Introduction to Technology Commercialisation
In simple terms, technology commercialisation is turning an invention or innovation into a marketable product that people can use.
As research institutions and universities ramp up efforts to translate ideas into impact, understanding this process is more important than ever. Commercialisation allows groundbreaking technologies to move out of the lab and into the real world, where they can improve lives and drive economic growth.
However, the path from conception to commercial product involves many complex steps. This article will review the technology commercialisation journey and discuss critical strategies like intellectual property (IP) protection, licensing deals, startup creation, and overcoming common obstacles.
The Process of Commercialising Technology
Turning a new technology into a commercially viable product involves extensive research, planning, and execution across various areas. The process typically begins with early-stage research and development, during which inventors focus on proving a concept and demonstrating technical feasibility.
The next step is evaluating the technology’s commercial potential by analysing customer demand, competing products, production costs, and regulatory requirements.
It is important to note that commercialisation is not a straight-line process; many different paths can be followed, and these vary depending on the technology or service, inventors, market, etc.
If the research focuses on delivering impact, including developing a product for commercialisation, then ideally, this market analysis should be undertaken before the research commences. That is, identify a current problem, the demand for a solution, and how that solution can be successfully rolled out at scale.
Finding a new way to solve a problem for which there is already an existing and acceptable product solution poses a real challenge for commercialisation unless that fresh solution is a considerable improvement or can be delivered better or more cheaply.
Once the commercial promise is confirmed, it is important (but only sometimes essential) to protect the IP behind the technology. Depending on the nature of the invention, protection could take the form of a patent, trade mark, copyright, or confidential information/trade secrets.
Robust IP protection provides the legal basis for commercialisation and can help attract investment from partners or investors.
The first step of any partner or investor interested in commercialising a technology will be to undertake due diligence on the IP, such as:
- Who created the IP?
- If the IP was created by an employee, who owns the IP?
- Are there agreements in place to confirm the ownership?
- Was other IP used to create the technology – whether earlier IP owned by the inventor or their employer (background IP) or IP owned by another person or organisation (third party IP)?
- If another IP was used, does the resulting technology use that IP in a way that requires the grant of a licence to the other IP?
- If so, is there an agreement granting rights to use that other IP?
- Has any third party provided funding to develop the IP, and if so, on what basis and terms (e.g. do they have an ownership interest or automatic licence to the IP)?
- Has the IP been disclosed or published?
- Is the technology protected by registered IP rights, and if so, is that protection valid and current?
- If there is no registered IP protection, has the IP been kept confidential and only disclosed under the terms of a confidentiality agreement?
Anyone seeking to commercialise IP should ensure that these IP due diligence issues (among others) are addressed at the outset and continuously. Leaving them until just before approaching a potential partner or investor can prove fatal to the chance of a successful commercialisation outcome.
It is always best for due diligence to be conducted, agreements to be in place at the earliest possible stage, and the IP position to be kept under regular review. Unsurprisingly, when there is a prospect of a commercial benefit, ownership and other IP issues can become much more challenging to resolve.
Unless those IP issues are resolved, no commercial partner or investor will be willing to proceed in all but the most exceptional cases.
With the IP strategy and protection secured, the focus shifts to finding the resources and partners needed to develop and launch the product. Typical routes include licensing the IP to an established company, starting a new company based around the IP, or seeking funding from government grants or private investors to further develop and trial the IP. Each path has pros and cons to weigh up.
Ultimately, commercialisation takes an idea through iterative proof of concept testing and prototyping, manufacturing ramp-up, market testing, and mass production and sales. At each stage, input from experts across fields such as commercialisation, business, engineering, manufacturing, law, and science is needed to navigate the complexities. If successful, the payoff is an innovative new product that meets a market need.
Protecting Intellectual Property
IP protection is the cornerstone of a technology commercialisation plan. IP can be broadly divided into registered and unregistered IP rights.
Registered IP protection includes patents, which provide exclusive rights to an invention; trade marks, which protect a company’s brand and assets; design rights, which protect the overall visual appearance of a product; and plant breeder’s rights, which provide commercial rights over a new plant variety.
Unregistered IP protection includes copyright, which protects creative expression like software code, and confidentiality and trade secrets, which safeguard confidential information.
