This paper is a draft of a proposal on the best options for commercializing the invention of clients Milly and Tui, who have contacted IP and Innovation Solutions NZ Ltd (IPISNZ) seeking commercialization advice on their project. Milly and Tui are two sisters living on Kowhai Island and are running a conservation project in their large home-built laboratory and workshop in the basement of an old lighthouse on the island. Since the sisters lack adequate funds for financing their invention project, they would need finances and practical help in developing it. The main purpose of this proposal is to provide options on how their interests could be protected so that they retain control over the use of the technology in future and continue earning income from their invention.
Milly and Tui have various options for commercializing their invention of salmons. For instance, they can commercialize their idea by selling a patent, licensing their invention, starting their own business, transferring technology, through assignment and collaboration with others. However, several factors must be considered in choosing the most appropriate option of commercialization. For instance, manufacturing and selling their invented products by themselves may not be the best option for commercializing their idea since they lack funds for developing the invention. The consequences of every option must therefore be considered carefully (Kieff & Paredes, 2012).
If Milly and Tui are passionate about selling their idea for a one time profit, then considering to sell their invention ideas would be the best option. In this way, they do not have to worry about the distribution, packaging or any other concerns relating to logistics in pushing their product along. However, selling of their patents would lock their potential in gaining some other kind of profit, since they would lose future returns should the idea take off successfully. If the two sisters are not sure if this is the best approach for them, then they should consider the financial viability of their product (Salmons) by considering if other similar products do exist in the market (In Manne & In Wright, 2011).
Licensing is the best option for Milly and Tui if they believe that their invention could possibly earn good money well before its inception. Licensing involves finalizing an agreement that helps in providing a partnership between the inventor and the licensee. Licensing is far much better and more profitable than selling your idea since the inventor remains to be the patent holder and is entitled to payments of royalty and any other future proceeds from sales. However, licensing means that the inventor would remain accountable for any mishaps of the product that fall under the licensee’s responsibility (Stelmach, Brozek & Soniewicka, 2010).
Technology transfer is a commercializing option designed primarily for a specialized technology that is invented by a group of individuals who are unable to commercialize it by their own (Wimbish & Clint, 2008). This approach is best for inventors who would mainly rely on the transfer of the technology in continuing to incorporate new technology into the marketplace, so that it becomes a shared resource (Kieff & Paredes, 2012).
An assignment option is where the inventor (the Assignor) sells his rights to his idea, copyright or trademark to the assignee or buyer. The assignor receives a lump sum payment from the assignee and then thereafter he is paid smaller payments of royalty streams over a certain time period provided that the Intellectual Property (IP) is developed successfully. According to Helwegen & Escoffier (2012) however, an assignment involves giving up of the inventor’s rights to the Intellectual Property (IP).
The greatest risk of licensing Intellectual property (IP) is loss of control of the production patents. This is even worse where the licensee is granted the right of assigning the license to another individual. This can happen when a big company ends up buying the licensee and then using your invented process. Another risk associated with licensing is in case the licensee is declared bankrupt and there is a likelihood of the license being assigned to his creditors. However, this risk can be mitigated by stating clearly in the agreement that if the licensee goes bankrupt, then the license comes to an automatic expiry (Kieff & Paredes, 2012).
According to Kingsbury (2012), transfer of technology also has its own risks. For instance, the inventor’s control over the technology is significantly weakened if he transfers it to an unaffiliated company. Besides, there is a possibility of loss of the Intellectual property (IP).
Milly and Tui can protect their control over their inventions by acquiring patents. Once they hold the patent, they will have the exclusive right making use of their inventions, and others will be prevented from manufacturing, selling, distributing their technology. A patent is a type of Intellectual Property (IP) that is issued by the government to an inventor in order to protect his rights to his retaining control over his invention (Bradgate, White & Llewelyn, 2012). Upon being granted the patent, Milly and Tui would gain a legal right to exclude any other person from using, making or selling their invention in the country without acquiring a license from them. This would create an opportunity for Milly and Tui to sell, license or trade their patented technological inventions with other individuals or companies that may be interested in using them. However, protection of patent in one country does not extend to other countries. Therefore, Milly and Tui need to obtain patents from each of the various countries and territories in which they intend to carry out their operations, in order to gain full protection of their invention (National Research Council, Merrill, Mazza & AM, 2011).
