The right business method applied to commercialising an invention usually consists of many stages, starting from the need to ideally protect your invention through to the marketing factors that are the most appropriate to bring your product or process to the marketplace.
Business Method: Patent your invention
Protecting your invention from imitation is the first step in your business method. In Australia, judging if an idea is patentable is carried out by IP Australia. The basic criteria for patentability are newness, inventiveness and usefulness. However, patents are not limited to devices. Substances, methods and processes are also patentable in Australia. Included amongst these are business methods which relate to novel and inventive ways to conduct business procedures. Patentable subject matter does not extend to artistic creations, mathematical models, plans or other purely mental or artistic processes.
A granted patent provides you with 20 years to solely develop and profit from your invention without having to worry about it being copied by a third party, or even sell or license your invention. Patent applications are lodged with the patent office of the country in which protection is sought, the Australian patent office being IP Australia. The first step in obtaining one or more patents will generally see you filing a provisional patent application, protecting your invention for 12 months.
Business Method: Patent attorney
It is critically important that the approaches taken by potential copiers are identified and that your idea is comprehensively protected as much as possible from the outset. Your provisional patent application should therefore be ideally prepared by a patent attorney. The unique qualifications of patent attorneys allow them to act for you, as a patent applicant or patent holder, and provide you the greatest possible monopoly based on your idea.
Business Method: Selling or licensing your patent
Obtaining a patent in your desired jurisdiction(s) gives you a number of options. Your business method will depend on your needs, expectations and other factors which will influence how much control over your invention you seek to maintain. Selling or licensing your patent to another party can be a very effective way to exploit your patent, particularly if you do not have the capital resources or experience to develop and market your product, process or service. Whether you sell your invention or license it depends upon both your needs and expectations, and the party with whom a deal is proposed.
An assignment refers the sale and transfer of ownership of the patent from the patent holder to the assignee, with a lump sum payment usually occurring at the time of selling the invention. In some cases the lump some payment is ‘stage-gated’ based on certain pre-determined milestones being achieved (e.g. the granting of a US patent). An assignment is irrevocable.
A licence contractually gives permission to a licensee to use a patent, though ownership of it remains with the licensor. The licensor will usually receive payments in the form of royalties, which are normally paid over the 20 year term or the life of product or process, which ever the lesser time. Licensing your invention should also take into account a number of aspects:
- Exclusive or non-exclusive licence — a non-exclusive licence agreements allow licensors to license IP to competitors (lowering the commercial value of each of the licences).
- Manufacturing — if you are a new inventor, it is often easiest to allow manufacturing of the product to be handled by the licensee.
- Geography — an invention can be licensed to different parties in different countries. Sales based royalty rates and manufacturing based royalty rates can be defined for each country or region.
- Financial arrangements — financial terms can come in the form of:
- an upfront licence fee;
- a once-only or per unit royalty;
- a combination of 1 and 2; or
- other terms.
Business Method: Commercialisation
Alternatively, you may choose to take control of your invention and its progression entirely. A commercialisation strategy tailored specifically to address the needs of your business and maximise the profits you can extract from your product or process should then be your approach, once of course you have obtained patent protection. The utilisation of a commercialisation expert’s market experience enables you to most effectively develop your commercialisation plan, ideally providing you with insightful advice that minimises drawbacks and ‘dead-ends’ that might otherwise occur, and hence eventually maximising your return on IP investment.
Business Method: Planning
If you are seeking to prove that your invention actually works, this normally requires your product or process to be prototyped in some form. To achieve this you may need to:
- obtain funds through a government grant or a financial investment;
- enter into a licence agreement; or
- form a strategic partnership.
Operating as a successful business requires that you:
- evaluate the infrastructure of your market;
- formulate a corporate identity that will hold you in good stead for both clients and customers; and
- select a sales strategy that will convince buyers to deal with you rather than with competitors.
A commercialisation expert will also assist you in avoiding beginner’s errors that could risk your invention’s competitive edge.
Important Disclaimer: The information on this website is not legal or professional advice. The information may:
- not be correct;
- only relate to the law or practice in a given country; and/or
- be outdated.