Innovation Management
There’s no point putting time and money towards creating intellectual property rights unless you have a sound business case supporting a return on the investment required to research, develop and commercialise the IP.
We all know there’s no such thing as a sure thing in business – and when it comes to new ventures based on innovative intellectual property, there are risks, as well as rewards, that are unique to IP based ventures.
The mistakes made with IP based ventures generally result in some way from a failure to align the protection of the IP with its commercialisation. This misalignment can manifest in various ways including premature disclosures (or sales) of your product in a way that damages your ability to secure meaningful IP rights such as a patent or a registered design. In other situations substantial IP costs are incurred only to find out much later that there is no reasonable likelihood of commercial success.
With respect to trademarks, misalignment between IP and commercialization strategies can result in myriad problems including:
- incorrect trademarks being protected;
- selection of trademarks with poor registration prospects and/or that infringe third party rights;
- applications being filed referring to the wrong goods/services; and
- money wasted on registering trademarks prematurely in international markets when there is no realistic business plan to monetize the IP assets in those markets.
Managing Risk
If you manage the key risks in your venture you will be well on your way to successful commercialisation. The key areas of risk in most IP based ventures dealing with the development of new products or services are:
Technical risk
You may have a very clever new and innovative product but technical risk demands you ask the question: can you reliably manufacture your product or offer your service to an acceptable market standard at an acceptable cost, and in a way that is scalable to meet increasing market demand?
Market risk
Don’t fall into the common trap of assuming the world will beat a path to your door to buy your new and innovative product – just because a product is new and innovative does not mean it will be commercially successful. To assess your market risk, you need to be sure your product addresses a real and currently unmet market need and can be offered at an acceptable price point. You must also have a plan to stay ahead of competitors.
You must also deploy a robust business model demonstrating that taking the product to market will generate the returns on the investment required to successfully commercialise. This “go to market” strategy could include licensing or entering the market directly but if you are looking to license do not underestimate how much work you will have to do to get your venture to the point where a third party will be willing to take a license. Potential licensees will always be more risk averse than you and will be looking for strong evidence that your IP can be successfully commercialised before they will make the required investment.
IP risk
There is no strong correlation between the mere existence of IP rights and commercial success. The IP rights have to matter. In essence, IP rights are only valuable if they protect a real and valuable source of competitive advantage. One question to ask is: can you establish IP rights that confer ownership of your product and represent a real obstacle to competitors? So, do your IP rights protect your competitive advantage?
You must also be mindful of Intellectual Property (IP) rights owned by others that may prevent you from operating. Ensuring you understand your IP landscape will enable you to make the right decisions in relation to your venture.