As the main objective of companies is to create revenues, the initial key factor for their success is, without any doubt, commercialisation. The capability of commercialising new products is a main challenge for companies since successful commercialisation requires multi-faceted cooperation between different skill sets: R&D, manufacturing, marketing, contractual law, HR supervision and – for sure – intellectual property management.
Whether you commercialise your product on your own or you would like to build up partnerships, for example via licensing, there are vital points to consider for protecting your intellectual assets during the commercialisation process.
Independently of the pathway which you choose for commercialisation (or maybe a combination of pathways, which normally is the real life case), the first rule remains the same: Keep your intellectual property (IP) to yourself until you securely protect it!
Now, let us get a bit deeper into the main commercialisation pathways and summarise the IP measures to undertake in a simple way:
1. Commercialisation by the owner: Although it may sound conservative, this model is very useful when you have enough capabilities to carry on exploitation/marketing actions or when you are hesitating about building up business partnerships based on your IP. The success of this model relies heavily on you and on your measures to keep your intellectual assets as a secret. Disclosing your intellectual assets (in particular inventions and designs) without taking any protection steps may ruin your business plans, as you may no longer protect your inventions or designs as patents or industrial designs once you disclose them to the public. What is more, trade marks and domain names are generally protected according to first-to-file basis. Therefore, any disclosure of your trade mark or domain name ideas may lead to an “intellectual theft” and you may lose your rights to register your brand or design, when the trade mark or design is already registered in the name of others.
“Keeping your IP as a secret” does not necessarily mean keeping them in password-protected zones or in hard stainless steel cases. Making sure that all confidentiality measures are taken – generally through staff or confidentiality contracts – and reminding all parties involved in the creation and development of IP about their responsibilities on confidentiality issues have utmost importance in keeping the IP secret.
Apart from the confidentiality issues, if you are commercialising your IP on your own, it means that you are also fully responsible for the IP protection. Taking steps to protect your IP assets is not only necessary for their proper management, but also for getting full benefit from those assets.
When speaking about protection, it is also worthwhile to make note of one essential point regarding trade secrets and know-how. As trade secrets (yes, they are literally “secrets”) and know-how are not protected by IP titles as other IP rights such as trade marks, patents or designs, you can only benefit from the competitive advantage of these intellectual assets as long as you keep them as a secret. Therefore, secrecy measures for such IP should be handled very carefully.
Companies also need to consider another essential step before commercialisation of any IP: Freedom to operate analysis (known as FTO). Such analysis helps to evaluate whether your IP can be exploited commercially without infringing third party rights. This means that such an analysis secures your business from encountering possible infringement allegations, when you put the product or service on the market by yourself.
2. Assignments: An IP assignment is a transfer of ownership of an IP Right from one party (the assignor) to another party (the assignee). This route can be an option especially when the owner of the IP does not have enough capabilities (financial, HR, marketing, etc) to market the developed intellectual asset and/or when he would like to realise an immediate cash flow from an IP asset, which he does not plan to exploit with its own resources.
From the IP perspective, for assignments, it is vital to sign non-disclosure agreements (NDAs) with the potential assignees already at the pre-agreement stages – even if these negotiations do not lead to any agreement. It is indeed generally the case that the prospective assignees need access to confidential information during the negotiation phase.
Besides, from the legal point of view, a well-drafted assignment contract is also very important in such a process, therefore having a professional guidance from an IP attorney or lawyer is highly recommended.
3. Licensing: A licence is a contract under which the holder of an intellectual property (licensor) grants permission for the use of its intellectual property to another party (licensee) within a certain time limit in a defined territory. It is in fact a very efficient commercialisation strategy, as it creates a win-win situation for both parties.
First of all, licensing provides significant benefits for market accessibility. The licensors can rely on their licensees’ experiences and capabilities for specific markets and both licensors and licensees can create revenues through the licensed intellectual assets. Furthermore, while on one hand licensing keeps the licensors away from investing marketing and distribution activities (as these activities will be under the responsibility of the licensees), on the other hand it also takes away the need for licensees to invest in R&D, as there is already a developed product to commercialise.
However, in order to take the full advantage of licensing, there are some very important measures to be taken. As in assignments, licensing also requires a well prepared negotiation phase. As a matter of fact, this phase is even tougher than it is for assignments, because contrary to assignments, licensing is a long-lasting business relationship that entails continuous care of the intellectual assets that remain the property of the licensor during the licensing period. Therefore, both NDAs and licensing agreement clauses should be drafted in a way that secures the IP in a most effective way.
As previously pointed out, although there are certainly other commercialisation routes such as franchising, creating joint ventures or spin-offs, the main principle behind all these routes stays the same: keeping your IP safe. Because you have invested time, money and – more importantly than that – intellectual efforts to develop your intellectual assets, they deserve to be safeguarded.
However, there must be one final thing to be underlined: today, we must admit that the success of commercialisation activities generally depends more on marketing capabilities than on the product itself. In the global marketing arena you, being a modern-time gladiator, certainly need a sharp sword, which is your product, to win the battle. But at the same time you must know how to use it, which depends on your capabilities. After all, the above IP measures provide you with a strong shield to protect you from the attacks of others and to make you more courageous when you are battling. So, if you are ready, it is time to put on your shield!
The European IPR Helpdesk has published a comprehensive guide on “Commercialising Intellectual Property”, where all forms of commercialisation routes are discussed, highlighting the IP elements to be taken into account. You can find the guide here.
Mr. Onur Emul is the IP Advisor in the Intellectual Property Institute of Luxembourg (IPIL) for the European IPR Helpdesk, a service initiative funded by the European Commission offering information, individual support and training in the field of IP through different services – free of charge. Visit http://www.iprhelpdesk.eu for more information.