I have a patent, what do I do now?

Published in Innovate! magazine, Issue 05 2007

<br /> I have a patent. What now?</p> <p><Body text><br /> In the previous edition we discussed why licensing technology is a good commercialisation strategy, and where it fits into the commercial cycle. Let’s assume you’ve paid the patent attorney to fund his upcoming ski holiday and now have a provisional patent in place. (As a side note, it is possible to write and file your own patent for a mere R65,00 through www.cipro.co.za, but if it is good technology, then its better to work through a good patent attorney, see www.saiipl.org.za for a comprehensive list of patent attorneys).</p> <p>First it’s important to note that in South Africa, it is not required by the patent registrar to do a competing patent search prior to granting a provisional patent. This means, you might think you have a patent, but somewhere else in the world, some one has beaten you to the patent attorney’s door. So start by doing your own patent search on the internet, and spend a few days searching for competing patents. Also note that patent attorneys will only do a patent search if you ask them to and you’d have to pay for the time they spend doing so. </p> <p>If, after your patent search, you are confident that your patent is novel, includes an inventive step and has commercial application, then another question needs to be asked: Is the technology really licensable? Innovations are normally divided into three classifications. </p> <p>A level one innovation has a specific application for a niche market, is difficult to distinguish from competing products, and has little license potential. </p> <p>Level two and three inventions have stronger patents, clearer commercial potential but often limited to a specific industry, and a limited life span.</p> <p>A level five innovation is regarded as disruptive technology – meaning the utilisation of your technology will bring to an end the existing technology that is currently in the market. A good example will be CD’s which pushed tape decks out of the market. Disruptive technology might sound impressive, but is often more difficult to commercialise than level four technology.</p> <p>Level four technology has a strong patent, wide commercial application across various industries, and can be “policed”. This simply means, you can determine from the end product whether someone is using your technology without the right to do so. This is the ideal technology to license.</p> <p>The R&D dilemma<br /> Often governments and private companies invest vast amounts in research and development (R&D), but fail to invest in commercialising the technology. It is a good rule of thumb to set aside as much funds for commercialisation as is invested in R&D. To turn a patent into profits, you need to package the technology, and you have to promote it.</p> <p>Packaging technology<br /> The following are guidelines to assist you in preparing your technology for promotion to potential clients.<br /> • All international licensees will want to see the strength of the patent. The PCT search reports helps to indicate the level of international patentability of the technology. So the sooner you have a PCT search report available, the better. </p> <p>• Draw up one page comparison of competing patents, and outline why yours are better. This provides confidence to the prospective licensee that you have done your homework, and can clearly identify the unique benefits of your technology.</p> <p>• Have generic copies of legal agreements available to send it immediately when it is required. Typical agreements that might be needed include a Non Disclosure Agreement, Non-Circumvention Agreement, Non-Analysis Agreements, Material Transfer for Testing and Analysis Agreement, Heads of Agreement template, Negotiation structure for Licensing Template, and License agreement drafts.</p> <p>• Something tangible is much more convincing than paper. Most licensees will want to see proof that your technology works, so have samples available to courier if possible. Alternatively, have a trial reference site or reference client and make a video recording to prove why it is working. If possible, obtain an independent third party to verify the results.</p> <p>• If it’s an electronic device, get a commercial person to identify and specify commercially available components, and build a commercial scale model. There’s nothing more limiting than having an academic researcher who removed bits and pieces from old stoves and TV sets to build a new technology proof-of-concept, but cannot take it one step further towards having a commercial prototype available.</p> <p>• Get commercial indication quotations. This might be difficult to obtain, but try to put a figure on the table of what it will cost to produce your technology on a commercial scale. Help the potential licensee to move from uncertainty towards greater clarity.</p> <p>• Develop some promotional material – Video, brochure, mock-ups, trial reference sites, photos, etc. Remember the person you have to impress is often the CEO of a prospective company who does not have a technical back ground. So make the benefits of your technology visual and interesting.</p> <p>• Do your market research to determine the size of your potential market. Be realistic and remember the licensee could make more money than you as licensor, because they invest the funds and take the risk of commercialising it. Use a good valuation model to determine a realistic value of your patent, and be prepared to explain how you got to your value.</p> <p>Once you have your technology well “packaged” for license, its time to promote it. This could be an expensive and frustrating exercise, but there are some new methods that will enable you to land your box of prototypes on the desk of the right person in the right company. We will discuss this in the next edition.</p> <p>About the author<br /> Nicolas Lategan is founder of Licensing Technology Network. A company focused on marketing South African technology to facilitate license deals with international and multi-national companies. He is accredited as independent technology broker for South African technology by Yet2.com, the world’s largest online technology transfer company. He is also a Registered Affiliate for NineSigma, and member of Licensing Executive Society. 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