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Don’t rush into protecting innovation unless it has commercial value

Developing intellectual property (IP) and protecting innovation is important but it is not something to rush into if you don’t need to. IP protection needs to be balanced against the commercial value of your innovation and your own business plans.

The simple message is don’t spend money protecting something

if you don’t understand its commercial value.

A low level or lack of commercial value in an innovation will often result in many technologies failing to achieve commercial success. To assess the commercial potential for an innovation you first need to consider two basic questions:

  1. What value will your innovation provide end users? 
  2. What does commercial success look like in your eyes?  

These two questions will determine the future activities that you should complete before jumping to protecting innovation.

What value will your innovation provide end users?

Innovators and entrepreneurs create to solve a problem and they usually have an end user in mind. But many innovators and entrepreneurs don’t know if end users want or see value in the innovation.  Instead of talking to and getting to know their end users they bury themselves in creating solutions to problems they see without checking if the problem is one big enough to motivate people to adopt change.  

Taking a step back from the innovation and focusing on the benefits it will provide to the person that will finally purchase and use it is a great way to get some objectivity. Focus on the top three benefits it will provide and test the market to assess the end consumer demand for the innovation. The value of the technology in your eyes may be different to what end consumers want or demand.

Some key factors to think about when assessing the commercial potential for a technology include:

  • A clear understanding of the problem the technology solves or the benefits it provides by the end customers;
  • The value proposition of the benefits that can be gained by the end customers from use of the technology;
  • The competitive advantage the technology offers over existing technologies; and
  • The value proposition or degree of commercial returns that can be gained by commercial partners in developing and marketing the technology. Unless you are marketing your innovation directly to the end user, you need to understand how the technology adds value to future partners that will sell it to end consumers.

In assessing the commercial value of the innovation, you need to understand the dollar value of the benefits it provides. If you feel there is a range of end markets or users then select the market that will gain the greatest value first.

Understand the value proposition to the end users

and potential partners

For high value and expensive technologies, consumers will generally require a minimum 3:1 return on their investment or purchase within 1 to 2 years. For low cost technologies this may be more like 5:1 in the first 12 months.   

Ask yourself:  

  1. Will your technology sell for a price that provides these minimum levels of return?
  2. Do you have adequate data to support your claims of the benefits? If not, then this is where you should invest before moving to secure IP protection. 

Protecting innovation while you assess its value.

Many innovators believe that they must have IP Protection before they can gather market information.  However, you can gather market information and test your product across selected markets before developing formal IP protection. It is important that your innovation remains confidential and is not used in a way that could affect your capacity to gain future IP protection.  

What does commercial success look like in you eyes?  

What commercial success looks like in your eyes will determine the business strategy or model that you require. Without some type of vision on how and where you want to develop your technology you can’t develop a suitable IP protection strategy.

Think about why you are developing the idea and what are your business objectives in developing the innovation or technology?  Do you want to start a new business, e.g. a Start-Up company to develop and sell the technology, or are you seeking to sell the technology and collect a royalty for its sale?

IP Protection must match your business strategy

If you are focused on developing the product in Australia only, then develop a low cost option to protect it here and nowhere else. However, if you want to develop it in Australia and then go on to sell it to others for international markets, then international protection may be important.

Your business strategy also needs to be time dependent. From an IP protection point of view, if you are seeking to gain international protection for your technology then you need to understand the costs for such protection and the timelines when major costs will occur.   

Major costs for a patent protection occur 30 months after the date of the initial application. Most start-up company’s goal is to find investment partners or to license the technology to commercial partners before the 30 months period is reached. This allows them to share costs involved in patent protection. For large corporations, clear business strategies must be defined in the 30 months period to justify ongoing patent protection. This would include an accurate assessment of the market size and value for the technology.    

Understanding the commercial value is the first important step that needs to be taken when commercialising new innovations and technology. Many businesses jump the gun on IP protection without understanding the commercial value of the innovation or technology they have developed or how it fits in their overall business strategy.  IP Active provides speciality services in supporting business protect and commercialise their innovations or technologies. If you have questions about assessing commercial value or would like to discuss your idea further you can contact us for a free 30 minute discovery session.