Registered IP protection can be more attractive to a commercial partner or investor; however, formal registration may need to be available or aligned with the commercial strategy. For example, registered IP rights protection requires public disclosure of the IP, and in some cases, keeping the IP confidential offers the best commercial benefit (the recipe for Coca-Cola and KFC being among the most famous examples).
Having a solid IP foundation is critical for several reasons. It allows the inventors to profit from their creation for a defined period in specific geographic locations. Valid IP protection can provide security for attracting investment and forming partnerships with established companies.
The type of IP protection sought, like patents versus trade secrets, can depend on the commercial strategy. Overall, IP helps ensure that innovators reap the rewards of their breakthroughs.
Licensing Technology
Along with starting a new company, licensing is a primary route for commercialising a technology. Licensing means that the IP owners retain ownership of their invention but grant a licence to an external company, allowing them, for example, to produce, market and sell it legally.
Often, great value is placed on the ownership of IP, although in practice, who has the right to use and exploit the IP is of far more commercial importance.
Licensing deals allow inventors to capitalise on their IP while avoiding the risk and effort of launching a startup. For companies, it provides access to innovative technologies without speculative internal R&D, although further development of a technology is often required before a product’s commercial launch is possible.
Typical licensing contract terms cover licence length, whether the licence is exclusive or non-exclusive, territories covered, payment structure (e.g. royalties, equity), performance requirements, and other rights. With the right partner, licensing enables a win-win situation.
Forming a Startup Company
Starting a new company to commercialise a technology can be rewarding, but it is also demanding and involves risk. It requires assembling a skilled team covering technology expertise, business operations, and often capital raising.
Founders must make significant decisions on company structure, equity splits, hiring strategy and crafting a compelling business plan. This plan is essential for attracting early seed funding from angel investors or venture capital firms to get off the ground.
Running a startup is only for some, and inventors in startups may find the day-to-day commercial and business tasks unfulfilling. Unless they are in a technology-focused role, inevitably, it will take them away from further research and making new inventions for much, if not all, of their time.
All inventors should ask themselves, what do I enjoy doing/what do I want to do? Startups can be all-consuming, with some ups and often many downs. Unless an inventor is committed to the journey and the tasks required, licensing the technology may provide the best option and allow inventors to devote their time to discovering the next great new technology.
Current trends show technology entrepreneurship is on the rise, with startups playing a vital economic role through job creation and innovation. Notable startups built around a novel technology include Silicon Valley darling Google, spawned from a Stanford PhD project. With careful planning and tenacity, a startup can propel promising technologies to commercial success.
Overcoming Commercialisation Challenges
While potentially lucrative, commercialising technology has inherent challenges at every phase, and every commercialisation journey is different. One major obstacle is the financial “Valley of Death” between proof-of-concept and product launch, where projects often stall due to lack of funding and support.
This can be mitigated by having a solid business plan based on a sound market assessment. In the end, though, there is no guarantee of success.
Thankfully, a range of programs exist to help to commercialise inventions. The government and other funders provide some support and funding. Incubators and accelerator programs offer mentoring for developing business skills. Even formidable commercialisation barriers can be overcome with patience, planning, and grit.
The Role of Universities
In recent decades, universities have dramatically expanded efforts to translate research outcomes into problem-solving impacts through commercialisation. Technology transfer offices at most major research universities now handle IP, licensing deals with industry and startup formation.
Commercialisation also opens up new revenue streams for institutions from licensing and equity agreements. But beyond the financial incentives, commercialising academic research can bring society tangible benefits by accelerating the use of next-gen technologies in fields like health, energy, and transportation. With targeted policies and resources, universities will continue driving innovation from lab to market.
Wrapping up
Commercialising new technologies is a complex but rewarding journey that turns ideas into products to benefit society and the economy. Through IP protection, licensing arrangements, startup creation, proactive support programs and commercialisation professionals, innovators can manage the obstacles and unlock the full potential of their inventions. With technological change accelerating, understanding the commercialisation process will be crucial for researchers and institutions seeking to maximise the real-world impact of their breakthrough discoveries.
It is an exciting time to commercialise technology, with considerable focus on improving Australia’s commercial outcomes from its research.
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