Monday, November 29, 2010

Economic policy - IP commercialization as a stand-alone discipline

Below is my opinion piece from Innovation Magazine published by the Irish Times, reproduced with permission:

We need to develop a specialised competency in commercialisation to build this route to the market

HOLLYWOOD has perpetuated the myth that any inventor with a patent is on the road to great riches.

In the UK, James Dyson is a poster-boy for inventors. Many see him as the man who struck it rich with a vacuum cleaner that he started manufacturing in 1993. The romantic image is one of overnight success.

In fact, Dyson’s first product came 23 years earlier in 1970, when he designed a “sea truck”, a flat-hulled, high-speed watercraft. He also got a patent for the Ballbarrow, a modified version of the wheelbarrow, and other products such as a Trolleyball and a Wheelboat.

When perfecting his product, he made more than 5,000 prototypes. The reason for his success is that, apart from being in possession of perseverance and inventiveness, Dyson is an unusually good communicator who has become the face of his invention.

Dyson achieved mass-market commercial success only after a TV advertising campaign. That happened more than 10 years after his original idea for the cyclonic vacuum cleaner. As we can see from Dyson’s story, many patents are of limited commercial value.

John Wanamaker, American retailer and advertising guru, is reputed to have said: “Half the money I spend on advertising is wasted – the trouble is, I don’t know which half.”

Some people apply the same quote to patents, suggesting that just half of them have commercial value. The reality, however, is much worse.

Tony Clayton of the UK Intellectual Property Office surveyed almost 10,000 owners of patents in France, Germany, Italy, the Netherlands, Spain and the UK. His research shows that the top 0.8 per cent of patents in Europe account for 42 per cent of total patent value. The same research found that the top 3.5 per cent of all patents account for 77 per cent of total value for single patents. This means the remaining 96.5 per cent of all patents account for only 23 per cent of total value.

So the challenge is to identify potential blockbusters among the bulk of competing inventions and then find a way to bring them to the market.

The idea behind the smart economy is that the payoff for Ireland will come from the “commercialisation” of ideas and processes. The ideal process involves inventing something, patenting it and then commercialising it.

There is huge pressure on researchers to commercialise their efforts. This is unfair, however. Asking top researchers to become commercialisers is like asking car headlight designers to race against Michael Schumacher because they are both in the car business.

This may seem logical because researchers are intimately familiar with the subject matter – but commercialisation involves more than knowledge of the product. It demands extensive knowledge of the market for the product, as well as an ability to exploit that market.

Most Irish inventors do not have the resources to manufacture and market their product for global markets.

Licensing is the typical route to market envisaged for products of the smart economy. A licence is not a physical product, though – it is a legal one, so it requires a different business model.

A licence agreement is a special form of contract. It is underpinned by intellectual property in the form of patents, copyright, trademarks and know-how. It is also often supported by and subject to litigation.

Managing all of this requires specialist knowledge of intellectual property (IP) law. Typically, the minimum entry requirement for legal personnel is a master’s degree in law, often with an additional IP specialisation.

Commercialisation is more than just law. By definition, it requires a deep understanding of business. To get the best return from potential licensees requires formidable effort. Structures are often complex and special negotiation skills are involved.

Because IP is at the heart of business for both the licensor and potential licensee, negotiations can be heated and intensely emotional. It takes special skill to work through a deal and still maintain a relationship that may have to continue for decades.

We should not forget that the subject matter is usually scientifically complex. A scientific vocabulary is essential in order to understand the technical needs of the market and communicate the specific attributes of the product. Without technical sensitivity, it is impossible to identify potential infringements by non-licensees and to manage compliance of existing licensees.

This means the commercialiser needs a combination of legal, technical and business credentials to achieve commercial success working with the fruits of Irish research and development.

It takes 10 to 20 years to make a top-class researcher, and it takes just as long to make a top-flight commercialiser. We need to develop a specialised competency in commercialisation to build this route to the market.

This is not a mere matter of adapting the efforts of researchers. No political bullying should divert our researchers from focusing on what they are good at: producing world-class research outcomes.

1 comment:

  1. Great post Raymond! Exactly what we think and how we operate.

    IP dynamic its allied to its own complexity and this means that is not apart of the outside world, by the contrary.

    Commercialize a patent is not like "sell" a car. Neither marketing it.

    And as brokers we cannot put ourselves apart of the world. Otherwise we will never get our job done.