Commercialization, patents, startups: 3 common questions faculty members ask
What makes an innovation a good candidate for commercialization? For patent protection? Is starting a company the right thing to do?
Commercialization of university-derived innovations is complex and requires time (often years) and resources. One has to start somewhere, though. The following are the three questions that faculty most commonly ask about commercialization and entrepreneurial activity.
Q: What makes an innovation a good candidate for commercialization?
A: This is difficult to answer in the abstract since all innovations are different. Plus, university-created innovations are usually at a very early stage and require years of further development before they become products or move into the marketplace. University researchers make discoveries that lead to products and only rarely do they create those products. In addition, university research typically is not based on commercial market need. We often create solutions to problems that do not yet exist. Lastly, the majority of university research is basic or fundamental research, adding to general knowledge that moves fields forward.
Despite these things, there are several factors we can evaluate to try and answer whether an innovation has commercial potential. These are the same factors that businesses investigate when making their product development decisions. Here are some of the questions we ask when assessing commercial potential:
- What is the potential product?
- Who will buy it, pay for it, wants or needs it?
- What is the size of the market?
- What is already on the market that does the same thing or is “good enough” for commercial use?
- What intellectual property (IP) protection is needed?
- If applicable, is it patentable?
- Can the product be manufactured at commercial scale?
- Would a company need to completely change its manufacturing infrastructure to make this product?
- Are regulatory approvals needed? Feasible?
- What resources are needed to develop a product, i.e. how much time and money are needed?
This isn’t a one-time assessment. As research advances, these answers often change. We encourage faculty to keep us informed of progress so that we can take multiple looks at commercial potential.
Q: Why won’t you patent my innovation?
A: There are many reasons for declining to file patent applications. Not all innovations have commercial potential despite being terrific ideas (see question 1). A patent is a business tool and nothing more. It allows the patent owner and licensee a limited monopoly and keeps competitors from using the patented matter so the owner or licensee can profit from that invention. In addition, financial resources for patent filings are limited so we have to make careful decisions on which innovations to pursue.
An innovation may not be patentable or it may not have a market, cannot be scaled up, may be toxic, etc. Also important is whether an innovation will be a fit into licensee’s pipelines, product plans and so on.
Another very common reason to forgo a patent application filing is that the innovation simply isn’t ready. In many fields, data demonstrating that the innovation actually works have to be included in the application. In these cases, it isn’t enough to just have an idea. In all cases, showing proof-of-concept can make for a far better patent application. If you are told your innovation isn’t ready for patenting, please keep our office informed about your progress AND of publication plans. If you plan to publish, do a poster or presentation, please let us know the timing. If necessary and appropriate, we will alter our putative filing timeline to fit with your plans. The reason for this is that outside the U.S., patent rights are automatically lost at the time of public disclosure. Within the U.S., there is a one-year grace period in which to file for patent rights. Innovations have more commercial value if worldwide rights are available, so we try to file prior to a public disclosure. We will never tell you that you cannot publish or present. Instead, we will work with you to ensure that patent rights are preserved in a way that makes sense.
If we decline to file a patent application for business-related reasons, please do not take the decision as criticism. It is simply a business decision and has no bearing on the innovation’s scientific value or validity. Please continue to disclose new innovations or modifications to existing innovations to our office. We want to work with you.
Q: It seems that everyone wants to start a company. How do I decide if it’s right for me?
A: Starting a company isn’t for everyone and certainly isn’t for the faint of heart. It is difficult, risky, requires a lot of hard work and the odds are against success from the beginning. This is particularly true in pharma and biotech where the resources needed to develop a product can be in the hundreds of millions of dollars. However, creating and growing a company is also exciting and quite satisfying when successful (no matter how success is defined).
Reasons to create a startup include if your innovation is a complete game changer in its field, or is a platform technology with many applications, or is so far ahead of the market that existing companies will not touch it.
For the innovation, a business analysis must be performed before deciding if a startup is appropriate. Typically, university discoveries are better suited for licensing to existing companies. The business analysis will steer our office and you in the direction that makes the most sense.
On a personal level, you should consider the impact that a startup will have on life. Read books on how to start companies. Talk with other faculty entrepreneurs. Become familiar with basic business terminology and process. You will need to understand these even if your company has management from the beginning. Starting a company requires a very different skillset and vocabulary than what many in academia are used to.
With a startup company, you will essentially have two full-time jobs. In addition to your role as university faculty, you will build and run the company, seek investors and strategic partners, find space, hire personnel and so on. State law and federal conflict of interest rules are such that you cannot use your regular lab or university facilities for business purposes. The University of Nevada, Reno makes it possible for you to obtain separate space, for a fee, through the Nevada Center for Applied Research (NCAR).
It is important to find competent management for the company as soon as possible. Finding the right person isn’t easy, but it’s critical. Investors usually invest in people so your company’s team should be chosen carefully. The science becomes secondary. The team also needs to have the expertise needed to grow a company. The Reno area has numerous resources available for mentoring entrepreneurs. Our office, including The Innevation Center—University of Nevada, Reno, can make introductions and guide you to the right people.
Investors usually will not invest in a university startup whose CEO is the faculty innovator. They want to feel comfortable that the company is run by seasoned business person(s). When venture capitalists (VC’s) enter the picture, they often bring in their own management. This can be difficult for the faculty founder since he or she will have to cede control. A thick skin is needed.
There are other considerations that come into play. Those discussed here are some of the first that have to be addressed or at least considered. If you like business, are both big-picture and detail-oriented and are not afraid of risk, you may be well-suited to creating a startup and leading an entrepreneurial lifestyle. Enterprise and Innovation will be delighted to help you determine if creating a new company is right for you.
Ellen Purpus, assistant vice president for Enterprise & Innovation, oversees enterprise and commercialization services for the University of Nevada, Reno including technology-transfer. Part of Research & Innovation at the University, Enterprise & Innovation includes The Innevation Center—University of Nevada, Reno, the Nevada Center for Applied Research and Nevada Industry Excellence.