inventions and processes lend themselves to implementing mechanisms that allow for easier identification of misappropriation.
- Pursue perpetrators: If you suspect or identify entities misappropriating your IP, pursue legal action against them to enforce your rights.
- Find partners: If identifying and pursuing IP infringers is not high on your to-do list, find a partner who has the experience and appetite for doing so and license your technology to them. Creating a partnership can relieve you from the effort and expense of pursuing infringers, while still ensuring that the economic incentive for them to be pursued is maintained.
Consider All Uses and Markets: Think about all the potential applications of the technology and make sure you get the proper protections for those uses.
- Target markets: Assess all the commercial markets the technology could potentially impact. Don’t be afraid to consider applications outside of your traditional areas of expertise. Technology that doesn’t necessarily impact your core functions or target markets can be licensed out to generate additional sources of revenue.
- Geography: Consider all potential end markets in terms of geography, and how that impacts disclosure and IP protection plans.
- Types of protections: Protect your innovation by properly securing the best type of protections. Processes that could easily be designed around or modified to avoid patent infringement may be best protected as trade secrets. Alternatively, if a product could be easily (and legally) reversed engineered, a patent may be more appropriate.
Manage Attribution: Give credit where credit is due, but no more, no less. Improper attribution for innovation can lead to complications as you seek to protect and ultimately commercialize the technology.
- Records: Keep good records of the inventive process distinguishing between inventive contributions (possibly giving rise to inventorship) versus supporting contributions (valuable, but contributors should not be considered as inventors).
- Disclosure: Ensure that you are disclosing the proper inventors in patent applications.
- Use agreements: Agreements can help clearly delineate rights of ownership of technology as a result of R&D efforts.
Implementing these best practices will not guarantee success in turning innovation into commercially successful products and services. They will however raise the probability of success, mitigate risks, and add value by helping turn intellectual capital into intellectual property, and ensuring that organizations are taking action to maximize the value and commercial prospects of intellectual property.
RubinBrown has a dedicated Life Sciences and Technology Services Group specializing in serving life sciences and technology based companies, including assisting startup and early stage companies and consulting on IP management and strategy.
1Kotha, Reddi, Kim, Phillip H., and Alexy, Oliver. Turn Your Science Into A Business. Harvard Business Review. November 2014.
Any federal tax advice contained in this communication (including any attachments): (i) is intended for your use only; (ii) is based on the accuracy and completeness of the facts you have provided us; and (iii) may not be relied upon to avoid penalties.
All Life Sciences & Technology News Life Sciences & Technology Overview