For advanced engineering companies, innovation to bring a product to market often involves some level of collaboration with partners in the supply chain. As such, firms that wish to work together in this way need to manage the process carefully to make sure their commercial interests are protected.
The point of disclosure is a critical moment for innovators as once an invention or idea is in the public domain, it’s impossible to turn back the clock. If the invention is publically disclosed before a patent application has been filed, then it is highly likely that the patent application, and any subsequently granted patent, will be invalid.
So how can the unnecessary loss of valuable ideas and inventions be safeguarded against? The answer lies in careful management of the innovation process, for example, when preparing to share innovations, the industry knowledge of a patent adviser can prove invaluable in helping to assess the commercial potential. Advisers will also have access to related patent applications, as well as specialist knowledge of new standards that may link their inventions to dominant user technologies.
Once an invention or idea has been shared internally, and appropriate protection has been applied for, there are a number of ways in which it can then be exploited. It can be sold in order to generate an immediate return on investment, licensed to a third party or manufactured in-house and sold. Managing this decision-making process can become complicated if a patent adviser has limited contact with the engineer responsible for a specific invention – an approach often taken by companies that do not want research activity to be interrupted. There are obvious risks in taking this approach and for most innovation-led businesses, closer and more regular dialogue is usually beneficial.
As part of the considerations that take place, it is important to think about how the invention is likely to be used commercially, as this will have a bearing on the type of IP protection sought.
For example, the pure licensing model is often used when a company acts as a high-value design house, introducing new inventions, which are then included in products made by someone else, and in many cases, marketed by someone else. In using this IP model, revenue streams are derived from licensing royalties for each unit sold, with high product volumes required to generate high earnings.
Another classic basis for protecting IP is the ‘fortress model’, which is particularly useful for organisations that research, design, develop, manufacture and market a product themselves. Applying this model involves using IP protection to effectively ring fence the invention, ensuring that the business is the only one that can develop products incorporating it and bring them to market. These products can then be sold at a premium price as a consequence of the lack of competition.
The first-to-market model avoids registered IP altogether. While this can be successful, businesses that adopt this model cannot afford to be complacent, because the window in which they can reap the commercial benefits of their inventions is much narrower. As a result, such businesses need to stay focused on delivery to retain their position as market leaders. However, despite having a well-differentiated, market-leading product, unless there are well-guarded IP rights in place, exposure to direct competition is greater. If the first to market route is to be pursued, then it is highly advisable that extensive IP clearance searches are undertaken prior to the product launch to ensure the product does not infringe anyone else’s IP.
Another model involves building a start-up company, usually around a small number of key IP rights obtained for a particular new product or technology, which could range from a new rotor to a specific transmission system. The purpose is to provide proof of concept, and perhaps small scale sales, with a view to showcasing the potential of the technology.
A real-life IP strategy, however, is likely to include a number of different elements and the most successful collaborations are rooted in dynamic business partnerships involving a team of inventors, partners and a skilled patent adviser with relevant sector experience. The increased risks associated with the protection of inventions that are being developed collaboratively make the advice and guidance of a specialist even more important.
Dave Croston is a partner and patent attorney at Withers & Rogers LLP – one of the UK’s leading firms of patent and trade mark attorneys, leading the firm’s advanced engineering group