University breakthroughs can have broad commercial applications and substantial impact on the economy – provided they’re successfully transferred to the market.
Visionary individuals and businesses of all sizes have been transforming, or trying to transform, innovative university technologies into merchantable products and applications to promote economic growth and/or create money-making opportunities.
To help bridge the gap between university research discoveries and the commercial marketplace, emerged are firms that specialized in the commercialization of university inventions.
These firms often collaborate with industry players to bring together the right technology, the right entrepreneur, and the right investor to move a new technology rapidly from lab to market.
For instance, they might create strategic partnerships with angel investors and investor networks to promote investments in startups that exploit university innovations. In return, investors can gain access to a large pool of intellectual property (IP) portfolios.
Interestingly, these startups companies, rather than their big corporate counterparts, are the most effective when it comes to translating university inventions into commercial products or processes.
According to “Technology Trends: Technology Transfer,” startups founded with the sole purpose to commercialize and gain profit from new inventions are also “fairly successful in generating income because of their strong desire to make the technology a success and, sometimes, because of entrepreneurial inventors’ involvement in all stages of product development and licensing process.”
Didier Leconte, President of MSBi Valorisation, a firm that invests in and commercializes seed-stage innovations, tells Venture Hype:
Early-stage firms are effective in transferring university technology for public benefits and for profits because they fill the gap left by large corporations.
Theoretically, large corporations are most capable to do technology transfer. They have cash, expertise, distribution channel, and worldwide consumer voice. But most, if not all, of them are risk averse in respect to external tech opportunities.
Smaller companies (SMEs) are quick decision makers; they have the freedom to think out-of-the-box. They’re poised to deliver what they’ve been financed to do. So, startups are a favored tech transfer model.
Lab coats aren’t business suits. Universities’ mission is to educate and research, not to create inventions that are ready for the marketplace. Technology transfer isn’t easy. As a tech transfer enthusiast or commercialization partner, you need to understand the risks of unsuccessful transfer (failure to commercialize the technology), and recognize the academics’ requirements to publish their work, thus disclosing all the information, the secret sauce, related to the technology to the public.
Therefore, if you intend to invest in, or help commercialize the technology of, a spinout company, you may want to ensure that the IP is adequately protected, such as in the form of a patent, before the academics publish anything. Once the invention is protected by a patent, those who copy it would infringe its IP. More on this in the next section.
Prefer to keep it as a trade secret rather than protecting it with a patent? Leconte comments, “Depending on the domain, it might be difficult to sustain a trade secret in the long term, as one could find out the secret sauce in many ways, such as reverse engineering, data mining, and etc.”
What exactly are the differences between these 2 forms of IP protection?
According to this interesting article, “Iron Man’s Suit Isn’t Patented, It’s A Trade Secret (Seriously),” if the invention is protected by a patent, one can get superior monetary relief if someone else copies it.
But if it’s kept as a trade secret, one could only hope that criminal law would dissuade people from stealing it, not to mention considerably less monetary relief.
Here’s a quick summary:
Patents
With a patent, the inventor publicly discloses the invention by filing a patent. If the patent is granted, the inventor is granted exclusive legal domain over the use of the patent for a limited amount of time.
If someone wants to build the same device, they can do so by simply reviewing the patent, but they will have to pay the inventor for the use or sale of that device.
As a reward for making the instructions public, the inventor is granted a plethora of legal protections, such as the ability to file for injunctions against infringement, and to recover attorney’s fees and treble damages in a lawsuit.
Trade Secret
With a trade secret, the inventor is required to “take reasonable measures to keep the information secret.”
If they do that, and “the information derives independent economic value… from not being generally known to, and not being readily ascertainable through proper means by, the public,” then federal law makes it a crime to misappropriate that information.
…state common law allows compensatory relief, [though] typically not attorney’s fees or treble damages.
Similarly, it’s harder to get an injunction for misuse of a trade secret than for infringement of a patent.
Next, innovation veteran Didier Leconte will list some of the critical criteria in accessing university technologies and offer advice to those who want to invest in or help commercialize them.
* For series, references are published in the last installment of the series.
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