In order to ensure that sustainable income is received from the invention, Milly and Tui need to calculate the basic financials and strategize the best ways of selling and funding their invention. This is very important in determining whether the invention is financially viable and if it would be profitable enough to warrant investment of their time and funds into it (Schechter, 2008). There are various ways in which Milly and Tui can ensure that they receive immediate, long-term and steady income from their invention. These are discussed below.
This is considered the fastest and easiest way for Milly and Tui to make money from the invention by selling off their rights. This option guarantees a definite and quick pay off for the invention. Through having patents as their form of intellectual property protection, the sisters can properly sign away their rights while maintaining their control over the invention. This helps them in ensuring that they continue receiving an income from it (Kingsbury, 2012).
Through licensing their intervention, Milly and Tui assign ownership of their technological idea to another party in exchange for royalty payments which usually range between two and eight percent of the products price (Kennedy & Watkins, 2012).
If the sisters desire to continue getting involved in the decision-making process, they can stay involved even without significantly having to commit their time. For instance, they can seek an advisory role which would enable them to influence important marketing issues and sales. This would ensure they continue earning from their invention (Jolly, Philpott & European Patent Office, 2009).
Having been strict vegetarians and passionate environmentalists, Milly and Tui have invented a way of producing a product which is identical to salmon in terms of texture and taste. In accordance with their environmental values, the sisters are highly determined in ensuring that their invention is used for solving ethical and environmental problems. This invention will help in reducing overfishing by providing an alternative way of producing salmons in the laboratory through combining starter cells, soy proteins, seaweed and moss that grow in the island (Kennedy & Watkins, 2012).
In commercializing their idea, it is highly recommended that Milly and Tui choose a commercialization option which would benefit them maximally from their invention. Therefore in this case, licensing their patent is considered the most appropriate approach since it would give them a one-time payment from licensees, as well as a periodical payment of royalties following a successful implementation of the business innovation idea. Besides, they will retain significant control over their invention, which would enable them ensure that they receive steady income from the invention all through. This will also ensure that their environmental values are upheld (Kingsbury, 2012).
However, in achieving this, the sisters need to take several “next steps”. For instance, they need to carry out necessary procedures in filing and acquiring a patent to their invention. Once the patent is obtained, they can proceed in identifying appropriate licensees and finalize an agreement with them in order to transfer their patent interest to them in exchange for money, while enforcing and protecting their intellectual property rights for use in the future (Battle, 2013).
Conclusion
As discussed above, there are various options in which Milly and Tui can use in commercializing their technological invention. However, in selecting the best option, the benefits of every option must be compared to its possible consequences, and then select the one which gives the maximum long-term profits and benefits to the inventors (Stelmach, Brozek, & Soniewicka, 2010). In this case, licensing is highly recommended for use by Milly and Tui.
References
Battle, C. (2013). The Pocket Legal Companion to Patents: A Friendly Guide to Protecting and Profiting from Patents. New York: Skyhorse Publishing, Inc.
Bradgate, R., White, F., & Llewelyn, M. (2012). Commercial law. Oxford: University Press.
Helwegen, W., & Escoffier, L. (2012). Nanotechnology commercialization for managers and scientists. Singapore: Pan Stanford Pub.
In Manne, G. A., & In Wright, J. D. (2011). Competition policy and patent law under uncertainty: Regulating innovation. New York: Cambridge University Press.
Jolly, A., Philpott, J., & European Patent Office. (2009). The handbook of European intellectual property management: Developing, managing and protecting your company’s intellectual property. London: Kogan Page Ltd.
Kennedy, J. P., & Watkins, W. H. (2012). How to Invent and Protect Your Invention: A Guide to Patents for Scientists and Engineers. Somerset: Wiley.
Kieff, F. S., & Paredes, T. (2012). Perspectives on commercializing innovation. Cambridge: Cambridge University Press.
Kingsbury, A. F. (2012). Intellectual property. Wellington, N.Z: LexisNexis NZ.
National Research Council (U.S.), Merrill, S. A., Mazza, & A.-M. (2011). Managing university intellectual property in the public interest. Washington, DC: National Research Council, National Academies Press.
Schechter, R. (2008). Intellectual Property. London: West Academic.
Stelmach, Brozek, & Soniewicka. (2010). Studies in the Philosophy of Law, p.5: Law and Biology. Krako?w: Jagiellonian University Press.
Wimbish, & J. Clint. (2008). Technology Transfer and Aspects of Patentability – Commercializing Nanotechnology. Somerset: Georgia Institute of Technology.
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