The technology transfer process is most often used by non-profit, publicly funded colleges, universities, government laboratories, and research institutions that are experts in conducting research, discovering scientific knowledge, and developing novel technologies. While there are many inventions out in the world with no real-world applications these entities are focused on using research methods to find potential solutions to today’s real problems. Their discoveries and inventions are intended to be shared with others to make a difference in the world. In an ideal world, the researchers are in close contact with people, stakeholders, stewards, and organizations that experience the problem and best understand the intricate details about the problem that need to be solved. In this way research can be conducted in parallel with a process that constantly evaluates what solutions, even at their most early stages of development, might be feasible in the real world or commercial market. This market discovery or awareness can help researchers conduct more impactful research results.
Reporting of an Invention
Depending on the non-profit entity where the invention originated, the first step is often to disclose(report) the invention created by the researchers to the administration to evaluate the commercial potential of the invention. Policies vary by institution with some allowing inventors to own their inventions and have the choice to work with or without their employer, and others require all inventions to be owned by their employer (often a university) as a condition of employment. Inquire with your own institution or search the WIPO Database of Intellectual Property Policies from Universities and Research Institutions for the policies relevant to your work. For this module we have assumed that the researcher is willingly allowing the employer (university) to take control of the invention. In most cases the employer has a Technology Transfer Office (TTO) which will receive the Report of Invention. The technology transfer professionals on staff will help researchers understand policies on how intellectual property (IP) and commercialization is managed at their specific institution, check if any intellectual property rights are restricted or encumbered as a condition in the project funding agreement related to the research that created the invention, and provide information and guidance on proceeding to the next step in the process.
One of the TTO’s hardest jobs is to properly assess and evaluate the commercial potential or societal impact of a new invention. Each invention has a unique set of characteristics that helped the invention get to its current level of development. A TTO will use this information to predict if an invention (and any associated IP) can be protected, and at what cost, and estimate the potential commercial value of an invention, once it is used to make a commercial product or social good. This assessment involves a comprehensive worldwide prior-art search (literature, website, competitors products, and patent databases), and a market opportunity analysis.
The prior art search will determine if the invention is novel, non-obvious and useful (and commercially viable), and therefore may qualify for protections (e.g. patents). Searches are conducted using comprehensive academic journal databases such as Academic Search Premier, Scholars Portal Journals, Web of Science (often available free at academic institutions) and free online patent application databases like the Canadian Patents Database, Google Patents, the PATENTSCOPE database, USPTO, Espacenet, etc.
The market analysis looks to determine if the invention would have commercial value by assessing how the invention works to solve a problem, the audience or target market that would be interested in such a solution, any competitive products or companies that exist and the scale of the potential opportunities. Large unsolved costly problems that affect many people or companies have much greater commercial value or social impact than those that only affect a small number of people and have small costs to them. Therefore, estimating the potential market size of the problem is critical to understand before anyone is going to invest time and funds into developing the technology into a product to solve the problem. The better one understands the problem from the customer’s perspective, the more likely a product will be developed that actually solves the problem. Another important characteristic of a technology is its current level of development or maturity, often called the Technology Readiness Level (TRL). Some inventions may not be sufficiently developed (i.e. proven) to be of interest to commercial partners, and further research may be necessary before real product development, investment, and partnerships can begin.
It is important to ensure proper protections are in place for an invention before starting the process of adding additional resources to develop a potential commercial product. In many cases, an invention must be kept confidential until a thorough analysis is completed by the TTO or the company developing the invention. If researchers need to discuss their invention with anyone outside of their team or control then they should only do so after executing a Non-Disclosure Agreement – to keep such discussions legally confidential. If an invention is made public by website postings, publication, or conference presentations, then considerable commercial value will be lost, especially in the opportunity to secure a granted patent. Most, but not all, commercial opportunities require some form of restriction on the rights of others to use the invention, and in most cases product developers demand the exclusive right to use the invention and associated intellectual property for commercial purposes (i.e. to build new products). In addition, these protections are a legal recognition of the ownership of the invention, which helps to prevent theft and imposters from assuming credit for the inventor’s work.
Inventions can be protected by various forms of intellectual property rights such as patents, copyright, trademarks, industrial designs, integrated circuit designs, proprietary use agreements, and trade secrets. These various types of protection often encourage investment from third parties to help the rights-owner commercialize their invention because they have exclusive rights and therefore have the potential to hold back the competition in the intended new product market. However, the laws governing IP are slightly different in each country, therefore take care to understand the different rights, rules, and regulations of your jurisdiction of interest. For example, a patent application can be filed in Canada or the USA by an inventor for up to one year after the inventor made a public presentation describing his/her invention. No such grace period exists in Europe.
In general, it is best to submit a patent application to the intellectual property office in the country of interest (i.e. CIPO for Canada and USPTO for USA) prior to making any invention public via a presentation, abstract, publication, etc.. This will maximize the probability of obtaining an approved patent (often takes many years) which improves the current commercial value of the invention (i.e. IP may result in a granted patent). Alternatively, a trade secret has no formal registration process, and its value is almost entirely based on the fact that it is a secret, has very limited distribution (sometimes only a few people), and it has security protocols maintained in-house by the inventor or owner to keep it secret.
With protections pending (such as a patent application under examination by CIPO), or in place (patent granted), it is time to start marketing and advertising the invention to prospective partners/companies that should want to license the invention to expand their business or support their innovation and product development goals. Marketing plans can include targeted print and digital advertising, telephone calls, email campaigns and meetings. A TTO should leverage all existing relationships with companies in addition to searching for new market opportunities. Cooperation among fellow academic TTOs is common as they help each other tap into each other’s networks to connect with potential licensees or buyers of new inventions and IP. One of the common outcomes that occur as TTOs talk with assumed customers, partners, and potential licensees is that it allows the TTO to validate the problem and market opportunity that the invention might solve. The problem cannot be validated in the office, it must occur by talking to many customers, licensees, or intermediaries that experience the problem, and then the value and configuration of potential solutions (i.e. invention) can be determined much more accurately.
If the negotiating parties are uncomfortable with the usefulness or quality of an invention, they may decide to execute an option agreement first to give the potential licensee/partner the right to use, test, and evaluate the invention. An option agreement (e.g. experimental use agreement) allows the potential licensee to conduct trials with the invention under close to realistic use-conditions, for a limited time before entering into a definitive license agreement. This “kick the tires” period can be months or even years, depending on how hard and long it takes to convert an invention into a real product.
Once a serious licensee has been found, and the quality of the current invention is not a concern, then a license agreement must be negotiated, which often takes weeks to months. The negotiation will finalize the terms of the agreement which will grant the licensee the rights to commercialize the invention in exchange for financial compensation (i.e. annual license fees, royalties, milestone payments, and other potential considerations). Some other terms that will be negotiated include the jurisdictions where commercialization of the invention is allowed, reporting requirements, and duration of the contract.
Once a license agreement has been executed it will describe the future obligations of each party (i.e. licensee and licensor), deadlines for completion, and the actions that one party may take if the other party fails to perform their obligations (called breach of agreement). These follow-up obligations/activities are intended to ensure that the relationship and common goals to commercialize the invention are maintained for the duration of the license. These obligations/activities often include the submission of annual reports, licensing payments, royalty payments, investment in further research, regulatory approvals or the launch of new products based on the licensed invention and term renewals, to name a few.